LIBERTY TAX CREDIT PLUS II L P - 10-K Annual Report

Back to GetFilings.com

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, 1996

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

Commission File Number 0-24660

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

Delaware 13-3458180
- - -------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

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:

Title of Class
--------------
Beneficial Assignment Certificates (including underlying Limited
Partnership Interests)

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

Page 1 of 117

PART I

Item 1. Business.

General

Liberty Tax Credit Plus II L.P. (the "Partnership") is a limited
partnership which was formed under the laws of the State of Delaware on March
25, 1988. The General Partners of the Partnership are Related Credit Properties
II L.P., a Delaware limited partnership (the "Related General Partner"),
Liberty Associates II L.P., a Delaware limited partnership ("Liberty
Associates"), and Liberty GP II Inc. (formerly Shearson Liberty GP II Inc.), a
Delaware corporation (the "Liberty General Partner"). The general partner of
the Related General Partner is Related Credit Properties II Inc., a Delaware
corporation.

Liberty Associates is the Special Limited Partner in all 27 Local
Partnerships, as well as a General Partner of the Partnership. Liberty
Associates has certain rights and obligations in its role as Special Limited
Partner, which permit this affiliate of the registrant to execute control over
the management and policies of the subsidiaries.

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 ("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 ("Rehabilitation Projects";
and together with the Apartment Complexes, the "Properties"). Some of the
Apartment Complexes benefit from one or more other forms of federal and state
housing assistance. The Partnership's investment in each Local Partnership
represents from 20% to 98% of the partnership interests in the Local
Partnership. As of March 31, 1996, the Partnership had acquired interests in 27
Local Partnerships and does not anticipate making any additional investments.
See Item 2, Properties.

The investment objectives of the Partnerships are to:

1. Entitle qualified Beneficial Assignment Certificates ("BACs") holders
to low-income housing Tax Credits (and to a lesser extent historic
rehabilitation tax credits) over the period of the Partnership's entitlement to
claim Tax Credits (for each Property, ten years from the date of investment or,
if later, the date the Property is placed in service.)

2. Preserve and protect the Partnership's capital.

3. Participate in any capital appreciation in the value of the
properties and provide distributions of sale or refinancing proceeds upon the
disposition of the properties.

4. Provide cash distributions when available from the operations of
Apartment Complexes and Rehabilitations Projects.

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 active business income.

On July 20, 1988 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 January 9, 1989 (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 $115,917,500 of gross proceeds of the Offering from
8,431 investors.

- 2 -

One of the Partnership's objectives is to entitle qualified BACs holders
to low-income housing Tax Credits over the period of the Partnership's
entitlement to claim Tax Credits (for each Property, 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"). 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 Tax Credits during the Credit Period
provided that the Local Partnership satisfies the rent restriction, minimum
set-aside and other requirements for recognition of the Tax Credits at all
times during the 15-year period commencing at the beginning of the Credit
Period. Once a Local Partnership has become eligible to recognize Tax Credits,
it may lose such eligibility and suffer an event of "recapture" if (i) the
Partnership ceases to meet qualification requirements , (ii) there is a
decrease in the qualified basis of the Projects, or (iii) there is a reduction
in the taxpayer's interest in the Project 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.

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

The General Partners generally require in connection with certain
investments in Local Partnerships that the general partner of the local
partnership undertake to fund operating deficits (up to a stated maximum
amount) of the Local Partnership during a limited period of time following the
Partnership's investment ("Guarantee Period"). Generally the amounts funded
pursuant to the Operating Deficit Guarantee are treated as Operating Loans do
not bear interest and will be repaid only out of 50% of available cash flow or
out of available net sale or refinancing proceeds. See Item 8, Note 8 - Related
Party Transactions.

The Partnership continues to meet its primary objective of generating
low income housing Tax Credits to qualified BACs holders. To date none of the
Local Partnerships has failed to remain in compliance with the Tax Credit
requirements, and therefore none has suffered an event of recapture of Tax
Credits. The Partnership generated $17,714,288, $17,203,141 and $17,203,130 in
Tax Credits during the 1995, 1994 and 1993 Fiscal Years, 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.

As of March 31, 1996, the Partnership has not met its investment
objective of providing cash distributions from the operations of the
Properties. Cash distributions received from the Local Partnerships have been
relatively immaterial. Management expects that the distributions received from
the Local Partnerships will increase, although not to a level sufficient to
permit cash distributions to BACs holders. The Partnership does not anticipate
providing cash distributions to BACs holders in circumstances other than
refinancings or sales.

Competition

The real estate business is highly competitive and substantially all of
the Properties acquired by the Partnership are subject to 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 business which may compete with the
Partnership.

- 3 -

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 Partnerships Amended and Restated Agreement and Certificate
of Limited Partnership (the "Partnership Agreement").

Item 2. Properties.

The Partnership has acquired an interest as a limited partner in 27
Local Partnerships. Set forth below is a schedule of these Local Partnerships
including certain information concerning the Apartment Complexes (the "Local
Partnership Schedule"). Further information concerning these Local Partnerships
and their Properties may be found in Item 14 Schedule III.

Except for the five limited partnerships listed below, the following is
the allocation of ownership percentage for each of the lower-tier partnerships.

General Partner 1%
Special Limited Partner 1%
Limited Partner -
Liberty Tax Credit Plus II L.P. 98%

General Special Liberty Tax *Other
Partner(s) Limited Partner Credit Plus II L.P. Limited Partners

Concourse Artists 1% 1% 19% 79%
Grand Concourse 1% 1% 19% 79%
Robin Housing 1% 1% 19% 79%
Willoughby - Wyckoff 1% 1% 19% 79%
Penn Alto 1% 1% 78.40% 19.60%

* Affiliate of Liberty Tax Credit Plus II L.P. with same management

- 4 -

Local Partnership Schedule

% of Units Occupied at May 1,
--------------------------------------
Name and Location (Number of Units) Date Acquired 1996 1995 1994 1993 1992
- - ------------------------------------------- ------------- ---- ---- ---- ---- ----

Polynesian Apartments Associates, Ltd.
(a Limited Partnership)
Homestead, FL (84) July 1988 94 99* 99* 0 100
Seagrape Village Associates, Ltd.
(a Limited Partnership)
Homestead, FL (112) July 1988 96 100* 100* 0 100
Metropolitan Towers Associates, L.P.
Rio Piedras, PR (150) December 1988 99 100 99 97 98
Westminster Place II - Olive Site, L.P.
St. Louis, MO (84) October 1988 88 93 99 96 100
Property Development Associates, L.P.
Kansas City, MO (232) December 1988 98 99 97 94 78
Whittier Plaza Associates Limited Partnership
St. Louis, MO (27) December 1988 81 88 100 89 100
United-Glen Arden I Limited Partnership
Glen Arden, MD (354) December 1988 90 95 96 87 95
United-Glen Arden II Limited Partnership
Glen Arden, MD (238) December 1988 98 98 96 94 95
Rolling Green Limited Partnership
Chicago, IL (224) December 1988 87 92 91 96 86
Santa Juanita II Limited Partnership
Bayamon, PR (46) December 1988 100 100 100 100 100
Spring Creek Associates, L.P.
(a Delaware Limited Partnership)
Brooklyn, NY (582) December 1988 97 95 97 99 97
East Two Thirty-Five Associates
(a Delaware Limited Partnership)
New York, NY (17) December 1988 94 94 100 100 100
Upper Fifth Avenue Residential Associates, L.P.
New York, NY (151) January 1989 97 93 95 95 98
West 107th Street Associates, L.P.
(a Delaware Limited Partnership)
New York, NY (25) January 1989 100 100 96 100 100
General Atlantic Second Avenue Associates, L.P.
(a Delaware Limited Partnership)
New York, NY (18) January 1989 94 100 100 100 100
Church Lane Associates
Germantown, PA (40) February 1989 95 92 99 98 100
Campeche Isle Apartments Limited Partnership
Galveston, TX (208) May 1989 65 85 97 99 100
Robin Housing Associates (a Limited Partnership)
Bronx, NY (100) November 1988 97 92 96 96 98
Concourse Artists Housing Associates
(a Limited Partnership)
Bronx, NY (23) November 1988 96 100 98 100 100

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

- 5 -

Local Partnership Schedule
(Continued)

% of Units Occupied at May 1,
--------------------------------------
Name and Location (Number of Units) Date Acquired 1996 1995 1994 1993 1992
- - ------------------------------------------- ------------- ---- ---- ---- ---- ----

2051 Grand Concourse Housing Associates
(a Limited Partnership)
Bronx, NY (63) November 1988 97 98 95 96 97
Willoughby-Wyckoff Housing Associates
(a Limited Partnership)
Bronx, NY (68) November 1988 97 88 90 85 88
Goodfellow Place Limited Partnership
St. Louis, MO (71) May 1989 91 96 98 92 94
Penn Alto Associates Limited Partnership
Altoona, PA (150) June 1989 87 81 94 100 98
Gramco Development Limited Dividend
Partnership, L.P.
Bayamon, PR (300) July 1989 99 93 100 100 100
Alexis Park Apartments
A Louisiana Partnership in Commendam
Bossier City, LA (280) July 1989 93 95 97 93 84
Williamsburg Residential, L.P.
Witchita, KS (76) August 1989 93 91 100 98 96
Victory Apartments
Chicago, IL (107) September 1989 96 98 100 98 100

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

Rents from commercial tenants (to which average rental per square foot
applies) comprise less than 5% of the rental revenues of the Partnership. Rents
for the residential units are determined annually by HUD and reflect increases
in consumer price indices in various geographic areas.

Management continuously reviews the physical state of the properties and
budgets improvements when required, which are generally funded from cash flow
from operations or release of replacement reserve escrows. No improvements are
expected to require additional financing.

Management continuously 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 included herein.

- 6 -

Item 3. Legal Proceedings.

During 1992, the insurer of Alexis Park Apartments ("Alexis") settled a
class action lawsuit filed on behalf of alleged tenants at Alexis in which the
subsidiary partnership was named as a co-defendant. The suit, Ukena, et al. v.
Cities Service Refinery, et al., was instituted in January 1990 in the 26th
Judicial District Court, Bossier Parish, Louisiana. The settlement paid by the
insurer was $25,000. The suit alleged liability for failure to warn the
plaintiffs of danger and conspiring to suppress information regarding testing
as well as health problems associated with the existence of certain chemical
and toxic fumes and, in addition, that the defendants failed to properly advise
the plaintiffs to protect them from health hazards at the property. Plaintiffs
added as a part of damages "fear of exposure to deadly, dangerous and unhealthy
chemicals and fumes, fear of potential physical damage, actual physical damage
and inconvenience created by the need for evacuation and physical trauma, etc."

Alexis has also been named as co-defendant in a suit for damages filed
by a group comprised of former tenants and a few present tenants at the
Project. The suit, Berzas, et. al. v. Oxy USA, Inc., et al., was instituted in
January 1991 in the 26th Judicial District Court, Bossier Parish, Louisiana.
The Partnership has been advised that Louisiana law does not permit disclosure
of money damages sought. The suit alleges certain personal injuries as a result
of exposure to toxic chemicals emanating from the site upon which the Apartment
Complex is built. Management intends to deny all allegations stated in the
complaint. Legal counsel for Alexis believes it is premature at this time to
make an evaluation of the amount or range of Alexis' potential loss. Legal
counsel for Alexis does not believe the plaintiffs will prevail.

Alexis is named as co-defendant in another suit. The suit, Jimmy Green,
et al. v. Cities Service Refinery, et al., was instituted in March 1991 in the
26th Judicial District Court, Bossier Parish, Louisiana. The Partnership has
been advised that Louisiana law does not permit disclosure of money damages
sought. The plaintiffs are a group of homeowners who live south of the Alexis
site and are seeking damages for devaluation of their property and for alleged
personal injuries suffered as a result of exposure to toxic chemicals which
they claim emanated from the site of an oil refinery. Alexis is built on a
portion of this site. The property upon which the plaintiffs homes are built is
not within the boundaries of the oil refinery site. Legal counsel for Alexis
believes it is premature at this time to make an evaluation of the amount or
range of Alexis' potential loss. Legal counsel for Alexis does not believe the
plaintiffs will prevail.

Alexis' liability insurer, Allstate Insurance Company, has agreed to
defend Alexis pursuant to a reservation of rights (the policy contains a
pollution exclusion) and has filed a general denial answer on its behalf.
Furthermore, since the allegations against Alexis include general negligence
and intentional tort liability, the case could possibly be removed from under
the pollution exclusion in the policy.

Alexis has filed a cross claim against the former owners of the
property, for judgment against them in solido, for any damages Alexis may
sustain arising from the environmental problem which is the subject of the suit
and also, should Alexis be cast in judgment in the main demand, then for
judgment over them in cross claim in solido, for the full amount of said
judgment.

In July 1991, the former general partner received notification from the
U.S. Department of Justice that some of its officers were under investigation
for possible violations of Federal criminal statutes arising out of the filing
of the Alexis Park Apartments Partnership tax returns for the years 1988 and
1989. Included in this notification was an invitation to appear before the
Grand Jury. The former general partner opted to have its corporate counsel
submit to the U.S. Attorney and Internal Revenue Service, a written summary of
the former general partner's involvement with Alexis Park Apartments and the
filing of its tax returns.

The former general partner denies any wrong doing. The facts and focus
of this investigation are unclear and the ultimate effects, if any, on the
Partnership's financial statements are not determinable.

Since it is too premature to make an evaluation of the amount or range
of Alexis' potential loss, it is management's opinion that no accrual for
potential losses is currently warranted in the financial statements. The
maximum loss which the Partnership would be liable for is its net investment in
Alexis amounting to approximately $1,016,000 at March 31, 1996.

- 7 -

The Local Partnership, Metropolitan Towers Associates, L.P., is a
defendant in a legal proceeding brought by one of its tenants for damages
suffered by her child upon falling from her apartment's balcony. The
proceedings are still in a preliminary phase but it is counsel's opinion that
if any damages are awarded to the plaintiff, the same will be covered by the
Local Partnership's insurance policy. It is management's opinion that no
accrual for potential losses is currently warranted in the financial
statements. The maximum loss which the Partnership would be liable for is its
net investment in Metropolitan amounting to approximately $1,471,000 at March
31, 1996.

A bank filed a suit against the Local Partnership Santa Juanita II
Limited Partnership ("Santa Juanita") for non-payment of the monthly
installments required by a second mortgage loan agreement. During February
1994, the court issued a judgement against Santa Juanita demanding immediate
payment of the second mortgage note with an outstanding principal balance of
$474,656, plus accrued interest and legal expenses. A significant portion of
the Local Partnership's operating assets is pledged as collateral for this note
and foreclosure by the bank would seriously impair Santa Juanita's continued
existence. In May 1996, the special limited partner of Santa Juanita instituted
proceedings to formally remove the general partner of Santa Juanita and is in
the process of replacing such general partner. The special limited partner is
presently having discussions with the bank for purposes of settling this
judgement. It is managements opinion that no accrual for potential losses is
currently warranted in the financial statements. The financial statements for
the 1995 Fiscal Year for this subsidiary partnership were not audited. The
maximum loss which the Partnership would be liable for is its net investment in
Santa Juanita amounting to approximately $568,000 at March 31, 1996. The
Partnerships investment in Santa Juanita at March 31, 1996 and 1995 was
approximately $568,000 and $659,000, and the minority interest balance was zero
at each date. Santa Juanita's net loss amounted to approximately $90,000,
$177,000 and $505,000 for the 1995, 1994 and 1993 Fiscal Years, respectively.

Robin Housing is a defendant in a personal injury lawsuit. The
Partnership's insurance carrier intends to defend the Partnership vigorously.
Counsel believes that the insurance coverage is adequate to cover any liability
arising from this action. It is management's opinion that no accrual for
potential losses is currently warranted in the financial statements. The
maximum loss which the Partnership would be liable for is its net investment in
Robin Housing amounting to approximately $185,000 at March 31, 1996.

In the event of a substantive violation relating to the provisions of
certain agreements between Gramco Development Limited Dividend and the
Municipality of Bayamon (the "Municipality") and between the Municipality and
HUD, a promissory note dated April 4, 1987 for $4,867,000 shall become
immediately due and payable at the election of HUD and the Municipality.
Otherwise, the principal amount of the obligation together with any interest
will be forgiven. Proceeds from the loan have been deducted from fixed assets.
It is management's opinion that no accrual for potential losses is currently
warranted in the financial statements. The maximum loss which the Partnership
would be liable for is its net investment in Bayamon amounting to approximately
$1,506,000 at March 31, 1996.

- 8 -

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 and outstanding 115,917.5 Limited Partnership
Interests, each representing a $1,000 capital contribution to the Partnership,
or an aggregate capital contribution of $115,917,500. All of the issued and
outstanding Limited Partnership Interests have been issued to Liberty Credit
Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued
115,917.5 BACs to the purchasers thereof for an aggregate purchase price of
$115,917,500. Each BAC represents all of the economic and virtually all of the
ownership rights attributable to a Limited Partnership Interest held by the
Assignor Limited Partner. BACs may be converted into Limited Partnership
Interests at no cost to the holder (other than 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 public trading market. Because of the provisions of the Revenue Act
of 1987, unless there are further changes in such law, 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
plan to impose limited restrictions on the transferability of the BACs and the
Limited Partnership Interests in secondary market transactions. Implementation
of the 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 March 31, 1996, the Partnership has 8,376 registered holders of an
aggregate of 115,917.5 BACs.

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

There are no material provisions in the Partnership's Amended and
Restated Agreement of Limited Partnership (the "Partnership Agreement") that
restrict the ability of the Partnership to make distributions.

The Partnership has made no distributions to the BACs holders as of
March 31, 1996. The Partnership does not anticipate providing cash
distributions to its BACs holders other than from net refinancings or sales
proceeds.

- 9 -

Item 6. Selected Financial Data.

The information set forth below presents selected financial data of the
Partnership. There were no operations prior to commencement of the Offering of
BACs on July 20, 1988. Additional financial information is set forth in the
audited financial statements in Item 8 hereof.

Years Ended March 31
-----------------------------------------------------------------------------------
OPERATIONS 1996 1995 1994 1993 1992
- - ---------- ------------- ------------- ------------- ------------- -------------

Revenues $ 25,386,930 $ 25,074,695 $ 24,285,784 $ 23,149,950 $ 22,418,860

Operating expenses 32,104,631 32,087,319 30,877,046 30,757,467 31,143,563
------------- ------------- ------------- ------------- -------------
Loss before minority interest
and extraordinary items (6,717,701) (7,012,624) (6,591,262) (7,607,517) (8,724,703)

Minority interest in loss
of subsidiaries 185,143 418,892 585,685 1,136,510 1,527,030
------------- ------------- ------------- ------------- -------------

Loss before extraordinary
items (6,532,558) (6,593,732) (6,005,577) (6,471,007) (7,197,673)

Extraordinary (loss) gain 0 (316,370) (374,018) 3,129,416 0
------------- ------------- ------------- ------------- -------------

Net loss $ (6,532,558) $ (6,910,102) $ (6,379,595) $ (3,341,591) $ (7,197,673)
============= ============= ============= ============= =============

Per unit amounts:

Loss before extra-
ordinary item per BAC $ (55.79) $ (56.31) $ (51.29) $ (55.27) $ (61.47)

Extraordinary (loss) gain
per BAC 0 (2.70) (3.19) 26.73 0
------------- ------------- ------------- ------------- -------------
Net loss per weighted
average BAC $ (55.79) $ (59.01) $ (54.48) $ (28.54) $ (61.47)
============= ============= ============= ============= =============

March 31,
-----------------------------------------------------------------------------------
FINANCIAL POSITION 1996 1995 1994 1993 1992
- - ------------------ ------------- ------------- ------------- ------------- -------------
Total assets $ 212,829,666 $ 218,920,596 $ 226,067,610 $ 232,159,011 $ 239,592,587
============= ============= ============= ============= =============

Total liabilities $ 143,880,937 $ 143,305,749 $ 143,119,315 $ 142,293,804 $ 144,707,509
============= ============= ============= ============= =============

Minority interest $ 3,827,457 $ 3,961,017 $ 4,384,363 $ 4,921,680 $ 6,599,960
============= ============= ============= ============= =============

Total partners' capital $ 65,121,272 $ 71,653,830 $ 78,563,932 $ 84,943,527 $ 88,285,118
============= ============= ============= ============= =============

During the years ended March 31, 1992 through 1996, total assets
decreased primarily due to depreciation, partially offset by net additions to
property and equipment.

- 10 -

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

Liquidity and Capital Resources

Prior to the time that all of the net proceeds had been fully invested
in Local Partnerships, the Partnership's primary source of funds was from the
proceeds of its public offering. During the years ended March 31, 1996, 1995
and 1994, the primary sources of liquidity included: (i) working capital
reserves in the original amount of 3% of gross equity raised; (ii) interest
earned on the working capital reserves; and (iii) cash distributions from
operations of the Local Partnerships. All these sources of funds are available
to meet obligations of the Partnership.

As of March 31, 1996, the Partnership has invested all of the net
proceeds in twenty-seven Local Partnerships. Approximately $733,000 of the
purchase price remains to be paid (of which $294,250 is held in escrow).

The Partnership is not expected to have access to additional sources of
financing, and in particular will not have the ability to access BACs holders
for additional capital contributions to provide capital if needed by the
Partnership. There can be no assurance that additional funds will be available
to the Partnership or any local partnership, nor that, if any property is sold,
the proceeds of the sale will be sufficient to pay outstanding balances due on
mortgage loans or other outstanding indebtedness to which the property is
subject.

The Partnership established a working capital reserve of approximately
$3,500,000 of which approximately $3,098,000 of the initial reserve has been
used as of March 31, 1996. The General Partners believe that the remaining
reserves plus any cash distributions received from the operations of the Local
Partnerships are sufficient to fund the Partnership's ongoing operations for
the foreseeable future. During the years ended March 31, 1996, 1995 and 1994,
respectively, amounts received from operations of the Local Partnerships were
$10,592, $8,250 and $0.

During the year ended March 31, 1996, cash and cash equivalents
increased $124,347 as a result of cash provided by operating activities
$2,057,742 exceeding cash used in financing activities of $427,944 (primarily
repayment of mortgage notes of $1,131,988 net of an increase in due to local
general partners and affiliates of $396,023) and cash used in investing
activities of $1,505,451 (primarily property improvements of $1,452,484).
Included in the adjustments to reconcile the net loss to cash flow from
operations is depreciation and amortization in the amount of $8,139,580.

The Partnership has negotiated Operating Deficit Guarantee Agreements
with all Local Partnerships, pursuant to which the general partners of the
Local Partnerships have 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 rent
stabilization. The gross amount of the Operating Deficit Guarantees is
approximately $11,567,000, of which an aggregage of approximately $11,273,300,
$10,099,330 and $10,099,330 had expired as of March 31, 1996, 1995 and 1994,
respectively. As of March 31, 1996, 1995 and 1994, respectively, approximately
$4,965,000, $4,304,000 and $2,962,000, had been funded by the Local General
Partners to meet such obligations. All operating deficit guarantees expire
within the next three years. Management does not expect a material impact on
liquidity, based on prior years' funding.

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.

HUD recently released the American Community Partnerships Act (the
"ACPA"). The ACPA is HUD's blueprint for providing for the nation's housing
needs in an era of static or decreasing budget authority.

Two key proposals in the ACPA could affect the Local Partnerships: (i)
discontinuation of project based Section 8 subsidy payments and (ii) an
attendant reduction in debt on properties that were supported by the Section 8
payments.

- 11 -

The ACPA calls for a transition during which the project-based Section 8
subsidy payments would be converted to a tenant-based voucher system. Any FHA
insured debt would then be "marked-to-market", that is revalued in light of the
reduced income stream, if any.

Several industry sources have already commented to HUD and Congress that
in the event the ACPA were fully enacted in its present form, the reduction in
mortgage indebtedness would be considered taxable income to limited partners in
the Partnership. Legislative relief has been proposed to exempt
"marked-to-market" debt from cancellation of indebtedness income treatment.
Though HUD initially backed away from the "marked-to-market" proposal, it has
now been re-introduced as "Portfolio Restructuring".

For discussions 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.

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 diversification of the portfolio may not
protect against a general downturn in the national economy. The Partnership has
fully invested the proceeds of its offerings in 27 Local Partnerships, all of
which fully 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 ten year period. If trends in the real estate
market warranted the sale of a property, the remaining tax credits would
transfer to the new owner, thereby adding significant value to the property on
the market, which are not included in the financial statement carrying amount.

Results of Operations

Property and equipment are carried at the lower of depreciated cost or
estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, and any other costs incurred in acquiring the properties. A
provision for loss on impairment of assets is recorded when estimated 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, 1996, the Partnership has not recorded
any provisions for loss on impairment of assets or reduction to estimated fair
value.

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". Under SFAS No. 121, the Partnership is required to review long-lived
assets and certain identifiable intangibles for impairment whenever events or
changes in circumstances indicate that the book value of an asset may not be
recoverable. An impairment loss should be recognized whenever the review
demonstrates that the book value of a long-lived asset is not recoverable.

Effective April 1, 1996, the Partnership intends to adopt SFAS No. 121,
consistent with the required adoption period. The Partnership does not expect
the implementation to have a material impact on its financial condition or its
results of operations.

The following is a summary of the results of operations of the
Partnership for the years ended March 31, 1996, 1995 and 1994 (the 1995, 1994,
and 1993 Fiscal Years, respectively).

The majority of the Local Partnership's revenues continue to be in the
form of rental income with the corresponding expenses divided among operations,
depreciation, and mortgage interest.

- 12 -

The net loss for the 1995, 1994 and 1993 Fiscal Years totaled
$6,532,558, $6,910,102 and $6,379,595, respectively. The net loss for the 1994
and 1993 Fiscal Years includes extraordinary losses of $316,370 and $374,018,
respectively. See Item 8, Note 10 - Extraordinary Items.

The Partnership continues to meet its primary objective of generating
low income housing Tax Credits to qualified BACs holders. To date, none of the
Local Partnerships have failed to remain in compliance with the Tax Credit
requirements, and, therefore, none have suffered an event of recapture of Tax
Credits. The Partnership generated $17,174,288, $17,203,130 and $17,175,785 in
Tax Credits during the 1995, 1994, and 1993 Fiscal Years, respectively.

1995 vs 1994

Rental income increased approximately $7,600 for the 1995 Fiscal Year as
compared to the corresponding period in 1994 due to annual rent increases which
are generally subject to HUD limitations.

Other income increased approximately $320,000 primarily due to a
settlement agreement which resulted in the return of funds allegedly
distributed in an unauthorized manner by the managing agent to Bayamon's
operating bank account. (See Results of Operation's of Certain Local
Partnerships).

Total expenses increased less than 1% for the 1995 Fiscal Year as
compared to the corresponding period in 1994.

1994 vs 1993

Rental income increased approximately $1,717,000 for the 1994 Fiscal
Year as compared to the 1993 Fiscal Year. 7% of this increase is attributable
to an increase in occupancy in three local partnerships, two of which suffered
major damage from Hurricane Andrew in August 1992. 1% of this increase is due
to annual rent increases which are generally subject to HUD limitations.

Other income decreased approximately $928,000 for the 1994 Fiscal Year
as compared to the 1993 Fiscal Year. Part of this decrease was due to the
inclusion in other income in the 1993 Fiscal Year of approximately $600,000 in
business interruption insurance proceeds resulting from damage suffered as a
result of Hurricane Andrew in August 1992. Other income also decreased due to
the inclusion in the 1993 Fiscal Year of approximately $359,000 as a result of
the release of a Local General Partner's obligations upon withdrawal as Local
General Partner under an operating deficit guarantee agreement.

Repairs and maintenance increased approximately $490,000 for the 1994
Fiscal Year as compared to the 1993 Fiscal Year. An 8% increase is attributable
to one local partnership addressing the physical needs of the property. Repairs
included exterior painting and installation of new carpeting, a 2% increase is
attributable to yearly routine repairs and maintenance due to the aging of the
properties. The expense increase is necessary to maintain high occupancy
levels.

Results of Operations of Certain Local Partnerships

Alexis Park Apartments

During 1990, vapor fumes were discovered in several apartments at Alexis
Park Apartments, a Louisiana Partnership in Commendam ("Alexis"). As a result,
47 of the 280 units were vacated as ordered by the Louisiana Department of
Environmental Quality ("DEQ"). At December 31, 1995, 39 of these units have
been cleared for occupancy by the Louisiana Department of Health and Hospital
and the remaining units have undergone refurbishing and are currently being
rented to an oil company. It is anticipated that the units will be available to
the general public in the near future.

Alexis has also been named as co-defendant in a suit for damages filed
by a group comprised of former tenants and a few present tenants at the
Project. The suit, Berzas, et. al. v. Oxy USA, Inc., et al., was instituted in

- 13 -

January 1991 in the 26th Judicial District Court, Bossier Parish, Louisiana. The
Partnership has been advised that Louisiana law does not permit disclosure of
money damages sought. The suit alleges certain personal injuries as a result of
exposure to toxic chemicals emanating from the site upon which the Apartment
Complex is built. Management intends to deny all allegations stated in the
complaint. Legal counsel for Alexis believes it is premature at this time to
make an evaluation of the amount or range of Alexis' potential loss. Legal
counsel for Alexis does not believe the plaintiffs will prevail.

Alexis is named as co-defendant in another suit. The suit, Jimmy Green,
et al. v. Cities Service Refinery, et al., was instituted in March 1991 in the
26th Judicial District Court, Bossier Parish, Louisiana. The Partnership has
been advised that Louisiana law does not permit disclosure of money damages
sought. The plaintiffs are a group of homeowners who live south of the Alexis
site and are seeking damages for devaluation of their property and for alleged
personal injuries suffered as a result of exposure to toxic chemicals which
they claim emanated from the site of an oil refinery. Alexis is built on a
portion of this site. The property upon which the plaintiffs homes are built is
not within the boundaries of the oil refinery site. Legal counsel for Alexis
believes it is premature at this time to make an evaluation of the amount or
range of Alexis' potential loss. Legal counsel for Alexis does not believe the
plaintiffs will prevail.

Alexis has filed a cross claim against the former owners of the
property, for judgment against them in solido, for any damages Alexis may
sustain arising from the environmental problem which is the subject of the suit
and also, should Alexis be cast in judgment in the main demand, then for
judgment over them in cross claim in solido, for the full amount of said
judgment.

Management of Alexis believes that the environmental issue has created a
negative image for the Project. The Louisiana Department of Environmental
Quality ("DEQ") has issued a statement that all occupied apartments are safe.
Pursuant to an Investigative Agreement with the DEQ, additional testing of the
project site and adjacent areas began June 15, 1992. The testing was overseen
by the DEQ and was completed on February 10, 1995.

The DEQ has now turned the matter over to the United States
Environmental Protection Agency ("EPA") to review the testing. As of February
21, 1996, the EPA had not completed its review. If remediation of some manner
is required, it could adversely affect the partnership. In summary, management
is optimistic that the hazardous waste matter will be favorably resolved and
that any losses from the class action lawsuit will be covered by insurance.
Management believes that the investigation by the U.S. Department of Justice is
unlikely to have any material financial effect on the Partnership. Management
believes the Partnership has demonstrated that it has the ability to generate
sufficient operating capital without the oil company's assistance. Based on
these evaluations management believes that the Partnership will continue as a
going concern for at least one year beyond December 31, 1995. It is too
premature to make an evaluation of the amount or range of Alexis' potential
loss, therefore it is management's opinion that no accrual for potential losses
is currently warranted in the financial statements. The maximum loss which the
Partnership would be liable for is its net investment in Alexis amounting to
approximately $1,016,000 at March 31, 1996. Management estimates that the
impact of the negative publicity on occupancy may continue for awhile and
believes that future levels of occupancy will depend on the final findings of
the investigating parties and on future media attention. The Partnership's
investment in Alexis at March 31, 1996 and 1995 was approximately $1,016,000
and $1,260,000, respectively, and the minority interest balance was
approximately $5,200 and $7,700. Alexis net loss after minority interest
amounted to approximately $244,000, $165,000 and $103,000, for the 1995, 1994,
and 1993 Fiscal Years respectively.

In July of 1991 the former general partner received notification from
the U.S. Department of Justice that some of its officers were under
investigation for possible violations of Federal criminal statutes arising out
of the filing of the Alexis Park Apartments Partnership tax returns for the
years 1988 and 1989. Included in this notification was an invitation to appear
before the Grand Jury. The former general partner opted to have its corporate
counsel submit to the U.S. Attorney and Internal Revenue Service, a written
summary of the former general partner's involvement with Alexis Park Apartments
and the filing of its tax returns.

The former general partner denies any wrong doing. The facts and focus
of this investigation are unclear and the ultimate effects, if any, on the
Partnership's financial statements are not determinable.

- 14 -

Whittier Plaza Associates

The financial statements for Whitter Plaza Associates Limited
Partnership ("Whittier") have been prepared assuming that the partnership will
continue as a going concern. Whittier has sustained continuous losses since
commencement of operations in 1988, including losses of $42,084, $57,951 and
$62,233 for the 1995, 1994 and 1993 Fiscal Years, respectively. Whittier has
experienced higher vacancies and lower rents than those originally projected,
resulting in increased difficulty in meeting both operating and debt service
obligations. A subsidiary general partner, pursuant to a development deficit
guarantee agreement, has advanced $54,234 and $19,698 in the 1995 and 1994
Fiscal Years, respectively, and $238,908 since 1988 to fund operating cash
shortfalls. In addition, the subsidiary partnership's management company, an
affiliate of the local general partner, has deferred receipt of various fees
since 1991 totalling $36,365. These items raise substantial doubt about
Whittier's ability to continue as a going concern. The Partnership's investment
in Whittier was reduced to zero as a result of prior years' losses. The
minority interest balance was $0 for each of the 1995, 1994, and 1993 Fiscal
Years. Whittier's net loss amounted to approximately $42,000, $58,000 and
$62,000 for the 1995, 1994 and 1993 Fiscal Years.

Gramco Development Limited Dividend

The Office of the Inspector General ("OIG") conducted an audit of the
construction costs of the Gramco Development Limited Dividend Partnership, L.P.
("Bayamon") to ascertain compliance with federal government regulations. The
report on such audit recommended the repayment of $2,006,118 of Housing
Development Assistance Grant ("HODAG") funds provided by the U.S. Department of
Housing and Urban Development ("HUD") through the Municipality of Bayamon (the
"Municipality"). The report also recommended the return of $341,667 to
Bayamon's operating account, allegedly distributed in an unauthorized manner.
In May 1995, the Partnership, OIG, HUD, the Municipality, the general
contractor (a related company of Bayamon), the Local Partnerships general
partner, the management agent, and the officers and directors of the related
companies executed a settlement agreement. As a result of this agreement, the
management agent assumed the liability and reimbursed $600,000 to the
Municipality of Bayamon corresponding to HODAG funds and $341,667 to the
project's general operating account which is included in other income for the
1995 Fiscal Year. The parties fully released one and the other from any further
claim and any/all causes of action in connection with the OIG audit.

In the event of a substantive violation relating to the provisions of
certain agreements Bayamon and the Municipality of Bayamon (the "Municipality")
and between the Municipality and HUD, a promissory note dated April 4, 1987 for
$4,867,000 shall become immediately due and payable at the election of HUD and
the Municipality. Otherwise, the principal amount of the obligation together
with any interest will be forgiven. Proceeds from the loan have been deducted
from fixed assets. It is management's opinion that no accrual for potential
losses is currently warranted in the financial statements. The Partnership's
investment in Bayamon at March 31, 1996 and March 31, 1995 was approximately
$1,506,000 and $1,429,000 and the minority interest balance was approximately
$427,000 for each of the years. Bayamon's net income (loss) after minority
interest amounted to approximately, $77,000, ($252,000), and ($492,000) for the
1995, 1994, and 1993 Fiscal Years, respectively.

Santa Juanita II Limited Partnership

A bank filed a suit against the Local Partnership Santa Juanita II
Limited Partnership ("Santa Juanita") for non-payment of the monthly
installments required by a second mortgage loan agreement. During February
1994, the court issued a judgement against Santa Juanita demanding immediate
payment of the second mortgage note with an outstanding principal balance of
$474,656, plus accrued interest and legal expenses. A significant portion of
the Local Partnership's operating assets is pledged as collateral for this note
and foreclosure by the bank would seriously impair Santa Juanita's continued
existence. In May 1996, the special limited partner of Santa Juanita instituted
proceedings to formally remove the general partner of Santa Juanita and is in
the process of replacing such general partner. The special limited partner is
presently having discussions with the bank for purposes of settling this
judgement. It is managements opinion that no accrual for potential losses is
currently warranted in the financial statements. The financial statements for
the 1995 Fiscal Year for this subsidiary partnership were not audited. The
maximum loss which the Partnership would be liable for is its net investment in
Santa Juanita amounting to approximately $568,000 at March 31, 1996. The
Partnerships investment in Santa

- 15 -

Juanita at March 31, 1996 and 1995 was approximately $568,000 and $659,000, and
the minority interest balance was zero at each date. Santa Juanita's net loss
amounted to approximately $90,000, $177,000 and $505,000 for the 1995, 1994 and
1993 Fiscal Years, respectively.

Campeche Isle Apartments, L.P.

Campeche Isle Apartments, L.P. ("Campeche") filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code ("Chapter 11") during
March 1996. Although current on its debt service up to and including the
January 1, 1996 payment, the property was unable to fully fund all operating
expenses plus debt service following a 1% increase in the interest rate on the
property's mortgage in June of 1994. Debt service had been kept current through
advances by the subsidiary partnership general partner, RCC Pineview, Inc., and
the Partnership totaling $286,050 as of December 31, 1995. In addition,
Campeche has not paid its managing agent in excess of $100,000 of management
fees.

In an effort to reduce the property's debt service burden, negotiations
with the holder of the property's first mortgage, Sun America Life Insurance
Company (the "Mortgagee") had been ongoing during January and February of 1996.
The Mortgagee rejected Campeche's proposals and commenced a foreclosure action
during the latter part of February. In order to preserve Campeche's ownership
of the property, the Chapter 11 filing was made during March 1996 and the
Mortgagee was stayed from proceeding with its foreclosure. Campeche has
presented a Plan of Reorganization to the Bankruptcy Court and the property is
being operated under a Cash Collateral order issued by the Court. The
Partnerships investment in Campeche at March 31, 1996 and 1995 was
approximately $788,000 and $1,122,000, respectively, and the minority interest
balance was zero at each date. Campeche's net loss amounted to approximately
$334,000, $251,000 and $312,000 for the 1995, 1994 and 1993 Fiscal Years,
respectively.

Other

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

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

The subsidiary 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 as, for example, for such
items as fuel, utilities and labor.

- 16 -

Item 8. Financial Statements and Supplementary Data.

Sequential
Page
----------

(a) 1. Consolidated Financial Statements

Independent Auditors' Report 18

Consolidated Balance Sheets at March 31, 1996 and 1995 80

Consolidated Statements of Operations for the Years
Ended March 31, 1996, 1995 and 1994 81

Consolidated Statements of Changes in Partners'
Capital for the Years Ended March 31, 1996,
1995 and 1994 82

Consolidated Statements of Cash Flows for the Years
Ended March 31, 1996, 1995 and 1994 83

Notes to Consolidated Financial Statements 86

- 17 -

[TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG,LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------
To the Partners of
Liberty Tax Credit Plus II L.P. and Subsidiaries
(A Delaware Limited Partnership)

We have audited the consolidated balance sheets of Liberty Tax Credit Plus II
L.P. (a Delaware Limited Partnership) and Subsidiaries as of March 31, 1996 and
1995, and the related consolidated statements of operations, partners' capital,
and cash flows for the years ended March 31, 1996, 1995 and 1994, (the 1995,
1994 and 1993 Fiscal Years). These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the financial
statements for 27 (1995, 1994, and 1993 Fiscal Years) subsidiary partnerships
whose losses aggregated $6,098,858, $6,767,457, and $6,710,936 for the 1995,
1994 and 1993 Fiscal Years, respectively, and whose assets constituted 99% of
the Partnership's assets at March 31, 1996 and 1995, presented in the
accompanying consolidated financial statements. The financial statements for 26
(1995 Fiscal Year) and 27 (1994 and 1993 Fiscal Years) of these subsidiary
partnerships were audited by other auditors whose reports thereon have been
furnished to us and our opinion expressed herein, insofar as it relates to the
amounts included for these subisdiary partnerships, is based solely upon the
reports of the other auditors. The financial statements of one of these
subsidiary partnerships for the 1995 Fiscal Year were unaudited.

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, based upon our audits, and the reports of the other auditors
referred to above, the accompanying consolidated financial statements referred
to in the first paragraph present fairly, in all material respects, the
financial position of Liberty Tax Credit Plus II L.P. and Subsidiaries at March
31, 1996 and 1995 and the results of their operations and their cash flows for
the years ended March 31, 1996, 1995 and 1994, in conformity with generally
accepted accounting principles.

As discussed in Note 11(a), the consolidated financial statements include the
financial statements of three limited partnerships with significant
contingencies and uncertainties. The financial statements of two of these
subsidiary partnerships were prepared assuming that each will continue as a
going concern. The financial statements for the 1995 Fiscal Year for one of
these subsidiary partnerships were not audited. The three subsidiary
partnerships' net losses aggregated $378,960 (Fiscal 1995), $402,565 (Fiscal
1994) and $671,329 (Fiscal 1993) and their assets aggregated $11,460,954 and
$11,918,459 at March 31, 1996 and 1995, respectively. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

/s/ TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP

TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP

New York, New York
June 4, 1996

- 18 -

[L. H. FRISHKOFF & COMPANY LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Polynesian Apartments Associates, Ltd.
(A Limited Partnership)
Miami, Florida

FHA PROJECT NO. FL29-K005-015-152

We have audited the accompanying statements of financial condition of Polynesian
Apartments Associates, Ltd. (A Limited Partnership) as of December 31, 1995 and
1994, 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 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 Polynesian Apartments
Associates, Ltd., (A Limited Partnership) as of December 31, 1995 and 1994, 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.

/s/ L. H. Frishkoff & Company
L. H. FRISHKOFF & COMPANY
New York, New York
January 19, 1996

[L. H. FRISHKOFF & COMPANY LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Polynesian Apartments Associates, Ltd.
(A Limited Partnership)
Miami, Florida

FHA PROJECT NO. FL29-K005-015-152

We have audited the accompanying statements of financial condition of Polynesian
Apartments Associates, Ltd. (A Limited Partnership) as of December 31, 1994 and
1993, 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 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 Polynesian Apartments
Associates, Ltd., (A Limited Partnership) as of December 31, 1994 and 1993, 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.

/s/ L. H. Frishkoff & Company
L. H. FRISHKOFF & COMPANY
New York, New York
January 20, 1995

[L. H. FRISHKOFF & COMPANY LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Seagrape Village Associates, Ltd.
(A Limited Partnership)
Miami, Florida

FHA PROJECT NO. FL29-K005-015-151

We have audited the accompanying statements of financial condition of Seagrape
Village Associates, Ltd. (A Limited Partnership) as of December 31, 1995 and
1994, 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 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 condition of Seagrape Village Associates,
Ltd. (A Limited Partnership) as of December 31, 1995 and 1994, 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.

/s/ L. H. Frishkoff & Company
L. H. FRISHKOFF & COMPANY
New York, New York
January 19, 1996

[L. H. FRISHKOFF & COMPANY LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Seagrape Village Associates, Ltd.
(A Limited Partnership)
Miami, Florida

FHA PROJECT NO. FL29-K005-015-151

We have audited the accompanying statements of financial condition of Seagrape
Village Associates, Ltd. (A Limited Partnership) as of December 31, 1994 and
1993, 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 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 condition of Seagrape Village Associates,
Ltd. (A Limited Partnership) as of December 31, 1994 and 1993, 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.

/s/ L. H. Frishkoff & Company
L. H. FRISHKOFF & COMPANY

New York, New York
January 20, 1995

[JOSE E. ROSARIO & CO. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Metropolitan Towers Associates, L.P.
Rio Piedras, Puerto Rico

I have audited the accompanying balance sheets of Metropolitan Towers
Associates, L.P. as of December 31, 1995 and 1994 and the related statements of
operations and changes in partners' capital and cash flows for the years ended
December 31, 1995 and 1994. These financial statements are the responsibility of
the partnership's management. My responsibility is to express an opinion on
these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining on a test basis, evidence supporting
the amount of disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Metropolitan Towers Associates,
L.P. as of December 31, 1995 and 1994, the results of its operations and changes
in partners' capital and cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Jose E. Rosario
JOSE E. ROSARIO & CO.
License No. 961
Expires December 1, 1998

January 23, 1996

Stamp No. 1336625 of the Puerto
Rico College of CPAs was
affixed to the original.

[JOSE E. ROSARIO & CO. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Metropolitan Towers Associates, L.P.
Rio Piedras, Puerto Rico

I have audited the accompanying balance sheets of Metropolitan Towers
Associates, L.P. as of December 31, 1994 and 1993 and the related statements of
operations and changes in partners' capital and cash flows for the years ended
December 31, 1994 and 1993. These financial statements are the responsibility of
the partnership's management. My responsibility is to express an opinion on
these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining on a test basis, evidence supporting
the amount of disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Metropolitan Towers Associates,
L.P. as of December 31, 1994 and 1993, the results of its operations and changes
in partners' capital and cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Jose E. Rosario
JOSE E. ROSARIO & CO.
License No. 961
Expires December 1, 1995

February 10, 1995

[AUDITOR'S SEAL #1274981]

[RUBIN, BROWN, GORNSTEIN & CO. LLP LETTERHEAD]

Independent Auditors' Report

Partners
Westminster Place II - Olive Site, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., a limited partnership, as of December 31, 1995 and 1994 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. 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 Westminster Place II - Olive
Site, L.P. as of December 31, 1995 and 1994 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, Gornstein & Co. LLP
January 24, 1996

[RUBIN, BROWN, GORNSTEIN & CO. LETTERHEAD]

Independent Auditors' Report

Partners
Westminster Place II - Olive Site, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., a limited partnership, as of December 31, 1994 and 1993 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. 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 Westminster Place II - Olive
Site, L.P. as of December 31, 1994 and 1993 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, Gornstein & Co.

January 30, 1995

[RUBIN, BROWN, GORNSTEIN & CO. LLP LETTERHEAD]

Independent Auditors' Report

Partners
Property Development Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Property Development
Associates, L.P., a limited partnership, as of December 31, 1995 and 1994 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. 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 Property Development
Associates, L.P., as of December 31, 1995 and 1994 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, Gornstein & Co. LLP

January 22, 1996

[RUBIN, BROWN, GORNSTEIN & CO. LETTERHEAD]

Independent Auditors' Report

Partners
Property Development Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Property Development
Associates, L.P., a limited partnership, as of December 31, 1994 and 1993 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. 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 Property Development
Associates, L.P., as of December 31, 1994 and 1993 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, Gornstein & Co.

January 20, 1995

[RUBIN, BROWN, GORNSTEIN & CO. LLP LETTERHEAD]

Independent Auditors' Report

Partners
Whittier Plaza Associates Limited
Partnership
St. Louis, Missouri

We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, a limited partnership, as of December 31, 1995 and 1994 and
the related statements of income, 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 Whittier Plaza Associates
Limited Partnership as of December 31, 1995 and 1994 and the results of its
operations and its cash flows for the years 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 7 to the
financial statements, the Partnership has sustained recurring losses from
operations, excessive vacancies, as well as required continual general partner
funding of deficits. These items raise substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Rubin, Brown, Gornstein & Co. LLP

February 1, 1996

[RUBIN, BROWN, GORNSTEIN & CO. LETTERHEAD]

Independent Auditors' Report

Partners
Whittier Plaza Associates Limited
Partnership
St. Louis, Missouri

We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, a limited partnership, as of December 31, 1994 and 1993 and
the related statements of income, 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 Whittier Plaza Associates
Limited Partnership as of December 31, 1994 and 1993 and the results of its
operations and its cash flows for the years 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 6 to the
financial statements, the Partnership has sustained recurring losses from
operations, increased vacancies, as well as required continual general partner
funding of deficits. These items raise substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Rubin, Brown, Gornstein & Co.

January 30, 1995

[HABIF, AROGETI & WYNNE, P.C. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
United - Glenarden I Limited Partnership

We have audited the accompanying balance sheet of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1995, 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 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 UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1995, and results of its operations and its cash
flows for the year then ended in conformity with generally accented accounting
principles.

/s/ Habif, Arogeti & Wynne, P.C.

Atlanta, Georgia
January 31, 1996

[HABIF, AROGETI & WYNNE, P.C. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
United - Glenarden I Limited Partnership

We have audited the accompanying balance sheet of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1994, 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 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 UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1994, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

/s/ Habif, Arogeti & Wynne, P.C.

Atlanta, Georgia
January 31, 1995

[HABIF, AROGETI & WYNNE, P.C. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
United - Glenarden I Limited Partnership

We have audited the accompanying balance sheet of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1993, 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 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 principal statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1993, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

/s/ Habif, Arogeti & Wynne, P.C.

Atlanta, Georgia
January 31, 1994

[HABIF, AROGETI & WYNNE, P.C. LETTERHEAD]

To the Partners
United - Glenarden II Limited Partnership

We have audited the accompanying balance sheet of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1995, and the related statements of operations,
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.

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 disclosure in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ Habif, Arogeti & Wynne, P.C.

Atlanta, Georgia
January 31, 1996

[HABIF, AROGETI & WYNNE, P.C. LETTERHEAD]

To the Partners
United - Glenarden II Limited Partnership

We have audited the accompanying balance sheet of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1994, and the related statements of operations,
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.

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 UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1994, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

/s/ Habif, Arogeti & Wynne, P.C.

Atlanta, Georgia
January 31, 1995

[HABIF, AROGETI & WYNNE, P.C. LETTERHEAD]

To the Partners
United - Glenarden II Limited Partnership

We have audited the accompanying balance sheet of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1993, 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 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 UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1993, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

/s/ Habif, Arogeti & Wynne, P.C.

Atlanta, Georgia
January 31, 1994

[SOLOMON, BAERSON, WITONSKI, PATEL & KASKEL, LTD. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
ROLLING GREEN LIMITED PARTNERSHIP
North Chicago, Illinois

We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP at December 31, 1995 and 1994 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. 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 ROLLING GREEN LIMITED
PARTNERSHIP at December 31, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

/s/ Solomon, Baerson, Witonski, Patel & Kaskel, Ltd.

January 26, 1996

[SOLOMON, BERKSON & BAERSON, LTD. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Parnters
ROLLING GREEN LIMITED PARTNERSHIP
North Chicago, Illinois

We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP at December 31, 1994 and 1993 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 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 ROLLING GREEN LIMITED
PARTNERSHIP at December 31, 1994 and 1993 and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

/s/ Solomon, Berkson & Baerson, Ltd.

January 27, 1995

[VELEZ, SEMPRIT, NIEVES & CO. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS

Partners
Santa Juanita II Limited Dividend Partnership
San Juan, Puerto Rico

We have audited the accompanying balance sheets of Santa Juanita II Limited
Dividend Partnership as of December 31, 1994 and 1993, and the related
statements of operations, partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Santa Juanita II Limited
Dividend Partnership Development as of December 31, 1994 and 1993, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

/s/ Velez, Semprit, Nieves & Co.

January 27, 1995

Stamp number 1282940 was
affixed to the original of this
report.

[GROSSMAN, TUCHMAN AND SHAH, LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of Spring Creek
Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of Spring Creek Associates, L.P.
(a Delaware limited partnership) as of December 31, 1995 and 1994, 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 Spring Creek Associates, L.P.
as of December 31, 1995 and 1994 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 29, 1996

[GROSSMAN, TUCHMAN AND SHAH LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of Spring Creek
Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of Spring Creek Associates, L.P.
(a Delaware limited partnership) as of December 31, 1994 and 1993, 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 Spring Creek Associates, L.P.
as of December 31, 1994 and 1993 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

New York, N.Y.
January 20, 1995

[GROSSMAN, TUCHMAN & SHAH, LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
East Two Thirty-Five
Associates, L.P.
New York. New York

We have audited the accompanying consolidated balance sheets of East Two
Thirty-Five Associates, L.P. (a Delaware limited partnership) and subsidiary as
of December 31, 1995 and 1994, and the related consolidated statements of income
(loss), changes in partners' capital (deficit), and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of East Two Thirty-Five
Associates, L.P. and subsidiary as of December 31, 1995 and 1994 and the
consolidated results of their operations and their 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 7, 1996

[GROSSMAN, TUCHMAN & SHAH LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
East Two Thirty-Five
Associates, L.P.
New York. New York

We have audited the accompanying consolidated balance sheets of East Two
Thirty-Five Associates, L.P. (a Delaware limited partnership) and subsidiary as
of December 31, 1994 and 1993, and the related consolidated statements of income
(loss), changes in partners' capital (deficit), and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of East Two Thirty-Five
Associates, L.P. and subsidiary as of December 31, 1994 and 1993 and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Grossman, Tuchman & Shah

New York, N.Y.
January 31, 1995

[GROSSMAN, TUCHMAN & SHAH, LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Upper Fifth Avenue Residential
Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of Upper Fifth Avenue
Residential Associates, L.P. (a Delaware limited partnership) as of December 31,
1995 and 1994, 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 Upper Fifth Avenue Residential
Associates, L.P. as of December 31, 1995 and 1994 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 1, 1996

[GROSSMAN, TUCHMAN & SHAH LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Upper Fifth Avenue Residential
Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of Upper Fifth Avenue
Residential Associates, L.P. (a Delaware limited partnership) as of December 31,
1994 and 1993, 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 Upper Fifth Avenue Residential
Associates, L.P. as of December 31, 1994 and 1993 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

New York, N.Y.
January 31, 1995

[GROSSMAN, TUCHMAN & SHAH, LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
West 107th Street
Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of West 107th Street Associates,
L.P. (a Delaware limited partnership) as of December 31, 1995 and 1994, 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 West 107th Street Associates,
L.P. as of December 31, 1995 and 1994 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 29, 1996

[GROSSMAN, TUCHMAN & SHAH LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
West 107th Street
Associates, L.P.
New York, New York

We have audited the accompanying balance sheets of West 107th Street Associates,
L.P. (a Delaware limited partnership) as of December 31, 1994 and 1993, 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 West 107th Street Associates,
L.P. as of December 31, 1994 and 1993 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

New York, N.Y.
January 18, 1995

[GROSSMAN, TUCHMAN & SHAH, LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of General Atlantic
Second Avenue Associates, L.P. (a Delaware limited partnership) and subsidiary
as of December 31, 1995 and 1994, and the related consolidated statements of
income (loss), changes in partners' capital (deficit), and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of General Atlantic
Second Avenue Associates, L.P. and subsidiary as of December 31, 1995 and 1994
and the consolidated results of their operations and their 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 7, 1996

[GROSSMAN, TUCHMAN & SHAH LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of General Atlantic
Second Avenue Associates, L.P. (a Delaware limited partnership) and subsidiary
as of December 31, 1994 and 1993, and the related consolidated statements of
income (loss), changes in partners' capital (deficit), and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of General Atlantic
Second Avenue Associates, L.P. and subsidiary as of December 31, 1994 and 1993
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Grossman, Tuchman & Shah

New York, N.Y.
January 23, 1995

[J.H. WILLIAMS & CO., LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Church Lane Associates (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Church Lane Associates (a
Limited Partnership) as of December 31, 1995 and 1994 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
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 Church Lane Associates (a
Limited Partnership) at December 31, 1995 and 1994, 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/ J.H. Williams & Co., LLP

Kingston, Pennsylvania
February 9, 1996

[J.H. WILLIAMS & CO. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Church Lane Associates (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Church Lane Associates (a
Limited Partnership) as of December 31, 1994 and 1993 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
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 atandards 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 teat 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 Church Lane Associates (a
Limited Partnership) at December 31, 1994 and 1993, 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/ J.H. Williams & Co.

Kingston, Pennsylvania
February 13, 1995

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Campeche Isle Apartments
Limited Partnership

We have audited the accompanying balance sheet of Campeche Isle Apartments
Limited Partnership as of December 31, 1995, 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 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 Campeche Isle Apartments
Limited Partnership as of December 31, 1995, and the results of its operations,
the changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.

/s/ Reznick Fedder & Silverman

Bethesda, Maryland
February 29, 1996

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Campeche Isle Apartments
Limited Partnership

We have audited the accompanying balance sheet of Campeche Isle Apartments
Limited Partnership as of December 31, 1994, 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 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 Campeche Isle Apartments
Limited Partnership as of December 31, 1994, and the results of its operations,
the changes in partners' equity and cash flows for the year then ended, in
conformity with qenerally accepted accounting principles.

/s/ Reznick Fedder & Silverman

Bethesda, Maryland
February 1, 1995

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Campeche Isle Apartments
Limited Partnership

We have audited the accompanying balance sheet of Campeche Isle Apartments
Limited Partnership as of December 31, l993, 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. 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 Campeche Isle Apartments
Limited Partnership as of December 31, 1993, 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.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 4, 1994

[MARDEN, HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Robin Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 1995 and 1994, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Robin Housing Associates (a
limited partnership) as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 29, 1996

[MARDEN, HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Robin Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 1994 and 1993, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Robin Housing Associates (a
limited partnership) as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

MARDEN, HARRISON & KREUTER
Certified Public Accountants. P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 31, 1995

[MARDEN, HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Concourse Artists Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Concourse Artists Housing
Associates as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles

MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 29, 1996

[MARDEN, HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Concourse Artists Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 1994 and 1993, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Concourse Artists Housing
Associates (a limited partnership) as of December 31, 1994 and 1993, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 31, 1995

[MARDEN, HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
2051 Grand Concourse Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 2051 Grand Concourse Housing
Associates as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 29, 1996

[MARDEN, HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
2051 Grand Concourse Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 1994 and 1993, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 1994 and 1993, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 31, 1995

[MARDEN HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Willoughby-Wyckoff Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 29, 1996

[MARDEN HARRISON & KREUTER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Willoughby-Wyckoff Housing Associates
3743-A White Plains Road
Bronx, New York 10467

We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 1994 and 1993, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 1994 and 1993, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

MARDEN, HARRISON & KREUTER
Certified Public Accountants. P.C.

/s/ Marden, Harrison & Kreuter

Port Chester, New York
January 31, 1995

[WOLFE NILGES NAHORSKI]

INDEPENDENT AUDITORS' REPORT

To the Partners
Goodfellow Place Limited Partnership
St. Louis, Missouri

We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, l995 and 1994, 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 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 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 Goodfellow Place Limited
Partnership as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

/s/ Wolfe Nilges Nahorski

A Professional Corporation
Certified Public Accountants

February 6, 1996

[WOLFE NILGES NAHORSKI]

INDEPENDENT AUDITORS' REPORT

To the Partners
Goodfellow Place Limited Partnership
St. Louis, Missouri

We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, 1994 and 1993, 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 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 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 Goodfellow Place Limited
Partnership as of December 31, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

/s/ Wolfe Nilges Nahorski

A Professional Corporation
Certified Public Accountants

February 7, 1995

[HAMILTON & MUSSER, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Penn Alto Associates, Limited Partnership
Altoona, Pennsylvania 16601

We have audited the accompanying balance sheets of Penn Alto Associates,
Limited Partnership as of December 31, 1995 and 1994 and the related statements
of income, changes in partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our 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 the opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Penn Alto Associates,
Limited Partnership, as of December 31, 1995 and 1994, 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 accompanying supplementary
information on pages 10 and 11 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 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.

Mechanicsburg, Pennsylvania /s/ Hamilton & Musser
February 26, 1996 Certified Public Accountants

[HAMILTON & MUSSER, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Penn Alto Associates, Limited Partnership
Altoona, Pennsylvania 16601

We have audited the accompanying balance sheets of Penn Alto Associates,
Limited Partnership as of December 31, 1994 and 1993 and the related statements
of income, changes in partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our 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 the opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Penn Alto Associates,
Limited Partnership, as of December 31, 1994 and 1993, 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 accompanying supplementary
information on pages 10 and 11 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 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.

Mechanicsburg, Pennsylvania /s/ Hamilton & Musser
February 22, 1996 Certified Public Accountants

[VELEZ, SEMPRIT, NIEVES & CO. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS

Partners
Gramco Development Limited Dividend Partnership, L.P.
San Juan, Puerto Rico

We have audited the accompanying balance sheets of Gramco Development Dividend
Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December 31, 1995
and 1994, and the related statements of profit and loss, partners' capital, and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 Gramco Development Limited
Dividend Partnership, L.P. as of December 31, 1995 and 1994, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Velez Semprit Nieves & Co.

March 11, 1996

Stamp number 1340376 was
affixed to the original of this
report.

[VELEZ, SEMPRIT, NIEVES & CO. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS

Partners
Gramco Development Limited Dividend Partnership, L.P.
San Juan, Puerto Rico

We have audited the accompanying balance sheets of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 1994 and 1993, and the related statements of profit and loss, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits

We conducted our audits in accordance with generally accepted auditing
standards. 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 Gramco Development Limited
Dividend Partnership, L.P. as of December 31, 1994 and 1993, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

As discussed in Note 12 to the financial statements, the Office of the Inspector
General (OIG) conducted an audit of the construction costs of the Bayamon
Country Club project to ascertain compliance with Federal Government
regulations. A report on such audit was issued on August 6, 1992 recommending
the repayment of $2,006,118 of Housing Development Grant (HDG) funds and the
return of $341,667 to the Project's operating account, allegedly distributed in
an unauthorized manner. The Partnership's management has provided subsequently
additional documentation to the Office of the Inspector General and the HUD Area
and Regional Offices. HUD and the Partnership are in the process of executing a
settlement agreement. As a result of this agreement, the Partnership and its
general partner will have to reimburse $600,000 to the governmental entities and
$341,667 will have to be reimbursed to the general operating bank account of the
Partnership's project for the parties fully release one and the other from any
further claim and any/all causes of action in connection with the OIG audit. The
Partnership's management agent has agreed to assume the payment of said amounts.
Accordingly, no provision for any liability in connection with the settlement
agreement has been made in the accompanying financial statements.

/s/ Velez Semprit Nieves & Co.
April 27, 1995

Stamp number 1282941 was
affixed to the original of this
report.

[COLE, EVANS & PETERSON LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Alexis Park Apartments,
A Louisiana Partnership In Commendam
Bossier City, Louisiana

We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at December 31, 1995 and December 31, 1994
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. 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 in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at December 31, 1995 and
December 31, 1994, and the results of its operations and its cash flows for the
years 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 mentioned in Note 12 to the
financial statements, there are uncertainties that affect the Partnership
concerning the existence of hazardous waste, related lawsuits, and an unrelated

investigation by the U.S. Department of Justice, that raise substantial doubt
about the Partnership's ability to continue as a going concern. Management's
position in regards to these matters are also mentioned in Note 12. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.

/s/ Cole, Evans & Peterson
Cole, Evans & Peterson

[COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT

To the Partners
Alexis Park Apartments,
A Louisiana Partnership In Commendam
Bossier City, Louisiana

We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at December 31, 1994 and December 31, 1993
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. 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 in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at December 31, 1994 and
December 31, 1993, and the results of its operations and its cash flows for the
years 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 mentioned in Note 11 to the
financial statements, there are uncertainties that affect the Partnership
concerning the existence of hazardous waste, related lawsuits, and an unrelated

investigation by the U.S. Department of Justice, that raise substantial doubt
about the Partnership's ability to continue as a going concern. Management's
position in regards to these matters are also mentioned in Note 11. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.

/s/ Cole, Evans & Peterson
Cole, Evans & Peterson

[CHESSER & COMPANY LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

Partners
Williamsburg Residential, L.P.
Wichita, Kansas

We have audited the accompanying balance sheet of Williamsburg Residential, L.P.
as of December 31, 1994 and 1993, 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 our 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.
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, L.P.
as of December 31, 1994 and 1993, 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

February 14, 1995

[PHILIP ROOTBERG & COMPANY, LLP LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Victory Apartments

We have audited the accompanying balance sheet of Victory Apartments (a limited
partnership) - F.H.A. Project No. 071-35588 as of December 31, 1995 and 1994,
and the related statements of profit and loss, 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 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 Victory Apartments, F.H.A.
Project No. 071-35588 as of December 31, 1995 and 1994, and the results of its
operations, changes in partners' capital (deficit) 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 30, 1996, on our consideration of the Partnership's internal
control structure and a report dated January 30, 1996, on its compliance with
laws and regulations.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
listed on the preceding contents page are presented for purposes of additional
analysis to comply with HUD reporting requirements and are 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/ Philip Rootberg & Company, LLP

January 30, 1996

[PHILIP ROOTBERG & COMPANY, LLP LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Victory Apartments

We have audited the accompanying balance sheet of Victory Apartments (a limited
partnership) - F.H.A. Project No. 071-35588 as of December 31, 1994 and 1993,
and the related statements of profit and loss, partners' capital, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Victory Apartments, F.H.A.
Project No. 071-35588 as of December 31, 1994 and 1993, 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.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
listed on the preceding contents page are presented for purposes of additional
analysis to comply with HUD reporting requirements and are 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/ Philip Rootberg & Company, LLP

January 27, 1995

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

March 31
------------------------------
1996 1995
------------ ------------

ASSETS

Property and equipment, at cost, less accumulated
depreciation (Notes 2, 4 and 7) $192,479,831 $198,974,458
Cash and cash equivalents (Notes 2 and 11) 4,498,565 4,374,218
Cash held in escrow (Notes 2 and 5) 6,382,851 6,193,946
Deferred costs - less accumulated amortization (Notes 2 and 6) 4,479,818 4,544,175
Other assets 4,988,601 4,833,799
------------ ------------
Total assets $212,829,666 $218,920,596
============ ============

LIABILITIES AND PARTNERS' CAPITAL

Liabilities
Mortgage notes payable (Note 7) $119,895,307 $120,866,090
Accounts payable and other liabilities (Note 11) 8,477,781 8,053,691
Due to local general partners and affiliates (Note 8) 10,632,221 10,074,267
Due to general partners and affiliates (Note 8) 1,216,964 714,451
Due to selling partners 3,658,664 3,597,250
------------ ------------
143,880,937 143,305,749
------------ ------------
Minority interests (Note 2) 3,827,457 3,961,017
------------ ------------
Commitments and contingencies (Notes 8 and 11)
Partners' capital
Limited partners (200,000 BACs authorized; 115,917.5
issued and outstanding) (Note 1) 65,500,743 71,967,975
General partners (379,471) (314,145)
------------ ------------
Total partners' capital 65,121,272 71,653,830
------------ ------------
Total liabilities and partners' capital $212,829,666 $218,920,596
============ ============

See accompanying notes to consolidated financial statements.

-19-

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

Year Ended March 31
----------------------------------------------
1996 1995 1994
----------- ------------ -----------

Revenues
Rental income $24,287,772 $24,295,353 $22,578,106
Other (Note 11) 1,099,158 779,342 1,707,678
----------- ----------- -----------
25,386,930 25,074,695 24,285,784
----------- ----------- -----------
Expenses
General and administrative 4,777,882 4,788,987 4,294,081
General and administrative-related parties (Note 8) 1,051,462 1,112,005 1,222,849
Repairs and maintenance 4,318,297 4,020,852 3,531,160
Operating and other 2,838,531 3,028,546 3,277,986
Real estate taxes 1,042,652 1,063,983 1,028,607
Insurance 1,437,302 1,339,173 1,214,449
Financial, primarily interest 8,498,925 8,364,351 8,065,891
Depreciation and amortization 8,139,580 8,369,422 8,242,023
----------- ----------- -----------
32,104,631 32,087,319 30,877,046

Loss before minority interest and extraordinary items (6,717,701) (7,012,624) (6,591,262)

Minority interest in loss of subsidiaries 185,143 418,892 585,685
----------- ----------- -----------

Loss before extraordinary item (6,532,558) (6,593,732) (6,005,577)

Extraordinary loss (Note 10) 0 (316,370) (374,018)
----------- ----------- -----------
Net loss $(6,532,558) $(6,910,102) $(6,379,595)
=========== =========== ===========
Loss before extraordinary item - limited partners $(6,467,232) $(6,527,795) $(5,945,521)

Extraordinary item - limited partners 0 (313,206) (370,278)
----------- ----------- -----------
Net loss - limited partners $(6,467,232) $(6,841,001) $(6,315,799)
=========== =========== ===========
Number of BACs outstanding 115,917.5 115,917.5 115,917.5
=========== ============ ===========
Per BAC:
Loss before extraordinary item $ (55.79) $ (56.31) $ (51.29)
Extraordinary loss 0 (2.70) (3.19)
----------- ----------- -----------
Net loss per BAC $ (55.79) $ (59.01) $ (54.48)
=========== =========== ===========

See accompanying notes to consolidated financial statements.

-20-

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

Total Limited Partners General Partners
----------- ---------------- ----------------

Partners' capital - April 1, 1993 84,943,527 85,124,775 (181,248)

Net loss (6,379,595) (6,315,799) (63,796)
----------- ----------- ---------

Partners' capital - March 31, 1994 78,563,932 78,808,976 (245,044)

Net loss (6,910,102) (6,841,001) (69,101)
----------- ----------- ---------

Partners' capital - March 31, 1995 71,653,830 71,967,975 (314,145)

Net loss (6,532,558) (6,467,232) (65,326)
----------- ----------- ---------

Partners' capital - March 31, 1996 $65,121,272 $65,500,743 $(379,471)
=========== =========== =========

See accompanying notes to consolidated financial statements.

-21-

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

Year Ended March 31
----------------------------------------------
1996 1995 1994
----------- ----------- -----------

Cash flows from operating activities:
Net loss $(6,532,558) $(6,910,102) $(6,379,595)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:

Extraordinary loss (Note 10) 0 316,370 374,018
Present value of legal settlement (Note 11) 0 363,149 0
Depreciation and amortization 8,139,580 8,369,422 8,242,023
Minority interest in loss of subsidiaries (185,143) (418,892) (585,685)
(Increase) decrease in assets
Cash held in escrow (135,938) (519,316) 103,200
Deferred costs 0 (5,000) 0
Other assets (154,802) (538,766) (83,544)
(Decrease) increase in liabilities
Accounts payable and other liabilities 424,090 (1,534,982) 847,415
Due to general partners and affiliates 502,513 329,411 274,901
----------- ----------- -----------

Total adjustments 8,590,300 6,361,396 9,172,328
----------- ----------- -----------

Net cash provided by (used in) operating activities 2,057,742 (548,706) 2,792,733
----------- ----------- -----------

Cash flows from investing activities:
Acquisitions of property and equipment, net (1,452,484) (247,296) (8,031,400)
Increase in cash held in escrow (52,967) (540,012) (326,505)
Utilization of cash held in escrow for construction
in progress and property and equipment 0 0 5,171,049
Proceeds from insurance claim 0 0 2,270,253
----------- ----------- -----------

Net cash used in investing activities (1,505,451) (787,308) (916,603)
----------- ----------- -----------

Net cash provided by (used in) operating and
investing activities, carried forward 552,291 (1,336,014) 1,876,130

See accompanying notes to consolidated financial statements.

-22-

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

Year Ended March 31
----------------------------------------------
1996 1995 1994
----------- ----------- -----------

Net cash provided by (used in) operating and
investing activities, brought forward $ 552,291 $(1,336,014) $ 1,876,130
----------- ----------- -----------
Cash flows from financing activities:
Increase in deferred costs (128,112) (94,190) (142,191)
Proceeds from refinancing of mortgage notes 0 2,920,000 4,800,000
Repayments of mortgage notes (1,131,988) (3,975,877) (6,344,628)
Increase in due to local general partners
and affiliates 1,115,182 2,153,869 1,189,573
Decrease in due to local general partners
and affiliates (396,023) (455,588) (564,109)
Increase in due to selling partners 61,414 56,858 52,687
Increase (decrease) in capitalization of consolidated
subsidiaries attributable to minority interest 51,583 (4,454) 48,368
----------- ----------- -----------

Net cash (used in) provided by financing activities (427,944) 600,618 (865,602)
----------- ----------- -----------

Net increase (decrease) in cash and cash equivalents 124,347 (735,396) 1,010,528

Cash and cash equivalents at beginning of year 4,374,218 5,109,614 4,099,086
----------- ----------- -----------

Cash and cash equivalents at end of year $ 4,498,565 $ 4,374,218 $ 5,109,614
=========== =========== ===========

See accompanying notes to consolidated financial statements.

-23-

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

Year Ended March 31
---------------------------------------------
1996 1995 1994
---------- ---------- ----------

Supplemental disclosure of cash flows information:

Cash paid during the year for interest $7,600,270 $7,553,865 $7,567,412

Supplemental disclosures of noncash investing and
financing activities:

Proceeds from mortgage notes used to reduce due to
local general partners and affiliates $ 161,205 $ 0 $ 0
Increase in accounts payable and other liabilities
from present value of legal settlement 0 363,149 0
Mortgage principal payments and funding of
reserve for replacements made by the subsidiary
general partner on the subsidiary's behalf 0 74,621 39,919
Construction in progress reclassified to property
and equipment 0 0 669,662
Interest payable - local general partners and affiliates 0 316,370 518,298
Fees payable to local general partners and affiliates
previously capitalized as property and equipment written
off as payment period lapsed 0 0 47,349

See accompanying notes to consolidated financial statements.

-24-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 1 - General

Liberty Tax Credit Plus II L.P., (a Delaware limited
partnership) (the "Partnership") was organized on March 25, 1988, but had no
activity until July 1, 1988 (which date is considered to be inception for
financial accounting purposes). The Partnership had no operations until
commencement of the public offering on July 20, 1988.

The Partnership's business is to invest in other limited
partnerships ("Local Partnerships", "subsidiaries" or "subsidiary
partnerships"), owning leveraged Apartment Complexes that are eligible for the
low-income housing tax credit ("Tax Credit") enacted in the Tax Reform Act of
1986, and to a lesser extent in Local Partnerships owning properties that are
eligible for the historic rehabilitation tax credit. The Partnership's
investment in each Local Partnership represents a 20% to 98% interest in that
Local Partnership.

The Partnership has acquired interests in 27 Local Partnerships
as of March 31, 1996, and does not anticipate making any additional
investments.

The Partnership was authorized to issue a total of 200,000
Beneficial Assignment Certificates ("BACs"), of which 120,000 have been
registered with the Securities and Exchange Commission for sale to the public.
The public offering was completed on January 9, 1989 with a total of 115,917.5
BACs sold and $115,917,500 of proceeds received by the Partnership.

The terms of the Limited 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 27 subsidiary partnerships in which the Partnership is
a limited partner. All intercompany accounts and transactions with the
subsidiary partnerships have been eliminated in consolidation.

The Partnership's fiscal year ends on March 31. All
subsidiaries have calendar year ends. Accounts of the subsidiaries have been
adjusted for intercompany transactions from January 1 through March 31. The
books and records of the Partnership are maintained on the accrual basis of
accounting, in accordance with generally accepted accounting principles
("GAAP").

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 interests which exceed the
minority interest's investment in a subsidiary partnership have been charged
to the Partnership. Such losses aggregated $532,000, $274,950 and $241,004 for
the years ended March 31, 1996, 1995 and 1994 (the 1995, 1994 and 1993 Fiscal
Years), respectively. The Partnership's investment in each subsidiary
partnership is equal to the respective subsidiary partnerships's partners'
equity less minority interest capital, if any. In consolidation, all
subsidiary partnership losses are included in the Partnership's capital
account except for losses allocated to minority interest capital.

-25-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 2 - Summary of Significant Accounting Policies (Continued)

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.

c) Property and Equipment

Property and equipment are carried at the lower of
depreciated cost of estimated amounts recoverable through future operations
and ultimate disposition of the property. Cost includes the purchase price,
acquisition fees and expenses, and any other costs incurred in acquiring the
properties. The cost of property and equipment is depreciated over their
estimated useful lives using accelerated and straight-line methods.
Expenditures for repairs and maintenance are charged to expense as incurred;
major renewals and betterments are capitalized. At the time property and
equipment are retired or otherwise disposed of, the cost and accumulated
depreciation are eliminated from the assets and accumulated depreciation
accounts and the profit of loss on such disposition is reflected in earnings.
A provision for loss on impairment of assets is generally recorded when
estimated 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 when the property
is considered to be impaired and the depreciated cost exceeds estimated fair
value. Through March 31, 1996, the Partnership has not recorded any provisions
for loss on impairment of assets or reduction to estimated fair value.

d) Organization and Offering Costs

Costs incurred to organize the Partnership, including but
not limited to legal, accounting, and registration fees, are considered
deferred organization expenses. These costs have been capitalized and are
being amortized over a 60-month period. 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.

e) Income Taxes

The Partnership is not required to provide for, or pay, any
federal income taxes. Net income or loss generated by the Partnership is
passed through to the partners and is required to be reported by them. The
Partnership may be subject to state and local taxes in jurisdictions in which
it operates. For income tax purposes, the Partnership has a fiscal year ending
December 31 (Note 9).

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. In addition, the Partnership evaluates a potential environmental
liability independently from any potential claim for recovery.

g) Use of Estimates

The preparation of financial statements is conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly actual results could differ from those estimates.

-26-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 2 - Summary of Significant Accounting Policies (Continued)

h) Accounting Pronouncements Not Yet Implemented

In March 1995, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of". Under SFAS No. 121, the Partnership is required to review
long-lived assets and certain identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the book value of an asset
may not be recoverable. An impairment loss should be recognized whenever the
review demonstrates that the book value of a long-lived asset is not
recoverable.

Effective April 1, 1996, the Partnership intends to adopt
SFAS No. 121, consistent with the required adoption period. The Partnership
does not expect the implementation to have a material impact on its financial
condition or its future results of operations.

i) Certain reclassifications have been made to the Fiscal 1994
and Fiscal 1993 Financial Statements to confirm with the Fiscal 1995 Financial
Statement presentation. Such reclassifications had no effect on net loss as
previously reported.

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, Certificates of Deposit, Mortgage
Escrow Deposits and Cash-Restricted for Tenants' Security Deposits

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.

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

March 31, 1996 March 31, 1995
------------------------------ --------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
--------------- ------------ ------------ ------------

Mortgage Notes Payable for which it is:
Practicable to estimate fair value $ 9,206,333 $8,160,232 $9,367,761 $ 8,564,599
Not Practicable 110,688,974 (a) 111,498,329 (a)

-27-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 3 - Fair Value of Financial Instruments (continued)

(a) Management believes it is not practical to estimate the fair
value of the mortgage notes payable because mortgage programs with similar
characteristics are not currently available to the partnerships.

The carrying amount of other assets and liabilities
reported on the statement of financial position that require
such disclosure approximates fair value.

NOTE 4 - Property and Equipment

The components of property and equipment are as follows:

March 31
----------------------------- Estimated Useful
1996 1995 Lives (Years)
------------ ------------ ----------------

Land $ 14,537,850 $ 14,537,850 -
Building and improvements 221,514,496 220,193,762 15 to 40
Other 5,171,243 5,044,028 5 to 15
------------ ------------
241,223,589 239,775,640
Less: Accumulated depreciation (48,743,758) (40,801,182)
------------ ------------

$192,479,831 $198,974,458
============ ============

Included in property and equipment is $6,955,050 of acquisition
fees paid or accrued to the general partners and $1,606,014 of acquisition
expenses as of March 31, 1996 and 1995. In addition, as of March 31, 1996 and
1995, buildings and improvements include $7,015,991 of capitalized interest.

Depreciation expense for the years ended March 31, 1996, 1995
and 1994 amounted to $7,947,111, $7,954,255 and $7,698,919, respectively.

In connection with the rehabilitation of the properties, the
subsidiary partnerships have incurred developer's fees of $20,563,695 to the
Local General Partners and affiliates. Such fees have been included in the
cost of property and equipment.

NOTE 5 - Cash Held in Escrow

Cash held in escrow is restricted and consists of the following:

March 31
-----------------------
1996 1995
---------- ----------
Purchase price payments $ 294,250 $ 294,250
Real estate taxes, insurance, reconstruction
and other 2,985,222 2,854,650
Reserve for replacements 2,248,958 2,195,991
Tenant security deposits 854,421 849,055
---------- ----------
$6,382,851 $6,193,946
========== ==========

-28-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 6 - Deferred Costs

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

March 31
---------------------------
1996 1995 Period
---------- ---------- -------------
Financing expenses $4,805,499 $ 4,859,548 *
Organization expenses 1,834,552 1,897,184 60 months
Other 717,628 717,628 Various
---------- -----------
7,357,67 7,474,360
Less: Accumulated amortization (2,877,861) (2,930,185)
---------- ----------
$4,479,818 $4,544,175
========== ==========

*Over the life of the respective related mortgages.

Amortization expense for the years ended March 31, 1996, 1995
and 1994 amounted to $192,469, $415,167 and $543,104, respectively. During the
year ended March 31, 1996, fully amortized deferred costs amounting to
$244,793 were written off.

NOTE 7 - Mortgage Notes Payable

The mortgage notes are payable in aggregate monthly installments
of approximately $719,000, including principal and interest at rates varying
from 0% to 15% per annum, through 2030. Each subsidiary partnership's mortgage
note payable is collateralized by the land and buildings of the respective
subsidiary partnership, the assignment of certain subsidiary partnership's
rents and leases and is without further recourse.

Annual principal payment requirements for each of the next five
fiscal years are as follows:

Fiscal Year Amount
----------- ------------
1996 $ 1,957,990
1997 1,445,391
1998 1,548,817
1999 1,642,532
2000 1,746,043
Thereafter 111,554,534
-----------
$119,895,307
============

One subsidiary partnership United Glen Arden II Limited
Partnership holds a mortgage note which is eligible for an interest reduction
subsidy under Section 236 of the National Housing Act. At December 31, 1995,
said note, which bears interest at 7.5% per annum, has a balance of
$2,833,801.

During the 1994 Fiscal Year, Penn Alto restructured its debt and
reduced its monthly mortgage payments as a result of the general partner
advancing $1,800,000 to the subsidiary partnership as a voluntary loan and
would receive priority payment pursuant to Penn Alto's partnership agreement.
The special limited partner of Penn Alto has not approved this debt
restructuring.

-29-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 8 - Related Party Transactions

A) Related Party Fees

One of the General Partners has a 1% interest as a special
limited partner in each of the Local Partnerships. An affiliate of the General
Partners also has a minority interest in certain Local Limited Partnerships.

The general partners and their affiliates perform services
for the Partnership. The costs incurred for the years ended March 31, 1996,
1995 and 1994 are as follows:

Year Ended March 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
Partnership management fees (a) $ 299,000 $ 293,000 $ 290,000
Expense reimbursement (b) 89,987 88,719 150,539
Property management fees (c) 613,475 697,786 743,310
Local administrative fee (d) 49,000 32,500 39,000
---------- ---------- ----------
$1,051,462 $1,112,005 $1,222,849
========== ========== ==========

(a) 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. Partnership management fees owed to the General
Partners amounting to approximately $882,000 and $583,000 were accrued and
unpaid as of March 31, 1996 and March 31, 1995, respectively.

(b) 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.

(c) Property management fees incurred by subsidiary
partnerships amounted to $1,478,178, $1,456,512 and $1,427,945 for the 1995,
1994 and 1993 Fiscal Years, respectively. Of these fees $613,475, $697,786 and
$743,310 were incurred to affiliates of the subsidiary partnerships' general
partners. Included in amounts incurred to affiliates of the subsidiary
partnerships' general partners are $77,325, $127,061 and $119,344,
respectively, which were also incurred to affiliates of the Partnership.

(d) Liberty Associates II L.P., 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.

Liberty Associates II L.P., has a .01% interest as the
special limited partner in each of the subsidiary partnerships. Liberty
Associates II L.P. received cash distributions of approximately $142, $166 and
$376 during the 1996, 1995 and 1994 Fiscal Years, respectively.

-30-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 8 - Related Party Transactions

A) Related Party Fees
Pursuant to the Partnership Agreement and the Local
Partnership Agreements, the General Partners and Liberty Associates II
received their allocable share of profits, losses and tax credits allocated by
the Partnership and the Local Partnerships, respectively.

(e) Due to Local General Partners and affiliates at March
31, 1996 and 1995 consists of the following:

1996 1995
----------- -----------
Operating advances $ 2,116,729 $ 1,970,856
Development fee payable 2,610,081 2,507,024
Operating deficit advances 3,736,146 3,319,827
Management and other fees 719,566 959,140
Interest (Note 11) 247,158 114,879
Long term notes payable (f) 1,202,541 1,202,541
----------- -----------
$10,632,221 $10,074,267
=========== ===========
(f) Long term notes payable consist of the following:

Polynesian $ 316,370 $ 316,370
----------
This promissory note bears interest at 11% with a maturity
date of June 1, 2003 (Note 10). Interest expense of $34,800
and $17,400 was incurred for March 31, 1996 and 1995,
respectively.

Seagrape 886,171 886,171
-------- ------- -------
This promissory note bears interest at 11% with a maturity
date of July 1, 2002 (Note 10). Interest expense of $97,479
was incurred for March 31, 1996 and 1995, respectively.
$ 1,202,541 $ 1,202,541
=========== ===========
B) Guarantees

The Partnership has negotiated Operating Deficit Guarantee
Agreements with all Local Partnerships, pursuant to which the general partners
of the Local Partnerships have 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 aggregates
approximately $11,567,000, of which $11,273,300, $10,099,330 and $10,099,330
had expired as of March 31, 1996, 1995, and 1994, respectively. As of March
31, 1996, 1995, and 1994, respectively, approximately $4,965,000, $4,304,000
and $2,962,000, respectively had been funded by the Local General Partners to
meet such obligations. Of the total amount funded through March 31, 1996,
approximately $1,033,000 has been recorded as a capital contribution, $136,000
was funded by the Related Companies, $60,000 has been recognized as income
during the 1992 Fiscal Year, and the remaining balance of approximately
$3,736,146 is recorded as noninterest-bearing operating advances to be repaid
from operating cash flow.

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.

-31-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

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:

Year Ended December 31
-----------------------------------------------
1995 1994 1993
------------ ------------ ------------

Financial statement
Net loss $ (6,532,558) $ (6,910,102) $ (6,379,595)

Difference resulting from parent company having a
different fiscal year for income tax and financial
reporting purposes (59,193) 218,609 (192,626)

Difference between depreciation and amortization
expense recorded for financial reporting purposes
and the accelerated cost recovery system utilized
for income tax purposes (1,980,066) (1,995,644) (2,018,495)

Difference between extraordinary gain recorded
for financial reporting purposes
and for income tax purposes 0 0 144,280

Non-deductible litigation settlement (Note 11a) (18,800) 359,244 0

Other 737,898 444,903 639,472
------------ ------------ ------------
Net loss as shown on the income tax return for the
calendar year ended $ (7,852,719) $ (7,882,990) $ (7,806,964)
============= ============= =============

NOTE 10 - Extraordinary Items

During the 1993 Fiscal Year, Polynesian and Seagrape received
additional insurance proceeds from damage from Hurricane Andrew, resulting in
an extraordinary gain for financial statement purposes of $144,280. In
addition, $784,088 of business interruption insurance is included in other
income in the 1993 Fiscal Year.

On December 22, 1993, Seagrape refinanced its mortgage with
another financial institution in the principal amount of $4,800,000 with a
maturity date of December 21, 2005. Proceeds from the savings of interest
expense due to positive amortization became payable to the principals of the
general partner, as stated in the Partnership Agreement. For the 1993 Fiscal
Year, the amount of $518,298 is shown as an extraordinary loss in the
financial statements.

On June 3, 1994, Polynesian refinanced its mortgage note. The
original mortgage loan amortized over a thirty-year period assuming an eleven
percent payrate on the outstanding principal balance. Interest accrued at two
and three quarters percent above a specified index. At December 31, 1993, the
interest rate was 6%. To the extent that the monthly payments exceeded the
applicable interest rate, such excess payments (positive amortization) were

-32-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 10 - Extraordinary Items (continued)

to be treated as voluntary prepayments of the outstanding principal balance.
Proceeds from the savings of interest expense due to positive amortization
became payable to the principals of the General Partner, as stated in the
partnership agreement. For the 1994 Fiscal Year, the amount of $316,370 is
shown as an extraordinary loss in the financial statements.

NOTE 11 - Commitments and Contingencies

a) Subsidiary Partnerships - Going Concern

The auditors for two subsidiary Partnerships, Whittier Plaza Associates
Limited Partnership and Alexis Park Apartments, modified their reports on the
1995 Fiscal Year financial statements due to the uncertainty of each subsidiary
partnership's ability to continue as a going concern. The financial statements
do not include any adjustments that would be necessary in the event the
subsidiary partnerships are unable to continue as going concerns.

Whittier Plaza Associates Limited Partnership

The financial statements for Whittier Plaza Associates Limited
Partnership ("Whittier") have been prepared assuming that the partnership will
continue as a going concern. Whittier has sustained continuous losses since
commencement of operations in 1988, including losses of $42,084, $57,951 and
$62,233, in 1995, 1994, and 1993 Fiscal Years, respectively. Whittier has
experienced higher vacancies and lower rents than those originally projected,
resulting in increased difficulty in meeting both operating and debt service
obligations. A subsidiary general partner, pursuant to a development deficit
guarantee agreement, has advanced $54,234 and $19,698 in 1995 and 1994 Fiscal
Years, respectively, and $238,908 since 1988 to fund operating cash shortfalls.
In addition, the subsidiary partnership's management company, an affiliate of
the local general partner, has deferred receipt of various fees since 1991
totalling $36,365. These items raise substantial doubt about Whittier's ability
to continue as a going concern. The Partnership's investment in Whittier was
reduced to zero as a result of prior years' losses. The minority interest
balance was $0 for each of the 1995, 1994, and 1993 Fiscal Years. Whittier's net
loss amounted to approximately $42,000, $58,000 and $62,000 for the 1995, 1994
and 1993 Fiscal Years.

Alexis Park Apartments

During 1990, vapor fumes were discovered in several apartments at
Alexis Park Apartments, a Louisiana Partnership in Commendam ("Alexis"). As a
result, 47 of the 280 units were vacated as ordered by the Louisiana Department
of Environmental Quality ("DEQ"). At December 31, 1995, 39 of these units have
been cleared for occupancy by the Louisiana Department of Health and Hospitals,
the remaining 8 units have undergone refurbishing and are currently being rented
to an oil company. It is anticipated that the units will be available to the
general public in the near future.

Alexis has also been named as co-defendant in a suit for damages filed
by a group comprised of former tenants and a few present tenants at the Project.
The suit, Berzas, et. al. v. Oxy USA, Inc., et al., was instituted in January
1991 in the 26th Judicial District Court, Bossier Parish, Louisiana. The
Partnership has been advised that Louisiana law does not permit disclosure of
money damages sought. The suit alleges certain personal injuries as a result of
exposure to toxic chemicals emanating from the site upon which the Apartment
Complex is built. Management intends to deny all allegations stated in the
complaint. Legal counsel for Alexis believes it is

-33-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 11 - Commitments and Contingencies (Continued)

a) Subsidiary Partnerships - Going Concern (Continued)

premature at this time to make an evaluation of the amount or range of Alexis'
potential loss. Legal counsel for Alexis does not believe the plaintiffs
will prevail.

Alexis is named as co-defendant in another suit. The suit, Jimmy Green,
et al. v. Cities Service Refinery, et al., was instituted in March 1991 in the
26th Judicial District Court, Bossier Parish, Louisiana. The Partnership has
been advised that Louisiana law does not permit disclosure of money damages
sought. The plaintiffs are a group of homeowners who live south of the Alexis
site and are seeking damages for devaluation of their property and for alleged
personal injuries suffered as a result of exposure to toxic chemicals which they
claim emanated from the site of an oil refinery. Alexis is built on a portion of
this site. The property upon which the plaintiff's homes are built is not within
the boundaries of the oil refinery site. Legal counsel for Alexis believes it is
premature at this time to make an evaluation of the amount or range of Alexis'
potential loss. Legal counsel for Alexis does not believe the plaintiffs will
prevail.

Alexis has filed a cross claim against the former owners of the
property, for judgment against them in solido, for any damages Alexis may
sustain arising from the environmental problem which is the subject of the suit
and also, should Alexis be cast in judgment in the main demand, then for
judgment over them in cross claim in solido, for the full amount of said
judgment.

In July of 1991, the former general partner received notification from
the U.S. Department of Justice that some of its officers were under
investigation for possible violations of Federal criminal statutes arising out
of the filing of the Alexis Park Apartments Partnership tax returns for the
years 1988 and 1989. Included in this notification was an invitation to appear
before the Grand Jury. The former general partner opted to have its corporate
counsel submit to the U.S. Attorney and Internal Revenue Service, a written
summary of the former general partner's involvement with Alexis Park Apartments
and the filing of its tax returns.

The former general partner denies any wrong doing. The facts and focus
of this investigation are unclear and the ultimate effects, if any, on the
Partnership's financial statements are not determinable.

Management of Alexis believes that the environmental issue has created
a negative image for the Project. The DEQ has issued a statement that all
occupied apartments are safe. Pursuant to an Investigative Agreement with the
DEQ, additional testing of the project site and adjacent areas began June 15,
1992. The testing was overseen by the DEQ and was completed February 10, 1995.

The DEQ has now turned the matter over to the United States
Environmental Protection Agency ("EPA") for review and as of February 21, 1996,
the EPA had not completed its review. If remediation of some manner is required,
it could adversely affect the subsidiary partnership. In summary, management is
optimistic that the hazardous waste matter will be favorably resolved and that
any losses from the class action lawsuit will be covered by insurance.
Management believes that the investigation by the U.S. Department of Justice is
unlikely to have any material financial effect on the Partnership. Management
believes the Partnership has demonstrated that it has the ability to generate
sufficient operating capital without the oil company's assistance. Based on
these evaluations management believes that the Partnership will continue as a
going concern for at least one year beyond December 31, 1995. It is too
premature to make an evaluation of the amount or range of Alexis's potential
loss, therefore it is managements opinion that no accrual for potential losses
is currently warranted on the financial

-34-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 11 - Commitments and Contingencies (Continued)

a) Subsidiary Partnerships - Going Concern (Continued)

statements. The maximum loss which the Partnership would be liable for is
its net investment in Alexis amounting to approximately $1,016,000 at
March 31, 1996. Management estimates that the impact of the negative publicity
on occupancy may continue for awhile and believes that future levels of
occupancy will depend on the final findings of the investigating parties and on
future media attention. These items raise substantial doubt about Alexis'
ability to continue as a going concern. The Partnership's investment in Alexis
at March 31, 1996 and 1995 was approximately $1,016,000 and $1,260,000,
respectively, and the minority interest balance was approximately $5,200 and
$7,700. Alexis net loss after minority interest amounted to approximately
$244,000, $165,000 and $103,000, for the 1995, 1994, and 1993 Fiscal Years
respectively.

b) Subsidiary Partnerships - Other

Gramco Development Limited Dividend Partnership, L.P.

The Office of the Inspector General conducted an audit of the
construction costs of the Gramco Development Limited Dividend Partnership, L.P.
("Bayamon") to ascertain compliance with federal government regulations. The
report on such audit recommended the repayment of $2,006,118 of Housing
Development Assistance Grant ("HODAG") funds provided by the U.S. Department of
Housing and Urban Development ("HUD") through the Municipality of Bayamon
("Municipality"). The report also recommended the return of $341,667 to
Bayamon's operating account, allegedly distributed in an unauthorized manner. In
May 1995, the Partnership, OIG, HUD, the Municipality of Bayamon, the general
contractor (a related company of Bayamon ), the partnership's general partner,
the management agent, and the officers and directors of the related companies
executed a settlement agreement. As a result of this agreement, the management
agent assumed the liability and reimbursed $600,000 to the Municipality of
Bayamon corresponding to HODAG funds and $341,667 to the project's general
operating account, which is included in other income for the 1995 Fiscal Year.
The parties fully released one and the other from any further claim and any/all
causes of action in connection with the OIG audit.

In the event of a substantive violation relating to the provisions of
certain agreements between Bayamon and the Municipality of Bayamon (the
"Municipality") and between the Municipality and HUD, a promissory note dated
April 4, 1987 for $4,867,000 shall become immediately due and payable at the
election of HUD and the Municipality. Otherwise, the principal amount of the
obligation together with any interest will be forgiven. Proceeds from the loan
have been deducted from fixed assets. It is management's opinion that no accrual
for potential losses is currently warranted in the financial statements. The
Partnership's investment in Bayamon at March 31, 1996 and March 31, 1995 was
approximately $1,506,000 and $1,429,000 and the minority interest balance was
approximately $427,000 for each year. Bayamon's net income (loss) after minority
interest amounted to approximately, $77,000, ($252,000), and ($492,000) for the
1995, 1994, and 1993 Fiscal Years, respectively.

Robin Housing Associates

Robin Housing Associates ("Robin Housing") is a defendant in a personal
injury lawsuit. The Partnership's insurance carrier intends to defend the
Partnership vigorously. Counsel believes that the insurance coverage is adequate
to cover any liability arising from this action. It is management's opinion that
no accrual for potential losses is currently warranted in the financial
statements. The maximum loss which the Partnership would be liable for is
its net investment in Robin Housing amounting to approximately $185,000 at
March 31, 1996.

-35-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 11 - Commitments and Contingencies (Continued)

b) Subsidiary Partnerships - Other (Continued)

Metropolitan Towers Associates, L.P.

The subsidiary partnership, Metropolitan Towers Associates, L.P., is a
defendant in a legal proceeding brought about by one of its tenants for damages
suffered by her child upon falling from her apartment's balcony. The proceedings
are still in a preliminary phase but it is legal's counsel opinion that if any
damages are awarded to the plaintiff, the same will be covered by the
partnership's insurance policy. It is management's opinion that no accrual for
potential losses is currently warranted in the financial statements. The maximum
loss which the Partnership would be liable for is its net investment in
Metropolitan amounting to approximately $1,471,000 at March 31, 1996.

Santa Juanita II Limited Partnership

A bank filed a suit against the Local Partnership Santa Juanita II
Limited Partnership ("Santa Juanita") for non-payment of the monthly
installments required by a second mortgage loan agreement. During February 1994,
the court issued a judgement against Santa Juanita demanding immediate payment
of the second mortgage note with an outstanding principal balance of $474,656,
plus accrued interest and legal expenses. A significant portion of the Local
Partnership's operating assets is pledged as collateral for this note and
foreclosure by the bank would seriously impair Santa Juanita's continued
existence. In May 1996, the special limited partner of Santa Juanita instituted
proceedings to formally remove the general partner of Santa Juanita and is in
the process of replacing such general partner. The special limited partner is
presently having discussions with the bank for purposes of settling this
judgement. It is managements opinion that no accrual for potential losses is
currently warranted in the financial statements. The financial statements for
the 1995 Fiscal Year for this subsidiary partnership were not audited. The
maximum loss which the Partnership would be liable for is its net investment in
Santa Juanita amounting to approximately $568,000 at March 31, 1996. The
Partnerships investment in Santa Juanita at March 31, 1996 and 1995 was
approximately $568,000 and $659,000, and the minority interest balance was zero
at each date. Santa Juanita's net loss amounted to approximately $90,000,
$177,000 and $505,000 for the 1995, 1994 and 1993 Fiscal Years, respectively.

Rolling Green Limited Partnership

Rolling Green Limited Partnership ("Rolling Green") operates and is
regulated by the United States Department of Housing and Urban Development (HUD)
under Section 221(d)(3) of the National Housing Act. Rents received by the
Project are subsidized by Section 8 Housing Assistance Payments. Rental income
from such Assistance Payments totaled $1,143,607 and $968,241 in 1995 and 1994,
respectively. In September, 1996, two of the three Section 8 contracts, now in
operation, will expire. Management has been assured in verbal communications
that such contracts will be renewed. However, uncertainties regarding the future
of HUD Programs exist. It is not practical to estimate the impact upon the
Rolling Green's operations if the rents were to be respectively changed to
market value.

Campeche Isle Apartments, L.P.

Campeche Isle Apartments, L.P. ("Campeche") filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code ("Chapter 11") during
March 1996. Although current on its debt service up to and including the January
1, 1996 payment, the property was unable to fully fund all operating expenses
plus debt

-36-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 11 - Commitments and Contingencies (Continued)

service following a 1% increase in the interest rate on the property's mortgage
in June of 1994. Debt service had been kept current through advances by the
subsidiary partnership general partner, RCC Pineview, Inc., and the Partnership
totaling $286,050 as of December 31, 1995. In addition, Campeche has not paid
its managing agent in excess of $100,000 of management fees.

In an effort to reduce the property's debt service burden, negotiations
with the holder of the property's first mortgage, Sun America Life Insurance
Company (the "Mortgagee") had been ongoing during January and February of 1996.
The Mortgagee rejected Campeche's proposals and commenced a foreclosure action
during the latter part of February. In order to preserve Campeche's ownership of
the property, the Chapter 11 filing was made during March 1996 and the Mortgagee
was stayed from proceeding with its foreclosure. Campeche has presented a Plan
of Reorganization to the Bankruptcy Court and the property is being operated
under a Cash Collateral order issued by the Court. The Partnerships investment
in Campeche at March 31, 1996 and 1995 was approximately $788,000 and
$1,122,000, respectively, and the minority interest balance was zero at each
date. Campeche's net loss amounted to approximately $334,000, $251,000 and
$312,000 for the 1995, 1994 and 1993 Fiscal Years, respectively.

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, 1996, uninsured cash and cash
equivalents approximated $2,950,000.

d) Line of Credit

Included in accounts payable and other liabilities at March 31, 1995,
is approximately $792,000 borrowed by one subsidiary partnership, Rolling Green,
against a $1,000,000 line of credit. The subsidiary partnership is required to
pay forty-eight monthly installments of $10,602 including interest at an annual
rate of 10.25% with a balloon payment of approximately $662,000 due on July 15,
1998.

e) 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 33% of the properties are located in any single state. There are
also substantial risks associated with owning properties receiving government
assistance, for example the possibility that Congress may not appropriate funds
to enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owners 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.

f) Tax Credits

The Partnership and BACs holders began recognizing Housing Tax Credits
with respect to a Property when the Credit Period for such Property began.
Because of the time required for the acquisition,

-37-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE 11 - Commitments and Contingencies (Continued)

completion and rent-up of Properties, the amount of Tax Credits per BAC
gradually increased over the first three years of the Partnership. Housing Tax
Credits not recognized in the first three years will be recognized in the 11th
through 13th years. For the 1995, 1994, and 1993 tax years, Housing Tax Credits
of $17,174,288, $17,203,130 and $17,175,785, were generated.

A portion of the low-income housing tax credits are subject to
recapture in future years if (i) the Partnership ceases to meet qualification
requirements, (ii) there is a decrease in the qualified basis of the projects,
or (iii) there is a reduction in the taxpayer's interest in the project at any
time during the 15-year Compliance Period that began with the first tax year of
the credit period.

-38-

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

None

PART III

Item 10. Directors and Executive Officers of the Registrant.

The Partnership has no directors or executive officers. The
Partnership's affairs are managed and controlled by the General Partners.
Certain information concerning the directors and executive officers of the
General Partners is set forth below.

Related Credit Properties II Inc., general partner of Related
Credit Properties II L.P. (the "Related General Partner").

Name Position
---- --------

Stephen M. Ross Director

J. Michael Fried President and Director

Alan P. Hirmes Vice President

Stuart J. Boesky Vice President

Lawrence J. Lipton Assistant Vice President and Treasurer

Robert Bordonaro Assistant Vice President

Lynn A. McMahon Secretary

STEPHEN M. ROSS, 56, is a Director of the general partner of the
Related General Partner. Mr. Ross is also President, Director and shareholder of
The Related Realty Group, Inc., the General Partner of The Related Companies,
L.P. He graduated from the University of Michigan School of Business
Administration with a Bachelor of Science degree and from Wayne State University
School of Law with a Juris Doctor degree. Mr. Ross 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.

J. MICHAEL FRIED, 52, is President and a Director of the general
partner of the Related General Partner. Mr. Fried is the sole shareholder of
one of the general partners of Related Capital Company ("Capital"), a real
estate finance and acquisition affiliate of the Related General Partner. In
that capacity, he is the chief executive officer of Capital's syndication,
finance, acquisition and investor reporting activities. Mr. Fried practiced
corporate law in New York City with the law firm of Proskauer Rose Goetz &
Mendelsohn from 1974 until he joined Capital in 1979. Mr. Fried graduated from
Brooklyn Law School with a Juris Doctor degree, magna cum laude; from Long
Island University Graduate School with a Master of Science degree in
Psychology; and from Michigan State University with a Bachelor of Arts degree
in History.

-39-

ALAN P. HIRMES, 41, is a Vice President of the general partner of the
Related General Partner. Mr. Hirmes has been a Certified Public Accountant in
New York since 1978. Prior to joining Capital in October 1983, Mr. Hirmes was
employed by Weiner & Co., certified public accountants. Mr. Hirmes is also a
Vice President of Capital. Mr. Hirmes graduated from Hofstra University with a
Bachelor of Arts degree.

STUART J. BOESKY, 40, is a Vice President of the general partner of the
Related General Partner. Mr. Boesky 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, 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.

LAWRENCE J. LIPTON, 40, is an Assistant Vice President and Treasurer of
the general partner of the Related General Partner. Mr. Lipton has been a
Certified Public Accountant in New York since 1989. Prior to joining Related,
Mr. Lipton was employed by Deloitte & Touche from 1987-1991. Mr. Lipton
graduated from Rutgers College with a Bachelor of Arts degree and from Baruch
College with a Masters of Business Administration degree.

ROBERT BORDONARO, 42, is Assistant Vice President of the general
partner of the Related General Partner. Mr. Bordonaro is also a controller of
The Related Companies, L.P. Mr. Bordonaro has been a Certified Public Accountant
in New York since 1977. Prior to joining Related, Mr. Bordonaro was employed by
the accounting firms of Weiner & Co. from 1982-1985 and Arthur Young from
1975-1981. Mr. Bordonaro graduated from New York University with a Bachelor of
Science degree in 1974 and with a Masters of Business Administration degree in
1975.

LYNN A. McMAHON, 40, is Secretary of the general partner of the Related
General Partner. Since 1983, she has served as Assistant to the President of
Capital. From 1978 to 1983 she was employed at Sony Corporation of America in
the Government Relations Department.

-40-

Liberty GP II Inc.

Name Position
---- --------

Paul L. Abbot Chairman of the Board, President,
Chief Executive Officer and Chief
Financial Officer

Donald E. Petrow Vice President

PAUL L. ABBOTT, 50, is President of the Liberty General Partner and the
Managing Director of Lehman Brothers. Mr. Abbott joined Lehman in August 1988,
and is responsible for investment management of residential, commercial and
retail real estate. Prior to joining Lehman, Mr. Abbott was a real estate
consultant and a senior officer of a privately held company specializing in the
syndication of private real estate limited partnerships. From 1974 to 1983, Mr.
Abbott was an officer of two life insurance companies and a director of an
insurance agency subsidiary. Mr. Abbott received his formal education in the
undergraduate and graduate schools of Washington University in St. Louis.

DONALD E. PETROW, 39, is a Vice President of the Liberty General
Partner and First Vice President of Lehman Brothers. From March 1989, he has
been responsible for the investment management and restructuring of mortgage and
equity investments secured by multi-family apartments and government assisted
housing. From November 1981 to February 1989, Mr. Petrow, as a Vice President of
Lehman, was involved in investment banking activities relating to commercial
real estate direct investments. Prior to joining Lehman, Mr. Petrow was employed
in accounting and equipment leasing firms. Mr. Petrow holds a B.S. degree in
accounting from Saint Peters College and an M.B.A. in finance from Pace
University.

-41-

Item 11. Executive Compensation.

The Partnership has no officers or directors. The Partnership does not
pay or accrue any fees, salaries or other forms of compensation to directors or
officers of the General Partners for their services. Certain directors and
executive officers of the General Partners receive compensation from the General
Partner 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.
Such arrangements include, but are not limited to, the payment of an accountable
operating expense reimbursement, an annual partnership management fee not to
exceed 0.5% of invested assets and subordinated disposition fees. 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 also 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 is incorporated by reference thereto.

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

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

Name and Address of Amount and Nature of Percentage
Title of Class Beneficial Ownership Beneficial Ownership of Class
- - -------------- -------------------- -------------------- ----------

General Partnership Related Credit Properties $500 capital contribution 49%
Interest in the Partnership II L.P. - directly owned
625 Madison Avenue
New York, NY 10022

Liberty GP II, Inc. $500 capital contribution 49%
Lehman Plaza - directly owned
3 World Financial Center
New York, NY 10235

Liberty Associates II L.P. $1,000 capital contribution 2%
625 Madison Avenue - directly owned
New York, NY 10022

Liberty Associates II L.P. holds a 1% limited partnership interest in
each Local Partnership.

No person is known by the Partnership to be the beneficial owner of
more than 5% percent of the Limited Partnership Interests and/or the BACs; and
neither General Partner nor any director or executive officer of either General
Partner owns any Limited Partnership Interests or BACs.

Item 13. Certain Relationships and Related Transactions.

The Partnership has and will continue to have certain relationships
with the General Partners and their affiliates, as discussed in Item 11 and also
Note 8 to the Financial Statements in Item 8 above, 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 General
Partners.

-42-

PART IV

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

Sequential
Page
----------

(a) 1. Consolidated Financial Statements

Independent Auditors' Report 18

Consolidated Balance Sheets at March 31, 1996 and 1995 80

Consolidated Statements of Operations for the Years Ended
March 31, 1996, 1995 and 1994 81

Consolidated Statements of Changes in Partners' Capital for the
Years Ended March 31, 1996, 1995 and 1994 82

Consolidated Statements of Cash Flows for the Years Ended
March 31, 1996, 1995 and 1994 83

Notes to Consolidated Financial Statements 86

(a) 2. Financial Statement Schedules

Independent Auditors' Report 107

Schedule I - Condensed Financial Information of Registrant 108

Schedule III - Real Estate and Accumulated Depreciation and
Mortgage Loans on Real Estate 111

All other schedules have been omitted because they are not
required or because the required information is contained in the
financial statements and notes thereto.

(a) 3. Exhibits

(21) Subsidiaries of the Registrant 116

(27) Financial date schedule (filed herewith) 117

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter.

-43-

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 II L.P.
(Registrant)

By: RELATED CREDIT PROPERTIES II L.P.
a General Partner

By: RELATED CREDIT PROPERTIES II INC.
a General Partner therein

Date: June 28, 1996 By: /s/ J. Michael Fried
J. Michael Fried
President and Director
(Principal Executive Officer)

and

By: LIBERTY G.P. II INC.
a General Partner

Date: June 28, 1996 By: /s/ Paul L. Abbott
Paul L. Abbott
Chairman of the Board,
President, Chief Executive
Officer and Director

-47-

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

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

President Chief Executive Officer Principal
Executive Officer) and Director of Related Credit
Properties Inc., General Partner of Related Credit
/s/ J. Michael Fried Properties II, L.P. (a General Partner
J. Michael Fried of Registrant) June 28, 1996

/s/ Lawrence J. Lipton Treasurer (Principal Financial and Accounting
Lawrence J. Lipton Officer) of Related Credit Properties II Inc. June 28, 1996

Director of Related Credit Properties II Inc.,
General Partner of Related Credit
/s/ Stephen M. Ross Properties II, L.P. (a General Partner June 28, 1996
Stephen M. Ross of Registrant)

Chairman of the Board, President, Chief
/s/ Paul L. Abbott Executive Officer (Principal Executive Officer),
Paul L. Abbott and Director of Liberty GP II Inc. June 28, 1996

-48-

[TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG, LLP-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

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

In connection with our audits of the consolidated financial statements of
Liberty Tax Credit Plus II L.P. and Subsidiaries included in the Form 10-K as
presented in our opinion dated June 4, 1996 on pages 18 and 19, and based
on the reports of other auditors, we have also audited supporting Schedules I
and III for the 1995, 1994 and 1993 Fiscal Years. 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 11(a), the consolidated financial statements include the
financial statements of three limited partnerships with significant
contingencies and uncertainties. The financial statements of two of these
subsidiary partnerships were prepared assuming that each will continue as a
going concern. The financial statements for the 1995 Fiscal Year for one of
these subsidiary partnerships were not audited. The three subsidiary
partnerships' net losses aggregated $378,960 (Fiscal 1995), $402,565 (Fiscal
1994) and $671,329 (Fiscal 1993) and their assets aggregated $11,460,954 and
$11,918,459 at March 31, 1996 and 1995, respectively. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

/s/ TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP

TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP

New York, New York
June 4, 1996

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

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

CONDENSED BALANCE SHEETS

ASSETS

March 31
-------------------------
1996 1995
----------- -----------
Cash and cash equivalents $ 841,173 $ 1,197,736
Investment in subsidiary partnerships 66,806,594 71,808,330
Due from subsidiary partnership 148,672 40,000
Other assets 447,447 447,447
----------- -----------
Total assets $68,243,886 $73,493,513
=========== ===========

LIABILITIES AND PARTNERS' EQUITY

Due to general partner and affiliates 896,925 588,122
Other liabilities 139,890 136,513
----------- -----------

Total liabilities 1,036,815 724,635

Partners' equity 67,207,071 72,768,878
----------- -----------
Total liabilities and partners' equity $68,243,886 $73,493,513
=========== ===========

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

-1-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF OPERATION

Year Ended March 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------

Revenues $ 31,847 $ 43,843 $ 400,828
----------- ----------- -----------

Expenses

Administrative and management 213,523 223,661 214,633
Administrative and management-related parties 388,987 381,719 440,539
----------- ----------- -----------

Total Expenses 602,510 605,380 655,172
----------- ----------- -----------

Loss from operations (570,663) (561,537) (254,344)
----------- ----------- -----------

Equity in loss of subsidiary partnerships (4,991,144) (5,592,469) (5,990,301)
----------- ----------- -----------

Net loss $(5,561,807) $(6,154,006) $(6,244,645)
=========== =========== ===========

-2-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Year Ended March 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------

Cash flows from operating activities:

Net loss $(5,561,807) $(6,154,006) $(6,244,645)
----------- ----------- -----------

Adjustments to reconcile net loss to net cash
(used in) operating activities:

Equity in loss of subsidiary partnerships 4,991,144 5,592,469 5,990,301
Decrease in other assets 0 0 5,971

Increase (decrease) in liabilities

Due to general partners and affiliates 308,803 305,941 274,085
Other liabilities 3,377 (1,956) 18,506
----------- ----------- -----------

Total adjustment 5,303,324 5,896,454 6,288,863
----------- ----------- -----------

Net cash (used in) provided by operating activities (258,483) (257,552) 44,218
----------- ----------- -----------

Net cash used in financing activities:

Advances to subsidiary partnerships (108,672) (40,000) 0
----------- ----------- -----------

Cash flows from investing activities:

Distributions from subsidiaries 10,592 8,250 0
Payments to subsidiaries 0 (371,184) 0
----------- ----------- -----------

Net cash provided by (used in) investing activities 10,592 (362,934) 0
----------- ----------- -----------

Net (decrease) increase in cash and cash equivalents (356,563) (660,486) 44,218

Cash and cash equivalents, beginning of year 1,197,736 1,858,222 1,814,004
----------- ----------- -----------

Cash and cash equivalents, end of year $ 841,173 $ 1,197,736 $ 1,858,222
=========== =========== ===========

-3-

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 1996

Costs
Capitalized Gross Amount
Initial Cost to Partnership Subsequent to at which Carried At Close of Period
Subsidiary ---------------------------- Acquisition: --------------------------------------------
Partnership's Buildings and Improvements Buildings and
Residential Property Encumbrances Land Improvements (Disposals) Land Improvements Total
- - -------------------- ------------ ----------- ------------- ------------- ----------- ------------- ------------

Apartment Complexes

Polynesian Apartments $ 2,830,185 $ 386,180 $ 4,195,068 $ (10,325) $ 388,192 $ 4,182,731 $ 4,570,923
Associates, Ltd.
Homestead, FL
Seagrape Village 4,729,009 1,270,000 6,123,373 709,189 1,275,292 6,827,270 8,102,562
Associates, LTD.
Homestead, FL
Metropolitan Towers 5,087,011 322,000 2,434,303 5,549,042 327,292 7,978,053 8,305,345
Associates, Ltd.
Rio Piedras, PR
Westminster Place II- 4,611,870 928,979 5,382,740 159,495 916,669 5,554,545 6,471,214
Olive Site, L.P.
St. Louis, MO
Property Development 5,750,000 624,858 7,228,721 5,164,684 606,704 12,411,559 13,018,263
Associates, L.P.
Kansas City, MO
Whittier Plaza 1,761,929 26,920 2,015,030 94,074 32,261 2,103,763 2,136,024
Associates, L.P.
St. Louis, MO
United-Glen Arden I 12,941,754 1,770,000 6,577,720 12,388,540 1,775,293 18,960,967 20,736,260
L.P.
Glen Arden, MO
United-Glen Arden II 9,850,277 1,190,000 4,837,436 8,807,465 1,195,293 13,639,608 14,834,901
L.P.
Glen Arden, MO

(RESTUB-TABLE CONTINUED FROM ABOVE)

Life on which
Year of Depreciation in
Subsidiary Con- Latest Income
Partnership's Accumulated struction/ Date Statement is
Residential Property Depreciation Renovation Acquired Computed(a)(b)
- - -------------------- ------------ ---------- -------- --------------

Apartment Complexes

Polynesian Apartments $ 424,047 1988 July 1988 27.5 years
Associates, Ltd.
Homestead, FL
Seagrape Village 707,920 1988 July 1988 27.5 years
Associates, LTD.
Homestead, FL
Metropolitan Towers 1,188,546 1987 Dec. 1988 20-40 years
Associates, Ltd.
Rio Piedras, PR
Westminster Place II- 1,059,294 1988 Oct. 1988 20-40 years
Olive Site, L.P.
St. Louis, MO
Property Development 2,508,850 1988 Dec. 1988 15-40 years
Associates, L.P.
Kansas City, MO
Whittier Plaza 413,075 1987 Dec. 1988 20-40 years
Associates, L.P.
St. Louis, MO
United-Glen Arden I 5,180,803 1988 Dec. 1988 25 years
L.P.
Glen Arden, MO
United-Glen Arden II 3,811,001 1988 Dec. 1988 25 years
L.P.
Glen Arden, MO

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 1996

Costs
Capitalized Gross Amount
Initial Cost to Partnership Subsequent to at which Carried At Close of Period
Subsidiary ---------------------------- Acquisition: --------------------------------------------
Partnership's Buildings and Improvements Buildings and
Residential Property Encumbrances Land Improvements (Disposals) Land Improvements Total
- - -------------------- ------------ ----------- ------------- ------------- ----------- ------------- ------------

Apartment Complexes

Rolling Green L.P. 1,984,427 466,683 4,533,670 3,168,874 471,975 7,697,252 8,169,227
Chicago, IL
Santa Juanita II L.P. 1,718,238 115,000 2,085,485 1,748,804 120,293 3,828,996 3,949,289
Bayamon, PR
Spring Creek 0 3,343,549 16,216,700 17,117,231 2,595,782 34,081,698 36,677,480
Associates, L.P.
Brooklyn, NY
East Two Thirty-Five 0 950,000 2,542,604 (559,822) 430,627 2,502,155 2,932,782
Associates L.P.
(14th Street)
New York, NY
Concourse Artists 1,610,469 5,750 2,246,560 52,924 11,042 2,294,192 2,305,234
Housing Associates,
L.P.
Bronx, NY
2051 Grand Concourse 4,159,556 31,500 5,221,117 52,924 36,792 5,268,749 5,305,541
Housing Associates
Bronx, NY
Robin Housing 5,514,245 26,750 8,186,055 52,925 32,042 8,233,688 8,265,730
Associates
Bronx, NY

(RESTUB-TABLE CONTINUED FROM ABOVE)

Life on which
Year of Depreciation in
Subsidiary Con- Latest Income
Partnership's Accumulated struction/ Date Statement is
Residential Property Depreciation Renovation Acquired Computed(a)(b)
- - -------------------- ------------ ---------- -------- --------------

Apartment Complexes

Rolling Green L.P. 1,584,375 1988 Dec. 1988 7-39 years
Chicago, IL
Santa Juanita II L.P. 834,669 1988 Dec. 1988 27.5 years
Bayamon, PR
Spring Creek 7,341,122 1987 Dec. 1988 15-27.5 years
Associates, L.P.
Brooklyn, NY
East Two Thirty-Five 596,370 1988 Dec. 1988 27.5-31.5 years
Associates L.P.
(14th Street)
New York, NY
Concourse Artists 589,805 1988 Nov. 1988 27.5 years
Housing Associates,
L.P.
Bronx, NY
2051 Grand Concourse 1,392,563 1988 Nov. 1988 27.5 years
Housing Associates
Bronx, NY
Robin Housing 2,144,137 1988 Nov. 1988 27.5 years
Associates
Bronx, NY

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 1996

Costs
Capitalized Gross Amount
Initial Cost to Partnership Subsequent to at which Carried At Close of Period
Subsidiary ---------------------------- Acquisition: --------------------------------------------
Partnership's Buildings and Improvements Buildings and
Residential Property Encumbrances Land Improvements (Disposals) Land Improvements Total
- - -------------------- ------------ ----------- ------------- ------------- ----------- ------------- ------------

Apartment Complexes

Willoughby-Wyckoff 4,235,673 17,000 6,126,088 52,925 22,292 6,173,721 6,196,013
Housing Associates
Bronx, NY
Upper Fifth Avenue 19,245,100 159,861 21,096,862 979,633 166,763 22,069,593 22,236,356
Residential
Associates, L.P.
Bronx, NY
West 107th Street 0 305,813 3,850,928 106,794 312,715 3,950,820 4,263,535
Associates, L.P.
Bronx, NY
General Atlantic 0 246,495 2,689,395 167,710 253,397 2,850,203 3,103,600
Second Avenue
Associates, L.P.
(96th Street)
Bronx, NY
Church Lane 1,922,422 20,000 4,009,983 6,521 26,902 4,009,602 4,036,504
Associates
Germantown, PA
Campeche Isle 4,287,516 450,000 6,792,005 164,731 456,902 6,949,834 7,406,736
Apartments L.P.
Galveston, TX
Goodfellow Place L.P. 4,034,695 160,000 4,581,787 149,820 166,902 4,724,705 4,891,607
St. Louis, MO

(RESTUB-TABLE CONTINUED FROM ABOVE)

Life on which
Year of Depreciation in
Subsidiary Con- Latest Income
Partnership's Accumulated struction/ Date Statement is
Residential Property Depreciation Renovation Acquired Computed(a)(b)
- - -------------------- ------------ ---------- -------- --------------

Apartment Complexes

Willoughby-Wyckoff 1,600,925 1988 Nov. 1988 27.5 years
Housing Associates
Bronx, NY
Upper Fifth Avenue 3,662,231 1987 Jan. 1989 40 years
Residential
Associates, L.P.
Bronx, NY
West 107th Street 911,963 1987 Jan. 1989 27.5-31.5 years
Associates, L.P.
Bronx, NY
General Atlantic 668,358 1988 Jan. 1989 27.5-31.5 years
Second Avenue
Associates, L.P.
(96th Street)
Bronx, NY
Church Lane 1,076,715 1988 Feb. 1989 27.5 years
Associates
Germantown, PA
Campeche Isle 1,861,915 1988 May 1989 27.5 years
Apartments L.P.
Galveston, TX
Goodfellow Place L.P. 843,582 1988 May 1989 40 years
St. Louis, MO

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 1996

Costs
Capitalized Gross Amount
Initial Cost to Partnership Subsequent to at which Carried At Close of Period
Subsidiary ---------------------------- Acquisition: --------------------------------------------
Partnership's Buildings and Improvements Buildings and
Residential Property Encumbrances Land Improvements (Disposals) Land Improvements Total
- - -------------------- ------------ ----------- ------------- ------------- ----------- ------------- ------------

Apartment Complexes

Penn Alto Associates 5,209,939 60,000 2,731,082 8,986,096 97,907 11,679,271 11,777,178
L.P.
Altoona, PA
Gramco Development 4,799,278 1,322,887 7,609,024 (165,419) 1,329,788 7,436,704 8,766,492
Limited Dividend
Partnership, L.P.
(Bayamon)
Bayamon, PR
Alexis Park 5,203,743 640,000 7,297,925 272,413 646,902 7,563,436 8,210,338
Apartments
Bossier City, LA
Williamsburg 2,018,163 136,974 831,584 3,467,140 673,429 3,762,269 4,435,698
Residential
Witchita, KS
Victory Apartments 6,389,808 161,500 4,929,133 5,028,124 168,402 9,950,355 10,118,757
Chicago, IL
------------ ----------- ------------ ----------- ----------- ------------ ------------
$119,895,307 $15,138,699 $152,372,378 $73,712,512 $14,537,850 $226,685,739 $241,223,589
============ =========== ============ =========== =========== ============ ============

(RESTUB-TABLE CONTINUED FROM ABOVE)

Life on which
Year of Depreciation in
Subsidiary Con- Latest Income
Partnership's Accumulated struction/ Date Statement is
Residential Property Depreciation Renovation Acquired Computed(a)(b)
- - -------------------- ------------ ---------- -------- --------------

Apartment Complexes

Penn Alto Associates 2,356,806 1989 June 1989 40 years
L.P.
Altoona, PA
Gramco Development 2,141,645 1989 July 1989 25 years
Limited Dividend
Partnership, L.P.
(Bayamon)
Bayamon, PR
Alexis Park 1,801,897 1986 July 1989 27.5 years
Apartments
Bossier City, LA
Williamsburg 532,210 1989 Aug. 1989 40 years
Residential
Witchita, KS
Victory Apartments 1,508,934 1988 Sept. 1989 40 years
Chicago, IL
-----------
$48,743,758
===========

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

(c) Furniture and fixtures, included in building improvements, are
depreciated primarily by the straight line method over the estimated
useful lives ranging from 5 to 15 years.

LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 1996
(Continued)

Cost of Property and Equipment Accumulated Depreciation
------------------------------ ------------------------
Year Ended March 31
------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994
------------ ------------ ------------ ----------- ----------- -----------

Balance at beginning of period $239,775,640 $239,572,378 $230,918,665 $40,801,182 $32,890,961 $25,192,042
Additions during period:
Improvements 1,479,481 246,910 8,703,042
Depreciation expense 7,947,111 7,954,255 7,698,919
Reductions during period:
Dispositions 31,532 43,648 49,329 4,535 44,034 0
------------ ------------ ------------ ----------- ----------- -----------
Balance at end of period $241,223,589 $239,775,640 $239,572,378 $48,743,758 $40,801,182 $32,890,961
============ ============ ============ =========== =========== ===========

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

Subsidiaries of the Registrant (Exhibit 21)

Jurisdiction
of Formation
------------

Polynesian Apartments Associates, Ltd. (a Limited Partnership) FL
Seagrape Village Associates, Ltd. (a Limited Partnership) FL
Metropolitan Towers Associates, L.P. PR
Westminster Place II - Olive Site, L.P. MO
Property Development Associates, L.P. (Bridgeport) MO
Whittier Plaza Associates Limited Partnership MO
United-Glen Arden I Limited Partnership MD
United-Glen Arden II Limited Partnership MD
Rolling Green Limited Partnership IL
Santa Juanita II Limited Partnership NY
Spring Creek Associates, L.P. (a Delaware Limited Partnership) DE
East Two Thirty-Five Associates L.P. (a Delaware Limited Partnership) (14th Street) DE
Upper Fifth Avenue Residential Associates, L.P. DE
West 107th Street Associates, L.P. (a Delaware Limited Partnership) DE
General Atlantic Second Avenue Associates, L.P. (a Delaware Limited Partnership) (96th Street) NY
Church Lane Associates PA
Campeche Isle Apartments Limited Partnership TX
Robin Housing Associates (a Limited Partnership) NY
Concourse Artists Housing Associates (a Limited Partnership) NY
2051 Grand Concourse Housing Associates (a Limited Partnership) NY
Willoughby-Wyckoff Housing Associates (a Limited Partnership) NY
Goodfellow Place Limited Partnership MO
Penn Alto Associates Limited Partnership PA
Gramco Development Limited Dividend Partnership, L.P. (Bayamon) PR
Alexis Park Apartments, a Louisiana Partnership in Commendam LA
Williamsburg Residential, L.P. KS
Victory Apartments IL

-49-