-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JPTPycRHchixbQo13FvFWhBgH/EbCi1y6lWQK7i+KrmBfRYKvadQRVRGd6jTVaIf JN9gh1qK3e+xciGFuCmFkQ== 0001084067-08-000076.txt : 20080516 0001084067-08-000076.hdr.sgml : 20080516 20080516172433 ACCESSION NUMBER: 0001084067-08-000076 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20080516 DATE AS OF CHANGE: 20080516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WNC HOUSING TAX CREDIT FUND VI LP SERIES 5 CENTRAL INDEX KEY: 0001036500 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 330745418 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24855 FILM NUMBER: 08843322 BUSINESS ADDRESS: STREET 1: 3158 REDHILL AVE STREET 2: STE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7146625565 MAIL ADDRESS: STREET 1: 3158 REDHILL AVE STREET 2: STE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 10-K 1 nt65sup10k.txt 10-K NAT 6-5 UNITED STATES FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March, 31, 2004 For the fiscal year ended March, 31, 2005 For the fiscal year ended March, 31, 2006 For the fiscal year ended March, 31, 2007 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 0-24855 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) California 33-0745418 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 17782 Sky Park Circle, 92614-6404 Irvine, CA (zip code) (Address of principal executive offices) (714) 662-5565 (Telephone Number) Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes_____ No___X__ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes_____ No___X__ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes_____ No___X__ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer___ Accelerated filer___ Non-accelerated filer___X__ Smaller reporting company___ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes____ No__X__ State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. INAPPLICABLE DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). NONE 2 PART I. ITEM 1. BUSINESS ORGANIZATION WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership") is a California limited partnership formed under the laws of the State of California on March 3, 1997 has commenced operations on August 29, 1997. The Partnership was formed to acquire limited partnership interests in other limited partnerships or limited liability companies ("Local Limited Partnerships") which owns multi-family housing complexes ("Housing Complexes") that are eligible for Federal low income housing tax credits ("Low Income Housing Tax Credits"). The local general partners (the "Local General Partners") of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited partnership or limited liability company operating agreement (the "Local Limited Partnership Agreement"). The general partner of the Partnership is WNC & Associates, Inc. ("Associates" or the "General Partner"). The chairman and president of Associates own substantially all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through the General Partner, as the Partnership has no employees of its own. Pursuant to a registration statement Prospectus and Supplements thereto, filed with the U.S. Securities and Exchange Commission on June 23, 1997, the Partnership commenced a public offering of 25,000 units of limited partnership interest("Partnership Units"), at a price of $1,000 per Partnership Unit. Since inception, the Partnership has received and accepted subscriptions for 25,000 Partnership Units in the amount of $24,918,175, net of dealer and volume discounts of $81,825. Holders of Partnership Units are referred to herein as "Limited Partners." The Partnership shall continue in full force and effect until December 31, 2052 unless terminated prior to that date pursuant to the Partnership Agreement (as defined below) or law. DESCRIPTION OF BUSINESS The Partnership's principal business objective is to provide its Limited Partners with Low Income Housing Tax Credits. The Partnership's principal business therefore consists of investing as a limited partner or non-managing member in Local Limited Partnerships each of which will own and operate a Housing Complex which will qualify for the Low Income Housing Tax Credits. In general, under Section 42 of the Internal Revenue Code, an owner of low income housing can receive the Low Income Housing Tax Credits to be used to reduce Federal taxes otherwise due in each year of a ten-year credit period. Each Housing Complex is subject to a 15 year compliance period (the "Compliance Period"), and under state law may have to be maintained as low income housing for 30 or more years. In general, in order to avoid recapture of Low Income Housing Tax Credits, the Partnership does not expect that it will dispose of its interests in Local Limited Partnerships ("Local Limited Partnership Interests") or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. Because of (i) the nature of the Housing Complexes, (ii) the difficulty of predicting the resale market for low income housing and (iii) the ability of government lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership, dated March 3, 1997 as amended on August 29, 1997 ("Partnership Agreement"), will be accomplished promptly at the end of the Compliance Period. If a Local Limited Partnership is unable to sell its Housing Complex, it is anticipated that the Local General Partner will either continue to operate such Housing Complex or take such other actions as the Local General Partner believes to be in the best interest of the Local Limited Partnership. Notwithstanding the preceding, circumstances beyond the control of the General Partner or the Local General Partners may occur during the Compliance Period, which would require the Partnership to approve the disposition of a Housing Complex prior to the end thereof, possibly resulting in recapture of Low Income Housing Tax Credits. 3 The Partnership invested in fifteen Local Limited Partnerships, none of which had been sold or otherwise disposed as of March 31, 2007, 2006, 2005 and 2004. Each of these Local Limited Partnerships owns a single Housing Complex that was eligible for the Low Income Housing Tax Credits. Certain Local Limited Partnerships may also benefit from additional government programs promoting low- or moderate-income housing. EXIT STRATEGY The Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits. The initial programs are completing their Compliance Periods. With that in mind, the General Partner is continuing its review of the Housing Complexes, with special emphasis on the more mature Housing Complexes such as any that have satisfied the IRS compliance requirements. The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, and the tax consequences to the Limited Partners from the sale of the Housing Complexes. Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners' return wherever possible and, ultimately, to wind down the Partnership. Local Limited Partnership Interests may be disposed of any time by the General Partner in its discretion. As of March 31, 2007, no Housing Complexes have been sold or selected for disposition. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of March 31, 2007. As of March 31, 2007 none of the Housing Complexes had completed the 15 year compliance period. The proceeds from the disposition of any of the Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement, the sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership. Should such distributions occur, the Limited Partners will be entitled to receive distributions from the proceeds remaining after payment of Partnership obligations and funding of reserves, equal to their capital contributions and their return on investment (as defined in the Partnership Agreement). The General Partners would then be entitled to receive proceeds equal to their capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner. ITEM 1A. RISK FACTORS Set forth below are the principal risks the Partnership believes are material to the Limited Partners. The Partnership and the Local Limited Partnerships operate in a continually changing business environment and, therefore, new risks emerge from time to time. This section contains some forward-looking statements. For an explanation of the qualifications and limitations on forward-looking statements, see Item 7. (a) RISKS ARISING FROM THE INTERNAL REVENUE CODE RULES GOVERNING LOW INCOME HOUSING TAX CREDITS LOW INCOME HOUSING TAX CREDITS MIGHT NOT BE AVAILABLE. If a Housing Complex does not satisfy the requirements of Internal Revenue Code Section 42, then the Housing Complex will not be eligible for Low Income Housing Tax Credits. LOW INCOME HOUSING TAX CREDITS MIGHT BE LESS THAN ANTICIPATED. The Local General Partners will calculate the amount of the Low Income Housing Tax Credits. No opinion of counsel will cover the calculation of the amount of Low Income Housing Tax Credits. The IRS could challenge the amount of the Low Income Housing Tax Credits claimed for any Housing Complex under any of a number of 4 provisions set forth in Internal Revenue Code Section 42. A successful challenge by the IRS would decrease the amount of the Low Income Housing Tax Credits from the amount paid for by the Partnership. UNLESS A BOND IS POSTED OR A TREASURY DIRECT ACCOUNT IS ESTABLISHED, LOW INCOME HOUSING TAX CREDITS MAY BE RECAPTURED IF HOUSING COMPLEXES ARE NOT OWNED AND OPERATED FOR 15 YEARS. Housing Complexes must comply with Internal Revenue Code Section 42 for the 15-year Compliance Period. Low Income Housing Tax Credits will be recaptured with interest to the extent that a Housing Complex is not rented as low income housing or in some other way does not satisfy the requirements of Internal Revenue Code Section 42 during the Compliance Period. For example, unless a bond is posted or a Treasury Direct Account is established, recapture with interest would occur if: o a Local Limited Partnership disposed of its interest in a Housing Complex during the Compliance Period, or o the Partnership disposed of its interest in a Local Limited Partnership during the Compliance Period. For these purposes, disposition includes transfer by way of foreclosure. It will be up to the Partnership to determine whether to post a bond. There is no obligation under the agreements with the Local Limited Partnerships that the Local Limited Partnerships must do so. There can be no assurance that recapture will not occur. If it does, recapture will be of a portion of all Low Income Housing Tax Credits taken in prior years for that Housing Complex, plus interest. During the first 11 years of the Compliance Period, non-compliance results in one-third of the credits up to that point for the particular Housing Complex being recaptured, plus interest. Between years 12 and 15, the recapture is phased out ratably. SALES OF HOUSING COMPLEXES AFTER 15 YEARS ARE SUBJECT TO LIMITATIONS WHICH MAY IMPACT A LOCAL LIMITED PARTNERSHIP'S ABILITY TO SELL ITS HOUSING COMPLEX. Each Local Limited Partnership executes an extended low income housing commitment with the state in which the Housing Complex is located. The extended low income housing commitment states the number of years that the Local Limited Partnership and any subsequent owners must rent the Housing Complex as low income housing. Under Federal law, the commitment must be for at least 30 years. The commitment actually agreed to may be significantly longer than 30 years. In prioritizing applicants for Low Income Housing Tax Credits, most states give additional points for commitment periods in excess of 30 years. On any sale of the Housing Complex during the commitment period, the purchaser would have to agree to continue to rent the Housing Complex as low income housing for the duration of the commitment period. This requirement reduces the potential market, and possibly the sales price, for the Housing Complexes. The sale of a Housing Complex may be subject to other restrictions. For example, Federal lenders or subsidizers may have the right to approve or disapprove a purchase of a Housing Complex. Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amount of cash will be distributed to the Limited Partners. As a result, a material portion of the Low Income Housing Tax Credits may represent a return of the money originally invested in the Partnership. LIMITED PARTNERS CAN ONLY USE LOW INCOME HOUSING TAX CREDITS IN LIMITED AMOUNTS. The ability of an individual or other non-corporate Limited Partner to claim Low Income Housing Tax Credits on his individual tax return is limited. For example, an individual Limited Partner can use Low Income Housing Tax Credits to reduce his tax liability on: o an unlimited amount of passive income, which is income from entities such as the Partnership, and o $25,000 in income from other sources. However, the use of Low Income Housing Tax Credits by an individual against these types of income is subject to ordering rules, which may further limit the use of Low Income Housing Tax Credits. Some corporate Limited Partners are subject to similar and other limitations. They include corporations which provide personal services, and corporations which are owned by five or fewer shareholders. Any portion of a Low Income Housing Tax Credit which is allowed to a Limited Partner under such rules is then aggregated with all of the Limited Partner's other business credits. The aggregate is then subject to the general limitation on all business credits. That limitation provides that a Limited Partner can use 5 business credits to offset the Limited Partner's annual tax liability equal to $25,000 plus 75% of the Limited Partner's tax liability in excess of $25,000. However, business credits may not be used to offset any alternative minimum tax. All of these concepts are extremely complicated. (b) RISKS RELATED TO INVESTMENT IN LOCAL LIMITED PARTNERSHIPS AND HOUSING COMPLEXES BECAUSE THE PARTNERSHIP HAS FEW INVESTMENTS, EACH INVESTMENT WILL HAVE A GREAT IMPACT ON THE PARTNERSHIP'S RESULTS OF OPERATIONS. Any single Housing Complex experiencing poor operating performance, impairment of value or recapture of Low Income Housing Tax Credits will have a significant impact upon the Partnership as a whole. THE FAILURE TO PAY MORTGAGE DEBT COULD RESULT IN A FORCED SALE OF A HOUSING COMPLEX. Each Local Limited Partnership leverages the Partnership's investment therein by incurring mortgage debt. A Local Limited Partnership's revenues could be less than its debt payments and taxes and other operating costs. If so, the Local Limited Partnership would have to use working capital reserves, seek additional funds, or suffer a forced sale of its Housing Complex, which could include a foreclosure. The same results could occur if government subsidies ceased. Foreclosure would result in a loss of the Partnership's capital invested in the Housing Complex. Foreclosure could also result in a recapture of Low Income Housing Tax Credits, and a loss of Low Income Housing Tax Credits for the year in which the foreclosure occurs. If the Housing Complex is highly-leveraged, a relatively slight decrease in the rental revenues could adversely affect the Local Limited Partnership's ability to pay its debt service requirements. Mortgage debt may be repayable in a self-amortizing series of equal installments or with a large balloon final payment. Balloon payments maturing prior to the end of the anticipated holding period for the Housing Complex create the risk of a forced sale if the debt cannot be refinanced. There can be no assurance that additional funds will be available to any Local Limited Partnership if needed on acceptable terms or at all. THE PARTNERSHIP DOES NOT CONTROL THE LOCAL LIMITED PARTNERSHIPS AND MUST RELY ON THE LOCAL GENERAL PARTNERS. The Local General Partners will make all management decisions for the Local Limited Partnerships and the Housing Complexes. The Partnership has very limited rights with respect to management of the Local Limited Partnerships. The Partnership will not be able to exercise any control with respect to Local Limited Partnership business decisions and operations. Consequently, the success of the Partnership will depend on the abilities of the Local General Partners. HOUSING COMPLEXES SUBSIDIZED BY OTHER GOVERNMENT PROGRAMS ARE SUBJECT TO ADDITIONAL RULES WHICH MAY MAKE IT DIFFICULT TO OPERATE AND SELL HOUSING COMPLEXES. Some or all of the Housing Complexes receive or may receive government financing or operating subsidies in addition to Low Income Housing Tax Credits. The following are risks associated with some such subsidy programs: o Obtaining tenants for the Housing Complexes. Government regulations limit the types of people who can rent subsidized housing. These regulations may make it more difficult to rent the residential units in the Housing Complexes. o Obtaining rent increases. In many cases rents can only be increased with the prior approval of the subsidizing agency. o Limitations on cash distributions. The amount of cash that may be distributed to owners of subsidized Housing Complexes is less than the amount that could be earned by the owners of non-subsidized Housing Complexes. o Limitations on sale or refinancing of the Housing Complexes. A Local Limited Partnership may be unable to sell its Housing Complex or to refinance its mortgage loan without the prior approval of the subsidizer. The subsidizer may withhold such approval in the discretion of the subsidizer. Approval may be subject to conditions, including the condition that the purchaser continues to operate the property as affordable housing for terms which could be as long as 30 years or more. In addition, any prepayment of a mortgage may result in the assessment of a prepayment penalty. o Limitations on transfers of interests in Local Limited Partnerships. The Partnership may be unable to sell its interest in a Local Limited Partnership without the prior approval of the subsidizer. The subsidizer may withhold such approval in the discretion of the subsidizer. Approval may be subject to conditions. 6 o Limitations on removal and admission of Local General Partners. The Partnership may be unable to remove a Local General Partner from a Local Limited Partnership except for cause, such as the violation of the rules of the subsidizer. Regulations may prohibit the removal of a Local General Partner or permit removal only with the prior approval of the subsidizer. Regulations may also require approval of the admission of a successor Local General Partner even upon the death or other disability of a Local General Partner. o Limitations on subsidy payments. Subsidy payments may be fixed in amount and subject to annual legislative appropriations. The rental revenues of a Housing Complex, when combined with the maximum committed subsidy, may be insufficient to meet obligations. Congress or the state legislature, as the case may be, may fail to appropriate or increase the necessary subsidy. In those events, the mortgage lender could foreclose on the Housing Complex unless a workout arrangement could be negotiated. o Possible changes in applicable regulations. Legislation may be enacted which adversely revises provisions of outstanding mortgage loans. Such legislation has been enacted in the past. o Limited Partners may not receive distributions if Housing Complexes are sold. There is no assurance that Limited Partners will receive any cash distributions from the sale or refinancing of a Housing Complex. The price at which a Housing Complex is sold may not be high enough to pay the mortgage and other expenses which must be paid at such time. If that happens, a Limited Partner's return may be derived only from the Low Income Housing Tax Credits and tax losses. UNINSURED CASUALTIES COULD RESULT IN LOSSES AND RECAPTURE. There are casualties which are either uninsurable or not economically insurable. These include earthquakes, floods, wars and losses relating to hazardous materials or environmental matters. If a Housing Complex experienced an uninsured casualty, the Partnership could lose both its invested capital and anticipated profits in such property. Even if the casualty were an insured loss, the Local Limited Partnership might be unable to rebuild the destroyed property. A portion of prior tax credits could be recaptured and future tax credits could be lost if the Housing Complex were not restored within a reasonable period of time. And liability judgments against the Local Limited Partnership could exceed available insurance proceeds or otherwise materially and adversely affect the Local Limited Partnership. The cost of liability and casualty insurance has increased in recent years. Casualty insurance has become more difficult to obtain and may require large deductible amounts. HOUSING COMPLEXES WITHOUT FINANCING OR OPERATING SUBSIDIES MAY BE UNABLE TO PAY OPERATING EXPENSES. If a Local Limited Partnership were unable to pay operating expenses, one result could be a forced sale of its Housing Complex. If a forced sale occurs during the first 15 years of a Housing Complex, a partial recapture of Low Income Housing Tax Credits could occur. In this regard, some of the Local Limited Partnerships may own Housing Complexes which have no subsidies other than Low Income Housing Tax Credits. Those Housing Complexes do not have the benefit of below-market-interest-rate financing or operating subsidies which often are important to the feasibility of low income housing. Those Housing Complexes rely solely on rents to pay expenses. However, in order for any Housing Complex to be eligible for Low Income Housing Tax Credits, it must restrict the rent which may be charged to tenants. Over time, the expenses of a Housing Complex will increase. If a Local Limited Partnership cannot increase its rents, it may be unable to pay increased operating expenses. THE PARTNERSHIP'S INVESTMENT PROTECTION POLICIES WILL BE WORTHLESS IF THE NET WORTH OF THE LOCAL GENERAL PARTNERS IS NOT SUFFICIENT TO SATISFY THEIR OBLIGATIONS. There is a risk that the Local General Partners will be unable to perform their financial obligations to the Partnership. The General Partner has not established a minimum net worth requirement for the Local General Partners. Rather, each Local General Partner demonstrates a net worth which the General Partner believes is appropriate under the circumstances. The assets of the Local General Partners are likely to consist primarily of real estate holdings and similar assets. The fair market value of these types of assets is difficult to estimate. These types of assets cannot be readily liquidated to satisfy the financial guarantees and commitments which the Local General Partners make to the Partnership. Moreover, other creditors may have claims on these assets. No escrow accounts or other security arrangements will be established to ensure performance of a Local General Partner's obligations. The cost to enforce a Local General Partner's obligations may be high. If a Local General Partner does not satisfy its obligations the Partnership may have no remedy, or the remedy may be limited to removing the Local General Partner as general partner of the Local Limited Partnership. 7 FLUCTUATING ECONOMIC CONDITIONS CAN REDUCE THE VALUE OF REAL ESTATE. Any investment in real estate is subject to risks from fluctuating economic conditions. These conditions can adversely affect the ability to realize a profit or even to recover invested capital. Among these conditions are: o the general and local job market, o the availability and cost of mortgage financing, o monetary inflation, o tax, environmental, land use and zoning policies, o the supply of and demand for similar properties, o neighborhood conditions, o the availability and cost of utilities and water. (c) TAX RISKS OTHER THAN THOSE RELATING TO TAX CREDITS In addition to the risks pertaining specifically to Low Income Housing Tax Credits, there are other Federal income tax risks. Additional Federal income tax risks associated with the ownership of Partnership Units and the operations of the Partnership and the Local Limited Partnerships include, but are not limited to, the following: NO OPINION OF COUNSEL AS TO CERTAIN MATTERS. No legal opinion is obtained regarding matters: o the determination of which depends on future factual circumstances, o which are peculiar to individual Limited Partners, or o which are not customarily the subject of an opinion. The more significant of these matters include: o allocating purchase price among components of a property, particularly as between buildings and fixtures, the cost of which is depreciable, and the underlying land, the cost of which is not depreciable, o characterizing expenses and payments made to or by the Partnership or a Local Limited Partnership, o identifying the portion of the costs of any Housing Complex which qualify for historic and other tax credits, o applying to any specific Limited Partner the limitation on the use of tax credits and tax losses. Limited Partners must determine for themselves the extent to which they can use tax credits and tax losses, and o the application of the alternative minimum tax to any specific Limited Partner, or the calculation of the alternative minimum tax by any Limited Partner. The alternative minimum tax could reduce the tax benefits from an investment in the Partnership. There can be no assurance, therefore, that the IRS will not challenge some of the tax positions adopted by the Partnership. The courts could sustain an IRS challenge. An IRS challenge, if successful, could have a detrimental effect on the Partnership's ability to realize its investment objectives. PASSIVE ACTIVITY RULES WILL LIMIT DEDUCTION OF THE PARTNERSHIP'S LOSSES AND IMPOSE TAX ON INTEREST INCOME. The Internal Revenue Code imposes limits on the ability of most investors to claim losses from investments in real estate. An individual may claim these so-called passive losses only as an offset to income from investments in real estate or rental activities. An individual may not claim passive losses as an offset against other types of income, such as salaries, wages, dividends and interest. These passive activity rules will restrict the ability of most Limited Partners to use losses from the Partnership as an offset of non-passive income. THE PARTNERSHIP MAY EARN INTEREST INCOME ON ITS RESERVES AND LOANS. The passive activity rules generally will categorize interest as portfolio income, and not passive income. Passive losses cannot be used as an offset to portfolio income. Consequently, a Limited Partner could pay tax liability on portfolio income from the Partnership. AT RISK RULES MIGHT LIMIT DEDUCTION OF THE PARTNERSHIP'S LOSSES. If a significant portion of the financing used to purchase Housing Complexes does not consist of qualified nonrecourse financing, the "at risk" rules will limit a Limited Partner's ability to claim Partnership losses to the amount the Limited 8 Partner invests in the Partnership. The "at risk" rules of the Internal Revenue Code generally limit a Limited Partner's ability to deduct Partnership losses to the sum of: o the amount of cash the Limited Partner invests in the Partnership, and o the Limited Partner's share of Partnership qualified nonrecourse financing. Qualified nonrecourse financing is non-convertible, nonrecourse debt which is borrowed from a government, or with exceptions, any person actively and regularly engaged in the business of lending money. TAX LIABILITY ON SALE OF A HOUSING COMPLEX OR LOCAL LIMITED PARTNERSHIP INTEREST MAY EXCEED THE CASH AVAILABLE FROM THE SALE. When a Local Limited Partnership sells a Housing Complex it will recognize gain. Such gain is equal to the difference between: o the sales proceeds plus the amount of indebtedness secured by the Housing Complex, and o the adjusted basis for the Housing Complex. The adjusted basis for a Housing Complex is its original cost, plus capital expenditures, minus depreciation. Similarly, when the Partnership sells an interest in a Local Limited Partnership the Partnership will recognize gain. Such gain is equal to the difference between: o the sales proceeds plus the Partnership's share of the amount of indebtedness secured by the Housing Complex, and o the adjusted basis for the interest. The adjusted basis for an interest in a Local Limited Partnership is the amount paid for the interest, plus income allocations and cash distributions, less loss allocations. Accordingly, gain will be increased by the depreciation deductions taken during the holding period for the Housing Complex. In some cases, a Limited Partner could have a tax liability from a sale greater than the cash distributed to the Limited Partner from the sale. ALTERNATIVE MINIMUM TAX LIABILITY COULD REDUCE A LIMITED PARTNER'S TAX BENEFITS. If a Limited Partner pays alternative minimum tax, the Limited Partner could suffer a reduction in benefits from an investment in the Partnership. The application of the alternative minimum tax is personal to each Limited Partner. Tax credits may not be utilized to reduce alternative minimum tax liability. IRS COULD AUDIT THE RETURNS OF THE PARTNERSHIP, THE LOCAL LIMITED PARTNERSHIPS OR THE LIMITED PARTNERS. The IRS can audit the Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity. The IRS does not have to audit each Limited Partner in order to challenge a position taken by the Partnership or a Local Limited Partnership. Similarly, only one judicial proceeding can be filed to contest an IRS determination. A contest by the Partnership of any IRS determination might result in high legal fees. AN AUDIT OF THE PARTNERSHIP OR A LOCAL LIMITED PARTNERSHIP ALSO COULD RESULT IN AN AUDIT OF A LIMITED PARTNER. An audit of a Limited Partner's tax returns could result in adjustments both to items that are related to the Partnership and to unrelated items. The Limited Partner could then be required to file amended tax returns and pay additional tax plus interest and penalties. A SUCCESSFUL IRS CHALLENGE TO TAX ALLOCATIONS OF THE PARTNERSHIP OR A LOCAL LIMITED PARTNERSHIP WOULD REDUCE THE TAX BENEFITS OF AN INVESTMENT IN THE PARTNERSHIP. Under the Internal Revenue Code, a partnership's allocation of income, gains, deductions, losses and tax credits must have substantial economic effect. Substantial economic effect is a highly-technical concept. The fundamental principle is two-fold. If a partner will benefit economically from an item of partnership income or gain, that item must be allocated to him so that he bears the correlative tax burden. Conversely, if a partner will suffer economically from an item of partnership deduction or loss, that item must be allocated to him so that he bears the correlative tax benefit. If a partnership's allocations do not have substantial economic effect, then the partnership's tax items are allocated in accordance with each partner's interest in the partnership. The IRS might challenge the allocations made by the Partnership: 9 o between the Limited Partners and the General Partner, o among the Limited Partners, or o between the Partnership and a Local General Partner. If any allocations were successfully challenged, a greater share of the income or gain or a lesser share of the losses or tax credits might be allocated to the Limited Partners. This would increase the tax liability or reduce the tax benefits to the Limited Partners. TAX LIABILITIES COULD ARISE IN LATER YEARS OF THE PARTNERSHIP. After a period of years following commencement of operations by a Local Limited Partnership, the Local Limited Partnership may generate profits rather than losses. A Limited Partner would have tax liability on his share of such profits unless he could offset the income with: o unused passive losses from the Partnership or other investments, or o current passive losses from other investments. In such circumstances, the Limited Partner would not receive a cash distribution from the Partnership with which to pay any tax liability. IRS CHALLENGE TO TAX TREATMENT OF EXPENDITURES COULD REDUCE LOSSES. The IRS may contend that fees and payments of the Partnership or a Local Limited Partnership: o should be deductible over a longer period of time or in a later year, o are excessive and may not be capitalized or deducted in full, o should be capitalized and not deducted, or o may not be included as part of the basis for computing tax credits. Any such contention by the IRS could adversely impact, among other things: o the eligible basis of a Housing Complex used to compute Low Income Housing Tax Credits, o the adjusted basis of a Housing Complex used to compute depreciation, o the correct deduction of fees, o the amortization of organization and offering expenses and start-up expenditures. If the IRS were successful in any such contention, the anticipated Low Income Housing Tax Credits and losses of the Partnership would be reduced, perhaps substantially. CHANGES IN TAX LAW MIGHT REDUCE THE VALUE OF LOW INCOME HOUSING TAX CREDITS. Although all Low Income Housing Tax Credits are allocated to a Housing Complex at commencement of the 10-year credit period, there can be no assurance that future legislation may not adversely affect an investment in the Partnership. For example, legislation could reduce or eliminate the value of Low Income Housing Tax Credits. In this regard, before 1986, the principal tax benefit of an investment in low income housing was tax losses. These tax losses generally were used to reduce an investor's income from all sources on a dollar-for-dollar basis. Investments in low income housing were made in reliance on the availability of such tax benefits. However, tax legislation enacted in 1986 severely curtailed deduction of such losses. NEW ADMINISTRATIVE OR JUDICIAL INTERPRETATIONS OF THE LAW MIGHT REDUCE THE VALUE OF TAX CREDITS. Many of the provisions of the Internal Revenue Code related to low income housing and real estate investments have not been interpreted by the IRS in regulations, rulings or public announcements, or by the courts. In the future, these provisions may be interpreted or clarified by the IRS or the courts in a manner adverse to the Partnership or the Local Limited Partnerships. The IRS constantly reviews the Federal tax rules, and can revise its interpretations of established concepts. Any such revisions could reduce or eliminate tax benefits associated with an investment in the Partnership. 10 STATE INCOME TAX LAWS MAY ADVERSELY AFFECT THE LIMITED PARTNERS. A Limited Partner may be required to file income tax returns and be subject to tax and withholding in each state or local taxing jurisdiction in which: a Housing Complex is located, the Partnership or a Local Limited Partnership engages in business activities, or the Limited Partner is a resident. Corporate Limited Partners may be required to pay state franchise taxes. THE TAX TREATMENT OF PARTICULAR ITEMS UNDER STATE OR LOCAL INCOME TAX LAWS MAY VARY MATERIALLY FROM THE FEDERAL INCOME TAX TREATMENT OF SUCH ITEMS. Nonetheless, many of the Federal income tax risks associated with an investment in the Partnership may also apply under state or local income tax law. The Partnership may be required to withhold state taxes from distributions or income allocations to Limited Partners in some instances. (d) RISKS RELATED TO THE PARTNERSHIP AND THE PARTNERSHIP AGREEMENT THE PARTNERSHIP MAY BE UNABLE TO TIMELY PROVIDE FINANCIAL REPORTS TO THE LIMITED PARTNERS WHICH WOULD ADVERSELY AFFECT THEIR ABILITY TO MONITOR PARTNERSHIP OPERATIONS. Each Local General Partner is required to retain independent public accountants and to report financial information to the Partnership in a timely manner. There cannot be any assurance that the Local General Partners will satisfy these obligations. If not, the Partnership would be unable to provide to the Limited Partners in a timely manner its financial statements and other reports. That would impact the Limited Partners' ability to monitor Partnership operations. The Partnership's failure to meet its filing requirements under the Securities Exchange Act of 1934 could reduce the liquidity for the Partnership Units due to the unavailability of public information concerning the Partnership. The failure to file could also result in sanctions imposed by the SEC. Any defense mounted by the Partnership in the face of such sanctions could entail legal and other fees, which would diminish cash reserves. LACK OF LIQUIDITY OF INVESTMENT. It is unlikely that a public market will develop for the purchase and sale of Partnership Units. Accordingly, Limited Partners may not be able to sell their Partnership Units promptly or at a reasonable price. Partnership Units should be considered as a long-term investment because the Partnership is unlikely to sell any Local Limited Partnership Interests for at least 15 years. Partnership Units cannot be transferred to tax-exempt or foreign entities, or through a secondary market. The General Partner can deny effectiveness of a transfer if necessary to avoid adverse tax consequences from the transfer. The General Partner does not anticipate that any Partnership Units will be redeemed by the Partnership. THE LIMITED PARTNERS WILL NOT CONTROL THE PARTNERSHIP AND MUST RELY TOTALLY ON THE GENERAL PARTNER. The General Partner will make all management decisions for the Partnership. Management decisions include exercising powers granted to the Partnership by a Local Limited Partnership. Limited Partners have no right or power to take part in Partnership management. Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority. The Partnership Agreement grants to Limited Partners owning more than 50% of the Partnership Units the right to: o remove the General Partner and elect a replacement general partner, o amend the Partnership Agreement, o terminate the Partnership. Accordingly, a majority-in-interest of the Limited Partners could cause any such events to occur, even if Limited Partners owning 49% of the Partnership Units opposed such action. LIMITATIONS ON LIABILITY OF THE GENERAL PARTNER TO THE PARTNERSHIP. The ability of Limited Partners to sue the General Partner and it affiliates is subject to limitations. The Partnership Agreement limits the liability of the General Partner and it affiliates to the Limited Partners. The General Partner and it affiliates will not be liable to the Limited Partners for acts and omissions: performed or omitted in good faith, and performed or omitted in a manner which the General Partner reasonably believed to be within the scope of its authority and in the best interest of the Limited Partners, provided such conduct did not constitute negligence or misconduct. Therefore, Limited Partners may be less able to sue the General Partner and it affiliates than would be the case if such provisions were not included in the Partnership Agreement. 11 PAYMENT OF FEES TO THE GENERAL PARTNER AND ITS AFFILIATES REDUCES CASH AVAILABLE FOR INVESTMENT IN LOCAL LIMITED PARTNERSHIPS. The General Partner and it affiliates perform many services for the Partnership. They are paid fees for these services, which reduce the amount of the cash available for investment in Local Limited Partnerships. Accordingly, an investor investing directly in a low income housing apartment complex would have a greater amount available for investment than an investor investing in low income housing through the Partnership. ASSOCIATES AND ITS AFFILIATES ARE SERVING AS THE GENERAL PARTNERS OF MANY OTHER PARTNERSHIPS. Depending on their corporate area of responsibility, the officers of Associates initially devote approximately 5% to 50% of their time to the Partnership. These individuals spend significantly less time devoted to the Partnership after the investment of the Partnership`s capital in Local Limited Partnerships. THE INTERESTS OF LIMITED PARTNERS MAY CONFLICT WITH THE INTERESTS OF THE GENERAL PARTNER AND ITS AFFILIATES. The General Partner and its affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to those of the Partnership. The General Partner and its affiliates receive substantial compensation from the Partnership. ANTICIPATED FUTURE AND EXISTING CASH RESOURCES OF THE PARTNERSHIP ARE NOT SUFFICIENT TO PAY EXISTING LIABILITIES OF THE PARTNERSHIP. However, substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or its affiliates. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason. ITEM 1B. UNRESOLVED STAFF COMMENTS Not Applicable ITEM 2. PROPERTIES Through its investments in Local Limited Partnerships, the Partnership holds indirect ownership interests in the Housing Complexes. The following table reflects the status of the fifteen Housing Complexes as of the dates or for the periods indicated: 12 ------------------------------ -------------------------------------------- AS OF MARCH 31, 2007 AS OF DECEMBER 31, 2006 ------------------------------ -------------------------------------------- ESTIMATED AGGREGATE PARTNERSHIP'S LOW INCOME MORTGAGE TOTAL INVESTMENT AMOUNT OF HOUSING BALANCES OF LOCAL LIMITED GENERAL IN LOCAL LIMITED INVESTMENT NUMBER OCCU- TAX LOCAL LIMITED PARTNERSHIP NAME LOCATION PARTNER NAME PARTNERSHIPS PAID TO DATE OF UNITS PANCY CREDITS (1) PARTNERSHIPS - --------------------------------------------------------------------------------------- -------------------------------------------- Apartment Housing Theodore, Apartment Developers, of Theodore Alabama Inc. and Thomas H. $ 1,187,000 $ 1,187,000 40 80% $ 1,855,000 $ 1,098,000 Cooksey Austin Gateway, Austin, Gary L. Kersch 131,000 131,000 10 100% 225,000 354,000 Ltd. Texas Bradley Villas Bradley, Limited Arkansas Horizon Bank 501,000 501,000 20 100% 806,000 523,000 Partnership Chillicothe Plaza Chillicothe, MBL Development Co. 972,000 972,000 28 86% 1,524,000 629,000 Apts. L.P. Missouri Concord Apartment Orlando, New Communities, LLC, a Partners, L.P. Florida Colorado limited 470,000 470,000 26 100% 853,000 260,000 liability Company El Reno Housing Associates Limited El Reno, Cowen Properties, Inc., Partnership Oklahoma an Oklahoma Corporation 3,040,000 3,040,000 100 97% 4,406,000 2,463,000 Enhance, L.P. Baton Rouge, Olsen Securities Corp. 620,000 620,000 23 70% 899,000 596,000 Louisiana Hillcrest Marshalltown, WNC & Associates 609,000 609,000 32 94% 997,000 502,000 Heights, L.P. Iowa Hughes Villas Hughes, Billy Wayne Bunn 182,000 182,000 20 90% 334,000 741,000 Limited Arkansas Partnership 13 ------------------------------ -------------------------------------------- AS OF MARCH 31, 2007 AS OF DECEMBER 31, 2006 ------------------------------ -------------------------------------------- ESTIMATED AGGREGATE PARTNERSHIP'S LOW INCOME MORTGAGE TOTAL INVESTMENT AMOUNT OF HOUSING BALANCES OF LOCAL LIMITED GENERAL IN LOCAL LIMITED INVESTMENT NUMBER OCCU- TAX LOCAL LIMITED PARTNERSHIP NAME LOCATION PARTNER NAME PARTNERSHIPS PAID TO DATE OF UNITS PANCY CREDITS (1) PARTNERSHIPS - --------------------------------------------------------------------------------------- -------------------------------------------- Mansur Wood Living Carbon Cliff, Elderly Living Center, L.P. Illinois Development, Inc. 6,531,000 6,531,000 115 90% 8,953,000 3,623,000 Mark Twain Senior Community Limited Oakland, Thomas P. Lam and Partnership California Marilyn S. Lam 740,000 740,000 106 95% 1,132,000 1,346,000 Murfreesboro Villas Murfreesboro, Murfreesboro Industrial Limited Partnership Arkansas Development Corporation 685,000 685,000 24 96% 1,038,000 717,000 Spring Valley Mayer, Spring Valley Terrace, Terrace Apartments, Arizona Inc. 716,000 716,000 20 95% 1,102,000 780,000 LLC United Development Memphis, Harold E. Buehler, Sr. Co., L.P. - 97.1 Tennessee and Jo Ellen Buehler 1,845,000 1,845,000 40 100% 2,693,000 846,000 United Development Memphis, Harold E. Buehler, Sr. Co., L.P. - 97.2 Tennessee and Jo Ellen Buehler 743,000 743,000 20 95% 1,061,000 355,000 ---------- ---------- ---- ---- ----------- ---------- $ 18,972,000 $ 18,972,000 624 93% $ 27,878,000 $14,833,000 ========== ========== ==== ==== =========== ========== (1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 74% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners. 14 -------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2006 -------------------------------------------------------------------- LOW INCOME HOUSING TAX CREDITS ALLOCATED TO LOCAL LIMITED PARTNERSHIP NAME RENTAL INCOME NET LOSS PARTNERSHIP - -------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 157,000 $ (50,000) 98.99% Austin Gateway, Ltd. 59,000 (25,000) 99.98% Bradley Villas Limited Partnership 66,000 (32,000) 99.00% Chillicothe Plaza Apts. L.P. 98,000 (8,000) 99.97% Concord Apartment Partners, L.P. 113,000 (9,000) 99.98% El Reno Housing Associates Limited Partnership 517,000 (162,000) 99.98% Enhance, L.P. 86,000 (48,000) 99.98% Hillcrest Heights, L.P. 177,000 (11,000) 99.99% Hughes Villas Limited Partnership 110,000 (27,000) 99.00% Mansur Wood Living Center, L.P. 669,000 (355,000) 98.99% Mark Twain Senior Community Limited Partnership 549,000 (76,000) 98.99% Murfreesboro Villas Limited Partnership 92,000 (34,000) 99.00% Spring Valley Terrace Apartments, LLC 61,000 (57,000) 99.98% United Development Co., L.P. - 97.1 327,000 (58,000) 99.98% United Development Co., L.P. - 97.2 122,000 (24,000) 99.98% ---------- ---------- $3,203,000 $(976,000) ========== ========== 15 ----------------------------------- AS OF MARCH 31, 2006 ----------------------------------- PARTNERSHIP'S TOTAL INVESTMENT AMOUNT OF LOCAL LIMITED IN LOCAL LIMITED INVESTMENT PARTNERSHIP NAME LOCATION GENERAL PARTNER NAME PARTNERSHIPS PAID TO DATE - ------------------------------------------------------------------------------------------------------ Apartment Housing of Theodore, Apartment Developers, Theodore Alabama Inc. and Thomas H. Cooksey $ 1,187,000 $ 1,187,000 Austin Gateway, Ltd. Austin, Texas Gary L. Kersch 131,000 131,000 Bradley Villas Limited Bradley, Partnership Arkansas Horizon Bank 501,000 501,000 Chillicothe Plaza Apts. Chillicothe, MBL Development Co. L.P. Missouri 972,000 972,000 Concord Apartment Orlando, New Communities, LLC, a Partners, L.P. Florida Colorado limited liability Company 470,000 470,000 El Reno Housing El Reno, Cowen Properties, Inc., Associates Limited Oklahoma an Oklahoma Corporation Partnership 3,040,000 3,040,000 Enhance, L.P. Baton Rouge, Olsen Securities Corp. Louisiana 620,000 620,000 Hillcrest Heights, L.P. Marshalltown, WNC & Associates Iowa 609,000 609,000 Hughes Villas Limited Hughes, Billy Wayne Bunn Partnership Arkansas 182,000 182,000 Mansur Wood Living Carbon Cliff, Elderly Living Center, L.P. Illinois Development, Inc. 6,531,000 6,531,000 Mark Twain Senior Oakland, Thomas P. Lam and Community Limited California Marilyn S. Lam Partnership 740,000 740,000 Murfreesboro Villas Murfreesboro, Murfreesboro Industrial Limited Partnership Arkansas Development Corporation 685,000 685,000 Spring Valley Terrace Mayer, Arizona Spring Valley Terrace, Apartments, LLC Inc. 716,000 716,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.1 Tennessee and Jo Ellen Buehler 1,845,000 1,845,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.2 Tennessee and Jo Ellen Buehler 743,000 743,000 ------- ------- $18,972,000 $18,972,000 =========== =========== 16 -------------------------------------------------------- AS OF DECEMBER 31, 2005 -------------------------------------------------------- ESTIMATED MORTGAGE AGGREGATE LOW BALANCES OF LOCAL LIMITED NUMBER INCOME HOUSING LOCAL LIMITED PARTNERSHIP NAME LOCATION GENERAL PARTNER NAME OF UNITS OCCUPANCY TAX CREDITS (1) PARTNERSHIPS - -------------------------------------------------------------------- -------------------------------------------------------- Apartment Housing of Theodore, Apartment Developers, Theodore Alabama Inc. and Thomas H. Cooksey 40 90% $ 1,855,000 $ 1,110,000 Austin Gateway, Ltd. Austin, Texas Gary L. Kersch 10 100% 225,000 363,000 Bradley Villas Limited Bradley, Partnership Arkansas Horizon Bank 20 100% 806,000 524,000 Chillicothe Plaza Apts. Chillicothe, MBL Development Co. L.P. Missouri 28 100% 1,524,000 649,000 Concord Apartment Orlando, New Communities, LLC, a Partners, L.P. Florida Colorado limited liability Company 26 100% 853,000 264,000 El Reno Housing El Reno, Cowen Properties, Inc., Associates Limited Oklahoma an Oklahoma Corporation Partnership 100 94% 4,406,000 2,488,000 Enhance, L.P. Baton Rouge, Olsen Securities Corp. Louisiana 23 96% 899,000 604,000 Hillcrest Heights, L.P. Marshalltown, WNC & Associates Iowa 32 97% 997,000 514,000 Hughes Villas Limited Hughes, Billy Wayne Bunn Partnership Arkansas 20 95% 334,000 745,000 Mansur Wood Living Carbon Cliff, Elderly Living Center, L.P. Illinois Development, Inc. 115 92% 8,953,000 3,725,000 Mark Twain Senior Oakland, Thomas P. Lam and Community Limited California Marilyn S. Lam Partnership 106 94% 1,132,000 1,366,000 Murfreesboro Villas Murfreesboro, Murfreesboro Industrial Limited Partnership Arkansas Development Corporation 24 96% 1,038,000 691,000 Spring Valley Terrace Mayer, Arizona Spring Valley Terrace, Apartments, LLC Inc. 20 75% 1,102,000 714,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.1 Tennessee and Jo Ellen Buehler 40 90% 2,693,000 858,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.2 Tennessee and Jo Ellen Buehler 20 100% 1,061,000 359,000 --------- ---- ----------- ----------- 624 95% $ 27,878,000 $14,974,000 ========= ==== =========== =========== (1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 68% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners. 17 -------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2005 -------------------------------------------------------------------- LOW INCOME HOUSING TAX LOCAL LIMITED PARTNERSHIP NAME CREDITS ALLOCATED TO RENTAL INCOME NET LOSS PARTNERSHIP - -------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 163,000 $ (44,000) 98.99% Austin Gateway, Ltd. 69,000 (36,000) 99.98% Bradley Villas Limited Partnership 63,000 (33,000) 99.00% Chillicothe Plaza Apts. L.P. 102,000 (22,000) 99.97% Concord Apartment Partners, L.P. 112,000 (27,000) 99.98% El Reno Housing Associates Limited Partnership 490,000 (181,000) 99.98% Enhance, L.P. 74,000 (51,000) 99.98% Hillcrest Heights, L.P. 152,000 (12,000) 99.99% Hughes Villas Limited Partnership 111,000 (35,000) 99.00% Mansur Wood Living Center, L.P. 687,000 (219,000) 98.99% Mark Twain Senior Community Limited Partnership 559,000 (21,000) 98.99% Murfreesboro Villas Limited Partnership 94,000 (51,000) 99.00% Spring Valley Terrace Apartments, LLC 56,000 (44,000) 99.98% United Development Co., L.P. - 97.1 250,000 (111,000) 99.98% United Development Co., L.P. - 97.2 108,000 (51,000) 99.98% ---------- --------- $3,090,000 $(938,000) ========== ========= 18 ----------------------------------- AS OF MARCH 31, 2005 ----------------------------------- PARTNERSHIP'S TOTAL INVESTMENT AMOUNT OF LOCAL LIMITED IN LOCAL LIMITED INVESTMENT PARTNERSHIP NAME LOCATION GENERAL PARTNER NAME PARTNERSHIPS PAID TO DATE - ------------------------------------------------------------------------------------------------------ Apartment Housing of Theodore, Apartment Developers, Theodore Alabama Inc. and Thomas H. Cooksey $1,187,000 $1,187,000 Austin Gateway, Ltd. Austin, Texas Gary L. Kersch 131,000 131,000 Bradley Villas Limited Bradley, Partnership Arkansas Horizon Bank 501,000 501,000 Chillicothe Plaza Apts. Chillicothe, MBL Development Co. L.P. Missouri 972,000 972,000 Concord Apartment Orlando, New Communities, LLC, a Partners, L.P. Florida Colorado limited liability Company 470,000 470,000 El Reno Housing El Reno, Cowen Properties, Inc., Associates Limited Oklahoma an Oklahoma Corporation Partnership 3,040,000 3,040,000 Enhance, L.P. Baton Rouge, Olsen Securities Corp. Louisiana 620,000 620,000 Hillcrest Heights, L.P. Marshalltown, WNC & Associates Iowa 609,000 609,000 Hughes Villas Limited Hughes, Billy Wayne Bunn Partnership Arkansas 182,000 182,000 Mansur Wood Living Carbon Cliff, Elderly Living Center, L.P. Illinois Development, Inc. 6,531,000 6,531,000 Mark Twain Senior Oakland, Thomas P. Lam and Community Limited California Marilyn S. Lam Partnership 740,000 740,000 Murfreesboro Villas Murfreesboro, Murfreesboro Industrial Limited Partnership Arkansas Development Corporation 685,000 685,000 Spring Valley Terrace Mayer, Arizona Spring Valley Terrace, Apartments, LLC Inc. 716,000 716,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.1 Tennessee and Jo Ellen Buehler 1,845,000 1,845,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.2 Tennessee and Jo Ellen Buehler 743,000 743,000 ----------- ----------- $18,972,000 $18,972,000 =========== =========== 19 -------------------------------------------------------- AS OF DECEMBER 31, 2004 -------------------------------------------------------- ESTIMATED MORTGAGE AGGREGATE LOW BALANCES OF LOCAL LIMITED NUMBER INCOME HOUSING LOCAL LIMITED PARTNERSHIP NAME LOCATION GENERAL PARTNER NAME OF UNITS OCCUPANCY TAX CREDITS (1) PARTNERSHIPS - ------------------------------------------------------------------- -------------------------------------------------------- Apartment Housing of Theodore, Apartment Developers, Theodore Alabama Inc. and Thomas H. Cooksey 40 98% $ 1,855,000 $1,121,000 Austin Gateway, Ltd. Austin, Texas Gary L. Kersch 10 92% 225,000 371,000 Bradley Villas Limited Bradley, Partnership Arkansas Horizon Bank 20 95% 806,000 526,000 Chillicothe Plaza Apts. Chillicothe, MBL Development Co. L.P. Missouri 28 93% 1,524,000 669,000 Concord Apartment Orlando, New Communities, LLC, a Partners, L.P. Florida Colorado limited liability Company 26 88% 853,000 266,000 El Reno Housing El Reno, Cowen Properties, Inc., Associates Limited Oklahoma an Oklahoma Corporation Partnership 100 90% 4,406,000 2,511,000 Enhance, L.P. Baton Rouge, Olsen Securities Corp. Louisiana 23 74% 899,000 612,000 Hillcrest Heights, L.P. Marshalltown, WNC & Associates Iowa 32 81% 997,000 541,000 Hughes Villas Limited Hughes, Billy Wayne Bunn Partnership Arkansas 20 90% 334,000 748,000 Mansur Wood Living Carbon Cliff, Elderly Living Center, L.P. Illinois Development, Inc. 115 95% 8,953,000 3,820,000 Mark Twain Senior Oakland, Thomas P. Lam and Community Limited California Marilyn S. Lam Partnership 106 94% 1,132,000 1,385,000 Murfreesboro Villas Murfreesboro, Murfreesboro Industrial Limited Partnership Arkansas Development Corporation 24 88% 1,038,000 693,000 Spring Valley Terrace Mayer, Arizona Spring Valley Terrace, Apartments, LLC Inc. 20 90% 1,102,000 716,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.1 Tennessee and Jo Ellen Buehler 40 98% 2,693,000 859,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.2 Tennessee and Jo Ellen Buehler 20 100% 1,061,000 361,000 --------- ----- ----------- ----------- 624 92% $ 27,878,000 $15,199,000 ========= ===== =========== =========== (1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 54% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners. 20 -------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2004 -------------------------------------------------------------------- LOW INCOME HOUSING TAX CREDITS ALLOCATED TO LOCAL LIMITED PARTNERSHIP NAME RENTAL INCOME NET LOSS PARTNERSHIP - -------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 165,000 $ (58,000) 98.99% Austin Gateway, Ltd. 60,000 (26,000) 99.98% Bradley Villas Limited Partnership 56,000 (50,000) 99.00% Chillicothe Plaza Apts. L.P. 98,000 (14,000) 99.97% Concord Apartment Partners, L.P. 111,000 (7,000) 99.98% El Reno Housing Associates Limited Partnership 466,000 (167,000) 99.98% Enhance, L.P. 75,000 (49,000) 99.98% Hillcrest Heights, L.P. 151,000 (33,000) 99.99% Hughes Villas Limited Partnership 94,000 (27,000) 99.00% Mansur Wood Living Center, L.P. 669,000 (481,000) 98.99% Mark Twain Senior Community Limited Partnership 555,000 (58,000) 98.99% Murfreesboro Villas Limited Partnership 70,000 (46,000) 99.00% Spring Valley Terrace Apartments, LLC 64,000 (40,000) 99.98% United Development Co., L.P. - 97.1 313,000 (91,000) 99.98% United Development Co., L.P. - 97.2 118,000 (62,000) 99.98% ---------- ----------- $3,065,000 $(1,209,000) ========== =========== 21 ----------------------------------- AS OF MARCH 31, 2004 ----------------------------------- PARTNERSHIP'S TOTAL INVESTMENT AMOUNT OF LOCAL LIMITED IN LOCAL LIMITED INVESTMENT PARTNERSHIP NAME LOCATION GENERAL PARTNER NAME PARTNERSHIPS PAID TO DATE - ------------------------------------------------------------------------------------------------------ Apartment Housing of Theodore, Apartment Developers, Theodore Alabama Inc. and Thomas H. Cooksey $ 1,187,000 $ 1,187,000 Austin Gateway, Ltd. Austin, Texas Gary L. Kersch 131,000 131,000 Bradley Villas Limited Bradley, Partnership Arkansas Horizon Bank 501,000 501,000 Chillicothe Plaza Apts. Chillicothe, MBL Development Co. L.P. Missouri 972,000 972,000 Concord Apartment Orlando, New Communities, LLC, a Partners, L.P. Florida Colorado limited liability Company 470,000 470,000 El Reno Housing El Reno, Cowen Properties, Inc., Associates Limited Oklahoma an Oklahoma Corporation Partnership 3,040,000 2,901,000 Enhance, L.P. Baton Rouge, Olsen Securities Corp. Louisiana 620,000 620,000 Hillcrest Heights, L.P. Marshalltown, WNC & Associates Iowa 609,000 609,000 Hughes Villas Limited Hughes, Billy Wayne Bunn Partnership Arkansas 182,000 182,000 Mansur Wood Living Carbon Cliff, Elderly Living Center, L.P. Illinois Development, Inc. 6,531,000 6,531,000 Mark Twain Senior Oakland, Thomas P. Lam and Community Limited California Marilyn S. Lam Partnership 740,000 715,000 Murfreesboro Villas Murfreesboro, Murfreesboro Industrial Limited Partnership Arkansas Development Corporation 685,000 685,000 Spring Valley Terrace Mayer, Arizona Spring Valley Terrace, Apartments, LLC Inc. 716,000 716,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.1 Tennessee and Jo Ellen Buehler 1,845,000 1,845,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.2 Tennessee and Jo Ellen Buehler 743,000 743,000 ----------- ----------- $18,972,000 $18,808,000 =========== =========== 22 -------------------------------------------------------- AS OF DECEMBER 31, 2003 -------------------------------------------------------- ESTIMATED MORTGAGE AGGREGATE LOW BALANCES OF LOCAL LIMITED NUMBER INCOME HOUSING LOCAL LIMITED PARTNERSHIP NAME LOCATION GENERAL PARTNER NAME OF UNITS OCCUPANCY TAX CREDITS (1) PARTNERSHIPS - ------------------------------------------------------------------- -------------------------------------------------------- Apartment Housing of Theodore, Apartment Developers, Theodore Alabama Inc. and Thomas H. Cooksey 40 93% $ 1,855,000 $ 1,130,000 Austin Gateway, Ltd. Austin, Texas Gary L. Kersch 10 92% 225,000 377,000 Bradley Villas Limited Bradley, Partnership Arkansas Horizon Bank 20 95% 806,000 527,000 Chillicothe Plaza Apts. Chillicothe, MBL Development Co. L.P. Missouri 28 86% 1,524,000 688,000 Concord Apartment Orlando, New Communities, LLC, a Partners, L.P. Florida Colorado limited liability Company 26 100% 853,000 272,000 El Reno Housing El Reno, Cowen Properties, Inc., Associates Limited Oklahoma an Oklahoma Corporation Partnership 100 93% 4,406,000 2,339,000 Enhance, L.P. Baton Rouge, Olsen Securities Corp. Louisiana 23 70% 899,000 620,000 Hillcrest Heights, L.P. Marshalltown, WNC & Associates Iowa 32 100% 997,000 553,000 Hughes Villas Limited Hughes, Billy Wayne Bunn Partnership Arkansas 20 95% 334,000 752,000 Mansur Wood Living Carbon Cliff, Elderly Living Center, L.P. Illinois Development, Inc. 115 79% 8,953,000 3,909,000 Mark Twain Senior Oakland, Thomas P. Lam and Community Limited California Marilyn S. Lam Partnership 106 91% 1,132,000 1,402,000 Murfreesboro Villas Murfreesboro, Murfreesboro Industrial Limited Partnership Arkansas Development Corporation 24 88% 1,038,000 663,000 Spring Valley Terrace Mayer, Arizona Spring Valley Terrace, Apartments, LLC Inc. 20 70% 1,102,000 719,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.1 Tennessee and Jo Ellen Buehler 40 98% 2,693,000 869,000 United Development Co., Memphis, Harold E. Buehler, Sr. L.P. - 97.2 Tennessee and Jo Ellen Buehler 20 95% 1,061,000 365,000 --------- --- ----------- ----------- 624 90% $ 27,878,000 $15,185,000 ========= === =========== =========== (1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 44% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners. 23 -------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2003 -------------------------------------------------------------------- LOW INCOME HOUSING TAX CREDITS ALLOCATED TO LOCAL LIMITED PARTNERSHIP NAME RENTAL INCOME NET LOSS PARTNERSHIP - -------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 158,000 $ (65,000) 98.99% Austin Gateway, Ltd. 52,000 (26,000) 99.98% Bradley Villas Limited Partnership 65,000 (33,000) 99.00% Chillicothe Plaza Apts. L.P. 99,000 (6,000) 99.97% Concord Apartment Partners, L.P. 108,000 (12,000) 99.98% El Reno Housing Associates Limited Partnership 468,000 (205,000) 99.98% Enhance, L.P. 73,000 (61,000) 99.98% Hillcrest Heights, L.P. 160,000 (4,000) 99.99% Hughes Villas Limited Partnership 82,000 (40,000) 99.00% Mansur Wood Living Center, L.P. 632,000 (527,000) 98.99% Mark Twain Senior Community Limited Partnership 572,000 (51,000) 98.99% Murfreesboro Villas Limited Partnership 52,000 (58,000) 99.00% Spring Valley Terrace Apartments, LLC 45,000 (57,000) 99.98% United Development Co., L.P. - 97.1 324,000 (58,000) 99.98% United Development Co., L.P. - 97.2 116,000 (38,000) 99.98% ---------- ----------- $3,006,000 $(1,241,000) ========== =========== 24
ITEM 3. LEGAL PROCEEDINGS NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE PART II. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF OF EQUITY SECURITIES ITEM 5a. a) The Partnership Units are not traded on a public exchange but were sold through a public offering. It is not anticipated that any public market will develop for the purchase and sale of any Partnership Units and none exists. Partnership Units can be assigned or otherwise transferred only if certain requirements in the Partnership Agreement are satisfied. b) At March 31, 2007, 2006, 2005 and 2004, there were 1,409, 1,404, 1,387, and 1,366 Limited Partners, respectively, and 53, 51, 48, and 26, assignees of Partnership Units who were not admitted as Limited Partners, respectively. c) The Partnership was not designed to provide cash distributions to Limited Partners in circumstances other than, perhaps, refinancing or disposition of its investments in Local Limited Partnerships. Any such distributions would be made in accordance with the terms of the Partnership Agreement. d) No securities are authorized for issuance by the Partnership under equity compensation plans. e) The Partnership does not issue common stock f) No unregistered securities were sold by the Partnership during the years ended March 31, 2007, 2006, 2005 and 2004. ITEM 5b. USE OF PROCEEDS NOT APPLICABLE ITEM 5c. PURCHASES OF EQUITY SECURITIES BY THE ISSUERS AND AFFILIATED PURCHASERS NONE 25 ITEM 6. SELECTED FINANCIAL DATA Selected balance sheet information for the Partnership is as follows: FOR THE YEARS ENDING MARCH 31, ------------------------------------------------------------------------------------------------------ 2007 2006 2005 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ASSETS Cash $ 143,541 $ 125,887 $ 157,680 $ 17,196 $ 22,868 $ 1,288 $ 90,481 $ 574,137 Funds held in escrow disbursement acccount -- -- -- 209,711 208,778 204,125 256,649 243,595 Marketable securities -- -- -- -- -- -- -- 50,073 Investments in Local Limited Partnerships, net 8,470,127 10,041,847 11,792,881 13,614,334 15,089,794 16,200,256 17,555,917 19,293,654 Other assets -- -- 11,114 11,114 11,114 11,113 18,822 23,798 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- TOTAL ASSETS $ 8,613,668 $10,167,734 $11,961,675 $13,852,355 $15,332,554 $16,416,782 $17,921,869 $20,185,257 =========== =========== =========== =========== =========== =========== =========== =========== LIABILITIES Payables to Local Limited Partnerships $ -- $ -- $ -- $ 163,671 $ 180,471 $ 229,030 $ 229,030 $ 272,207 Accrued fees and expenses due to General Partner and affiliates 866,873 798,373 729,058 643,362 526,470 169,478 66,298 123,718 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- TOTAL LIABILITIES 866,873 798,373 729,058 807,033 706,941 398,508 295,328 395,925 PARTNERS' EQUITY 7,746,795 9,369,361 11,232,617 13,045,322 14,625,613 16,018,274 17,626,541 19,789,332 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 8,613,668 $10,167,734 $11,961,675 $13,852,355 $15,332,554 $16,416,782 $17,921,869 $20,185,257 =========== =========== =========== =========== =========== =========== =========== =========== 26 Selected results of operations, cash flows and other information for the Partnership are as follows: FOR THE YEARS ENDING MARCH 31, ------------------------------------------------------------------------------------------------------ 2007 2006 2005 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net loss from operations (Notes 1 and 2) $ (674,807) $ (935,955) $ (640,583) $ (325,285) $ (351,477) $ (253,400) $ (385,983) $ (588,597) Realized loss - marketable securities -- -- -- -- -- -- -- (188,483) Equity in losses from Local Limited Partnerships (948,430) (927,925) (1,176,616) (1,256,060) (1,045,926) (1,365,625) (1,803,882) (1,139,225) Interest income 671 624 4,494 1,054 4,742 10,758 27,074 130,017 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- NET LOSS $(1,622,566) $(1,863,256) $(1,812,705) $(1,580,291) $(1,392,661) $(1,608,267) $(2,162,791) $(1,786,288) =========== =========== =========== =========== =========== =========== =========== =========== NET LOSS ALLOCATED TO: General Partner $ (16,226) $ (18,632) $ (18,127) $ (15,803) $ (13,927) $ (16,083) $ (21,628) $ (17,863) =========== =========== =========== =========== =========== =========== =========== =========== Limited Partners $(1,606,340) $(1,844,624) $(1,794,578) $(1,564,488) $(1,378,734) $(1,592,184) $(2,141,163) $(1,768,425) =========== =========== =========== =========== =========== =========== =========== =========== NET LOSS PER PARTNERSHIP UNIT $ (64.25) $ (73.78) $ (71.78) $ (62.58) $ (55.15) $ (63.69) $ (85.65) $ (70.74) =========== =========== =========== =========== =========== =========== =========== =========== OUTSTANDING WEIGHTED PARTNERSHIP UNITS 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 =========== =========== =========== =========== =========== =========== =========== =========== Note 1 - Loss from operations for the years ended March 31, 2007, 2006, 2005, 2004, 2003, 2002, 2001 and 2000 include a charge for impairment losses on investments in Local Limited Partnerships of $559,870, $759,132, $580,301, $154,864, $0, $0, $0, and $0, respectively. (See Note 2 to the financial statements.) Note 2 - Loss from operations for the years ended March 31, 2007, 2006, 2005, 2004, 2003, 2002, 2001 and 2000 include a recovery of bad debt income of $0, $0, $118,272, $0, $0, $0 and $0, respectively. (See Note 6 to the financial statements) 27 FOR THE YEARS ENDING MARCH 31, ------------------------------------------------------------------------------------------------------ 2007 2006 2005 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- NET CASH PROVIDED BY (USED IN): Operating activities $ 17,654 $ (31,793) $ (23,828) $ 12,061 $ (13,473) $ (17,046) $ (59,867) $ (209,600) Investing activities -- -- 164,312 (17,733) 35,053 (72,147) (423,789) (2,248,991) Financing activities -- -- -- -- -- -- -- (70,401) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- NET CHANGE IN CASH 17,654 (31,793) 140,484 (5,672) 21,580 (89,193) (483,656) (2,528,992) CASH, BEGINNING OF PERIOD 125,887 157,680 17,196 22,868 1,288 90,481 574,137 3,103,129 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- CASH, END OF PERIOD $ 143,541 $ 125,887 $ 157,680 $ 17,196 $ 22,868 $ 1,288 $ 90,481 $ 574,137 =========== =========== =========== =========== =========== =========== =========== =========== Low Income Housing Tax Credits per Partnership Unit were as follows for the years ended December 31: 2006 2005 2004 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Federal $ 107 $ 111 $ 111 $ 112 $ 110 $ 111 $ 84 $ 48 State -- -- -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total $ 107 $ 111 $ 111 $ 112 $ 110 $ 111 $ 84 $ 48 =========== =========== =========== =========== =========== =========== =========== ===========
28 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS With the exception of the discussion regarding historical information, this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other discussions elsewhere in this Form 10-K contain forward looking statements. Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate. Risks and uncertainties inherent in forward looking statements include, but are not limited to, the Partnerhip's future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the Low Income Housing Tax Credits property market and the economy in general, as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period. Subsequent written and oral forward looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-K and in other reports filed with the Securities and Exchange Commission. The following discussion should be read in conjunction with the Financial Statements and the Notes thereto included elsewhere in this filing. CRITICAL ACCOUNTING POLICIES AND CERTAIN RISKS AND UNCERTAINTIES The Partnership believes that the following discussion addresses the Partnership's most significant accounting policies, which are the most critical to aid in fully understanding and evaluating the Partnership's reported financial results, and certain of the Partnership's risks and uncertainties. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. METHOD OF ACCOUNTING FOR INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships' results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the product of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 30 years. (See Notes 2 and 3 to the financial statements) "Equity in losses of Local Limited Partnerships" for each year ended March 31 has been recorded by the Partnership based on nine months of reported results provided by the Local Limited Partnerships for each year ended December 31 and on three months of results estimated by management of the Partnership. Management's estimate for the three-month period is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. In subsequent annual 29 financial statements, upon receiving the actual annual results reported by the Local Limited Partnerships, management reverses its prior estimate and records the actual results reported by the Local Limited Partnerships. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. As soon as the investment balance reaches zero, amortization of the related costs of acquiring the investment are impaired. Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended. The Partnership does not consolidate the accounts and activities of the Local Limited Partnerships which are Variable Interest Entities under Financial Accounting Standards Board Interpretation No. 46-Revised, "Consolidation of Variable Interest Entities", because the Partnership is not considered the primary beneficiary. The Partnership's balance in Investments in Local Limited Partnerships represents the maximum exposure to loss in connection with such investments. The Partnership's exposure to loss on the Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners. INCOME TAXES No provision for income taxes has been recorded in the financial statements as any liabilities and/or benefits from income taxes flow to the partners of the Partnership and are their obligations and/or benefits. For income tax purposes, the Partnership reports on a calendar year basis. CERTAIN RISKS AND UNCERTAINTIES See Item 1A for a discussion of risks regarding the Partnership. To date, certain Local Limited Partnerships have incurred significant operating losses and have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership's investment in certain of such Local Limited Partnerships could be lost, and the loss and recapture of the related Low Income Housing Tax Credits could occur. FINANCIAL CONDITION FOR THE YEAR ENDED MARCH 31, 2007 The Partnership's assets at March 31, 2007 consisted primarily of $144,000 in cash, and aggregate investments in 15 Local Limited Partnerships of $8,470,000 (See "Method of Accounting for Investments in Local Limited Partnerships"). Liabilities at March 31, 2007 primarily consisted of $867,000 of accrued annual management fees and advances payable to the General Partner and/or its affiliates. (See "Future Contractual Cash Obligations" below) FOR THE YEAR ENDED MARCH 31, 2006 The Partnership's assets at March 31, 2006 consisted primarily of $126,000 in cash, and aggregate investments in 15 Local Limited Partnerships of $10,042,000 (See "Method of Accounting for Investments in Local Limited Partnerships"). Liabilities at March 31, 2006 primarily consisted of $798,000 of accrued annual management fees and advances payable to the General Partner and/or its affiliates. (See "Future Contractual Cash Obligations" below) 30 FOR THE YEAR ENDED MARCH 31, 2005 The Partnership's assets at March 31, 2005 consisted primarily of $158,000 in cash, aggregate investments in 15 Local Limited Partnerships of $11,793,000 (See "Method of Accounting for Investments in Local Limited Partnerships") and $11,000 in other assets. Liabilities at March 31, 2005 primarily consisted of $729,000 of accrued annual management fees and advances payable to the General Partner and/or its affiliates. (See "Future Contractual Cash Obligations" below) FOR THE YEAR ENDED MARCH 31, 2004 The Partnership's assets at March 31, 2004 consisted primarily of $17,000 in cash, $210,000 in funds being held in escrow, aggregate investments in 15 Local Limited Partnerships of $13,614,000 (See "Method of Accounting for Investments in Local Limited Partnerships") and $11,000 in other assets. Liabilities at March 31, 2004 primarily consisted of $164,000 of estimated future capital contributions to the Local Limited Partnerships and $643,000 of accrued annual management fees and advances payable to the General Partner and/or its affiliates. (See "Future Contractual Cash Obligations" below) RESULTS OF OPERATIONS YEAR ENDED MARCH 31, 2007 COMPARED TO YEAR ENDED MARCH 31, 2006 The Partnership's net loss for the year ended March 31, 2007 was $(1,623,000), reflecting a decrease of $240,000 from the net loss experienced for the year ended March 31, 2006 of $(1,863,000). That decrease in net loss was largely due to a decrease in loss from operations of $261,000. The change in loss from operations is due to a $199,000 decrease in impairment loss. The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value of the investments compared to the current carrying value of each of the investments to the Partnership. During the year ended March 31, 2007 there was an advance for $20,000 made to a Local Limited Partnership which was also reserved in full as of March 31, 2007 compared to an advance during the year ended March 31, 2006 for $46,000 and fully reserved for in that year. The net difference of the reserves was the reason that bad debt decreased by $26,000. The accounting and legal expense increased by $(3,000) for the year ended March 31, 2007 compared to the year ended March 31, 2006, due to a timing issue of the accounting work being performed. The other operating expenses decreased by $1,000 during the year ended March 31, 2007. Due to a majority of the accounting work being performed during the year ended March 31, 2008, the Partnership expects a large increase for the year ended March 31, 2008. Reporting fee income increased by $37,000 for the year ended March 31, 2007 due to the fact that Local Limited Partnerships pay the reporting fee to the Partnership when the Local Limited Partnership's cash flow will allow for the payment. The decrease in loss from operations was offset by an increase in the equity in losses of Local Limited Partnerships of $(21,000). The equity in losses from Local Limited Partnerships can vary year to year depending on the local economies of the individual properties. YEAR ENDED MARCH 31, 2006 COMPARED TO YEAR ENDED MARCH 31, 2005 The Partnership's net loss for the year ended March 31, 2006 was $(1,863,000), reflecting an increase of $(50,000) from the net loss experienced for the year ended March 31, 2005 of $(1,813,000). That increase was due to an increase in loss from operations of $(295,000). The change in loss from operations is largely due to a $(179,000) increase in impairment loss. The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value of the investments compared to the current carrying value of each of the investments to the Partnership. During the year ended March 31, 2006 there were advances of $46,000 made to Local Limited Partnerships which was also reserved in full as of March 31, 2006 compared to advances during the year ended March 31, 2005 for $49,000 and fully reserved for in that year. The net difference of the reserves was the reason that bad debt decreased by $3,000. The accounting and legal expense increased by $2,000 for the year ended March 31, 2006 compared to the year ended March 31, 2005, due to a timing issue of the accounting work being performed. The other operating expenses decreased by $3,000. During the year ended March 31, 2005 there was a $118,000 recovery of bad debt income compared to no bad debt recovery during the year ended March 31, 2006 (see Note 6 to the financial statements). Reporting fees decreased by $(2,000) for the 31 year ended March 31, 2006 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnership's cash flow will allow for the payment. The increase in loss from operations was offset by a large decrease in the equity in losses of Local Limited Partnerships of $249,000. The equity in losses from Local Limited Partnerships can vary year to year depending on the local economies of the individual properties. Interest income decreased by $(4,000) for the year ended March 31, 2006 compared to the year ended March 31, 2005. YEAR ENDED MARCH 31, 2005 COMPARED TO YEAR ENDED MARCH 31, 2004 The Partnership's net loss for the year ended March 31, 2005 was $(1,813,000), reflecting an increase of $(233,000) from the net loss experienced for the year ended March 31, 2004 of $(1,580,000). That increase was primarily due to an increase in loss from operations of $(316,000). The change in loss from operations is due to a $(425,000) increase in impairment loss. The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value of the investments compared to the current carrying value of each of the investments to the Partnership. During the year ended March 31, 2004 there were advances of $17,000 made to a Local Limited Partnership which was also reserved in full as of March 31, 2004 compared to advances during the year ended March 31, 2005 of $49,000 and fully reserved for in that year. The net difference of the reserves was the reason that bad debt increased by $(32,000). The accounting and legal expense decreased by $17,000 for the year ended March 31, 2005 compared to the year ended March 31, 2004, due to a timing issue of the accounting work being performed. During the year ended March 31, 2005 there was a $118,000 recovery of advances previously written off compared to no such recoveries during the year ended March 31, 2004. Reporting Fees increased by $7,000 for the year ended March 31, 2005 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnership's cash flow will allow for the payment. The increase in loss from operations was offset by a $79,000 decrease in the equity in losses of Local Limited Partnerships. The equity in losses can vary each year depending on the operations of each of the Local Limited Partnerships. Finally, interest income increased by $3,000 due to the Partnerships cash balances increasing. YEAR ENDED MARCH 31, 2004 COMPARED TO YEAR ENDED MARCH 31, 2003 The Partnership's net loss for the year ended March 31, 2004 was $(1,580,000), reflecting an increase of $(187,000) from the net loss experienced for the year ended March 31, 2003 of $(1,393,000). That increase was largely due to an increase in the equity in losses of Local Limited Partnerships of $(210,000). The equity in losses can vary each year depending on the operations of each of the Local Limited Partnerships. The large increase in equity in losses of Local Limited Partnerships was offset by a $26,000 decrease in loss from operations along with a $4,000 decrease in interest income. The change in loss from operations is due to a $(155,000) increase in impairment loss. During the year ended March 31, 2004 management adopted a new method to evaluate impairment whereby they compare each investment carrying amount to the sum of the remaining Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value of the investment to the Partnership and record an impairment loss for any determined difference. During the year ended March 31, 2004 there were advances for $17,000 made to Local Limited Partnerships which was also reserved in full as of March 31, 2004 compared to an advance during the year ended March 31, 2003 for $199,000 and fully reserved for in that year. The net difference of the reserves was the reason that bad debt decreased by $182,000. The accounting and legal expense decreased by $5,000 for the year ended March 31, 2004 compared to the year ended March 31, 2003, due to a timing issue of the accounting work being performed. The other operating expenses decreased by $2,000. Reporting fees decreased by $(5,000) and the distribution income decreased by $(2,000) for the year ended March 31, 2004 due to the fact that Local Limited Partnerships pay the reporting fee and distribution income to the Partnership when the Local Limited Partnership's cash flow will allow for the payment. YEAR ENDED MARCH 31, 2003 COMPARED TO YEAR ENDED MARCH 31, 2002 The Partnership's net loss for the year ended March 31, 2003 was $(1,393,000), reflecting a decrease of $(215,000) from the net loss $(1,608,000) experienced for the year ended March 31, 2002. The change is primarily due to a decrease in equity in losses of Local Limited Partnerships of $(320,000) to $(1,046,000) for the year ended March 31, 2003 from $(1,366,000) for the year ended March 31, 2002 and an increase in operating expenses of $119,000. The increase in operating expenses is primarily due to an increase of $141,000 in advances to Local Limited Partnerships written off from March 31, 2002 to March 31, 2003 which was also offset by a decrease in other expenses of $46,000. The increase in advances written off is due to one Local Limited Partnership that needed advances and the Partnership deemed the advances as uncollectible. In addition to the increase in operating expenses, reporting fees increased by $18,000 offset by a decrease in interest income of $6,000 during the year ended March 31, 2003. The differences in the reporting fees are due to the fact that Local Limited Partnerships pay reporting fees to the Partnership when the Local Limited Partnership's cash flow will allow for the payment. 32 LIQUIDITY AND CAPITAL RESOURCES YEAR ENDED MARCH 31, 2007 COMPARED TO YEAR ENDED MARCH 31, 2006 The net increase in cash during the year ended March 31, 2007 was $18,000 compared to a net decrease in cash for the year ended March 31, 2006 of $(32,000). The net change of $50,000 was due to the increase in net cash provided by operating activities of $50,000. For the year ended March 31, 2006 the Partnership collected $11,000 in receivables from the General Partner or an affiliate, compared to $0 being collected for the year ended March 31, 2007. During the year ended March 31, 2007 the Partnership advanced a Local Limited Partnership $20,000 compared to $46,000 that was advanced for the year ended March 31, 2006. That netted to a decrease in cash used for the year ended March 31, 2007 of $26,000. The advances were due to several Local Limited Partnerships experiencing cash flow issues. For the year ended March 31, 2007 the Partnership paid the General Partner or an affiliate approximately $18,000 for asset management fees and reimbursement for expenses paid on behalf of the Partnership compared to $15,000 paid for the year ended March 31, 2006, which is a $2,000 increase in cash used. During the year ended March 31, 2007 the Partnership had an increase of $37,000 in reporting fees that were collected from Local Limited Partnerships which contributed to the cash provided by operating activities. YEAR ENDED MARCH 31, 2006 COMPARED TO YEAR ENDED MARCH 31, 2005 The net decrease in cash during the year ended March 31, 2006 was $(32,000) compared to a net increase in cash for the year ended March 31, 2005 of $140,000. The net change of $(172,000) was due to cash being provided by investing activities of $164,000 for the year ended March 31, 2005 compared to $0 provided by investing activities for the year ended March 31, 2006. During the year ended March 31, 2005 the Partnership's escrow account was released back to the Partnership and was deposited into the Partnerships money market account. That escrow balance was approximately $210,000. The Partnership had also made a capital contribution to a Local Limited Partnership along with a $(118,000) reduction of an outstanding capital contribution. The reduction was due to the fact that the payment had previously been reflected as an advance to a Local Limited Partnership and later reclassified as a capital contribution. There was an offsetting $118,000 increase in cash provided by operating activities which was the income realized by the Partnership for the $118,000 recovery of bad debt. For the year ended March 31, 2006 the Partnership made $(46,000) of advances to Local Limited Partnerships compared to $(49,000) of advances to a Local Limited Partnership during the year ended March 31, 2005, which resulted in a $3,000 decrease in cash used for the year ended March 31, 2006. For the year ended March 31, 2006 the Partnership paid the General Partner and affiliates approximately $15,000 for asset management fees and reimbursement for expenses paid on behalf of the Partnership compared to $12,000 paid for the year ended March 31, 2005, which is a $(3,000) increase in cash used for the year ended March 31, 2006. YEAR ENDED MARCH 31, 2005 COMPARED TO YEAR ENDED MARCH 31, 2004 The net increase in cash during the year ended March 31, 2005 was $140,000 compared to a net decrease in cash for the year ended March 31, 2004 of $(6,000). This increase of $146,000 was due to the net change in cash provided (used in) in investing activities of $64,000, in addition to a $82,000 increase in cash provided by operating activities. Also for the year ended March 31, 2005 the Partnership made capital contribution payments to Local Limited Partnerships of $(46,000) compared to $(17,000) in paid capital contributions for the year ended March 31, 2004. Included in the capital contribution payments to Local Limited Partnerships was a $(118,000) reduction of an outstanding capital contribution. The reduction was due to the fact that the payment had previously been reflected as an advance to a Local Limited Partnership and later reclassified as a capital contribution. There was an offsetting $118,000 increase in cash provided by operating activities which was the income realized by the Partnership for the $118,000 recovery of bad debt. During the year ended March 31, 2005, the Partnership's escrow account was released back to the Partnership and was deposited into the Partnerships money market account. That escrow balance was approximately $210,000. For the year ended March 31, 2005 the Partnership paid the General Partner and affiliates approximately $12,000 for asset management fees and reimbursement for expenses paid on behalf of the Partnership compared to $19,000 paid for the year ended March 31, 2004 for a net difference of $7,000 less cash used during March 31, 2005. For the year ended March 31, 2005, the Partnership made $(49,000) of advances to Local Limited Partnerships compared to $(17,000) of advances to Local Limited Partnerships during the year ended March 31, 2004, which resulted in a $(33,000) increase in cash used for the year ended 33 March 31, 2005. Additionally, during the year ended March 31, 2005 the Partnership collected $20,000 in reporting fees compared to $13,000 collected during the year ended March 31, 2004. YEAR ENDED MARCH 31, 2004 COMPARED TO YEAR ENDED MARCH 31, 2003 The net decrease in cash during the year ended March 31, 2004 was $(6,000) compared to a net increase in cash for the year ended March 31, 2003 of $22,000. This decrease of $28,000 was due to the net change in cash provided (used in) in investing activities of $(251,000), in addition to a $224,000 increase in cash provided by operating activities. The change in cash provided by (used in) investing activities was primarily due to $287,000 being advanced from Associates during the year ended March 31, 2003 compared to $0 for the year ended March 31, 2004. For the year ended March 31, 2004 the Partnership made $(17,000) in capital contributions compared to $(49,000) in capital contributions made during the year ended March 31, 2003 to Local Limited Partnerships. Additionally, there was a $224,000 change in cash provided by operating activities that was partially due to the advances made to Local Limited Partnerships of $(17,000) for the year ended March 31, 2004 compared to $(199,000) advanced to Local Limited Partnerships during the year ended March 31, 2003. This resulted in a $182,000 decrease in cash used for the year ended March 31, 2004. For the year ended March 31, 2004 the Partnership paid the General Partner and affiliates approximately $19,000 for asset management fees and reimbursement for expenses paid on behalf of the Partnership compared to $0 paid for the year ended March 31, 2003, resulting in a net increase of $19,000 in cash used during March 31, 2004. YEAR ENDED MARCH 31, 2003 COMPARED TO YEAR ENDED MARCH 31, 2002 The net increase in cash during the year ended March 31, 2003 was $22,000, compared to a net decrease in cash for the year ended March 31, 2002 of $(89,000). The change of $111,000 was primarily due to an increase in cash provided by investing activities of $107,000. The increase in cash provided by investing activities results primarily from approximately $287,000 advanced from the General Partner of which $199,000 was then advanced to one Local Limited Partnerships additionally there was a decrease of $36,000 in payments made to Local Limited Partnerships. During the year ended March 31, 2003 the Partnership made capital contributions in the amount of $49,000 compared to $85,000 during the year ended March 31, 2002. Additionally, there was an increase of $4,000 provided by operating activities. The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through April 30, 2009. OTHER MATTERS The Partneship is not obligated to fund advances to the Local Limited Partneships. Occasionally, when Local Limited Partnerships encounter operational issues the Partnership may decide to advance funds to assist the Local Limited Partnership with its operational issues. As of March 31, 2007, the Partnership advanced cash in the amount of $562,213 to one of the Local Limited Partnerships in which it has a Limited Partnership interest to assist with the payments of their operating expenses. Of the $562,213 of advances, the full amount was reserved as of March 31, 2007. As of March 31, 2003 and 2004 the Partnership had advances of $680,484 reflected for this same Local Limited Partnership. However, during the year ended March 31, 2005 an escrow account that the Partnership controlled in the name of this Local Limited Partnership was released back to the Partnership. At this time, it was realized that the $118,272 in outstanding capital contributions due to this Local Limited Partnership was in fact previously paid with what had been classified as an advance. The capital contribution was reduced to zero and the advances were reduced by the same amount. The reversal of the reserve was recorded as income - recovery of bad debt during the year ended March 31, 2005. The Partnership did receive $9,000 in payments from the Local Limited Partnership. Advances were made to augment the Local Limited Partnership's cash flows which were not sufficient to support the operating costs of the property. Such advances have been expensed in full in the accompanying financial statements. As of March 31, 2007, 2006, 2005, 2004 and 2003 the Partnership in total had advanced $264,580, $264,580, $264,580, $ 215,579, $198,658 to one Local Limited Partnership, Mansur Wood, in which the Partnership is a limited partner. These advances were used to pay for the property taxes and operational expenses. All advances were reserved in full in the year they were advanced. 34 FUTURE CONTRACTUAL CASH OBLIGATIONS The following table summarizes the Partnership's future contractual cash obligations as of March 31, 2007: 2008 2009 2010 2011 2012 THEREAFTER TOTAL ---------- ---------- ---------- ---------- ---------- ---------- ---------- Asset management fees(1) $ 481,595 $ 70,068 $ 70,068 $ 70,068 $ 70,068 $2,802,720 $3,564,587 Capital Contributions payable to Local Limited Partnerships -- -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total contractual cash obligations $ 481,595 $ 70,068 $ 70,068 $ 70,068 $ 70,068 $2,802,720 $3,564,587 ========== ========== ========== ========== ========== ========== ==========
(1) Asset management fees are payable annually until termination of the Partnership, which is to occur no later than 2052. The estimate of the fees payable included herein assumes the retention of the Partnership's interest in all Housing Complexes until 2052. Amounts due to the General Partner as of March 31, 2007 have been included in the 2008 column. The General Partner does not anticipate that these fees will be paid until such time as capital reserves are in excess of the aggregate of the existing contractual obligations and the anticipated future foreseeable obligations of the Partnership. For additional information regarding our asset management fees, see Notes 2 and 3 to the financial statements included elsewhere herein. OFF-BALANCE SHEET ARRANGEMENTS The Partnership has no off-balance sheet arrangements. EXIT STRATEGY See Item 1 for information in this regard. NEW ACCOUNTING PRONOUNCEMENTS See footnote 1 to the audited financial statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOVE MARKET RISK NOT APPLICABLE ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 35 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 5 We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund VI, L.P., Series 5 (a California Limited Partnership) (the Partnership) as of March 31, 2007, 2006, 2005 and 2004, and the related statements of operations, partners' equity (deficit) and cash flows for each of the years in the four-year period then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain local limited partnerships which investments represent $4,269,720, $5,646,286, and $317,936 of the total Partnership assets as of March 31, 2007, 2006 and 2005, respectively, and $(420,349), $(450,547) and $(47,096) of the total Partnership loss for the years ended March 31, 2007, 2006 and 2005, respectively. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to those local limited partnerships, is based solely on the reports of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund VI, L.P., Series 5 (a California Limited Partnership) as of March 31, 2007, 2006, 2005 and 2004, and the results of its operations and its cash flows for each of the years in the four-year period then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed under Item 15(a)(2) in the index related to years above are presented for the purpose of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied to the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial statement data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Reznick Group P.C. - ---------------------- Bethesda, Maryland May 15, 2008 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 5 Irvine, California We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund VI, L.P., Series 5 (a California Limited Partnership) (the "Partnership") as of March 31, 2003 and the related statements of operations, partners' equity (deficit) and cash flows for the years ended March 31, 2003 and 2002. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. A significant portion of the financial statements of the limited partnerships in which the Partnership is a limited partner were audited by other auditors whose reports have been furnished to us. As discussed in Note 1 to the financial statements, the Partnership accounts for its investments in limited partnerships using the equity method. The portion of the Partnership's investments in limited partnerships audited by other auditors represented 84% of the total assets of the Partnership at March 31, 2003 and 90% and 87% of the Partnership's equity in losses of limited partnerships for the years ended March 31, 2003 and 2002, respectively. Our opinion, insofar as it relates to the amounts included in the financial statements for the limited partnerships which were audited by others, is based solely on the reports of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund VI, L.P., Series 5 (a California Limited Partnership) as of March 31, 2003 and the results of its operations and its cash flows for each of the years ended March 31, 2003 and 2002 in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 7, the financial statements as of and for the year ended March 31, 2003 have been restated. The Partnership currently has insufficient working capital to fund its operations. WNC and Associates, Inc., the general partner of the General Partner of the Partnership, has agreed to provide advances sufficient enough to fund the operations and working capital requirements of the Partnership through August 31, 2004. /s/ BDO Seidman, LLP - -------------------- Costa Mesa, California July 16, 2003, except for Notes 2, 4, 6 and 7, as to which the date is May 9, 2008 INDEPENDENT AUDITORS' REPORT To the Partners MURFREESBORO VILLAS LIMITED PARTNERSHIP AN ARKANSAS PARTNERSHIP IN COMMENDAM We have audited the accompanying balance sheets of MURFREESBORO VILLAS LIMITED PARTNERSHIP, AN ARKANSAS PARTNERSHIP IN COMMENDAM as of December 31, 2005 and 2004 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above preset fairly, in all material respects, the financial position of MURFREESBORO VILLAS LIMITED PARTNERSHIP, AN ARKANSAS PARTNERSHIP IN COMMENDAM as of December 31, 2005 and 2004 and the result of its operations, chances in partners' equity and cash flow for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Pailet, Meunier and LeBlanc, LLP - ------------------------------------ Metairie, Louisiana April 12, 2006 38 INDEPENDENT AUDITORS' REPORT To the Partners HILLCREST HEIGHTS, L.P. We have audited the accompanying balance sheets of HILLCREST HEIGHTS, L.P. as of December 31, 2005 and 2004 and the related statements of income, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above preset fairly, in all material respects, the financial position of HILLCREST HEIGHTS, L.P. as of December 31, 2005 and 2004 in conformity with accounting principles generally accepted in the United States of America. /s/ Pailet, Meunier and LeBlanc, LLP - ------------------------------------ Metairie, Louisiana February 22, 2007 39 Report of Independent Auditors To the Partners of United Development Co., L.P.-97.1 We have audited the accompanying balance sheet of United Development Co., L.P.-97.1 as of December 31, 2005, and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United Development Co., L.P.-97.1 at December 31, 2005, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Novogradac & Company LLP - ---------------------------- Alpharetta, Georgia February 6, 2006 40 Report of Independent Auditors To the Partners of United Development Co., L.P.-97.2: We have audited the accompanying balance sheet of United Development Co., L.P.-97.2 at December 31, 2005, and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United Development Co., L.P.-97.2 at December 31, 2005, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Novogradac & Company LLP - ---------------------------- Alpharetta, Georgia February 10, 2006 41 INDEPENDENT AUDITORS' REPORT To the Partners MANSUR WOOD LIVING CENTER, L.P. BETTENDORF, IOWA We have audited the accompanying balance sheets to MANSUR WOOD LIVING CENTER, L.P. as of December 31, 2006 and 2005, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. The financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above preset fairly, in all material respects, the financial position of MANSUR WOOD LIVING CENTER, L.P. as of December 31, 2006 and 2005, and the result of its operations, chances in partners' equity and cash flow for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Pailet, Meunier and LeBlanc, LLP - ------------------------------------ Metairie, Louisiana June 28, 2007 42 INDEPENDENT AUDITORS' REPORT To the Partners MURFREESBORO VILLAS LIMITED PARTNERSHIP AN ARKANSAS PARTNERSHIP IN COMMENDAM We have audited the accompanying balance sheets to MURFREESBORO VILLAS LIMITED PARTNERSHIP, AN ARKANSAS PARTNERSHIP IN COMMENDAM as of December 31, 2006 and 2005 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. The financial statements are the responsibility of the partnershi's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above preset fairly, in all material respects, the financial position of MURFREESBORO VILLAS LIMITED PARTNERSHIP, AN ARKANSAS PARTNERSHIP IN COMMENDAM as of December 31, 2006 and 2005 and the result of its operations, chances in partners' equity and cash flow for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Pailet, Meunier and LeBlanc, LLP - ------------------------------------ Metairie, Louisiana April 24, 2007 43 INDEPENDENT AUDITORS' REPORT To the Partners HILLCREST HEIGHTS, L.P. We have audited the accompanying balance sheets to HILLCREST HEIGHTS, L.P. as of December 31, 2006 and 2005 and the related statements of income, changes in partners' equity and cash flows for the years then ended. The financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above preset fairly, in all material respects, the financial position of HILLCREST HEIGHTS, L.P. as of December 31, 2006 and 2005 in conformity with accounting principles generally accepted in the United States of America. /s/ Pailet, Meunier and LeBlanc, LLP - ------------------------------------ Metairie, Louisiana May 1, 2007 44 Report of Independent Auditors To the Partners of United Development Co., L.P.-97.2: We have audited the accompanying balance sheet of United Development Co., L.P.-97.2 at December 31, 2006, and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United Development Co., L.P.-97.2 at December 31, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Novogradac & Company LLP - ---------------------------- Alpharetta, Georgia May 31, 2007 45 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS MARCH 31, ------------------------------------------------------------------------ 2007 2006 2005 2004 2003 ------------ ------------ ------------ ------------ ------------ ASSETS Cash $ 143,541 $ 125,887 $ 157,680 $ 17,196 $ 22,868 Funds held in escrow disbursement account -- -- -- 209,711 208,778 Investments in Local Limited Partnerships, net (Notes 2 and 3) 8,470,127 10,041,847 11,792,881 13,614,334 15,089,794 Other assets -- -- 11,114 11,114 11,114 ------------ ------------ ------------ ------------ ------------ Total Assets $ 8,613,668 $ 10,167,734 $ 11,961,675 $ 13,852,355 $ 15,332,554 ============ ============ ============ ============ ============ LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Liabilities: Payables to Local Limited Partnerships (Note 5) $ -- $ -- $ -- $ 163,671 $ 180,471 Accrued fees and advances due to General Partner and affiliate (Note 3) 866,873 798,373 729,058 643,362 526,470 ------------ ------------ ------------ ------------ ------------ Total Liabilities 866,873 798,373 729,058 807,033 706,941 ------------ ------------ ------------ ------------ ------------ Partners' equity (deficit) General Partner (171,625) (155,399) (136,767) (118,640) (102,837) Limited Partners (25,000 Partnership Units authorized; 25,000 Partnership Units issued and outstanding) 7,918,420 9,524,760 11,369,384 13,163,962 14,728,450 ------------ ------------ ------------ ------------ ------------ Total Partners' Equity 7,746,795 9,369,361 11,232,617 13,045,322 14,625,613 ------------ ------------ ------------ ------------ ------------ Total Liabilities and Partners' Equity $ 8,613,668 $ 10,167,734 $ 11,961,675 $ 13,852,355 $ 15,332,554 ============ ============ ============ ============ ============ See accompanying notes to financial statements 46 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, --------------------------------------------------------------------------------- 2007 2006 2005 2004 2003 2002 ----------- ----------- ----------- ----------- ----------- ----------- Reporting fees $ 54,685 $ 18,062 $ 20,300 $ 13,288 $ 18,500 $ -- Distribution income -- -- -- -- 2,250 -- Recovery of bad debt -- -- 118,272 -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Total income 54,685 18,062 138,572 13,288 20,750 -- ----------- ----------- ----------- ----------- ----------- ----------- Operating expenses: Amortization (Notes 2 and 3) 63,420 63,978 64,536 64,536 64,536 64,536 Asset management fees (Note 3) 70,068 70,068 70,068 70,068 70,068 70,068 Impairment loss (Note 2) 559,870 759,132 580,301 154,864 -- -- Accounting and legal fees 8,388 5,288 2,852 19,642 24,451 45,504 Write off of advances to Local Limited Partnerships (Note 6) 20,000 46,415 49,001 16,921 198,658 57,880 Other 7,746 9,136 12,397 12,542 14,514 15,412 ----------- ----------- ----------- ----------- ----------- ----------- Total operating expenses 729,492 954,017 779,155 338,573 372,227 253,400 ----------- ----------- ----------- ----------- ----------- ----------- Loss from operations (674,807) (935,955) (640,583) (325,285) (351,477) (253,400) Equity in losses of Local Limited Partnerships (Note 2) (948,430) (927,925) (1,176,616) (1,256,060) (1,045,926) (1,365,625) Interest income 671 624 4,494 1,054 4,742 10,758 ----------- ----------- ----------- ----------- ----------- ----------- Net loss $(1,622,566) $(1,863,256) $(1,812,705) $(1,580,291) $(1,392,661) $(1,608,267) =========== =========== =========== =========== =========== =========== Net loss allocated to: General Partner $ (16,226) $ (18,632) $ (18,127) $ (15,803) $ (13,927) $ (16,083) =========== =========== =========== =========== =========== =========== Limited Partners $(1,606,340) $(1,844,624) $(1,794,578) $(1,564,488) $(1,378,734) $(1,592,184) =========== =========== =========== =========== =========== =========== Net loss per Partnership Unit $ (64.25) $ (73.78) $ (71.78) $ (62.58) $ (55.15) $ (63.69) =========== =========== =========== =========== =========== =========== Outstanding weighted Partnership Units 25,000 25,000 25,000 25,000 25,000 25,000 =========== =========== =========== =========== =========== =========== See accompanying notes to financial statements 47 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY (DEFICIT) FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 GENERAL LIMITED PARTNER PARTNERS TOTAL ------------ ------------ ------------ Partners' equity (deficit) at March 31, 2001 $ (72,827) $ 17,699,368 $ 17,626,541 Net loss (16,083) (1,592,184) (1,608,267) ------------ ------------ ------------ Partners' equity (deficit) at March 31, 2002 (88,910) 16,107,184 16,018,274 Net loss (13,927) (1,378,734) (1,392,661) ------------ ------------ ------------ Partners' equity (deficit) at March 31, 2003 (102,837) 14,728,450 14,625,613 Net loss (15,803) (1,564,488) (1,580,291) ------------ ------------ ------------ Partners' equity (deficit) at March 31, 2004 (118,640) 13,163,962 13,045,322 Net loss (18,127) (1,794,578) (1,812,705) ------------ ------------ ------------ Partners' equity (deficit) at March 31, 2005 (136,767) 11,369,384 11,232,617 Net loss (18,632) (1,844,624) (1,863,256) ------------ ------------ ------------ (155,399) 9,524,760 9,369,361 Partners' equity (deficit) at March 31, 2006 Net loss (16,226) (1,606,340) (1,622,566) ------------ ------------ ------------ Partners' equity (deficit) at March 31, 2007 $ (171,625) $ 7,918,420 $ 7,746,795 ============ ============ ============ See accompanying notes to financial statements 48 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, ----------------------------------------------- 2007 2006 2005 ----------- ----------- ----------- Cash flows from operating activities: Net loss $(1,622,566) $(1,863,256) $(1,812,705) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization 63,420 63,978 64,536 Impairment loss 559,870 759,132 580,301 Equity in losses of Local Limited Partnerships 948,430 927,925 1,176,616 Change in other assets -- 11,114 -- Advances made to a Local Limited Partnership (20,000) (46,415) (49,001) Write off of advances made to Local Limited Partnerships 20,000 46,415 49,001 Recovery of bad debt -- -- (118,272) Change in accrued fees and expenses due to General Partner and affiliates 68,500 69,314 85,696 ----------- ----------- ----------- Net cash provided by (used in) operating activities 17,654 (31,793) (23,828) ----------- ----------- ----------- Cash flows from investing activities: Investments in Local Limited Partnerships, net -- -- (45,399) Funds held in escrow disbursement account -- -- 209,711 ----------- ----------- ----------- Net cash provided by investing activities -- -- 164,312 ----------- ----------- ----------- Net increase (decrease) in cash 17,654 (31,793) 140,484 Cash, beginning of year 125,887 157,680 17,196 ----------- ----------- ----------- Cash, end of year $ 143,541 $ 125,887 $ 157,680 =========== =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Taxes paid $ 800 $ 800 $ 800 =========== =========== =========== See accompanying notes to financial statements 49 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, -------------------------------------------------- 2004 2003 2002 --------------- ------------ ------------- Cash flows from operating activities: Net loss $(1,580,291) $(1,392,661) $(1,608,267) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization 64,536 64,536 64,536 Impairment loss 154,864 -- -- Equity in losses of Local Limited Partnerships 1,256,060 1,045,926 1,365,625 Advances to Local Limited Partnerships (16,921) (198,659) (50,171) Write off of advances made to Local Limited Partnerships 16,921 198,658 57,880 Recovery of bad debt -- -- -- Change in accrued fees and expenses due to General Partner and affiliates 116,892 70,068 103,180 ----------- ----------- ----------- Net cash provided by (used in) operating activities 12,061 (212,132) (67,217) ----------- ----------- ----------- Cash flows from investing activities: Investments in Local Limited Partnerships, net (16,800) (48,559) (84,500) Funds held in escrow disbursement amount (933) (4,653) 52,524 Distributions from Local Limited Partnerships -- -- 10,000 Advances from Associates -- 286,924 -- ----------- ----------- ----------- Net cash provided by (used in) investing activities (17,733) 233,712 (21,976) ----------- ----------- ----------- Net increase (decrease) in cash (5,672) 21,580 (89,193) Cash, beginning of year 22,868 1,288 90,481 ----------- ----------- ----------- Cash, end of year $ 17,196 $ 22,868 $ 1,288 =========== =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Taxes paid $ 800 $ 800 $ 800 =========== =========== =========== See accompanying notes to financial statements
50 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------- Organization - ------------ WNC Housing Tax Credit Fund VI, L.P., Series 5, a California Limited Partnership (the "Partnership") was formed on March 3, 1997 under the laws of the State of California, and commenced operations on August 29, 1997. The Partnership was formed to invest primarily in other limited partnerships or limited liability companies (the "Local Limited Partnerships") which own and operate multi-family housing complexes (the "Housing Complexes") that are eligible for Federal low income housing tax credits ("Low Income Housing Tax Credits"). The local general partners (the "Local General Partners") of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the "Local Limited Partnership Agreement"). The general partner is WNC & Associates, Inc. ("Associates" or the "General Partner"). The chairman and president of Associates own substantially all the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates, as the Partnership has no employees of its own. The Partnership shall continue in full force and effect until December 31, 2052, unless terminated prior to that date, pursuant to the partnership agreement or law. The financial statements include only activity relating to the business of the Partnership, and do not give effect to any assets that the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes, of the partners. The Partnership agreement authorized the sale of up to 25,000 units of limited partnership interest ("Partnership Units") at $1,000 per Partnership Unit. The offering of Partnership Units has concluded and 25,000 Partnership Units, representing subscriptions in the amount of $24,918,175, net of discounts of $54,595 for volume purchases and dealer discounts of $27,230 had been accepted. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership. The investors (the "Limited Partners") in the Partnership will be allocated the remaining 99% of these items in proportion to their respective investments. The proceeds from the disposition of any of the Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement. The sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership. Should such distributions occur, the Limited Partners will be entitled to receive distributions from the proceeds remaining after payment of Partnership obligations and funding reserves, equal to their capital contributions and their return on investment (as defined in the Partnership Agreement). The General Partners would then be entitled to receive proceeds equal to their capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner. Risks and Uncertainties - ----------------------- An investment in the Partnership and the Partnership's investments in Local Limited Partnerships and their Housing Complexes are subject to risks. These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership's 51 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED - ------------------------------------------------------------------------------- investments. Some of those risks include the following: The Low Income Housing Tax Credits rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to the tax liability due on the person's last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a price which would result in the Partnership realizing cash distributions or proceeds from the transaction. Accordingly, the Partnership may be unable to distribute any cash to its Limited Partners. Low Income Housing Tax Credits may be the only benefit from an investment in the Partnership. The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership's ability to satisfy its investment objectives. Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years, the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership's investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership's investments in Local Limited Partnerships, nor the Local Limited Partnerships' investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others. The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to the Limited Partners could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes. No trading market for the Partnership Units exists or is expected to develop. Limited Partners may be unable to sell their Partnership Units except at a discount and should consider their Partnership Units to be a long-term investment. Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners. The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through April 30, 2009. 52 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED - ------------------------------------------------------------------------------- Anticipated future and existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership. However, substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or its affiliates. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason. Exit Strategy - ------------- The IRS Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits. The initial programs are completing their compliance periods. With that in mind, the General Partner is continuing its review of the Housing Complexes, with special emphasis on the more mature Housing Complexes such as any that have satisfied the IRS compliance requirements. The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, and the tax consequences to the Limited Partners from the sale of the Housing Complexes. Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners' return wherever possible and, ultimately, to wind down the Partnership. Local Limited Partnership Interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of March 31, 2007. As of March 31, 2007 none of the Housing Complexes had completed the 15 year compliance period. As of March 31, 2007, no Housing Complexes have been selected for disposition. Method of Accounting For Investments in Local Limited Partnerships - ------------------------------------------------------------------ The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships' results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 30 years. (See Notes 2 and 3) "Equity in losses of Local Limited Partnerships" for each year ended March 31 has been recorded by the Partnership based on nine months of reported results provided by the Local Limited Partnerships for each year ended December 31 and on three months of results estimated by management of the Partnership. Management's estimate for the three-month period is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. In subsequent annual financial statements, upon receiving the actual annual results reported by the Local Limited Partnerships, management reverses its prior estimate and records 53 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED - ------------------------------------------------------------------------------- the actual results reported by the Local Limited Partnership. Equity in losses from the Local Limited Partnerships allocated to the Partnership are not recognized to the extent that the investment balance would be adjusted below zero. As soon as the investment balance reaches zero, the related costs of acquiring the investment are impaired (see Note 3). If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended. The Partnership does not consolidate the accounts and activities of the Local Limited Partnerships which are considered Variable Interest Entities under Financial Accounting Standards Board Interpretation No. 46-Revised, "Consolidation of Variable Interest Entities", because the Partnership is not considered the primary beneficiary. The Partnership's balance in Investments in Local Limited Partnerships, plus the risk of recapture of Low Income Housing Tax Credits previously recognized on such investments, represents the maximum exposure to loss in connection with such investments. The Partnership's exposure to loss on the Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantees against Low Income Housing Tax Credit recapture. Distributions received from the Local Limited Partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income. As of March 31, 2007, three investment accounts in Local Limited Partnerships had reached zero. Use of Estimates - ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Cash and Cash Equivalents - ------------------------- The Partnership considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. For all periods presented, the Partnership had no cash equivalents. Reporting Comprehensive Income - ------------------------------ The STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 130, REPORTING COMPREHENSIVE INCOME established standards for the reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements. The Partnership had no items of other comprehensive income for all periods presented, as defined by SFAS No. 130. Concentration of Credit Risk - ---------------------------- At March 31, 2007, the Partnership maintained cash balances at a certain financial institution in excess of the federally insured maximum. The Partnership believes it is not exposed to any significant financial risk on cash. Net Loss Per Partnership Unit - ----------------------------- Net loss per Partnership Unit is calculated pursuant to STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128, EARNINGS PER SHARE. Net loss per Partnership Unit includes no dilution and is computed by dividing loss allocated to Limited Partners by the weighted average Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit is not required. 54 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED - ------------------------------------------------------------------------------- Income Taxes - ------------ No provision for income taxes has been recorded in the financial statements as any liabilities and or benefits from income taxes flow to the partners of the Partnership and are their obligations and/or benefits. For income tax purposes, the Partnership reports on a calendar year basis. Impact of New Accounting Pronouncements - --------------------------------------- In September 2006, the FASB issued SFAS 157, "Fair Value Measurements" and in February 2007, the FASB issued SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities." SFAS 157 defines fair values as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS 157 applies whenever other standards require assets or liabilities to be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS 157 establishes a hierarchy that prioritizes the information used in developing fair value estimates. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, such as the reporting entity's own data. SAFAS 157 requires fair value measurements to be disclosed by level within the fair value hierarchy. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Partnership is currently evaluating the impacts and disclosures of this standard, but would not expect SFAS 157 to have a material impact on the Partnership's results of operations or financial condition. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Partnership is currently evaluating the impacts and disclosures of this standard, but would not expect SFAS 159 to have a material impact on the Partnership's results of operations or financial condition. On December 4, 2007, The FASB issued Statement No 141R, "Business Combinations" ("SFAS 141R"). This statement changes the accounting for acquisitions specifically eliminating the step acquisition model, changing the recognition of contingent consideration from being recognized when it is probable to being recognized at the time of acquisition, disallowing the capitalization of transaction costs and delays when restructurings related to acquisitions can be recognized. The standard is effective for fiscal years ending after December 15, 2008. The Partnership is currently evaluating the impacts and disclosures of this standard, but would not expect SFAS 141R to have a material impact on the Partnership's results of operations or financial condition. On December 4, 2007, the FASB issued Statement No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS 160"). SFAS 160 replaces the concept of minority interest with noncontrolling interests in subsidiaries. Noncontrolling interests will now be reported as a component of equity in the consolidated statement of financial position. Earnings attributable to noncontrolling interests will continue to be reported as part of consolidated earnings; however, SFAS 160 requires that income attributable to both controlling and noncontrolling interests be presented separately on the face of the consolidated income statement. In addition, SFAS 160 provides that when losses attributable to noncontrolling interests exceed the noncontrolling interes's basis, losses continue to be attributed to the noncontrolling interest as opposed to being absorbed by the consolidating entity. SFAS 160 required retroactive adoption of the presentation and disclosure 55 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - ------------------------------------------------------------------------------- requirements for existing minority interests. All other requirements of SFAS 160 shall be applied prospectively. SAS 160 is effective for the first annual reporting period beginning on or after December 15, 2008. The Partnership does not expect SFAS 160 to have a material impact on the Partnership's statement of operations or financial position. Revenue Recognition - ------------------- The Partnership is entitled to receive reporting fees from the Local Limited Partnerships. The intent of the reporting fees is to offset (in part) administrative costs incurred by the Partnership in corresponding with the Local Limited Partnerships. Due to the uncertainty of the collection of these fees, the Partnership recognizes reporting fees as collections are made. Reclassifications - ----------------- Certain reclassifications have been made to the 2003 and 2002 financial statements to be consistent with the 2007, 2006, 2005 and 2004 presentation. Amortization - ------------ Acquisition fees and costs are being amortized over 30 years using the straight-line method. Amortization expense for the year ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002 was $63,420, $63,978, $64,536, $64,536, $64,536, and $64,536, respectively. Estimated amortization for the ensuing years through March 31, 2012 is $61,924 annually. Impairment - ---------- Impairment is measured by comparing the Partnership's carrying amount in the investment to the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership. Effective from the year ended March 31, 2004, a loss in value of an investment in a Local Limited Partnership other than a temporary decline is recorded as an impairment loss. For the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002 impairment expense related to investments in Local Limited Partnerships was $559,870, $759,132, $580,301, $154,864, $0, and $0, respectively. When the value of the Partnership's investment in a Local Limited Partnership has been reduced to zero, the respective net acquisition fees and costs component of investments in Local Limited Partnerships are impaired. For each of the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002 impairment expense related to acquisition fees and costs $30,957, $24,850, $0, $0, $0, and $0, respectively. NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS - -------------------------------------------------- As of the periods presented, the Partnership had acquired Limited Partnership interests in 15 Local Limited Partnerships, each of which owns one Housing Complex, consisting of an aggregate of 624 apartment units. The respective Local General Partners of the Local Limited Partnerships manage the day-to-day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a limited partner, is generally entitled to 99.9%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses and Low Income Housing Tax Credits of the Local Limited Partnerships. 56 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED - ------------------------------------------------------------- The Partnership's Investments in Local Limited Partnerships as shown in the balance sheets at March 31, 2007, 2006, 2005, 2004 and 2003 are approximately $(646,000), $(44,000), $773,000, $1,362,000 and $1,604,000 respectively greater than (less than) the Partnership's equity at the preceding December 31 as shown in the Local Limited Partnerships' combined condensed financial statements presented below. This difference is primarily due to acquisition, selection, and other costs related to the acquisition of the investments which have been capitalized in the Partnership's investment account, impairment losses recorded in the Partnership's investment account and capital contributions payable to the Local Limited Partnerships which were netted against partner capital in the Local Limited Partnership's financial statements. The Partnership's equity in losses of Local Limited Partnerships is also lower than the Partnership's equity as shown in the Local Limited Partnership's combined condensed financial statements due to the estimated losses recorded by the Partnership for the three month period ended March 31. A loss in value from a Local Limited Partnership other than a temporary decline would be recorded as an impairment loss. During the year ended March 31, 2004 management adopted a new method to evaluate impairment whereby they compare each investment carrying amount to the sum of the remaining Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value of the investment to the Partnership and record an impairment loss for any determined difference. Accordingly, the Partnership recorded impairment losses of $559,870, $759,132, $580,301, $154,864, $0, and $0, during the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, respectively. At March 31, 2007 and 2006 the investment accounts in certain Local Limited Partnerships have reached a zero balance. Consequently, a portion of the Partnership's estimate of its share of losses for the years ended March 31, 2007 and 2006 amounting to approximately $52,000 and $40,000 respectively, have not been recognized. As of March 31, 2007, the aggregate share of net losses not recognized by the Partnership amounted to $92,000. The financial information for the year ended March 31, 2003 has been restated see footnote 7. The following is a summary of the equity method activity of the investments in the Local Limited Partnerships for the periods presented: FOR THE YEARS ENDED MARCH 31, -------------------------------------------------- 2007 2006 2005 ------------ ------------ ------------ Investments per balance sheet, beginning of period $ 10,041,847 $ 11,792,881 $ 13,614,334 Impairment loss (559,870) (759,132) (580,301) Equity in losses of Local Limited Partnerships (948,430) (927,925) (1,176,616) Amortization of paid acquisition fees and costs (63,420) (63,977) (64,536) ------------ ------------ ------------ Investment per balance sheet, end of period $ 8,470,127 $ 10,041,847 $ 11,792,881 ============ ============ ============ 57 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED - ------------------------------------------------------------- FOR THE YEARS ENDED MARCH 31, -------------------------------------------------- 2004 2003 2002 ------------ ------------ ------------ Investments per balance sheet, beginning of period $ 15,089,794 $ 16,200,256 $ 17,555,917 Capital contributions paid, net -- -- 84,500 Impairment loss (154,864) -- -- Equity in losses of Local Limited Partnerships (1,256,060) (1,045,926) (1,365,625) Amortization of paid acquisition fees and costs (64,536) (64,536) (64,536) Distributions received from Local Limited Partnerships -- -- (10,000) ------------ ------------ ------------ Investment per balance sheet, end of period $ 13,614,334 $ 15,089,794 $ 16,200,256 ============ ============ ============ FOR THE YEARS ENDED MARCH 31, ---------------------------------------------------- 2007 2006 2005 --------------- --------------- -------------- Investments in Local Limited Partnerships, net $ 7,169,677 $ 8,647,020 $ 10,309,226 Acquisition fees and costs, net of accumulated amortization of $635,284, $540,907 and $452,079 1,300,450 1,394,827 1,483,655 --------------- --------------- -------------- Investments per balance sheet, end of period $ 8,470,127 $ 10,041,847 $ 11,792,881 =============== =============== ============== FOR THE YEARS ENDED MARCH 31, ---------------------------------------------------- 2004 2003 2002 --------------- --------------- -------------- Investments in Local Limited Partnerships, net $ 12,066,143 $ 13,477,067 $ 14,522,993 Acquisition fees and costs, net of accumulated amortization of $387,543, $323,007 and $258,471 1,548,191 1,612,727 1,677,263 --------------- --------------- -------------- Investments per balance sheet, end of period $ 13,614,334 $ 15,089,794 $ 16,200,256 =============== =============== ============== 58 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED - ------------------------------------------------------------- The financial information from the individual financial statements of the Local Limited Partnerships include rental and interest subsidies. Rental subsidies are included in total revenues and interest subsidies are generally netted in interest expense. Approximate combined condensed financial information from the individual financial statements of the Local Limited Partnerships as of December 31 and for the years then ended is as follows: COMBINED CONDENSED BALANCE SHEETS 2006 2005 2004 2003 2002 ------------ ------------ ------------ ------------ ------------ ASSETS BUILDINGS AND IMPROVEMENT (NET OF ACCUMULATED DEPRECIATION FOR 2006, 2005, 2004, 2003 AND 2002 OF $10,229,000, $9,012,000, $7,830,000, $6,606,000, AND $5,351,000, RESPECTIVELY) $ 25,683,000 $ 26,708,000 $ 27,833,000 $ 29,039,000 $ 30,278,000 LAND 883,000 883,000 883,000 883,000 883,000 OTHER ASSETS 1,380,000 1,431,000 1,362,000 1,215,000 1,495,000 ------------ ------------ ------------ ------------ ------------ TOTAL ASSETS $ 27,946,000 $ 29,022,000 $ 30,078,000 $ 31,137,000 $ 32,656,000 ============ ============ ============ ============ ============ LIABILITIES MORTGAGE AND CONSTRUCTION LOANS PAYABLE $ 14,833,000 $ 14,974,000 $ 15,199,000 $ 15,185,000 $ 15,374,000 DUE TO AFFILIATES 3,143,000 3,149,000 3,040,000 2,917,000 2,929,000 OTHER LIABILITIES 993,000 955,000 935,000 838,000 869,000 ------------ ------------ ------------ ------------ ------------ TOTAL LIABILITIES 18,969,000 19,078,000 19,174,000 18,940,000 19,172,000 ------------ ------------ ------------ ------------ ------------ PARTNERS' CAPITAL WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 9,116,000 10,085,000 11,020,000 12,252,000 13,486,000 OTHER PARTNERS (139,000) (141,000) (116,000) (55,000) (2,000) ------------ ------------ ------------ ------------ ------------ TOTAL PARTNERS' EQUITY 8,977,000 9,944,000 10,904,000 12,197,000 13,484,000 ------------ ------------ ------------ ------------ ------------ TOTAL LIABILITIES AND PARTNERS' EQUITY $ 27,946,000 $ 29,022,000 $ 30,078,000 $ 31,137,000 $ 32,656,000 ============ ============ ============ ============ ============ 59 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED - ------------------------------------------------------------- COMBINED CONDENSED STATEMENTS OF OPERATIONS 2006 2005 2004 ----------- ----------- ----------- REVENUES $ 3,345,000 $ 3,244,000 $ 3,129,000 ----------- ----------- ----------- EXPENSES: OPERATING EXPENSES 2,223,000 2,050,000 2,182,000 INTEREST EXPENSE 862,000 893,000 907,000 DEPRECIATION AND AMORTIZATION 1,236,000 1,239,000 1,249,000 ----------- ----------- ----------- TOTAL EXPENSES 4,321,000 4,182,000 4,338,000 ----------- ----------- ----------- NET LOSS $ (976,000) $ (938,000) $(1,209,000) =========== =========== =========== NET LOSS ALLOCABLE TO THE PARTNERSHIP, $ (970,000) $ (934,000) $(1,201,000) =========== =========== =========== NET LOSS RECORDED BY THE PARTNERSHIP $ (948,000) $ (928,000) $(1,177,000) =========== =========== =========== 60 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED - ------------------------------------------------------------- 2003 2002 2001 ----------- ----------- ----------- REVENUES $ 3,105,000 $ 3,070,000 $ 2,974,000 ----------- ----------- ----------- EXPENSES: OPERATING EXPENSES 2,124,000 1,967,000 1,973,000 INTEREST EXPENSE 942,000 1,011,000 975,000 DEPRECIATION AND AMORTIZATION 1,280,000 1,298,000 1,342,000 ----------- ----------- ----------- TOTAL EXPENSES 4,346,000 4,276,000 4,290,000 ----------- ----------- ----------- NET LOSS $(1,241,000) $(1,206,000) $(1,316,000) =========== =========== =========== NET LOSS ALLOCABLE TO THE PARTNERSHIP $(1,234,000) $(1,199,000) $(1,242,000) =========== =========== =========== NET LOSS RECORDED BY THE PARTNERSHIP $(1,256,000) $(1,046,000) $(1,366,000) =========== =========== =========== Certain Local Limited Partnerships have incurred significant operating losses and/or have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partner may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership's investment in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related Low Income Housing Tax Credits could occur.
61 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 3 - RELATED PARTY TRANSACTIONS - ----------------------------------- Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates for the following fees: Acquisition fees of up to 7% of the gross proceeds from the sale of Partnership Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships. As of all periods presented, the Partnership incurred acquisition fees of $1,750,000. Accumulated amortization of these capitalized costs was $526,534, $468,194, $409,854, $351,514, and $293,174 as of March 31, 2007, 2006, 2005, 2004 and 2003, respectively. Reimbursement of costs incurred by the General Partner or by an affiliate of Associates in connection with the acquisition of Local Limited Partnerships. These reimbursements have not exceeded 1.5% of the gross proceeds. As of all periods presented, the Partnership had incurred acquisition costs of $185,734 which have been included in Investments in Local Limited Partnerships. Accumulated amortization was $108,750, $72,713, $42,225, $36,029, and $29,833 as of March 31, 2007, 2006, 2005, 2004 and 2003, respectively. An annual asset management fee in an amount equal to 0.2% of the Invested Assets of the Partnership. "Invested Assets" means the sum of the Partnership's investment in Local Limited Partnerships and the Partnership's allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Management fees of $70,068, $70,086, $70,086, $70,086, $70,086 and $70,086 were incurred during the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, respectively, of which $6,250, $0, $0, $10,000, $0 and $16,795, were paid for the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, respectively. The Partnership reimbursed the General Partner or its affiliates for operating expenses incurred by the Partnership and paid for by the General Partner or its affiliates on behalf of the Partnership. Operating expense reimbursements were $11,453, $15,177, $12,390, $9,082, $0 and $112,640 during the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, respectively. A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the limited partners receiving a preferred return of 12% through December 31, 2008 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. No such fee was incurred for all periods presented. The accrued fees and expenses due to the General Partner and affiliates consist of the following at: MARCH 31, ---------------------------------------------------- 2007 2006 2005 2004 2003 -------- -------- -------- -------- -------- Asset management fee payable $411,527 $347,709 $277,641 $207,573 $147,505 Expenses paid by the General Partner or an affiliate on behalf of the Partnership 455,346 450,664 451,417 435,789 378,965 -------- -------- -------- -------- -------- Total $866,873 $798,373 $729,058 $643,362 $526,470 ======== ======== ======== ======== ======== The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to provide advances sufficient enough to fund the operations and working capital requirements of the Partnership through April 30, 2009. 62 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - ---------------------------------------------------- The following is a summary of the quarterly operations for the years ended March 31: 2007 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 ---- ------------ ------------ ------------ ------------ Income $ -- $ 54,000 $ -- $ -- Operating expenses (594,000) (39,000) (35,000) (62,000) Income (loss) from operations (594,000) 15,000 (35,000) (62,000) Equity in losses of Local Limited Partnerships (229,000) (229,000) (229,000) (261,000) Interest income -- -- -- 1,000 Net loss (823,000) (214,000) (264,000) (32,000) Net loss available to Limited Partners (815,000) (212,000) (261,000) (318,000) Net loss per Partnership Unit (33) (8) (10) (13) 2006 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 ---- ------------ ------------ ------------ ------------ Income $ -- $ 18,000 $ -- $ -- Operating expenses (816,000) (60,000) (40,000) (38,000) Loss from operations (816,000) (42,000) (40,000) (38,000) Equity in losses of Local Limited Partnerships (234,000) (249,000) (216,000) (229,000) Interest income -- -- -- 1,000 Net loss (1,050,000) (291,000) (256,000) (266,000) Net loss available to Limited Partners (1,039,000) (288,000) (253,000) (265,000) Net loss per Partnership Unit (42) (12) (10) (11) 63 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - CONTINUED - ---------------------------------------------------------------- 2005 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 ---- ---------- ----------- ----------- ---------- Income $ 3,000 $ 17,000 $ 118,000 $ 1,000 Operating expenses (620,000 (37,000) (83,000) (39,000) Income (loss) from operations (617,000 (20,000) 35,000 (38,000) Equity in losses of Local Limited Partnerships (314,000 (314,000) (314,000) (235,000) Interest income -- -- 4,000 -- Net loss (931,000) (334,000) (275,000) (27,000) Net loss available to Limited Partners (922,000) (331,000) (272,000) (270,000) Net loss per Partnership Unit (37) (13) (11) (11) 2004 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 ---- ---------- ----------- ----------- ---------- Income $ 1,000 $ 12,000 $ -- $ -- Operating expenses (213,000) (47,000) (38,000) (41,000) Loss from operations (212,000) (35,000) (38,000) (41,000) Equity in losses of Local Limited Partnerships (308,000) (308,000) (308,000) (332,000) Interest income -- -- -- 1,000 Net loss (520,000) (343,000) (346,000) (371,000) Net loss available to Limited Partners (514,000) (340,000) (342,000) (368,000) Net loss per Partnership Unit (21) (14) (14) (15) 64 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - CONTINUED - ---------------------------------------------------------------- 2003 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 ---- ---------- ----------- ----------- ---------- Income $ -- $ -- $ -- $ 25,000 Operating expenses (47,000) (66,000) (86,000) (173,000) Equity in losses of Local Limited Partnerships (355,000) (355,000) (248,000) (88,000) Net loss (402,000) (421,000) (334,000) (233,000) Net loss available to Limited Partners (398,000) (416,000) (331,000) (233,000) Net loss per Partnership Unit (16) (17) (13) (9) 2002 JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 ---------- ----------- ----------- ---------- Income $ -- $ -- $ -- $ 11,000 Operating expenses (47,000) (90,000) (56,000) (60,000) Equity in losses of Local Limited Partnerships (409,000) (409,000) (408,000) (140,000) Net loss (456,000) (499,000) (464,000) (189,000) Net loss available to Limited Partners (452,000) (494,000) (460,000) (186,000) Net loss per Partnership Unit (18) (20) (18) (7)
65 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 5 - PAYABLES TO LOCAL LIMITED PARTNERSHIPS - ----------------------------------------------- Payables to Local Limited Partnerships represent amounts which are due at various times based on conditions specified in the Local Limited Partnership agreements. These contributions are payable in installments and are generally due upon the Local Limited Partnerships achieving certain operating and development benchmarks (generally within two years of the Partnership's initial investment). NOTE 6 -ADVANCES TO LOCAL LIMITED PARTNERSHIPS - ---------------------------------------------- As of March 31, 2007, the Partnership advanced cash in the amount of $562,213 to one of the Local Limited Partnerships in which it has a Limited Partnership interest to assist with the payments of their operating expenses. Of the $562,213 of advances, the full amount was reserved as of March 31, 2007. As of March 31, 2003 and 2004 the Partnership had advances of $680,485 reflected for this same Local Limited Partnership. However, during the year ended March 31, 2005 an escrow account that the Partnership controlled in the name of this Local Limited Partnership was released back to the Partnership. At this time, it was realized that the $118,272 in outstanding capital contributions due to this Local Limited Partnership was in fact previously paid with what had been classified as an advance. The capital contribution was reduced to zero and the advances were reduced by the same amount. The reversal of the reserve was recorded as income - recovery of bad debt during the year ended March 31, 2005. The Partnership did receive $9,000 in payments from the Local Limited Partnership. Advances were made to augment the Local Limited Partnership's cash flows which were not sufficient to support the operating costs of the property. Such advances have been expensed in full in the accompanying financial statements. As of March 31, 2007, 2006, 2005, 2004 and 2003 the Partnership in total had advanced $264,580, $264,580, $264,580, $ 215,579, $198,658 to one Local Limited Partnership, Mansur Wood, in which the Partnership is a limited partner. These advances were used to pay for the property taxes and operational expenses. All advances were reserved in full in the year they were advanced. As of March 31, 2007 and 2006 the Partnership had advanced one Local Limited Partnership, Murfreesboro L.P., $21,500. The advances were used by the Local Limited Partnership to pay several years of accounting fees. The advance was made during the year ended March 31, 2006, which was also fully reserved in the same year. As of March 31, 2007, $20,000 was advanced to Concord Apartment Partners L.P. The advance was fully reserved during the year ended March 31, 2007. The funds were to help the property with operating expenses. NOTE 7 - RESTATEMENT - -------------------- The Partnership previously reported a restatement of its financial statements on a Form 10-K/A with the U.S. Securities & Exchange Commission on May 9, 2008. The restatement was a result of the following matters: The Partnership, as a limited partner or limited liability company member in the Local Limited Partnerships, may be unable to affect the selection or monitor the progress of the auditors of a Local Limited Partnership. The partnership agreement or operating agreement of each Local Limited Partnership includes disincentives for the failure of the Local Limited Partnership to timely deliver audited financial statements to the Partnership. However, there can be no absolute assurance that the Partnership will be able to timely obtain audited financial statements from each Local Limited Partnership. In such a case, the Partnership might estimate its interest in the results of the operations of the Local Limited Partnership. For the Partnership fiscal year ended March 31, 2003, the Partnership was unable to obtain audited financial statements from two of 66 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 7 - RESTATEMENT, CONTINUED - ------------------------------- its Local Limited Partnerships, Mansur Wood Living Center, L.P. ("Mansur Wood") and Murfreesboro Villas Limited Partnerships ("Murfreesboro") as of and for the Mansur Wood and Murfreesboro fiscal year ended December 31, 2002. Additionally for the fiscal year ended March 31, 2002, the Partnership was unable to obtain audited financial statements for Mansur Wood as of and for the Mansur Wood fiscal year ended December 31, 2001. Subsequent to the filing date of the Partnership's original Form 10-K for the period ended March 31, 2003, the Partnership obtained the audited financial statements of Mansur Wood for the Mansur Wood fiscal year ended December 31, 2002 and 2001. Additionally the Partnership obtained the audited financial statements of Murfreesboro for the year ended December 31, 2002. As a result, the Partnership has restated its accompanying financial statements for the year ended March 31, 2003 to reflect the differences in the Partnership's estimated interests in the results of the operations in Mansur Wood and Murfreesboro, and the Partnership's actual interests in Mansur Wood and Murfreesboro based on the audited financial statements of Mansur Wood and Murfreesboro for the fiscal years ended December 31, 2002 and 2001. During the fiscal year ended March 31, 2003, the Partnership advanced approximately $199,000 to one Local Limited Partnership, Mansur Wood, in which the Partnership is a limited partner. These advances were used to pay for the current year property taxes. When the original Form 10-K was filed the Partnership incorrectly concluded that the advances would be repaid. The Partnership has determined that the advances should have been fully reserved during the year ending December 31, 2003. As such, the financial statements have been adjusted to reflect the write off of these advances during the year ended March 31, 2003 for the amended Form 10-K/A. The following table shows the effect of the restatement on the Balance Sheet as previously reported: March 31, 2003 ------------------------------------------------------------ As Restated Adjustments As Previously Reported ------------------ -------------- -------------------------- Investment in limited partnerships, net $ 15,089,794 $ 134,981 (a) $ 14,954,813 Total assets 15,332,554 (63,677) 15,396,231 Partners' equity (deficit) General partner (102,837) (152) (c) (102,685) Limited partners 14,728,450 (14,966) (c) 14,743,416 Total partners' equity 14,625,613 (15,118) (c) 14,640,731 The following table shows the effect of the restatement on the Statement of Operations as previously reported: Year Ending March 31, 2003 ---------------------------------------------------------------- As Restated Adjustments As Previously Reported --------------------- ----------------- ------------------------ Equity in losses of limited partnerships $ (1,045,926) $ 134,981 (a) $ (1,180,907) Net loss (1,392,661) (15,118) (b) (1,377,543) Net loss allocated to: General partner (13,927) (152) (c) (13,775) Limited partners (1,378,734) (14,966) (c) (1,363,768) Net loss per limited partner unit (55.15) (.60) (d) (54.55) 67 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 7 - RESTATEMENT, CONTINUED - ------------------------------- The following table shows the effect of the restatement on the Statement of Partners' Equity (Deficit) as previously reported: Year Ending March 31, 2003 ------------------------------------------------------------- As Restated Adjustments As Previously Reported ------------------- ------------------ ---------------------- General Partner Partners' equity (deficit) at March 31, 2002 $ (88,910) $ - $ (88,910) Net loss (13,927) (152) (c) (13,775) ---------------- ------------------ --------------- Partners' equity (deficit) at March 31, 2003 $ (102,837) $ (152) $ (102,685) Limited Partners Partners' equity (deficit) at March 31, 2002 $ 16,107,184 $ - $ 16,107,184 Net loss (1,378,734) (14,966) (c) (1,363,768) ---------------- ------------------ --------------- Partners' equity (deficit) at March 31, 2003 $ 14,728,450 $ (14,966) $ 14,743,416 Total Partners' equity (deficit) at March 31, 2002 $ 16,018,274 $ - $ 16,018,274 Net loss (1,392,661) (15,118) (b) (1,377,543) ---------------- ------------------ --------------- Partners' equity (deficit) at March 31, 2003 $ 14,625,613 $ (15,118) $ 14,640,731 The following table shows the effect of the restatement on the Statement of Cash Flows as previously reported: Year Ending March 31, 2003 --------------------------------------------------------------- As Restated Adjustments As Previously Reported --------------------- ----------------- ----------------------- Cash flows from operating activities: Net loss $ (1,392,661) $ (15,118) (b) $ (1,377,543) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Equity in losses of limited partnerships (1,045,926) 134,981 (a) (1,180,907) Write off of advances to Local Limited Partnerships 198,658 150,099 (e) 48,559 Cash flows from investing activities: Investments in Limited Partnerships (48,559) (48,559) (f) - Advances to Local Limited Partnerships (198,659) 48,559 (f) (247,218)
(a) The originally filed Form 10-K included estimates for the equity in losses for two of its Local Limited Partnerships, Mansur Wood and Murfreesboro. Subsequent to that originally filed 10-K, the audited financials for those two Local Limited Partnerships were received and as such the Partnership recorded the actual audited equity in losses for the two Local Limited Partnerships. The audits for the two Local Limited Partnerships had total losses of $134,981 less than the estimate that was originally filed; this adjustment is the amount to true up the losses to the actual audited amounts. (b) This amount represents the total net loss adjustment which is made up of the reduction in equity in losses of Local Limited Partnerships discussed in (a) offset by the increase in write-off of advances of Local Limited Partnerships discussed in (e). 68 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS - CONTINUED FOR THE YEARS ENDED MARCH 31, 2007, 2006, 2005, 2004, 2003 AND 2002 NOTE 7 - RESTATEMENT, CONTINUED - ------------------------------- (c) These amounts represent the General Partner and Limited Partners allocated share of the overall net loss adjustments. The General Partner is allocated 1% and the Limited Partners are allocated 99%. (d) The $(.60) increase in net loss per partnership unit is due to $(14,966) adjustment to the Limited Partners net loss allocation for the year ended March 31, 2003 divided by the number of Limited Partner units, 25,000. (e) The write of advances made to Local Limited Partnerships in the originally filed Form 10-K amounted to $48,559. As of March 31, 2003 there was $198,659 in advances made to a Local Limited Partnership which was deemed to be collectible. Subsequent to the filing of the original Form 10-K for the year ended March 31, 2003 the Partnership determined the advances needed to be reserved. As such, the Partnership has reserved against the $198,659, in the Form 10-K/A. The $48,569 that was originally deemed as uncollectible has subsequently been reclassified as a capital contribution payment to the Local Limited Partnership and therefore reducing the write off of advances to Local Limited Partnerships. The net effect of the two adjustments is the additional write-off of advances of $150,099. (f) Refer to (e) above. 69 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE ITEM 9A. CONTROLS AND PROCEDURES (a) As of March 31 of each of the years 2007, 2006, 2005 and 2004, the Partnership's General Partner, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of Associates, carried out an evaluation of the effectiveness of the Partnership's "disclosure controls and procedures" as defined in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of each period covered by this report, the Partnership's disclosure controls and procedures were adequate and effective in timely alerting them to material information relating to the Partnership required to be included in the Partnership's periodic SEC filings. (b) There were no changes in the Partnership's internal control over financial reporting that occurred during the periods ended March 31, 2007, 2006, 2005, or 2004 that materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. ITEM 9B. OTHER INFORMATION NONE PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Identification of Directors, (b) Identification of Executive Officers, (c) -------------------------------------------------------------------------- Identification of Certain Significant Employees, (d) Family Relationships, -------------------------------------------------------------------------- and (e) Business Experience --------------------------- Neither the General Partner nor the Partnership has directors, executive officers or employees of its own. The business of the Partnership is conducted primarily through Associates. Associates is a California corporation which was organized in 1971. The following biographical information is presented for the officers and employees of Associates with principal responsibility for the Partnership's affairs. Wilfred N. Cooper, Sr. Chairman Wilfred N. Cooper, Jr. President and Chief Executive Officer David N. Shafer, Esq. Executive Vice President Michael J. Gaber Executive Vice President Sylvester P. Garban Senior Vice President - Institutional Investments Thomas J. Riha, CPA Senior Vice President - Chief Financial Officer Thomas J. Hollingsworth Vice President - Asset Management Gregory S. Hand Vice President - Acquisitions Melanie R. Wenk Vice President - Portfolio Management & Accounting In addition to Wilfred N. Cooper, Sr., the directors of Associates are Wilfred N. Cooper, Jr., Kay L. Cooper, and Jennifer Cooper. The principal shareholders of Associates are trusts established by the Coopers. Wilfred N. Cooper, Sr., age 77, is the founder and Chairman of the Board of Directors of Associates, a Director of WNC Capital Corporation, and a general partner in some of the partnerships previously sponsored by Associates. Mr. Cooper has been actively involved in the affordable housing industry since 1968. Previously, during 1970 and 1971, he was founder and a principal of Creative Equity Development Corporation, a predecessor of Associates, and of Creative Equity Corporation, a real estate investment firm. For 12 years before that, Mr. Cooper was employed by Rockwell International Corporation, last serving as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project management in urban planning and development. He has testified before committees of the U.S. Senate and the U.S. 70 House of Representatives on matters pertaining to the affordable housing industry. Mr. Cooper is a Life Director of the National Association of Home Builders, a National Trustee for NAHB's Political Action Committee, and a past Chairman of NAHB's Multifamily Council. He is a Life Trustee of the National Housing Conference, and a founder and Director of the California Housing Consortium. He is the husband of Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree. Wilfred N. Cooper, Jr., age 44, is President, Chief Executive Officer, Secretary, a Director and a member of the Acquisition Committee of Associates. He is President and a Director of, and a registered principal with, WNC Capital Corporation. He has been involved in real estate investment and acquisition activities since 1988 when he joined Associates. Previously, he served as a Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper serves on the Board of Trustees of the National Housing Conference, and is a member of the Editorial Advisory Board of LIHTC Monthly Report, a Steering Member of the Housing Credit Group of the National Association of Home Builders, a member of the Tax Policy Council for the National Trust for Historic Preservation, a member of the Advisory Board of the New York State Association for Affordable Housing, a member of the Urban Land Institute, a member of the Orange County Advisory Board of US Bank, and a member of Vistage International, a global network of business leaders and chief executives. He is the son of Wilfred Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The American University in 1985 with a Bachelor of Arts degree. David N. Shafer, age 55, is an Executive Vice President, a member of the Acquisition Committee of, and oversees the New Markets Tax Credit operations of, Associates, and is responsible for the business development activities of WNC Community Preservation Partners. Mr. Shafer has been active in the real estate industry since 1984. Before joining Associates in 1990, he was engaged as an attorney in the private practice of law with a specialty in real estate and taxation. Mr. Shafer is a Director and past President of the California Council of Affordable Housing, and a member of the State Bar of California. Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris Doctor degree cum laude and from the University of San Diego in 1986 with a Master of Law degree in Taxation. Michael J. Gaber, age 41, is an Executive Vice President, oversees the Originations, and the Acquisitions Departments, and is a member of the Acquisition Committee of Associates. Mr. Gaber has been involved in real estate acquisition, valuation and investment activities since 1989 and has been associated with Associates since 1997. Prior to joining Associates, he was involved in the valuation and classification of major assets, restructuring of debt and analysis of real estate taxes with H.F. Ahmanson & Company, parent of Home Savings of America. Mr. Gaber graduated from the California State University, Fullerton in 1991 with a Bachelor of Science degree in Business Administration - Finance. Sylvester P. Garban, age 61, is Senior Vice President - Institutional Investments of Associates and a registered principal with WNC Capital Corporation. Mr. Garban has been involved in domestic and multinational institutional real estate investment activities since 1978. Before joining Associates in 1989, he served as Executive Vice President with MRW, Inc., a commercial real estate development and management firm. He was previously involved in operations management with The Taubman Company, an international regional mall developer. Mr. Garban is a member of the National Association of Affordable Housing Lenders and the Financial Planning Association. He graduated from Michigan State University in 1967 with a Bachelor of Science degree in Business Administration. Thomas J. Riha, age 52, is Senior Vice President - Chief Financial Officer and a member of the Acquisition Committee of Associates. He has been involved in real estate acquisition and investment activities since 1979. Before joining Associates in 1994, Mr. Riha was employed by Trust Realty Advisor, a real estate acquisition and management company, last serving as Vice President - Operations. He is a founding member of the Housing Credit Certified Professional Board of Governors, a national professional certification program administered by the NAHB and the National Affordable Housing Management Association. Mr. Riha graduated from the California State University, Fullerton in 1977 with a Bachelor of Arts degree cum laude in Business Administration with a concentration in Accounting and is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. 71 Thomas J. Hollingsworth, age 56, is Vice President - Asset Management of Associates and oversees WNC's asset management group. Mr. Hollingsworth has been involved in real estate acquisitions, operations and syndication of multifamily properties for over 25 years. Prior to joining WNC in 2005, he was the senior workout specialist at Key Corporation Housing Management, Inc., a division of Key Bank. He has also been responsible for structuring several tax sheltered multifamily acquisitions during his career. Mr. Hollingsworth graduated from the University of Utah in 1973 with a Bachelor of Science degree (cum laude) in Business Administration. Gregory S. Hand, age 44, is Vice President - Acquisitions of, and oversees the property underwriting activities of, Associates. Mr. Hand has been involved in real estate analysis, development and management since 1987. Prior to joining WNC in 1998, he was a portfolio asset manager with a national Tax Credit sponsor with responsibility for the management of $200 million in assets. Prior to that, he was a finance manager with The Koll Company and a financial analyst with The Irvine Company. Mr. Hand graduated from Iowa State University in 1987 with a Bachelor of Business Administration degree in finance. Melanie R. Wenk, age 39, is Vice President - Portfolio Management & Accounting of Associates. She is responsible for overseeing institutional and retail fund portfolio management, including partnership accounting, SEC reporting, quarterly and annual investor reporting, monitoring investment returns for all stabilized WNC institutional funds, and corporate accounting. Prior to joining WNC in 2003, Ms. Wenk was associated as a public accountant with BDO Seidman, LLP. She graduated from the California Polytechnic State University, Pomona, in 1999 with a Bachelor of Science degree in accounting. (f) Involvement in Certain Legal Proceedings ---------------------------------------- Two Local Limited Partnerships invested in by other Associates-sponsored public limited partnerships were unable to meet their obligations as they became due, and each has filed a voluntary petition in bankruptcy. The local general partner of one of them is not affiliated with Associates. The original unaffiliated local general partner of the other was removed and replaced with a general partnership wholly-owned by two of the executive officers of Associates identified above. (g) Promoters and Control Persons ----------------------------- Inapplicable. (h) Audit Committee Financial Expert, and (i) Identification of the audit --------------------------------------------------------------------- Committee --------- Neither the Partnership nor Associates has an audit committee. (j) Changes to Nominating Procedures -------------------------------- Inapplicable. (k) Compliance With Section 16(a) of the Exchange Act ------------------------------------------------- None. (l) Code of Ethics -------------- Associates has adopted a Code of Ethics which applies to the Chief Executive Officer and Chief Financial Officer of Associates. The Code of Ethics will be provided without charge to any person who requests it. Such requests should be directed to: Investor Relations at (714)662-5565 extension 187. ITEM 11. EXECUTIVE COMPENSATION The Partnership has no officers, employees, or directors. However, under the terms of the Partnership Agreement the Partnership is obligated to the General Partner or its affiliates for the following fees: 72 a. Annual Asset Management Fee. An annual asset management fee in an amount equal to 0.2% of the Invested Assets of the Partnership. "Invested Assets" means the sum of the Partnership's original Investment in Local Limited Partnerships and the Partnership's allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Fees of $70,068, $70,068, $70,068, $70,068, $70,068 and $70,068 were incurred during the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, respectively, of which $6,250, $0, $0, $10,000, $0 and $16,795 were paid for the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, respectively. b. Subordinated Disposition Fee. A subordinated disposition fee in an amount equal to 1% of the sale price may be received in connection with the sale or disposition of a Housing Complex. Subordinated disposition fees will be subordinated to the prior return of the Limited Partners' capital contributions and payment of the Return on Investment to the Limited Partners. "Return on Investment" means an annual, cumulative but not compounded, "return" to the Limited Partners (including Low Income Housing Tax Credits) as a class on their adjusted capital contributions commencing for each Limited Partner on the last day of the calendar quarter during which the Limited Partner's capital contribution is received by the Partnership, calculated at the following rates: (i) 12% through December 31, 2008, and (ii) 6% for the balance of the Partnerships term. No such fees have been paid. c. Operating Expenses. The Partnership reimbursed the General Partner or its affiliates for operating expenses of $11,453, $15,177, $12,370, $9,082, $0 and $112,640 during the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, respectively. d. Interest in Partnership. The General Partner receives 1% of the Partnership's allocated Low Income Housing Tax Credits, which approximated $26,658, $27,876, $27,886, $28,078 and $28,094, for the General Partner for the years ended December 31, 2006, 2005, 2004, 2003 and 2002, respectively. The General Partner is also entitled to receive 1% of cash distributions. There were no distributions of cash to the General Partner during the years March 31, 2007, 2006, 2005, 2004, 2003 and 2002. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS (a) Securities Authorized for Issuance Under Equity Compensation Plans ------------------------------------------------------------------ The Partnership has no compensation plans under which interests in the Partnership are authorized for issuance. (b) Security Ownership of Certain Beneficial Owners ----------------------------------------------- No person is known to the General Partner to own beneficially in excess of 5% of the outstanding Partnership Units. (c) Security Ownership of Management -------------------------------- Neither the General Partner, Associates, its affiliates, nor any of the officers or directors of the General Partner, Associates, or its affiliates own directly or beneficially any Partnership Units. (d) Changes in Control ------------------ The management and control of the General Partner and of Associates may be changed at any time in accordance with their respective organizational documents, without the consent or approval of the Limited Partners. In addition, the Partnership Agreement provides for the admission of one or more additional and successor General Partners in certain circumstances. First, with the consent of any other General Partners and a majority-in-interest of the Limited Partners, any General Partner may designate one or more persons to be successor or additional General Partners. In addition, any General Partner may, without the consent of any other General Partner or the Limited Partners, (i) substitute in 73 its stead as General Partner any entity which has, by merger, consolidation or otherwise, acquired substantially all of its assets, stock or other evidence of equity interest and continued its business, or (ii) cause to be admitted to the Partnership an additional General Partner or Partners if it deems such admission to be necessary or desirable so that the Partnership will be classified a partnership for Federal income tax purposes. Finally, a majority-in-interest of the Limited Partners may at any time remove the General Partner of the Partnership and elect a successor General Partner. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE (a) The General Partner manages all of the Partnership's affairs. The transactions with the General Partner are primarily in the form of fees paid by the Partnership for services rendered to the Partnership, reimbursement of expenses, and the General Partner's interest in the Partnership, as discussed in Item 11 and in the notes to the Partnership's financial statements. (b) The Partnership has no directors. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following is a summary of fees paid to the Partnership's principal independent registered public accounting firm for the years ended March 31: 2007 2006 2005 2004 2003 ------- ------- ------- ------- ------- Audit Fees $ 5,122 $ -- $ 707 $14,229 $16,045 Audit-related Fees -- -- -- -- -- Tax Fees 2,625 5,000 -- 3,000 3,000 All Other Fees -- -- -- -- -- ------- ------- ------- ------- ------- TOTAL $ 7,747 $ 5,000 $ 707 $17,229 $19,045 ======= ======= ======= ======= ======= The Partnership has no Audit Committee. All audit services and any permitted non-audit services performed by the Partnership's independent auditors are preapproved by the General Partner. 74 PART IV. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1) List of Financial statements included in Part II hereof ------------------------------------------------------- Balance Sheets, March 31, 2007, 2006, 2005, 2004 and 2003 Statements of Operations for the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002 Statements of Partners' Equity (Deficit) for the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002 Statements of Cash Flows for the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002 Notes to Financial Statements (a)(2) List of Financial statement schedules included in Part IV hereof: ----------------------------------------------------------------- Schedule III, Real Estate Owned by Local Limited Partnerships (a)(3) Exhibits. --------- 3.1 Agreement of Limited Partnership dated as of March 3, 1997 included as Exhibit 3.1 to the Form 10-K filed for the year ended December 31, 1997, is hereby incorporated herein as Exhibit 3.1. 3.2 First Amendment to Agreement of Limited Partnership dated August 29, 1997 included as Exhibit 3.2 to the Form 10-K filed for the year ended December 31, 1997, is hereby incorporated as Exhibit 3.2. 31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) 31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) 32.1 Section 1350 Certification of the Chief Executive Officer. (filed herewith) 32.2 Section 1350 Certification of the Chief Financial Officer. (filed herewith) 99.1 Amended and Restated Agreement of Limited Partnership of Chillicothe Plaza Apts., L.P. filed as exhibit 10.1 to the current report on Form 8-K dated November 11, 1997, is herein incorporated by reference as Exhibit 99.1. 99.2 Amended and Restated Agreement of Spring Valley Terrace Apartments, L.L.C. filed as Exhibit 10.3 to Post-effective Amendment No. 1 to Registration statement, is herein incorporated by reference as Exhibit 99.2. 99.3 Amended and Restated Agreement of Limited Partnership of El Reno Housing Associates Limited Partnership filed as Exhibit 10.1 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 99.3. 99.4 Second Amended and Restated Agreement of Limited Partnership of Hughes Villas Limited Partnership filed as Exhibit 10.2 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 99.4. 99.5.1 First Amendment to Second Amended and Restated Agreement of Limited Partnership of Hughes Villas Limited Partnership filed as Exhibit 10.3 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 99.5. 75 99.6 Amended and Restated Agreement of Limited Partnership of Mark Twain Senior Community Limited Partnership filed as Exhibit 10.3 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 99.6. 99.7 Amended and Restated Agreement of Limited Partnership of Bradley Villas, L.P. filed as Exhibit 10.1 to Form 8-K dated April 1, 1998 is herein incorporated as Exhibit 99.7. 99.8 Amended and Restated Agreement of Limited Partnership of Murfreeburo Villas filed as Exhibit 10.5 to Form 8-K dated April 1, 1998 is herein incorporated as Exhibit 99.8. 99.9 Amended and Restated Agreement of Limited Partnership of United Development Co., L.P. - 97-2 filed as Exhibit 10.3 to Form 8-K dated April 30, 1998 is herein incorporated as Exhibit 99.9. 99.10 Second Amended and Restated Agreement of Limited Partnership of United Development Co., L.P. - 97-2 filed as Exhibit 10.2 to Form 8-K dated April 30, 1998 is herein incorporated as Exhibit 99.10. 99.11 Second Amended and Restated Agreement of Limited Partnership of United Development Co., L.P. - 97-1 filed as Exhibit 10.3 to Form 8-K dated April 30, 1998 is herein incorporated as Exhibit 99.11. 99.12 Second Amended and Restated Agreement of Limited Partnership of Concord Apartment Partners, L.P. filed as Exhibit 10.1 to Form 8-K dated May 31, 1998 is herein incorporated as Exhibit 99.12. 99.13 Amended and Restated Agreement of Limited Partnership of Mansur Wood Living Center, L.P. filed as Exhibit 10.1 to Form 8-K dated September 19, 1998 is herein incorporated as Exhibit 99.13. 99.14 Amended and Restated Agreement of Apartment Housing of Theodore, LTD filed as Exhibit 10.23 to Post-Effective Amendment No 3 to Registration Statement dated May 1, 1998 is herein incorporated as Exhibit 99.14. 99.15 Amended and Restated Agreement of Limited Partnership of Enhance, L.P. filed as Exhibit 10.15 to Form 10-K dated November 13, 2000 is herein incorporated as Exhibit 99.15. 99.16 Second Amended and Restated Agreement of Limited Partnership of Austin Gateway, Ltd. 99.17 Financial Statements of Mansur Wood, as of and for the years ended December 31, 2006, 2005, 2004, 2003 and 2002 together with Independent Auditors' Report thereon; a significant subsidiary of the Partnership. (filed herewith). 76 Report of Independent Certified Public Accountants on Financial Statement Schedules To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 5 The audits referred to in our report dual dated July 16, 2003 and May 9, 2008, relating to the 2003 and 2002 financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 5 (the 'Partnership"), which is contained in Item 8 of this Form 10-K, included the audit of the accompanying financial statement schedules. The financial statement schedules, listed in Item 15(a)2, are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statement schedules based upon our audits. In our opinion, such financial statement schedules present fairly, in all material respects, the financial information set forth therein. /s/ BDO SEIDMAN, LLP ------------------------- Costa Mesa, California July 16, 2003, except for Notes 2, 4, 6 and 7, as to which the date is May 9, 2008 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2007 ------------------------------------- --------------------------- AS OF MARCH 31, 2007 INITIAL COST TO PARTNERSHIP ------------------------------------- --------------------------- TOTAL INVESTMENT IN AMOUNT OF LOCAL LIMITED LOCAL LIMITED INVESTMENT BUILDING & PARTNERSHIP NAME LOCATION PARTNERSHIP PAID TO DATE LAND IMPROVEMENTS - ----------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore, Theodore Alabama $ 1,187,000 $ 1,187,000 $63,000 $ 2,195,000 Austin Gateway, Ltd. Austin, Texas 131,000 131,000 13,000 417,000 Bradley Villas Bradley, Limited Partnership Arkansas 501,000 501,000 30,000 933,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri 972,000 972,000 56,000 1,844,000 Concord Apartment Orlando, Florida Partners, L.P. 470,000 470,000 90,000 279,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 3,040,000 3,040,000 75,000 5,240,000 Enhance, L.P. Baton Rouge, Louisiana 620,000 620,000 48,000 1,254,000 Hillcrest Heights, Marshalltown, L.P. Iowa 609,000 609,000 30,000 1,115,000 Hughes Villas Limited Hughes, Arkansas Partnership 182,000 182,000 12,000 938,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 6,531,000 6,531,000 51,000 10,842,000 Mark Twain Senior Oakland, Community Limited California Partnership 740,000 740,000 130,000 2,134,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas 685,000 685,000 16,000 1,184,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 716,000 716,000 39,000 1,361,000 United Development Memphis, Co., L.P. - 97.1 Tennessee 1,845,000 1,845,000 100,000 2,999,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 743,000 743,000 65,000 962,000 ------------- ----------- ----------- ----------- $ 18,972,000 $18,972,000 $ 818,000 $33,697,000 ============= =========== =========== ============ 78 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2007 AS OF DECEMBER 31, 2006 COST MORTGAGE CAPITALIZED BALANCES OF LOCAL LIMITED SUBSEQUENT TO LOCAL LIMITED BUILDING & ACCUMULATED NET BOOK PARTNERSHIP NAME LOCATION ACQUISITION PARTNERSHIPS LAND EQUIPMENT DEPRECIATION VALUE - ------------------------------------------------------------------------------------------------------------------------------------ Apartment Housing of Theodore, Theodore Alabama $ 89,000 $1,098,000 $ 63,000 $2,284,000 $ (599,000) $1,748,000 Austin Gateway, Ltd. Austin, Texas 217,000 354,000 12,000 634,000 (139,000) 507,000 Bradley Villas Bradley, Limited Partnership Arkansas 37,000 523,000 30,000 970,000 (262,000) 738,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri 14,000 629,000 56,000 1,858,000 (350,000) 1,564,000 Concord Apartment Orlando, Florid Partners, L.P. 79,000 260,000 90,000 358,000 (158,000) 290,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 668,000 2,463,000 75,000 5,908,000 (1,796,000) 4,187,000 Enhance, L.P. Baton Rouge, Louisiana 114,000 596,000 48,000 1,368,000 (474,000) 942,000 Hillcrest Heights, Marshalltown, L.P. Iowa 79,000 502,000 30,000 1,194,000 (298,000) 926,000 Hughes Villas Limited Hughes, Arkansa Partnership 37,000 741,000 12,000 975,000 (295,000) 692,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 197,000 3,623,000 51,000 11,039,000 (2,698,000) 8,392,000 Mark Twain Senior Oakland, Community Limited California Partnership 580,000 1,346,000 130,000 2,714,000 (1,300,000) 1,544,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas (6,000) 717,000 82,000 1,178,000 (325,000) 935,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 49,000 780,000 39,000 1,410,000 (318,000) 1,131,000 United Development Memphis, Co., L.P. - 97.1 Tennessee 1,000 846,000 100,000 3,000,000 (846,000) 2,254,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 60,000 355,000 65,000 1,022,000 (371,000) 716,000 ----------- ------------ ------------ -------------- ------------- -------------- $ 2,215,000 $ 14,833,000 $ 883,000 $ 35,912,000 $ (10,229,000) $ 26,566,000 =========== ============ ============ ============== ============= ============== 79 WNC HOUSING TAX CREDIT FUND VI, L.P. SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2007 ------------------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2006 ------------------------------------------------------------------------------------------- YEAR ESTIMATED LOCAL LIMITED INVESTMENT USEFUL LIFE PARTNERSHIP NAME RENTAL INCOME NET LOSS ACQUIRED STATUS (YEARS) - ------------------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 157,000 $ (50,000) 1998 Completed 40.0 Austin Gateway, Ltd. 59,000 (25,000) 2000 Completed 40.0 Bradley Villas Limited Partnership 66,000 (32,000) 1998 Completed 40.0 Chillicothe Plaza Apts. L.P. 98,000 (8,000) 1997 Completed 50.0 Concord Apartment Partners, L.P. 113,000 (9,000) 1998 Completed 30.0 El Reno Housing Associates Limited Partnership 517,000 (162,000) 1998 Completed 40.0 Enhance, L.P. 86,000 (48,000) 2000 Completed 27.5 Hillcrest Heights, L.P. 177,000 (11,000) 1998 Completed 27.0 Hughes Villas Limited Partnership 110,000 (27,000) 1998 Completed 40.0 Mansur Wood Living Center, L.P. 669,000 (355,000) 1998 Completed 27.5 Mark Twain Senior Community Limited Partnership 549,000 (76,000) 1998 Completed 27.5 Murfreesboro Villas Limited Partnership 92,000 (34,000) 1998 Completed 40.0 Spring Valley Terrace Apartments, LLC 61,000 (57,000) 1997 Completed 40.0 United Development Co., L.P. - 97.1 327,000 (58,000) 1998 Completed 27.5 United Development Co., L.P. - 97.2 122,000 (24,000) 1998 Completed 27.5 ----------- --------- $ 3,203,000 $(976,000) =========== ========= 80 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2006 ------------------------------------- --------------------------- AS OF MARCH 31, 2006 INITIAL COST TO PARTNERSHIP ------------------------------------- --------------------------- TOTAL INVESTMENT IN AMOUNT OF LOCAL LIMITED LOCAL LIMITED INVESTMENT BUILDING & PARTNERSHIP NAME LOCATION PARTNERSHIP PAID TO DATE LAND IMPROVEMENTS - ---------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore, Theodore Alabama $1,187,000 $1,187,000 $63,000 $ 2,195,000 Austin Gateway, Ltd. Austin, Texas 131,000 131,000 13,000 417,000 Bradley Villas Bradley, Limited Partnership Arkansas 501,000 501,000 30,000 933,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri 972,000 972,000 56,000 1,844,000 Concord Apartment Orlando, Florida Partners, L.P. 470,000 470,000 90,000 279,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 3,040,000 3,040,000 75,000 5,240,000 Enhance, L.P. Baton Rouge, Louisiana 620,000 620,000 48,000 1,254,000 Hillcrest Heights, Marshalltown, L.P. Iowa 609,000 609,000 30,000 1,115,000 Hughes Villas Limited Hughes, Arkansas Partnership 182,000 182,000 12,000 938,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 6,531,000 6,531,000 51,000 10,842,000 Mark Twain Senior Oakland, Community Limited California Partnership 740,000 740,000 130,000 2,134,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas 685,000 685,000 16,000 1,184,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 716,000 716,000 39,000 1,361,000 United Development Memphis, Co., L.P. - 97.1 Tennessee 1,845,000 1,845,000 100,000 2,999,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 743,000 743,000 65,000 962,000 ----------- ----------- -------- ----------- $18,972,000 $18,972,000 $818,000 $33,697,000 =========== =========== ======== =========== 81 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2006 ----------------------------------------------------------------------------- AS OF DECEMBER 31, 2005 ----------------------------------------------------------------------------- COST MORTGAGE CAPITALIZED BALANCES OF LOCAL LIMITED SUBSEQUENT TO LOCAL LIMITED BUILDING & ACCUMULATED NET BOOK PARTNERSHIP NAME LOCATION ACQUISITION PARTNERSHIPS LAND EQUIPMENT DEPRECIATION VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore, Theodore Alabama $ 90,000 $1,110,000 $63,000 $2,285,000 $ (535,000) $1,813,000 Austin Gateway, Ltd. Austin, Texas 217,000 363,000 12,000 634,000 (123,000) 523,000 Bradley Villas Bradley, Limited Partnership Arkansas 36,000 524,000 30,000 969,000 (236,000) 763,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri - 649,000 56,000 1,844,000 (304,000) 1,596,000 Concord Apartment Orlando, Florid Partners, L.P. 79,000 264,000 90,000 358,000 (149,000) 299,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 668,000 2,488,000 75,000 5,908,000 (1,567,000) 4,416,000 Enhance, L.P. Baton Rouge, Louisiana 115,000 604,000 48,000 1,369,000 (427,000) 990,000 Hillcrest Heights, Marshalltown, L.P. Iowa 78,000 514,000 30,000 1,193,000 (261,000) 962,000 Hughes Villas Limited Hughes, Arkansa Partnership 37,000 745,000 12,000 975,000 (271,000) 716,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 151,000 3,725,000 51,000 10,993,000 (2,284,000) 8,760,000 Mark Twain Senior Oakland, Community Limited California Partnership 449,000 1,366,000 130,000 2,583,000 (1,208,000) 1,505,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas (6,000) 691,000 82,000 1,178,000 (292,000) 968,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 49,000 714,000 39,000 1,410,000 (283,000) 1,166,000 United Development Memphis, Co., L.P. - 97.1 Tennessee - 858,000 100,000 2,999,000 (737,000) 2,362,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 60,000 359,000 65,000 1,022,000 (335,000) 752,000 ---------- ----------- ----------- -------------- -------------- -------------- $2,023,000 $14,974,000 $ 883,000 $ 35,720,000 $ (9,012,000) $ 27,591,000 ========== =========== =========== ============== =============== ============== 82 WNC HOUSING TAX CREDIT FUND VI, L.P. SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2006 ------------------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2005 ------------------------------------------------------------------------------------------- YEAR ESTIMATED LOCAL LIMITED INVESTMENT USEFUL LIFE PARTNERSHIP NAME RENTAL INCOME NET LOSS ACQUIRED STATUS (YEARS) - ------------------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 163,000 $ (44,000) 1998 Completed 40.0 Austin Gateway, Ltd. 69,000 (36,000) 2000 Completed 40.0 Bradley Villas Limited Partnership 63,000 (33,000) 1998 Completed 40.0 Chillicothe Plaza Apts. L.P. 102,000 (22,000) 1997 Completed 50.0 Concord Apartment Partners, L.P. 112,000 (27,000) 1998 Completed 30.0 El Reno Housing Associates Limited Partnership 490,000 (181,000) 1998 Completed 40.0 Enhance, L.P. 74,000 (51,000) 2000 Completed 27.5 Hillcrest Heights, L.P. 152,000 (12,000) 1998 Completed 27.0 Hughes Villas Limited Partnership 111,000 (35,000) 1998 Completed 40.0 Mansur Wood Living Center, L.P. 687,000 (219,000) 1998 Completed 27.5 Mark Twain Senior Community Limited Partnership 559,000 (21,000) 1998 Completed 27.5 Murfreesboro Villas Limited Partnership 94,000 (51,000) 1998 Completed 40.0 Spring Valley Terrace Apartments, LLC 56,000 (44,000) 1997 Completed 40.0 United Development Co., L.P. - 97.1 250,000 (111,000) 1998 Completed 27.5 United Development Co., L.P. - 97.2 108,000 (51,000) 1998 Completed 27.5 ---------- ---------- $3,090,000 $ (938,000) ========== ========== 83 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2005 ------------------------------------- --------------------------- AS OF MARCH 31, 2005 INITIAL COST TO PARTNERSHIP ------------------------------------- --------------------------- TOTAL INVESTMENT IN AMOUNT OF LOCAL LIMITED LOCAL LIMITED INVESTMENT BUILDING & PARTNERSHIP NAME LOCATION PARTNERSHIP PAID TO DATE LAND IMPROVEMENTS - ----------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore, Theodore Alabama $1,187,000 $1,187,000 $63,000 $ 2,195,000 Austin Gateway, Ltd. Austin, Texas 131,000 131,000 13,000 417,000 Bradley Villas Bradley, Limited Partnership Arkansas 501,000 501,000 30,000 933,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri 972,000 972,000 56,000 1,844,000 Concord Apartment Orlando, Florida Partners, L.P. 470,000 470,000 90,000 279,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 3,040,000 3,040,000 75,000 5,240,000 Enhance, L.P. Baton Rouge, Louisiana 620,000 620,000 48,000 1,254,000 Hillcrest Heights, Marshalltown, L.P. Iowa 609,000 609,000 30,000 1,115,000 Hughes Villas Limited Hughes, Arkansas Partnership 182,000 182,000 12,000 938,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 6,531,000 6,531,000 51,000 10,842,000 Mark Twain Senior Community Limited Oakland, Partnership California 740,000 740,000 130,000 2,134,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas 685,000 685,000 16,000 1,184,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 716,000 716,000 39,000 1,361,000 United Development Memphis, Co., L.P. - 97.1 Tennessee 1,845,000 1,845,000 100,000 2,999,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 743,000 743,000 65,000 962,000 ----------- ----------- -------- ----------- $18,972,000 $18,972,000 $818,000 $33,697,000 =========== =========== ======== =========== 84 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2005 ----------------------------------------------------------------------------- AS OF DECEMBER 31, 2004 ----------------------------------------------------------------------------- COST MORTGAGE CAPITALIZED BALANCES OF LOCAL LIMITED SUBSEQUENT TO LOCAL LIMITED BUILDING & ACCUMULATED NET BOOK PARTNERSHIP NAME LOCATION ACQUISITION PARTNERSHIPS LAND EQUIPMENT DEPRECIATION VALUE - ------------------------------------------------------------------------------------------------------------------------------------ Apartment Housing of Theodore, Theodore Alabama $ 89,000 $1,121,000 $ 63,000 $2,284,000 $ (470,000) $1,877,000 Austin Gateway, Ltd. Austin, Texas 218,000 371,000 12,000 635,000 (108,000) 539,000 Bradley Villas Bradley, Limited Partnership Arkansas 37,000 526,000 30,000 970,000 (208,000) 792,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri (1,000) 669,000 56,000 1,843,000 (257,000) 1,642,000 Concord Apartment Orlando, Florid Partners, L.P. 79,000 266,000 90,000 358,000 (139,000) 309,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 669,000 2,511,000 75,000 5,909,000 (1,338,000) 4,646,000 Enhance, L.P. Baton Rouge, Louisiana 115,000 612,000 48,000 1,369,000 (374,000) 1,043,000 Hillcrest Heights, Marshalltown, L.P. Iowa 79,000 541,000 30,000 1,194,000 (225,000) 999,000 Hughes Villas Limited Hughes, Arkansa Partnership 36,000 748,000 12,000 974,000 (246,000) 740,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 89,000 3,820,000 51,000 10,931,000 (1,878,000) 9,104,000 Mark Twain Senior Community Limited Oakland, Partnership California 452,000 1,385,000 130,000 2,586,000 (1,157,000) 1,559,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas (5,000) 693,000 82,000 1,179,000 (256,000) 1,005,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 49,000 716,000 39,000 1,410,000 (247,000) 1,202,000 United Development Memphis, Co., L.P. - 97.1 Tennessee (1,000) 859,000 100,000 3,000,000 (628,000) 2,472,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 59,000 361,000 65,000 1,021,000 (299,000) 787,000 ---------- ----------- ----------- ----------- ----------- ----------- $1,966,000 $15,199,000 $ 883,000 $35,663,000 $(7,830,000) $28,716,000 ========== =========== =========== =========== ============ =========== 85 WNC HOUSING TAX CREDIT FUND VI, L.P. SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2005 ------------------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2004 ------------------------------------------------------------------------------------------- YEAR ESTIMATED LOCAL LIMITED INVESTMENT USEFUL LIFE PARTNERSHIP NAME RENTAL INCOME NET LOSS ACQUIRED STATUS (YEARS) - ------------------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 165,000 $ (58,000) 1998 Completed 40.0 Austin Gateway, Ltd. 60,000 (26,000) 2000 Completed 40.0 Bradley Villas Limited Partnership 56,000 (50,000) 1998 Completed 40.0 Chillicothe Plaza Apts. L.P. 98,000 (14,000) 1997 Completed 50.0 Concord Apartment Partners, L.P. 111,000 (7,000) 1998 Completed 30.0 El Reno Housing Associates Limited Partnership 466,000 (167,000) 1998 Completed 40.0 Enhance, L.P. 75,000 (49,000) 2000 Completed 27.5 Hillcrest Heights, L.P. 151,000 (33,000) 1998 Completed 27.0 Hughes Villas Limited Partnership 94,000 (27,000) 1998 Completed 40.0 Mansur Wood Living Center, L.P. 669,000 (481,000) 1998 Completed 27.5 Mark Twain Senior Community Limited Partnership 555,000 (58,000) 1998 Completed 27.5 Murfreesboro Villas Limited Partnership 70,000 (46,000) 1998 Completed 40.0 Spring Valley Terrace Apartments, LLC 64,000 (40,000) 1997 Completed 40.0 United Development Co., L.P. - 97.1 313,000 (91,000) 1998 Completed 27.5 United Development Co., L.P. - 97.2 118,000 (62,000) 1998 Completed 27.5 ----------- ------------ $ 3,065,000 $ (1,209,000) =========== ============ 86 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2004 ------------------------------------- --------------------------- AS OF MARCH 31, 2004 INITIAL COST TO PARTNERSHIP ------------------------------------- --------------------------- TOTAL INVESTMENT IN AMOUNT OF LOCAL LIMITED LOCAL LIMITED INVESTMENT BUILDING & PARTNERSHIP NAME LOCATION PARTNERSHIP PAID TO DATE LAND IMPROVEMENTS - ----------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore, Theodore Alabama $1,187,000 $1,187,000 $63,000 $ 2,195,000 Austin Gateway, Ltd. Austin, Texas 131,000 131,000 13,000 417,000 Bradley Villas Bradley, Limited Partnership Arkansas 501,000 501,000 30,000 933,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri 972,000 972,000 56,000 1,844,000 Concord Apartment Orlando, Florida Partners, L.P. 470,000 470,000 90,000 279,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 3,040,000 2,901,000 75,000 5,240,000 Enhance, L.P. Baton Rouge, Louisiana 620,000 620,000 48,000 1,254,000 Hillcrest Heights, Marshalltown, L.P. Iowa 609,000 609,000 30,000 1,115,000 Hughes Villas Limited Hughes, Arkansas Partnership 182,000 182,000 12,000 938,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 6,531,000 6,531,000 51,000 10,842,000 Mark Twain Senior Oakland, Community Limited California Partnership 740,000 715,000 130,000 2,134,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas 685,000 685,000 16,000 1,184,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 716,000 716,000 39,000 1,361,000 United Development Memphis, Co., L.P. - 97.1 Tennessee 1,845,000 1,845,000 100,000 2,999,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 743,000 743,000 65,000 962,000 ----------- ------------ -------- ----------- $18,972,000 $ 18,808,000 $818,000 $33,697,000 =========== ============ ======== =========== 87 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2004 ----------------------------------------------------------------------------- AS OF DECEMBER 31, 2003 ----------------------------------------------------------------------------- COST MORTGAGE CAPITALIZED BALANCES OF LOCAL LIMITED SUBSEQUENT TO LOCAL LIMITED BUILDING & ACCUMULATED NET BOOK PARTNERSHIP NAME LOCATION ACQUISITION PARTNERSHIPS LAND EQUIPMENT DEPRECIATION VALUE - ------------------------------------------------------------------------------------------------------------------------------------ Apartment Housing of Theodore, Theodore Alabama $ 88,000 $ 1,130,000 $63,000 $ 2,283,000 $ (400,000) $1,946,000 Austin Gateway, Ltd. Austin, Texas 218,000 377,000 12,000 635,000 (92,000) 555,000 Bradley Villas Bradley, Limited Partnership Arkansas 37,000 527,000 30,000 970,000 (177,000) 823,000 Chillicothe Plaza Chillicothe, Apts. L.P. Missouri (1,000) 688,000 56,000 1,843,000 (211,000) 1,688,000 Concord Apartment Orlando, Florid Partners, L.P. 76,000 272,000 90,000 355,000 (132,000) 313,000 El Reno Housing El Reno, Associates Limited Oklahoma Partnership 669,000 2,339,000 75,000 5,909,000 (1,109,000) 4,875,000 Enhance, L.P. Baton Rouge, Louisiana 114,000 620,000 48,000 1,368,000 (316,000) 1,100,000 Hillcrest Heights, Marshalltown, L.P. Iowa 79,000 553,000 30,000 1,194,000 (189,000) 1,035,000 Hughes Villas Limited Hughes, Arkansa Partnership 36,000 752,000 12,000 974,000 (222,000) 764,000 Mansur Wood Living Carbon Cliff, Center, L.P. Illinois 90,000 3,909,000 51,000 10,932,000 (1,483,000) 9,500,000 Mark Twain Senior Oakland, Community Limited California Partnership 440,000 1,402,000 130,000 2,574,000 (1,066,000) 1,638,000 Murfreesboro Villas Murfreesboro, Limited Partnership Arkansas (6,000) 663,000 82,000 1,178,000 (219,000) 1,041,000 Spring Valley Terrace Mayer, Arizona Apartments, LLC 49,000 719,000 39,000 1,410,000 (208,000) 1,241,000 United Development Memphis, Co., L.P. - 97.1 Tennessee - 869,000 100,000 2,999,000 (518,000) 2,581,000 United Development Memphis, Co., L.P. - 97.2 Tennessee 60,000 365,000 65,000 1,022,000 (264,000) 823,000 ---------- ----------- --------- ------------ ------------ ------------ $1,949,000 $15,185,000 $ 883,000 $ 35,646,000 $ (6,606,000) $ 29,923,000 ========== =========== ========= ============ ============= ============ 88 WNC HOUSING TAX CREDIT FUND VI, L.P. SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2004 ------------------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2003 ------------------------------------------------------------------------------------------- YEAR ESTIMATED LOCAL LIMITED INVESTMENT USEFUL LIFE PARTNERSHIP NAME RENTAL INCOME NET LOSS ACQUIRED STATUS (YEARS) - ------------------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 158,000 $ (65,000) 1998 Completed 40.0 Austin Gateway, Ltd. 52,000 (26,000) 2000 Completed 40.0 Bradley Villas Limited Partnership 65,000 (33,000) 1998 Completed 40.0 Chillicothe Plaza Apts. L.P. 99,000 (6,000) 1997 Completed 50.0 Concord Apartment Partners, L.P. 108,000 (12,000) 1998 Completed 30.0 El Reno Housing Associates Limited Partnership 468,000 (205,000) 1998 Completed 40.0 Enhance, L.P. 73,000 (61,000) 2000 Completed 27.5 Hillcrest Heights, L.P. 160,000 (4,000) 1998 Completed 27.0 Hughes Villas Limited Partnership 82,000 (40,000) 1998 Completed 40.0 Mansur Wood Living Center, L.P. 632,000 (527,000) 1998 Completed 27.5 Mark Twain Senior Community Limited Partnership 572,000 (51,000) 1998 Completed 27.5 Murfreesboro Villas Limited Partnership 52,000 (58,000) 1998 Completed 40.0 Spring Valley Terrace Apartments, LLC 45,000 (57,000) 1997 Completed 40.0 United Development Co., L.P. - 97.1 324,000 (58,000) 1998 Completed 27.5 United Development Co., L.P. - 97.2 116,000 (38,000) 1998 Completed 27.5 ---------- ----------- $3,006,000 $(1,241,000) ========== =========== 89 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2003 -------------------------------------- AS OF MARCH 31, 2003 -------------------------------------- PARTNERSHIP'S TOTAL ORIGINAL INVESTMENT AMOUNT OF LOCAL LIMITED IN LOCAL LIMITED INVESTMENT PAID PARTNERSHIP NAME LOCATION PARTNERSHIPS TO DATE - ---------------------------------------------------------------------------------------------------- Apartment Housing of Theodore Theodore, Alabama $ 1,188,000 $ 1,188,000 Austin Gateway, Ltd. Austin, Texas 131,000 131,000 Bradley Villas Limited Partnership Bradley, Arkansas 501,000 501,000 Chillicothe Plaza Apts. L.P. Chillicothe, Missouri 972,000 972,000 Concord Apartment Partners, L.P. Orlando, Florida 470,000 470,000 El Reno Housing Associates Limited El Reno, Oklahoma 3,040,000 2,836,000 Partnership Enhance, L.P. Baton Rouge, Louisiana 620,000 620,000 Hillcrest Heights, L.P. Marshalltown, Iowa 609,000 609,000 Hughes Villas Limited Partnership Hughes, Arkansas 182,000 182,000 Mansur Wood Living Center, L.P. Carbon Cliff, Illinois 6,446,000 6,446,000 Mark Twain Senior Community Limited Oakland, California 740,000 715,000 Partnership Murfreesboro Villas Limited Murfreesboro, 685,000 685,000 Partnership Arkansas Spring Valley Terrace Apartments, Mayer, Arizona 716,000 716,000 LLC United Development Co., L.P. - 97.1 Memphis, Tennessee 1,845,000 1,845,000 United Development Co., L.P. - 97.2 Memphis, Tennessee 743,000 743,000 ------------ ----------- $18,888,000 $18,659,000 ============ =========== 90 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2003 -------------------------------------------------------------- AS OF DECEMBER 31, 2002 -------------------------------------------------------------- MORTGAGE LOANS LOCAL LIMITED OF LOCAL LIMITED PROPERTY AND ACCUMULATED PARTNERSHIP NAME LOCATION PARTNERSHIPS EQUIPMENT DEPRECIATION NET BOOK VALUE - -------------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore Theodore, Alabama $ 1,140,000 $ 2,346,000 $ (323,000) $ 2,023,000 Austin Gateway, Ltd. Austin, Texas 383,000 647,000 (76,000) 571,000 Bradley Villas Limited Partnership Bradley, Arkansas 513,000 1,000,000 (146,000) 854,000 Chillicothe Plaza Apts. L.P. Chillicothe, Missouri 708,000 1,899,000 (165,000) 1,734,000 Concord Apartment Partners, L.P. Orlando, Florida 277,000 445,000 (122,000) 323,000 El Reno Housing Associates Limited El Reno, Oklahoma 2,358,000 5,984,000 (879,000) 5,105,000 Partnership Enhance, L.P. Baton Rouge, Louisiana 628,000 1,417,000 (258,000) 1,159,000 Hillcrest Heights, L.P. Marshalltown, Iowa 564,000 1,218,000 (152,000) 1,066,000 Hughes Villas Limited Partnership Hughes, Arkansas 755,000 986,000 (193,000) 793,000 Mansur Wood Living Center, L.P. Carbon Cliff, Illinois 3,991,000 10,983,000 (1,079,000) 9,904,000 Mark Twain Senior Community Limited Oakland, California 1,419,000 2,691,000 (970,000) 1,721,000 Partnership Murfreesboro Villas Limited Murfreesboro, 673,000 1,261,000 (183,000) 1,078,000 Partnership Arkansas Spring Valley Terrace Apartments, Mayer, Arizona 720,000 1,449,000 (170,000) 1,279,000 LLC United Development Co., L.P. - 97.1 Memphis, Tennessee 877,000 3,099,000 (409,000) 2,690,000 United Development Co., L.P. - 97.2 Memphis, Tennessee 368,000 1,087,000 (226,000) 861,000 ----------- ----------- ----------- ----------- $15,374,000 $36,512,000 $(5,351,000) $31,161,000 =========== =========== =========== =========== 91 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2003 ------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2002 ------------------------------------------------------------------------------- YEAR ESTIMATED LOCAL LIMITED RENTAL INVESTMENT USEFUL LIFE PARTNERSHIP NAME INCOME NET LOSS ACQUIRED STATIS (YEARS) - -------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 151,000 $ (78,000) 1998 Completed 40.0 Austin Gateway, Ltd. 60,000 (37,000) 2000 Completed 40.0 Bradley Villas Limited Partnership 64,000 (28,000) 1998 Completed 40.0 Chillicothe Plaza Apts. L.P. 100,000 (12,000) 1997 Completed 50.0 Concord Apartment Partners, L.P. 104,000 (24,000) 1998 Completed 30.0 El Reno Housing Associates Limited Partnership 465,000 (241,000) 1998 Completed 40.0 Enhance, L.P. 66,000 (64,000) 2000 Completed 27.5 Hillcrest Heights, L.P. 159,000 (21,000) 1998 Completed 27.0 Hughes Villas Limited Partnership 88,000 (34,000) 1998 Completed 40.0 Mansur Wood Living Center, L.P. 675,000 (388,000) 1998 Completed 27.5 Mark Twain Senior Community Limited Partnership 561,000 (58,000) 1998 Completed 27.5 Murfreesboro Villas Limited Partnership 51,000 (89,000) 1998 Completed 40.0 Spring Valley Terrace Apartments, LLC 50,000 (45,000) 1997 Completed 40.0 United Development Co., L.P. - 97.1 302,000 (64,000) 1998 Completed 27.5 United Development Co., L.P. - 97.2 116,000 (23,000) 1998 Completed 27.5 ---------- ----------- $3,012,000 $(1,206,000) ========== =========== 92 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2002 -------------------------------------- AS OF MARCH 31, 2002 -------------------------------------- PARTNERSHIP'S TOTAL AMOUNT OF LOCAL LIMITED INVESTMENT IN LOCAL INVESTMENT PAID PARTNERSHIP NAME LOCATION LIMITED PARTNERSHIPS TO DATE - --------------------------------------------------------------------------------------------------- Apartment Housing of Theodore Theodore, Alabama $ 1,188,000 $ 1,188,000 Austin Gateway, Ltd. Austin, Texas 131,000 131,000 Bradley Villas Limited Partnership Bradley, Arkansas 501,000 501,000 Chillicothe Plaza Apts. L.P. Chillicothe, Missouri 972,000 972,000 Concord Apartment Partners, L.P. Orlando, Florida 470,000 470,000 El Reno Housing Associates Limited El Reno, Oklahoma 3,040,000 2,836,000 Partnership Enhance, L.P. Baton Rouge, Louisiana 620,000 620,000 Hillcrest Heights, L.P. Marshalltown, Iowa 609,000 609,000 Hughes Villas Limited Partnership Hughes, Arkansas 182,000 182,000 Mansur Wood Living Center, L.P. Carbon Cliff, Illinois 6,446,000 6,446,000 Mark Twain Senior Community Limited Oakland, California 740,000 715,000 Partnership Murfreesboro Villas Limited Murfreesboro, 685,000 685,000 Partnership Arkansas Spring Valley Terrace Apartments, Mayer, Arizona 716,000 716,000 LLC United Development Co., L.P. - 97.1 Memphis, Tennessee 1,845,000 1,845,000 United Development Co., L.P. - 97.2 Memphis, Tennessee 743,000 743,000 ----------- ----------- $18,888,000 $18,659,000 =========== =========== 93 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2002 -------------------------------------------------------------- AS OF DECEMBER 31, 2001 -------------------------------------------------------------- MORTGAGE LOANS LOCAL LIMITED OF LOCAL LIMITED PROPERTY AND ACCUMULATED PARTNERSHIP NAME LOCATION PARTNERSHIPS EQUIPMENT DEPRECIATION NET BOOK VALUE - -------------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore Theodore, Alabama $ 1,140,000 $ 2,346,000 $(244,000) $ 2,102,000 Austin Gateway, Ltd. Austin, Texas 388,000 647,000 (60,000) 587,000 Bradley Villas Limited Partnership Bradley, Arkansas 520,000 999,000 (115,000) 884,000 Chillicothe Plaza Apts. L.P. Chillicothe, Missouri 727,000 1,899,000 (119,000) 1,780,000 Concord Apartment Partners, L.P. Orlando, Florida 281,000 445,000 (98,000) 347,000 El Reno Housing Associates Limited El Reno, Oklahoma 2,367,000 5,984,000 (650,000) 5,334,000 Partnership Enhance, L.P. Baton Rouge, Louisiana 636,000 1,416,000 (199,000) 1,217,000 Hillcrest Heights, L.P. Marshalltown, Iowa 574,000 1,209,000 (117,000) 1,092,000 Hughes Villas Limited Partnership Hughes, Arkansas 758,000 986,000 (164,000) 822,000 Mansur Wood Living Center, L.P. Carbon Cliff, Illinois 4,067,000 10,946,000 (675,000) 10,271,000 Mark Twain Senior Community Limited Oakland, California 1,433,000 2,693,000 (875,000) 1,818,000 Partnership Murfreesboro Villas Limited Murfreesboro, 634,000 1,258,000 (142,000) 1,116,000 Partnership Arkansas Spring Valley Terrace Apartments, Mayer, Arizona 722,000 1,449,000 (131,000) 1,318,000 LLC United Development Co., L.P. - 97.1 Memphis, Tennessee 885,000 3,099,000 (300,000) 2,799,000 United Development Co., L.P. - 97.2 Memphis, Tennessee 371,000 1,087,000 (185,000) 902,000 ----------- ----------- ----------- ----------- $15,503,000 $36,463,000 $(4,074,000) $32,389,000 =========== =========== ============ =========== 94 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 SCHEDULE III REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS MARCH 31, 2002 ------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2001 ------------------------------------------------------------------------------- YEAR ESTIMATED LOCAL LIMITED RENTAL INVESTMENT USEFUL LIFE PARTNERSHIP NAME INCOME NET LOSS ACQUIRED STATIS (YEARS) - -------------------------------------------------------------------------------------------------------------------- Apartment Housing of Theodore $ 142,000 $ (64,000) 1998 Completed 40.0 Austin Gateway, Ltd. 71,000 (21,000) 2000 Completed 40.0 Bradley Villas Limited Partnership 59,000 (25,000) 1998 Completed 40.0 Chillicothe Plaza Apts. L.P. 96,000 (19,000) 1997 Completed 50.0 Concord Apartment Partners, L.P. 100,000 (29,000) 1998 Completed 30.0 El Reno Housing Associates Limited Partnership 364,000 (369,000) 1998 Completed 40.0 Enhance, L.P. 89,000 (78,000) 2000 Completed 27.5 Hillcrest Heights, L.P. 151,000 (50,000) 1998 Completed 27.0 Hughes Villas Limited Partnership 85,000 (20,000) 1998 Completed 40.0 Mansur Wood Living Center, L.P. 656,000 (394,000) 1998 Completed 27.5 Mark Twain Senior Community Limited Partnership 531,000 (57,000) 1998 Completed 27.5 Murfreesboro Villas Limited Partnership 53,000 (46,000) 1998 Completed 40.0 Spring Valley Terrace Apartments, LLC 58,000 (42,000) 1997 Completed 40.0 United Development Co., L.P. - 97.1 287,000 (75,000) 1998 Completed 27.5 United Development Co., L.P. - 97.2 109,000 (27,000) 1998 Completed 27.5 ---------- ----------- $2,851,000 $(1,316,000) ========== =========== 95
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 By: WNC & Associates, Inc., General Partner By: /s/ Wilfred N. Cooper, Jr. ---------------------------- Wilfred N. Cooper, Jr., President of WNC & Associates, Inc. Date: May 16, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Wilfred N. Cooper, Jr. -------------------------- Wilfred N. Cooper, Jr., Chief Executive Officer, President and Director of WNC & Associates, Inc. (principal executive officer) Date: May 16, 2008 By: /s/ Thomas J. Riha ------------------ Thomas J. Riha, Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. (principal financial officer and principal accounting officer) Date: May 16, 2008 By: /s/ Wilfred N. Cooper, Sr. -------------------------- Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc. Date: May 16, 2008 By: /s/ Kay L. Cooper ----------------- Kay L. Cooper Director of WNC & Associates, Inc. Date: May 16, 2008 96 EX-99 2 mansur069.txt SIGINIFICANT SUBSIDIARY MANSUR WOOD FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT MANSUR WOOD LIVING CENTER, L.P. DECEMBER 31, 2006 AND 2005 MANSUR WOOD LIVING CENTER, L.P. TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT 3 FINANCIAL STATEMENTS: BALANCE SHEETS 4 STATEMENTS OF INCOME 6 STATEMENTS OF CHANGES IN PARTNERS' EQUITY 7 STATEMENTS OF CASH FLOWS 8 NOTES TO FINANCIAL STATEMENT 9 SUPPLEMENTAL INFORMATION INDEPENDENT AUDITOR'S REPORT ON INFORMATION ACCOMPANYING THE BASIC FINANCIAL STATEMENTS 17 SUPPLEMENTAL SCHEDULE 18 PAILET, MEUNIER and LeBLANC, L.L.P. Certified Public Accountants Management Consultants INDEPENDENT AUDITORS' REPORT To the Partners Mansur Wood Living Center, L.P. Bettendorf, Iowa We have audited the accompanying balance sheets of Mansur Wood Living Center, L.P. as of December 31, 2006 and 2005, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that It Is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal contral over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's Internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mansur Wood Living Center, L.P. as of December 31, 2006 and 2005, and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Paulet, Meunier and LeBlanc, L.L.P. Metarie, Louisiana June 28, 2007 MANSUR WOOD LIVING CENTER, L.P. BALANCE SHEEETS December 31, 2006 and 2005 2006 2005 ------------ ------------ ASSETS Current Assets Cash and Cash Equivalents $ 1,798 $ 6,091 Accounts Receivable 47,670 34,420 TIF Receivable 58,456 90,838 Prepaid Insurance 9,300 11,600 ------------ ------------ Total Current Assets 117,224 142,949 ------------ ------------ Restricted Deposits & Reserves Tenant Security Deposits 23,512 11,982 Tax and Insurance Escrow 58,141 40,406 Replacement Reserve 79,226 61,447 ------------ ------------ Total Restricted Deposits & Reserves 160,879 113,835 ------------ ------------ Property and Equipment Land 51,500 51,500 Building 10,910,418 10,910,416 Furniture & Fixtures 128,966 81,931 Accumulated Depreciation (2,698,467) (2,284,064) ------------ ------------ Total Property and Equipment 8,392,415 8,759,783 ------------ ------------ Other Assets Financing Fees - Net 53,080 60,764 ------------ ------------ Total Other Assets 53,080 60,764 ------------ ------------ TOTAL ASSETS $ 8,723,598 $ 9,077,331 ============ ============ See accountant's report and notes to financial statements 4 MANSUR WOOD LIVING CENTER, L.P. BALANCE SHEETS December 31, 2006 and 2005 2006 2005 ----------- ----------- LIABILITIES AND EQUITY Current Liabilities Accounts Payable $ 103,972 $ 70,739 Accrued Expenses 1,956 3,227 Prepaid Rent 440 611 Tenant Security Deposits 32,041 29,621 Accrued Interest Payable 22,800 23,433 Accrued Real Estate Taxes 161,000 150,000 Reporting Fees Payable 40,000 35,000 Current Portion Long-Term Debt 110,274 102,411 ----------- ----------- Total Current Liabilities 472,483 415,042 ----------- ----------- Long-Term Debt Mortgage Payable 3,622,825 3,725,236 Less Current Portion Long-Term Debt (110,274) (102,411) Due to Related Parties 414,229 360,467 Due to Developer 445,732 445,732 ----------- ----------- Total Long-Term Debt 4,372,512 4,429,024 ----------- ----------- Total Liabilities 4,844,995 4,844,066 Partners' Equity 3,878,603 4,233,265 ----------- ----------- TOTAL LIABILITIES AND EQUITY $ 8,723,598 $ 9,077,331 =========== =========== See accountant's report and notes to financial statements 5 MANSUR WOOD LIVING CENTER, L.P. STATEMENTS OF INCOME December 31, 2006 and 2005 2006 2005 ----------- ----------- REVENUES Rent Revenue $ 668,930 $ 687,216 Laundry & Vending 1,415 1,036 NSF & Late Fee Revenue 4,087 5,093 Other Revenue 29,417 100,539 ----------- ----------- Total Revenue 703,849 793,884 ----------- ----------- EXPENSES Administrative 133,776 126,725 Utilities 65,864 29,482 Operating and Maintenance 80,705 68,983 Taxes and Insurance 73,879 75,234 Interest Expense 277,661 294,061 Depreciation & Amortization 422,088 413,309 ----------- ----------- Total Expenses 1,053,973 1,007,794 ----------- ----------- Net Operating Income (Loss) (350,124) (213,910) ----------- ----------- Other Revenue (Expense) Interest income 462 368 Entity Expense - Reporting Fees (5,000) (5,000) ----------- ----------- Total Other Revenue (Expense) (4,538) (4,632) ----------- ----------- NET INCOME (LOSS) $ (354,662) $ (218,542) =========== =========== See accountant's report and notes to financial statements 6 MANSUR WOOD LIVING CENTER, L.P. STATEMENTS OF CHANGES IN PARTNERS' EQUITY For the Years Ended December 31, 2006 and 2005 2006 2005 ----------- ----------- Balance, January 1 $ 4,233,265 $ 4,451,807 Capital Contributions 0 0 Net Income (Loss) (354,662) (218,542) Distributions 0 0 Prior Period Adjustments 0 0 ----------- ----------- Balance, December 31 $ 3,878,603 $ 4,233,265 =========== =========== See accountant's report and notes to financial statements 7 MANSUR WOOD LIVING CENTER, L.P. STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2006 and 2005 2006 2005 --------- --------- Cash flows from operating activities Net Income $(354,662) $(218,543) --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 422,087 413,309 (Increase) decrease in accounts receivable 19,132 (41,507) (Increase) decrease in prepaid expenses 2,300 783 Increase (decrease) in accounts payable 33,233 20,852 Increase (decrease) in interest payable (633) 0 Net change in tenants' security deposits held 2,420 (8,608) Increase (decrease) real estate taxes payable 11,000 0 Increase (decrease) in accrued liabilities (1,271) 0 Increase (decrease) in prepaid rent (171) 0 --------- --------- Total adjustments 488,097 384,829 --------- --------- Net cash provided (used) by operating activities 133,435 166,286 --------- --------- Cash flow from Investing activities: Cash payments for the purchase of properly (47,035) (61,220) Transfer (to) from operating reserves (17,735) (11,672) Transfer (to) from replacement reserve (17,779) (1,194) Transfer (to) from security deposit (11,530) 0 --------- --------- Net cash provided (used) by Investing activities (94,079) (74,086) --------- --------- Cash flow from financing activities: Increase (Payments) Related Party Debts 53,762 0 Principal payments on long-term debt (102,411) (95,109) Increase (payments) reporting fees payable 5,000 0 --------- --------- Net cash provided (used) by financing activities (43,649) (95,109) --------- --------- Net increase (decrease) in cash and equivalents (4,293) (2,909) Cash and equivalents, beginning of year 6,091 9,000 --------- --------- Cash and equivalents, end of year $ 1,798 $ 6,091 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest expense $ 277,759 $ 294,649 ========= ========= See accountant's report and notes to financial statements 8 MANSUR WOOD LIVING CENTER, L.P. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE A - ORGANIZATION MANSUR WOOD LIVING CENTER, L.P. (the Partnership) was organized as a limited partnership under the laws of the State of Illinois formed to acquire, construct, own and operate a rental housing project eligible for low income housing tax credits available under Section 42 of the Internal Revenue Code. The Project consists of 115 rental units located in Carbon Cliff, Illinois. The project began rental operations during calendar year 2000. The Project is eligible for low-income housing tax credits established under the program described in Section 42 of the Internal Revenue Code. The Partnership's financing agreement and Section 42 Revenue Code provisions place various restrictions on the operations of the Partnership including rental of units only to households with limited income. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows. Basis of Accounting - ------------------- The financial statements of the partnership are prepared on the accrual basis of accounting and in accordance with accounting principles generally accepted in the United States of America. Cash and Cash Equivalents - ------------------------- For purposes of statements of cash flows, cash and cash equivalents represent unrestricted cash and certificates of deposit with original maturities of 90 days or less. The carrying amount approximates fair value because of the short period to maturity of the instruments. The partnership treats all non replacement reserve, escrows and security deposit funds as cash equivalents. Cash on hand, in checking and savings accounts and certificates of deposit are considered cash equivalents. 9 MANSUR WOOD LIVING CENTER, L.P. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capitalization and Depreciation - ------------------------------- Land, buildings and improvements are recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight-fine method. Buildings are depreciated over twenty-seven years using the straight line method. Equipment and furnishings are depreciated over a period of five years using the straight line method. The Partnership incurred and capitalized $208,516 of interest and financing fees during the construction period and is depreciating them over 15 years using the straight-line method. Income Taxes - ------------ No provision or benefit for income taxes has been included in this financial statement since taxable income or loss passes through to, and is reportable by, the partners individually. The Partnership is eligible to receive low Income tax credits as provided by Section 42 of the Internal Revenue Code. Accounts Receivable and Bad Debts - --------------------------------- Tenant rents are due on the first day of each month of the tenant's lease. Rents are considered delinquent when they become more than 30 days past due. Tenant receivables are charged to bad debt expense when they are determined to be uncollectible based upon a periodic review of the accounts by management. Accounting principles generally accepted in the United States of America require that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method. Impairment of Lonu-Lived Assets - ------------------------------- The Partnership reviews long-lived assets, including rental property and intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying amount of that asset. To date, there have been no such losses. 10 MANSUR WOOD LIVING CENTER, L.P. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentration of Credit Risk - ---------------------------- The Partnership maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Partnership has not experienced any losses in such accounts to date and believes it is not exposed to any significant credit risk on cash and cash equivalents. Rental Income and Prepaid Rents - ------------------------------- Rental income is recognized for apartment rentals as it accrues. Advance receipts of rental income are deferred and classified as liabilities until earned. NOTE C - ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, Actual results could differ from those estimates. NOTE D - RESTRICTED DEPOSITS AND ESCROWS According to the partnership, loan and other regulatory agreements, the Partnership is required to maintain the following escrow deposits and reserves: Security Deposit Escrow - ----------------------- The tenants' security deposits are maintained In an interest-bearing savings account separate from the operating account of the Partnership. Withdrawals are restricted to reimbursements of tenants' security deposits and assessments for damages. The security deposit escrow account was under funded at December 31, 2006 and 2005. 11 MANSUR WOOD LIVING CENTER, L.P. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE D - RESTRICTED DEPOSITS AND ESCROWS (CONTINUED) Tax and Insurance Escrow - ------------------------ The Partnership makes monthly payments to escrow funds to accumulate reserves for real estate taxes and insurance. Disbursements in 2006 and 2005 for real estate taxes and insurance totaled $226,829 and $254,054, respectively, while deposits to the escrow account totaled $244,564 and $267,151, respectively. At December 31, 2006 and 2005, the Partnership had no delinquent real estate taxes. Reserve for Replacements - ------------------------ The Partnership is required by its loan agreement to make monthly deposits to the Reserve for Replacements totaling $17,400 annually. Disbursements from this escrow are restricted to replacement of structural elements or mechanical equipment. Deposits to the reserve for replacements totaled $48,251 and $17,715 during 2006 and 2005, while disbursements from the account totaled $30,472 and $16,521 in 2006 and 2005. NOTE E - LONG-TERM DEBT The notes below are secured by property and equipment of the Partnership at December 31, 2006 and by assignment of all accounts, rents, deposits, or other amounts receivable arising out of the operation of the project. 2006 2005 ----------- ----------- Mortgage note payable, original amount of $3,592,000, bearing interest at 7.57% per annum held by Fannie Mae. Monthly principal and interest Installments totaling $25,288 are based on a 15-year amortization of the original note balance. The loan matures July 1, 2016 $ 3,381,594 $ 3,427,175 Mortgage note payable, original amount of $505,000, bearing Interest at 7.30% per annum held by Fannie Mae. Monthly principal and interest installments totaling $6,393 are based on a 10-year amortization of the original note balance. The loan matures July 1, 2010 241,231 298,061 ----------- ----------- Total mortgages payable $ 3,622,825 $ 3,725,236 Less: Current maturities of long term debt (110,274) (102,411) ----------- ----------- Total long-term portion $ 3,512,551 $ 3,622,825 =========== =========== 12 MANSUR WOOD LIVING CENTER, L.P. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE E - LONG-TERM DEBT (CONTINUED) Estimated principal payments due over the next five years are as follows: December 31, 2007 $ 110,274 2008 118,741 2009 127,858 2010 105,321 2011 66,473 and Thereafter 3,094,158 ---------- Total $3,622,825 ========== NOTE F - RELATED PARTY TRANSACTIONS The developer fees were assigned to a newly admitted General Partner, LVMW, LLC, on April 6, 2005. As of December 31, 2006 and 2005, $445,732 of developer fees remained unpaid. The partnership agreement provides for the Partnership to pay the Limited Partner an annual reporting management fee of $5,000. During 2006 and 2005, management fees incurred were $5,000. At December 31, 2006 and 2005, $40,000 and $35,000 was owed for management fees, respectively. The partnership agreement provides for the Partnership to pay to the General Partner an annual incentive management fee equal to 70% of available cash flow. No such fee was earned in 2006 and 2005. The General Partner is obligated under the Partnership Agreement to provide funds for any development or operating deficits. Funds have been advanced to the Partnership by the General Partner, Including advances made pursuant to such obligation, The advances are non-interest bearing, unsecured and due on demand. Outstanding advances by the General Partner under these terms totaled $113,546 and $40,425, as of December 31, 2006 and 2005, respectively. In years prior to 2005, the Limited Partner advanced funds to the Partnership to fund operating deficits. Outstanding advances payable to the Limited Partner at December 31, 2006 and 2005, totaled $263,133. 13 MANSUR WOOD LIVING CENTER, L.P. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE G - PARTNERS AND PARTNESHIP INTEREST The Partnership has one General Partner, LVMW, LLC, which has a 1% interest, one Special Limited Partner, WNC Housing, L.P., which has .01% interest and one Investor Limited Partner, WNC Housing Tax Credit Fund VI, L.P., Series 5, which holds a 98.99% interest. NOTE H - PARTNERSHIP PROFITS, LOSSES AND DISTRIBUTIONS Generally, profits and losses are allocated 1% to the General Partner, and 99% to the Limited Partners. Cash flow, as defined by the Partnership Agreement, is generally distributable 1% to the General Partner and 99% to the Limited Partners. Profits and losses arising from the sale, refinancing or other disposition of all or substantially all of the Partnership's assets will be specially allocated based on the respective Partners' capital account balances, as prioritized in the Partnership Agreement. Additionally, the Partnership Agreement provides for other instances in which a special allocation of profits and losses and distributions may be required. NOTE I - TIF RECEIVABLE AND REAL ESTATE TAXES Pursuant to a Redevelopment Agreement, dated November 2, 1998, between the Partnership and the Village of Carbon Cliff, Rock island County, Illinois (the "Village"), the Partnership will be reimbursed 80% of the incremental (as defined) real estate taxes paid to the Village. Real estate taxes remitted to the Village of Carbon Cliff during the years ended December 31, 2006 and 2005 totaled $153,344 and $255,126, respectively. At December 31, 2006 and 2005, the Partnership was owed $58,456 and $90,838, respectively, by the Village of Carbon Cliff under the terms of this Redevelopment Agreement. NOTE J - PROPERTY PURCHASE OPTION According to the Partnership Agreement, the General Partner has an option to purchase partnership property at the end of the low-income housing tax credit compliance period at a price which would facilitate the purchase while protecting the Partnership's tax benefits from the Project. Such option Is based on the General Partner or sponsor maintaining the low-Income occupancy of the Project and Is in a form satisfactory to legal and accounting counsel. 14 MANSUR WOOD LIVING CENTER, L.P. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE K - RECLASSIFICATIONS Some items in the 2005 financial statements have been reclassified to be consistent with the current year's presentation. 15 EX-31 3 ex312.txt EX 31-2 Exhibit 31-2 CERTIFICATIONS I, Thomas J. Riha, certify that: 1. I have reviewed this annual report on Form 10-K of WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's independent registered accounting firm and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect in the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 16, 2008 /s/ Thomas J. Riha ------------------ Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. EX-32 4 ex321.txt EX 32-1 EXHIBIT 32-1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership") for the years ended March 31, 2007, 2006, 2005, and 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), and pursuant to 18 U.S.C., section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, I, Wilfred N. Cooper, Jr., President and Chief Executive Officer of WNC & Associates, Inc., general partner of the Partnership, hereby certify that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, except to the extent that (a) such provisions require certain audit reports of Local Limited Partnership financial statements to refer to the standards of the Public Company Accounting Oversight Board; and (b) the annual report covers the six year period ended March 31, 2007, and includes disclosure required in the annual reports for the years ended March 31, 2006, 2005, and 2004 in addition to the year ended March 31, 2007; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. /s/WILFRED N. COOPER, JR. - ------------------------- Wilfred N. Cooper, Jr. President and Chief Executive Officer of WNC & Associates, Inc. May 16, 2008 EX-32 5 ex322.txt EX 32-2 EXHIBIT 32-2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership") for the years ended March 31, 2007, 2006, 2005, and 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), and pursuant to 18 U.S.C., section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, I, Thomas J. Riha Senior Vice-President and Chief Financial Officer of WNC & Associates, Inc., general partner of the Partnership, hereby certify that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, except to the extent that (a) such provisions require certain audit reports of Local Limited Partnership financial statements to refer to the standards of the Public Company Accounting Oversight Board; and (b) the annual report covers the six year period ended March 31, 2007, and includes disclosure required in the annual reports for the years ended March 31, 2006, 2005, and 2004 in addition to the year ended March 31, 2007; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. /s/THOMAS J. RIHA - ----------------- Thomas J. Riha President and Chief Executive Officer of WNC & Associates, Inc. May 16, 2008 EX-31 6 ex311.txt EX 31-1 Exhibit 31-1 CERTIFICATIONS I, Wilfred N. Coooper, Jr. certify that: 1. I have reviewed this annual report on Form 10-K of WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's independent registered accounting firm and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect in the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 16, 2008 /s/ Wilfred N. Coooper, Jr. --------------------------- President and Chief Executive Officer of WNC & Associates, Inc. -----END PRIVACY-ENHANCED MESSAGE-----