WNC Housing Tax Credit Fund VI, L.P., Series 13 and Series 14, and WNC National Partners, LLC; Notice of Application, 46894-46896 [E5-4353]

Download as PDF 46894 Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices North, Public File Area O1 F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible electronically from the Agencywide Documents Access and Management System (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, https:// www.nrc.gov/reading-rm/adams.html. Persons who do not have access to ADAMS or who encounter problems in accessing the documents located in ADAMS should contact the NRC PDR Reference staff by telephone at 1–800– 397–4209 or 301–415–4737, or by e-mail to pdr@nrc.gov. Dated in Rockville, Maryland, this 5th day of August 2005. For The Nuclear Regulatory Commission. Robert E. Martin, Senior Project Manager, Section 1, Project Directorate II, Division of Licensing Project Management, Office of Nuclear Reactor Regulation. [FR Doc. E5–4351 Filed 8–10–05; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 27026 ; 812–13183] WNC Housing Tax Credit Fund VI, L.P., Series 13 and Series 14, and WNC National Partners, LLC; Notice of Application issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission’s Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on August 29, 2005, and should be accompanied by proof of service on applicants in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer’s interest, the reason for the request, and the issues contested. Persons may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, Commission, 100 F Street, NE., Washington, DC 20549– 9303. Applicants, 17782 Sky Park Circle, Irvine, California 92614. FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, (202) 551–6817, or Mary Kay Frech, Branch Chief, (202) 551–6821 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee from the Commission’s Public Reference Branch, 100 F Street, NE., Washington, DC 20549–0102 (telephone (202) 551–5850). Applicants’ Representations 1. Each Series was formed in 2005 as a California limited partnership. Each August 4, 2005. Series will operate as a ‘‘two-tier’’ AGENCY: Securities and Exchange partnership, i.e., each Series will invest Commission (‘‘Commission’’). as a limited partner in other limited partnerships (‘‘Local Limited ACTION: Notice of an application for an order under sections 6(c) and 6(e) of the Partnerships’’). The Local Limited Partnerships in turn will engage in the Investment Company Act of 1940 (the ownership and operation of apartment ‘‘Act’’) granting relief from all provisions of the Act, except sections 37 complexes expected to be qualified for low income housing tax credit under the through 53 of the Act and the rules and Internal Revenue Code of 1986, as regulations under those sections, other amended. The General Partner is a than rule 38a–1. California limited liability company Applicants: WNC Housing Tax Credit whose sole member is WNC & Fund VI, L.P., Series 13 and WNC Associates, Inc. (‘‘WNC & Associates’’), Housing Tax Credit Fund VI, L.P., Series a California corporation. 14 (each a ‘‘Series,’’ and collectively, the 2. The objectives of each Series are (a) ‘‘Fund’’), and WNC National Partners, to provide current tax benefits primarily LLC (the ‘‘General Partner’’). in the form of low income housing Summary of the Application: credits which investors may use to Applicants request an order to permit offset their Federal income tax each Series to invest in limited liabilities, (b) to preserve and protect partnerships that engage in the capital, and (c) to provide cash ownership and operation of apartment distributions from sale or refinancing complexes for low and moderate income transactions. persons. 3. On April 18, 2005, the Fund filed a registration statement under the DATES: The application was filed on April 18, 2005, and amended on July 22, Securities Act of 1933, pursuant to which the Fund intends to offer 2005. Hearing or Notification of Hearing: An publicly, in two series of offerings, 25,000 units of limited partnership order granting the application will be VerDate jul<14>2003 16:14 Aug 10, 2005 Jkt 205001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 interest (‘‘Units’’) at $1,000 per Unit. The minimum investment will be five Units for most investors, although employees of the General Partner and/ or its affiliates and/or investors in syndications previously sponsored by the General Partner and/or its affiliates may purchase a minimum of two Units. Purchasers of the Units will become limited partners (‘‘Limited Partners’’) of the Series offering the Units. 4. A Series will not accept any subscriptions for Units until the requested exemptive order is granted or the Series receives an opinion of counsel that it is exempt from registration under the Act. Subscriptions for Units must be approved by the General Partner. Such approval will be conditioned upon representations as to suitability of the investment for each subscriber. The suitability standards provide, among other things, that investment in a Series is suitable only for an investor who either (a) has a net worth (exclusive of home, furnishings, and automobiles), of at least $35,000 and an annual gross income of at least $35,000, or (b) irrespective of annual income, has a net worth (exclusive of home, furnishings, and automobiles) of at least $75,000. Units will be sold only to investors who meet these suitability standards, or such more restrictive suitability standards as may be established by certain states for purchasers of Units within their respective jurisdictions. In addition, transfers of Units will be permitted only if the transferee meets the same suitability standards as had been imposed on the transferor Limited Partner. 5. Although a Series’ direct control over the management of each apartment complex will be limited, the Series’ ownership of interests in Local Limited Partnerships will, in an economic sense, be tantamount to direct ownership of the apartment complexes themselves. A Series normally will acquire at least a 90% interest in the profits, losses, and tax credits of the Local Limited Partnerships. However, in certain cases, the Series may acquire a lesser interest in such partnerships. Each Local Limited Partnership’s partnership agreement will provide that distributions of proceeds from a sale or refinancing of an apartment complex will be paid to a Series in the range of from 10% to 50%. 6. Each Series will have certain voting rights with respect to each Local Limited Partnership. The voting rights will include the right to dismiss and replace the local general partner on the basis of performance, to approve or disapprove a sale or refinancing of the E:\FR\FM\11AUN1.SGM 11AUN1 Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices apartment complex owned by such Local Limited Partnership, to approve or disapprove the dissolution of the Local Limited Partnership, and to approve or disapprove amendments to the Local Limited Partnership agreement materially and adversely affecting the Series’ investment. 7. Each Series will be controlled by the General Partner, pursuant to a partnership agreement (the ‘‘Partnership Agreement’’). The Limited Partners, consistent with their limited liability status, will not be entitled to participate in the control of the business of the Series. However, a majority-in-interest of the Limited Partners will have the right to amend the Partnership Agreement (subject to certain limitations), to remove any General Partner and elect a replacement, and to dissolve the Series. In addition, under the Partnership Agreement, each Limited Partner is entitled to review all books and records of the Series. 8. Applicants state that the Partnership Agreement and prospectus of the Series contain provisions designed to ensure fair dealing by the General Partner with the Limited Partners. Applicants also state that all compensation to be paid to the General Partner and its affiliates is specified in the Partnership Agreement and prospectus. Applicants believe that the fees and other forms of compensation that will be paid to the General Partner and its affiliates are fair and on terms no less favorable to the Series than would be the case if such arrangements had been made with independent third parties. 9. During the offering and organizational phase, WNC Capital Corporation, an affiliate of the General Partner, will receive a dealer-manager fee and a nonaccountable underwriting expense allowance in amounts equal to 2% and 1%, respectively, of capital contributions. The General Partner or an affiliate will receive a nonaccountable organizational and offering expense reimbursement in an amount equal to 3% of capital contributions. The General Partner has agreed to pay all organizational and offering expenses (excluding selling commissions, the dealer-manager fee, the nonaccountable underwriting expense allowance and the nonaccountable expense reimbursement). 10. During the acquisition phase, each Series will pay WNC & Associates a fee equal to 7% of capital contributions for analyzing and evaluating potential investments in Local Limited Partnerships and for various other services. WNC & Associates will receive a nonaccountable acquisition expense VerDate jul<14>2003 16:14 Aug 10, 2005 Jkt 205001 reimbursement equal to 2% of capital contributions in consideration of which WNC & Associates will pay all acquisition expenses of each Series. Aggregate fees and expenses paid in connection with the organization of each Series, the offering of Units, and the acquisition of Local Limited Partnership interests by each Series will be limited by the Partnership Agreement and will comply with guidelines published by the North American Securities Administrators Association. These guidelines require that a specified percentage (generally 80%, but subject to reduction) of the aggregate Limited Partners’ capital contributions to the Fund be committed to Local Limited Partnership interests. 11. During the operating phase, the General Partner will receive 0.1% of any cash available for distribution, and each Series may pay certain fees and reimbursements to the General Partner or its affiliates. An asset management fee will be payable for services related to the administration of the affairs of each Series and ongoing management of each Series. Other fees may be paid in consideration of property management services provided by the General Partner or its affiliates as the management and leasing agents for some of the apartment complexes. In addition, the General Partner and its affiliates generally will be allocated 0.1% of profits and losses of each Series for tax purposes and tax credits. 12. During the liquidation phase, and subject to certain prior payments to the Limited Partners, each Series will pay the General Partner or its affiliates a fee equal to 1% of the sales price of the apartment complexes sold in which the General Partner or its affiliates have provided a substantial amount of services. The General Partner also will receive 10% of any additional sale or refinancing proceeds. 13. All proceeds from a Series’ public offering of Units initially will be placed in an escrow account with USbank (‘‘Escrow Agent’’). Pending release of offering proceeds to the Series, the Escrow Agent will deposit escrowed funds in short-term United States Government securities, securities issued or guaranteed by the United States Government, and certificates of deposit or time or demand deposits in commercial banks. Upon receipt of a prescribed minimum amount of capital contributions for a Series, funds in escrow will be released to the Series and held by it pending investment in Local Limited Partnerships. 14. If more than one entity that the General Partner or its affiliates advises or manages may invest in a particular PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 46895 investment opportunity, the decision as to the entity that will be allocated the investment will be based upon such factors as the effect of the acquisition on diversification of each entity’s portfolio, the estimated income tax effects of the purchase on each entity, the amount of funds of each entity available for investment, and the length of time such funds have been available for investment. Priority generally will be given to the entity having uninvested funds for the longest period of time. However, any entity that was formed to invest primarily in apartment complexes eligible for state low income housing tax credits (‘‘state tax credits’’) as well as for Federal low income housing tax credits will be given priority with respect to any investment that is eligible for state tax credits over entities which are not seeking to provide state tax credits. Applicants’ Legal Analysis 1. Applicants believe that the Fund and its Series will not be ‘‘investment companies’’ under sections 3(a)(1)(A) or 3(a)(1)(C) of the Act. If the Fund and its Series are deemed to be investment companies, however, applicants request an exemption under sections 6(c) and 6(e) of the Act from all provisions of the Act, except sections 37 through 53 of the Act and the rules and regulations under those sections, other than rule 38a–1. 2. Section 3(a)(1)(A) of the Act provides that an issuer is an ‘‘investment company’’ if it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities. Applicants believe that the Fund will not be an investment company under section 3(a)(1)(A) because the Fund will be in the business of investing in and being beneficial owner of apartment complexes, not securities. 3. Section 3(a)(1)(C) of the Act provides that an issuer is an ‘‘investment company’’ if it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire ‘‘investment securities’’ having a value exceeding 40% of the value of such issuer’s total assets (exclusive of Government securities and cash items). Applicants state that although the Local Limited Partnership interests may be deemed ‘‘investment securities,’’ they are not readily marketable, cannot be sold without severe adverse tax consequences, and have no value apart from the value of the apartment E:\FR\FM\11AUN1.SGM 11AUN1 46896 Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices complexes owned by the Local Limited Partnerships. 4. Applicants believe that the two-tier structure is consistent with the purposes and criteria set forth in the Commission’s release concerning twotier real estate partnerships (the ‘‘Release’’).1 The Release states that investment companies that are two-tier real estate partnerships that invest in limited partnerships engaged in the development and operation of housing for low and moderate income persons may qualify for an exemption from the Act pursuant to section 6(c). Section 6(c) provides that the Commission may exempt any person from any provision of the Act and any rule thereunder, if, and to the extent that, such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 6(e) permits the Commission to require companies exempted from the registration requirements of the Act to comply with certain specified provisions of the Act as though the company were a registered investment company. 5. The Release lists two conditions, designed for the protection of investors, which must be satisfied by two-tier partnerships to qualify for the exemption under section 6(c). First, interests in the issuer should be sold only to persons for whom investments in limited profit, essentially tax-shelter, investments would not be unsuitable. Second, requirements for fair dealing by the general partner of the issuer with the limited partners of the issuer should be included in the basic organizational documents of the company. 6. Applicants assert, among other things, that the suitability standards set forth in the application, the requirements for fair dealing provided by the Partnership Agreement, and pertinent governmental regulations imposed on each Local Limited Partnership by various Federal, state, and local agencies provide protection to investors in Units. In addition, applicants assert that the requested exemption is both necessary and appropriate in the public interest. For the Commission, by the Division of Investment Management, pursuant to delegated authority. J. Lynn Taylor, Assistant Secretary. [FR Doc. E5–4353 Filed 8–10–05; 8:45 am] BILLING CODE 8010–01–P 16:14 Aug 10, 2005 [Release No. 34–52216; File No. SR–Amex– 2005–024] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto to Establish a Process for the Waiver, Deferral, or Rebate of Listing Fees for Certain Closed-End Funds August 5, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 17, 2005, the American Stock Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in items I, II, and III below, which items have been prepared by the Exchange. On July 27, 2005, the Exchange filed Amendment No. 1 to the proposed rule change.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Amex proposes to amend Section 140 of the Amex Company Guide to provide a process for the waiver, deferral, or rebate of listing fees for certain closed-end funds. The text of the proposed rule change is available on the Amex’s Web site, https:// www.amex.com, at the Amex’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Amex included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 In Amendment No. 1, the Exchange made nonsubstantive changes to the text of the proposed rule change. 2 17 1 Investment Company Act Release No. 8465 (Aug. 9, 1974). VerDate jul<14>2003 SECURITIES AND EXCHANGE COMMISSION Jkt 205001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend section 140 of the Amex Company Guide to provide that the Amex Board of Governors or its designee may, in its discretion, waive, defer, or rebate all or any part of the initial listing fee applicable to a closed-end fund that transfers to the Amex from another marketplace. The Exchange currently has the authority to waive, defer, or rebate initial listing fees applicable to stocks, bonds, and warrants.4 To enable the Amex to respond to specific competitive situations, the Exchange believes it is appropriate to provide the authority to waive, defer, or rebate all or any part of the listing fees applicable to closed-end funds that transfer to the Amex from another marketplace. Such authority could be exercised only by the Amex Board of Governors or its designee. At its November 17, 2004, meeting, the Amex Board of Governors delegated authority to a staff committee, as its designee, to determine whether to grant the listing fee waiver, deferral, or rebate. The committee is comprised of management representatives from the Office of the Chairman and the ETF Marketplace, Finance and Listing Qualifications Departments.5 In addition, an attorney from the Office of the General Counsel would provide legal counsel to the committee. It is contemplated that fee reductions would be granted only infrequently to attract an important listing that is likely to generate significant transaction fee revenue. The committee composition is intended to ensure that fee reduction requests receive an appropriate degree of scrutiny and are granted only under circumstances in which a reduction is warranted for competitive reasons. The waiver, deferral, or rebate of closed-end fund listing fees would not impact the Exchange’s resource commitment to regulatory oversight of the listing or other regulatory programs.6 4 See Securities Exchange Act Release No. 50270 (August 26, 2004), 69 FR 53750 (September 2, 2004) (SR–Amex–2004–70). 5 An affirmative vote of a majority of the committee members attending a particular meeting (subject to a three person quorum requirement) would be necessary for waivers, deferrals, or rebates. 6 The Amex believes that if it determines to waive, defer, or rebate listing fees in a comprehensive and/or recurring manner that would constitute a stated policy, practice, or interpretation of an existing rule, the Amex would file an additional rule change pursuant to Rule 19b–4(f)(1) with respect such policy practice or interpretation. E:\FR\FM\11AUN1.SGM 11AUN1

Agencies

[Federal Register Volume 70, Number 154 (Thursday, August 11, 2005)]
[Notices]
[Pages 46894-46896]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4353]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 27026 ; 812-13183]


WNC Housing Tax Credit Fund VI, L.P., Series 13 and Series 14, 
and WNC National Partners, LLC; Notice of Application

August 4, 2005.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under sections 6(c) and 
6(e) of the Investment Company Act of 1940 (the ``Act'') granting 
relief from all provisions of the Act, except sections 37 through 53 of 
the Act and the rules and regulations under those sections, other than 
rule 38a-1.

-----------------------------------------------------------------------

    Applicants: WNC Housing Tax Credit Fund VI, L.P., Series 13 and WNC 
Housing Tax Credit Fund VI, L.P., Series 14 (each a ``Series,'' and 
collectively, the ``Fund''), and WNC National Partners, LLC (the 
``General Partner'').
    Summary of the Application: Applicants request an order to permit 
each Series to invest in limited partnerships that engage in the 
ownership and operation of apartment complexes for low and moderate 
income persons.

DATES: The application was filed on April 18, 2005, and amended on July 
22, 2005.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on August 29, 2005, and should be accompanied by proof of 
service on applicants in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, Commission, 100 F Street, NE., Washington, DC 
20549-9303. Applicants, 17782 Sky Park Circle, Irvine, California 
92614.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, 
(202) 551-6817, or Mary Kay Frech, Branch Chief, (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the Commission's Public Reference Branch, 100 F Street, NE., 
Washington, DC 20549-0102 (telephone (202) 551-5850).

Applicants' Representations

    1. Each Series was formed in 2005 as a California limited 
partnership. Each Series will operate as a ``two-tier'' partnership, 
i.e., each Series will invest as a limited partner in other limited 
partnerships (``Local Limited Partnerships''). The Local Limited 
Partnerships in turn will engage in the ownership and operation of 
apartment complexes expected to be qualified for low income housing tax 
credit under the Internal Revenue Code of 1986, as amended. The General 
Partner is a California limited liability company whose sole member is 
WNC & Associates, Inc. (``WNC & Associates''), a California 
corporation.
    2. The objectives of each Series are (a) to provide current tax 
benefits primarily in the form of low income housing credits which 
investors may use to offset their Federal income tax liabilities, (b) 
to preserve and protect capital, and (c) to provide cash distributions 
from sale or refinancing transactions.
    3. On April 18, 2005, the Fund filed a registration statement under 
the Securities Act of 1933, pursuant to which the Fund intends to offer 
publicly, in two series of offerings, 25,000 units of limited 
partnership interest (``Units'') at $1,000 per Unit. The minimum 
investment will be five Units for most investors, although employees of 
the General Partner and/or its affiliates and/or investors in 
syndications previously sponsored by the General Partner and/or its 
affiliates may purchase a minimum of two Units. Purchasers of the Units 
will become limited partners (``Limited Partners'') of the Series 
offering the Units.
    4. A Series will not accept any subscriptions for Units until the 
requested exemptive order is granted or the Series receives an opinion 
of counsel that it is exempt from registration under the Act. 
Subscriptions for Units must be approved by the General Partner. Such 
approval will be conditioned upon representations as to suitability of 
the investment for each subscriber. The suitability standards provide, 
among other things, that investment in a Series is suitable only for an 
investor who either (a) has a net worth (exclusive of home, 
furnishings, and automobiles), of at least $35,000 and an annual gross 
income of at least $35,000, or (b) irrespective of annual income, has a 
net worth (exclusive of home, furnishings, and automobiles) of at least 
$75,000. Units will be sold only to investors who meet these 
suitability standards, or such more restrictive suitability standards 
as may be established by certain states for purchasers of Units within 
their respective jurisdictions. In addition, transfers of Units will be 
permitted only if the transferee meets the same suitability standards 
as had been imposed on the transferor Limited Partner.
    5. Although a Series' direct control over the management of each 
apartment complex will be limited, the Series' ownership of interests 
in Local Limited Partnerships will, in an economic sense, be tantamount 
to direct ownership of the apartment complexes themselves. A Series 
normally will acquire at least a 90% interest in the profits, losses, 
and tax credits of the Local Limited Partnerships. However, in certain 
cases, the Series may acquire a lesser interest in such partnerships. 
Each Local Limited Partnership's partnership agreement will provide 
that distributions of proceeds from a sale or refinancing of an 
apartment complex will be paid to a Series in the range of from 10% to 
50%.
    6. Each Series will have certain voting rights with respect to each 
Local Limited Partnership. The voting rights will include the right to 
dismiss and replace the local general partner on the basis of 
performance, to approve or disapprove a sale or refinancing of the

[[Page 46895]]

apartment complex owned by such Local Limited Partnership, to approve 
or disapprove the dissolution of the Local Limited Partnership, and to 
approve or disapprove amendments to the Local Limited Partnership 
agreement materially and adversely affecting the Series' investment.
    7. Each Series will be controlled by the General Partner, pursuant 
to a partnership agreement (the ``Partnership Agreement''). The Limited 
Partners, consistent with their limited liability status, will not be 
entitled to participate in the control of the business of the Series. 
However, a majority-in-interest of the Limited Partners will have the 
right to amend the Partnership Agreement (subject to certain 
limitations), to remove any General Partner and elect a replacement, 
and to dissolve the Series. In addition, under the Partnership 
Agreement, each Limited Partner is entitled to review all books and 
records of the Series.
    8. Applicants state that the Partnership Agreement and prospectus 
of the Series contain provisions designed to ensure fair dealing by the 
General Partner with the Limited Partners. Applicants also state that 
all compensation to be paid to the General Partner and its affiliates 
is specified in the Partnership Agreement and prospectus. Applicants 
believe that the fees and other forms of compensation that will be paid 
to the General Partner and its affiliates are fair and on terms no less 
favorable to the Series than would be the case if such arrangements had 
been made with independent third parties.
    9. During the offering and organizational phase, WNC Capital 
Corporation, an affiliate of the General Partner, will receive a 
dealer-manager fee and a nonaccountable underwriting expense allowance 
in amounts equal to 2% and 1%, respectively, of capital contributions. 
The General Partner or an affiliate will receive a nonaccountable 
organizational and offering expense reimbursement in an amount equal to 
3% of capital contributions. The General Partner has agreed to pay all 
organizational and offering expenses (excluding selling commissions, 
the dealer-manager fee, the nonaccountable underwriting expense 
allowance and the nonaccountable expense reimbursement).
    10. During the acquisition phase, each Series will pay WNC & 
Associates a fee equal to 7% of capital contributions for analyzing and 
evaluating potential investments in Local Limited Partnerships and for 
various other services. WNC & Associates will receive a nonaccountable 
acquisition expense reimbursement equal to 2% of capital contributions 
in consideration of which WNC & Associates will pay all acquisition 
expenses of each Series. Aggregate fees and expenses paid in connection 
with the organization of each Series, the offering of Units, and the 
acquisition of Local Limited Partnership interests by each Series will 
be limited by the Partnership Agreement and will comply with guidelines 
published by the North American Securities Administrators Association. 
These guidelines require that a specified percentage (generally 80%, 
but subject to reduction) of the aggregate Limited Partners' capital 
contributions to the Fund be committed to Local Limited Partnership 
interests.
    11. During the operating phase, the General Partner will receive 
0.1% of any cash available for distribution, and each Series may pay 
certain fees and reimbursements to the General Partner or its 
affiliates. An asset management fee will be payable for services 
related to the administration of the affairs of each Series and ongoing 
management of each Series. Other fees may be paid in consideration of 
property management services provided by the General Partner or its 
affiliates as the management and leasing agents for some of the 
apartment complexes. In addition, the General Partner and its 
affiliates generally will be allocated 0.1% of profits and losses of 
each Series for tax purposes and tax credits.
    12. During the liquidation phase, and subject to certain prior 
payments to the Limited Partners, each Series will pay the General 
Partner or its affiliates a fee equal to 1% of the sales price of the 
apartment complexes sold in which the General Partner or its affiliates 
have provided a substantial amount of services. The General Partner 
also will receive 10% of any additional sale or refinancing proceeds.
    13. All proceeds from a Series' public offering of Units initially 
will be placed in an escrow account with USbank (``Escrow Agent''). 
Pending release of offering proceeds to the Series, the Escrow Agent 
will deposit escrowed funds in short-term United States Government 
securities, securities issued or guaranteed by the United States 
Government, and certificates of deposit or time or demand deposits in 
commercial banks. Upon receipt of a prescribed minimum amount of 
capital contributions for a Series, funds in escrow will be released to 
the Series and held by it pending investment in Local Limited 
Partnerships.
    14. If more than one entity that the General Partner or its 
affiliates advises or manages may invest in a particular investment 
opportunity, the decision as to the entity that will be allocated the 
investment will be based upon such factors as the effect of the 
acquisition on diversification of each entity's portfolio, the 
estimated income tax effects of the purchase on each entity, the amount 
of funds of each entity available for investment, and the length of 
time such funds have been available for investment. Priority generally 
will be given to the entity having uninvested funds for the longest 
period of time. However, any entity that was formed to invest primarily 
in apartment complexes eligible for state low income housing tax 
credits (``state tax credits'') as well as for Federal low income 
housing tax credits will be given priority with respect to any 
investment that is eligible for state tax credits over entities which 
are not seeking to provide state tax credits.

Applicants' Legal Analysis

    1. Applicants believe that the Fund and its Series will not be 
``investment companies'' under sections 3(a)(1)(A) or 3(a)(1)(C) of the 
Act. If the Fund and its Series are deemed to be investment companies, 
however, applicants request an exemption under sections 6(c) and 6(e) 
of the Act from all provisions of the Act, except sections 37 through 
53 of the Act and the rules and regulations under those sections, other 
than rule 38a-1.
    2. Section 3(a)(1)(A) of the Act provides that an issuer is an 
``investment company'' if it is or holds itself out as being engaged 
primarily, or proposes to engage primarily, in the business of 
investing, reinvesting, or trading in securities. Applicants believe 
that the Fund will not be an investment company under section 
3(a)(1)(A) because the Fund will be in the business of investing in and 
being beneficial owner of apartment complexes, not securities.
    3. Section 3(a)(1)(C) of the Act provides that an issuer is an 
``investment company'' if it is engaged or proposes to engage in the 
business of investing, reinvesting, owning, holding, or trading in 
securities, and owns or proposes to acquire ``investment securities'' 
having a value exceeding 40% of the value of such issuer's total assets 
(exclusive of Government securities and cash items). Applicants state 
that although the Local Limited Partnership interests may be deemed 
``investment securities,'' they are not readily marketable, cannot be 
sold without severe adverse tax consequences, and have no value apart 
from the value of the apartment

[[Page 46896]]

complexes owned by the Local Limited Partnerships.
    4. Applicants believe that the two-tier structure is consistent 
with the purposes and criteria set forth in the Commission's release 
concerning two-tier real estate partnerships (the ``Release'').\1\ The 
Release states that investment companies that are two-tier real estate 
partnerships that invest in limited partnerships engaged in the 
development and operation of housing for low and moderate income 
persons may qualify for an exemption from the Act pursuant to section 
6(c). Section 6(c) provides that the Commission may exempt any person 
from any provision of the Act and any rule thereunder, if, and to the 
extent that, such exemption is necessary or appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. 
Section 6(e) permits the Commission to require companies exempted from 
the registration requirements of the Act to comply with certain 
specified provisions of the Act as though the company were a registered 
investment company.
---------------------------------------------------------------------------

    \1\ Investment Company Act Release No. 8465 (Aug. 9, 1974).
---------------------------------------------------------------------------

    5. The Release lists two conditions, designed for the protection of 
investors, which must be satisfied by two-tier partnerships to qualify 
for the exemption under section 6(c). First, interests in the issuer 
should be sold only to persons for whom investments in limited profit, 
essentially tax-shelter, investments would not be unsuitable. Second, 
requirements for fair dealing by the general partner of the issuer with 
the limited partners of the issuer should be included in the basic 
organizational documents of the company.
    6. Applicants assert, among other things, that the suitability 
standards set forth in the application, the requirements for fair 
dealing provided by the Partnership Agreement, and pertinent 
governmental regulations imposed on each Local Limited Partnership by 
various Federal, state, and local agencies provide protection to 
investors in Units. In addition, applicants assert that the requested 
exemption is both necessary and appropriate in the public interest.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-4353 Filed 8-10-05; 8:45 am]
BILLING CODE 8010-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.