INDEPENDENCE TAX CREDIT PLUS PROGRAM - 10-K Annual Report

Back to GetFilings.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(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, 2002

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934

Commission File Number 0-20476

INDEPENDENCE TAX CREDIT PLUS L.P.
---------------------------------
(Exact name of registrant as specified in its charter)

Delaware 13-3589920
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

625 Madison Avenue, New York, New York 10022
- ----------------------------------------- --------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 421-5333

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Beneficial Assignment Certificates (including underlying Limited
Partnership Interests)

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----

Indicate by check mark 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]

DOCUMENTS INCORPORATED BY REFERENCE

None

PART I

Item 1. Business.

General
- -------

Independence Tax Credit Plus L.P. (the "Partnership") is a limited partnership
which was formed under the laws of the State of Delaware on November 7, 1990.
The general partner of the Partnership is Related Independence Associates L.P.,
a Delaware limited partnership (the "General Partner"). The general partner of
the General Partner is Related Independence Associates Inc., a Delaware
corporation.

On July 1, 1991, the Partnership commenced a public offering (the "Offering") of
Beneficial Assignment Certificates ("BACs") representing assignments of limited
partnership interests in the Partnership ("Limited Partnership Interests"),
managed by Related Equities Corporation (the "Dealer Manager"), pursuant to a
prospectus dated July 1, 1991, as supplemented by Master Supplement No. 1a
thereto dated April 28, 1992 and Master Supplement No. 2a thereto dated November
3, 1992 (as so supplemented, the "Prospectus").

The Partnership received $76,786,000 of Gross Proceeds from the Offering from
5,351 investors and no further issuance of BACs is anticipated.

The Partnership's was formed to invest as a limited partner in other
partnerships ("Local Partnerships") owning apartment complexes ("Apartment
Complexes" or "Properties") that are eligible for the low-income housing tax
credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, some of
which may also be eligible for the historic rehabilitation tax credit ("Historic
Tax Credit" and together with Housing Tax Credits, "Tax Credits"). The
Partnership's investment in each Local Partnership represents from 98% to 98.99%
of the Partnership's interests in the Local Partnership. As of March 31, 2002,
the Partnership had acquired interests in twenty-eight Local Partnerships. As of
March 31, 2002, approximately $59,700,000 (not including acquisition fees of
approximately $4,500,000) of net proceeds had been invested in Local
Partnerships of which approximately $33,000 remains to be paid to the Local
Partnerships, as certain benchmarks such as occupancy levels must be attained
prior to the release of the funds. The Partnership does not intend to acquire
additional properties. See Item 2, Properties, below.

The investment objectives of the Partnership are to:

1. Entitle qualified BACs holders to Tax Credits over the period of the
Partnership's entitlement to claim Tax Credits (for each Property, generally ten
years from the date of investment or, if later, the date the Property is placed
in service; referred to herein as the "Credit Period") with respect to each
Apartment Complex.

2. Preserve and protect the Partnership's capital.

3. Participate in any capital appreciation in the value of the Properties and
provide distributions of Sale or Refinancing Proceeds upon the disposition of
the Properties.

4. Allocate passive losses to individual BACs holders to offset passive income
that they may realize from rental real estate investments and other passive
activities, and allocate passive losses to corporate BACs holders to offset
business income.

One of the Partnership's objectives is to entitle qualified BACs holders to Tax
Credits over the Credit Period. Each of the Local Partnerships in which the
Partnership has acquired an interest has been allocated by the relevant state
credit agencies the authority to recognize Tax Credits during the Credit Period
provided that the Local Partnership satisfies the rent restriction, minimum
set-aside and other requirements for recognition of the Tax Credits at all times
dur-

-2-

ing such period. Once a Local Partnership has become eligible to recognize Tax
Credits, it may lose such eligibility and suffer an event of "recapture" if its
Property fails to remain in compliance with the Tax Credit requirements. None of
the Local Partnerships in which the Partnership has acquired an interest has
suffered an event of recapture.

There can be no assurance that the Partnership will achieve its investment
objectives as described above.

The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 21%
of the properties are located in any single state. There are also substantial
risks associated with owning interests in properties, as does the Partnership,
which receive government assistance, for example the possibility that Congress
may not appropriate funds to enable HUD to make rental assistance payments. HUD
also restricts annual cash distributions to partners based on operating results
and a percentage of the owner's equity contribution. The Partnership cannot sell
or substantially liquidate its investments in subsidiary partnerships during the
period that the subsidy agreements are in existence, without HUD's approval.
Furthermore, there may not be market demand for apartments at full market rents
when the rental assistance contracts expire.

Competition
- -----------

The real estate business is highly competitive and substantially all of the
properties acquired by the Partnership are subject to active competition from
similar properties in their respective vicinities. In addition, various other
limited partnerships may, in the future, be formed by the General Partner and/or
its affiliates to engage in businesses which may be competitive with the
Partnership.

Employees
- ---------

The Partnership does not have any direct employees. All services are performed
for the Partnership by its General Partner and its affiliates. The General
Partner receives compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partner and
certain of its affiliates for expenses incurred in connection with the
performance by their employees of services for the Partnership in accordance
with the Partnership's Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement").

Item 2. Properties.

The Partnership holds a 98.99% limited partnership interest in twenty-seven and
a 98% limited partnership interest in one Local Partnership as of March 31,
2002. Set forth below is a schedule of the Local Partnerships including certain
information concerning their respective Apartment Complexes (the "Local
Partnership Schedule"). Further information concerning these Local Partnerships
and their properties, including any encumbrances affecting the properties, may
be found in Item 14, Schedule III.

-3-

Local Partnership Schedule
--------------------------

-4-

Local Partnership Schedule (continued)
--------------------------

All leases are generally for periods not exceeding one to two years and no
tenant occupies more than 10% of the rentable square footage.

Rents from commercial tenants (to which average rental per square foot applies)
comprise less than 5% of the rental revenues of the Partnership. Maximum rents
for the residential units are determined annually by HUD and reflect
increases/decreases in consumer price indices in various geographic areas.
Market conditions, however, determine the amount of rent actually charged.

Management annually reviews the physical state of the properties and suggests to
the respective general partners of the Local Partnerships ("Local General
Partners") budget improvements, which are generally funded from cash flow from
operations or release of replacement reserve escrows to the extent available.

Management annually reviews the insurance coverage of the properties and
believes such coverage is adequate.

See Item 1, Business, above, for the general competitive conditions to which the
properties described above are subject.

-5-

Real estate taxes are calculated using rates and assessed valuations determined
by the township or city in which the property is located. Such taxes have
approximated 1% of the aggregate cost of the properties as shown in Schedule III
to the financial statements included herein.

Tax Credits with respect to a given Apartment Complex are available for a
ten-year period that commences when the property is leased to qualified tenants.
However, the annual Tax Credits available in the year in which the Apartment
Complex is leased to qualified tenants must be prorated based upon the months
remaining in the year. The amount of the annual Tax Credit not available in the
first year will be available in the eleventh year. In certain cases, the
Partnership acquired its interest in a Local Partnership after the Local
Partnership had placed its Apartment Complex in service. In these cases, the
Partnership may be allocated Tax Credits only beginning in the month following
the month in which it acquired its interest and Tax Credits allocated in any
prior period were not available to the Partnership.

Item 3. Legal Proceedings.

This information is incorporated by reference to the discussion of Old Public
Limited Partnership in the Results of Operations of Certain Local Partnerships
contained in Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations.

Item 4. Submission of Matters to a Vote of Security Holders.
None.

PART II

Item 5. Market for the Registrant's Common Equity and Related Security Holder
Matters.

As of March 31, 2002, the Partnership had issued and outstanding 76,786 Limited
Partnership Interests, each representing a $1,000 capital contribution to the
Partnership, or an aggregate capital contribution of $76,786,000. All of the
issued and outstanding Limited Partnership Interests have been issued to
Independence Assignor Inc. (the "Assignor Limited Partner"), which has in turn
issued 76,786 BACs to the purchasers thereof for an aggregate purchase price of
$76,786,000. Each BAC represents all of the economic and virtually all of the
ownership rights attributable to a Limited Partnership Interest held by the
Assignor Limited Partner. BACs may be converted into Limited Partnership
Interests at no cost to the holder (other than the payment of transfer costs not
to exceed $100), but Limited Partnership Interests so acquired are not
thereafter convertible into BACs.

Neither the BACs nor the Limited Partnership Interests are traded on any
established trading market. The Partnership does not intend to include the BACs
for quotation on NASDAQ or for listing on any national or regional stock
exchange or any other established securities market. The Revenue Act of 1987
contained provisions which have an adverse impact on investors in "publicly
traded partnerships." Accordingly, the General Partner has imposed limited
restrictions on the transferability of the BACs and the Limited Partnership
Interests in secondary market transactions. These restrictions should prevent a
public trading market from developing but may adversely affect the ability of an
investor to liquidate his or her investment quickly. It is expected that such
procedures will remain in effect until such time, if ever, as further revision
of the Revenue Act of 1987 may permit the Partnership to lessen the scope of the
restrictions.

As of May 6, 2002, the Partnership has approximately 4,597 registered holders of
an aggregate of 76,786 BACs.

All of the Partnership's general partnership interests, representing an
aggregate capital contribution of $1,000, are held by the General Partner.

-6-

There are no material legal restrictions in the Partnership Agreement on the
ability of the Partnership to make distributions. The Partnership has made no
distributions to the BACs holders as of March 31, 2002. The Partnership does not
anticipate providing cash distributions to its BACs holders other than from net
refinancing or sales proceeds.

In January 2001, affiliates of Everest Properties, Inc. ("Everest") conducted a
tender offer for up to 1,578 BACs. In connection with a prior tender offer for
BACs, an affiliate of the General Partner entered into a standstill agreement
dated as of April 23, 1997 (the "Standstill"), which precluded Everest from
independently soliciting BACs (by tender offer or otherwise). At Everest's
request, the General Partner caused its affiliate to release Everest from the
Standstill for the limited purpose of permitting Everest to make its tender
offer. In connection with such arrangements, Everest agreed to cover all of the
Partnership's expenses with respect to processing the tender offer including
mailing costs, legal fees and other administrative costs incurred by the
Partnership. These reimbursements resulted in aggregate payments to the
Partnership of $2,789 which are reflected as "other income" on the financial
statements for Fiscal Year 2001.

-7-

Item 6. Selected Financial Data.

The information set forth below presents selected financial data of the
Partnership. Additional financial information is set forth in the audited
consolidated financial statements in Item 8 hereof.

During the years ended March 31, 2002, 2001, 2000, 1999 and 1998, total assets
and liabilities decreased primarily due to depreciation partially offset by a
mortgage refinancing. During the year ended March 31, 1998, total assets
decreased primarily due to depreciation and a loss on impairment of assets.

*Reclassified for comparative purposes.

-8-

Selected Quarterly Financial Data (Unaudited)

Cash Distributions
- ------------------

There are no legal restrictions on the Partnership making distributions to BACs
holders; however, the Partnership has made no distributions to the BACs holders
as of March 31, 2002 and does not expect to be able to make distributions except
out of net sale proceeds when the Partnership begins to dispose of its
investments.

-9-

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of funds is the cash distributions from the
operations of the Local Partnerships. These cash distributions, which remain
relatively immaterial, are available to meet obligations of the Partnership.
Distributions of approximately $102,000, $288,000 and $34,000 were received
during the years ended March 31, 2002, 2001 and 2000, respectively. However,
management expects that the distributions received from the Local Partnerships
will increase, although not to a level sufficient to permit providing cash
distributions to BACs holders. These distributions, as well as the working
capital reserves and the continued deferral of fees payable to the General
Partner discussed below, will be used to meet the operating expenses of the
Partnership.

As of March 31, 2002, the Partnership has invested all of the net proceeds in
twenty-eight Local Partnerships. Approximately $33,000 of the purchase price
remains to be paid (all of which is held in escrow). During the year ended March
31, 2002, $59,000 was paid from escrow.

During the year ended March 31, 2002, cash and cash equivalents decreased
approximately $571,000. This decrease is due to acquisition of property and
equipment ($511,000), a decrease in due to Local General Partners and affiliates
relating to investing and financing activities ($273,000), an increase in
deferred costs ($27,000,) repayment of mortgage loan ($2,254,000) and a decrease
in capitalization of consolidated subsidiaries attributable to minority interest
($704,000) which exceeded cash provided by operating activities ($3,138,000) and
a decrease in cash held in escrow relating to investing activities ($59,000).
Included in the adjustments to reconcile the net loss to cash provided by
operating activities is depreciation and amortization ($5,784,000).

The Partnership's unconsolidated working capital reserve at March 31, 2002 was
approximately $10,000.

Partnership management fees owed to the General Partner amounting to
approximately $3,959,000 were accrued and unpaid as of March 31, 2002. Without
the General Partner's advances and continued accrual without payment of certain
fees and expense reimbursements, the Partnership will not be in a position to
meet its obligations. The General Partner has continued to advance and allow the
accrual without payment of these amounts but is under no obligation to continue
to do so.

For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships, below. Since the maximum
loss the Partnership would be liable for is its net investment in the respective
subsidiary partnerships, the resolution of the existing contingencies is not
anticipated to impact future results of operations, liquidity or financial
condition in a material way. However, the Partnership's loss of its investment
in a Local Partnership will eliminate the ability to generate future Tax Credits
from such Local Partnership and may also result in recapture of Tax Credits if
the investment is lost before expiration of the Credit Period.

Management is not aware of any trends or events, commitments or uncertainties,
which have not otherwise been disclosed, that will or are likely to impact
liquidity in a material way. Management believes the only impact would be from
laws that have not yet been adopted. The portfolio is diversified by the
location of the properties around the United States so that if one area of the
country is experiencing downturns in the economy, the remaining properties in
the portfolio may be experiencing upswings. However, the geographic
diversification of the portfolio may not protect against a general downturn in
the national economy. The Partnership has fully invested the proceeds of its
offering in 28 Local Partnerships, all of which fully have their Tax Credits in
place. The Tax Credits are attached to the property for a period of ten years,
and

-10-

are transferable with the property during the remainder of the ten-year period.
If trends in the real estate market warranted the sale of a property, the
remaining Tax Credits would transfer to the new owner; thereby adding
significant value to the property on the market, which are not included in the
financial statement carrying amount.

Results of Operations
- ---------------------

Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time property investments
themselves are reduced to estimated fair value (generally using discounted cash
flows) when the property is considered to be impaired and the depreciated cost
exceeds estimated fair value.

At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated.

Through March 31, 2002, the Partnership has recorded approximately $500,000 as a
loss on impairment of assets.

The following is a summary of the results of operations of the Partnership for
the years ended March 31, 2002, 2001 and 2000 (the 2001, 2000 and 1999 Fiscal
Years, respectively.)

The Partnership's results of operations for the 2001, 2000 and 1999 Fiscal Years
consisted primarily of the results of the Partnership's investment in the
twenty-eight Local Partnerships. The majority of Local Partnership income
continues to be in the form of rental income with the corresponding expenses
being divided among operations, depreciation and mortgage interest.

The net loss for the 2001, 2000 and 1999 Fiscal Years totaled $5,482,194,
$5,443,878 and $5,804,231, respectively.

The Partnership and BACs holders began to recognize Housing Tax Credits with
respect to a Property when the Credit Period for such Property commenced.
Because of the time required for the acquisition, completion and rent-up of
Properties, the amount of Tax Credits per BAC gradually increased over the first
three years of the Partnership. Housing Tax Credits not recognized in the first
three years will be recognized in the 11th through 13th years. The Partnership
generated $11,986,066, $11,986,066 and $11,986,066 of Housing Tax Credits during
the 2001, 2000 and 1999 tax years, respectively.

2001 vs. 2000
- -------------

Rental income remained fairly consistent with an increase of less than 1% for
the 2001 Fiscal Year as compared to the 2000 Fiscal Year.

Other income decreased approximately $268,000 for the 2001 Fiscal Year as
compared to the 2000 Fiscal Year due to an decrease in escrow interest received
at one Local Partnership and a decrease in transfer fees received at the
Partnership Level.

-11-

Total expenses, excluding insurance, remained fairly consistent with a decrease
of approximately 1% for the 2001 Fiscal Year as compared with the 2000 Fiscal
Year.

Insurance increased approximately $156,000 for the 2001 Fiscal Year as compared
to the 2000 Fiscal Year primarily due to an underaccrual of insurance charges at
four Local Partnerships during the 2000 Fiscal year.

2000 vs. 1999
- -------------

Rental income remained fairly consistent with a decrease of less than 1% for the
2000 Fiscal Year as compared to the 1999 Fiscal Year.

Total expenses, excluding repairs and maintenance, remained fairly consistent
with a decrease of approximately 4% for the 2000 Fiscal Year as compared to the
1999 Fiscal Year.

Repairs and maintenance increased approximately $435,000 for the 2000 Fiscal
Year as compared to the 1999 Fiscal Year primarily due to roof repairs and
replacement of water heaters at one Local Partnership, increased plumbing,
electrical, flooring and cleaning expenses due to hurricane damage at a second
Local Partnership and miscellaneous repairs at two other Local Partnerships.

Results of Operations of Certain Local Partnerships
- ---------------------------------------------------

Hope Bay Limited Partnership("Hope Bay")
- ----------------------------------------

Hope Bay has been experiencing higher operating costs attributable, in part, to
the project's dependence upon gas for heating and escalating repair costs. These
conditions, in addition to regulatory rent restrictions imposed under HUD
guidelines, have resulted in operating cash flow not meeting all current
obligations as they become due. At December 31, 2001, current liabilities exceed
current assets by approximately $50,000 creating a liquidity problem. This
raises doubt as to whether Hope Bay will be able to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability that might be necessary should Hope Bay be unable to continue as
a going concern.

Hope Bay's management has requested and received a HUD approval rent increase of
approximately 2% for all units effective December 1, 2001. Hope Bay's management
continuously monitors operating costs and will request additional rent increases
when allowed by HUD.

The Partnership's investment in Hope Bay at March 31, 2002 was $76,770 and the
minority interest balance at that date was approximately ($4,000). Hope Bay's
net loss after minority interest amounted to approximately $146,000 for the 2001
Fiscal Year.

Old Public Limited Partnership
- ------------------------------

Old Public Limited Partnership (the "Debtor") originally filed its bankruptcy
case in the United States Bankruptcy Court for the Southern District of New York
on November 17, 1998. The case was transferred to the United States Bankruptcy
Court for the Middle District of Tennessee, Columbia Division before Judge
George Paine, presiding as the result of a venue motion filed by the First
National Bank of Pulaski, Tennessee, the sole secured creditor of the Debtor
(the "Bank"). On or about February 9, 2001, the United States Bankruptcy Court
for the Middle District of Tennessee entered a Final Decree closing the Old
Public bankruptcy case. On September 10, 1999 the debtor filed its Second
Amended Plan of Reorganization and thereafter filed two modifications. On
February 18, 2000 the Judge ordered that the plan be confirmed in its entirety
and the Reorganized Debtor (Old Public Limited Partnership) must effectuate the
Plan according with the terms of the plan and the confirmation order. It was
also ordered that

-12-

the proceedings, Old Public Limited Partnership vs. First National Bank of
Pulaski, Tennessee be dismissed without prejudice.

As of March 31, 2002, Old Public owes the Partnership approximately $822,000.

Other
- -----

The Partnership's investment as a limited partner in the Local Partnerships is
subject to the risks incident to the potential losses arising from management
and ownership of improved real estate. The Partnership's investments also could
be adversely affected by poor economic conditions, generally, which could
increase vacancy levels and rental payment defaults and by increased operating
expenses, any or all of which could threaten the financial viability of one or
more of the Local Partnerships.

There also are substantial risks associated with the operations of Apartment
Complexes receiving government assistance. These include governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent apartments in the complexes; difficulties in obtaining government approval
for rent increases; limitations on the percentage of income which low and
moderate-income tenants may pay as rent; the possibility that Congress may not
appropriate funds to enable the Department of Housing and Urban Development to
make the rental assistance payments it has contracted to make; and that when the
rental assistance contracts expire there may not be market demand for apartments
at full market rents in a Local Partnership's Apartment Complex.

The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Inflation also affects the Local Partnerships
adversely by increasing operating costs, such as fuel, utilities and labor.

Item7A. Quantitative and Qualitative Disclosure About Market Risk.

Not Applicable.

-13-

Item 8. Financial Statements and Supplementary Data.

-14-

INDEPENDENT AUDITORS' REPORT

To the Partners of
Independence Tax Credit Plus L.P. and Subsidiaries
(A Delaware Limited Partnership)

We have audited the consolidated balance sheets of Independence Tax Credit Plus
L.P. and Subsidiaries (A Delaware Limited Partnership) as of March 31, 2002 and
2001, and the related consolidated statements of operations, changes in
partners' capital (deficit), and cash flows for the years ended March 31, 2002,
2001 and 2000 (the 2001, 2000 and 1999 Fiscal Years). 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 for twenty-eight (2001, 2000 and 1999 Fiscal
Years) subsidiary partnerships whose losses aggregated $4,071,996, $4,195,591
and $3,986,583 for the 2001, 2000 and 1999 Fiscal Years, respectively, and whose
assets constituted 99% of the Partnership's assets at March 31, 2002 and 2001,
presented in the accompanying consolidated financial statements. The financial
statements for twenty-seven of these subsidiary partnerships were audited by
other auditors whose reports thereon have been furnished to us and our opinion
expressed herein, insofar as it relates to the amounts included for these
subsidiary partnerships is based solely upon the reports of the other auditors.
The financial statements for one of these subsidiary partnerships were
unaudited.

We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 upon our audits, and the reports of the other auditors
referred to above, the consolidated financial statements referred to in the
first paragraph present fairly, in all material respects, the financial position
of Independence Tax Credit Plus L.P. and Subsidiaries at March 31, 2002 and
2001, and the results of their operations and their cash flows for the years
ended March 31, 2002, 2001 and 2000, in conformity with U.S. generally accepted
accounting principles.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 5, 2002

-15-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Harbor Court L.P.

We have audited the accompanying balance sheets of Harbor Court L.P. as of
December 31, 2001 and 2000, and the related statements of operations, 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 audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 Harbor Court L.P., as of
December 31, 2001 and 2000, and the results of its operations, the changes in
partners' equity and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 31, 2002

-16-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Harbor Court L.P.

We have audited the accompanying balance sheets of Harbor Court L.P. as of
December 31, 2000 and 1999, and the related statements of operations, 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. 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 Harbor Court L.P., as of
December 31, 2000 and 1999, and the results of its operations, the changes in
partners' equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 1, 2001

-17-

[Letterhead of Mack Roberts & Company, L.L.C.]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lancaster Terrace Limited Partnership
Salem, Oregon

We have audited the balance sheets of Lancaster Terrace Limited Partnership as
of December 31, 2001 and 2000, and the related statements of operations, changes
in partners' capital, 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 U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Lancaster Terrace Limited
Partnership as of December 31, 2001 and 2000, and the results of its operations
and its cash flows for the years then ended in conformity with U.S. generally
accepted accounting principles.

/s/ Mack, Roberts & Co., L.L.C.
Portland, Oregon

February 4, 2002

-18-

[Letterhead of Mack Roberts & Company, L.L.C.]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lancaster Terrace Limited Partnership
Salem, Oregon

We have audited the balance sheets of Lancaster Terrace Limited Partnership as
of December 31, 2000 and 1999, and the related statements of operations, changes
in partners' capital, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Lancaster Terrace Limited
Partnership as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Mack, Roberts & Co., L.L.C.
Portland, Oregon
February 6, 2001

-19-

[Letterhead of Pailet, Meunier and LeBlanc, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
655 North Street Limited Partnership
New Orleans, Louisiana

We have audited the accompanying balance sheets of 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 2001 and 2000, 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and free of
material misstatement. An audit includes examining, or 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 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 2001 and 2000, 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.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 28, 2002, on our
consideration of 655 North Street Limited Partnership's internal control, and
reports dated January 28, 2002, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to Fair
Housing and Non-Discrimination. Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 21 to 28 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Project. Such information
has been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects, in relation to the basic financial statements taken as a whole.

/s/ Pailet, Meunier & LeBlanc, L.L.P.
Metairie, Louisiana
January 28, 2002

-20-

[Letterhead of Pailet, Meunier and LeBlanc, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
of 655 North Street Limited Partnership
New Orleans, Louisiana

We have audited the accompanying balance sheets of 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 2000 and 1999, 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 audits.

We conducted our audits in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
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. 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 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 2000 and 1999 and the
results of its operations, changes in partners' equity, and cash flows for the
years then ended in conformity with generally accepted accounting principles.

In accordance with GOVERNMENT AUDITING STANDARDS and the CONSOLIDATED AUDIT
GUIDE FOR AUDITS OF HUD PROGRAMS issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 30, 2001, on our
consideration of 655 North Street Limited Partnership's internal control, and
reports dated January 30, 2001, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to
Affirmative Fair Housing.

/s/ Pailet, Meunier and LeBlanc, L.L.P.
Metairie, Louisiana
January 30, 2001

-21-

[Letterhead of Reznick, Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Landreth Venture

We have audited the accompanying balance sheet of Landreth Venture as of
December 31, 2001, and the related statements of profit and loss, changes in
partners' equity (deficit) 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 the financial statements based on our
audit. The financial statements of Landreth Venture for the year ended December
31, 2000, were audited by other auditors whose report, dated February 9, 2001,
expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the 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. 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 2001 financial statements referred to above present fairly,
in all material respects, the financial position of Landreth Venture as of
December 31, 2001, and the results of its operations, the changes in partners'
equity (deficit) and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.

Our 2001 audit was made for the purpose of forming an opinion on the basis
financial statements taken as a whole. The supplemental information on pages 27
through 30 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued our report
for the year ended December 31, 2001, dated February 8, 2002, on our
consideration of Landreth Venture's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations,
contracts and grants. The report is an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 8, 2002

-22-

[Letterhead of Ziner, Kennedy, Lehan LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Landreth Venture

We have audited the accompanying balance sheets of Landreth Venture (a
Pennsylvania limited partnership) as of December 31, 2000 and 1999 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 general partners and contracted management agent. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 the
Partnership's general partners and contracted management agent, 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 Landreth Venture as of December
31, 2000 and 1999, and the results of its operations, changes in partners'
equity and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Ziner, Kennedy, Lehan LLP
February 9, 2001
Boston, Massachusetts

-23-

[Letterhead of Friedman, Alpren & Green LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates, Ltd.

We have audited the accompanying balance sheet of HOMESTEAD APARTMENTS
ASSOCIATES, LTD.(a limited partnership) as of December 31, 2001 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 HOMESTEAD APARTMENTS
ASSOCIATES, LTD. as of December 31, 2001, 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/Friedman, Alpren & Green LLP
New York, New York
January 30, 2002

-24-

[Letterhead of Friedman, Alpren & Green LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates, Ltd.

We have audited the accompanying balance sheets of HOMESTEAD APARTMENTS
ASSOCIATES, LTD.(a limited partnership) as of December 31, 2000 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 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 HOMESTEAD APARTMENTS
ASSOCIATES, LTD. as of December 31, 2000, 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/Friedman, Alpren & Green LLP
New York, New York
February 1, 2001

-25-

[Letterhead of Friedman, Alpren & Green LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates, Ltd.

We have audited the accompanying balance sheets of Homestead Apartments
Associates, Ltd.(a limited partnership) as of December 31, 1999 and the related
statements of operations, partners' capital, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 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 Homestead Apartments
Associates, Ltd. as of December 31, 1999, and the results of its operations, and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/Friedman, Alpren & Green LLP
New York, New York
January 26, 2000

-26-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bethel Villa Associates, L.P..

We have audited the accompanying balance sheets of Bethel Villa Associates, L.P.
as of December 31, 2001 and 2000, and the related statements of operations,
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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards issued by the
Comptroller General of the 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. An audit includes examining, or 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 Bethel Villa Associates, LP. as
of December 31, 2001 and 2000 and 2000, and the results of its operations, the
changes in partners' equity (deficit) and cash flows for the years then ended,
in conformity with accounting principles generally accepted in the United States
of America.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 26
and 30 is presented for the purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 31,
2002 on our consideration of Bethel Villa Associates, L.P.'s internal control
and on its compliance with specific requirements applicable to major HUD and
DSHA programs, and fair housing and non-discrimination. Those reports are in
integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland Taxpayer Identification Number:
January 31, 2002 52-1088612

Lead Auditor: James P. Martinko

-27-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bethel Villa Associates, L.P.

We have audited the accompanying balance sheets of Bethel Villa Associates, L.P.
as of December 31, 2000 and 1999, the related statements of operations,
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 generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
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. 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 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 Bethel Villa Associates, L.P.
as of December 31, 2000, and 1999 and the results of its operations, the changes
in partners' equity (deficit) and cash flows for the years then ended, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 26
through 30 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 23,
2001 on our consideration of Bethel Villa Associates, L.P.'s internal control
and on its compliance with specific requirements applicable to major HUD and
DSHA programs, and fair housing and non-discrimination. Those reports are an
integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audit.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
Taxpayer Identification Number: 52-1088612
January 23, 2001

Lead Auditor: Robert J. Denmark

-28-

[Letterhead of Asher & Company Ltd.]

Independent Auditors' Report

The Partners
West Diamond Street Associates
T/A Sedgley Park Apartments
Marlton, New Jersey

We have audited the accompanying balance sheets of WEST DIAMOND STREET
ASSOCIATES T/A SEDGLEY PARK APARTMENTS (A LIMITED PARTNERSHIP), PHFA PROJECT NO.
O-0198, as of December 31, 2001 and 2000 and the related statements of loss,
Partners' capital 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 auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of
the 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. 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 WEST DIAMOND STREET ASSOCIATES
T/A SEDGLEY PARK APARTMENTS (A LIMITED PARTNERSHIP), PHFA PROJECT NO. O-0198, as
of December 31, 2001 and 2000, and the results of its operations, changes in its
Partners' capital and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 16, 2002 on our consideration of West Diamond Street Associates'
T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No. O-0198,
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. That report is an
integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audit.

/s/ Asher & Company, Ltd.
Philadelphia, Pennsylvania
January 16, 2002

-29-

[Letterhead of Asher & Company Ltd.]

Independent Auditors' Report

The Partners
West Diamond Street Associates
T/A Sedgley Park Apartments
Marlton, New Jersey

We have audited the accompanying balance sheets of WEST DIAMOND STREET
ASSOCIATES T/A SEDGLEY PARK APARTMENTS (A LIMITED PARTNERSHIP), PHFA PROJECT NO.
O-0198, as of December 31, 2000 and 1999 and the related statements of profit
and loss, Partners' capital 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 generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
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. 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 WEST DIAMOND STREET ASSOCIATES
T/A SEDGLEY PARK APARTMENTS (A LIMITED PARTNERSHIP), PHFA PROJECT NO. O-0198, as
of December 31, 2000 and 1999, and the results of its operations, changes in its
Partners' capital and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 31, 2001 on our consideration of West Diamond Street Associates'
T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No. O-0198,
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. That report is an
integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audit.

/s/ Asher & Company, Ltd.
Philadelphia, Pennsylvania
January 31, 2001

-30-

[Letterhead of J.H. Williams & Co., LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Susquehanna Partners (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Susquehanna Partners (a
Limited Partnership) as of December 31, 2001 and 2000 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 general
partner and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards (issued by the Comptroller General of
the 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. 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 the Partnership's general partner and contracted management agent, 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 Susquehanna Partners (a Limited
Partnership) at December 31, 2001 and 2000, 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/ J.H. Williams & Co., LLP
Kingston, Pennsylvania
February 8, 2002

-31-

[Letterhead of J.H. Williams & Co., LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Susquehanna Partners (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Susquehanna Partners (a
Limited Partnership) as of December 31, 2000 and 1999 and the related statements
of (loss), changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
partner and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 the Partnership's general partner and contracted
management agent, 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 Susquehanna Partners (a Limited
Partnership) at December 31, 2000 and 1999, and its results of 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/ J.H. Williams & Co., LLP
Kingston, Pennsylvania
February 9, 2001

-32-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R, as of December
31, 2001, and the related statements of operations, partners' deficiency, 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 auditing standards generally accepted
in the United States of America and the standards applicable to financial
statement audits contained in Government Auditing Standards, issued by the
Comptroller General of the 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. 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 Boston Bay Limited Partnership
as of December 31, 2001, and the results of its operations, changes in partners'
deficiency, and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 15, 2002 on our consideration of Boston Bay Limited Partnership's
internal control, a report dated January 15, 2002 on its compliance with laws
and regulations, and reports dated January 15, 2002 on its compliance with
specific requirements applicable to HUD programs. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 15, 2002

-33-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R, as of December
31, 2000, and the related statements of operations, 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 auditing standards generally accepted
in the United States of America and the standards applicable to financial
statement audits contained in GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the 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. 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 Boston Bay Limited Partnership
as of December 31, 2000, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 16, 2001 on our consideration of Boston Bay Limited Partnership's
internal control, a report dated January 16, 2001 on its compliance with laws
and regulations, and reports dated January 16, 2001 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency (MHFA) and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 16, 2001

-34-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R, as of December
31, 1999, and the related statements of operations, 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 generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
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. 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 Boston Bay Limited Partnership
as of December 31, 1999, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 20, 2000 on our consideration of Boston Bay Limited Partnership's
internal control, a report dated January 20, 2000 on its compliance with laws
and regulations, and reports dated January 20, 2000 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency (MHFA) and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 20, 2000

-35-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R, as
of December 31, 2001, and the related statements of operations, partners'
deficiency, 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 auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of
the 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. 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 Morrant Bay Limited Partnership
as of December 31, 2001, and the results of its operations, changes in partners'
deficiency, and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 17, 2002 on our consideration of Morrant Bay Limited Partnership's
internal control, a report dated January 17, 2002 on its compliance with laws
and regulations, and reports dated January 17, 2002 on its compliance with
specific requirements applicable to HUD programs. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 16 through 29) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 17, 2002

-36-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R, as
of December 31, 2000, and the related statements of operations, 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 auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of
the 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. 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 Morrant Bay Limited Partnership
as of December 31, 2000, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 19, 2001 on our consideration of Morrant Bay Limited Partnership's
internal control, a report dated January 19, 2001 on its compliance with laws
and regulations, and reports dated January 19, 2001 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 19, 2001

-37-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R, as
of December 31, 1999, and the related statements of operations, 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 generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
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. 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 Morrant Bay Limited Partnership
as of December 31, 1999, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 2000 on our consideration of Morrant Bay Limited Partnership's
internal control, a report dated January 22, 2000 on its compliance with laws
and regulations, and reports dated January 22, 2000 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 22, 2000

-38-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R, as of December
31, 2001, and the related statements of operations, partners' deficiency, 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 auditing standards generally accepted
in the United States of America and the Standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of
the 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. 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 Hope Bay Limited Partnership as
of December 31, 2001, and the results of its operations, changes in partners'
deficiency, and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 15, 2002 on our consideration of Hope Bay Limited Partnership's
internal control, a report dated January 15, 2002 on its compliance with laws
and regulations, and reports dated January 15, 2002 on its compliance with
specific requirements applicable to HUD programs. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjuction with this report in considering the results of our
audit.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 15, 2002

-39-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R, as of December
31, 2000, and the related statements of operations, 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 auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of
the 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. 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 Hope Bay Limited Partnership as
of December 31, 2000, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 15, 2001 on our consideration of Hope Bay Limited Partnership's
internal control, a report dated January 15, 2001 on its compliance with laws
and regulations, and reports dated January 15, 2001 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 15, 2001

-40-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R, as of December
31, 1999, and the related statements of operations, 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 generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
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. 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 Hope Bay Limited Partnership as
of December 31, 1999, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 2000 on our consideration of Hope Bay Limited Partnership's
internal control, a report dated January 21,2000 on its compliance with laws and
regulations, and reports dated January 21,2000 on its compliance with specific
requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 21, 2000

-41-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lares Apartments Limited Partnership

I have audited the accompanying balance sheets of Lares Apartments Limited
Partnership, Rural Development Project No.: 63-034-660467896, as of December 31,
2001 and 2000, and the related statements of income, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of
the United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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. I believe that my audits provide a reasonable basis for my
opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Lares Apartments Limited
Partnership, as of December 31, 2001 and 2000, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.

In accordance with Government Auditing Standards, I have also issued my report
dated January 29, 2002, on my consideration of Lares Apartments Limited
Partnership internal control over financial reporting and my tests of its
compliance with certain provisions of laws, regulations, contracts, and grants.
That report is an integral part of an audit performed in accordance with
Government auditing Standards and should be read in conjunction with this report
in considering the results of my audit.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 20 thru 31 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
San Juan, Puerto Rico
January 29, 2002

The stamp #1713602 of the CPA's College of PR was affixed to the original of
this report.

-42-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lares Apartments Limited Partnership

I have audited the accompanying balance sheets of Lares Apartments Limited
Partnership, Rural Development Project No.: 63-034-660467896, as of December 31,
2000 and 1999, and the related statements of income, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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. I believe that my audits provide a reasonable basis for my
opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Lares Apartments Limited
Partnership, as of December 31, 2000 and 1999, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 20 thru 31 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
San Juan, Puerto Rico
The stamp #1684722 of the CPA's College of PR was affixed to the original of
this report.
February 1, 2001

-43-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lajas Apartments Limited Partnership

I have audited the accompanying balance sheets of Lajas Apartments Limited
Partnership, Rural Development Project No.: 63-017-0660422313, as of December
31, 2001 and 2000, and the related statements of income, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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. I believe that my audits provide a reasonable basis for my
opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Lajas Apartments Limited
Partnership, as of December 31, 2001 and 2000, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.

In accordance with Government Auditing Standards, I have also issued my report
dated January 25, 2002, on my consideration of Lajas Apartments Limited
Partnership internal control over financial reporting and my tests of its
compliance with certain provisions of laws, regulations, contracts, and grants.
That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report
in considering the results of my audit.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 20 thru 31 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
January 25, 2002
San Juan, Puerto Rico

The stamp #1713599 of the CPA's College of PR was affixed to the original of
this report.

-44-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lajas Apartments Limited Partnership

I have audited the accompanying balance sheets of Lajas Apartments Limited
Partnership, Rural Development Project No.: 63-017-0660422313, as of December
31, 2000 and 1999, and the related statements of operations, changes in
partners' capital (deficit), and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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. I believe that my audits provide a reasonable basis for my
opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Lajas Apartments Limited
Partnership, as of December 31, 2000 and 1999, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 20 thru 31 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
San Juan, Puerto Rico
The stamp #1684725 of the CPA's College of PR was affixed to the original of
this report.
February 1, 2001

-45-

[Letterhead of Ree & Kim]

To the Partners
Arlington - Rodeo Properties
(A California Limited Partnership)

We have audited the accompanying balance sheet of Arlington - Rodeo Properties
(A California Limited Partnership) as of December 31, 2001 and 2000 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 Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We have conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Arlington - Rodeo Properties as
of December 31, 2001 and 2000 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

/s/ Ree and Kim
Los Angeles, California
February 23, 2002

-46-

[Letterhead of Ree & Kim]

To the Partners
Arlington - Rodeo Properties
(A California Limited Partnership)

We have audited the accompanying balance sheets of Arlington - Rodeo Properties
(A California Limited Partnership) as of December 31, 2000 and 1999 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 Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We have conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Arlington - Rodeo Properties as
of December 31, 2000 and 1999 and its results of operations, changes in
partner's equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Ree & Kim
Los Angeles, California
February 15, 2001

-47-

[Letterhead of Insero, Kasperski, Ciaccia & Co., P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Conifer Bateman Associates
(A Limited Partnership)
Lowville, New York

We have audited the accompanying balance sheets of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 2001 and 2000 and the related statements
of changes in partners' equity, operations, 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 Conifer Bateman Associates (A
Limited Partnership) as of December 31, 2001 and 2000, and the results of its
operations and cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants
Rochester, New York
January 30, 2002

-48-

[Letterhead of Insero, Kasperski, Ciaccia & Co., P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Conifer Bateman Associates
(A Limited Partnership)
Lowville, New York

We have audited the accompanying balance sheets of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 2000 and 1999 and the related statements
of changes in partners' equity, operations, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Conifer Bateman Associates (A
Limited Partnership) as of December 31, 2000 and 1999, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants
Rochester, New York
January 29, 2001

-49-

[Letterhead of Mortland Co. P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners'
Hampden Hall Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 2001 and the related statements of loss, 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 this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hampden Hall associates, L.P.,
as of December 31, 2001 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Mortland & Co., P.C.
St. Louis, Missouri
February 15, 2002

-50-

[Letterhead of Mortland & Co. P.C.]

Independent Auditors' Report

To the Partners'
Hampden Hall Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 2000 and the related statements of loss, 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 this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hampden Hall Associates, L.P.,
as of December 31, 2000 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Mortland & Co. P.C.
St. Louis, Missouri
February 17, 2001

-51-

[Letterhead of Mortland & Co. P.C.]

Independent Auditors' Report

To the Partners'
Hampden Hall Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 1999 and the related statements of loss, 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 this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hampden Hall Associates, L.P.,
as of December 31, 1999 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Mortland & Co. P.C.
St. Louis, Missouri
February 15, 2000

-52-

[Letterhead of Reznick, Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Chester Renaissance Associates

We have audited the accompanying balance sheet of Chester Renaissance Associates
as of December 31, 2001, and the related statements of operations, changes in
partners' equity (deficit) 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. The financial statements of Chester Renaissance Associates for the
year ended December 31, 2000, were audited by other auditors whose report, dated
January 14, 2001, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the 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. 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 2001 financial statements referred to above present fairly,
in all material respects, the financial position of Chester Renaissance
Associates as of December 31, 2001, and the results of its operations, the
changes in partners' equity (deficit) and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

Our 2001 audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 24
through 27 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
for the year ended December 31, 2001, dated January 18, 2002, on our
consideration of Chester Renaissance Associates' internal control over financial
reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

/s/ Reznick, Fedder & Silverman
Baltimore, Maryland
January 18, 2002

-53-

[Letterhead of Ziner, Kennedy & Lehan, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Chester Renaissance Associates

We have audited the accompanying balance sheets of Chester Renaissance
Associates (a Pennsylvania limited partnership) as of December 31, 2000 and 1999
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 general partners and contracted management
agent. Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 the
Partnership's general partners and contracted management agent, 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 Chester Renaissance Associates
as of December 31, 2000 and 1999, and the results of its operations, changes in
partners' equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan, LLP
Boston, Massachusetts
January 15, 2001

-54-

[Letterhead of Friedman, Alpren & Green L.L.P.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates II, Ltd.

We have audited the accompanying balance sheet of HOMESTEAD APARTMENTS
ASSOCIATES II, LTD. (a limited partnership), as of December 31, 2001, 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 audits.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 HOMESTEAD APARTMENTS ASSOCIATES
II, LTD. as of December 31, 2001, 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/ Friedman, Alpren & Green L.L.P.
New York, New York
January 30, 2002

-55-

[Letterhead of Friedman, Alpren & Green L.L.P.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates II, Ltd.

We have audited the accompanying balance sheet of HOMESTEAD APARTMENTS
ASSOCIATES II, LTD. (a limited partnership), as of December 31, 2000, 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 audits.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 HOMESTEAD APARTMENTS ASSOCIATES
II, LTD. as of December 31, 2000, 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/ Friedman Alpren & Green L.L.P.
New York, New York
February 1, 2001

-56-

[Letterhead of Friedman, Alpren & Green L.L.P.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates II, Ltd.

We have audited the accompanying balance sheets of Homestead Apartments
Associates II, LTD. (a limited partnership), as of December 31, 1999, 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 audits.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. 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 Homestead Apartments Associates
II, LTD. as of December 31, 1999, and the results of its operations, and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Friedman Alpren & Green L.L.P.
New York, New York
January 26, 2000

-57-

[Letterhead of Rosen, Seymour, Shapss, Martin & Co., L.L.P.]

INDEPENDENT AUDITORS' REPORT

To the Partners
P.S. 157 Associates, L.P.
Brooklyn, New York

We have audited the accompanying balance sheet of P.S. 157 Associates, L.P. (a
limited partnership), as of December 31, 2001, and the related statements of
operations, 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. The financial statements of P.S. 157 Associates, L.P. as of and for
the year ended December 31, 2000 were audited by the firm of Klein, Petitto,
Zapolsky & Company, LLP who merged their practice into Rosen Seymour Shapss
Martin & Company LLP effective October 1, 2001, and whose report dated January
31, 2001 stated that they were not aware of any material modifications that
should be made to the financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 P.S. 157 Associates, L.P. (a
limited partnership) as of December 31, 2001, and the results of its operations
and its cash flows for the year then ended in conformity and accounting
principles generally accepted in the United States of America.

/s/ Rosen, Seymour, Shapss, Martin & Co., L.L.P.
New York, New York
January 28, 2002

-58-

[Letterhead of Klein, Petitto, Zapolsky & Company, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
P.S. 157 Associates, L.P.
Brooklyn, NY

We have audited the accompanying balance sheets of P.S. 157 Associates, L.P. (a
limited partnership), as of December 31, 2000 and 1999 and the related
statements of operations, partners' capital, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 P.S. 157 Associates, L.P. (a
limited partnership) as of December 31, 2000 and 1999, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Klein, Petitto, Zapolsky, & Company, LLP
Great Neck, NY
January 31, 2001
except for Note 10, as to which the date is
February 15, 2001

-59-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Cloisters Limited Partnership II

We have audited the accompanying balance sheet of Cloisters Limited Partnership
II as of December 31, 2001, and the related statements of operations, changes in
partners' equity (deficit) 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. The financial statements of Cloisters Limited Partnership II for the
year ended December 31, 2000, were audited by other auditors whose report, dated
January 28, 2001, expressed an unqualified opinion on those statements.

We conducted our audits in accordance with generally accepted in the United
States of America. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. 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 2001 financial statements referred to above present fairly,
in all material respects, the financial position of Cloisters Limited
Partnership II as of December 31, 2001, the results of its operations, the
changes in partners' equity (deficit) and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 1, 2002

-60-

[Letterhead of Ziner, Kennedy & Lehan L.L.P.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Cloisters Limited Partnership II

We have audited the accompanying balance sheets of Cloisters Limited Partnership
II (a Pennsylvania limited partnership) as of December 31, 2000 and 1999, 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 general partner and contracted management agent. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 the
Partnership's general partner and contracted management agent, 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 Cloisters Limited Partnership
II at December 31, 2000 and 1999, and the results of its operations, changes in
partners' equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan L.L.P.
Boston, Massachusetts
February 6, 2001

-61-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Creative Choice Homes II, Ltd.
(A Limited Partnership)
d/b/a The Gardens Apartments

We have audited the accompanying balance sheet of Creative Choice Homes II, LTD.
(A Limited Partnership) d/b/a The Gardens Apartments as of December 31, 2001,
and the related statements of operations, partners' equity (deficit) 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 auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the 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. 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 Creative Choice Homes II, LTD.
(A Limited Partnership) d/b/a The Gardens Apartments as of December 31, 2001,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 24 through 28
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 18,
2002 on our consideration of Creative Choice Homes II, Ltd.'s internal control
and on its compliance with specific requirements applicable to major HUD
programs and fair housing and non-discrimination. Those reports are an integral
part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and
should be read in conjunction with this report in considering the results of our
audit..

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 18, 2002

-62-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Creative Choice Homes II, Ltd.
(A Limited Partnership)
d/b/a The Gardens Apartments

We have audited the accompanying balance sheet of Creative Choice Homes II, LTD.
(A Limited Partnership) d/b/a The Gardens Apartments as of December 31, 2000,
and the related statements of operations, partners' equity (deficit) 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 generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
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. 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 Creative Choice Homes II, LTD.
(A Limited Partnership) d/b/a The Gardens Apartments as of December 31, 2000,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 24 through 28
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS and "Consolidated Audit Guide
for Audits of HUD Programs," we have also issued reports dated January 22, 2001
on our consideration of Creative Choice Homes II, LTD. (A Limited Partnership)
d/b/a The Gardens Apartments' internal control and on its compliance with
specific requirements applicable to major HUD programs and fair housing and
non-discrimination. Those reports are an integral part of an audit performed in
accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audit.

/s/ Reznick Fedder & Silverman
Lead Auditor: James P. Martinko
Bethesda, Maryland
Taxpayer Identification Number: 52-1088612
January 22, 2001

-63-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Creative Choice Homes II, Ltd.
(A Limited Partnership)
d/b/a The Gardens Apartments

We have audited the accompanying balance sheet of Creative Choice Homes II, LTD.
(A Limited Partnership) d/b/a The Gardens Apartments as of December 31, 1999,
and the related statements of operations, partners' equity (deficit) 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 generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
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. 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 Creative Choice Homes II, LTD.
(A Limited Partnership) d/b/a The Gardens Apartments as of December 31, 1999,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 24 through 28
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with Government Auditing Standards and "Consolidated Audit Guide
for Audits of HUD Programs," we have also issued reports dated January 7, 2000
on our consideration of Creative Choice Homes II, LTD. (A Limited Partnership)
d/b/a The Gardens Apartments' internal control and on its compliance with
specific requirements applicable to major HUD programs and fair housing and
non-discrimination.

/s/ Reznick Fedder & Silverman
Lead Auditor: James P. Martinko
Bethesda, Maryland
Taxpayer Identification Number: 52-1088612
January 7, 2000

-64-

[Letterhead of Halbert, Katz & Co., P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Milford Crossing Associates, L.P.
Wilmington, Delaware

We have audited the accompanying balance sheets of MILFORD CROSSING ASSOCIATES,
L.P., as of December 31, 2001 and December 31, 2000, and the related statements
of loss, partners' capital (capital deficiency) and cash flows for the years
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS issued by the
comptroller general of the 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. 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 MILFORD CROSSING ASSOCIATES,
L.P. as of December 31, 2001 and December 31, 2000 and the results of its
operations, changes in partners' capital (capital deficiency) and cash flows for
the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 14 to 26) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of MILFORD
CROSSING ASSOCIATES, L.P. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, and the CONSOLIDATED AUDIT
GUIDE FOR AUDITS OF HUD PROGRAMS, issued buy the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 31, 2002, on our
consideration of MILFORD CROSSING ASSOCIATES, L.P'S internal controls, and
reports dated January 31, 2002, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to Fair
Housing and Non-Discrimination. Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

/s/ Halbert, Katz & Co., P.C.
Philadelphia, Pennsylvania
January 31, 2002

-65-

[Letterhead of Halbert, Katz & Co., P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
MILFORD CROSSING ASSOCIATES, L.P.
Wilmington, Delaware

We have audited the accompanying balance sheets of MILFORD CROSSING ASSOCIATES,
L.P., as of December 31, 2000 and December 31, 1999, and the related statements
of loss, partners' capital (capital deficiency) and cash flows for the years
then ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS issued by the comptroller general of the
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. 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 MILFORD CROSSING ASSOCIATES,
L.P. as of December 31, 2000 and December 31, 1999 and the results of its
operations, changes in partners' capital (capital deficiency) and cash flows for
the years then ended, in conformity with generally accepted accounting
principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 14 to 26) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of MILFORD
CROSSING ASSOCIATES, L.P. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 31, 2001, on our consideration of MILFORD CROSSING ASSOCIATES,
L.P'S internal controls, and reports dated January 31, 2001, on its compliance
with specific requirements applicable to major HUD programs and specific
requirements applicable to Fair Housing and Non-Discrimination.

/s/ Halbert, Katz & Co., P.C.
Philadelphia, Pennsylvania
January 31, 2001

-66-

[Letterhead of Citrin Cooperman & Company, L.L.P.]

INDEPENDENT AUDITORS' REPORT

To the Partners
BX-7X ASSOCIATES, L.P.

We have audited the accompanying balance sheets of BX-7F Associates, L.P. as of
December 31, 2001 and 2000 and the related statements of operations, partners'
capital, 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 BX-7F Associates, L.P. as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/ Citrin Cooperman & Company, L.L.P.
January 31, 2002
White Plains, New York

-67-

[Letterhead of Bernhardt, Karlitz, Hayden & DeCruze LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
BX-7F ASSOCIATES, L.P.
New York, New York

We have audited the accompanying balance sheets of BX-7F Associates, L.P. as of
December 31, 2000 and 1999 and the related statements of operations, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 BX-7F Associates, L.P. as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

/s/ Bernhardt, Karlitz, Hayden & DeCruze LLP
White Plains, New York
January 26, 2001

-68-

[Letterhead of Amilcar Torres Rivera, CPA]

INDEPENDENT AUDITORS' REPORT

To the Partners
Los Angeles Limited Partnership

I have audited the accompanying balance sheets of Los Angeles Limited
Partnership as of December 31, 2001 and 2000, and the related statements of
loss, changes in Partners' capital and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. My responsibility is to express an opinion on these financial
statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in
the United States of America which require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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. I believe that my audit provides a reasonable basis for my
opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Los Angeles Limited Partnership as
of December 31, 2001 and 2000, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

Los Angeles Limited Partnership rent income from subsidies is approximately 86%
of total Partnership revenues. As disclosed in Note 1-A, the actual rent subsidy
contract is due since December 31, 2001 (124 units).

/s/ Amilcar Torres Rivera, CPA
Stamp #1652577 of the
Puerto Rico Society of
CPA's was affixed to the original.

San Juan, Puerto Rico
January 28, 2002

-69-

[Letterhead of Amilcar Torres Rivera.]

INDEPENDENT AUDITOR'S REPORT

The Partners
Los Angeles Limited Partnership

I have audited the accompanying balance sheets of Los Angeles Limited
Partnership as of December 31, 2000 and 1999, and the related statements of
loss, changes in Partners' capital 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 my audit.

I conducted my audit in accordance with generally accepted auditing standards
which require that I plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. 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. I believe that my
audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Los Angeles Limited Partnership. as
of December 31, 2000 and 1999, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.

Los Angeles Limited Partnership rent income from subsidies is approximately 86%
of total Partnership revenues. As disclosed in Note 1-A, the actual rent subsidy
contract is due since September 30, 2000 (124 units).

/s/ Amilcar Torres Rivera, CPA
Stamp #1652521 of the
Puerto Rico Society of
CPA's was affixed to the original.

San Juan, Puerto Rico
January 29, 2001

-70-

[Letterhead of Toski, Schaefer & Co., P.C.]

INDEPENDENT AUDITOR'S REPORT

The Partners
Christine Apartments, L.P.:

We have audited the accompanying balance sheets of Christine Apartments, L.P. as
of December 31, 2001 and 2000 and the related statements of operations,
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 auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the 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. 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 Christine Apartments, L.P. as
of December 31, 2001 and 2000 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.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated February 5, 2002 on our consideration of the Partnership's internal
control and on its compliance with laws and regulations applicable to the
financial statements. That report is an integral part of an audit performed in
accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audit.

/s/ Toski, Schaefer & Co., P.C.
Williamsville, New York
February 5, 2002

-71-

[Letterhead of Toski, Schaefer & Co., P.C.]

INDEPENDENT AUDITOR'S REPORT

The Partners
Christine Apartments, L.P.:

We have audited the accompanying balance sheets of Christine Apartments, L.P. as
of December 31, 2000 and 1999 and the related statements of operations,
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 generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
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. 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 Christine Apartments, L.P. as
of December 31, 2000 and 1999 and the results of its operations, changes in
partners' equity and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued reports
dated February 9, 2001 on our consideration of the Partnership's internal
control and on its compliance with laws and regulations applicable to the
financial statements. That report is an integral part of an audit performed in
accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audit.

/s/ Toski, Schaefer & Co., P.C.
Williamsville, New York
February 9, 2001

-72-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Plainsboro Housing Partners Limited Partnership

We have audited the accompanying balance sheets of Plainsboro Housing Partners
Limited Partnership as of December 31, 2001 and 2000, and the related statements
of revenue and expenses, 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 Plainsboro Housing Partners
Limited Partnership as of December 31, 2001 and 2000, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 3, 2002

-73-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Plainsboro Housing Partners Limited Partnership

We have audited the accompanying balance sheets of Plainsboro Housing Partners
Limited Partnership as of December 31, 2000 and 1999, and the related statements
of revenue and expenses, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Plainsboro Housing Partners
Limited Partnership as of December 31, 2000 and 1999, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended, in conformity with generally accepted accounting principles.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 5, 2001

-74-

See accompanying notes to consolidated financial statements.

-75-

See accompanying notes to consolidated financial statements.

-76-

See accompanying notes to consolidated financial statements.

-77-

See accompanying notes to consolidated financial statements.

-78-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

NOTE 1 - General

Independence Tax Credit Plus L.P. (the "Partnership"), a Delaware limited
partnership, was organized on November 7, 1990, but had no activity until May
31, 1991 (which date is considered to be inception for financial accounting
purposes) and commenced its public offering on July 1, 1991. The general partner
of the Partnership is Related Independence Associates L.P., a Delaware limited
partnership (the "General Partner").

The Partnership's business is to invest in other partnerships ("Local
Partnerships," "subsidiaries" or "subsidiary partnerships") owning leveraged
Apartment Complexes that are eligible for the low-income housing tax credit
("Tax Credit") enacted in the Tax Reform Act of 1986, some of which complexes
may also be eligible for the historic rehabilitation tax credit.

The Partnership has interests in twenty-eight Local Partnerships as of March 31,
2002.

The Partnership was authorized to issue a total of 200,000 Beneficial Assignment
Certificates ("BACs") which have been registered with the Securities and
Exchange Commission for sale to the public. Each BAC represents all of the
economic and virtually all of the ownership rights attributable to a limited
partnership interest. As of March 31, 2002, the Partnership had raised a total
of $76,786,000 representing 76,786 BACs and no further issuance of BACs is
anticipated.

The terms of the Partnership's Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") provide, among other things, that net
profits or losses and distributions of cash flow are, in general, allocated 99%
to the limited partners and BACs holders and 1% to the General Partner.

NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Accounting

For financial reporting purposes the Partnership's fiscal year ends on March 31.
All subsidiaries have fiscal years ending December 31. Accounts of the
subsidiaries have been adjusted for intercompany transactions from January 1
through March 31. The Partnership's fiscal year ends March 31 in order to allow
adequate time for the subsidiaries financial statements to be prepared and
consolidated. The books and records of the Partnership are maintained on the
accrual basis of accounting, in accordance with U.S. generally accepted
accounting principles ("GAAP").

b) Basis of Consolidation

The consolidated financial statements include the accounts of the Partnership
and twenty-eight subsidiary partnerships in which the Partnership is a limited
partner. Through the rights of the Partnership and/or an affiliate of the
General Partner, which affiliate has a contractual obligation to act on behalf
of the Partnership, to remove the general partner of the subsidiary local
partnerships and to approve certain major operating and financial decisions, the
Partnership has a controlling financial interest in the subsidiary local
partnerships. All intercompany accounts and transactions with the subsidiary
partnerships have been eliminated in consolidation.

Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from cash contributions and cash
distributions to the minority interest partners.

-79-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

Losses attributable to minority interest which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated approximately $35,000, $35,000 and $31,000 for the years ended March
31, 2002, 2001 and 2000, respectively (the 2001, 2000 and 1999 Fiscal Years,
respectively). The Partnership's investment in each subsidiary is equal to the
respective subsidiary's partners' equity less minority interest capital, if any.
In consolidation, all subsidiary partnership losses are included in the
Partnership's capital account except for losses allocated to minority interest
capital.

c) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term highly liquid instruments purchased with original maturities of
three months or less.

d) Property and Equipment

Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis is below depreciated cost. At that time, property investments
themselves are reduced to estimated fair value (generally using discounted cash
flows) when the property is considered to be impaired and the depreciated cost
exceeds estimated fair value.

At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated.

Through March 31, 2002, the Partnership has recorded approximately $500,000 as a
loss on impairment of assets.

e) Income Taxes

The Partnership is not required to provide for, or pay, any federal income
taxes. Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The Partnership may be subject
to state and local taxes in jurisdictions in which it operates. For income tax
purposes, the Partnership has a fiscal year ending December 31.

f) Offering Costs

Costs incurred to sell BACs, including brokerage and the nonaccountable expense
allowance, are considered selling and offering expenses. These costs are charged
directly to limited partners' capital.

-80-

*Management believes it is not practical to estimate the fair value of these
mortgage notes payable because mortgage programs with similar characteristics
are not currently available to the Partnerships.

The carrying amount of other financial instruments that require such disclosure
approximates fair value.

-81-

Included in property and equipment is approximately $4,500,000 of acquisition
fees paid to the general partner and $1,057,104 of acquisition expenses as of
March 31, 2002 and 2001. In addition, as of March 31, 2002 and 2001, building
and improvements include approximately $4,378,000 of capitalized interest.

In connection with the rehabilitation of the properties, the subsidiary
partnerships have incurred developer's fees of approximately $14,500,000 to the
Local General Partners and affiliates, net of approximately $979,000 earned by
the Partnership. Such fees have been included in the cost of property and
equipment.

Depreciation expense for the years ended March 31, 2002, 2001 and 2000 amounted
to, $5,591,004, $5,576,423 and $5,773,153, respectively.

During the years ended March 31, 2002 and 2001, accumulated depreciation of $684
and $9,200, respectively, was written off.

NOTE 5 - Cash Held in Escrow

Cash held in escrow consists of the following:

*Represents amounts to be paid to seller after completion of properties under
construction and upon meeting specified rental achievement criteria.

-82-

*Over the life of the related mortgages.

Amortization expense for the years ended March 31, 2002, 2001 and 2000 amounted
to $192,817, $173,714 and $435,090, respectively.

During the year ended March 31, 2001, deferred costs of $97,459 and accumulated
amortization of $97,459 were written off.

NOTE 7 - Mortgage Notes Payable

The mortgage notes are payable in aggregate monthly installments of
approximately $632,000, including principal and interest at rates varying from
0% to 10.29% per annum, through the year 2048. Each subsidiary partnership's
mortgage note payable is collateralized by the land and buildings of the
respective subsidiary partnership, the assignment of certain subsidiary
partnership's rents and leases, and is without further recourse.

Certain mortgage notes with balances aggregating $10,619,405 and $10,754,705 at
December 31, 2001 and 2000, respectively, which bear interest at rates ranging
from 8.5% to 9% per annum, were eligible for interest rate subsidies.
Accordingly, the subsidiary partnerships paid only that portion of the monthly
payments that would be required if the interest rate was 1% and the balance was
subsidized under Sections 236 and 551(b) of the National Housing Act.

Annual principal payment requirements, as of March 31, 2002, for each of the
next five fiscal years and thereafter, are as follows:

The mortgage agreements require monthly deposits to replacement reserves of
approximately $46,000 and monthly deposits to escrow accounts for real estate
taxes, hazard and mortgage insurance and other (Note 5).

-83-

(i) The General Partner is entitled to receive a partnership management fee,
after payment of all partnership expenses, which together with the local annual
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. Subject to the foregoing limitation, the partnership
management fee will be determined by the General Partner in its sole discretion
based upon its review of the Partnership's investments. Unpaid partnership
management fees for any year have been, and will continue to be, accrued without
interest and will be payable only to the extent of available funds after the
Partnership has made distributions to the limited partners of sale or
refinancing proceeds equal to their original capital contributions plus a 10%
priority return thereon (to the extent not theretofore paid out of cash flow).
Partnership management fees owed to the General Partner amounting to
approximately $3,959,000 and $3,179,000 were accrued and unpaid as of March 31,
2002 and 2001, respectively.

(ii) The Partnership reimburses the General Partner and its affiliates for
actual Partnership operating expenses incurred by the General Partner and its
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partner performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance. Expense reimbursements owed to the General Partners
and its affiliates amounting to approximately $360,000 and $525,000 were accrued
and unpaid as of March 31, 2002 and 2001, respectively.

(iii) Property management fees incurred to affiliates of the subsidiary
partnerships amounted to $957,982, $945,245 and $946,707 for the 2001, 2000 and
1999 Fiscal Years, respectively.

-84-

Interest expense incurred on such long-term notes payable amounted to
approximately $105,000, $108,000 and $107,000 for the 2001, 2000 and 1999 Fiscal
Years, respectively.

C) Other

Pursuant to the Partnership Agreement and the Local Partnership Agreements, the
General Partner and Independence SLP L.P. received their pro rata share of
profits, losses and tax credits.

-85-

NOTE 10 - Commitments and Contingencies

Hope Bay Limited Partnership("Hope Bay")
- ----------------------------------------
Hope Bay has been experiencing higher operating costs attributable, in part, to
the project's dependence upon gas for heating and escalating repair costs. These
conditions, in addition to regulatory rent restrictions imposed under HUD
guidelines, have resulted in operating cash flow not meeting all current
obligations as they become due. At December 31, 2001, current liabilities exceed
current assets by approximately $50,000 creating a liquidity problem. This
raises doubt as to whether Hope Bay will be able to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability that might be necessary should Hope Bay be unable to continue as
a going concern.

Hope Bay's management has requested and received a HUD approval rent increase of
approximately 2% for all units effective December 1, 2001. Hope Bay's management
continuously monitors operating costs and will request additional rent increases
when allowed by HUD.

The Partnership's investment in Hope Bay at March 31, 2002 was $76,770 and the
minority interest balance at that date was approximately ($4,000). Hope Bay's
net loss after minority interest amounted to approximately $146,000 for the 2001
Fiscal Year.

Old Public Limited Partnership
- ------------------------------
Old Public Limited Partnership (the "Debtor") originally filed its bankruptcy
case in the United States Bankruptcy Court for the Southern District of New York
on November 17, 1998. The case was transferred to the United States Bankruptcy
Court for the Middle District of Tennessee, Columbia Division before Judge
George Paine, presiding as the result of a venue motion filed by the First
National Bank of Pulaski, Tennessee, the sole secured creditor of the Debtor

-86-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002

(the "Bank"). On or about February 9, 2001, the United States Bankruptcy Court
for the Middle District of Tennessee entered a Final Decree closing the Old
Public bankruptcy case. On September 10, 1999 the debtor filed its Second
Amended Plan of Reorganization and thereafter filed two modifications. On
February 18, 2000 the Judge ordered that the plan be confirmed in its entirety
and the Reorganized Debtor (Old Public Limited Partnership) must effectuate the
Plan according with the terms of the plan and the confirmation order. It was
also ordered that the proceedings, Old Public Limited Partnership vs. First
National Bank of Pulaski, Tennessee be dismissed without prejudice.

As of March 31, 2002, Old Public owes the Partnership approximately $822,000.

a) Uninsured Cash and Cash Equivalents

The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation up to $100,000. As of March 31, 2002, uninsured cash and cash
equivalents approximated $347,000.

b) Other

The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 21%
of the properties are located in any single state. There are also substantial
risks associated with owning properties receiving government assistance; for
example, the possibility that Congress may not appropriate funds to enable the
U.S. Department of Housing and Urban Development ("HUD") to make rental
assistance payments. HUD also restricts annual cash distributions to partners
based on operating results and a percentage of the owner's equity contribution.
The Partnership cannot sell or substantially liquidate its investments in
subsidiary partnerships during the period that the subsidy agreements are in
existence, without HUD's approval. Furthermore, there may not be market demand
for apartments at full market rents when the rental assistance contracts expire.

The Partnership and BACs holders began to recognize Housing Tax Credits with
respect to a Property when the Credit Period for such Property commenced.
Because of the time required for the acquisition, completion and rent-up of
Properties, the amount of Tax Credits per BAC gradually increased over the first
three years of the Partnership. Housing Tax Credits not recognized in the first
three years will be recognized in the 11th through 13th years. The Partnership
generated $11,986,066, $11,986,066 and $11,986,066 Housing Tax Credits during
the 2001, 2000 and 1999 tax years, respectively.

-87-

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None

PART III

Item 10. Directors and Executive Officers of the Registrant.

The Partnership has no directors or executive officers. The Partnership's
affairs are managed and controlled by the General Partner. Certain information
concerning the directors and executive officers of Related Independence
Associates Inc. ("RIAI"), the sole general partner of Related Independence
Associates L.P., the General Partner, is set forth below.

STEPHEN M. ROSS, 62, is also President, Director and shareholder of The Related
Realty Group, Inc., the General Partner of The Related Companies, L.P. He
graduated from the University of Michigan School of Business Administration with
a Bachelor of Science degree and from Wayne State University School of Law with
a Juris Doctor degree. Mr. Ross than received a Master of Laws degree in
taxation from New York University School of Law. He joined the accounting firm
of Coopers & Lybrand in Detroit as a tax specialist and later moved to New York,
where he worked for two large Wall Street investment banking firms in their real
estate and corporate finance departments. Mr. Ross formed the predecessor of The
Related Companies, L.P. in 1972 to develop, manage, finance and acquire
subsidized and conventional apartment developments. Mr. Ross also serves on the
Board of Trustees of Charter Municipal Mortgage Acceptance Company.

MICHAEL BRENNER, 56, is a Director of Aegis, and is the Executive Vice President
and Chief Financial Officer of TRCLP. Prior to joining TRCLP in 1996, Mr.
Brenner was a partner with Coopers & Lybrand, having served as managing partner
of its Industry Programs and Client Satisfaction initiatives from 1993-1996,
managing partner of the Detroit group of offices from 1986-1993 and the Chairman
of its National Real Estate Industry Group from 1984-1986. Mr. Brenner graduated
summa cum laude from the University of Detroit with a Bachelors degree in
Business Administration and from the University of Michigan with a Masters of
Business Administration, with distinction. Mr. Brenner also serves on the Board
of Trustees of Charter Municipal Mortgage Acceptance Company and Aegis Realty,
Inc.

ALAN P. HIRMES, 47, has been a Certified Public Accountant in New York since
1978. Prior to joining Capital in October 1983, Mr. Hirmes was employed by
Weiner & Co., Certified Pub-

-88-

lic Accountants. Mr. Hirmes is also a Vice President of Capital. Mr. Hirmes
graduated from Hofstra University with a Bachelor of Arts degree. Mr. Hirmes
also serves on the Board of Directors of Aegis Realty, Inc., Charter Municipal
Mortgage Acceptance Company and American Mortgage Acceptance Company.

STUART J. BOESKY, 46, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984, Mr. Boesky practiced law with the Boston law firm of
Kaye Fialkow Richard & Rothstein (which subsequently merged with Strook & Strook
& Lavan) and from 1978 to 1980 was a consultant specializing in real estate at
the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from Michigan
State University with a Bachelor of Arts degree and from Wayne State School of
Law with a Juris Doctor degree. He then received a Master of Laws degree in
Taxation from Boston University School of Law. Mr. Boesky also serves on the
Board of Directors of Aegis Realty, Inc., Charter Municipal Acceptance Company
and American Mortgage Acceptance Company.

MARC D. SCHNITZER, 41, is responsible both for financial restructurings of real
estate properties and directing Capital's acquisitions of properties generating
Housing Tax Credits. Mr. Schnitzer received a Masters of Business Administration
from The Wharton School of the University of Pennsylvania in December 1987
before joining Related in January 1988. From 1983 to January 1986, he was a
financial analyst for the First Boston Corporation in New York. Mr. Schnitzer
graduated summa cum laude with a Bachelor of Science in Business Administration
from the School of Management at Boston University in May 1983.

DENISE L. KILEY, 42, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in RCC sponsored
corporate, public and private equity and debt funds. Prior to joining Related in
1990, Ms. Kiley had experience acquiring, financing and asset managing
multifamily residential properties. From 1981-1985 she was an auditor with Price
Waterhouse. Ms. Kiley holds a Bachelor of Science in Accounting from Boston
College.

GLENN F. HOPPS, 39, joined Related in December, 1990, and prior to that date was
employed by Mark Shron & Company and Weissbarth, Altman and Michaelson certified
public accountants. Mr. Hopps graduated from New York State University at Albany
with a Bachelor of Science Degree in Accounting.

TERESA WICELINSKI, 36, joined Related in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski graduated from Pace University with a Bachelor of Arts Degree in
Accounting.

-89-

Item 11. Executive Compensation.

The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the general partner of the General Partner for their services. Under
the terms of the Partnership Agreement, the General Partner and its affiliates
are entitled to receive compensation from the Partnership in consideration of
certain services rendered to the Partnership by such parties. In addition, the
General Partner is entitled to 1% of all cash distributions and Tax Credit
allocations and a subordinated 15% interest in Net Sales or Refinancings
Proceeds. See Note 8 to the Financial Statements in Item 8 above for a
presentation of the types and amounts of compensation paid to the General
Partner and its affiliates, which is incorporated herein by reference thereto.

Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The levels of
compensation payable to the General Partner and/or its affiliates is limited by
the terms of the Partnership Agreement and may not be increased therefrom on a
discretionary basis.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Independence SLP L.P., a limited partnership whose general partner is the
General Partner of the Partnership and which acts as the special limited partner
of each Local Partnership, holds either a 0.1% or 1% limited partnership
interest in each Local Partnership. See Note 8 to the Financial Statements in
Item 8 above, which information is incorporated herein by reference thereto.

Except as set forth in the table below, no person is known by the Partnership to
be the beneficial owner of more than 5% of the Limited Partnership Interests and
neither the Related General Partner nor any director or executive officer of the
Related General Partner owns any Limited Partnership Interests. The following
table sets forth the number of BACs beneficially owned, as of June 1, 2002, by
(i) each BACs holder known to the Partnership to be a beneficial owner of more
than 5% of the BACs, (ii) each director and executive officer of the general
partner of the Related General Partner and (iii) the directors and executive
officers of the general partner of the Related General Partner as a group.
Unless otherwise noted, all BACs are owned directly with sole voting and
dispositive powers.

-90-

(1) The address for each of the persons in the table is 625 Madison Avenue, New
York, New York 10022.

(2) As set forth in Schedule 13D filed by Lehigh Tax Credit Partners L.L.C.
("Lehigh I") and Lehigh Tax Credit Partners, Inc., (the "Managing Member") on
June 10, 1997 with the Securities and Exchange Commission (the "Commission") and
pursuant to a letter agreement dated May 28, 1997 among the Partnership, Lehigh
I and the Related General Partner (the "Standstill Agreement"), Lehigh I agreed
that, prior to May 28, 2007 (the "Standstill Expiration Date"), it will not and
it will cause certain affiliates including (Lehigh II) not to (i) acquire,
attempt to acquire or make a proposal to acquire, directly or indirectly, more
than 45% (including BACs acquired through all other means) of the outstanding
BACs, (ii) seek to propose to enter into, directly or indirectly, any merger,
consolidation, business combination, sale or acquisition of assets, liquidation,
dissolution or other similar transaction involving the Partnership, (iii) make,
or in any way participate, directly or indirectly, in any "solicitation" of
"proxies" or "consents" (as such terms are used in the proxy rules of the
Commission) to vote any voting securities of the Partnership, (iv) form, join or
otherwise participate in a "group" (within the meaning of Section 13 (d)(3) of
the Securities and Exchange Act of 1934) with respect to any voting securities
of the Partnership, except those affiliates bound by the Standstill Agreement
will not be deemed to have violated it and formed a "group" solely by acting in
accordance with the Standstill Agreement, (v) disclose in writing to any third
party any intention, plan or arrangement inconsistent with the terms of the
Standstill Agreement, or (vi) loan money to, advise, assist or encourage any
person in connection with any action inconsistent with the terms of the
Standstill Agreement. In addition, Lehigh I agreed that until the Standstill
Expiration Date it will not sell any BACs acquired by it unless the buyer of
such BACs agrees to be bound by the Standstill Agreement; provided, however,
Lehigh I may make transfers in the secondary market to any purchaser which
represents that following such sale it will not own three (3%) percent or more
of the BACs outstanding. By the terms of the Standstill Agreement, Lehigh I also

-91-

agreed to vote its BACs in the same manner as a majority of all voting BACs
holders; provided, however, Lehigh I is entitled to vote its BACs as it
determines with regard to any proposal (i) to remove the Related General Partner
as a general partner of the Partnership or (ii) concerning the reduction of any
fees, profits, distributions or allocations for the benefit of the Related
General Partner or its affiliates. The addresses of each of the Partnership,
Lehigh I and the Related General Partner is 625 Madison Avenue, New York, New
York 10022.

(3) All of such BACs represent BACs owned directly by Lehigh, I and Lehigh Tax
Credit Partners II, L.L.C. ("Lehigh II") for which the Managing Member serves as
managing member. As of June 1, 2002, Lehigh I held 3,410.65 BACs and Lehigh II
held 3,435.65 BACs.

(4) Each such party serves as a director and executive officer of the Managing
Member and owns an equity interest therein except J. Michael Fried who owns only
an economic interest.

Item 13. Certain Relationships and Related Transactions.

The Partnership has and will continue to have certain relationships with the
General Partner and its affiliates, as discussed in Item 11 and also Note 8 to
the Financial Statements in Item 8 above, which is incorporated herein by
reference. However, there have been no direct financial transactions between the
Partnership and the directors and officers of the general partner of the General
Partner.

-92-

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

-93-

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(continued)

-94-

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(continued)

(d) Not applicable

-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.

INDEPENDENCE TAX CREDIT PLUS L.P.
---------------------------------
(Registrant)

By: RELATED INDEPENDENCE ASSOCIATES L.P.,
its General Partner

By: RELATED INDEPENDENCE ASSOCIATES INC.,
a General Partner

Date: June 6, 2002 By: /s/ Michael Brenner
-------------------
Michael Brenner
President and Chief Executive Officer
(Principal Executive Officer)

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:

Signature Title Date
- ------------------- --------------------- ------------

President and Chief Executive Officer
/s/ Michael Brenner (principal executive officer)
- ------------------- of Related Independence Associates Inc. June 6, 2002
Michael Brenner

Senior Vice President
/s/ Alan P. Hirmes (principal financial officer)
- ------------------- of Related Independence Associates Inc. June 6, 2002
Alan P. Hirmes

Treasurer
/s/ Glenn F. Hopps (principal accounting officer) of
- ------------------- Related Independence Associates Inc. June 6, 2002
Glenn F. Hopps

/s/ Stephen M. Ross Director of
- -------------------- Related Independence Associates Inc. June 6, 2002
Stephen M. Ross

INDEPENDENT AUDITORS' REPORT

To the Partners of
Independence Tax Credit Plus L.P. and Subsidiaries
(A Delaware Limited Partnership)

In connection with our audits of the consolidated financial statements of
Independence Tax Credit Plus L.P. and Subsidiaries (A Delaware Limited
Partnership) included in the Form 10-K as presented in our opinion dated June 5,
2002 on page 15, and based on the reports of other auditors, we have also
audited supporting Schedule I for the 2001, 2000 and 1999 Fiscal Years and
Schedule III at March 31, 2002. In our opinion, and based upon the reports of
the other auditors, these consolidated schedules present fairly, when read in
conjunction with the related consolidated financial statements, the financial
data required to be set forth therein.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 5, 2002

Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly, partners' capital on the consolidated balance sheet will differ
from partners' capital shown above.

*Condensed partners' capital includes $659,125 and $694,270 of related party
income at March 31, 2002 and 2001, respectively.

*Personal property is depreciated over the estimated useful life ranging from 3
to 10 years.
**During the year ended December 31, 1997, the Partnership sold a parcel of land
for $210,000 to an entity with a member who is also the general partner of the
Partnership.

At the time the Local Partnerships were acquired by Independence Tax Credit Plus
L.P., the entire purchase price paid by Independence Tax Credit Plus L.P. was
pushed down to the local partnerships as property and equipment with an
offsetting credit to capital. Since the projects were in the construction phase
at the time of acquisition, the capital accounts were insignificant at the time
of purchase. Therefore, there are no material differences between the original
cost basis for tax and GAAP.