LIBERTY TAX CREDIT PLUS III LP - 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 0-24656

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

Delaware 13-3491408
- --------------------------------- -------------------
(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:

Limited Partnership Interests and Beneficial Assignment Certificates
(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
- -------

Liberty Tax Credit Plus III L.P. (the "Partnership") is a limited partnership
which was formed under the laws of the State of Delaware on November 17, 1988.
The General Partners of the Partnership are Related Credit Properties III L.P.,
a Delaware limited partnership (the "Related General Partner"), and Liberty GP
III Inc., a Delaware corporation (the "Liberty General Partner"). The general
partner of the Related General Partner is Related Credit Properties III Inc., a
Delaware corporation. On November 25, 1997, an affiliate of the Related General
Partner, purchased 100% of the stock of the Liberty General Partner (the
"Transfer"). In addition to the Transfer, by acquiring the stock of the Liberty
General Partner, an affiliate of the Related General Partner also acquired the
Liberty General Partner's general partnership interest in Liberty Associates IV,
L.P. ("Liberty Associates"), the special limited partner of the Partnership.
Pursuant to the Partnership's Amended and Restated Partnership Agreement, the
consent of the limited partners was not required to approve the Transfer. In
connection with the Transfer, the Partnership paid to the Liberty General
Partner the accrued asset management fees owed to the Liberty General Partner in
the aggregate amount of $737,750.

On May 2, 1989, 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").

As of March 30, 1990, (the date on which the Partnership held the final closing
of the sale of BACs and on which the Offering was terminated), the Partnership
had received $139,101,500 of gross proceeds of the Offering from 9,082
investors.

The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "Subsidiary
Partnerships") each of which owns one or more leveraged low-income multifamily
residential complexes ("Apartment Complexes") that are eligible for the
low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform
Act of 1986, and some of which are eligible for the historic rehabilitation tax
credit ("Historic Rehabilitation Tax Credit") ("Rehabilitation Projects"; and
together with the Apartment Complexes, the"Properties"). Some of the Apartment
Complexes benefit from one or more other forms of federal or state housing
assistance. The Partnership's investment in each Local Partnership represents
from 27% to 98% of the Partnership interests in the Local Partnership. As of
March 31, 2002 the Partnership has disposed of one of its 62 original
properties. As of March 31, 2002, approximately $109,000,000 (not including
acquisition fees) of net proceeds have been invested in the remaining 61 Local
Partnerships. The Partnership does not anticipate making any additional
investments. See Item 2, Properties, below.

Liberty Associates is the special limited partner in all of the Local
Partnerships. Liberty Associates has certain rights and obligations in its role
as special limited partner which permit this affiliate of the registrant to
exercise control over the management and policies of the Local Partnerships.

2

The Partnership has been formed to invest primarily in low-income Apartment
Complexes that are eligible for the Housing Tax Credit. The investment
objectives of the Partnership are to:

1. Entitle qualified BACs holders to substantial Housing Tax Credits over the
period of the Partnership's entitlement to claim such 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
Properties.

4. Provide cash distributions when available from the operations of the
Properties, current taxes on which are expected to be substantially deferred.

5. 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
Housing 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 agency the authority to recognize Housing 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
Housing Tax Credits at all times during the 15-year period (the "Compliance
Period") commencing at the beginning of the Credit Period. Once a Local
Partnership has become eligible to recognize Housing Tax Credits, it may lose
such eligibility and suffer an event of "recapture" if (1) the Partnership
ceases to meet qualification requirements , (2) there is a decrease in the
qualified basis of the property, or (3) there is a reduction in the taxpayer's
interest in the property at any time during the Compliance Period. None of the
Local Partnerships in which the Partnership has acquired an interest has
suffered an event of recapture.

The Partnership continues to meet its primary objective of generating Housing
Tax Credits. The Partnership generated Housing Tax Credits of approximately
$8,019,000, $15,786,000 and $19,534,000 during the tax years 2001, 2000 and 1999
respectively.

The Partnership also continues to meet its objective of allocating passive
losses to individual BACs holders to offset passive income that they may realize
from rental real estate investments and other passive activities, and allocating
passive losses to corporate BACs holders to offset business income.

Cash distributions received from the Local Partnerships have been relatively
immaterial. Management does not expect that the distributions received from the
Local Partnerships will be sufficient to permit cash distributions to BACs
holders. The Partnership does not anticipate providing cash distributions to
BACs holders other than distributions of sale or refinancing proceeds upon the
disposition of Properties.

There can be no assurance that the Partnership will continue to achieve its
investment objectives in the future.

Certain Subsidiary Partnerships are the beneficiaries of certain subsidy
agreements pursuant to which the United States Department of Housing and Urban
Development ("HUD") subsidizes the amount of rent that the Subsidiary
Partnership earns. Pursuant to those subsidy agree-

3

ments, the Subsidiary Partnerships are subject to HUD restrictions which limit
annual cash distributions to partners and restrict the Subsidiary Partnerships
from selling or otherwise liquidating their assets during the period that the
agreement with HUD is in existence without HUD's approval.

In order for certain Subsidiary Partnerships to qualify for the section 421A
program ("Section 421A Program") and the inclusionary zoning program
("Inclusionary Zoning Program"), they must comply with certain requirements by
local authorities as to the level of rent that may be charged to tenants, the
tenants' incomes, the obligation to operate the property in accordance with rent
stabilization guidelines, and restrictions on the rate at which housing units
may be released from such guidelines.

Also, certain Subsidiary Partnerships obtain grants from local authorities to
fund construction costs of the properties and in order to qualify must maintain
the low-income nature of the property, among other provisions.

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
20% of the Properties are located in any single state. There are also
substantial risks associated with owning Properties receiving government
assistance, such as 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.

Segments
- --------

The Partnership operates in one segment, which is the investment in multi-family
residential properties.

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

The real estate business is highly competitive and substantially all of the
Properties in which the Partnership has acquired an interest 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 Partners and/or their 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 Partners and their affiliates. The General
Partners receive compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partners
and certain of their 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.

As of March 31, 2002 the Partnership held a 98% limited partnership interest in
60 Local Partnerships and a 26.46% limited partnership interest in 1 Local
Partnership (the other 71.54% limited partnership interest is held by an
affiliate of the Partnership with the same management); together these 61 Local
Partnerships own 65 apartment complexes. During the year

4

ended March 31, 2002, the Partnership sold its Limited Partnership Interest in
one Local Partnership, Northwood Associates Limited Partnership (the "Sold
Asset"). Set forth below is a schedule of these 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.

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

5

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

6

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

7

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

(a) Consists of five apartment complexes located throughout Michigan.

(b) The Partnership's Limited Partnership Interest was sold during the fiscal
year ended March 31, 2002 (see Note 10 in Item 8. Financial Statements and
Supplemental Data).

The General Partners have generally required, in connection with the
Partnership's investments in the Local Partnerships, that the general partners
of each Local Partnership (the "Local General Partners") undertake an obligation
to fund operating deficits (up to a stated maximum amount) of the Local
Partnership during a limited period of time following rent stabilization
("Guarantee Period"). In each case, the operating deficits have been funded by
Operating Loans which will not bear interest and will be repaid only out of 50%
of available cash flow or out of available net sale or refinancing proceeds. The
gross amount of the Operating Deficit Guarantees aggregate approximately
$18,700,000, of which approximately $17,600,000 had expired as of March 31,
2002. In cases where the General Partners deem it appropriate, the obligations
of a Local General Partner under the operating deficit and/or rent-up guarantees
are secured by letters of credit and/or cash escrow deposits.

The Housing Tax Credits are available for a ten-year period which commences when
the property is occupied by qualified tenants. However, the annual Housing Tax
Credit available in the year in which the Apartment Complex was first occupied
by qualified tenants must be prorated based upon the months remaining in the
year after the Apartment Complex was placed in service. The amount of the annual
Housing 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 was allocated Housing Tax Credits
only beginning in the month following the month in which the Partnership
acquired its interest. In addition, Housing Tax Credits allocated in any prior
period may not be claimed by the Partnership. The Partnership has also acquired
Local Partnership Interests in which some of the Local Partnerships owning
historic complexes qualify for the Historic Rehabilitation Tax Credit. The
amount of the Historic Rehabilitation Tax Credit is generally 20% of qualified
rehabilitation expenditures and is available in its entirety in the year the
rehabilitated building is placed in service or, under certain circumstances, in
the year in which the rehabilitation expenditure is made.

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

Rent 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 indexes in various geographic areas.
Market conditions, however, determine the amount of rent actually charged.

8

Management annually reviews the physical state of the Properties and suggests to
the respective Local General Partner budget improvements, which improvements 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.

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.

Item 3. Legal Proceedings.

None.

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.

The Partnership has issued 27,820.3 Limited Partnership Interests, each
representing a $5,000 capital contribution to the Partnership, for aggregate
Gross Proceeds of $139,101,500. All of the issued and outstanding Limited
Partnership Interests have been issued to Liberty Credit Assignor III Inc. (the
"Assignor Limited Partner"), which has in turn issued 139,101.5 BACs to the
purchasers thereof for an aggregate purchase price of $139,101,500. Each BAC
represents all of the economic and virtually all of the ownership rights
attributable to one-fifth of 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 Partners have imposed limited
restrictions on the transferability of the BACs and the Limited Partnership
Interests in secondary market transactions. Implementation of these restrictions
should prevent a public trading market from developing and 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 15, 2002, the Partnership has approximately 9,078 registered holders
of an aggregate of 139,101.5 BACs.

9

All of the Partnership's general partnership interests, representing an
aggregate capital contribution of $2,000, are held by the two General Partners.

Certain Subsidiary Partnerships are subject to HUD restrictions which limit
annual cash distributions to partners and restrict the Subsidiary Partnerships
from selling or otherwise liquidating their assets during the period that the
agreement with HUD is in existence without HUD's approval.

Pursuant to the terms of the Partnership Agreement there are no material
restrictions that restrict the ability of the Partnership to make distributions.

However, the Partnership has made no distributions to BACs holders as of March
31, 2002. The Partnership does not anticipate providing cash distributions to
BACs holders other than distributions of sale or refinancing proceeds upon the
disposition of Properties.

10

Item 6. Selected Financial Data.

The information set forth below presents selected financial data of the
Partnership from the last five fiscal years. Additional financial information is
set forth in the audited financial statements in Item 8 hereof.

During the years ended March 31, 1998 through 2002, total assets decreased
primarily due to depreciation, partially offset by net addition to property and
equipment. During the years ended March 31, 1998 through 2002, total liabilities
increased primarily due to the accrual of principal and interest payments at one
of the Local Partnerships along with the increase in obligations at the
remaining Local Partnerships.

11

Selected Quarterly Financial Date (Unaudited)

12

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

Liquidity and Capital Resources
- -------------------------------

Through March 31, 2002, the Partnership has invested approximately $109,000,000
(not including acquisition fees) of net proceeds in 62 Local Partnerships, of
which approximately $260,000 remains to be paid including approximately $242,000
held in escrow. During the year ended March 31, 2002, the Partnership sold its
Limited Partnership Interest in one Local Partnership.

During the year ended March 31, 2002, the Partnership's primary source of funds
included (i) working capital reserves and (ii) cash distributions from the
operations of the Local Partnerships, neither of which are substantial in
amount.

For the year ended March 31, 2002, cash and cash equivalents of the Partnership
and its 62 consolidated Subsidiary Partnerships increased by approximately
$1,199,000. This increase was attributable to an increase in cash provided by
operating activities ($4,003,000), an increase in capitalization of consolidated
subsidiaries attributable to minority interest ($136,000), proceeds from sale of
property in excess of costs related to sale ($26,000), a net increase in due to
Local General Partners and affiliates relating to investing and financing
activities ($294,000), an increase in advances from debt guarantor ($895,000)
and a decrease in cash held in escrow for real estate investments relating to
investing activities ($40,000) which exceeded acquisition of property and
equipment ($1,260,000), repayments on mortgage notes ($2,758,000), a decrease in
cash held in escrow for investing activities ($176,000) and an increase in
deferred costs ($2,000). Included in the adjustments to reconcile the net loss
to cash provided by operating activities is depreciation and amortization in the
amount of $10,839,000, loss on sale of property ($84,000), forgiveness of debt
($2,157,000) and an increase in due to debt guarantor in the amount of
$3,029,000.

The Partnership has an unconsolidated working capital reserve of approximately
$60,000 at March 31, 2002.

The Partnership is not expected to have access to additional sources of
financing, and in particular will not have the ability to assess BACs holders
for additional capital contributions to provide capital if needed by the
Partnership. Accordingly, if circumstances arise that cause a Local Partnership
to require capital in addition to that contributed by the Partnership and any
equity of the Local General Partner, the only sources from which such capital
needs will be able to be satisfied (other than the limited reserves available at
the Partnership level) will be additional third party debt financing (which may
not be available if, as expected, the Property owned by the Local Partnership is
already substantially leveraged or, as in the case of the New York program
properties, the incurrence of third party debt is not permitted) or additional
equity contributions of the Local General Partner or other equity sources (which
could adversely affect the Partnership's interest in operating cash flow and/or
proceeds of sale or refinancing of the Property and result in adverse tax
consequences to the BACs holders). There can be no assurance that any of such
sources would be readily available in sufficient proportions to fund the capital
requirements of the Local Partnerships in question, particularly if the residual
value of a Property is uncertain. If such sources are not available, such Local
Partnership would risk foreclosure on its Property if it was unable to
renegotiate the terms of its first mortgage and any other debt with the lenders
thereof. The risks associated with the need of such Local Partnership to
refinance its underlying first mortgage debt are exacerbated by the probability
that the term of certain favorable assistance programs from which a Local
Partnership may benefit will expire prior to the end of the Compliance Period
with respect to such Local Partnership's Property.

13

Cash distributions received from the Local Partnerships remain relatively
immaterial. These distributions, as well as the working capital reserves
referred to above, will be used towards the future operating expenses of the
Partnership. During the years ended March 31, 2002, 2001 and 2000, the amounts
received from operations of the Local Partnerships were approximately $216,000,
$239,000 and $151,000, respectively.

Partnership management fees owed to the General Partners amounted to
approximately $7,035,000 and $5,601,000 were accrued and unpaid at March 31,
2002 and 2001. Without the General Partners' continued accrual without payment
of these fees and expense reimbursements, the Partnership will not be in a
position to meet its obligations. The General Partners have allowed for the
accrual without payment of these amounts but are 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
Local 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 the expiration of the Compliance Period.

Except as described above, 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 diversifications of the portfolio may not protect against a general
downturn in the national economy. The Partnership has fully invested the
proceeds of the offering in 62 Local Partnerships, one of which has been sold
and twenty-four of which have their Tax Credits in place. The Tax Credits are
attached to the project for a period of ten years and are transferable with the
Property during the remainder of the Credit 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 is 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 such property and equipment. 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. 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. Through March 31, 2002, the
Partnership has recorded approximately $20,083,000 as a loss on impairment of
assets.

14

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. Such
assets would be classified as property and equipment-held for sale and are not
depreciated. There are no assets classified as property and equipment-held for
sale through March 31, 2002.

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

The majority of the Local Partnerships' income continues to be in the form of
rental income, with the corresponding expenses (excluding loss on impairment of
assets) being divided among operations, depreciation and mortgage interest.

The net loss for the 2001, 2000 and 1999 Fiscal Years totaled $12,036,873,
$14,047,309 and $15,946,574, respectively.

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

Rental income increased approximately 2% for Fiscal 2001 as compared to Fiscal
2000. Excluding the Sold Asset, rental income increased approximately 3%,
primarily due to rental rate increases.

Other income decreased approximately $1,003,000 for Fiscal 2001 as compared to
Fiscal 2000, primarily due to a mortgage refinancing in 2000 at one Local
Partnership, a tax refund in 2000 at a second Local Partnership, and the
write-off of old receivables in 2000 at a third Local Partnership.

Total expenses, remained fairly consistent with a decrease of approximately 1%
for Fiscal 2001 as compared to Fiscal 2000. Excluding the Sold Asset, total
expenses increased less than 1%.

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

Rental income increased approximately 3% for Fiscal 2000 as compared to Fiscal
1999, primarily due to rental rate increases.

Other income increased approximately $687,000 for Fiscal 2000 as compared to
Fiscal 1999, primarily due to a mortgage refinancing at one Local Partnership, a
tax refund at a second Local Partnership, write off of old receivables at a
third Local Partnership and water and sewer reimbursements from the tenants at a
fourth and fifth Local Partnership.

Total expenses, excluding general and administrative-related parties and
depreciation and amortization, remained fairly consistent with an increase of
approximately 2% for Fiscal 2000 as compared to Fiscal 1999.

General and administrative-related parties increased approximately $300,000 for
Fiscal, 2000 as compared to Fiscal 1999, primarily due to an increase in
property management fees incurred to affiliates of the Local General Partners.

Depreciation and amortization decreased approximately $1,236,000 for Fiscal 2000
as compared to Fiscal 1999, primarily due to auditors adjustment at one Local
Partnership.

15

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

R.P.P. Limited Dividend Housing Association Limited Partnership ("River Place")
- -------------------------------------------------------------------------------

River Place has been unable to generate sufficient cash flow to make the
required principal and interest payments under its loan agreements. River
Place's debt guarantor, General Retirement System of the City of Detroit
("GRS"), entered into an agreement with the Michigan State Housing Authority
(the "Authority") to purchase these loans upon the occurrence of certain events.
GRS has declared River Place in default under its obligation to make the
required payments. During 1996, GRS agreed to waive its right of foreclosure
under the mortgages, unless certain events occur, through February 1, 2006. GRS
has made advances for debt service and has incurred certain fees relating to
these loans totaling $42,858,984, including accrued interest on such advances at
a rate of 15%. Such amount is included in the amount due to debt guarantor on
the balance sheet.

Management anticipates that River Place will be unable to make all of the
required debt service payments during 2002. However, there is no guarantee that
GRS, or any other persons, will continue to make these payments on behalf of
River Place. These items raise substantial doubt about River Place's ability to
continue as a going concern.

The financial statements of River Place have been prepared assuming that River
Place will continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty. The
Partnership's investment in River Place has been written down to zero by prior
years' losses and the minority interest balance was approximately $883,000 at
both March 31, 2002 and 2001. The net loss after minority interest for River
Place amounted to approximately $3,190,000, $3,795,000 and $3,822,000 for the
years ended March 31, 2002, 2001 and 2000, respectively.

Brandywine Court Associates, L.P. ("Brandywine")
- ------------------------------------------------

The financial statements of Brandywine have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of Brandywine as a going concern. Brandywine has had
recurring net losses and has a working capital deficit that increased
approximately $90,000 during the year ended December 31, 2001. Furthermore,
Brandywine's management anticipates that the property will need a new roof in
the near future, the cost of which is expected to exceed $100,000. Brandywine's
management plans to meet with Jacksonville Housing Authority Housing Assistance
Division and United States Department of Housing and Urban Development in an
effort to obtain financial relief for Brandywine. There can be no assurance that
such relief will be obtained. In view of these matters, there is substantial
doubt as to Brandywine's ability to continue as a going concern. The
Partnership's investment in Brandywine has been written down to zero by prior
years' losses and the minority interest balance was approximately $0 at both
March 31, 2002 and 2001. The net loss after minority interest for Brandywine
amounted to approximately $161,000, $143,000 and $105,000 for the years ended
March 31, 2002, 2001 and 2000, respectively.

Jefferson Limited Partnership ("Jefferson")
- -------------------------------------------

At December 31, 2001 and 2000, Jefferson's current liabilities exceeded its
current assets by over $18,000 and $7,000, respectively. Although this condition
could raise substantial doubt about Jefferson's ability to continue as a going
concern, such doubt is alleviated by the fact that $17,763 and $17,918 of
current liabilities at December 31, 2001 and 2000, respectively, are to related
parties which do not intend to pursue payment beyond Jefferson's ability to pay.

Accordingly, management believes that Jefferson has the ability to continue as a
going concern for at least one year from December 31, 2001. The Partnership's
investment in Jefferson was approximately $263,000 and $413,000 at March 31,
2002 and 2001, respectively, and the minority interest balance was $0 at each
date. The net loss after minority interest for Jefferson

16

amounted to approximately $150,000, $105,000, and $149,000 for the years ended
March 31, 2002, 2001 and 2000, respectively.

Manhattan A Associates ("Manhattan A")
- --------------------------------------

The financial statements for Manhattan A have not been audited for the 2001
Fiscal Year. In August 2001 the Local General Partner of Manhattan A was
replaced as the managing agent. The auditors for Manhattan A have been
unable to obtain all the books and records to complete the audit. The
Partnership is in the process of replacing the Local General Partner.

Other Subsidiary Partnerships
- -----------------------------

Four of the Subsidiary Partnerships are leasing the land on which the Properties
are located for terms ranging from 28 to 99 years. The leases for these
Properties are noncancelable. At December 31, 2001, those Subsidiary
Partnerships were committed to minimum annual rentals on the leases aggregating
$155,130 for each of the next five years, and $3,633,863 in total thereafter.

Other
- -----

The Partnership's investments in the Local Partnerships are subject to the risks
incident to management and ownership of improved real estate. The Partnership's
investments also could be adversely affected by poor economic conditions, which
could increase vacancy levels, rental payment defaults, and 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 operation of Apartment
Complexes receiving government assistance. These risks stem from 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 HUD to make the rental assistance payments it has
contracted to make, and the possibility 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, for example, for such items as fuel,
utilities and labor. However, continued inflation should allow for appreciated
values of the Local Partnerships' Apartment Complexes over a period of time as
rental revenues and replacement costs continue to increase.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

17

Item 8. Financial Statements and Supplementary Data.
Sequential
Page
----------

(a) 1. Consolidated Financial Statements

Independent Auditors' Report 19

Consolidated Balance Sheets at March 31, 2002 and 2001 148

Consolidated Statements of Operations for the Years
Ended March 31, 2002, 2001 and 2000 149

Consolidated Statements of Changes in Partners'
Deficit for the Years Ended March 31, 2002, 2001 and 2000 150

Consolidated Statements of Cash Flows for the Years
Ended March 31, 2002, 2001 and 2000 151

Notes to Consolidated Financial Statements 153

18

INDEPENDENT AUDITORS' REPORT

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

We have audited the consolidated balance sheets of Liberty Tax Credit Plus III
L.P. and Subsidiaries (A Delaware Limited Partnership) (the "Partnership") as of
March 31, 2002 and 2001, and the related consolidated statements of operations,
changes in partners' deficit, and cash flows for the years ended March 31, 2002,
2001 and 2000 (the 2001, 2000 and 1999 Fiscal Years, respectively). These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of 61 (Fiscal 2001, 2000
and 1999) subsidiary partnerships whose losses aggregated $10,083,257,
$12,004,389 and $12,717,054 of the Partnership's net loss for the 2001, 2000 and
1999 Fiscal Years, respectively, and whose assets constituted 96% of the
Partnership's assets at March 31, 2002 and 2001, respectively, presented in the
accompanying consolidated financial statements. The financial statements of 60
(Fiscal 2001) and 61 (Fiscal 2000 and 1999) 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 of one (Fiscal 2001) subsidiary partnership
was 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 Liberty Tax Credit Plus III 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.

As discussed in Note 12(a), the consolidated financial statements include the
financial statements of two subsidiary partnerships with significant
contingencies and uncertainties. The financial statements of these subsidiary
partnerships were prepared assuming that they will continue as going concerns.
These two subsidiary partnerships' net losses aggregated $3,351,069 (Fiscal
2001), $3,938,903 (Fiscal 2000) and $3,926,774 (Fiscal 1999), and their assets
aggregated $14,257,189 and $14,543,105 at March 31, 2002 and 2001, respectively.
Management's plans in regard to these matters are also described in Note 12(a).
The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 25, 2002

19

[Letterhead of BERDON, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
C.V. Bronx Associates, L.P.
New York, New York

We have audited the accompanying balance sheet of C.V. Bronx Associates, L.P. (a
Delaware Limited Partnership) as of December 31, 2001, and the related
statements of operations, changes in partners' capital (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 C.V.
Bronx Associates, L.P., as of December 31, 2000, were audited by other auditors
whose report dated February 2, 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. 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 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 C.V. Bronx Associates, L.P.
as of December 31, 2001 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/ Berdon LLP
Certified Public Accountants
New York, N.Y.

February 1, 2002

20

[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
C.V. Bronx Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of C.V. Bronx Associates, L.P.
(a Delaware limited partnership) as of December 31, 2000 and 1999, and the
related statements of income (loss), changes in partners' capital (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 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 C.V. Bronx 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.

Respectfully submitted,

/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.

February 2, 2001

21

[Letterhead of THEO CARSON & ASSOCIATES]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Michigan Rural Housing Limited Partnership

I have audited the accompanying balance sheets of Michigan Rural Housing Limited
Partnership (a Michigan partnership) as of December 31, 2001 and 2000, and the
related statements of operations, changes in partners' 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 have conducted the audits in accordance with auditing standards generally
accepted in the United States of America. 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 the 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 Michigan Rural Housing 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.

/s/ Theo C. Carson & Associates
Kalamazoo, Michigan

January 28, 2002

22

[Letterhead of THEO CARSON & ASSOCIATES]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Michigan Rural Housing Limited Partnership

I have audited the accompanying balance sheets of Michigan Rural Housing Limited
Partnership (a Michigan partnership) as of December 31, 2000 and 1999, and the
related statements of operations, changes in partners' 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 have conducted the audits in accordance with generally accepted auditing
standards. 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 the 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 Michigan Rural Housing 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/ Theo C. Carson & Associates
Kalamazoo, Michigan

February 3, 2001

23

[Letterhead of COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT

To the Partners
Jefferson Limited Partnership
Shreveport, Louisiana

We have audited the accompanying balance sheets of Jefferson Limited Partnership
at December 31, 2001 and December 31, 2000, and the related statements of
income, 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. These 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 financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of
Jefferson Limited Partnership at December 31, 2001 and December 31, 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.

Our audits were made primarily for the purpose of forming an opinion on the
basic financial statements for the years ended December 31, 2001 and December
31, 2000 taken as a whole. The supplementary Schedule 1 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 audit
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/ Cole, Evans & Peterson
February 6, 2002
Shreveport, Louisiana

24

[Letterhead of COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT

To the Partners
Jefferson Limited Partnership
Shreveport, Louisiana

We have audited the accompanying balance sheets of Jefferson Limited Partnership
at December 31, 2000 and December 31, 1999, and the related statements of
income, 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. These 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 financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of
Jefferson Limited Partnership at December 31, 2000 and 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.

Our audits were made primarily for the purpose of forming an opinion on the
basic financial statements for the years ended December 31, 2000 and December
31, 1999 taken as a whole. The supplementary Schedule 1 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 audit
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/ Cole, Evans & Peterson
Shreveport, Louisiana

February 6, 2001

25

[Letterhead of DAMIANO & BURK]

INDEPENDENT AUDITORS' REPORT

To the Partners

Inter-Tribal Indian Village Housing Development Associates, L.P.
(A Limited Partnership)
Providence, RI

We have audited the accompanying balance sheet of Project No. HIP010 of
Inter-Tribal Indian Village Housing Development Associates, L.P. (a limited
partnership) as of December 31, 2001, and the related statements of operations
and changes in partners' equity (deficit) and cash flows for the year 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 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 Inter-Tribal Indian Village Housing
Development Associates, L.P. as of December 31, 2001 and the results of its
operations and 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.

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 15, 2002 on our
consideration of Inter-Tribal Indian Village Housing Development Associates,
L.P.'s internal control and reports dated January 15, 2002 on its compliance
with specific requirements applicable to non-major HUD programs. These 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 conducted 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 13-19 are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Inter-Tribal Indian Village Housing Development 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.

/s/ Damiano & Burk CPAs, PC
Lincoln, Rhode Island

January 15, 2002

26

[Letterhead of PAUL DAMIANO]

INDEPENDENT AUDITORS' REPORT

To the Partners
Inter-Tribal Indian Village Housing Development Associates, L.P.
(A Limited Partnership)
Providence, RI

We have audited the accompanying balance sheet of Project No. HIP010 of
Inter-Tribal Indian Village Housing Development Associates, L.P. (a limited
partnership) as of December 31, 2000, and the related statements of loss and
changes in partners' equity (capital deficiency) and cash flows for the year
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 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 Project No. HIP010 as of December
31, 2000 and the results of its operations and the changes in partners' equity
(capital deficiency) and cash flows for the year 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 18, 2001 on our
consideration of Inter-Tribal Indian Village Housing Development Associates,
L.P.'s internal control and reports dated January 18, 2001 on its compliance
with specific requirements applicable to non-major HUD programs. These 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 conducted for the purpose of forming an opinion on the basic
financial statements taken an a whole. The supporting information included in
the report shown on pages 12-18 are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project No. HIP010. 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.

/s/ Paul Damiano CPA PC
Lincoln, Rhode Island

January 18, 2001

27

[Letterhead of PAUL DAMIANO]

INDEPENDENT AUDITORS' REPORT

To the Partners

Inter-Tribal Indian Village Housing Development Associates, L.P.
(A Limited Partnership)
Providence, RI

We have audited the accompanying balance sheet of Project No. HIP010 of
Inter-Tribal Indian Village Housing Development Associates, L.P. (a limited
partnership) as of December 31, 1999, and the related statements of loss and
changes in partners' equity (capital deficiency) and cash flows for the year
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 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 Project No. HIP010 as of December
31, 1999 and the results of its operations and the changes in partners' equity
(capital deficiency) and cash flows for the year 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 18, 2000 on our
consideration of Inter-Tribal Indian Village Housing Development Associates,
L.P.'s internal control and reports dated January 18, 2000 on its compliance
with specific requirements applicable to major RIHMFC programs, specific
requirements applicable to Fair Housing and Non-Discrimination, and specific
requirements applicable to nonmajor RIHMFC program transactions.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken an a whole. The supporting information included in
the report shown on pages 13-17 are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project No. HIP010. 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.

/s/ Paul Damiano CPA PC
Lincoln, Rhode Island

January 18, 2000

28

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
RBM Associates

We have audited the accompanying balance sheets of RBM Associates 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 these financial statements based on
our audit. The financial statements of RBM Associates for the year ended
December 31, 2000, were audited by other auditors whose report, dated January
25, 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 the 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 RBM Associates as of December
31, 2001, and the results of its operations, 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 23
through 26 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 25, 2002, on our
consideration of RBM 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 25, 2002

29

[ZINER, KENNEDY & LEHAN LLP. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
RBM Associates

We have audited the accompanying balance sheets of RBM 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 RBM 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
Quincy, Massachusetts

January 25, 2001

30

[Letterhead of McKONLY & ASBURY LLP]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Glenbrook Associates
Lancaster, Pennsylvania

Rural Development
Allentown, Pennsylvania

We have audited the accompanying balance sheets of Glenbrook Associates (a
limited partnership) as of December 31, 2001 and 2000, and the related
statements of income, 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Glenbrook Associates at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended in conformity with auditing standards generally
accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued a report
dated January 14, 2002 on our consideration of Glenbrook Associates' internal
control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts, and grants. This 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 audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information on pages 16
through 19 is presented for the purpose 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.

/s/ McKonly & Asbury, LLP
Harrisburg, Pennsylvania

January 14, 2002

31

[Letterhead of McKONLY & ASBURY LLP]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Glenbrook Associates
Lancaster, Pennsylvania

Rural Housing Service
Allentown, Pennsylvania

We have audited the accompanying balance sheets of Glenbrook Associates (a
limited partnership) as of December 31, 2000 and 1999, and the related
statements of income, 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Glenbrook Associates at
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.

In accordance with Government Auditing Standards, we have also issued a report
dated January 16, 2001 on our consideration of Glenbrook Associates' internal
control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts, and grants. This 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 audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information on pages 16
and 17 is presented for the purpose 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.

/s/ McKonly & Asbury, LLP
Harrisburg, Pennsylvania

January 16, 2001

32

[Letterhead of FELDMAN, HOLTZMAN, LUPO & ZERBO, LLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Affordable Flatbush Associates
(A New York Limited Partnership)

We have audited the accompanying balance sheets of Affordable Flatbush
Associates (A New York Limited Partnership) as of December 31, 2001 and December
31, 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 audit.

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 Affordable Flatbush Associates
(A New York Limited Partnership) at December 31, 2001 and December 31, 2000, and
the results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.

/s/ Feldman, Holtzman, Lupo & Zerbo, LLC
Pompton Lakes, New Jersey

March 1, 2002

33

[Letterhead of J.R. LUPO, P.A. CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Affordable Flatbush Associates
(A New York Limited Partnership)

We have audited the accompanying balance sheets of Affordable Flatbush
Associates (A New York Limited Partnership) as of December 31, 2000 and December
31, 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 Affordable Flatbush Associates
(A New York Limited Partnership) at December 31, 2000 and 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/ J.R. Lupo
Verona, New Jersey
March 1, 2001

34

[Letterhead of WESSEL & COMPANY]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Barclay Village II, Ltd.

We have audited the accompanying balance sheets of Barclay Village II, Ltd. (a
limited partnership) PHFA No. R-0039-8F 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 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 and Pennsylvania Housing Finance Agency
regulations. Those standards and regulations 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 Barclay Village II, Ltd., PHFA
No. R-0039-8F, as of December 31, 2001 and 2000, and the results of its
operations, changes in partners' capital, 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 Auditing of HUD Programs issued by the U.S. Department of Housing and
Urban Development and the Pennsylvania Housing Finance Agency regulations, we
have also issued a report dated February 6, 2002, on our consideration of
Barclay Village II, Ltd.'s internal control, and reports dated February 6, 2002,
on its compliance with specific requirements applicable to major HUD Programs,
Pennsylvania Housing Finance Agency regulations, and specific requirements
applicable to Fair Housing and Nondiscrimination.

/s/ Wessel & Company
Certified Public Accountants
Johnstown, Pennsylvania

February 6, 2002

35

[Letterhead of WESSEL & COMPANY]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Barclay Village II, Ltd.

We have audited the accompanying balance sheets of Barclay Village II, Ltd. (a
limited partnership) PHFA No. R-0039-8F 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 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 and Pennsylvania Housing Finance Agency
regulations. Those standards and regulations 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 Barclay Village II, Ltd., PHFA
No. R-0039-8F, as of December 31, 2000 and 1999, and the results of its
operations, changes in partners' capital, 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 the Consolidated Audit Guide
for Auditing of HUD Programs issued by the U.S. Department of Housing and Urban
Development and the Pennsylvania Housing Finance Agency regulations, we have
also issued a report dated February 27, 2001, on our consideration of Barclay
Village II, Ltd.'s internal control, and reports dated February 27, 2001, on its
compliance with specific requirements applicable to major HUD Programs,
Pennsylvania Housing Finance Agency regulations, and Specific Requirements
applicable to Fair Housing and Nondiscrimination.

/s/ Wessel & Company
Certified Public Accountants
Johnstown, Pennsylvania

February 27, 2001

36

[Letterhead of BERDON, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
1850 Second Avenue Associates, L.P.
New York, New York

We have audited the accompanying balance sheet of 1850 Second Avenue Associates,
L.P. (a Delaware Limited Partnership) as of December 31, 2001, and the related
statements of operations, changes in partners' capital (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 the
Partnership as of December 31, 2000, were audited by other auditors whose
report, dated January 25, 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. 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 1850 Second Avenue
Associates, L.P. as of December 31, 2001 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/ Berdon, LLP
Certified Public Accountants
New York, N.Y.

January 26, 2002

37

[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
1850 Second Avenue Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of 1850 Second Avenue
Associates, L.P. (a Delaware limited partnership) as of December 31, 2000 and
1999, and the related statements of income (loss), changes in partners' capital
(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 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 1850 Second Avenue 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.

Respectfully submitted,

/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.

January 25, 2001

38

[Ernst & Young Letterhead]

Report of Independent Certified Public Accountants

Partners
R.P.P. Limited Dividend Housing
Association Limited Partnership

We have audited the accompanying balance sheets of R.P.P. Limited Dividend
Housing Association Limited Partnership (the Partnership) as of December 31,
2001 and 2000, and the related statements of operations, partners' 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. 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 R.P.P. Limited Dividend Housing
Association Limited Partnership at 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.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 6, the
Partnership has been unable to generate sufficient cash flow to meet its debt
service requirements and is in default under those obligations. These conditions
raise substantial doubt about the Partnership's ability to continue as a going
concern. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability of assets or the amounts of
liabilities that may result from the outcome of this uncertainty.

/s/ Ernst & Young LLP
West Palm Beach, Florida

January 31, 2002

39

[Ernst & Young Letterhead]

Report of INDEPENDENT Certified Public Accountants

Partners
R.P.P. Limited Dividend Housing
Association Limited Partnership

We have audited the accompanying balance sheets of R.P.P. Limited Dividend
Housing Association Limited Partnership (the Partnership) as of December 31,
2000 and 1999, and the related statements of operations, partners' 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. 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 R.P.P. Limited Dividend Housing
Association Limited Partnership at December 31, 2000 and 1999, 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.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 7, the
Partnership has been unable to generate sufficient cash flow to meet its debt
service requirements and is in default under those obligations. These conditions
raise substantial doubt about the Partnership's ability to continue as a going
concern. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability of assets or the amounts of
liabilities that may result from the outcome of this uncertainty.

/s/ Ernst & Young LLP
West Palm Beach, Florida

January 31, 2001

40

[Letterhead of DICKEY, WOLF & HUMBARD, LLC]

INDEPENDENT AUDITORS' REPORT

To the Partners
Williamsburg Residential II, L.P.

We have audited the balance sheet of Williamsburg Residential II, L.P. (a Kansas
Limited Partnership) 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.

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 Williamsburg Residential II,
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 accounting principles generally
accepted in the United States of America.

/s/ Dickey, Wolf & Humbard, LLC
Certified Public Accountants

Harrisonville, MO
February 13, 2002

41

[Letterhead of CHESSER & COMPANY]

INDEPENDENT AUDITOR'S REPORT

Partners
Williamsburg Residential II, L.P.
New York, New York

We have audited the accompanying balance sheet of Williamsburg Residential II,
L.P. 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 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 Williamsburg Residential II,
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/ Chesser & Company, P.A.
Wichita, Kansas

March 16, 2001

42

[Letterhead of FELDMAN, HOLTZMAN, LUPO & ZERBO, LLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
West 104th Street Associates, L.P.
(a Delaware Limited Partnership)

We have audited the accompanying balance sheets of West 104th Street Associates,
L.P. (a Delaware Limited Partnership) as of December 31, 2001 and December 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 104th Street Associates,
L.P. at December 31, 2001 and December 31, 2000, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.

/s/ FELDMAN, HOLTZMAN, LUPO & ZERBO, LLC
Pompton Lakes, New Jersey
March 1, 2002

43

[Letterhead of J.R. LUPO, P.A. CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
West 104th Street Associates, L.P.
(a Delaware Limited Partnership)

We have audited the accompanying balance sheets of West 104th Street Associates,
L.P. (a Delaware Limited Partnership) as of December 31, 2000 and December 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 West 104th Street Associates,
L.P. at December 31, 2000 and 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/ J.R. Lupo
Verona, New Jersey
March 1, 2001

44

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Meredith Apartments, Ltd.

We have audited the accompanying balance sheet of Meredith Apartments, Ltd. (a
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 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 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 Meredith Apartments, Ltd. at
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.

/s/ Lake, Hill & Myers

Salt Lake City, Utah
January 14, 2002

45

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Meredith Apartments, Ltd.

We have audited the accompanying balance sheet of Meredith Apartments, Ltd. (a
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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Meredith Apartments, Ltd. at
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.

/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 24, 2001

46

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ritz Apartments, Ltd.

We have audited the accompanying balance sheet of Ritz Apartments, Ltd. (a
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 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 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 Ritz Apartments, Ltd. at
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.

/s/ Lake, Hill & Myers

Salt Lake City, Utah
January 14, 2002

47

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ritz Apartments, Ltd.

We have audited the accompanying balance sheet of Ritz Apartments, Ltd. (a
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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Ritz Apartments, Ltd. at
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.

/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 19, 2001

48

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ashby Apartments, Ltd.

We have audited the accompanying balance sheet of Ashby Apartments, Ltd. (a
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 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 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 Ashby Apartments, Ltd. at
December 31, 2001 and 2000, and the results of its operations and cash flows for
the years then ended, in conformity accounting principles generally accepted in
the United States of America.

/s/ Lake, Hill & Myers

Salt Lake City, Utah
January 14, 2002

49

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ashby Apartments, Ltd.

We have audited the accompanying balance sheet of Ashby Apartments, Ltd. (a
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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Ashby Apartments, Ltd. at
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.

/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 19, 2001

50

[Letterhead of DAUBY O'CONNOR & ZALESKI]

Independent Auditors' Report

To the Partners of
South Toledo Associates, Ltd.
Toledo, Ohio

We have audited the accompanying balance sheet of South Toledo Associates, Ltd.
(an Ohio Limited Partnership) as of December 31, 2001, and the related
statements of profit and loss (HUD Form 92410), changes in partners' equity 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 South Toledo Associates, Ltd.
(an Ohio Limited Partnership) 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.

In accordance with Government Auditing Standards, we have also issued a report
dated January 8, 2002, on our consideration of the Partnership's internal
controls and a report dated January 8, 2002, on its compliance with laws and
regulations.

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 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.

/s/ Dauby O'Connor & Zaleski, LLC
Certified Public Accountants

January 8, 2002
Carmel, Indiana

51

[Letterhead of DAUBY O'CONNOR & ZALESKI]

Independent Auditors' Report

To the Partners of
South Toledo Associates, Ltd.
Toledo, Ohio

We have audited the accompanying balance sheet of South Toledo Associates, Ltd.
(an Ohio Limited Partnership) as of December 31, 2000, and the related
statements of profit and loss (HUD Form 92410), changes in partners' equity 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 South Toledo Associates, Ltd.
(an Ohio Limited Partnership) 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.

In accordance with Government Auditing Standards, we have also issued a report
dated January 5, 2001, on our consideration of the Partnership's internal
controls and a report dated January 5, 2001, on its compliance with laws and
regulations.

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 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.

/s/ Dauby O'Connor & Zaleski, LLC
Certified Public Accountants
Carmel, Indiana

January 5, 2001

52

[Letterhead of DAUBY O'CONNOR & ZALESKI]

Independent Auditors' Report

To the Partners of
South Toledo Associates, Ltd.
Toledo, Ohio

We have audited the accompanying balance sheet of South Toledo Associates, Ltd.
(an Ohio Limited Partnership) as of December 31, 1999, and the related
statements of profit and loss (HUD Form 92410), changes in partners' equity 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 South Toledo Associates, Ltd.
(an Ohio Limited Partnership) 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.

In accordance with Government Auditing Standards, we have also issued a report
dated January 7, 2000, on our consideration of the Partnership's internal
controls and a report dated January 7, 2000, on its compliance with laws and
regulations.

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 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.

/s/ Dauby O'Connor & Zaleski, LLC
Certified Public Accountants
Carmel, Indiana

January 7, 2000

53

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Dunlap School Venture

We have audited the accompanying balance sheet of Dunlap School 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 these financial statements based on
our audit. The financial statements of Dunlap School Venture for the year ended
December 31, 2000, were audited by other auditors whose report, dated January
13, 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 Dunlap School Venture at
December 31, 2001, and the results of its operations, 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 February 1, 2002, on our
consideration of Dunlap School Venture's 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

February 1, 2002

54

[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Dunlap School Venture

We have audited the accompanying balance sheets of Dunlap School 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 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 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 Dunlap School Venture at
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.

/s/ Ziner, Kennedy & Lehan LLP
Quincy, Massachusetts

January 13, 2001

55

[Letterhead of BAKER NEWMAN & NOYES]

INDEPENDENT AUDITORS' REPORT

To the Partners of Philipsburg Elderly Housing Associates
(A Maine Limited Partnership)

We have audited the accompanying balance sheets of Philipsburg Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0210-8E, as of
December 31, 2001 and 2000, and the related statements of profit and 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
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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Philipsburg Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0210-8E, 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.

In accordance with Government Auditing Standards, we have also issued our
reports dated January 18, 2002 on our consideration of internal controls over
financial reporting of Philipsburg Elderly Housing Associates (A Maine Limited
Partnership) and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
used in conjunction with this report in considering the results of our audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included on
pages 15-18 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership, but is
supplementary information required by the Pennsylvania Housing Finance Agency
(PHFA). Such information has been subjected to the auditing procedures applied
in our 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/ Baker Newman & Noyes
Limited Liability Company

Portland, Maine
January 18, 2002

56

[Letterhead of BAKER NEWMAN & NOYES]

INDEPENDENT AUDITORS' REPORT

To the Partners of Philipsburg Elderly Housing Associates
(A Maine Limited Partnership)

We have audited the accompanying balance sheets of Philipsburg Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0210-8E, as of
December 31, 2000 and 1999, and the related statements of profit and 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
our audits.

We conducted our audits in accordance with generally accepted auditing standards
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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Philipsburg Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0210-8E, 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.

In accordance with Government Auditing Standards, we have also issued our
reports dated January 18, 2001 on our consideration of internal controls over
financial reporting of Philipsburg Elderly Housing Associates (A Maine Limited
Partnership) and on our tests of its compliance with certain provisions of laws,
regulations contracts and grants. Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should be used in
conjunction with this report in considering the results of our audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included on
pages 16 - 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership, but is
supplementary information required by the Pennsylvania Housing Finance Agency
(PHFA). Such information has been subjected to the auditing procedures applied
in our 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/ Baker Newman & Noyes
Limited Liability Company
Portland, Maine

January 18, 2001

57

[Letterhead of BAKER NEWMAN & NOYES]

INDEPENDENT AUDITORS' REPORT

To the Partners of Franklin Elderly Housing Associates
(A Maine Limited Partnership)

We have audited the accompanying balance sheets of Franklin Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0383-8E, as of
December 31, 2001 and 2000, and the related statements of profit and loss,
changes in partners' capital (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 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Franklin Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0383-8E, 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.

In accordance with Government Auditing Standards, we have also issued our
reports dated January 18, 2002 on our consideration of internal controls over
financial reporting of Franklin Elderly Housing Associates (A Maine Limited
Partnership) and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
used in conjunction with this report in considering the results of our audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included on
pages 15-18 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership, but is
supplementary information required by the Pennsylvania Housing Finance Agency
(PHFA). Such information has been subjected to the auditing procedures applied
in our 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/ Baker Newman & Noyes
Limited Liability Company
Portland, Maine

January 18, 2002

58

[Letterhead of BAKER NEWMAN & NOYES]

INDEPENDENT AUDITORS' REPORT

To the Partners of Franklin Elderly Housing Associates
(A Maine Limited Partnership)

We have audited the accompanying balance sheets of Franklin Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0383-8E, as of
December 31, 2000 and 1999, and the related statements of profit and loss,
changes in partners' capital (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 generally accepted auditing standards
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 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 Franklin Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0383-8E, 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.

In accordance with Government Auditing Standards, we have also issued our
reports dated January 25, 2001 on our consideration of internal controls over
financial reporting of Franklin Elderly Housing Associates (A Maine Limited
Partnership) and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
used in conjunction with this report in considering the results of our audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included on
pages 16 - 23 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership, but is
supplementary information required by the Pennsylvania Housing Finance Agency
(PHFA). Such information has been subjected to the auditing procedures applied
in our 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/ Baker Newman & Noyes
Limited Liability Company
Portland, Maine

January 25, 2001

59

[Letterhead of BAKER NEWMAN & NOYES]

INDEPENDENT AUDITORS' REPORT

To the Partners of Wade D. Mertz Elderly Housing Associates
(A Maine Limited Partnership)

We have audited the accompanying balance sheets of Wade D. Mertz Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0488-8E, as of
December 31, 2001 and 2000, and the related statements of profit and 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
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 Wade D. Mertz Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0488-8E, 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.

In accordance with Government Auditing Standards, we have also issued our
reports dated January 18, 2002 on our consideration of internal controls over
financial reporting of Wade D. Mertz Elderly Housing Associates (A Maine Limited
Partnership) and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
used in conjunction with this report in considering the results of our audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included on
pages 15-18 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership, but is
supplementary information required by the Pennsylvania Housing Finance Agency
(PHFA). Such information has been subjected to the auditing procedures applied
in our 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/ Baker Newman & Noyes
Limited Liability Company
Portland, Maine

January 18, 2002

60

[Letterhead of BAKER NEWMAN & NOYES]

INDEPENDENT AUDITORS' REPORT

To the Partners of Wade D. Mertz Elderly Housing Associates
(A Maine Limited Partnership)

We have audited the accompanying balance sheets of Wade D. Mertz Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0488-8E, as of
December 31, 2000 and 1999, and the related statements of profit and 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
our audits.

We conducted our audits in accordance with generally accepted auditing standards
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 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 Wade D. Mertz Elderly Housing
Associates (A Maine Limited Partnership), PHFA Project Number R-0488-8E, 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.

In accordance with Government Auditing Standards, we have also issued our
reports dated January 26, 2001 on our consideration of internal controls over
financial reporting of Wade D. Mertz Elderly Housing Associates (A Maine Limited
Partnership) and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
used in conjunction with this report in considering the results of our audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included on
pages 16 - 23 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership, but is
supplementary information required by the Pennsylvania Housing Finance Agency
(PHFA). Such information has been subjected to the auditing procedures applied
in our 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/ Baker Newman & Noyes
Limited Liability Company
Portland, Maine

January 26, 2001

61

[Letterhead of BICK FREDMAN & CO]

Independent Auditor's Report

The General and Limited Partners
Lancashire Towers Associates Limited Partnership

We have audited the accompanying balance sheets of Lancashire Towers Associates
Limited Partnership (An Ohio Limited Partnership) as of December 31, 2001 and
2000, and the related statement of income, partners' capital (deficit) 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 Lancashire Towers Associates
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.

In accordance with Government Auditing Standards, we have also issued a report
dated January 11, 2002 on our consideration of Lancashire Towers Associates
Limited Partnership's internal control and reports dated January 11, 2002 on its
compliance with laws and regulations. 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/ Bick Fredman & Co
Cleveland, Ohio
January 11, 2002

62

[Letterhead of BICK FREDMAN & CO]

Independent Auditors' Report

The General and Limited Partners
Lancashire Towers Associates Limited Partnership
Cleveland, Ohio

We have audited the accompanying balance sheets of Lancashire Towers Associates
Limited Partnership (An Ohio Limited Partnership) as of December 31, 2000 and
1999, and the related statement of operations, partners' capital (deficit) 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 U.S. 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 Lancashire Towers Associates
Limited Partnership's 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.

In accordance with Government Auditing Standards, we have also issued a report
dated January 13, 2001 on our consideration of Lancashire Towers Associates
Limited Partnership's internal control and reports dated January 13, 2001 on its
compliance with laws and regulations. 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/ Bick Fredman & Co
Cleveland, Ohio
January 13, 2001

63

[INSERO, KASPERSKI, CIACCIA & CO. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Northwood Associates Limited Partnership
Toledo, Ohio

We have audited the accompanying balance sheets of Northwood Associates Limited
Partnership, HUD Project #042-44050-LDP, as of October 4, 2001 and December 31,
2000 and the related statements of changes in partners' equity, operations, and
cash flows for the period ended October 4, 2001 and the year ended December 31,
2000. 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 Northwood Associates Limited
Partnership as of October 4, 2001 and December 31, 2000, and the results of its
operations, changes in partners' equity, and cash flows for the period ended
October 4, 2001 and the year ended December 31, 2000 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 February 8, 2002, on our
consideration of Northwood Associates Limited Partnership's internal control,
and reports dated February 8, 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.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants

Rochester, New York
February 8, 2002

64

[INSERO, KASPERSKI, CIACCIA & CO. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Northwood Associates Limited Partnership
Toledo, Ohio

We have audited the accompanying balance sheets - regulatory basis of Northwood
Associates Limited Partnership, HUD Project #042-44050-LDP, as of December 31,
2000 and 1999 and the related statements of changes in partners' equity -
regulatory basis, operations - regulatory basis, and cash flows - regulatory
basis 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.

As described in Note 1, the Project's policy is to prepare its financial
statements on the basis of accounting practices prescribed or permitted by U.S.
Department of Housing and Urban Development. These practices differ in some
respects from generally accepted accounting principles. Accordingly, the
accompanying financial statements are not intended to present financial position
and results of operations in conformity with generally accepted accounting
principles. This report is intended solely for filing with regulatory agencies
and is not intended for any other purpose.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northwood Associates Limited
Partnership 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 on the
basis of accounting described in Note 1.

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 February 7, 2001, on our
consideration of Northwood Associates Limited Partnership's internal control,
and reports dated February 7, 2001, 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.

Respectfully Submitted,

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

February 7, 2001

65

[Letterhead of FASMAN, KLEIN & FELDSTEIN]

INDEPENDENT AUDITOR'S REPORT

To the Partners,
Brewery Renaissance Associates, L.P.

We have audited the accompanying balance sheet of Brewery Renaissance
Associates, L.P. (the Partnership) 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 audit.

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 Brewery Renaissance 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 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 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.

Respectfully submitted,
/s/ FASMAN, KLEIN & FELDSTEIN
New City, NY
March 12, 2002

66

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Brewery Renaissance Associates, L.P.

We have audited the accompanying balance sheets of Brewery Renaissance
Associates, L.P. as of December 31, 1999 and 1998, 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 audit.

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 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 Brewery Renaissance Associates,
L.P. as of December 31, 1999 and 1998, and the results of its operations, the
changes in partners' equity and cash flows for the years then ended, in
conformity with generally accepted accounting principles.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland

January 14, 2000

67

[Letterhead of ASHER & COMPANY, LTD.]

Independent Auditors' Report

The Partners
Brandywine Court Associates, L.P.
Marlton, New Jersey

We have audited the accompanying balance sheets of Brandywine Court Associates,
L.P. (A Limited Partnership), HUD Project No. 063-94015, as of December 31, 2001
and 2000, and the related statements of loss, Partners' capital and cash flows
for the year ended December 31, 2001. 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 Brandywine Court Associates,
L.P. (A Limited Partnership), HUD Project No. 063-94015, as of December 31, 2001
and 2000, and the results of its operations, changes in its Partners' capital,
and its cash flows for the year ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that
Brandywine Court Associates, L.P. (A Limited Partnership) will continue as a
going concern. As described in Note B and reported in the accompanying financial
statements, Brandywine Court Associates, L.P. (A Limited Partnership) has had
recurring net losses and has an increasing working capital deficit in recent
years. These conditions raise substantial doubt about Brandywine Court
Associates, L.P. (A Limited Partnership) ability to continue as a going concern.
Management's plans in regard to those matters are described in Note B. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the
Partnership cannot continue in existence.

Our audit was 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 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.

68

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 17, 2002 on our
consideration of Brandywine Court Associates, L.P.'s (A Limited Partnership),
HUD Project No. 063-94015, internal control and reports dated January 17, 2002
on its compliance with specific requirements applicable to major HUD program,
specific requirements applicable to nonmajor HUD program transactions and
specific requirements applicable to fair housing and non-discrimination. These
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/ Asher & Company, Ltd.
Philadelphia, Pennsylvania

January 17, 2002

69

[Letterhead of ASHER & COMPANY, LTD.]

Independent Auditors' Report

The Partners
Brandywine Court Associates, L.P.
Marlton, New Jersey

We have audited the accompanying balance sheets of Brandywine Court Associates,
L.P. (A Limited Partnership), HUD Project No. 063-94015, as of December 31, 2000
and 1999 and the related statements of loss, Partners' capital and cash flows
for the year ended December 31, 2000. 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 Brandywine Court Associates,
L.P. (A Limited Partnership), HUD Project No. 063-94015, as of December 31, 2000
and 1999, and the results of its operations, changes in its Partners' capital,
and its cash flows for the year ended December 31, 2000, 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 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 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, issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2001 on our
consideration of Brandywine Court Associates, L.P.'s (A Limited Partnership),
HUD Project No. 063-94015, internal control and reports dated January 17, 2001
on its compliance with specific requirements applicable to major HUD program,
specific requirements applicable to nonmajor HUD program transactions and
specific requirements applicable to fair housing and non-discrimination. These
reports are an integral part of an auditing 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 17, 2001

70

[Letterhead of J.H. WILLIAMS & CO., LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Art Apartments Associates (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Art Apartments Associates (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 Art Apartments Associates (a
Limited Partnership) at 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.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated February 1, 2002 on our consideration of Art Apartments 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.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supporting data on pages
16 to 23 is presented for purposes of additional analysis and is not a required
part of the basic financial statements of Art Apartments Associates (a Limited
Partnership). 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/ J. H. Williams & Co., LLP
Kingston, Pennsylvania
February 1, 2002

71

[Letterhead of J.H. WILLIAMS & CO., LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Art Apartments Associates (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Art Apartments Associates (a
Limited Partnership) as of December 31, 2000 and 1999 and the related statements
of (loss), changes in partners' equity (deficit) 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 Art Apartments Associates (a
Limited Partnership) 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 accounting principles generally accepted accounting
principles in the United States of America.

/s/ J. H. Williams & Co., LLP
Kingston, Pennsylvania
January 31, 2001

72

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
The Village at Carriage Hills, Ltd.
Clinton, Tennessee

We have audited the accompanying balance sheets of The Village at Carriage Hills
Ltd., a limited partnership, RHS Project No.: 48-001-630980039 as of December
31, 2001 and 2000, and the related statements of operations, partners' 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 The Village at Carriage Hills,
Ltd., RHS Project No.: 48-001-630980039 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 26, 2002 on our consideration of The Village at Carriage Hills,
Ltd.'s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2002

73

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
The Village at Carriage Hills, Ltd.
Clinton, Tennessee

We have audited the accompanying balance sheets of The Village at Carriage Hills
Ltd., a limited partnership, RHS Project No.: 48-001-630980039 as of December
31, 2000 and 1999, and the related statements of operations, partners' 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 The Village at Carriage Hills,
Ltd., RHS Project No.: 48-001-630980039 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 26, 2001 on our consideration of The Village at Carriage Hills,
Ltd.'s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2001

74

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Mountainview Apartments, Ltd.
Newport, Tennessee

We have audited the accompanying balance sheets of Mountainview Apartments,
Ltd., a limited partnership, RHS Project No.: 48-015-63097225 as of December 31,
2001 and 2000, and the related statements of operations, partners' 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Mountainview Apartments, Ltd.,
RHS Project No.: 48-015-63097225 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 6, 2002 on our consideration of Mountainview Apartments, Ltd.'s,
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 6, 2002

75

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Mountainview Apartments, Ltd.
Clinton, Tennessee

We have audited the accompanying balance sheets of Mountainview Apartments,
Ltd., a limited partnership, RHS Project No.: 48-015-63097225 as of December 31,
2000 and 1999, and the related statements of operations, partners' 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Mountainview Apartments, Ltd.,
RHS Project No.: 48-015-63097225 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 6, 2001 on our consideration of Mountainview Apartments, Ltd.'s,
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 6, 2001

76

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
The Park Village, Limited
Jackson, Mississippi

We have audited the accompanying balance sheets of The Park Village, Limited, a
limited partnership, 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 the 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 the 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 The Park Village, Limited, 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 auditing standards generally
accepted in the United States of America.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 11 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 audit 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/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 25, 2002

77

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
The Park Village, Limited
Jackson, Mississippi

We have audited the accompanying balance sheets of The Park Village, Limited, 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 the 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 the 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 The Park Village, Limited, 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 11 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 audit 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/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 25, 2001

78

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
River Oaks Apartments, Ltd.
Oneonta, Alabama

We have audited the accompanying balance sheets of River Oaks Apartments, Ltd.,
a limited partnership, RHS Project No.: 01-005-630988076 as of December 31, 2001
and 2000, and the related statements of operations, partners' 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 River Oaks Apartments, Ltd.,
RHS Project No.: 01-005-630988076 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 26, 2002 on our consideration of River Oaks Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2002

79

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
River Oaks Apartments, Ltd.
Oneonta, Alabama

We have audited the accompanying balance sheets of River Oaks Apartments, Ltd.,
a limited partnership, RHS Project No.: 01-005-630988076 as of December 31, 2000
and 1999, and the related statements of operations, partners' 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 River Oaks Apartments, Ltd.,
RHS Project No.: 01-005-630988076 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 26, 2001 on our consideration of River Oaks Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2001

80

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Forrest Ridge, Ltd.
Forrest City, Arkansas

We have audited the accompanying balance sheets of Forrest Ridge Apartments,
Ltd., a limited partnership, RHS Project No.: 03-062-630899211 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Forrest Ridge Apartments, Ltd.,
RHS Project No.: 03-062-630899211 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 26, 2002 on our consideration of Forrest Ridge Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2002

81

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Forrest Ridge, Ltd.
Forrest City, Arkansas

We have audited the accompanying balance sheets of Forrest Ridge Apartments,
Ltd., a limited partnership, RHS Project No.: 03-062-630899211 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Forrest Ridge Apartments, Ltd.,
RHS Project No.: 03-062-630899211 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 26, 2001 on our consideration of Forrest Ridge Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2001

82

[Letterhead of SCHOONOVER BOYER AND ASSOCIATES]

INDEPENDENT AUDITORS' REPORT

The Partners
The Hearthside Limited Dividend
Housing Association Limited Partnership
(a Michigan Limited Partnership)

We have audited the accompanying balance sheets of The Hearthside Limited
Dividend Housing Association Limited Partnership, (a Michigan limited
partnership) as of December 31, 2001 and 2000, and the related statements of
income (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 the 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 The Hearthside Limited Dividend
Housing Association 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.

/s/ Schoonover Boyer & Associates
Columbus, Ohio

January 25, 2002

83

[Letterhead of SCHOONOVER BOYER GETTMAN AND ASSOCIATES]

INDEPENDENT AUDITORS' REPORT

The Partners
The Hearthside Limited Dividend Housing Association Limited Partnership
(a Michigan limited partnership)

We have audited the accompanying balance sheets of The Hearthside Limited
Dividend Housing Association Limited Partnership, (a Michigan limited
partnership) as of December 31, 2000 and 1999, and the related statements of
income (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 the 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 The Hearthside Limited Dividend
Housing Association 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/ Schoonover Boyer Gettman & Associates
Columbus, Ohio

January 26, 2001

84

[Letterhead of PAILET, MEUNIER AND LeBLANC, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
of Redemptorist Limited Partnership
New Orleans, Louisiana

We have audited the accompanying balance sheets of Redemptorist Limited
Partnership, HUD Project No. 064-35271, 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 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 Redemptorist Limited
Partnership, HUD Project No. 064-35271, 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 February 20, 2002, on our
consideration of Redemptorist Limited Partnership's internal control, and
reports dated February 20, 2002, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to
Affirmative Fair Housing. 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 17 to 27 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of Redemptorist Limited
Partnership. 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 and LeBlanc, L.L.P.
Metairie, Louisiana

February 20, 2002

85

[Letterhead of PAILET, MEUNIER AND LeBLANC, L.L.P.]

INDEPENDENT AUDITORS' REPORT

To the Partners
of Redemptorist Limited Partnership
New Orleans, Louisiana

We have audited the accompanying balance sheets of Redemptorist Limited
Partnership, HUD Project No. 064-35271, 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 Redemptorist Limited
Partnership, HUD Project No. 064-35271, 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 February 19, 2001, on our
consideration of Redemptorist Limited Partnership's internal control, and
reports dated February 19, 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

February 19, 2001

86

[Letterhead of SATTY, LEVINE & CIACCO, CPAs, P.C.]

To the Partners
MANHATTAN A ASSOCIATES
(A LIMITED PARTNERSHIP)
New York, New York

We have audited the accompanying balance sheet of Manhattan A Associates (A
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 of these
financial statements based on our audits.

We conducted our audits with 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 MANHATTAN A ASSOCIATES as of
December 31, 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.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on page nine is presented for purposes of additional analysis and is
not a required part of the basic financial statements of Manhattan A Associates.
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/ Satty, Levine & Ciacco, CPAs, P.C.
Jericho, New York

February 19, 2001

87

[Letterhead of GREGG ASSOCIATES]

INDEPENDENT AUDITOR'S REPORT

To the Partners/Owners
Weidler Associates Limited Partnership
Portland, Oregon

We have audited the accompanying balance sheets of Weidler Associates Limited
Partnership, HUD Project No. 126-35209, as of December 31, 2001 and 2000, and
the related statements of profit and 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 our audit.

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 Weidler Associates Limited
Partnership as of December 31, 2001 and 2000, and the results of its operations,
changes in partners' capital, and its 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 February 20, 2002, on our
consideration of Weidler Associates Limited Partnership's internal control, and
reports dated February 20, 2002, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to Fair
Housing and Non-Discrimination, and specific requirements applicable to nonmajor
HUD program transactions. These reports are an integral report 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 audits.

Our 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 14-21 is presented for the purpose of additional analysis,
and is not a required part of the basic financial statements of Weidler
Associates Limited Partnership. 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.

GREGG ASSOCIATES, PC

/s/ David R. Gregg
David R. Gregg
Certified Public Accountant
Portland, Oregon
February 20, 2002

88

[Letterhead of GREGG ASSOCIATES]

INDEPENDENT AUDITORS' REPORT

To the Partners
of Weidler Associates Limited Partnership
Portland, Oregon

We have audited the accompanying balance sheets of Weidler Associates 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 Weidler Associates Limited
Partnership as of December 31, 2000 and 1999, and the results of its operations,
changes in partners' capital, and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

GREGG ASSOCIATES, PC

/s/ David R. Gregg
David R. Gregg
Certified Public Accountant
Portland, Oregon
February 26, 2001

89

[Letterhead of ASHER & COMPANY, LTD.]

Independent Auditors' Report

The Partners
Gentle Pines - West Columbia Associates, L.P.
Marlton, New Jersey

We have audited the accompanying balance sheets of Gentle Pines - West Columbia
Associates, L.P. (A Limited Partnership), HUD Project No. 054-36627, as of
December 31, 2001 and 2000, and the related statements of loss, Partners'
capital and cash flows for the year ended December 31, 2001. 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 Gentle Pines - West Columbia
Associates, L.P. (A Limited Partnership), HUD Project No. 054-36627, as of
December 31, 2001 and 2000, and the results of its operations, changes in its
Partners' capital, and its cash flows for the year ended December 31, 2001 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 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 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, issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 21, 2002 on our
consideration of Gentle Pines - West Columbia Associates, L.P.'s (A Limited
Partnership), HUD Project No. 054-36627, internal control and reports dated
January 21, 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/ Asher & Company, Ltd
Philadelphia, Pennsylvania

January 21, 2002

90

[Letterhead of ASHER & COMPANY, LTD.]

Independent Auditors' Report

The Partners
Gentle Pines - West Columbia Associates, L.P.
Marlton, New Jersey

We have audited the accompanying balance sheets of Gentle Pines - West Columbia
Associates, L.P. (A Limited Partnership), HUD Project No. 054-36627, as of
December 31, 2000 and 1999, and the related statements of loss, Partners'
capital and cash flows for the year ended December 31, 2000. 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 Gentle Pines - West Columbia
Associates, L.P. (A Limited Partnership), HUD Project No. 054-36627, as of
December 31, 2000 and 1999, and the results of its operations, changes in its
Partners' capital, and its cash flows for the year ended December 31, 2000 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 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 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, issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 24, 2001 on our
consideration of Gentle Pines - West Columbia Associates, L.P.'s (A Limited
Partnership), HUD Project No. 054-36627, internal control and reports dated
January 24, 2001 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/ Asher & Company, Ltd
Philadelphia, Pennsylvania

January 24, 2001

91

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Lake Forest Estates II, Ltd.
Livingston, Alabama

We have audited the accompanying balance sheets of Lake Forest Estates II, Ltd.,
a limited partnership, RHS Project No.: 01-060-630996944 as of December 31, 2001
and 2000, and the related statements of operations, partners' 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Lake Forest Estates II, Ltd.,
RHS Project No.: 01-060-630996944 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 6, 2002 on our consideration of Lake Forest Estates II, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 6, 2002

92

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Lake Forest Estates II, Ltd.
Livingston, Alabama

We have audited the accompanying balance sheets of Lake Forest Estates II, Ltd.,
a limited partnership, RHS Project No.: 01-060-630996944 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Lake Forest Estates II, Ltd.,
RHS Project No.: 01-060-630996944 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 6, 2001 on our consideration of Lake Forest Estates II, Ltd.,
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 6, 2001

93

[Letterhead of AMILCAR TORRES RIVERA, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Las Camelias Limited Partnership

I have audited the accompanying balance sheets of Las Camelias Limited
Partnership as of December 31, 2001 and 2000, and the related statements of
loss, changes in Partner's 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 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 Las Camelias 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.

/s/ Amilcar Torres Rivera, CPA
San Juan, Puerto Rico
Stamp #1652576 of the Puerto Rico Society of CPA's was affixed to the original.
February 2, 2002

94

[Letterhead of AMILCAR TORRES RIVERA, CPA]

INDEPENDENT AUDITORS' REPORT

To the Partners
Las Camelias Limited Partnership

I have audited the accompanying balance sheets of Las Camelias Limited
Partnership as of December 31, 2000 and 1999, and the related statements of
loss, changes in Partner's 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 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 statements 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 Las Camelias Limited Partnership as
of December 31, 2000 and 1999, and the result of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.

/s/ Amilcar Torres Rivera, CPA
San Juan, Puerto Rico
Stamp #1598370 of the Puerto Rico Society of CPA's was affixed to the original.
February 2, 2001

95

[Letterhead of DAVID W. SCOTT, CPA, P.C.]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
WPL Associates XXIII Limited Partnership
522 NW 23rd, Suite 200
Portland, Oregon 97201

We have audited the accompanying balance sheet of WPL Associates XXIII Limited
Partnership, as of December 31, 2001, and the related statements of operations,
changes in partnerships' 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.
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 WPL Associates XXIII Limited
Partnership at 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/ David W. Scott, CPA, P.C.
Portland, Oregon
February 22, 2002

96

[Letterhead of DAVID W. SCOTT, CPA, P.C.]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
WPL Associates XXIII Limited Partnership
522 NW 23rd, Suite 200
Portland, Oregon 97201

We have audited the accompanying balance sheet of WPL Associates XXIII Limited
Partnership, as of December 31, 2000, and the related statements of operations,
changes in partnerships' 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.
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 WPL Associates XXIII Limited
Partnership at 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/ David W. Scott, CPA, P.C.
Portland, Oregon
March 2, 2001

97

[Letterhead of DAVID W. SCOTT, CPA, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
WPL Associates XXIII Limited Partnership
522 NW 23rd, Suite 200
Portland, Oregon 97201

We have audited the accompanying balance sheet of WPL Associates XXIII Limited
Partnership, as of December 31, 1999, and the related statements of operations,
changes in partnerships' 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.
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 WPL Associates XXIII Limited
Partnership at 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/ David W. Scott, CPA, P.C.
Portland, Oregon
February 15, 2000

98

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Broadway Townhouses L.P.

We have audited the accompanying balance sheet of Broadway Townhouses L.P. 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 Broadway Townhouses L.P. 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 31,
2002 on our consideration of Broadway Townhouses L.P.'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 31, 2002
Taxpayer Identification Number: 52-1088612
Lead Auditor: James P. Martinko

99

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Broadway Townhouses L.P.

We have audited the accompanying balance sheet of Broadway Townhouses L.P. 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 Broadway Townhouses L.P. 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 the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 24,
2001 on our consideration of Broadway Townhouses L.P.'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
Lead Auditor: Robert J. Denmark
Bethesda, Maryland

Taxpayer Identification Number: 52-1088612
January 24, 2001

100

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Broadway Townhouses L.P.

We have audited the accompanying balance sheet of Broadway Townhouses L.P. 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 Broadway Townhouses L.P. 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 the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 19,
2000 on our consideration of Broadway Townhouses L.P.'s 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: Robert J. Denmark
Bethesda, Maryland

Taxpayer Identification Number: 52-1088612
January 19, 2000

101

[Letterhead of JUAN P. SANTIAGO & ASSOCIATES]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Puerto Rico Historic Zone Limited Dividend Partnership

We have audited the accompanying balance sheet of Puerto Rico Historic Zone
Limited Dividend Partnership as of December 31, 2001, and the related statements
of operations, partners' equity, 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 my 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 my
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Puerto Rico Historic Zone
Limited Dividend Partnership as of December 31, 2001, and the results of its
operations, the changes in partners' deficit and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audits of
HUD Programs issued by the U.S. Department of Housing and Urban Development we
have also issued a report dated February 19, 2002, on our consideration of
Puerto Rico Historic Zone Limited Dividend Partnership's internal control and
reports dated February 19, 2002, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to Fair
Housing and Non-Discrimination, and special requirements applicable to non-major
HUD program transactions. 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 supplemental information on pages 19 through 23
is presented for the purpose of additional analysis and is not required as part
of the basic financial statement. 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/ Juan P. Santiago
Lic. No. 692, In force
I.D. No. 66-0528810
Stamp No. 1777085 was affixed to the original of this report.

San Juan, Puerto Rico
February 19, 2002

102

[Letterhead of HECTOR M. LOPEZ CERTIFIED PUBLIC ACCOUNTANT]

INDEPENDENT AUDITORS' REPORT

To the Partners
Puerto Rico Historic Zone Limited Dividend Partnership

I have audited the accompanying balance sheet of Puerto Rico Historic Zone
Limited Dividend Partnership as of December 31, 2000, and the related statements
of operations, partners' equity, and cash flows for the year 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 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 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 Puerto Rico Historic Zone Limited
Dividend Partnership as of December 31, 2000, and the results of its operations,
the changes in partners' equity and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audits of
HUD Programs, issued by the U.S. Department of Housing and Urban Development, I
have also issued reports dated January 31, 2001, on our consideration of Puerto
Rico Historic Zone Limited Dividend Partnership's internal control and reports
dated January 31, 2001, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to fair housing and
non-discrimination, specific requirements applicable to non-major HUD program
transactions. 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 my audit.

My audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 20 through 24
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 my opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ Hector M. Lopez

The Stamp No. 1703003 was adhered to the original of this report.
Taxpayer Identification Number: 050-36-4320
San Juan, Puerto Rico
January 31, 2001

103

[Letterhead of HECTOR M. LOPEZ CERTIFIED PUBLIC ACCOUNTANT]

INDEPENDENT AUDITORS' REPORT

To the Partners
Puerto Rico Historic Zone Limited Dividend Partnership

I have audited the accompanying balance sheet of Puerto Rico Historic Zone
Limited Dividend Partnership as of December 31, 1999, and the related statements
of operations, partners' equity and cash flows for the year 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 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 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 Puerto Rico Historic Zone Limited
Dividend Partnership as of December 31, 1999, and the results of its operations,
the changes in partners' equity and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

My audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 20 through 24
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 my 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," I have also issued reports dated February 18,
2000, on my consideration of Puerto Rico Historic Zone Limited Dividend
Partnership's internal control and on its compliance with specific requirements
applicable to major HUD programs, and fair housing and non-discrimination.

/s/ Hector M. Lopez

The Stamp No. 1623825 was adhered to the original of this report.
Taxpayer Identification Number: 050-36-4320
San Juan, Puerto Rico
February 18, 2000

104

[Letterhead of CABLISH, GENTILE & GAY]

INDEPENDENT AUDITORS' REPORT

To the Partners
Citrus Meadows Apartments, Ltd.
Bradenton, Florida

We have audited the accompanying balance sheet of Citrus Meadows Apartments,
Ltd., FHA Project No. 067-36654 (a limited partnership) (the Partnership), 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 these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards,
GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United
States and the Consolidated Audit Guide for Audits of HUD Programs, issued by
the U.S. Department of Housing and Urban Development, Office of Inspector
General, in August 1997. 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 Citrus Meadows Apartments, Ltd.
at December 31, 2001 and the results of its operations, cash flows and changes
in partners' equity (deficit) for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules included in the
financial statements (shown on pages 11 through 15) are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements of Citrus Meadows Apartment, Ltd. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly presented in all material respects in
relation to the financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued reports
dated February 9, 2002 on our consideration of Citrus Meadows Apartments, Ltd.'s
internal controls and on its compliance with laws and regulations applicable to
the basic financial statements. In accordance with the Consolidated Audit Guide,
we have also issued reports dated February 9, 2002 on major HUD programs, and
the nonmajor HUD program.

/s/ Cablish, Gentile & Gay, CPA

BRADENTON, FLORIDA
February 9, 2002

105

[Letterhead of CABLISH, GENTILE & GAY]

INDEPENDENT AUDITORS' REPORT

To the Partners
Citrus Meadows Apartments, Ltd.
Bradenton, Florida

We have audited the accompanying balance sheet of Citrus Meadows Apartments,
Ltd., FHA Project No. 067-36654 (a limited partnership) (the Partnership), as of
December 31, 2000, and the related statements of changes in profit and loss,
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,
GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United
States and the Consolidated Audit Guide for Audits of HUD Programs, issued by
the U.S. Department of Housing and Urban Development, Office of Inspector
General, in August 1997. 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 Citrus Meadows Apartments, Ltd.
at December 31, 2000 and the results of its operations, cash flows and changes
in partners' equity (deficit) for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information included in the
financial statements (shown on pages 12 through 16) are presented for the
purposes of additional analysis and are not a required part of the basic
financial statements of Citrus Meadows Apartment, Ltd. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly presented in all material respects in
relation to the financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued reports
dated February 5, 2001 on our consideration of Citrus Meadows Apartments, Ltd.'s
internal controls and on its compliance with laws and regulations applicable to
the basic financial statements. In accordance with the Consolidated Audit Guide,
we have also issued reports dated February 5, 2001, on major HUD programs, and
the nonmajor HUD program.

/s/ Cablish, Gentile & Gay, CPA

BRADENTON, FLORIDA
February 5, 2001

106

[Letterhead of CABLISH, GENTILE & GAY]

INDEPENDENT AUDITORS' REPORT

To the Partners
Citrus Meadows Apartments, Ltd.
Bradenton, Florida

We have audited the accompanying balance sheet of Citrus Meadows Apartments,
Ltd., FHA Project No. 067-36654 (a limited partnership) (the Partnership), as of
December 31, 1999, and the related statements of changes in profit and loss,
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,
Government Auditing Standards, issued by the Comptroller General of the United
States and the Consolidated Audit Guide for Audits of HUD Programs, issued by
the U.S. Department of Housing and Urban Development, Office of Inspector
General, in August 1997. 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 Citrus Meadows Apartments, Ltd.
at December 31, 1999 and the results of its operations, cash flows and changes
in partners' equity (deficit) for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information included in the
financial statements (shown on pages 12 through 17) are presented for the
purposes of additional analysis and are not a required part of the basic
financial statements of Citrus Meadows Apartment, Ltd. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly presented in all material respects in
relation to the financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued reports
dated February 7, 2000 on our consideration of Citrus Meadows Apartments, Ltd.'s
internal controls and on its compliance with laws and regulations applicable to
the basic financial statements. In accordance with the Consolidated Audit Guide,
we have also issued reports dated February 7, 2000, on major HUD programs, and
the nonmajor HUD program.

/s/ Cablish, Gentile & Gay, CPA

BRADENTON, FLORIDA
February 7, 2000

107

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Sartain School Venture

We have audited the accompanying balance sheet of Sartain School Venture as of
December 31, 2001 and the related statements of profit and loss, changes in
partners' 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 Sartain School Venture for the year ended
December 31, 2000, were audited by other auditors whose report, dated January
13, 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 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 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 Sartain School Venture as of
December 31, 2001, and the results of its operations, changes in partners'
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 23
through 26 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 January 25, 2002, on our
consideration of Sartain School Venture's 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 25, 2002

108

[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Sartain School Venture

We have audited the accompanying balance sheets of Sartain School 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 Sartain School 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
Quincy, Massachusetts

January 13, 2001

109

[ASHER & COMPANY, LTD. LETTERHEAD]

Independent Auditors' Report

The Partners
Driftwood Terrace Associates, Ltd.
Marlton, New Jersey

We have audited the accompanying balance sheets of Driftwood Terrace Associates,
Ltd. (A Limited Partnership), HUD Project No. 066-36678, as of December 31, 2001
and 2000, and the related statements of loss, Partners' capital and cash flows
for the year ended December 31, 2001. 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 Driftwood Terrace Associates,
Ltd. (A Limited Partnership), HUD Project No. 066-36678, as of December 31, 2001
and 2000, and the results of its operations, changes in its Partners' capital,
and its cash flows for the year ended December 31, 2001, 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 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 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, issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 14, 2002 on our
consideration of Driftwood Terrace Associates, Ltd.'s (A Limited Partnership),
HUD Project No. 066-36678, internal control and reports dated January 14, 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/ Asher & Company, Ltd.
Philadelphia, Pennsylvania

January 14, 2002

110

[ASHER & COMPANY, LTD. LETTERHEAD]

Independent Auditors' Report

The Partners
Driftwood Terrace Associates, Ltd.
Marlton, New Jersey

We have audited the accompanying balance sheets of Driftwood Terrace Associates,
Ltd. (A Limited Partnership), HUD Project No. 066-36678, as of December 31, 2000
and 1999 and the related statements of loss, Partners' capital and cash flows
for the year ended December 31, 2000. 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 Driftwood Terrace Associates,
Ltd. (A Limited Partnership), HUD Project No. 066-36678, as of December 31, 2000
and 1999 and the results of its operations, changes in its Partners' capital,
and its cash flows for the year ended December 31, 2000, 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 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 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, issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 16, 2001on our
consideration of Driftwood Terrace Associates, Ltd.'s (A Limited Partnership),
HUD Project No. 066-36678, internal control and reports dated January 16, 2001on
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/ Asher & Company, Ltd.
Philadelphia, Pennsylvania

January 16, 2001

111

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Holly Hill, Ltd.

Greenville, Tennessee

We have audited the accompanying balance sheets of Holly Hill, Ltd., a limited
partnership, RHS Project No.: 48-030-621264791 as of December 31, 2001 and 2000,
and the related statements of operations, partners' 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Holly Hill, Ltd., RHS Project
No.: 48-030-621264791 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 21, 2002 on our consideration of Holly Hill, Ltd.'s internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 21, 2002

112

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Holly Hill, Ltd.
Greenville, Tennessee

We have audited the accompanying balance sheets of Holly Hill, Ltd., a limited
partnership, RHS Project No.: 48-030-621264791 as of December 31, 2000 and 1999,
and the related statements of operations, partners' 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Holly Hill, Ltd., RHS Project
No.: 48-030-621264791 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 16, 2001on our consideration of Holly Hill, Ltd.'s internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 16, 2001

113

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Mayfair Apartments, Ltd.
Morristown, Tennessee

We have audited the accompanying balance sheets of Mayfair Apartments, Ltd., a
limited partnership, RHS Project No.: 48-032-630957575 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Mayfair Apartments, Ltd., RHS
Project No.: 48-032-630957575 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
auditing standards generally accepted in the United States of America.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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 auditing standards generally accepted in the United States of
America, we have also issued a report dated February 20, 2002 on our
consideration of Mayfair Apartments, Ltd.'s internal control over financial
reporting and on our tests of its compliance with certain provisions of laws and
regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2002

114

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Mayfair Apartments, Ltd.
Morristown, Tennessee

We have audited the accompanying balance sheets of Mayfair Apartments, Ltd., a
limited partnership, RHS Project No.: 48-032-630957575 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Mayfair Apartments, Ltd., RHS
Project No.: 48-032-630957575 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 20, 2001on our consideration of Mayfair Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2001

115

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Foxcroft Apartments, Ltd.
Troy, Alabama

We have audited the accompanying balance sheets of Foxcroft Apartments, Ltd., a
limited partnership, RHS Project No.: 01-055-630971151 as of December 31, 2001
and 2000, and the related statements of operations, partners' 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Foxcroft Apartments, Ltd., RHS
Project No.: 01-055-630971151 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 25, 2002 on our consideration of Foxcroft Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 25, 2002

116

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Foxcroft Apartments, Ltd.
Troy, Alabama

We have audited the accompanying balance sheets of Foxcroft Apartments, Ltd., a
limited partnership, RHS Project No.: 01-055-630971151 as of December 31, 2000
and 1999, and the related statements of operations, partners' 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Foxcroft Apartments, Ltd., RHS
Project No.: 01-055-630971151 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 26, 2001on our consideration of Foxcroft Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2001

117

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Canterbury Apartments, Ltd.
Indianola, Mississippi

We have audited the accompanying balance sheets of Canterbury Apartments, Ltd.,
a limited partnership, RHS Project No.: 28-067-630979083 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Canterbury Apartments, Ltd.,
RHS Project No.: 28-067-630979083 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated March 2, 2002 on our consideration of Canterbury Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
March 2, 2002

118

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Indianola, Mississippi

We have audited the accompanying balance sheets of Canterbury Apartments, Ltd.,
a limited partnership, RHS Project No.: 28-067-630979083 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Canterbury Apartments, Ltd.,
RHS Project No.: 28-067-630979083 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 22, 2001 on our consideration of Canterbury Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 22, 2001

119

[Letterhead from KPMG/Greenville, SC]

INDEPENDENT AUDITORS' REPORT

To the Partners
Cutler Canal III Associates, Ltd.

We have audited the accompanying balance sheet of Cutler Canal III Associates,
Ltd., as of December 31, 2001, and the related statements of operations,
partners' capital (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. 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 Cutler Canal III 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.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information included in the
Schedule of Certain Expenses 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.

/s/ KPMG LLP
Greenville, South Carolina
February 13, 2002

120

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Cutler Canal III Associates, Ltd.

We have audited the accompanying balance sheets of Cutler Canal III Associates,
Ltd., 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 Cutler Canal III Associates,
Ltd., 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.

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 17
and 18 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.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia

January 28, 2001

121

[Letterhead of MUELLER, PROST, PURK & WILLBRAND, P.C.]

To the Partners
Jefferson Place, L.P.
Omaha, Nebraska

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying balance sheets of Jefferson Place, L.P., (A
Missouri Limited Partnership) (the "Partnership"), as of December 31, 2001, 2000
and 1999, and the related statements of income, changes in partners' 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 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Jefferson Place, L.P., as of
December 31, 2001, 2000 and 1999, 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/ Mueller, Prost, Purk & Willbrand, P.C.
Certified Public Accountants

St. Louis, MO
February 1, 2002

122

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Callaway Village, Ltd.
Clinton, Tennessee

We have audited the accompanying balance sheets of Callaway Village, Ltd., a
limited partnership, RHS Project No.: 48-001-581172107 as of December 31, 2001
and 2000, and the related statements of operations, partners' 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 the 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, and the U.S. Department of
Agriculture, Farmers Home Administration Audit Program. 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 the
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 Callaway Village, Ltd., RHS
Project No.: 48-001-581172107 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 23, 2002 on our consideration of Callaway Village, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 23, 2002

123

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Callaway Village, Ltd.
Clinton, Tn.

We have audited the accompanying balance sheets of Callaway Village, Ltd., a
limited partnership, RHS Project No.: 48-001-581172107 as of December 31, 2000
and 1999, and the related statements of operations, partners' 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Callaway Village, Ltd., RHS
Project No.: 48-001-581172107 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 21, 2001 on our consideration of Callaway Village, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 21, 2001

124

[Letterhead of HALBERT, KATZ & CO. P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners

Commerce Square Apartments Associates, L.P.
Wilmington, Delaware

We have audited the accompanying balance sheets of Commerce Square Apartments
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. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Commerce Square Apartments
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 page 13 to 15) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of
Commerce Square Apartments Associates, L.P. 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 financial statements taken as a whole.

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

125

[Letterhead of HALBERT, KATZ & CO. P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Commerce Square Apartments Associates, L.P.
Wilmington, Delaware

We have audited the accompanying balance sheets of Commerce Square Apartments
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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Commerce Square Apartments
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 page 13 to 23) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of
Commerce Square Apartments Associates, L.P. 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 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 Commerce Square Apartments
Associates, L.P.'s internal control 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

126

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
West 132nd Development Partnership

We have audited the accompanying balance sheets of West 132nd Development
Partnership 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 audit.

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 West 132nd Development
Partnership, as of December 31, 2001 and 2000, and the results of its
operations, 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.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland

January 9, 2002

127

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
West 132nd Development Partnership

We have audited the accompanying balance sheets of West 132nd Development
Partnership as of December 31, 2000 and 1999, 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 audit.

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 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 West 132nd Development
Partnership, as of December 31, 2000 and 1999, and the results of its
operations, changes in partners' equity (deficit) and cash flows for the years
then ended, in conformity with generally accepted accounting principles.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland

January 17, 2001

128

[Letterhead of O'CONNOR DAVIES MUNNS & DOBBINS, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Site H Development Company
(A Limited Partnership)

We have audited the accompanying balance sheets of Site H Development Company (a
Limited Partnership) for the years ended 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
Site H Development Company 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 aforementioned financial statements represent fairly, in all
material respects, the financial position of Site H Development Company as of
December 31, 2001 and 2000, and its operations, changes in its partners' capital
accounts and cash flows for the years then ended in conformity with the
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 information in schedules
of project operating expenses 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 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/ O'Connor Davies Munns & Dobbins, LLP
Harrison, NY

February 28, 2002

129

[Letterhead of MUNNS AND DOBBINS]

To the Partners
Site H Development Company
(A Limited Partnership)

Independent Auditors' Report

We have audited the accompanying statement of assets, liabilities and partners'
capital of Site H Development Company (a Limited Partnership) for the years
ended December 31, 2000 and 1999 and the related statements of income and
expenses, changes in partners' capital and cash flows for the years then ended.
These financial statements are the responsibility of Site H Development Company
(a Limited Partnership) 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 aforementioned financial statements represent fairly, in all
material respects, the assets, liabilities and partners' capital of Site H
Development Company (a Limited Partnership) as of December 31, 2000 and 1999 and
its income and expenses, changes in its partners' capital accounts and cash
flows for the years then ended in conformity with the 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 information in Schedule
1 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
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/ Munns and Dobbins
CERTIFIED PUBLIC ACCOUNTANTS
Scarsdale, NY
February 28, 2001

130

[Letterhead of KG & Company, LLP]

Independent Auditor's Report

To the Partners
L.I.H. Chestnut Associates, L.P.

We have audited the accompanying balance sheets of L.I.H. Chestnut Associates,
L.P. (A Pennsylvania limited partnership), PHFA Project No. O-0083, 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 L.I.H Chestnut Associates, L.P.'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 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 financial statements referred to above present fairly, in
all material respects, the financial position of L.I.H. Chestnut Associates,
L.P. (A Pennsylvania limited partnership), PHFA Project No. O-0083, 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.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our report
dated February 9, 2002 on our consideration of L.I.H. Chestnut Associates,
L.P.'s (A Pennsylvania limited partnership), PHFA Project No. O-0083, internal
control over financial reporting and on our tests of its compliance with certain
provision of laws, regulators, contracts and grants. This 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
audits.

/s/ KG & Company, Certified Public Accountants, LLP
New York, New York

February 9, 2002

131

[Letterhead of KPMG]

Independent Auditors' Report

The Partners
L.I.H. Chestnut Associates, L.P.:

We have audited the accompanying balance sheet of L.I.H. Chestnut Associates,
L.P. (A Pennsylvania limited partnership), PHFA Project No. O-0083, as of
December 31, 1999, and the related statements of loss, 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 generally accepted auditing standards
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 L.I.H. Chestnut Associates,
L.P. (A Pennsylvania limited partnership), PHFA Project No. O-0083, as of
December 31, 1999, and the results of its operations, changes in its Partners'
capital, and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in note 3 to the
financial statements, the Partnership has suffered recurring losses from
operations and is in default of certain obligations under the terms of the
mortgage loan. These conditions raise substantial doubt about the Partnership's
ability to continue as a going concern at December 31, 1999. The General
Partner's plans regarding these matters are described in note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplementary information is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such supplementary 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 our report
dated March 15, 2000, on our consideration of L.I.H. Chestnut Associates, L.P.'s
(A Pennsylvania limited partnership), PHFA Project No. O-0083, internal control
over financial reporting.

/s/ KPMG LLP
Philadelphia, Pennsylvania
March 15, 2000

132

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Diamond Phase II Venture

We have audited the accompanying balance sheet of Diamond Phase II 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 these financial statements based on
our audits. The financial statements of Diamond Phase II Venture for the year
ended December 31, 2000, were audited by other auditors whose report, dated
January 27, 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 the 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 Diamond Phase II Venture at
December 31, 2001, and the results of its operations, 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 25, 2002, on our
consideration of Diamond Phase II Venture's 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 25, 2002

133

[Letterhead of ZINER, KENNEDY & LEHAN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Diamond Phase II Venture

We have audited the accompanying balance sheets of Diamond Phase II 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 year 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 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 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 Diamond Phase II Venture at
December 31, 2000 and 1999, and the results of its operations, changes in
partners' equity and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan LLP
Boston, Massachusetts

January 27, 2001

134

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bookbindery Associates

We have audited the accompanying balance sheet of Bookbindery Associates 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 these financial statements based on
our audits. The financial statements of Bookbindery Associates for the year
ended December 31, 2000, were audited by other auditors whose report, dated
January 19, 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 the 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 Bookbindery Associates as of
December 31, 2001, and the results of its operations, 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 25
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, we have also issued a report
for the year ended December 31, 2001, dated January 25, 2002, on our
consideration of Bookbindery 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 25, 2002

135

[Letterhead of ZINER, KENNEDY & LEHAN LLP

INDEPENDENT AUDITORS' REPORT

To the Partners of
Bookbindery Associates

We have audited the accompanying balance sheets of Bookbindery 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 Bookbindery 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
Boston, Massachusetts

January 11, 2001

136

[Letterhead of BUCHBINDER TUNICK & COMPANY LLP]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners of The Hamlet, Ltd.

We have audited the accompanying balance sheets of The Hamlet, Ltd. (a Florida
limited partnership) (the "Partnership") 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. 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 The Hamlet, Ltd. 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/ BUCHBINDER TUNICK & COMPANY LLP

Boca Raton, Florida
January 31, 2002

137

[Letterhead of BUCHBINDER TUNICK & COMPANY LLP]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners of The Hamlet, Ltd.

We have audited the accompanying balance sheets of The Hamlet, Ltd. (a Florida
limited partnership) (the "Partnership") 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 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 The Hamlet, Ltd. 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 accounting principles generally accepted in
the United States of America.

/s/ Buchbinder Tunick & Company LLP
Boca Raton, Florida

January 26, 2001

138

[Letterhead of ISRAEL ROLON, CPA]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY
INFORMATION

TO THE PARTNERS OF
STOP 22 LIMITED PARTNERSHIP

I have audited the accompanying balance sheet of Stop 22 Limited Partnership,
H.U.D. Project No.: R2-46-E-006-014 and R2-46-E-00l-013, as of December 31,
2001, and the related statements of loss, changes in partners' deficit and cash
flows for the year 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 and 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 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 Stop 22 Limited Partnership, as of
December 31, 2001, and the results of its operations, changes in partners'
deficit, and 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, and the CONSOLIDATED AUDIT
GUIDE FOR AUDITS OF HUD PROGRAMS issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated February 14, 2002 on my
consideration of Stop 22 Limited Partnership's internal control and reports
dated February 14, 2002 on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to Fair Housing and
Non-discrimination, and laws and regulations applicable to the financial
statements. 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.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages to 21 to 29) 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/ ISRAEL ROLON, C.P.A.
SAN JUAN, PUERTO RICO
February 14, 2002
FEDERAL EMPLOYER IDENTIFICATION NUMBER: 66-0392808
STAMP NUMBER 1772481 WAS AFFIXED TO THE ORIGINAL OF THIS REPORT.

139

[Letterhead Of ISRAEL ROLON]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY
INFORMATION

TO THE PARTNERS OF
STOP 22 LIMITED PARTNERSHIP

I have audited the accompanying balance sheet of Stop 22 Limited Partnership,
H.U.D. Project No.: R2-46-E-006-014 and R2-46-E-00l-013, as of December 31,
2000, and the related statements of loss, changes in partners' deficit and cash
flows for the year 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 U.S. 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 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 Stop 22 Limited Partnership, as of
December 31, 2000, and the results of its operations, changes in partners'
deficit, and cash flows for the year then ended in conformity with U.S.
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, I have also issued reports dated February 14, 2001 on my
consideration of Stop 22 Limited Partnership's internal control and reports
dated February 14, 2001 on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to Fair Housing and
Non-discrimination, and laws and regulations applicable to the financial
statements.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages to 22 to 30) 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/ ISRAEL ROLON, C.P.A.
SAN JUAN, PUERTO RICO

FEDERAL EMPLOYER IDENTIFICATION NUMBER: 66-0392808
STAMP NUMBER 1698748 WAS AFFIXED TO THE ORIGINAL OF THIS REPORT.
February 14, 2001

140

[Letterhead Of ISRAEL ROLON]

INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY
INFORMATION

TO THE PARTNERS OF
STOP 22 LIMITED PARTNERSHIP

I have audited the accompanying balance sheet of Stop 22 Limited Partnership,
H.U.D. Project No.: R2-46-E-006-014 and R2-46-E-00l-013, as of December 31,
1999, and the related statements of loss, changes in partners' equity and cash
flows for the year 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 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 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 Stop 22 Limited Partnership, as of
December 31, 1999, and the results of its operations, changes in partners'
equity, and cash flows for the year 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, I have also issued reports dated February 17, 2000 on my
consideration of Stop 22 Limited Partnership's internal control and on its
compliance with specific requirements applicable to major HUD programs, specific
requirements applicable to Fair Housing and Non-discrimination, and laws and
regulations applicable to the financial statements.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages to 22 to 30) 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/ ISRAEL ROLON, C.P.A.
SAN JUAN, PUERTO RICO

FEDERAL EMPLOYER IDENTIFICATION NUMBER: 66-0392808
STAMP NUMBER 1621959 WAS AFFIXED TO THE ORIGINAL OF THIS REPORT.
February 17, 2000

141

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Knob Hill Apartments, Ltd.
Morristown, Tennessee

We have audited the accompanying balance sheets of Knob Hill Apartments, Ltd. a
limited partnership, RHS Project No.: 48-032-638979224 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 the 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 the 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 Knob Hill Apartments, Ltd., RHS
Project No 48-032-638979224 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2001 and 2000, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 20, 2002 on our consideration of Knob Hill Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2002

142

[Letterhead of DONALD W. CAUSEY & ASSOCIATES, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Knob Hill Apartments, Ltd.
Morristown, Tennessee

We have audited the accompanying balance sheets of Knob Hill Apartments, Ltd. a
limited partnership, RHS Project No.: 48-032-638979224 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 the audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States, and the U.S. Department of Agriculture, Farmers Home
Administration Audit Program. 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 the 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 Knob Hill Apartments, Ltd., RHS
Project No 48-032-638979224 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2000 and 1999, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit 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
dated February 20, 2001 on our consideration of Knob Hill Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2001

143

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

INDEPENDENT AUDITORS' REPORT

To the Partners of
Conifer James Street Associates
(A Limited Partnership)
Syracuse, New York

We have audited the accompanying balance sheets of Conifer James Street
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 James Street 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

144

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

INDEPENDENT AUDITORS' REPORT

To the Partners of
Conifer James Street Associates
(A Limited Partnership)
Syracuse, New York

We have audited the accompanying balance sheets of Conifer James Street
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 James Street 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 23, 2001

145

[Letterhead of RBG & CO.]

Independent Auditors' Report

Partners
Longfellow Heights Apartments, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Longfellow Heights Apartments,
L.P., a limited partnership, as of December 31, 2001 and 2000, and the related
statements of income (loss), 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. 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 Longfellow Heights Apartments,
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/ Rubin, Brown, Gornstern & Co. LLP
St. Louis, Missouri
January 23, 2002

146

[Letterhead of RBG & CO.]

Independent Auditors' Report

Partners

Longfellow Heights Apartments, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Longfellow Heights Apartments,
L.P., a limited partnership, as of December 31, 2000 and 1999, and the related
statements of income (loss), 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 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 Longfellow Heights Apartments,
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/ Rubin, Brown, Gornstern & Co. LLP
St. Louis, Missouri
February 5, 2001

147

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS

* Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.

148

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements.

149

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT

See accompanying notes to consolidated financial statements.

150

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

151

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(continued)

See accompanying notes to consolidated financial statements.

152

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

NOTE 1 - General

Liberty Tax Credit Plus III L.P., a Delaware limited partnership (the
"Partnership"), was organized on November 17, 1988. The Partnership had no
operations until commencement of the public offering on May 2, 1989. The general
partners of the Partnership are Related Credit Properties III L.P., a Delaware
limited partnership (the "Related General Partner"), and Liberty GP III Inc., a
Delaware corporation (the "Liberty General Partner"). The general partner of the
Related General Partner is Related Credit Properties III Inc., a Delaware
corporation.

The Partnership's business is to invest in other limited partnerships ("Local
Partnerships" or "Subsidiaries" or "Subsidiary Partnerships") owning leveraged
apartment complexes ("Apartment Complexes") that are eligible for the low-income
housing tax credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986,
and to a lesser extent in Local Partnerships owning properties that are eligible
for the historic rehabilitation tax credit ("Historic Rehabilitation Tax
Credit", "Rehabilitation Projects", and together with the apartment complexes,
the "Properties").

As of March 31, 2002 the Partnership has interests in 61 Local Partnerships and
no further acquisitions are anticipated. During the year ended March 31, 2002,
the Partnership's limited partnership interest in one Local Partnership was
sold.

The Partnership is authorized to issue a total of 150,000 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 one-fifth of
a limited partnership interest. As of March 31, 2002, 139,101.5 have been
issued, and no further issuance of BACs is anticipated. The offering was
completed on March 30, 1990.

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 partners.

NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Consolidation

The consolidated financial statements include the accounts of the Partnership
and 62 Subsidiary Partnerships (including one Subsidiary Partnership in which
the Partnership sold its limited partnership interest during the year ended
March 31, 2002) in which the Partnership is the principal limited partner.
Through the rights of the Partnership and/or an affiliate of the General
Partners (which has a contractual obligation to act on behalf of the
Partnership) to remove the general partner of the Subsidiary Partnerships and to
approve certain major operating and financial decisions, the Partnership has a
controlling financial interest in the Subsidiary Partnerships.

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

153

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

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").

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.

Losses attributable to minority interest which exceed the minority interest's
investment in a Subsidiary have been charged to the Partnership. Such losses
aggregated approximately $239,000, $244,000 and $273,000 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 partners' equity less minority interest capital, if
any. In consolidation, all Subsidiary Partnerships' losses are included in the
Partnership's capital account except for losses allocated to minority interest
capital.

b) 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. Cash held in escrow has various use restrictions and is not
considered a cash equivalent.

c) 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 such property and equipment. 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. 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. Through March 31, 2002, the
Partnership has recorded approximately $20,083,000 as a loss on impairment of
assets.

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. Such
assets would be classified as property and equipment-held for sale and are not
depreciated. There are no assets classified as property and equipment-held for
sale through March 31, 2002.

154

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

d) 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 (see Note 9).

e) 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. (See Note 8).

f) Loss Contingencies

The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated.

g) Use of Estimates

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates.

NOTE 3 - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (all of which are held for non-trading
purposes) for which it is practicable to estimate that value:

Cash and Cash Equivalents and Cash Held in Escrow
- -------------------------------------------------
The carrying amount approximates fair value.

Mortgage Notes Payable
- ----------------------

The fair value of mortgage notes payable is estimated, where practicable, based
on the borrowing rate currently available for similar loans.

155

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

The estimated fair values of the Partnership's mortgage note payable are as
follows:

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

Due to Local General Partners and Affiliates
- --------------------------------------------

The estimated fair value of the Partnership's due to the general partners of
each Local Partnership (the "Local General Partners") and affiliates are as
follows:

(*) Management believes it is not practicable to estimate the fair value of due
to Local General Partners and affiliates, because market information on such
unique loans are not currently available to the Local Partnership.

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

156

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

NOTE 4 - Property and Equipment

The components of property and equipment are as follows:

Included in property and equipment are $8,346,089 of acquisition fees paid to
the general partners and $2,908,694 of acquisition expenses as of March 31, 2002
and 2001. In addition, as of March 31, 2002 and 2001, buildings and improvements
include $14,677,111 of capitalized interest.

Depreciation expense for the years ended March 31, 2002, 2001 and 2000 amounted
to $10,678,356, $10,763,766 and $12,020,100, respectively.

In connection with the rehabilitation of the properties, the Subsidiary
Partnerships have incurred developers' fees of $25,440,729 as of both March 31,
2002 and 2001 to the Local General Partner and affiliates. Such fees have been
included in the cost of property and equipment.

During the 2001 and 2000 Fiscal Years, there was a decrease in accumulated
depreciation in the amount of $2,107,234 and $11,316, respectively, due to
write-offs on dispositions.

NOTE 5 - Cash Held in Escrow

The components of cash held in escrow are as follows:

* Represents amounts to be paid to seller upon meeting specified rental
achievement criteria.

157

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

NOTE 6 - Deferred Costs

The components of deferred costs and their periods of amortization are as
follows:

*Over the life of the related mortgages

Amortization of deferred costs for the years ended March 31, 2002, 2001 and 2000
amounted to $160,460, $208,396 and $187,860, respectively. During the year ended
March 31, 2001, there was a decrease in accumulated amortization due to the
write-off of fully amortized costs in the amount of $13,235.

NOTE 7 - Mortgage Notes Payable

The mortgage and construction notes, which are collateralized by land and
buildings, are payable in aggregate monthly installments of approximately
$987,000, including principal and interest at rates varying from 0% to 11.5% per
annum, through the year 2044. Each Subsidiary Partnership's mortgage note
payable is without further recourse and is collateralized by the land and
buildings of the respective Subsidiary Partnership and the assignment of certain
Subsidiary Partnership's rent and leases.

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

No adjustment has been made in the table above for the events of default and
other matters described in Note 12(a).

The mortgage agreements require monthly deposits to replacement reserves of
approximately $90,000 and monthly deposits to escrow accounts for real estate
taxes, hazard and mortgage insurance and other (Note 5).

158

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

L.I.H Chestnut Associates, L.P. ("Chestnut")
- --------------------------------------------
Chestnut's Mortgage Agreement contains various covenants pertaining to payment
of monthly loan installments and maintenance of reserve funds. At December 31,
2001, Chestnut was in violation of such covenants. As of March 15, 2002, the
Pennsylvania Housing Finance Agency ("PHFA") has not waived the reserve funds
requirements, and accordingly, Chestnut is currently in default. Under the terms
of the Mortgage Agreement, if any event of default, as defined, occurs and is
continuing, other rights may be enforced on behalf of the lenders, inclusive of
possession of the Property.

NOTE 8 - Related Party Transactions

As of March 31, 2002, Liberty Associates IV L.P. ("Liberty Associates"), an
affiliate of the General Partners, has a 1% and .998% (see Note 12a with respect
to River Place) interest as a special limited partner in 60 and 1 of the Local
Partnerships, respectively.

The General Partners and their affiliates and the Local General Partners and
their affiliates perform services for the Partnership and the Local
Partnerships, respectively. The costs incurred for the years ended March 31,
2002, 2001 and 2000 are as follows:

A) Guarantees

The Partnership negotiated Operating Deficit Guarantee Agreements with all Local
Partnerships in which the General Partners of the Local Partnerships agreed to
fund operating deficits for a specified period of time. The terms of the
Operating Deficit Guarantee Agreements vary for each Local Partnership, with the
maximum dollar amounts to be funded for a specified period of time, generally
three years, commencing at stabilization. The gross amount of the operating
deficit guarantees aggregate approximately $18,700,000 of which approximately
$17,600,000 had expired as of March 31, 2002. At both March 31, 2002 and 2001,
approximately $2,400,000 had been funded by the Local General Partners to meet
such obligations. Amounts funded under such agreements are treated as
noninterest bearing loans, which will be repaid only out of 50% of available
cash flow or out of available net sale or refinancing proceeds.

The Operating Deficit Guarantee Agreements were negotiated to protect the
Partnership's interest in the Local Partnerships and to provide incentive to the
Local General Partners to generate positive cash flow.

B) Related Party Fees

159

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

The costs incurred to related parties for the years ended March 31, 2002, 2001
and 2000 were as follows:

(i) The General Partners are 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. The partnership management fee, subject to the foregoing
limitation, will be determined by the General Partners in their sole discretion
based upon their review of the Partnership's investments. Unpaid partnership
management fees for any year will be accrued without interest and will be
payable only to the extent of available funds after the Partnership has made the
distributions to the BACs holders 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 Partners amounting to approximately $7,035,000 and $5,601,000 were
accrued and unpaid at March 31, 2002 and 2001. Without the General Partners'
continued accrual without payment of these fees and expense reimbursements, the
Partnership will not be in a position to meet its obligations. The General
Partners have allowed for the accrual without payment of these amounts but are
under no obligation to continue to do so.

(ii) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
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 Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the Subsidiary
Partnerships' performance.

(iii) The Subsidiary Partnerships incurred property management fees amounting to
$2,384,810, $2,365,130 and $2,214,259 for the years ended March 31, 2002, 2001
and 2000, respectively, of which $1,897,013, $1,901,840 and $1,689,366,
respectively, was incurred to affiliates of the Local General Partners.

(iv) Liberty Associates, a special limited partner of the Subsidiary
Partnerships, is entitled to receive a local administrative fee of up to $2,500
per year from each Subsidiary Partnership.

160

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

Liberty Associates received cash distributions from the Local Partnerships of
$7,548, $1,882 and $1,284 during the years ended March 31, 2002, 2001 and 2000,
respectively.

Pursuant to the Partnership Agreement and the Local Partnership Agreements, the
General Partners and Liberty Associates received their allocable pro rata share
of profits, losses and tax credits from the Partnership and the Local
Partnerships, respectively.

C) Due to Local General Partners and Affiliates

Due to Local General Partners and affiliates at March 31, 2002 and 2001 consists
of the following:

161

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

(i) Developer loans consist of the following:

162

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

(iii) Long-term note payable consists of the following

NOTE 9 - Income Taxes

A reconciliation of the financial statement net loss to the income tax loss for
the Partnership and its consolidated Subsidiaries follows:

163

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

NOTE 10 - Sale of Property

On October 4, 2001, the Partnership's limited partnership interest in Northwood
Associates Limited Partnership ("Northwood") was sold to an unaffiliated third
party purchaser for $180,000 and the assumption of the mortgage note, resulting
in a loss in the amount of approximately $84,000.

NOTE 11 - Forgiveness of Debt

On March 29, 2001, Lancashire Towers Associates Limited Partnership
("Lancashire") executed a note purchase agreement with the note holder whereby
all liabilities and obligations of Lancashire to such note holder were settled.
The loan was paid off from the amount of allowable surplus cash distributable to
the partners in 2001 and, therefore, no permission from HUD was necessary to
consummate this transaction. The resultant forgiveness of debt of $2,156,560 has
been recorded as an extraordinary item in the financial statements.

NOTE 12 - Commitments and Contingencies

a) Subsidiary Partnerships - Going Concerns

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

R.P.P. Limited Dividend Housing Association Limited Partnership ("River Place")
- -------------------------------------------------------------------------------
River Place has been unable to generate sufficient cash flow to make the
required principal and interest payments under its loan agreements. River
Place's debt guarantor, The General Retirement System of the City of Detroit
("GRS"), entered into an agreement with the Michigan State Housing Development
Authority ("MSHDA") to purchase these loans upon the occurrence of certain
events. GRS has declared River Place in default under its obligation to make the
required payments. During 1996, GRS agreed to waive its right of foreclosure
under the mortgages, unless certain events occur, through February 1, 2006. GRS
has made advances for debt service and has incurred certain fees relating to
these loans totaling $42,858,984, including accrued interest on such advances at
a rate of 15%. Such amount is included in the amount due to debt guarantor on
the balance sheet.

Management anticipates that River Place will be unable to make all of the
required debt service payments during 2002. However, there is no guarantee that
GRS, or any other persons, will continue to make these payments on behalf of
River Place. These items raise substantial doubt about River Place's ability to
continue as a going concern.

The financial statements of River Place have been prepared assuming that River
Place will continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty. The
Partnership's investment in River Place has been written down to zero by prior
years' losses and the minority interest balance was approximately $883,000 at
both March 31, 2002 and 2001. The net loss after minority interest for River
Place amounted to approximately $3,190,000, $3,795,000 and $3,822,000 for the
years ended March 31, 2002, 2001 and 2000, respectively.

164

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

Brandywine Court Associates, L.P. ("Brandywine")
- ------------------------------------------------
The financial statements of Brandywine have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of Brandywine as a going concern. Brandywine has had
recurring net losses and has a working capital deficit that increased
approximately $90,000 during the year ended December 31, 2001. Furthermore,
Brandywine's management anticipates that the property will need a new roof in
the near future, the cost of which is expected to exceed $100,000. Brandywine's
management plans to meet with Jacksonville Housing Authority Housing Assistance
Division and United States Department of Housing and Urban Development in an
effort to obtain financial relief for Brandywine. There can be no assurance that
such relief will be obtained. In view of these matters, there is substantial
doubt as to Brandywine's ability to continue as a going concern. The
Partnership's investment in Brandywine has been written down to zero by prior
years' losses and the minority interest balance was approximately $0 at both
March 31, 2002 and 2001. The net loss after minority interest for Brandywine
amounted to approximately $161,000, $143,000 and $105,000 for the years ended
March 31, 2002, 2001 and 2000, respectively.

b) Subsidiary Partnerships - Other

Jefferson Limited Partnership ("Jefferson")
- -------------------------------------------
At December 31, 2001 and 2000, Jefferson's current liabilities exceeded its
current assets by over $18,000 and $7,000, respectively. Although this condition
could raise substantial doubt about Jefferson's ability to continue as a going
concern, such doubt is alleviated by the fact that $17,763 and $17,918 of
current liabilities at December 31, 2001 and 2000, respectively, are to related
parties which do not intend to pursue payment beyond Jefferson's ability to pay.

Accordingly, management believes that Jefferson has the ability to continue as a
going concern for at least one year from December 31, 2001. The Partnership's
investment in Jefferson was approximately $263,000 and $413,000 at March 31,
2002 and 2001, respectively, and the minority interest balance was $0 at each
date. The net loss after minority interest for Jefferson amounted to
approximately $150,000, $105,000, and $149,000 for the years ended March 31,
2002, 2001 and 2000, respectively.

Manhattan A Associates ("Manhattan A")
- --------------------------------------

The financial statements for Manhattan A have not been audited for the 2001
Fiscal Year. In August 2001 the Local General Partner of Manhattan A was
replaced as the managing agent. The auditors for Manhattan A have been unable
to obtain all the books and records to complete the audit. The Partnership is
in the process of replacing the Local General Partner.

Leases
- ------

Four of the Subsidiary Partnerships are leasing the land on which the Properties
are located, for terms ranging from 28 to 99 years. The leases on these
Properties are noncancelable. At December 31, 2001, those Subsidiary
Partnerships were committed to minimum future annual rentals on the leases
aggregating $155,130 for each of the next five years, and $3,633,863 in total
thereafter.

165

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

c) 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 ("FDIC") up to $100,000. As of March 31, 2002, uninsured cash and
cash equivalents approximated $2,965,000.

d) 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
20% of the Properties are located in any single state. There are also
substantial risks associated with owning Properties receiving government
assistance, such as 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.

In order for certain Subsidiaries to qualify for the Section 421A Program and
the Inclusionary Zoning Program, they are subject to certain requirements by
local authorities as to the level of rent that may be charged to tenants, the
tenants' incomes, the obligation to operate the Property in accordance with rent
stabilization guidelines, and restrictions on the rate at which housing units
may be released from such guidelines.

Also, certain Subsidiary Partnerships obtain grants from local authorities to
fund construction costs of the Properties and in order to qualify must maintain
the low-income nature of the Property, among other provisions.

e) Tax Credits

A portion of Housing Tax Credits are subject to recapture in future years if (1)
the Local Partnership ceases to meet qualification requirements, (2) there is a
decrease in the qualified basis of the Property, or (3) there is a reduction in
the taxpayer's interest in the Property at any time during the 15-year
Compliance Period that began with the first tax year of the Credit Period. None
of the Local Partnerships in which the Partnership has acquired an interest has
suffered an event of recapture.

During the tax years 2001, 2000 and 1999, the Partnership generated Housing Tax
Credits of approximately $8,019,000, $15,786,000 and $19,534,000, respectively.

166

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.

On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Liberty General Partner (the "Transfer"). As a result of the
Transfer, that affiliate of the Related General Partner also acquired the
Liberty General Partner's general partnership interest in Liberty Associates,
the special limited partner of the Partnership. Pursuant to the Partnership's
Amended and Restated Partnership Agreement, the consent of the limited partners
was not required to approve the Transfer. In connection with the Transfer, the
Partnership paid to the Liberty General Partner the accrued asset management
fees owed to the Liberty General Partner in the aggregate amount of $737,750.

The Partnership has no directors or executive officers. The Partnership's
affairs are managed and controlled by the General Partners. Certain information
concerning the directors and executive officers of the Liberty General Partner
and of Related Credit Properties III Inc., the general partner of the Related
General Partner, are set forth below.

Related Credit Properties III, L.P.
- -----------------------------------
Name Position
- ---- --------

Stephen M. Ross Director

Alan P. Hirmes President and Chief Executive Officer

Stuart J. Boesky Senior Vice President

Marc D. Schnitzer Vice President

Denise L. Kiley Vice President

Glenn F. Hopps Treasurer and Assistant Vice President

Teresa Wicelinski Secretary

STEPHEN M. ROSS, 62, is the President, and a 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 then 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.

167

ALAN P. HIRMES, 47, has been a Certified Public Accountant in New York since
1978. Prior to joining Related Capital Company ("Capital") in October 1983, Mr.
Hirmes was employed by Weiner & Co., certified public 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 Mortgage
Acceptance Company and American Mortgage Acceptance Company.

MARC D. SCHNITZER, 41, joined Capital in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, 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 Capital
sponsored corporate, public and private equity and debt funds. Prior to joining
Capital in 1990, Ms. Kiley had experience acquiring, financing and asset
managing multifamily residential properties. From 1981 through 1985, she was an
auditor with Price Waterhouse. Ms. Kiley holds a Bachelor of Science degree in
Accounting from Boston College.

GLENN F. HOPPS, 39, joined Capital in December, 1990, and prior to that date was
employed by Marks 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 Capital 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.

Liberty GP III Inc.
- -------------------
Name Position
- ---- --------

Michael Brenner Director

Alan P. Hirmes President and Chief Executive Officer

Stuart J. Boesky Executive Vice President

Marc D. Schnitzer Vice President

168

Denise L. Kiley Vice President

Glenn F. Hopps Treasurer

Teresa Wicelinski Secretary

MICHAEL BRENNER, 56, is a Director of Aegis Reality, Inc., and is the Executive
Vice President and Chief Financial Officer of The Related Companies, L.P. 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.

Biographical information with respect to Messrs. Hirmes, Boesky, Hopps,
Schnitzer, Ms. Kiley and Ms. Wicelinski is set forth above.

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 the directors or
officers of the Liberty General Partner or of the general partner of the Related
General Partner for their services. Certain directors and officers of the
Liberty General Partner and of the general partner of the Related General
Partner receive compensation from the General Partners and their affiliates for
services performed for various affiliated entities which may include services
performed for the Partnership.

Under the terms of the Partnership Agreement, the General Partners and their
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 Partners are entitled to 1% of all cash distributions
and Tax Credit allocations and a subordinated 15% interest in net sales or
refinancing proceeds. See Note 8 to the Financial Statements in Item 8 for a
presentation of the types and amounts of compensation paid to the General
Partners and their affiliates, which information is incorporated herein by
reference thereto. Tabular information concerning salaries, bonuses and other
types of compensation payable to executive officers have not been included in
this annual report. As noted above, the Partnership has no executive officers.
The levels of compensation payable to the General Partners and/or their
affiliates is limited by the terms of the Partnership Agreement and may not be
increased therefrom on a discretionary basis.

169

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

As of March 31, 2002, Liberty Associates holds a 1% and .998% (see Item 7 with
respect to River Place) limited partnership interest in 60 and 1 Local
Partnerships, respectively.

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 or
BACs, neither the Liberty General Partner nor any director or executive officer
of the Liberty General Partner owns any Limited Partnership Interests or BACs,
and neither the Related General Partner nor any director or executive officer of
the general partner of the Related General Partner owns any Limited Partnership
Interests or BACs. 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 Liberty General Partner and (iii) the directors and executive
officers of the general partner of the Related General Partner and Liberty
General Partner as a group. Unless otherwise noted, all BACs are owned directly
with sole voting and dispositive powers.

170

(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 the 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 April 4, 1997 among the Partnership, Lehigh
I and the Related General Partner (the "Standstill Agreement"), Lehigh I agreed
that, prior to April 4, 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
BAC's, (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,
that 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
agreed to vote its BACs in the same manner as a majority of all voting BACs
holders;

171

provided, however, that 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 address 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 6,458.33 BACs and Lehigh II
held 6,520.33 BACs.

(4) Each such party serves as a director and executive officer of the Managing
Member and owns an equity interest therein, except for 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 Partners and its affiliates, as discussed in Item 11 and in Note 8 to
the Financial Statements in Item 8, which is incorporated herein by reference
thereto. However, there have been no direct financial transactions between the
Partnership and the directors and executive officers of the Liberty General
Partner or the directors and executive officers of the general partner of the
Related General Partner.

172

PART IV

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

173

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

174

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

(d) Not applicable.

176

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.

LIBERTY TAX CREDIT PLUS III L.P.
--------------------------------
(Registrant)

By: RELATED CREDIT PROPERTIES III L.P.,
a General Partner

By: Related Credit Properties III Inc.,
its general partner

Date: June 26, 2002
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President and Chief Executive Officer
(principal executive and financial
officer)

By: LIBERTY GP III INC.,
a General Partner

Date: June 26, 2002
By: /s/ Alan P. Hirmes
-----------------
Alan P. Hirmes
President and Chief Executive Officer
(principal executive and financial
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:

INDEPENDENT AUDITORS' REPORT
----------------------------

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

In connection with our audits of the consolidated financial statements of
Liberty Tax Credit Plus III L.P. and Subsidiaries (A Delaware Limited
Partnership) included in the Form 10-K as presented in our opinion dated June
25, 2002 on page 19, 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 on 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.

As discussed in Note 12(a), the consolidated financial statements include the
financial statements of two subsidiary partnerships with significant
contingencies and uncertainties. The financial statements of these subsidiary
partnerships were prepared assuming that they will continue as going concerns.
These two subsidiary partnerships' net losses aggregated $3,351,069 (Fiscal
2001), $3,938,903 (Fiscal 2000) and $3,926,774 (Fiscal 1999), and their assets
aggregated $14,257,189 and $14,543,105 at March 31, 2002 and 2001, respectively.
Management's plans in regard to these matters are also described in Note 12(a).
The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 25, 2002

LIBERTY TAX CREDIT PLUS III L.P.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Summarized condensed financial information of registrant (not including
consolidated subsidiary partnerships)

CONDENSED BALANCE SHEETS

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

LIBERTY TAX CREDIT PLUS III L.P.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF OPERATIONS

LIBERTY TAX CREDIT PLUS III L.P.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2002

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2002
(continued)

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2002
(continued)

(a) Personal property is depreciated primarily by the straight-line method over
the estimated useful life ranging from 5 to 10 years

(b) Since all properties were acquired as operating properties, depreciation is
computed using primarily the straight-line method over the estimated useful
life determined by the Partnership date of acquisition.

(c) The Partnership's Limited Partnership Interest was sold during the fiscal
year ended March 31, 2002

LIBERTY TAX CREDIT PLUS III L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2002
(continued)