FREEDOM TAX CREDIT PLUS LP - 10-K Annual Report

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

FORM 10-K
(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended March 31, 1997

OR

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

Commission File Number 0-24652

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

Delaware 13-3533987
(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 and 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

Index to exhibits may be found on page 107

Page 1 of 118

PART I

Item 1. Business.

General

Freedom Tax Credit Plus L.P. (the "Partnership") is a limited partnership
which was formed under the laws of the State of Delaware on August 28, 1989. The
General Partners of the Partnership are Related Freedom Associates L.P., a
Delaware limited partnership (the " Related General Partner"), and Freedom GP
Inc., a Delaware corporation (the "Lehman General Partner" and together with the
Related General Partner, the "General Partners"). The general partner of the
Related General Partner is Related Freedom Associates Inc., a Delaware
corporation.

On February 9, 1990, 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"), pursuant to a prospectus dated February 9, 1990, as
supplemented by supplements thereto dated December 7, 1990, May 10, 1991, July
10, 1991 and July 23, 1991 (as so supplemented, the "Prospectus").

The Partnership has received $72,896,000 of Gross Proceeds of the Offering
from 4,780 investors, and the Offering has been terminated. (See Item 8,
"Financial Statements and Supplementary Data", Note 1 of Notes to Consolidated
Financial Statements.)

The Partnership was formed to invest as a limited partner in other limited
partnerships ("Local Partnerships"), each of which owns one or more leveraged
low-income multi-family residential complexes ("Apartment Complexes" or
"Properties") that are eligible for the low-income housing tax credit ("Housing
Tax Credit") enacted in the Tax Reform Act of 1986, and some of which may also
be eligible for the historic rehabilitation tax credit ("Historic Tax Credit";
together with Housing Tax Credits, the "Tax Credits"). The Partnership's
investment in each Local Partnership represents 98% to 99% of the partnership
interests in the Local Partnership. As of March 31, 1997, the Partnership had
acquired interests in forty-two Local Partnerships. As of March 31, 1997,
approximately $58,000,000 of net proceeds have been invested in such properties,
representing all of the Partnership's net proceeds available for investment.
Subsequent to March 31, 1997 and as of the date of this filing, there have been
no additional investments, nor are any other investments expected. See Item 2,
Properties, below.

The investment objectives of the Partnership are described below.

1. Entitle qualified BACs holders to Housing Tax Credits over the Credit
Period (as defined below) with respect to each Apartment Complex.

2. Preserve and protect the Partnership's capital.

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

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

One of the Partnership's objectives is to entitle qualified BACs holders to
Housing Tax Credits over the period of the Partnership's entitlement to claim
Tax Credits (for each Property, generally ten years from the date of investment
or, if later, the date the Property is leased to qualified tenants; referred to
herein as the "Credit Period"). Each of the Local Partnerships in which the
Partnership has an interest has been allocated by the relevant

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state credit agency the authority to recognize Housing Tax Credits during the
Credit Period provided that the Local Partnership satisfies the rent
restriction, minimum set-aside and other requirements for recognition of the
Housing Tax Credits at all times during such period. Once a Local Partnership
has become eligible to recognize Housing Tax Credits, it may lose such
eligibility and suffer an event of "recapture" if its Property fails to remain
in compliance with the Housing Tax Credit requirements. None of the Local
Partnerships in which the Partnership has acquired an interest has suffered an
event of recapture.

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

Competition

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

Employees

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

Item 2. Properties.

The Partnership holds a 99%, 98.99% and 98% limited partnership interest in
nine, ten and twenty-three Local Partnerships, respectively. 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, including any
encumbrances affecting the properties, may be found in Schedule III.

Local Partnership Schedule

% of Units Occupied at May 1
------------------------------------------------------------
Name and Location (Number of Units) Date Acquired 1997 1996 1995 1994 1993
- - ----------------------------------- ------------- ---- ---- ---- ---- ----

Parkside Townhomes
York, PA (53) September 1990 91% 98% 100% 100% 100%

Twin Trees
Layton, UT (43) October 1990 100% 100% 100% 100% 100%

Bennion (Mulberry)
Taylorsville, UT (80) October 1990 99% 100% 100% 99% 98%

Hunters Chase
Madison, AL (91) October 1990 97% 97% 83% 92% 98%

Wilshire Park
Huntsville, AL (65) October 1990 92% 92% 89% 86% 97%

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Local Partnership Schedule (continued)

% of Units Occupied at May 1
------------------------------------------------------------
Name and Location (Number of Units) Date Acquired 1997 1996 1995 1994 1993
- - ----------------------------------- ------------- ---- ---- ---- ---- ----

Bethel Park
Bethel, OH (84) October 1990 95% 93% 96% 96% 99%

Zebulon Park
Owensville, OH (66) October 1990 88% 97% 92% 94% 92%

Tivoli Place
Murphreesboro, TN (61) October 1990 97% 100% 100% 100% 98%

Northwood (Hartwood)
Jacksonville, FL (110) October 1990 100% 100% 99% 97% 100%

Oxford Trace
Aiken, SC (29) October 1990 100% 100% 100% 93% 93%

Ivanhoe Apts
Salt Lake City, UT (19) January 1991 84% 100% 100% 100% 100%

Washington Brooklyn
Brooklyn, NY (24) January 1991 92% 96% 100% 100% 100%

Manhattan B (C.H. Development)
New York, NY (35) January 1991 100% 100% 97% 100% 100%

Davidson Court
Staten Island, NY (38) March 1991 97% 97% 92% 87% 100%

Magnolia Mews
Philadelphia, PA (63) March 1991 98% 100% 100% 100% 100%

Oaks Village
Whiteville, NC (40) March 1991 95% 100% 95% 100% 100%

Greenfield Village
Dunn, NC (40) March 1991 98% 100% 98% 95% 95%

Morris Avenue (CLM Equities)
Bronx, NY (58) April 1991 100% 100% 100% 100% 100%

Victoria Manor
Riverside, CA (112) April 1991 91% 97% 97% 98% 100%

Ogontz Hall
Philadelphia, PA (35) April 1991 90% 87% 97% 100% 98%

Eagle Ridge
Stoughton, WI (54) May 1991 72% 91% 94% 96% 96%

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Local Partnership Schedule (continued)

% of Units Occupied at May 1
------------------------------------------------------------
Name and Location (Number of Units) Date Acquired 1997 1996 1995 1994 1993
- - ----------------------------------- ------------- ---- ---- ---- ---- ----

Nelson Anderson
Bronx, NY (20) June 1991 99% 93% 98% 100% 100%

Abraham Lincoln Apts
Irondequoit, NY (69) September 1991 100% 97% 100% 97% 100%

Wilson Street Apts. (Middletown)
Middletown, PA (44) September 1991 96% 100% 96% 98% 100%

Lauderdale Lakes
Lauderdale Lakes, FL (172) October 1991 98% 100% 99% 100% 99%

Flipper Temple
Atlanta, GA (163) October 1991 100% 100% 100% 99% 100%

220 Cooper Street
Camden, NJ (29) December 1991 77% 97% 100% 97% 100%

Pecan Creek
Tulsa, OK (47) December 1991 100% 98% 98% 97% 100%

Vendome
Brooklyn, NY (24) December 1991 100% 96% 100% 100% 100%

Rainer Villas
New Augusta, MS (20) December 1991 100% 100% 100% 100% 96%

Pine Shadow Apts
Waveland, MS (48) December 1991 100% 100% 100% 100% 100%

Windsor Place
Wedowee, AL (24) December 1991 100% 100% 100% 100% 100%

Brookwood Apts
Foley, AL (38) December 1991 100% 100% 100% 100% 100%

Heflin Hills Apts
Heflin, AL (24) December 1991 100% 100% 100% 100% 100%

Shadowood Apts
Stevenson, AL (24) December 1991 92% 92% 100% 88% 83%

Brittany Apts
DeKalb, MS (25) December 1991 100% 100% 100% 100% 100%

Hidden Valley Apts
Brewton, AL (40) December 1991 95% 100% 100% 100% 100%

Westbrook Square
Carthage, MS (32) December 1991 88% 100% 97% 81% 100%

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Local Partnership Schedule (continued)

% of Units Occupied at May 1
------------------------------------------------------------
Name and Location (Number of Units) Date Acquired 1997 1996 1995 1994 1993
- - ----------------------------------- ------------- ---- ---- ---- ---- ----

Royal Pines Apts. (Warsaw Elderly)
Warsaw, KY (36) December 1991 100% 100% 100% 100% 100%

West Hill Square
Gordo, AL (24) December 1991 100% 100% 96% 100% 96%

Elmwood Manor
Picayune, MS (24) December 1991 100% 100% 100% 100% 100%

Harmony Gate Apts
Los Angeles, CA (70) March 1992 94% 96% 94% 98% 100%

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

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 the U.S. Department of Housing and
Urban Development ("HUD") and reflect increases, if any, 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.

In connection with investments in development-stage Apartment Complexes,
the General Partners generally require that the general partners of the Local
Partnerships ("Local General Partners") provide completion guarantees and/or
undertake to repurchase the Partnership's interest in the Local Partnership if
construction or rehabilitation is not completed substantially on time or on
budget ("Development Deficit Guarantees"). Since the properties are no longer
under construction and are in the operating stage, the Development Deficit
Guarantees have expired and the operating deficit guarantees have come into
effect. The Development Deficit Guarantees generally also require the Local
General Partner to provide any funds necessary to cover net operating deficits
of the Local Partnership until such time as the Apartment Complex has achieved
break-even operations. The General Partners generally require that the Local
General Partners undertake an obligation to fund operating deficits of the Local
Partnership (up to a stated maximum amount) during a limited period of time
(typically three to five years) following the achievement of break-even
operations ("Operating Deficit Guarantees"). Under the terms of the Operating
Deficit Guarantees, amounts funded will be treated as operating loans which will
not bear interest and which will be repaid only out of 50% of available cash
flow or out of available net sale or refinancing proceeds. In cases where the
General Partners deem it appropriate, the obligations of a Local General Partner
under the Development Deficit and Operating Deficit Guarantees were secured by
letters of credit and/or cash escrow deposits.

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Housing Tax Credits with respect to a given Apartment Complex are available
for a ten-year period that commences when the property is leased to qualified
tenants. However, the annual Tax Credits available in the year in which the
Apartment Complex is leased to qualified tenants must be prorated based upon the
months remaining in the year. The amount of the annual Housing 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. Tax Credits allocated in
any prior period are not available to the Partnership.

Item 3. Legal Proceedings.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

PART II

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

As of March 31, 1997, the Partnership had issued and has outstanding 72,896
Limited Partnership Interests, each representing a $1,000 capital contribution
to the Partnership, or an aggregate capital contribution of $72,896,000. All of
the issued and outstanding Limited Partnership Interests have been issued to
Freedom Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued
72,896 BACs to the purchasers thereof for an aggregate purchase price of
$72,896,000. Each BAC represents all of the economic and virtually all of the
ownership rights attributable to a Limited Partnership Interest held by the
Assignor Limited Partner. BACs may be converted into Limited Partnership
Interests at no cost to the holder (other than the payment of transfer costs not
to exceed $100), but Limited Partnership Interests so acquired are not
thereafter convertible into BACs. As of May 1, 1997, the Partnership has 4,736
registered holders of an aggregate of 72,896 BACs.

Neither the BACs nor the Limited Partnership Interests are traded on any
established trading market. The Partnership does not intend to include the BACs
for quotation on NASDAQ or for listing on any national or regional stock
exchange or any other established securities market. The Revenue Act of 1987
contained provisions which have an adverse impact on investors in "publicly
traded partnerships." Accordingly, the General Partners have imposed
restrictions limiting the transferability of the BACs and the Limited
Partnership Interests in secondary market transactions. These restrictions
should prevent a public trading market from developing that would 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.

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

There are no material restrictions in the Partnership Agreement on the
ability of the Partnership to make distributions. The Partnership has made no
distributions to the BACs holders as of March 31, 1997. The Partnership does not
anticipate providing cash distributions to its BACs holders other than from net
refinancing or sales proceeds.

There has recently been an increasing number of requests for the list of
BACs holders of limited partnerships such as the Partnership. Often these
requests are made by a person who, only a short time before making the request,
acquired merely a small number of BACs in the partnership and seeks the list for
an improper purpose, a purpose that is not in the best interest of the
partnership or is harmful to the partnership. In order to best serve and protect
the interests of the Partnership and all of its investors, the General Partners
of the Partnership have

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adopted a policy with respect to requests for the Partnership's list of BACs
holders. This policy is intended to protect investors from unsolicited and
coercive offers to acquire BACs holders' interests and does not limit any other
rights the General Partners may have under the Partnership Agreement or
applicable law.

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Item 6. Selected Financial Data.

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

For the Years Ended March 31,
-----------------------------------------------------------------------------------------
OPERATIONS 1997 1996 1995 1994 1993
- - ---------- ------------ ------------ ------------ ------------ ------------

Revenues $ 13,270,634 $ 12,999,861 $ 12,714,134 $ 12,743,936 $ 10,324,655

Expenses 18,666,634 18,120,329 17,520,409 17,309,022 16,114,022
------------ ------------ ------------ ------------ ------------
Loss before minority
interest (5,396,000) (5,120,468) (4,806,275) (4,565,086) (5,789,367)

Minority interest 59,470 58,131 50,461 56,776 15,292
------------ ------------ ------------ ------------ ------------

Loss before
extraordinary item (5,336,530) (5,062,337) (4,755,814) (4,508,310) (5,774,075)

Extraordinary item -
forgiveness of
indebtedness 87,262 0 0 0 0
------------ ------------ ------------ ------------ ------------

Net loss $ (5,249,268) $ (5,062,337) $ (4,755,814) $ (4,508,310) $ (5,774,075)
============ ============ ============ ============ ============
Per BAC:

Loss before
extraordinary item $ (72.48) $ (68.75) $ (64.59) $ (61.23) $ (78.01)
Extraordinary item 1.19 0.00 0.00 0.00 0.00
------------ ------------ ------------ ------------ ------------
Net loss $ (71.29) $ (68.75) $ (64.59) $ (61.23) $ (78.01)
============ ============ ============ ============ ============

March 31,
----------------------------------------------------------------------------------------
FINANCIAL POSITION 1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------

Total assets $122,394,464 $127,623,516 $133,237,559 $138,872,814 $147,981,833
============ ============ ============ ============ ============
Mortgage notes payable 71,673,532 72,249,613 73,019,371 73,518,550 74,330,267
============ ============ ============ ============ ============

Construction notes payable 0 0 0 0 298,963
============ ============ ============ ============ ============
Total liabilities $ 79,120,739 $ 79,110,848 $ 79,311,502 $ 79,988,589 $ 84,723,765
============ ============ ============ ============ ============

Total partners' capital $ 35,327,274 $ 40,582,160 $ 45,631,256 $ 50,389,210 $ 54,897,520
============ ============ ============ ============ ============

During the year ended March 31, 1993, the Partnership was in the property
acquisition stage, with approximately $15,000,000 expended for construction in
progress and property and equipment. In addition, the Local Partnerships
borrowed approximately $45,000,000 during the year ended March 31, 1993. From
March 31, 1992 to March 31, 1993, the majority of the construction notes were
converted to mortgage notes. During the years ended March 31, 1993 through 1997,
total assets decreased primarily due to depreciation, partially offset by new
additions to property and equipment. Mortgage notes payable decreased primarily
due to principal repayments of mortgages.

-9-

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

Liquidity and Capital Resources

The Partnership's primary source of funds was the proceeds of its public
offering. During the year ended March 31, 1997, the primary sources of liquidity
included working capital reserves, interest earned on working capital reserves,
and distributions received from the Local Partnerships.

Pursuant to a public offering which began in February 1990 and terminated
during August 1991, the Partnership received $72,896,000 in gross proceeds from
the sale of Limited Partnership Interests. The net proceeds available for
investment, after establishment of a working capital reserve, payment of sales
commissions, acquisition fees, acquisition expenses and organization and
offering expenses, were approximately $58,681,000. The entire amount of the net
proceeds has been fully invested in 42 Local Partnerships.

A working capital reserve of approximately $2,551,000 (3.5% of gross equity
raised) was initially established. Approximately $649,000 remains in the reserve
as of March 31, 1997. The balance was previously used to pay operating expenses
of the Partnership, including Partnership management fees payable to the General
Partners.

During the fiscal year ended March 31, 1997, cash and cash equivalents of
the Partnership and its forty-two Local Partnerships decreased approximately
$319,000 primarily as a result of capital improvements ($434,000), repayments of
mortgage loans ($576,000) and a net decrease in due to local general partners
and affiliates ($352,000) which exceeded cash flow from operating activities
($1,027,000) an increase in the capitalization of consolidated subsidiaries
attributable to minority interest ($10,000), and a decrease in deferred costs
($7,000). Included in the adjustments to reconcile the net loss to cash flow
from operating activities is forgiveness of indebtedness income ($87,000) and
depreciation and amortization ($5,336,000).

During the years ended March 31, 1997 ("Fiscal Year 1997"), March 31, 1996
("Fiscal Year 1996") and March 31, 1995 ("Fiscal 1995") the amounts received
from the Local Partnerships were $116,296 , $116,626, and $157,786,
respectively. Cash distributions from Local Partnerships are not expected to
reach a level sufficient to permit cash distributions to BACs holders. These
distributions, as well as the working capital reserves referred to in the
paragraph above, will be used to meet the operating expenses of the Partnership.

The original amount of the Operating Deficit Guarantees aggregated
approximately $9,500,000 of which approximately $8,400,000 had expired as of
March 31, 1997. As of March 31, 1997, 1996 and 1995, approximately $494,000,
$494,000, and $384,000, respectively, had been funded by the local general
partners to meet such obligations. All remaining operating deficit guarantees
expire within the next two years. Management does not expect a material impact
on liquidity, based on prior years' fundings.

Partnership management fees owed to the General Partners amounting to
approximately $1,526,000 and $850,000 were accrued and unpaid as of March 31,
1997 and March 31, 1996, respectively.

HUD previously 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 that could affect the Local Partnerships are: a discontinuation of
project-based Section 8 subsidy payments, and an attendant reduction in debt on
properties that were supported by the Section 8 payments. The ACPA calls for a
transition during which the project-based Section 8 payments would be converted
to a tenant-based voucher system. Any FHA insured debt would then be reduced in
light of the reduced income stream.

Several industry sources have 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 owners such as the
limited partners in the Partnership. Legislative relief has been proposed to
exempt such debt reduction from cancellation of indebtedness income treatment.
At present, there are several bills pending

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in Congress to address this tax relief issue. Additionally, in the interim, HUD
has agreed to annual extensions of any expiring project-based Section 8
contracts, but there is no guarantee that such extensions will be available in
the future.

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

Except as described above, management is not aware of any trends or events,
commitments or uncertainties, which have not otherwise been disclosed, that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the properties around the United States so that
if one area of the country is experiencing downturns in the economy, the
remaining properties in the portfolio may not be affected. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy. The Partnership has fully invested the
proceeds of its offering in 42 local partnerships, all of which have their tax
credits in place. The tax credits are attached to the project for a period of
ten years and are transferable with the property during the remainder of the 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.

Results of Operations

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 Company 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.
Impairment of properties to be held and used is determined to exist when
estimated amounts recoverable through future operations on an undiscounted basis
are below the properties' carrying value. If a property is determined to be
impaired, it is written down to its estimated fair value. Effective April 1,
1996, the Partnership adopted SFAS No. 121, consistent with the required
adoption period.

The determination of fair value is based, not only upon future cash flows,
which rely upon estimates and assumptions including expense growth, occupancy
and rental rates, but also upon market capitalization and discount rates as well
as other market indicators. The General Partners believe that the estimates and
assumptions used are appropriate in evaluating the carrying amount of the
Partnership's properties. However, changes in market conditions and
circumstances may occur in the near term which would cause these estimates and
assumptions to change, which, in turn, could cause the amounts ultimately
realized upon the sale or other disposition of the properties to differ
materially from their estimated fair value. Such changes may also require
write-downs in future years. No write-downs for impairments have been recorded
as of March 31, 1997.

The following is a summary of the results of operations of the Partnership
for the fiscal years ended March 31, 1997, 1996 and 1995.

The Partnership's primary source of income continues to be rental income
with the corresponding expenses being divided among operations, depreciation,
and mortgage interest.

The Partnership has negotiated Operating Deficit Guaranty Agreements with
all Local Partnerships, by which the Local General Partners have agreed to funds
operating deficits for a specified period of time commencing at break-even.
Amounts received under Operating Deficit Guarantees from the Local General
Partners are treated as operating loans which will not bear interest and will be
repaid only out of 50% of available cash flow or out of available net sale or
refinancing proceeds.

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1997 vs. 1996

Rental income increased approximately 2% for the year ended March 31, 1997
as compared to 1996 primarily due to rental rate increases.

Total expenses, excluding repairs and maintenance and general and
administrative-related parties, increased less than 1% for the year ended March
31, 1997 as compared to 1996.

Repairs and maintenance increased approximately $199,000 for the year ended
March 31, 1997 as compared to 1996. This increase was primarily due to the
replacement of roofs damaged by a hurricane at one Local Partnership for which
insurance proceeds were received and are included in other income, the
repainting of the building at another Local Partnership, the repainting of the
trim and an increase in landscaping expenses at a third Local Partnership as
well as small increases at three other Local Partnerships.

General and administrative-related parties increased approximately $330,000
for the year ended March 31, 1997 as compared to 1996 primarily due to an
increase in partnership management fees payable to the General Partners.

An extraordinary item for forgiveness of indebtedness amounting to
approximately $87,000 relating to the cancellation of a loan due to withdrawing
general partners at Eagle Ridge was recorded in the 1997 Fiscal Year.

1996 vs. 1995

Rental income increased approximately 2% for the year ended March 31, 1996
as compared to 1995 primarily due to rental rate increases.

Total expenses, excluding repairs and maintenance and general and
administrative-related parties, increased less than 1% for the year ended March
31, 1996 as compared to 1995.

Repairs and maintenance increased approximately $328,000 for the year ended
March 31, 1996 as compared to 1995 primarily due to eight Local Partnerships
addressing the physical needs of their properties. Increases at four Local
Partnerships were the result of an increase in landscaping expenses and
carpeting replacement. There was an increase at a fifth Local Partnership due to
painting and repairs to cabinets and doors as a result of a HUD inspection.
There was an increase at a sixth Local Partnership due to the installation of an
alarm system and replacement of doors. Carpeting replacement led to increases at
two other Local Partnerships.

General and administrative-related parties expenses increased approximately
$199,000 for the year ended March 31, 1996 as compared to 1995 primarily due to
an increase in partnership management fees and property management fees.

Results of Operations of a Certain Local Partnership

Eagle Ridge Limited Partnership

Eagle Ridge Limited Partnership ("Eagle Ridge") has entered into a
Forbearance Agreement with Wisconsin Housing and Economic Development Authority
("WHEDA") as a result of Eagle Ridge's failure to pay all the required
installment payments under the mortgage note. Under the terms of the agreement,
WHEDA has agreed to temporarily forego the enforcement of its rights and
remedies against Eagle Ridge through December 31, 1998 and to continue to extend
Eagle Ridge financing provided that Eagle Ridge complies with certain
conditions. The conditions of the agreement consist of, but are not limited to:
(1) monthly payments of escrow and reserve deposits, (2) monthly payments of
principal and interest limited to the lower of 100% of net operating income
("NOI") or 5% of the regularly scheduled monthly note payment (base payment),
(3) 75% of the monthly NOI in excess of the base payment for principal and
interest and (4) the remaining 35% of NOI in excess of the base payment is to be
paid as an incentive management to the management agent. The Partnership's
investment in Eagle

-12-

Ridge at March 31, 1997 and 1996 was approximately $278,000 and $414,000,
respectively, and the minority interest balance was approximately $163,000 and
$92,000, respectively. The Partnership's share of Eagle Ridge's net loss
amounted to approximately $137,000, $174,000 and $155,000 for the 1997, 1996,
and 1995 Fiscal Years, respectively.

Other

The Partnership continues to meet its primary objective of generating
Housing Tax Credits. Housing Tax Credits are generated by a Property over a
ten-year period commencing as each Property is leased to qualified tenants.
During the years ended March 31, 1997, 1996 and 1995, the Housing Tax Credits
received by the Partnership totaled $11,208,966, $11,208,869, and $11,208,869,
respectively. There were no Historic Tax Credits received in Fiscal Years 1997,
1996, and 1995.

The Partnership's investments as limited partners in the Local Partnerships
are subject to the risks incident to the 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 operating expenses, any or all of which could threaten the
financial viability of one or more of the Local Partnerships.

There are also 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 Local Partnerships are impacted by inflation in several ways. Inflation
generally allows for increases in rental rates to reflect the impact of higher
operating and replacement costs. Inflation also affects the Local Partnerships
adversely by increasing operating costs as a result of higher costs of such
items as fuel, utilities and labor. However, continued inflation may result in
appreciated values of the Local Partnerships' Apartment Complexes over a period
of time as rental revenues and replacement costs continue to increase.

The Partnership does not anticipate that it will be in a position to make
cash distributions at any time prior to the disposition of the properties. If
distributions of operating cash flow are made, it is expected that they will be
limited. As of March 31, 1997, no such distributions have been made.

There has recently been an increasing number of requests for the list of
BAC holders of limited partnership such as the Partnership. Often these requests
are made by a person who, only a short time before making the request, acquired
merely a small number of BACs in the partnership and seeks the list for an
improper purpose, a purpose that is not in the best interest of the partnership
or is harmful to the partnership. In order to best serve and protect the
interests of the Partnership and all of its investors, the General Partners of
the Partnership have adopted a policy with respect to requests for the
Partnership's list of BAC holders. This policy is intended to protect investors
from unsolicited and coercive offers to acquire BAC holders' interests and does
not limit any other rights the General Partners may have under the Partnership
Agreement or applicable law.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). This
statement simplifies the current standards for computing earnings per share
(EPS) , as specified in Accounting Principles Board Opinion No. 15, "Earnings
per Share" (APB 15). Under SFAS 128, the presentation of primary EPS will be
replaced by the presentation of basic EPS. For companies with complex capital
structures, the presentation of fully diluted EPS will be replaced by diluted
EPS. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB 15.
The Partnership will adopt this standard in fiscal 1998, beginning with the
fiscal quarter ending December 31, 1997, and its adoption is not expected to
have any impact on reported earning per BAC for future or the retroactive
application to prior periods.

-13-

Item 8. Financial Statements and Supplementary Data.

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

(a) 1. Financial Statements

Independent Auditors' Report 15

Consolidated Balance Sheets as of March 31, 1997 and 1996 88

Consolidated Statements of Operations for the
years ended March 31, 1997, 1996 and 1995 89

Consolidated Statements of Changes in Partners'
Capital for the years ended March 31, 1997, 1996 and 1995 90

Consolidated Statements of Cash Flows for the years ended
March 31, 1997, 1996 and 1995 91

Notes to Consolidated Financial Statements 93

-14-

INDEPENDENT AUDITORS' REPORT

The Partners
Freedom Tax Credit Plus L.P.:

We have audited the accompanying consolidated balance sheets of Freedom Tax
Credit Plus L.P. and consolidated partnerships as of March 31, 1997 and 1996,
and the related consolidated statements of operations, changes in partners'
capital, and cash flows for each of the years in the three-year period ended
March 31, 1997. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedules. These
consolidated financial statements and the financial statement schedules are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements and the financial
statement schedules based on our audits. We did not audit the financial
statements of 27 of the consolidated partnerships, which statements reflect
combined assets constituting 48% and 49% and combined revenues constituting 49%
and 49% of the related consolidated totals for 1997 and 1996, respectively.
Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts included
for those partnerships, is based solely on the reports of the other auditors.

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 and the reports of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Freedom Tax Credit Plus L.P. and
consolidated partnerships as of March 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the years in the three-year
period ended March 31, 1997, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set forth
therein.

/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

New York, New York
June 18, 1997

INDEPENDENT AUDITORS REPORT

The Partners
Freedom Tax Credit Plus L.P.:

We have audited the accompanying consolidated balance sheets of Freedom
Tax Credit Plus L.P. and consolidated partnerships as of March 31, 1996 and
1995, and the related consolidated statements of operations, changes in
partners' capital and cash flows for each of the years in the three-year
period ended March 31, 1996. In connection with our audits of the consolidated
financial statements, we also have audited the financial statement schedules.
These consolidated financial statements and the financial statement schedules
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these consolidated financial statements and the
financial statement schedules based on our audits. We did not audit the
financial statements of 28 of the consolidated partnerships, which statements
reflect combined assets constituting 49% and combined revenues constituting
49% of the related consolidated totals for 1996 and 1995. Those statements
were audited by other auditors whose reports have been furnished to us, and
our opinion, insofar as it relates to the amounts included for those
partnerships, is based solely on the reports of the other auditors.

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 and the reports of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Freedom Tax Credit Plus L.P. and
consolidated partnerships as of March 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended March 31, 1996, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

New York New York
June 18, 1996

[McKONLY & ASBURY LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Parkside Townhomes Associates
Lancaster, Pennsylvania

We have audited the accompanying balance sheets of Parkside Townhomes Associates
(a limited partnership), as of December 31, 1996 and 1995, and the related
statements of income, partners' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parkside Townhomes Associates
at December 31, 1996 and 1995, and its income, partners' equity, and cash flows
for the years then ended in conformity with generally accepted accounting
principles.

In accordance with Government Auditing Standards and Pennsylvania Housing
Finance Agency's HOMES Financial Reporting Manual, we have also issued a report
dated February 2, 1997 on our consideration of Parkside Townhomes Associates
internal control structure and a report dated February 2, 1997 on its compliance
with laws and regulations.

/s/ McKONLY & ASBURY

Harrisburg, Pennsylvania
February 2, 1997

[Letterhead of McKonly & Asbury]

INDEPENDENT AUDITOR'S REPORT

The Partners of Parkside
Townhomes Associates
Lancaster, Pennsylvania

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Parkside
Townhomes Associates at December 31, 1995 and 1994, and its income,
partners' equity, and cash flows for the years then ended in conformity
with generally accepted accounting principles.

/s/ McKonly & Asbury
Harrisburg, Pennsylvania
February 6, 1996

[Letterhead addresses]

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ivanhoe Apartments Limited Partnership

We have audited the accompanying balance sheet of Ivanhoe Apartments Limited
Partnership (a Limited Partnership) as of December 31, 1996 and 1995 and the
related statements of operations, changes in partners' capital and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ivanhoe Apartments Limited
Partnership at December 31, 1996 and 1995, and the results of its operations and
cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Lake, Hill & Company
- - -------------------------
Lake, Hill & Company

Salt Lake City, Utah
January 17, 1997

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ivanhoe Apartments Limited Partnership

We have audited the accompanying balance sheet of Ivanhoe Apartments Limited
Partnership (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 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 Ivanhoe Apartments Limited
Partnership at December 31, 1995 and 1994, and the results of its operations and
cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Lake, Hill & Company
Lake, Hill & Company
Salt Lake City, Utah
January 15, 1996

[RUBIN & KATZ LLP LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Washington Brooklyn Limited Partnership

We have audited the accompanying balance sheet of Washington Brooklyn Limited
Partnership, as of December 31, 1996, and the related statements of operations,
changes in partners' capital and cash flows for the year then ended. These
financial statements are the representation 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 Washington Brooklyn Limited
Partnership as of December 31, 1996 and the results of its operations, changes
in partners' capital and cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ RUBIN & KATZ LLP

New York, New York
February 26, 1997

[RUBIN & KATZ LLP LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Washington Brooklyn Limited Partnership

We have audited the accompanying balance sheet of Washington Brooklyn Limited
Partnership, as of December 31, 1995, and the related statements of operations,
changes in partners' capital and cash flows for the year then ended. These
financial statements are the representation 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 Washington Brooklyn Limited
Partnership as of December 31, 1995 and the results of its operations, changes
in partners' capital and cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ RUBIN & KATZ LLP

New York, New York
February 23, 1996

[Letterhead of Rubin & Katz LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Washington Brooklyn Limited Partnership
New York, New York

We were engaged to audit the accompanying balance sheet of Washington Brooklyn
Limited Partnership as of December 31, 1994, and the related statements of
operations, changes in partners' capital, and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management.

We were unable to obtain written representations from management as required by
generally accepted auditing standards. Also, certain supporting data was not
available for our audit. Therefore, we were not able to satisfy ourselves about
the status of tenant recertifications (which effect the low income housing
credits) and reserve fund requirements, as well as the amounts at which due from
managing agent, due from general partner and cash restricted for tenants'
security deposits are recorded in the accompanying balance sheet at December 31,
1994.

Because of the significance of the matters discussed in the preceding paragraph,
the scope of our work was not sufficient to enable us to express, and we do not
express, an opinion on the financial statements referred to in the first
paragraph.

/s/ Rubin & Katz LLP
New York, New York
February 6, 1995

[RICHARD J. KLINKOWITZ LETTERHEAD]

To the Partners
C-H DEVELOPMENT GROUP ASSOCIATES
(A LIMITED PARTNERSHIP)
625 Madison Avenue
New York, New York 10022

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 1996 and the
related statement of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES as
of December 31, 1996 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ RICHARD J. KLINKOWITZ

Far Rockaway, New York
February 24 ,1997

[Letterhead of Richard J. Klinkowitz Certified Public Accountant]

To the Partners
C-H DEVELOPMENT GROUP ASSOCIATES
(A LIMITED PARTNERSHIP)
625 Madison Avenue
New York, New York 10022

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 1995 and the
related statement of operations, partners' capital and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES 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.

Respectfully submitted,
/s/ Richard J. Klinkowitz

Far Rockaway, New York
February 19, 1996

[Letterhead of Richard J. Klinkowitz Certified Public Accountant]

To the Partners
C-H DEVELOPMENT GROUP ASSOCIATES
(A LIMITED PARTNERSHIP)
4 Weyant Drive
Cedarhurst, NY 11516

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 1994 and the
related statement of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES as
of December 31, 1994 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,
/S/ Richard J. Klinkowitz

Far Rockaway, New York
February 19, 1995

[HAEFELE, FLANAGAN & CO. P.C. LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mews Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania Limited Partnership) as of December 31, 1996, 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 MAGNOLIA MEWS LIMITED
PARTNERSHIP as of December 31, 1996, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ HAEFELE, FLANAGAN & CO. P.C.

Moorestown, New Jersey
January 31, 1997

[Letterhead of Haefele, Flanagan & Co. p.c.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mew Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania 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 MAGNOLIA MEWS 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/ Haefele, Flanagan & Co. p.c.

Moorestown, New Jersey
February 2, 1996

[Letterhead of Haefele, Flanagan & Co. p.c.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mew Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania 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 MAGNOLIA MEWS LIMITED
PARTNERSHIP as of December 31, 1994, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ Haefele, Flanagan & Co. p.c.

Moorestown, New Jersey
February 8, 1995

[SNIPES, GOWER & ASSOCIATES, P.A. LETTERHEAD]

The Partners
The Oaks Village Limited Partnership
Dunn, North Carolina

Gentlemen:

We have audited the accompanying balance sheets of The Oaks Village Limited
Partnership, Dunn, North Carolina (a North Carolina limited partnership),
Project No.: 38-024-561572445 as of December 31, 1996 and 1995, and the related
statements of operations, partners' equity (deficit), and cash flows for the
years then ended. These financial statements are the responsibility of The Oaks
Village Limited Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Oaks Village Limited
Partnership, Dunn, North Carolina

as of December 31, 1996 and 1995, and the results of its operations, the changes
in partners' equity (deficit) and cash flows for the years then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a
report dated January 23, 1997 on our consideration of The Oaks Village Limited
Partnership's internal control structure and a report dated January 23, 1997 on
its compliance with laws and regulations applicable to the financial statements.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on Page 13
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.

Respectfully submitted,

/s/ Snipes, Gower & Associates, P. A.
-------------------------------------
Snipes, Gower & Associates, P. A.

Dunn, North Carolina
January 23, 1997

-3-

[Letterhead of Bradley, Snipes, Gower & Associates, P.A.]

The Partners
The Oaks Village Limited Partnership
Dunn, North Carolina

Gentlemen:

We have audited the accompanying balance sheets of The Oaks Village Limited
Partnership, Dunn, North Carolina (a North Carolina limited partnership), FmHA
Project No.: 38-024-561572445 as of December 3l, 1995 and 1994, and the
related statements of operations, partners' equity, and cash flows for the years
then ended. These financial statements are the responsibility of The Oaks
Village Limited Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Oaks Village Limited
Partnership, Dunn, North Carolina as of December 31, 1995 and 1994, and the
results of its operations, the changes

in partners' equity and cash flows for the years then ended in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on Page 14
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.

Respectfully submitted,

/s/ Bradley, Snipes, Gower & Associates, P.A.

Bradley, Snipes, Gower
& Associates, P. A.

Dunn, North Carolina

January 25, 1996

[SNIPES, GOWER & ASSOCIATES, P.A. LETTERHEAD]

The Partners

Greenfield Village Limited Partnership

Dunn, North Carolina

Gentlemen:

We have audited the accompanying balance sheets of Greenfield Village
Limited Partnership, Dunn, North Carolina (a North Carolina limited
partnership), Project No.: 38-043 561614646, as of December 31, 1996 and 1995,
and the related statements of operations, partners' equity (deficit), and cash
flows for the years then ended. These financial statements are the
responsibility of the Greenfield Village Limited 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.

-2-

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Greenfield Village Limited
Partnership, Dunn, North Carolina as of December 31, 1996 and 1995, and the
results of its operations, the changes in partners' equity (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 23, 1997 on our consideration of Greenfield Village Limited
Partnership's internal control structure and a report dated January 23, 1997 on
its compliance with laws and regulations applicable to the financial statements.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on Page 13
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

Respectfully submitted,

/s/ Snipes, Gower & Associates, P. A.
-------------------------------------
Snipes, Gower & Associates, P. A.

Dunn, North Carolina

January 23, 1997

-3-

[Letterhead of Bradley, Snipes, Gower & Associates, P.A.]

The Partners
Greenfield Village Limited Partnership
Dunn, North Carolina

Gentlemen:

We have audited the accompanying balance sheets of Greenfield Village
Limited Partnership, Dunn, North Carolina (a North Carolina limited
partnership), FmHA Project No.: 38-043-561614646, as of December 31, 1995 and
1994, and the related statements of operations, partners' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Greenfield Village Limited 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 Greenfield Village Limited
Partnership, Dunn, North Carolina as of December 31, 1995 and 1994, and the
results of its operations, the changes in partners' equity and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on Page 14
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

Respectfully submitted,

/s/ Bradley, Snipes, Gower & Associates, P.A.

Bradley, Snipes, Gower & Associates, P. A.

Dunn, North Carolina

January 25, 1996

[KOCH GERINGER & CO. LLP LETTERHEAD]

Independent Auditor's Report

To the Partners
CLM Equities

We have audited the accompanying balance sheet of CLM Equities (A Limited
Partnership) as of December 31, 1996 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company'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 CLM Equities (A Limited
Partnership) as of December 31, 1996 and the results of its operations, changes
in its partners' equity and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

/s/ Koch Geringer & Co., LLP
----------------------------
Certified Public Accountants

New York, New York
January 7, 1997

-2-

[Letterhead of Koch Geringer & Company]

Independent Auditor's Report

To the Partners
CLM Equities

We have audited the accompanying balance sheet of CLM Equities (A Limited
Partnership) as of December 31, 1995 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company'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 CLM Equities (A Limited
Partnership) as of December 31, 1995 and the results of its operations, changes
in partners' equity and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

/s/ Koch Geringer & Company
Certified Public Accountants

New York, New York

January 18, 1996

[Letterhead of Koch Geringer & Company]

Independent Auditor's Report

To the Partners
CLM Equities

We have audited the accompanying balance sheet of CLM Equities (A Limited
Partnership) as of December 31, 1994 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company'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 CLM Equities (A Limited
Partnership) as of December 31, 1994 and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ Koch Geringer & Company
Certified Public Accountants

New York, New York
January 30, 1995

[Letterhead of Nanas, Stern, Biers, Neinstein and Co.
- Beverly Hills, California]

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Beverly Hills, California

We have audited the accompanying balance sheet of Victoria Manor Associates (a
California limited partnership), as of December 31, 1995 and the related
statements of 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 Victoria Manor Associates 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/ Nanas, Stern, Biers, Neinstein and Co.
NANAS, STERN, BIERS, NEINSTEIN AND CO.

January 8, 1996

[Letterhead of Nanas, Stern, Biers, Neinstein and Co.
- Beverly Hills, California]

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Los Angeles, California

We have audited the accompanying balance sheet of Victoria Manor Associates (a
California limited partnership) as of December 31, 1994 and the related
statements of 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 Victoria Manor Associates as of
December 31, 1994, and results of its cash flows for the year then ended in
conformity with general accepted accounting principles.

/s/ Nanas, Stern, Biers, Neinstein and Co.

January 31, 1995

[FISHBEIN & COMPANY, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

February 4, 1997

Partners
Ogontz Hall Investors
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of OGONTZ HALL INVESTORS (A
Limited Partnership), PHFA Project No. 0-0116, as of December 31, 1996 and 1995,
and the related statements of profit and loss, partners' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ogontz Hall Investors as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
included in this report (shown on pages 25 through 31) is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of the Partnership. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.

In accordance with "Government Auditing Standards," we have also issued a
report dated February 4, 1997, on our consideration of Ogontz Hall Investors'
internal control structure and a report dated February 4, 1997, on compliance.

/s/ Fishbein & Company, P.C.

Elkins Park, PA
February 4, 1997

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Ogontz Hall Investors Limited Partnership

We have audited the accompanying balance sheets of Ogontz Hall Investors
Limited Partnership as of December 31, 1994 and 1993, and the related statements
of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits 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 Ogontz Hall Investors
Limited Partnership as of December 31, 1994 and 1993, and the results of its
operations, the changes in partners' equity and cash flows for the years then
ended, in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information as of
December 31, 1994 on pages 35 through 39 is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ Reznick Fedder & Silverman

Bethesda, Maryland

February 2, 1995, except Note H as to
which the date is March 23, 1995

[SUBY, VON HADEN & ASSOCIATES, S.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

We have audited the accompanying balance sheet of WHEDA Project No. 011/001138
of Eagle Ridge Limited Partnership as of December 31, 1996, and the related
statements of loss, 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. The financial statements of Eagle Ridge Limited
Partnership for the year ended December 31, 1995 were audited by other auditors,
whose report dated February 29, 1996 on those financial statements included an
explanatory paragraph describing conditions that raised substantial doubt about
the partnership's ability to continue as a going concern.

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 WHEDA Project No. 011/001138 of
Eagle Ridge Limited Partnership as of December 31, 1996, and the results of its
operations, changes in partners' equity and cash flows for the year then ended
in conformity with generally accepted accounting principles.

Madison, Wisconsin
January 14, 1997,
except for Note J as to /s/ Suby, Von Haden & Associates, S.C.
which date is April 24, 1997

-1-

[Letterhead of Morton, Nehls & Tierney, S.C.]

INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL STRUCTURE

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

In planning and performing our audit of the financial statements of Eagle Ridge
Limited Partnership as of and for the year ended December 31, 1995, we
considered its internal control structure in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial statements
and not to provide assurance on the internal control structure. However, we
noted a certain matter involving the internal control structure and its
operation that we consider to be a reportable condition under standards
established by the American Institute of Certified Public Accountants.
Reportable conditions involve matters coming to our attention relating to
significant deficiencies in the design or operation of the internal control
structure that, in our judgment, could adversely affect the Partnership's
ability to record, process, summarize, and report financial data consistent with
the assertions of management in the financial statements.

The reportable condition we noted was that there is not an adequate overall
internal control structure design because there is little segregation of duties.
A system of internal control procedures contemplates an adequate segregation of
duties so that no one individual handles a transaction from its inception to its
completion. While we recognize your entity may not be large enough to permit an
adequate segregation of duties in all respects for an effective system of
internal control procedures, it is important you are aware of this condition.

We also noted matters involving the internal control structure and its operation
that we have reported to the management of the Partnership in a separate
communication.

This report is intended for the information of the owners, management and the
Wisconsin Housing and Economic Development Authority.

/s/ Morton, Nehls & Tierney, S.C.

Madison, Wisconsin
February 29, 1996

[Letterhead of Morton, Nehls & Tierney, S.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

We have audited the accompanying balance sheets of Eagle Ridge Limited
Partnership as of December 31, 1994 and 1993, and the related statements of
income (loss), 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 the 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.

Madison, Wisconsin
January 26, 1995, except for the first
paragraph in Note 2 as to which the
date is February 3, 1995

/s/ Morton, Nehls & Tierney, S.C.

[Letterhead of Coopers & Lybrand]

Report of Independent Accountants

To the Partners
Conifer Irondequoit Associates

We have audited the accompanying balance sheets of Conifer Irondequoit
Associates (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 Conifer Irondequoit 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.

/s/ Coopers & Lybrand

Rochester, New York
February 2, 1996

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

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates (a Limited Partnership)
Middletown, Pennsylvania

We have audited the accompanying balance sheets of Middletown Associates (a
Limited Partnership) as of December 31, 1996 and 1995 and the related statements
of (loss), statements of changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership 'a 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 Middletown Associates (a
Limited Partnership) at December 31, 1996 and 1995, 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 13, 1997

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

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates (a Limited Partnership)
Middletown, Pennsylvania

We have audited the accompanying balance sheets of Middletown Associates (a
Limited Partnership) as of December 31, 1995 and 1994 and the related statements
of income, statements of 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 Middletown Associates (a
Limited Partnership) at December 31, 1995 and 1994, and the results of its
operations, changes in partners' equity and cash flows for the years then
ended in conformity with generally accepted accounting principles.

/s/ J.H. Williams & Co.

Kingston, Pennsylvania
February 12, 1996

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Flipper Temple Associates, L.P.

We have audited the accompanying balance sheet of Flipper Temple
Associates, L.P. as of December 31, 1996, and the related statements of profit
and loss (on HUD Form No. 92410), partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Flipper Temple Associates,
L.P. as of December 31, 1996, 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.

Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 22
through 27 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

-6-

In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 23, 1997 on our consideration of Flipper Temple Associates L.P.'s
internal control structure and on its compliance with specific requirements
applicable to major HUD programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.

/s/ Reznick Fedder & Silverman

Bethesda, Maryland Federal Employer
January 23, 1997 Identification Number:
52-1088612

Audit Principal: Lester A. Kanis

-7-

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
220 Cooper Street, L.P.

We have audited the accompanying balance sheet of 220 Cooper Street, L.P.,
as of December 31, 1996, 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 220 Cooper Street, L.P. as
of December 31, 1996, 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
January 29, 1997

-3-

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
220 Cooper Street, L.P.

We have audited the accompanying balance sheet of 220 Cooper Street, L.P.,
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 220 Cooper Street, L.P. 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 9, 1996

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners of
220 Cooper Street, L.P.

We have audited the accompanying balance sheet of 220 Cooper Street, L.P.,
as of December 31, 1994, and the related statements of operations, partners'
equity and cash flows for the year then ended. There 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 220 Cooper Street, L.P. 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
generally accepted accounting principles.

/s/ Reznick Fedder & Silverman

Bethesda, Maryland
January 17, 1995

[ARCHAMBO, MUEGGENBORG & DICK, INC. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pecan Creek Limited Partnership
Bartlesville, Oklahoma

We have audited the accompanying balance sheets of Pecan Creek Limited
Partnership, HUD Project No. FHA 118-35121 (a limited partnership), as of
December 31, 1996 and 1995 and the related statements of income, changes in
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pecan Creek Limited Partnership
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.

Page 2

Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental information shown on
pages 13 to 19 is presented for the purpose of additional analysis and is not a
required part of the financial statements of Pecan Creek Limited Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the financial statements and, in our opinion, is fairly presented in
all material respects in relation to the financial statements taken as a whole.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued reports dated January 30, 1997 on our
consideration of Pecan Creek Limited Partnership's internal control structure,
on its compliance with specific requirements applicable to major HUD programs,
specific requirements applicable to nonmajor HUD program transactions, and
specific requirements applicable to Affirmative Fair Housing.

/s/ Archambo, Mueggenborg & Dick, Inc.
- - --------------------------------------
ARCHAMBO, MUEGGENBORG & DICK, INC.
Certified Public Accountants

Bartlesville, Oklahoma
January 30, 1997

[Letterhead of Archambo, Mueggenborg & Hulsey, Inc. - Bartlesville, Oklahoma]

To the Partners
Pecan Creek Limited Partnership
Bartlesville, Oklahoma

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying balance sheet of Pecan Creek Limited
Partnership, HUD Project No. FHA 118-35121 (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 management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pecan Creek 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 financial
statements taken as a whole. The accompanying supplemental information shown on
pages 13 to 19 is presented for the purpose of additional analysis and is not a
required part of the financial statements of Pecan Creek Limited Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the financial statements and, in our opinion, is fairly presented in
all material respects in relation to the financial statements taken as a whole.

/s/ Archambo, Mueggenborg & Hulsey, Inc.

January 22, 1996

[AGBIMSON & CO., PLLC LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
363 Grand Vendome Associates, Limited Partnership

We have audited the accompanying balance sheet of 363 Grand Vendome Associates,
Limited Partnership, as of December 31, 1996, and the related statements of
Loss, Partners' Capital and Cash Flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

Except as discussed in the following paragraph, 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.

We are unable to obtain adequate support for the carrying value for the building
construction and rehabilitation costs included in the fixed assets at December
31, 1996, which also affected material amounts included in the Statements of
Loss and Partners' Capital for the year then ended as described in Note 10.

In our opinion, except for the effects on the financial statements of such
adjustments, if any, as might have been determined to be necessary had we been
able to examine evidence regarding the carrying value of building and
rehabilitation costs, the financial statements referred to in the first
paragraph above present fairly, in all material respects, the financial position
of 363 Grand Vendome Associates, Limited Partnership, as of December 31, 1996,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

/S/ AGBIMSON & CO., PLLC

Rockville Centre, New York
February 21, 1997

[Letterhead of Agbimson & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
363 Grand Vendome Associates, Limited Partnership

We have audited the accompanying balance sheet of 363 Grand Vendome Associates,
Limited Partnership, as of December 31, 1995, and the related statements of
Loss, Partners' Capital and Cash Flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

Except as discussed in the following paragraph, 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.

We are unable to obtain adequate support for the carrying value for the building
construction and rehabilitation costs included in the fixed assets at December
31, 1995, which also affected material amounts included in the Statements of
Loss and Partners' Capital for the year then ended as described in Note 10.

In our opinion, except for the effects on the financial statements of such
adjustments, if any, as might have been determined to be necessary had we been
able to examine evidence regarding the carrying value of building and
rehabilitation costs, the financial statements referred to in the first
paragraph above present fairly, in all material respects, the financial position
of 363 Grand Vendome Associates, 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/ Agbimson & Co., PLLC

Rockville Centre, New York
February 29, l996

[Letterhead of Agbimson & Co., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
363 Grand Vendome Associates, Limited Partnership

We have audited the accompanying balance sheet of 363 Grand Vendome Associates,
Limited Partnership, as of December 31, 1994, and the related statements of
Loss, Partners' Capital and Cash Flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

Except as discussed in the following paragraph, 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.

We were unable to obtain adequate support for the carrying value for the
building construction and rehabilitation costs included in the fixed assets at
December 31, 1994, which also affected material amounts included in the
Statements of Loss and Partner's Capital for the year then ended as described
in Note 9.

In our opinion, except for the effects on the financial statements of such
adjustments, if any, as might have been determined to be necessary had we been
able to examine evidence regarding the carrying value of building and
rehabilitation costs, the financial statements referred to in the first
paragraph above present fairly, in all material respects, the financial position
of 363 Grand Vendome Associates, Limited Partnership, as of December 31, 1994,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

/s/ Agbimson & Co., PLLC

Rockville Centre, New York
February 10, 1995

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
New Augusta Associates, Ltd.
New Augusta, Mississippi

I have audited the accompanying balance sheets of New Augusta Associates, Ltd.,
a limited partnership, RHS Project No.: 28-056-640665470 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of New Augusta Associates, Ltd., RHS
Project No.: 28-056-640665470 as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 19, 1997 on my consideration of New Augusta Associates, Ltd.,
internal control structure and a report dated February 19, 1997 on its
compliance with laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 19, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
New Augusta Associates, Ltd.
New Augusta, Mississippi

I have audited the accompanying balance sheets of New Augusta Associates, Ltd.,
a limited partnership, RECD Project No.: 28-056-640665470 as of December 31,
1995 and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of New Augusta Associates, Ltd., RECD
Project No.: 28-056-640665470 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 5, 1996 on my consideration of New Augusta Associates, Ltd.,
internal control structure and a report dated February 5, 1996 on its compliance
with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 5, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pine Shadow, Ltd.
Waveland, Mississippi

I have audited the accompanying balance sheets of Pine Shadow, Ltd., a limited
partnership, RHS Project No.: 28-023-640661063 as of December 31, 1996 and 1995,
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. My responsibility is to express an opinion on these
financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Pine Shadow, Ltd., RHS Project No.:
28-023-640661063 as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 21, 1997 on my consideration of Pine Shadow, Ltd., Internal
control structure and a report dated February 21, 1997 on its compliance with
laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 21, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pine Shadow, Ltd.
Waveland, Mississippi

I have audited the accompanying balance sheets of Pine Shadow, Ltd., a limited
partnership, RECD Project No.: 28-023-640661063 as of December 31, 1995 and
1994, 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. My responsibility is to express an opinion on
these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Pine Shadow Ltd., RECD Project
No.: 28-023-640661063 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 1, 1996 on my consideration of Pine Shadow, Ltd., internal
control structure and a report dated February 1, 1996 on its compliance with
laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 1, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Windsor Place, L.P.
Wedowee, Alabama

I have audited the accompanying balance sheets of Windsor Place, L.P., a limited
partnership, RHS Project No.: 01-056-631024917 as of December 31, 1996 and 1995,
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. My responsibility is to express an opinion on these
financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Windsor Place, L.P., RHS Project
No.: 01-056-631024917 as of December 31; 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 19, 1997 on my consideration of Windsor Place, L.P., internal
control structure and a report dated February 19, 1997 on its compliance with
laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 19, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Windsor Place, L.P.
Wedowee, Alabama

I have audited the accompanying balance sheets of Windsor Place, L.P., a limited
partnership, RECD Project No.: 01-056-631024917 as of December 31, 1995 and
1994, 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. My responsibility is to express an opinion on
these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Windsor Place, L.P., RECD Project
No.: 01-056-631024917 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 4, 1996 on my consideration of Windsor Place, L.P.'s internal
control structure and a report dated February 4, 1996 on its compliance with
laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 4, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Brookwood Associates, Ltd.
Foley, Alabama

I have audited the accompanying balance sheets of Brookwood Associates, Ltd., a
limited partnership, RHS Project No.: 01-002-621394754 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Brookwood Associates, Ltd., RHS
Project No.: 01-002-621394754 as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form FmHA 1930-8) Parts I through
II for the years ended December 31, 1996 and 1995, is presented for purposes of
complying with the requirements of the Rural Housing Services and is also not a
required part of the basic financial statements. Such information has been
subjected to the audit procedures applied in the audit of the basic financial
statements and, in my opinion is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 15, 1997 on my consideration of Brookwood Associates, Ltd.,
internal control structure and a report dated February 15, 1997 on its
compliance with laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 15, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Brookwood Associates, Ltd.
Foley, Alabama

I have audited the accompanying balance sheets of Brookwood Associates, Ltd., a
limited partnership, RECD Project No.: 01-002-621394754 as of December 31, 1995
and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Brookwood Associates, Ltd., RECD
Project No.: 01-002-621394754 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 21, 1996 on my consideration of Brookwood Associates, Ltd.'s
internal control structure and a report dated February 21, 1996 on its
compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 21, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Heflin Hills Apartments, Ltd.
Heflin, Alabama

I have audited the accompanying balance sheets of Heflin Hills Apartments, Ltd.,
a limited partnership, RHS Project No.: 01-015-631039371 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Heflin Hills Apartments, Ltd., RHS
Project No.: 01-015-631039371 as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 6, 1997 on my consideration of Heflin Hills Apartments, Ltd.'s
internal control structure and a report dated February 6, 1997 on its compliance
with laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 6, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Heflin Hills Apartments, Ltd.
Heflin, Alabama

I have audited the accompanying balance sheets of Heflin Hills Apartments, Ltd.,
a limited partnership, RECD Project No.: 01-015-631039371 as of December 31,
1995 and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Heflin Hills Apartments, Ltd., RECD
Project No.: 01-015-631039371 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 23, 1996 on my consideration of Heflin Hills Apartments, Ltd.,
internal control structure and a report dated February 23, 1996 on its
compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 23, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Shadowood Apartments, Ltd.
Stevenson, Alabama

I have audited the accompanying balance sheets of Shadowood Apartments, Ltd., a
limited partnership, RHS Project No.: 0l-036-63l030l82 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Shadowood Apartments, Ltd., RHS
Project No.: 01-036-631030182 as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated January 30, 1997 on my consideration of Shadowood Apartments, Ltd.,
internal control structure and a report dated January 30, 1997 on its compliance
with laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
January 30, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Shadowood Apartments, Ltd.
Stevenson, Alabama

I have audited the accompanying balance sheets of Shadowood Apartments, Ltd., a
limited partnership, RECD Project No.: 01-036-631030182 as of December 31, 1995
and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shadowood Apartments, Ltd.,
RECD Project No.: 01-036-631030182 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 23, 1996 on my consideration of Shadowood Apartments, Ltd.,
internal control structure and a report dated February 23, 1996 on its
compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 23, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Brittany Associates, L.P.
Dekalb, Mississippi

I have audited the accompanying balance sheets of Brittany Associates, L.P., a
limited partnership, RHS Project No.: 28-035-581896085 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Brittany Associates, L.P., RHS
Project No.: 28-035-581896085 as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form FmHA 1930-8) Parts I through
II for the year ended December 31, 1996 and 1995, is presented for purposes of
complying with the requirements of the Rural Housing Services and is also not a
required part of the basic financial statements. Such information has been
subjected to the audit procedures applied in the audit of the basic financial
statements and, in my opinion is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards. I have also issued a report
dated February 14, 1997 on my consideration of Brittany Associates, L.P.,
internal control structure and a report dated February 14, 1997 on its
compliance with laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 14, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Brittany Associates, L.P.
Dekalb, Mississippi

I have audited the accompanying balance sheets of Brittany Associates, L.P., a
limited partnership, RECD Project No.: 28-035-58l896085 as of December 31, 1995
and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Brittany Associates, L.P., RECD
Project No.: 28-035-581896085 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 20, 1996 on my consideration of Brittany Associates, L.P.,
internal control structure and a report dated February 20, 1996 on its
compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 20, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Hidden Valley Apartments, Ltd.
Brewton, Alabama

I have audited the accompanying balance sheets of Hidden Valley Apartments,
Ltd., a limited partnership, RHS Project No.: 01-027-631025600 as of December
31, 1996 and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Hidden Valley Apartments, Ltd., RHS
Project No.: 01-027-631025600, as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 19, 1997 on my consideration of Hidden Valley Apartments, Ltd.,
internal control structure and a report dated February 19, 1997 on its
compliance with laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 19, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Hidden Valley Apartments, Ltd.
Brewton, Alabama

I have audited the accompanying balance sheets of Hidden Valley Apartments,
Ltd., a limited partnership, RECD Project No.: 01-027-631025600 as of December
31, 1995 and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Hidden Valley Apartments, Ltd.,
RECD Project No.: 01-027-631025600 as of December 31, l995 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 23, 1996 on my consideration of Hidden Valley Apartments, Ltd.,
internal control structure and a report dated February 23, 1996 on its
compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 23, 1996

[BOB T. ROBINSON LETTERHEAD]

To the Partners
Westbrook Square, Ltd.

Independent Auditor's Report

I have audited the accompanying balance sheet of Westbrook Square, Ltd.
(FmHA Case number 28-040-640770978) as of December 31, 1996 and the related
statements of income, retained earnings, and cash flows for the year then ended.
These financial statements are the responsibility of the partnership's
management. My responsibility is to express an opinion on these financial
statements based on my audit. The financial statements of Westbrook Square, Ltd.
as of December 31, 1995 were audited by other auditors whose report dated
February 28, 1996 expressed an unqualified opinion on those statements.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Westbrook Square, Ltd. as of
December 31, 1996 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

My audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information, including separate
reports on compliance with laws and regulations and on internal controls, is
presented for the purposes of additional analysis and is not a required part of
the financial statements of Westbrook Square, Ltd. Such information has been
subjected to the auditing procedures applied in the audit of the financial
statements and, in my opinion, is fairly presented in all material respects in
relation to the financial statements taken as a whole.

/s/ BOB T. ROBINSON

Jackson, Mississippi
February 28, 1997

Page 1

[Letterhead of Bartlett & Gunter, CPA, P.C. - Opelika, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Westbrook Square Ltd.

We have audited the balance sheets of Westbrook Square, Ltd., (a limited
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 audit.

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

In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Westbrook Square, Ltd. (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.

/s/ Bartlett & Gunter, CPA, P.C.

February 28, l995

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Warsaw Elderly Housing, Ltd.
Warsaw, Kentucky

I have audited the accompanying balance sheets of Warsaw Elderly Housing, Ltd.,
a limited partnership, RHS Project No.: 20-039-621409235 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position c Warsaw Elderly Housing, Ltd., RHS
Project No.: 20-039-621409235 as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 18, 1997 on my consideration of Warsaw Elderly Housing, Ltd.,
internal control structure and a report dated February 18, 1997 on its
compliance with laws and regulations.

/S/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 18, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Warsaw Elderly Housing, Ltd.
Warsaw, Kentucky

I have audited the accompanying balance sheets of Warsaw Elderly Housing, Ltd.,
a limited partnership, RECD Project No.: 20-039-621409235 as of December 31,
1995 and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Warsaw Elderly Housing, Ltd., RECD
Project No.: 20-039-621409235 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 22, 1996 on my consideration of Warsaw Elderly Housing, Ltd.,
internal control structure and a report dated February 22, 1996 on its
compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 22, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
West Hill Square, Ltd.
Gordo, Alabama

I have audited the accompanying balance sheets of West Hill Square, Ltd., a
limited partnership, RHS Project No.: 01-054-631010865 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of West Hill Square, Ltd., RHS Project
No.: 01-054-631010865 as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 21, 1997 on my consideration of West Hill Square, Ltd., internal
control structure and a report dated February 21, 1997 on its compliance with
laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 21, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
West Hill Square, Ltd.
Gordo, Alabama

I have audited the accompanying balance sheets of West Hill Square, Ltd., a
limited partnership, RECD Project No.: 01-054-631010865 as of December 31, 1995
and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of West Hill Square, Ltd., RECD
Project No.: 01-054-631010865 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 25, 1996 on my consideration of West Hill Square, Ltd., internal
control structure and a report dated February 25, 1996 on its compliance with
laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 25, 1996

[DONALD W. CAUSEY, CPA, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Elmwood Associates, L.P.
Picayune, Mississippi

I have audited the accompanying balance sheets of Elmwood Associates, L.P., a
limited partnership, RHS Project No.: 28-055-640804193 as of December 31, 1996
and 1995, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Elmwood Associates, L.P., RHS
Project No.: 28-055-640804193 as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I through II for the year ended December 31, 1996 and 1995, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 20, 1997 on my consideration of Elmwood Associates, L.P.,
internal control structure and a report dated February 20, 1997 on its
compliance with laws and regulations.

/s/ DONALD W. CAUSEY, CPA, P.C.

Gadsden, Alabama
February 20, 1997

-1-

[Letterhead of Donald W. Causey, CPA, P.C. - Gadsden, Alabama]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Elmwood Associates, L.P.
Picayune, Mississippi

I have audited the accompanying balance sheets of Elmwood Associates, L.P., a
limited partnership, RECD Project No.: 28-055-640804193 as of December 31, 1995
and 1994, 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. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Elmwood Associates, L.P., RECD
Project No.: 28-055-640804193 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 audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Year End Report and Analysis (Form RECD 1930-8) Parts I through
III for the year ended December 31, 1995 and 1994, is presented for purposes of
complying with the requirements of the Rural Economic Community Development and
is also not a required part of the basic financial statements. Such information
has been subjected to the audit procedures applied in the audit of the basic
financial statements and, in my opinion is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 17, 1996 on my consideration of Elmwood Associates, L.P.'s
internal control structure and a report dated February 17, 1996 on its
compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C.

February 17, 1996

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND 1996

ASSETS

1997 1996
------------- -------------

Property and equipment - (at cost, net of accumulated depreciation
of $29,490,168 and $24,353,844, respectively) (Note 4) $ 113,446,936 $ 118,149,068
Cash and cash equivalents 1,925,081 2,243,763
Investment in marketable securities (Note 2) 110,343 115,961
Cash held in escrow 3,524,350 3,511,010
Deferred costs (net of accumulated amortization of $1,153,799 and
$947,180, respectively) (Note 5) 2,254,752 2,461,371
Other assets 1,133,002 1,142,343
------------- -------------

Total Assets $ 122,394,464 $ 127,623,516
============= =============

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Mortgage notes payable (Note 6) $ 71,673,532 $ 72,249,613
Accounts payable and other liabilities 2,798,335 2,515,873
Due to local general partners and affiliates (Note 7) 2,964,502 3,385,520
Due to general partners and affiliates (Note 7) 1,684,370 959,842
------------- -------------

Total Liabilities 79,120,739 79,110,848
------------- -------------

Minority interests 7,946,451 7,930,508
------------- -------------

Partners' Capital:
Limited partners (72,896 BACs
issued and outstanding) 35,649,218 40,845,993
General partners (327,427) (274,934)
Unrealized gain on marketable securities 5,483 11,101
------------- -------------

Total Partners' Capital 35,327,274 40,582,160
------------- -------------

Commitments and Contingencies (Notes 7 and 10)

Total Liabilities and Partners' Capital $ 122,394,464 $ 127,623,516
============= =============

See accompanying notes to consolidated financial statements.

-16-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995

1997 1996 1995
------------ ------------ ------------

Revenues:
Rental income $ 11,930,785 $ 11,662,928 $ 11,481,242
Other 1,339,849 1,336,933 1,232,892
------------ ------------ ------------

13,270,634 12,999,861 12,714,134
------------ ------------ ------------

Expenses:

Repairs and maintenance 2,044,087 1,845,258 1,517,390
Operating and other 1,720,139 1,657,747 1,574,470
Real estate taxes 899,014 826,883 809,169
Interest 5,019,334 4,970,087 4,975,829
Depreciation and amortization (Notes 4 and 5) 5,335,528 5,471,471 5,522,228
General and administrative 2,131,261 2,161,959 2,131,790
General and administrative-related parties (Note 7) 1,517,271 1,186,924 989,533
------------ ------------ ------------

18,666,634 18,120,329 17,520,409
------------ ------------ ------------

Loss before minority interest (5,396,000) (5,120,468) (4,806,275)

Minority interest in losses of subsidiary
partnerships 59,470 58,131 50,461
------------ ------------ ------------

Loss before extraordinary item (5,336,530) (5,062,337) (4,755,814)

Extraordinary item-forgiveness of indebtedness (Note 9) 87,262 0 0
------------ ------------ ------------

Net loss $ (5,249,268) $ (5,062,337) $ (4,755,814)
============ ============ ============

Loss before extraordinary item - limited partners (5,283,164) (5,011,714) (4,708,256)
Extraordinary item - limited partners 86,389 0 0
------------ ------------ ------------
Net loss - limited partners $ (5,196,775) $ (5,011,714) $ (4,708,256)
============ ============ ============
Number of BACs outstanding 72,896 72,896 72,896
============ ============ ============
Per BAC:

Loss before extraordinary item $ (72.48) $ (68.75) $ (64.59)
Extraordinary item 1.19 0.00 0.00
------------ ------------ ------------
Net loss $ (71.29) $ (68.75) $ (64.59)
============ ============ ============

See accompanying notes to consolidated financial statements.

-17-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED MARCH 31, 1997, 1996 AND 1995

Net unrealized
Gain (loss) on
Marketable
Total Limited Partners General Partners Securities
------------ ------------ ------------ ------------

Partners' capital - March 31, 1994 $ 50,389,210 $ 50,565,963 $ (176,753) $ 0

Net unrealized loss on marketable securities (2,140) 0 0 (2,140)

Net loss (4,755,814) (4,708,256) (47,558) 0
------------ ------------ ------------ ------------

Partners' capital - March 31, 1995 45,631,256 45,857,707 (224,311) (2,140)

Net loss (5,062,337) (5,011,714) (50,623) 0

Change in net unrealized loss on
marketable securities 13,241 0 0 13,241
------------ ------------ ------------ ------------
Partners' capital - March 31, 1996 40,582,160 40,845,993 (274,934) 11,101

Net loss (5,249,268) (5,196,775) (52,493) 0

Change in net unrealized gain on
marketable securities (5,618) 0 0 (5,618)
------------ ------------ ------------ ------------

Partners' capital - March 31, 1997 $ 35,327,274 $ 35,649,218 $ (327,427) $ 5,483
============ ============ ============ ============

See accompanying notes to consolidated financial statements.

-18-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995

1997 1996 1995
----------- ----------- -----------

Cash flows from operating activities:
Net loss $(5,249,268) $(5,062,337) $(4,755,814)

Adjustments to reconcile net loss to net cash provided by operating
activities:

Extraordinary item - forgiveness of indebtedness (87,262) 0 0
Depreciation and amortization 5,335,528 5,471,471 5,522,228
Minority interest in loss of subsidiaries (59,470) (58,131) (50,461)
Decrease (increase) in other assets 9,341 (88,248) 163,820
Increase (decrease) in accounts payable and other
liabilities 282,462 318,915 (248,501)
(Increase) decrease in cash held in escrow (13,340) 397,094 31,204
Increase in due to general partners
and affiliates 724,528 443,042 278,858
Increase in due to local general partners and affiliates 183,295 0 0
Decrease in due to local general partners
and affiliates (99,067) 0 0
----------- ----------- -----------

Net cash provided by operating activities 1,026,747 1,421,806 941,334
----------- ----------- -----------

Cash flows from investing activities:

Acquisition of property and equipment (434,192) (216,221) (103,754)
Decrease in marketable securities 0 0 (108,941)
Increase in due to local general partners
and affiliates 9,845 109,884 287,703
Decrease in due to local general partners
and affiliates (270,191) (302,737) (495,968)
----------- ----------- -----------

Net cash used in investing activities (694,538) (409,074) (420,960)
----------- ----------- -----------

Net cash provided by operating and used in
investing activities, carried forward 332,209 1,012,732 520,374
----------- ----------- -----------

See accompanying notes to consolidated financial statements.

-19-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995

1997 1996 1995
----------- ----------- -----------

Net cash provided by operating and used in
investing activities, brought forward 332,209 1,012,732 520,374
----------- ----------- -----------

Cash flows from financing activities:
Repayments of mortgage loans (576,081) (769,758) (499,179)
Decrease (increase) in deferred costs 7,415 (7,427) 0
Increase in due to local general partners and affiliates 137,349 0 0
Decrease in due to local general partners and affiliates (229,262) 0 0
Increase (decrease) in capitalization of consolidated
subsidiaries attributable to minority interest 9,688 (306,162) (149,753)
----------- ----------- -----------

Net cash used in financing activities (650,891) (1,083,347) (648,932)
----------- ----------- -----------

Net decrease in cash and cash equivalents (318,682) (70,615) (128,558)

Cash and cash equivalents at beginning of year 2,243,763 2,314,378 2,442,936
----------- ----------- -----------

Cash and cash equivalents at end of year $ 1,925,081 $ 2,243,763 $ 2,314,378
=========== =========== ===========

Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 3,830,228 $ 3,935,154 $ 4,117,039
=========== =========== ===========

Supplemental disclosure of non-cash financing and investing activities:

Conversion of operating deficit loan to equity:

Decrease in due to local general partners and affiliates (65,725) 0 0
Increase in capitalization of consolidated subsidiaries
attributable to minority interest 65,725 0 0

Forgiveness of indebtedness (Note 9):

Decrease in due to local general partners and affiliates (87,262) 0 0

See accompanying notes to consolidated financial statements.

-20-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997, 1996 AND 1995

NOTE 1 - General

Freedom Tax Credit Plus L.P., a Delaware limited partnership (the
"Partnership"), was organized on August 28, 1989 and commenced the public
offering on February 9, 1990. The general partners of the Partnership are
Related Freedom Associates L.P. (the "Related General Partner"), a Delaware
limited partnership, and Freedom GP Inc., a Delaware corporation, together (the
"General Partners").

The Partnership's business is to invest in other partnerships ("Local
Partnerships," "subsidiaries" or "subsidiary partnerships") owning leveraged
apartment complexes that are eligible for the low-income housing tax credit
("Housing Tax Credit") enacted in the Tax Reform Act of 1986. Some of the
complexes may also be eligible for the historic rehabilitation tax credit
("Historic Tax Credits"). During Fiscal Years 1997, 1996 and 1995, the
Partnership generated $11,208,966, $11,208,869, and $11,208,869, respectively,
in Housing Tax Credits. There were no Historic Tax Credits generated in 1997,
1996, and 1995.

The Partnership was authorized to issue a total of 200,000 Beneficial
Assignment Certificates ("BACs"), which had been registered with the Securities
and Exchange Commission for sale to the public. As of August 8, 1991 (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 $72,896,000 of gross
proceeds of the Offering from 4,780 investors. As of March 31, 1997,
approximately $58,000,000 of net proceeds have been invested in 42 Local
Partnerships and no further investments are anticipated.

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 Accounting and Presentation

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. Certain items in
Fiscal Years 1995 and 1996 have been reclassified to conform to 1997
presentation.

b) Basis of Consolidation

The consolidated financial statements include the accounts of the
Partnership and 42 subsidiary partnerships, in which the Partnership is a
limited partner, with an ownership interest of approximately 99%. All
intercompany accounts and transactions with the subsidiary partnerships have
been eliminated in consolidation. Through the rights of the Partnership and/or
the affiliate of the General Partner, which affiliate has a contractual
obligation to act on behalf of the Partnership, to remove the general partner of
the subsidiary partnerships and to approve certain major operating and financial
decisions, the Partnership has a controlling financial interest in the
subsidiary partnerships.

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

-21-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies (continued)

The Partnership's investment in each subsidiary is equal to the respective
subsidiary's partners' equity less minority interest capital, if any.

c) Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash and cash
equivalents include cash on hand, cash in banks, and investments in short-term
money market accounts (which were purchased with maturities of three months or
less).

d) Investment in Marketable Securities

Effective April 1, 1994, the Partnership adopted the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards ("SFAS") No. 115 "Accounting for Certain Investments in Debt and
Equity Securities." At March 31, 1997 and 1996 the Partnership has classified
its securities as available-for-sale.

Available-for-sale securities are carried at fair value with net unrealized
gain (loss) reported as a separate component of partner's capital until
realized. A decline in the market value of any available-for-sale security below
cost that is deemed other than temporary is charged to earnings resulting in the
establishment of a new cost basis for the security. At March 31, 1997 and 1996,
the net unrealized gain on securities available for sale was $5,483 and $11,101,
respectively.

e) Cash held in Escrow

The Partnership in certain instances will pay a certain percentage of the
aggregate purchase price with the balance held in an interest bearing escrow
account. Certain benchmarks, such as occupancy level, must be attained prior to
the release of the funds.

f) Property and Equipment

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 Company 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.
Impairment of properties to be held and used is determined to exist when
estimated amounts recoverable through future operations on an undiscounted basis
are below the properties' carrying value. If a property is determined to be
impaired, it is written down to its estimated fair value. Effective April 1,
1996, the Partnership adopted SFAS No. 121, consistent with the required
adoption period.

The determination of fair value is based, not only upon future cash flows,
which rely upon estimates and assumptions including expense growth, occupancy
and rental rates, but also upon market capitalization and discount rates as well
as other market indicators. The General Partners believe that the estimates and
assumptions used are appropriate in evaluating the carrying amount of the
Partnership's properties. However, changes in market conditions and
circumstances may occur in the near term which would cause these estimates and
assumptions to change, which, in turn, could cause the amounts ultimately
realized upon the sale or other disposition of the properties to differ
materially from their estimated fair value. Such changes may also require
write-downs in future years. No write-downs for impairments have been recorded
as of March 31, 1997.

-22-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies (continued)

Property and equipment are depreciated over their estimated useful lives,
which range from 20 to 40 years for properties. Equipment lives range from 5 to
7 years and are depreciated on a straight-line basis. The property is
depreciated using accelerated or straight-line method.

g) Acquisition Fees and Costs

At investor closings, the General Partners were paid a property acquisition
fee (equal to 6% of the gross proceeds) for evaluating and screening real
property to be acquired. Acquisition fees and other acquisition expenses
incurred by the Partnership are charged to the property accounts based on the
costs of properties acquired.

h) Income Taxes

The Partnership is not required to provide for, or pay, any federal income
taxes. Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The Partnership may be subject
to state and local taxes in jurisdictions in which it operates. For income tax
purposes, the Partnership has a fiscal year ending December 31 (see Note 8).

i) Development Deficit Guarantees

Amounts received under Development Deficit Guarantees from the developers
of the properties purchased by the Partnership are treated as a reduction of the
asset.

j) Operating Deficit Guarantees

Amounts received under Operating Deficit Guarantees from the local general
partners are treated as operating loans which will not bear interest and will be
repaid only out of 50% of available cash flow or out of available net sale or
refinancing proceeds.

k) Organization and Offering Costs

Costs incurred to organize the Partnership, including but not limited to
legal and accounting, are considered deferred organization expenses. These
costs, which had been capitalized, were amortized on the straight-line method
over a 60-month period and were fully amortized as of the end of the 1996 Fiscal
Year. Costs incurred to sell BACs including selling commissions and fees and the
non-accountable expense allowance were considered selling and offering expenses.
These costs were charged directly against limited partners' capital.

l) 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.

m) Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions relating to reporting of assets, liabilities, revenues and expenses
disclosed in the consolidated financial statements. Accordingly, actual results
could differ from those estimates.

-23-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - Fair Value of Financial Instruments

In accordance with SFAS No. 107 "Disclosures about Fair Value of Financial
Instruments," the following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it is practicable to
estimate that value:

Cash and Cash Equivalents, Cash Held in Escrow, Accounts Payable and Other
Liabilities, Due to Local General Partners and Affiliates, and Due to General
Partners and Affiliates

The carrying amount of cash and cash equivalents, cash held in escrow,
accounts payable and other liabilities approximates fair value. Due to Local
General Partners and Affiliates and Due to General Partners and Affiliates would
be paid from the future operations or sale of the properties which is not
readily determinable.

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 note payable are as
follows:

March 31, 1997 March 31, 1996
-------------------------- ------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
---------- ---------- -------- ----------

Mortgage Notes Payable for which it is:

Practicable to estimate fair value $44,207,925 $44,950,092 $45,504,436 $42,402,990
Not Practicable (a) $27,465,607 $26,697,723

(a) The mortgage notes payable are insured by HUD primarily in accordance
with Section 236 of the National Housing Act. New loans are no longer being
insured in accordance with Section 236 and presently existing loans are subject
to restrictions regarding prepayment. Management believes the estimation of fair
value to be impracticable.

-24-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - Property and Equipment

The components of property and equipment are as follows:

March 31,
---------------------------------
1997 1996
------------- -------------

Land $ 5,720,520 $ 5,720,520
Buildings and improvements 132,298,828 132,189,111
Other 4,917,756 4,593,281
------------- -------------

142,937,104 142,502,912
Less: Accumulated depreciation (29,490,168) (24,353,844)
------------- -------------

$ 113,446,936 $ 118,149,068
============= =============

Included in property and equipment is $4,281,577 of acquisition fees paid
to the General Partners and $1,162,054 of acquisition expenses at March 31, 1997
and 1996. In addition, at March 31, 1997 and 1996, buildings and improvements
include $3,965,423 of capitalized interest. Amounts funded pursuant to
Development Deficit Guarantees are shown as a reduction of the cost of property
and equipment, equalling $1,930,840 at March 31, 1997. No such fundings occurred
in Fiscal Years 1997, 1996 and 1995.

In connection with the development or rehabilitation of the properties, the
subsidiary partnerships have incurred developers' fees of $12,320,963 to the
Local General Partner and affiliates. Such fees have been included in the costs
of the properties at March 31, 1997 and 1996.

Depreciation expense for the years ended March 31, 1997, 1996, and 1995
amounted to $5,136,324, $5,247,213, and $5,291,539, respectively.

NOTE 5 - Deferred Costs

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

March 31,
-----------------------------------------
1997 1996 1995 Period
----------- ----------- ----------- ---------
Financing expenses $ 3,052,495 $ 3,052,495 $ 3,045,080 (a)
Organization expenses 356,056 356,056 356,056 60 months
----------- ----------- -----------

3,408,551 3,408,551 3,401,136
Less: Accumulated
amortization (1,153,799) (947,180) (722,934)
----------- ----------- -----------

$ 2,254,752 $ 2,461,371 $ 2,678,202
=========== =========== ===========

(a) Over the life of the related mortgages, ranging from 15 to 50 years,
using the interest method.

Amortization of deferred costs for the years ended March 31, 1997, 1996,
and 1995 amounted to $199,204, $224,258, and $230,689, respectively.

-25-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - Mortgage Notes Payable

At March 31, 1997 and 1996, mortgages payable, all of which are nonrecourse
to the Partnership, are summarized as follows:

Range of Carrying Amount at March 31
Number of Interest Range of ------------------------------
Mortgages Rates Maturities 1997 1996
--------- ----- ---------- ------------ ------------

2 0% 2007-2016 $ 2,383,151 $ 2,383,151
12 1% 2015-2022 12,056,004 12,086,430
13 3%-8.5% 1999-2031 14,159,045 12,877,496
17 8.75%-9% 2007-2040 26,296,762 26,501,112
16 9.24%-13.5% 2002-2032 16,778,570 18,401,424
------------ ------------
$ 71,673,532 $ 72,249,613
============ ============

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, leases and replacement reserves, and
is without further recourse.

Annual principal payments required for each of the next five years are as
follows:

Fiscal Year Ending March 31, Amount
---------------------------- -----------

1998 $620,133
1999 673,600
2000 744,712
2001 810,005
2002 881,860

At December 31, 1996, the mortgage of the Eagle Ridge Limited Partnership
was in default by six payments (see Note 10).

NOTE 7 - Related Party Transactions and Transactions with General Partners and
Affiliates

Freedom SLP L.P., an affiliate of the General Partners, has either a .01%
or 1% interest, as a special limited partner, in each of the Local Partnerships.

The General Partners and their affiliates perform services for the
Partnership. The costs incurred are as follows:

a) Guarantees

The Partnership has negotiated Operating Deficit Guaranty Agreements with
all Local Partnerships whereby the Local General Partners have agreed to fund
operating deficits for a specified period of time commencing at break-even
point.

-26-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - Related Party Transactions and Transactions with General Partners and
Affiliates (continued)

The original amount of the Operating Deficit Guarantees aggregated
approximately $9,500,000 of which approximately $8,400,000 had expired as of
March 31, 1997. As of March 31, 1997, 1996, and 1995, approximately $494,000,
$494,000 and $384,000, respectively, had been funded by the local general
partners to meet such obligations. Amounts funded under such agreements are
treated as non-interest bearing loans. (See Note 7(b) below for repayment
terms).

b) Due to Local General Partners and Affiliates

At March 31, 1997 and 1996, a majority of these fees were incurred in
connection with the development of the property and have been included in the
basis of the building.

Due to local general partners and affiliates at March 31, 1997 and 1996
consists of the following:

1997 1996
---------- ----------
Operating advances $ 440,241 $ 355,892
Development fees 2,006,649 2,266,995
Due to contractor 114,620 114,620
Operating deficit loans (i) 310,138 485,925
General Partner distributions 474 949
Management and other fees 92,380 161,139
---------- ----------

$2,964,502 $3,385,520
========== ==========

(i) Operating deficit loans consist of the following:

1997 1996
---------- ----------
Eagle Ridge (see Note 9) $ 0 $ 152,987
Oxford Trace 18,650 18,650
Tivoli Place 0 22,800
Wilshire Park 191,775 191,775

These loans are unsecured, non-interest bearing and are payable out of
available surplus cash of the respective subsidiary partnership, or at the time
of sale or refinancing.

1997 1996
---------- ----------

Parkside Townhomes $ 81,135 $ 81,135
Ognotz Hall 18,578 18,578

These loans are unsecured, non-interest bearing and are subordinate to the
second mortgage.

-27-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

c) Other Expenses

The costs incurred to related parties for the years ended March 31, 1997,
1996 and 1995 were as follows:

Year Ended March 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
Partnership management fees (a) $ 676,000 $ 400,000 $ 241,163
Expense reimbursement (b) 143,694 125,835 127,756
Property management fees (c) 630,074 595,406 554,464
Local administrative fee (d) 67,503 65,683 66,150
---------- ---------- ----------
$1,517,271 $1,186,924 $ 989,533
========== ========== ==========

(a) The General Partners are entitled to receive a partnership management
fee, after payment of all Partnership expenses, which together with the annual
local administrative fees will not exceed a maximum of 0.5% per annum of
Invested Assets (as defined in the Partnership Agreement), for administering the
affairs of the Partnership. Subject to the foregoing limitation, the partnership
management fee will be determined by the General Partners in their sole
discretion based upon their review of the Partnership's investment. Unpaid
partnership management fees for any year will be accrued without interest and
will be payable from working capital reserves or to the extent of available
funds after the Partnership has made distributions to the Limited Partners and
BACs holders of sale or refinancing proceeds equal to their original capital
contributions plus a 10% priority return thereon (to the extent not theretofore
paid out of Cash Flow). Partnership management fees owed to General Partners
amounting to approximately $1,526,000 and $850,000 were accrued and unpaid as of
March 31, 1997 and 1996, 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 $902,087, $856,553 and $805,923 for the 1997, 1996 and 1995 Fiscal Years,
respectively. Of these fees $630,074, $595,406, and $554,464 were incurred to
affiliates of the subsidiary partnerships.

(d) Freedom SLP L.P., a special limited partner of the subsidiary
partnerships, is entitled to receive an annual local administrative fee of up to
$2,500 from each subsidiary partnership.

-28-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - Income Taxes

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

Years Ended December 31
1996 1995 1994
----------- ----------- -----------

Financial statement
Net loss $(5,249,268) $(5,062,337) $(4,755,814)

Difference resulting from parent company having a
different fiscal year for income tax and financial
reporting purposes 448,899 (152,066) 357,381

Difference between depreciation and amortization
expense recorded for financial statement and income
tax reporting purposes (306,706) (107,970) (105,297)

Tax-exempt interest income (23,693) (26,614) (33,976)

Other (49,787) 69,189 (19,854)
----------- ----------- -----------

Net loss as shown on the Partnership's
income tax returns $(5,180,555) $(5,279,798) $(4,557,560)
=========== =========== ===========

NOTE 9 - Extraordinary Item - Forgiveness of Indebtedness Income

In the event an operating deficit existed for Eagle Ridge Limited
Partnership ("Eagle Ridge") at any time before May 31, 1995, the General
Partners, jointly and severally, were to provide such funds up to $260,000 to
Eagle Ridge as was necessary to pay such operating deficits. The loan was
subordinate and bore no interest. The loan balance was $152,987 as of December
31, 1995. Effective July 26, 1996, the General Partners withdrew from Eagle
Ridge and assigned to Freedom SLP L.P., the special limited partner, their
partnership interests. In conjunction with the withdrawal of the General
Partners, the loan was cancelled. Of the $152,987 balance payable at July 26,
1996, $87,262 was forgiven and $65,725 was converted to equity.

NOTE 10 - Commitments and Contingencies

(a) Event of Default

Eagle Ridge Limited Partnership

Eagle Ridge Limited Partnership ("Eagle Ridge") has entered into a
Forbearance Agreement with Wisconsin Housing and Economic Development Authority
("WHEDA") as a result of Eagle Ridge's failure to pay all the required
installment payments under the mortgage note. Under the terms of the agreement,
WHEDA has agreed to temporarily forego the enforcement of its rights and
remedies against Eagle Ridge through December 31, 1998 and to continue to extend
Eagle Ridge financing provided that Eagle Ridge complies with certain
conditions. The conditions of the agreement consist of, but are not limited to:
(1) monthly payments of escrow and reserve

-29-

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - Commitments and Contingencies (continued)

(a) Event of Default

deposits, (2) monthly payments of principal and interest limited to the lower of
100% of net operating income ("NOI") or 5% of the regularly scheduled monthly
note payment (base payment), (3) 75% of the monthly NOI in excess of the base
payment for principal and interest and (4) the remaining 35% of NOI in excess of
the base payment is to be paid as an incentive management to the management
agent. The Partnership's investment in Eagle Ridge at March 31, 1997 and 1996
was approximately $278,000 and $414,000, respectively, and the minority interest
balance was approximately $163,000 and $92,000, respectively. The Partnership's
share of Eagle Ridge's net loss amounted to approximately $137,000, $174,000 and
$155,000 for the 1997, 1996, and 1995 Fiscal Years, respectively.

(b) Other

The Partnership is subject to 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 24%
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
contract expire.

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 not be affected. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.

-30-

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 each of the General Partners
is set forth below.

Related Freedom Associates Inc., ("RFAI") is the sole general partner of
Related Freedom Associates L.P.

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

Stephen M. Ross Director

J. Michael Fried President and Director

Alan P. Hirmes Senior Vice President

Stuart J. Boesky Senior Vice President

Marc D. Schnitzer Vice President

Richard A. Palermo Treasurer

Lynn A. McMahon Secretary

STEPHEN M. ROSS, 57, is a Director of RFAI. Mr. Ross is also President and
a Director and shareholder of The Related Realty Group, Inc., the general
partner of The Related Companies, L.P. He graduated from the University of
Michigan School of Business Administration with a Bachelor of Science degree and
from Wayne State University School of Law with a Juris Doctor degree. Mr. Ross
then received a Master of Laws degree in taxation from New York University
School of Law. He joined the accounting firm of Coopers & Lybrand in Detroit as
a tax specialist and later moved to New York, where he worked for two large Wall
Street investment banking firms in their real estate and corporate finance
departments. Mr. Ross formed the predecessor of The Related Companies, L.P. in
1972 to develop, manage, finance and acquire subsidized and conventional
apartment developments.

J. MICHAEL FRIED, 54, is President and a Director of RFAI. 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 responsible for all 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.

ALAN P. HIRMES, 42, is a Senior Vice President of RFAI. 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.

-31-

STUART J. BOESKY, 41, is a Vice President of RFAI. 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 (which subsequently merged with Strook & Strook & Lavan) and
from 1978 to 1980 was a consultant specializing in real estate at the accounting
firm of Laventhol & Horwath. Mr. Boesky graduated from Michigan State University
with a Bachelor of Arts degree and from Wayne State School of Law with a Juris
Doctor degree. He then received a Master of Laws degree in Taxation from Boston
University School of Law.

MARC D. SCHNITZER, 36, is a Vice President of RFAI. He is responsible both
for financial restructurings of real estate properties and directing Related's
acquisition of properties generating Housing Tax Credits. Mr. Schnitzer received
a Masters of Business Administration from The Wharton School of the University
of Pennsylvania in December 1987 before joining Related in January 1988. From
1983 to January 1986, he was a financial analyst for the First Boston
Corporation in New York. Mr. Schnitzer graduated summa cum laude with a Bachelor
of Science in Business Administration from the School of Management at Boston
University in May 1983.

RICHARD A. PALERMO, 37, is Treasurer of the General Partner of the Related
General Partner. Mr. Palermo has been a Certified Public Accountant in New York
since 1985. Prior to joining Related in September 1993, Mr. Palermo was employed
by Sterling Grace Capital Management from October 1990 to September 1993,
Integrated Resources, Inc. from October 1988 to October 1990 and E.F. Hutton &
Company, Inc. from June 1986 to October 1988. From October 1982 to June 1986,
Mr. Palermo was employed by Marks Shron & Company and Mann Judd Landau,
certified public accountants. Mr. Palermo graduated from Adelphi University with
a Bachelor of Business Administration Degree.

LYNN A. McMAHON, 41, is Secretary of RFAI. 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.

-32-

The Lehman General Partner

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

Donald E. Petrow Vice President

PAUL A. ABBOTT, 51, is an Executive Vice President of Lehman Brothers and
Chairman of the Board, President and Chief Executive Officer of the Lehman
General Partner. Mr. Abbott joined Lehman Brothers in August 1988, and is
responsible for the investment management of residential, commercial and retail
real estate. Prior to joining Lehman Brothers, 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 through 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 of St. Louis.

DONALD E. PETROW, 40, is a First Vice President of Lehman Brothers and Vice
President of the Lehman General Partner. From March 1989, he has been
responsible for the investment management of various investment portfolios,
including but not limited to, federal insured mortgages, residential real
estate, broadcasting and energy. From November 1981 to February 1989, Mr.
Petrow, as a Vice President of Lehman Brothers, was involved in investment
banking activities relating to partnership finance and acquisition. Prior to
joining Lehman Brothers, 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.

-33-

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. However, under the terms of
the Partnership Agreement , the General Partners and their affiliates are
entitled to receive compensation from the Partnership in consideration of
certain services rendered to the Partnership by such parties. In addition, the
General Partners collectively hold a 1% interest in all profits, losses and
distributions attributable to operations and a subordinated 15% interest in such
items attributable to sales and refinancings. See Note 7 to the Financial
Statements in Item 8 above, which information is incorporated herein by
reference thereto. Certain directors and 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.

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 Freedom $1,000 capital contribution 50%
Interest in the Associates L.P. -directly owned
Partnership 625 Madison Avenue
New York, NY 10022

Freedom GP Inc. $1,000 capital contribution 50%
c/o Lehman Brothers -directly owned
3 World Financial Center
New York, NY 10285

Freedom SLP L.P., a limited partnership whose general partners are the
General Partners of the Partnership and which acts as the special limited
partner of each Local Partnership, holds a 1% limited partnership interest in
each Local Partnership.

As of March 31, 1997, no person (other than the Assignor Limited Partner)
was known by the Partnership to be the beneficial owner of more than five
percent of the Limited Partnership Interests and/or BACs; and neither the
General Partner nor any director or officer of the General Partners 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
7 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 officers of the General Partners.

-34-

PART IV

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

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

(a)1. Financial Statements

Independent Auditors' Report 15

Consolidated Balance Sheets as of March 31, 1997 and
1996 88

Consolidated Statements of Operations for the years
ended March 31, 1997, 1996 and 1995 89

Consolidated Statements of Changes in Partners' Capital
for the years ended March 31, 1997, 1996 and 1995 90

Consolidated Statements of Cash Flows for the years
ended March 31, 1997, 1996 and 1995 91

Notes to Consolidated Financial Statements 93

(a)2. Financial Statement Schedules

Schedule I - Condensed Financial Information of
Registrant 112

Schedule III - Real Estate and Accumulated
Depreciation 115

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

(a)3. Exhibits

(3A) The Partnership's Amended and Restated Agreement of
Limited Partnership, incorporated herein as an
exhibit by reference to Exhibit A to the
Partnership's Prospectus, dated February 9, 1990, as
supplemented by supplements thereto dated December 7,
1990, May 10, 1991, July 10, 1991 and July 23, 1991
(as so supplemented, the "Prospectus"), filed with
the Securities and Exchange Commission on July 30,
1992, as part of Post-Effective Amendment No. 6 to
the Partnership's registration statement on Form
S-11, File No. 33-30859 ("Post-Effective Amendment
No. 6")

(3B) The Partnership's Certificate of Limited Partnership,
as filed with Secretary of State of the State of
Delaware on August 28, 1989, incorporated herein as
an exhibit by reference to Exhibit (3C) to the
Partnership's registration statement on Form S-11,
File No. 33-30859, as filed with the Securities and
Exchange Commission on September 1, 1989 (the
"Initial S-11")

(10A) Form of Subscription Agreement, incorporated herein
as an exhibit by reference to Exhibit B to the
Prospectus as filed as part of Post-Effective
Amendment No. 6

-35-

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

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

(a)3. Exhibits (continued)

(10B) Form of Purchase and Sale Agreement pertaining to
the Partnership's acquisition of Local Partnership
Interests, incorporated herein as an exhibit by
reference to Exhibit (10C) to the Initial S-11

(10C) Form of Amended and Restated Agreement of Limited
Partnership of Local Partnerships, incorporated
herein as an exhibit by reference to Exhibit (10D) to
Pre-Effective Amendment No. 1 to the Partnership's
registration statement on Form S-11, File No.
33-30859, as filed with the Securities and Exchange
Commission on December 21, 1989

(21) Subsidiaries of the Registrant 109

(27) Financial Data Schedule (filed herewith) 118

(b) Reports on Form 8-K

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

-36-

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

Jurisdiction
(c) Subsidiaries of the Registrant (Exhibit 21) of Organization
------------------------------ ---------------

Parkside Townhomes Associates PA
Twin Trees Apartments UT
Bennion Park Apartments (Mulberry) UT
Hunters Chase Apartments AL
Wilshire Park Apartments AL
Bethel Park Apartments OH
Zebulon Park Apartments OH
Tivoli Place Apartments TN
Northwood Apartments of Georgia FL
Oxford Trace Apartments SC
Ivanhoe Apartments Limited Partnership UT
Washington Brooklyn Limited Partnership NY
C.H. Development Group Associates (Manhattan B) NY
Davidson Court Limited Partnership NY
Magnolia Mews Limited Partnership PA
The Oaks Village Limited Partnership NC
Greenfield Village Limited Partnership NC
CLM Equities Limited Partnership (Morris Avenue) NY
Victoria Manor Associates CA
Ogontz Hall Investors PA
Eagle Ridge Limited Partnership WI
Nelson Anderson Affordable Housing Limited Partnership NY
Conifer Irondequoit Associates (Abraham Lincoln) NY
Middletown Associates (Wilson Street) PA
Lauderdale Lakes Associates, Ltd. FL
Flipper Temple Associates Limited Partnership GA
220 Cooper Street Associates Limited Partnership NJ
Pecan Creek OK
363 Grand Vendome Associates Limited Partnership NY
New Augusta Ltd. (Rainer Villas) AL
Pine Shadow Apartments AL
Windsor Place Apartments AL
Brookwood Apartments, Ltd. AL
Heflin Hills Apartments, Ltd. AL
Shadowood Apts., Ltd. AL
Brittany Associates, Ltd. MS
Hidden Valley Apartments AL
Westbrook Square Limited Partnership MS
Warsaw Elderly Housing Ltd. (Royal Pines Apts.) KY
West Hill Square Apts., Ltd. AL
Elmwood Associates MS
Harmony Gate Associates CA

(d) not applicable

-37-

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.

FREEDOM TAX CREDIT PLUS L.P.
(Registrant)

By: RELATED FREEDOM ASSOCIATES L.P.
a general partner

By: RELATED FREEDOM ASSOCIATES INC.
a general partner

Date: June 27, 1997

By:/s/J. Michael Fried
--------------------------------
J. Michael Fried,
President and Director

By: FREEDOM GP INC.
a general partner

Date: June 27, 1997

By:/s/Paul L. Abbott
--------------------------------
Paul L. Abbott,
President and Director
(Principal Executive Officer)

-38-

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the report has been signed below by the following persons
on behalf by the registrant and in the capacities and on the dates indicated:

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

/s/ J. Michael Fried President and Director of Related
- - ------------------------ Freedom Associates Inc.
J. Michael Fried (Principal Executive Officer) June 27. 1997

/s/ Alan P. Hirmes
- - ------------------------ Senior Vice President (Principal Financial
Alan P. Hirmes Officer) of Related
Freedom Associates, Inc. June 27. 1997

/s/ Richard A. Palermo
- - ------------------------ Treasurer (Principal Accounting Officer)
Richard A. Palermo of Related Freedom Associates, Inc. June 27. 1997

/s Stephen M. Ross Director of Related Freedom
- - ------------------------ Associates, Inc. June 27. 1997
Stephen M. Ross

/s/ Paul L. Abbott President, Chief Operating Officer and
- - ------------------------ Director of Freedom GP. Inc.
Paul L. Abbott (Chief Executive Officer) June 27. 1997

-39-

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

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

CONDENSED BALANCE SHEETS

ASSETS

March 31,
-------------------------
1997 1996
----------- -----------

Cash and cash equivalents $ 649,488 $ 796,641
Investment in subsidiary partnerships, carried on an equity basis 36,163,814 40,582,659
Other assets 69,652 69,652
----------- -----------

Total assets $36,882,954 $41,448,952
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL

Due to general partner and affiliates $ 1,510,380 $ 822,792
Accounts payable and other liabilities 45,300 44,000
----------- -----------

Total liabilities 1,555,680 866,792
----------- -----------

Partners' capital 35,327,274 40,582,160
----------- -----------

Total liabilities and partners' capital $36,882,954 $41,448,952
=========== ===========

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

CONDENSED STATEMENTS OF OPERATIONS

Year Ended March 31.
-------------------------------------------
1997 1996* 1995*
----------- ----------- -----------

Income

Other income $ 23,204 $ 53,838 $ 26,609
----------- ----------- -----------

Expenses

Equity in losses of subsidiary partnerships
(including share of extraordinary loss of $87,262
in 1997) $ 4,296,931 $ 4,429,069 $ 4,114,216
General and administrative 88,344 92,255 229,138
General and administrative-related parties 887,197 591,518 429,069
Amortization of organization costs 0 3,333 10,000
----------- ----------- -----------
Total Expenses 5,272,472 5,116,175 4,782,423
----------- ----------- -----------

Net loss $(5,249,268) $(5,062,337) $(4,755,814)
=========== =========== ===========

* Reclassified for comparative purposes

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

CONDENSED STATEMENTS OF CASH FLOWS

Year Ended March 31,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------

Cash flows from operating activities:

Net loss $(5,249,268) $(5,062,337) $(4,755,814)
----------- ----------- -----------

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

Equity in losses of subsidiary partnerships 4,296,931 4,429,069 4,114,216
Amortization 0 3,333 10,000
Decrease in other assets 0 0 88,332

Increase (decrease) in liabilities:

Due to general partner and affiliates 687,588 410,640 245,358
Accounts payable and other liabilities 1,300 (11,000) 15,908
----------- ----------- -----------

Total adjustments 4,985,819 4,832,042 4,473,814
----------- ----------- -----------

Net cash used in operating activities (263,449) (230,295) (282,000)
----------- ----------- -----------

Cash flows from investing activities:

Distributions from subsidiaries 116,296 116,626 157,786
----------- ----------- -----------

Net cash provided by investing activities 116,296 116,626 157,786
----------- ----------- -----------

Net decrease in cash and cash equivalents (147,153) (113,669) (124,214)

Cash and cash equivalents, beginning of year 796,641 910,310 1,034,524
----------- ----------- -----------

Cash and cash equivalents, end of year $ 649,488 $ 796,641 $ 910,310
=========== =========== ===========

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
MARCH 31, 1997

Initial Cost
to Partnership
------------------------- Cost Purchase Price
Buildings Capitalized Adjustments(B)
and Subsequent to Buildings and
Description Encumbrances Land Improvements Acquisition Improvements
----------- ------------ --------- ------------ ------------- ----------------

Properties:

Parkside Townhouses
York, PA $1,756,783 $263,231 $4,439,564 $ 51,289 $ 0
Twin Trees
Layton, UT 1,217,863 112,401 2,668,179 91,005 (47,642)
Bennion (Mulberry)
Taylorsville, UT 2,319,143 258,000 4,934,447 378,312 (22,842)
Hunters Chase
Madison, AL 2,670,220 411,100 5,616,330 110,593 (713,028)
Bethel Park
Bethel, OH 2,044,686 141,320 5,365,882 127,816 (846,229)
Zebulon Park
Owensville, OH 1,719,211 165,000 4,187,880 125,797 (542,936)
Tivoli Place
Murphreesboro, TN 1,638,704 267,500 4,146,759 100,926 (207,625)
Northwood
Jacksonville, FL 2,959,582 494,900 6,630,321 144,415 (294,886)
Oxford Trace
Aiken, SC 765,355 162,000 1,725,512 60,716 (161,049)
Wilshire
Huntsville, AL 1,830,895 178,497 4,014,281 101,352 (432,405)
Ivanhoe
Salt Lake City, UT 579,295 41,000 1,136,915 33,554 0
Washington Avenue
Brooklyn, NY 0 42,485 2,843,351 63,404 0
C.H. Development
(Manhattan B)
New York, NY 1,791,820 3 3,294,688 46,902 0
Davidson Court
Staten Island, NY 0 96,892 773,052 37,064 0
Magnolia Mews
Philadelphia, PA 1,814,910 200,000 668,007 2,272,681 0
Oaks Village
Whiteville, NC 1,477,112 63,548 1,799,849 61,915 0
Greenfield Village
Dunn, NC 1,487,507 78,296 1,806,126 41,934 0
Morris Avenue
(CLM Equities)
Bronx, NY 2,654,821 2 4,767,049 35,554 0
Victoria Manor
Riverside, CA 2,704,846 615,000 5,340,962 (153,198) 0
Ogontz Hall
Philadelphia, PA 2,007,018 0 328,846 3,296,947 0
Eagle Ridge
Stoughton, WI 1,604,985 321,594 2,627,385 (37,722) 0
Nelson Anderson
Bronx, NY 3,886,670 2 6,524,096 33,554 0

Gross Amount at which
Carried At Close of Period Life on which
--------------------------------------------- Depreciation in
Buildings Year of Latest Income
and Accumulated Construction/ Date Statements is
Description Land Improvements Total(a) Depreciation Renovation Acquired Computed(c)(d)
----------- ------------ ------------ ------------ ------------ ---------- -------- --------------

Properties:

Parkside Townhouses
York, PA $ 265,796 $ 4,488,288 $ 4,754,084 $ 1,022,289 1989 Sept. 1990 27.5
Twin Trees
Layton, UT 115,125 2,708,818 2,823,943 739,955 1989 Oct. 1990 27.5
Bennion (Mulberry)
Taylorsville, UT 260,565 5,287,352 5,547,917 1,446,566 1989 Oct. 1990 27.5
Hunters Chase
Madison, AL 413,665 5,011,330 5,424,995 1,530,414 1989 Oct. 1990 27.5
Bethel Park
Bethel, OH 143,885 4,644,904 4,788,789 1,433,022 1989 Oct. 1990 27.5
Zebulon Park
Owensville, OH 167,565 3,768,176 3,935,741 1,101,137 1989 Oct. 1990 27.5
Tivoli Place
Murphreesboro, TN 270,065 4,037,495 4,307,560 1,144,324 1989 Oct. 1990 27.5
Northwood
Jacksonville, FL 497,465 6,477,285 6,974,750 1,860,513 1989 Oct. 1990 27.5
Oxford Trace
Aiken, SC 164,564 1,622,615 1,787,179 464,337 1989 Oct. 1990 27.5
Wilshire
Huntsville, AL 181,060 3,680,665 3,861,725 1,095,732 1989 Oct. 1990 27.5
Ivanhoe
Salt Lake City, UT 42,677 1,168,792 1,211,469 227,388 1991 Jan. 1991 27.5
Washington Avenue
Brooklyn, NY 44,162 2,905,078 2,949,240 547,396 1991 Jan. 1991 27.5
C.H. Development
(Manhattan B)
New York, NY 1,680 3,339,913 3,341,593 722,156 1991 Jan. 1991 27.5
Davidson Court
Staten Island, NY 98,569 808,439 907,008 173,550 1991 Mar. 1991 27.5
Magnolia Mews
Philadelphia, PA 201,677 2,939,011 3,140,688 536,633 1991 Mar. 1991 27.5
Oaks Village
Whiteville, NC 65,225 1,860,087 1,925,312 439,747 1991 Mar. 1991 27.5
Greenfield Village
Dunn, NC 79,973 1,846,383 1,926,356 437,668 1991 Mar. 1991 27.5
Morris Avenue
(CLM Equities)
Bronx, NY 1,679 4,800,926 4,802,605 909,824 1991 Apr. 1991 27.5
Victoria Manor
Riverside, CA 616,677 5,186,087 5,802,764 1,067,349 1991 Apr. 1991 27.5
Ogontz Hall
Philadelphia, PA 1,677 3,624,116 3,625,793 647,394 1990 Apr. 1991 27.5
Eagle Ridge
Stoughton, WI 323,271 2,587,986 2,911,257 744,442 1991 May 1991 27.5
Nelson Anderson
Bronx, NY 1,679 6,555,973 6,557,652 1,260,138 1991 June 1991 27.5

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
MARCH 31, 1997

Initial Cost
to Partnership
------------------------- Cost Purchase Price
Buildings Capitalized Adjustments(B)
and Subsequent to Buildings and
Description Encumbrances Land Improvements Acquisition Improvements
----------- ------------ --------- ------------ ------------- ----------------

Conifer Irondequoit
(Abraham Lincoln)
Irondequoit, NY 3,000,833 20,000 5,407,108 15,784 0
Wilson Street Apts
(Middletown)
Middletown, PA 1,673,496 38,449 0 3,374,421 0
Lauderdale Lakes
Lauderdale Lakes, FL 5,184,690 873,973 3,976,744 5,208,145 0
Flipper Temple
Atlanta, GA 2,624,186 70,519 4,907,110 621,279 0
220 Cooper Street
Camden, NJ 999,685 41,000 0 3,656,586 0
Vendome
Brooklyn, NY 2,697,689 12,000 4,867,584 220,536 0
Pecan Creek
Tulsa, OK 1,016,900 50,000 1,484,923 20,196 0
New Augusta Ltd.
(Rainer Villas)
New Augusta, AL 679,505 15,000 939,681 43,395 0
Pine Shadow Apts
Waveland, MS 1,642,057 74,550 2,117,989 97,808 0
Windsor Place Apts
Wedowee, AL 767,877 40,000 904,888 10,804 0
Brookwood Apts
Foley, AL 1,274,574 68,675 1,517,190 49,179 0
Heflin Hills Apts
Heflin, AL 745,991 50,000 841,300 7,422 0
Shadowood Apts
Stevenson, AL 750,915 27,000 898,800 3,227 0
Brittany Associates
Dekalb, MS 690,416 20,000 843,592 6,827 0
Hidden Valley Apts
Brewton, AL 1,288,706 68,000 1,637,840 11,576 0
Westbrook Square L.P.
Carthage, MS 1,031,963 40,000 1,254,957 10,097 0
Warsaw Elderly Housing Ltd.
Warsaw, KY 1,145,135 98,819 1,333,606 4,924 0
West Hill Square Apts. Ltd.
Gordo, AL 774,055 60,000 954,020 7,369 0
Elmwood Assoc
Picayune, MS 712,398 81,500 829,183 7,812 0
Harmony Gate Assoc
Los Angeles, CA 4,041,035 0 9,757,807 27,490 0
----------- ---------- ------------ ----------- -----------
$71,673,532 $5,662,256 $120,113,803 $20,429,687 $(3,268,642)
=========== ========== ============ =========== ===========

Gross Amount at which
Carried At Close of Period Life on which
--------------------------------------------- Depreciation in
Buildings Year of Latest Income
and Accumulated Construction/ Date Statements is
Description Land Improvements Total Depreciation Renovation Acquired Computed(a)(b)
----------- ------------ ------------ ------------ ------------ ---------- -------- --------------

Conifer Irondequoit
(Abraham Lincoln)
Irondequoit, NY 21,677 5,421,215 5,442,892 1,122,565 1991 Sept. 1991 27.5
Wilson Street Apts
(Middletown)
Middletown, PA 40,126 3,372,744 3,412,870 558,783 1991 Sept. 1991 27.5
Lauderdale Lakes
Lauderdale Lakes, FL 875,668 9,183,194 10,058,862 1,180,876 1991 Oct. 1991 40
Flipper Temple
Atlanta, GA 72,196 5,526,712 5,598,908 1,143,085 1991 Oct. 1991 27.5
220 Cooper Street
Camden, NJ 42,677 3,654,909 3,697,586 680,728 1991 Dec. 1991 27.5
Vendome
Brooklyn, NY 13,677 5,086,443 5,100,120 1,237,923 1991 Dec. 1991 20
Pecan Creek
Tulsa, OK 50,161 1,504,958 1,555,119 243,461 1991 Dec. 1991 27.5
New Augusta Ltd.
(Rainer Villas)
New Augusta, AL 15,161 982,915 998,076 135,190 1991 Dec. 1991 27.5
Pine Shadow Apts
Waveland, MS 74,711 2,215,636 2,290,347 381,585 1991 Dec. 1991 27.5
Windsor Place Apts
Wedowee, AL 40,161 915,531 955,692 129,443 1991 Dec. 1991 27.5
Brookwood Apts
Foley, AL 68,836 1,566,208 1,635,044 225,868 1991 Dec. 1991 27.5
Heflin Hills Apts
Heflin, AL 50,161 848,561 898,722 130,431 1991 Dec. 1991 27.5
Shadowood Apts
Stevenson, AL 27,161 901,866 929,027 134,967 1991 Dec. 1991 27.5
Brittany Associates
Dekalb, MS 20,161 850,258 870,419 132,442 1990 Dec. 1991 27.5
Hidden Valley Apts
Brewton, AL 68,161 1,649,255 1,717,416 237,866 1991 Dec. 1991 27.5
Westbrook Square L.P.
Carthage, MS 40,161 1,264,893 1,305,054 192,759 1990 Dec. 1991 27.5
Warsaw Elderly Housing Ltd.
Warsaw, KY 98,980 1,338,369 1,437,349 181,283 1991 Dec. 1991 27.5
West Hill Square Apts. Ltd.
Gordo, AL 60,161 961,228 1,021,389 144,940 1991 Dec. 1991 27.5
Elmwood Assoc
Picayune, MS 81,661 836,834 918,495 111,052 1991 Dec. 1991 27.5
Harmony Gate Assoc
Los Angeles, CA 161 9,785,136 9,785,297 1,632,947 1992 Jan. 1992 27.5
---------- ------------ ------------ -----------
$5,720,520 $137,216,584 $142,937,104 $29,490,168
========== ============ ============ ===========

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
MARCH 31, 1997

(A) Aggregate cost for federal income tax purposes, $145,300,494

(B) Rental guarantees and development deficit guarantees for GAAP purposes are
treated as a reduction of the asset

(C) Furniture and fixtures, included with buildings and improvements, are
depreciated primarily by the straight line method over the estimated useful
lives ranging from 5 to 7 years.

(D) 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 from date of acquisition.

(E) Reconciliation of Real Estate owned:

Cost of Property and Equipment Accumulated Depreciation
------------------------------------------------ ----------------------------------------------
Year Ended March 31,
----------------------------------------------------------------------------------------------------
1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ----------- ----------- -----------

Balance at beginning of year $142,502,912 $142,286,691 $142,182,937 $24,353,844 $19,106,631 $13,815,092
Additions during year:
Improvements 434,192 216,221 103,754
Depreciation expense 5,136,324 5,247,213 5,291,539
------------ ------------ ------------ ----------- ----------- -----------

Balance at close of year $142,937,104 $142,502,912 $142,286,691 $29,490,168 $24,353,844 $19,106,631
============ ============ ============ =========== =========== ===========

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