Back to GetFilings.com



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

FORM 10-K
(Mark One)

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


For the fiscal year ended March 31, 2004

OR

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

Commission File Number 0-24660

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

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

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

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

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

None

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X
----- -----

The approximate aggregate book value of the voting and non-voting common
equity held by non-affiliates of the Registrant as of September 30, 2003 was
$2,941,180, based on Limited Partner equity as of such date.

DOCUMENTS INCORPORATED BY REFERENCE
None



PART I

Item 1. Business.

General
- -------

Liberty Tax Credit Plus II L.P. (the "Partnership") is a limited partnership
which was formed under the laws of the State of Delaware on March 25, 1988. The
general partners of the Partnership are Related Credit Properties II L.P., a
Delaware limited partnership (the "Related General Partner"), Liberty Associates
II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP
II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the
"Liberty General Partner" and together with the Related General Partner and
Liberty Associates, the "General Partners"). The general partner of the Related
General Partner is Related Credit Properties II Inc., a Delaware corporation.
The general partners of Liberty Associates are Related Credit Properties II
Inc., and the Liberty General Partner. Liberty Associates is also the special
limited partner of the Partnership. On November 17, 2003, CharterMac acquired
Related Capital Company, which is the indirect parent of RCC Manager LLC, the
sole shareholder of Related Credit Properties II Inc. Pursuant to the
acquisition, CharterMac acquired controlling interests in the General Partners.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partners' management team remained unchanged.

On July 20, 1988 the Partnership commenced a public offering (the "Offering") of
Beneficial Assignment Certificates ("BACs") representing assignments of limited
partnership interests in the Partnership ("Limited Partnership Interests").

As of January 9, 1989 (the date on which the Partnership held the final closing
of the sale of BACs and on which the Offering was terminated), the Partnership
had received $115,917,500 of gross proceeds of the Offering from 8,431
investors.

The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships") each of which owns one or more leveraged low-income multifamily
residential complexes ("Apartment Complexes") that are eligible for the
low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform
Act of 1986, and to a lesser extent, in Local Partnerships owning properties
("Rehabilitation Projects" and together with the Apartment Complexes, the
"Properties") that are eligible for the historic rehabilitation tax credit (the
"Historic Rehabilitation Tax Credit" and together with the Housing Tax Credit,
the "Tax Credits"). Some of the Apartment Complexes benefit from one or more
other forms of federal and state housing assistance. The Partnership's
investment in each Local Partnership represents from 20% to 98% of the
partnership interests in the Local Partnership. As of March 31, 2004, the
Partnership had acquired interests in 27 Local Partnerships and does not
anticipate making any additional investments. Through the fiscal year ended
March 31, 2004, the property and the related assets and liabilities of three
Local Partnerships were sold. See Item 2, Properties.

Liberty Associates is the special limited partner in all remaining 24 Local
Partnerships, as well as a general partner of the Partnership. Liberty
Associates has certain rights and obligations in its role as special limited
partner which permit it to execute control over the management and policies of
the Local Partnerships.

Investment Objectives, Tax Credits
- ----------------------------------

The investment objectives of the Partnership are to:

1. Entitle qualified BACs holders to Housing Tax Credits (and to a lesser extent
Historic Rehabilitation Tax Credits) over the period of the Partnership's
entitlement to claim Tax Credits (for each Property, ten years from the date of
investment or, if later, the date the Property is placed in service.);

2. Preserve and protect the Partnership's capital;

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

2


4. Provide cash distributions when available from the operations of Properties;
and

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

One of the Partnership's objectives is to entitle qualified BACs holders to Tax
Credits over the period of the Partnership's entitlement to claim Tax Credits
(for each Property, ten years from the date of investment or, if later, the date
the Property is leased to qualified tenants; referred to herein as the "Credit
Period"). Each of the Local Partnerships in which the Partnership has acquired
an interest has been allocated by the relevant state credit agency the authority
to recognize Tax Credits during the Credit Period provided that the Local
Partnership satisfies the rent restriction, minimum set-aside and other
requirements for recognition of the Tax Credits at all times during the 15-year
period (the "Compliance Period") commencing at the beginning of the Credit
Period. Once a Local Partnership has become eligible to recognize Tax Credits,
it may lose such eligibility and suffer an event of "recapture" if (i) the Local
Partnership ceases to meet qualification requirements, (ii) there is a decrease
in the qualified basis of Property, or (iii) there is a reduction in its
interest in the Property at any time during the Compliance Period. None of the
Local Partnerships in which the Partnership has acquired an interest has
suffered an event of recapture.

As of March 31, 2004, the Credit Periods for all of the Properties have expired,
although each Local Partnership must continue to comply with the Tax Credit
requirements until the end of the Compliance Period in order to avoid recapture
of a portion of the Tax Credits.

The Partnership has met its primary objective of generating Tax Credits for
qualified BACs holders. The Partnership generated $14,364, $20,509 and
$1,725,324 in Tax Credits during the 2003, 2002 and 2001 Fiscal Years,
respectively.

The Partnership continues to meet its objective of allocating passive losses to
individual BACs holders to offset passive income that they may realize from
rental real estate investments and other passive activities, and allocating
passive losses to corporate BACs holders to offset business income. At this
time, there can be no assurance that the Partnership will continue to meet this
investment objective.

The General Partners generally required, in connection with certain investments
in Local Partnerships, that the general partner of the Local Partnership ("Local
General Partners") undertake the funding of operating deficits (up to a stated
maximum amount) of the Local Partnership during a limited period of time
following the Partnership's investment ("Guarantee Period"). As of March 31,
2004, all operating deficit guarantees have expired. Generally the amounts
funded pursuant to the operating deficit guarantee (the "Operating Deficit
Guarantee") have been treated as Operating Loans, do not bear interest and will
be repaid only out of 50% of available cash flow or out of available net sale or
refinancing proceeds. See Item 8, Note 8 - Related Party Transactions.

As of March 31, 2004, the Partnership has not made any cash distributions from
the operations of the Properties. The Partnership does not anticipate providing
cash distributions to BACs holders other than distributions of sale or
refinancing proceeds upon the disposition of Properties. Accordingly, at this
time there can be no assurance that the Partnership will achieve this investment
objective.

Government Regulations
- ----------------------

The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally. However, no more than
38% of the properties are located in any single state.

The Partnership is the beneficiary of certain subsidy agreements pursuant to
which the United States Department of Housing and Urban Development ("HUD")
subsidizes the amount of rent that the Local Partnerships earn. There are
substantial risks associated with owning properties receiving government
assistance, such as the possibility that Congress may not appropriate funds to
enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owner's equity contribution. The Partnership cannot sell or substantially
liquidate its investments in Local Partnerships during the period that the
subsidy agreements are in existence without HUD's approval. Furthermore, there

3


may not be market demand for apartments at full market rents when the rental
assistance contracts expire.

Segments
- --------

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

Sale of Properties
- ------------------

On March 2, 2004, a letter of intent was received that constitutes a proposal
from the purchaser to purchase the property and the related assets and
liabilities of Goodfellow Place Limited Partnership for a purchase price of
$100,000 plus the existing debt. No assurance can be given that the closing will
actually occur.

On August 15, 2003, the property and the related assets and liabilities of
Polynesian Apartments Associates, Ltd. ("Polynesian") were sold to an
unaffiliated third party for $2,700,000, resulting in a loss of approximately
$287,000.

On August 15, 2003, the property and the related assets and liabilities of
Seagrape Village Associates, Ltd. ("Seagrape") were sold to an unaffiliated
third party for $5,140,000, resulting in a loss of approximately $260,000.

On January 18, 2002, the property and the related assets and liabilities of
Campeche Isle Apartments, Limited Partnership ("Campeche") were sold to an
unaffiliated third party for $4,625,000, resulting in a loss of approximately
$45,000.

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

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

Employees
- ---------

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

Item 2. Properties.

The Partnership had acquired an interest as a limited partner in 27 Local
Partnerships. During the fiscal year ended March 31, 2004, the property and the
related assets and liabilities of two Local Partnerships were sold. Through the
fiscal year ended March 31, 2004, the property and the related assets and
liabilities of three Local Partnerships were sold. 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 Item 15, Schedule III.

4


Except for the seven Local Partnerships listed below, the following is the
allocation of ownership percentage for each of the Local Partnerships:

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


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

Concourse Artists 1% 1% 19% 79%
Grand Concourse 1% 1% 19% 79%
Robin Housing 1% 1% 19% 79%
Willoughby-Wyckoff 1% 1% 19% 79%
Penn Alto 1% 1% 78.20% 19.80%
United Glen Arden I 1% 1% 73.52% 24.48%
Property Development
Associates 1% 1% 66.33% 31.67%


*Each is an affiliate of the Partnership with the same management.

5



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



Name and Location % of Units Occupied at May 1,
----------------------------
(Number of Units) Date Acquired 2004 2003 2002 2001 2000
- ----------------- ------------- ---- ---- ---- ---- ----

Polynesian Apartments Associates,
Ltd. (a Limited Partnership)
Homestead, FL (84) July 1988 (b) 98 99 99 96
Seagrape Village Associates, Ltd.
(a Limited Partnership)
Homestead, FL (112) July 1988 (b) 98 99 98 98
Metropolitan Towers Associates, L.P.
Rio Piedras, PR (150) December 1988 96 91 98 99 98
Westminster Place II - Olive Site, L.P.
St. Louis, MO (84) October 1988 98 94 93 93 93
Property Development Associates, L.P.
Kansas City, MO (232) December 1988 82 81 78 84 94
Whittier Plaza Associates
Limited Partnership
St. Louis, MO (27) December 1988 100 100 96 100 89
United-Glen Arden I
Limited Partnership
Glen Arden, MD (354) December 1988 95 97 98 98 97
United-Glen Arden II
Limited Partnership
Glen Arden, MD (238) December 1988 99 98 99 99 98
Rolling Green Limited Partnership
Chicago, IL (224) December 1988 99 95 90 96 90
Santa Juanita II Limited Partnership
Bayamon, PR (46) December 1988 96 100 100 93 100
Spring Creek Associates, L.P.
(a Delaware Limited Partnership)
Brooklyn, NY (582) December 1988 100 98 98 98 98
East Two Thirty-Five Associates
(a Delaware Limited Partnership)
New York, NY (17) December 1988 94 100 100 100 100
Upper Fifth Avenue Residential
Associates, L.P.
New York, NY (151) January 1989 98 97 100 99 100
West 107th Street Associates, L.P.
(a Delaware Limited Partnership)
New York, NY (25) January 1989 100 100 100 100 100
General Atlantic Second Avenue
Associates, L.P.
(a Delaware Limited Partnership)
New York, NY (18) January 1989 94 100 100 100 100
Church Lane Associates
Germantown, PA (40) February 1989 98 100 100 98 95
Campeche Isle Apartments
Limited Partnership
Galveston, TX (208) May 1989 (a) (a) (a) 96 85
Robin Housing Associates
(a Limited Partnership)
Bronx, NY (100) November 1988 99 96 98 93 98
Concourse Artists Housing
Associates (a Limited Partnership)
Bronx, NY (23) November 1988 96 96 100 96 96
2051 Grand Concourse Housing
Associates (a Limited Partnership)
Bronx, NY (63) November 1988 95 98 91 100 95


6




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



Name and Location % of Units Occupied at May 1,
----------------------------
(Number of Units) Date Acquired 2004 2003 2002 2001 2000
- ----------------- ------------- ---- ---- ---- ---- ----

Willoughby-Wyckoff Housing
Associates (a Limited Partnership)
Bronx, NY (68) November 1988 94 99 100 87 87
Goodfellow Place Limited Partnership
St. Louis, MO (71) May 1989 94 97 93 92 92
Penn Alto Associates
Limited Partnership
Altoona, PA (150) June 1989 83 84 83 82 82
Gramco Development
Limited Dividend
Partnership, L.P.
Bayamon, PR (300) July 1989 92 98 98 98 96
Alexis Park Apartments
A Louisiana Partnership
in Commendam
Bossier City, LA (280) July 1989 91 96 86 86 90
Williamsburg Residential, L.P.
Wichita, KS (76) August 1989 76 81 93 100 70
Victory Apartments
Chicago, IL (107) September 1989 95 94 94 95 93


(a) The property and the related assets and liabilities were sold during the
fiscal year ended March 31, 2002 (see Item 7 below).

(b) The property and the related assets and liabilities were sold during the
fiscal year ended March 31, 2004 (see Item 7 below).


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

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

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

Management annually reviews the insurance coverage of the Properties and subject
to budget constraints recommends to the respective Local General Partners
additional coverage if warranted. Management believes that coverage is presently
adequate.

See Item 1, Business, above for the general competitive conditions to which the
Local Partnerships and 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.


7


Item 3. Legal Proceedings.

This information is incorporated by reference to the discussion of Alexis Park
Apartments contained under the heading "Results of Operations of Certain Local
Partnerships" in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations.

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

None.

PART II

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

The Partnership has issued and outstanding 115,917.5 Limited Partnership
Interests, each representing a $1,000 capital contribution to the Partnership,
or an aggregate capital contribution of $115,917,500. All of the issued and
outstanding Limited Partnership Interests have been issued to Liberty Credit
Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued
115,917.5 BACs to the purchasers thereof for an aggregate purchase price of
$115,917,500. Each BAC represents all of the economic and virtually all of the
ownership rights attributable to a Limited Partnership Interest held by the
Assignor Limited Partner. BACs may be converted into Limited Partnership
Interests at no cost to the holder (other than payment of transfer costs not to
exceed $100), but Limited Partnership Interests so acquired are not thereafter
convertible into BACs.

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

As of May 4, 2004, the Partnership had 8,515 registered holders of an aggregate
of 115,917.5 BACs.

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

There are no material provisions in the Partnership Agreement that restrict the
ability of the Partnership to make distributions.

The Partnership has not made any distributions to BACs holders as of March 31,
2004. The Partnership does not anticipate providing cash distributions to BACs
holders other than distributions of sale or refinancing proceeds upon the
disposition of Properties.

8


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
financial statements in Item 8 hereof.



Year Ended March 31,
---------------------------------------------------------------------------------
OPERATIONS 2004 2003 2002 2001 2000
- ---------- ------------- ------------- ------------- ------------- -------------

Revenues $ 26,443,167 $ 27,239,534 $ 29,319,132 $ 28,153,009 $ 27,104,148


Operating expenses (35,102,365) (35,399,924) (37,441,863) (36,010,097) (35,347,234)
------------- ------------- ------------- ------------- -------------

Loss before minority interest
and extraordinary items (8,659,198) (8,160,390) (8,122,731) (7,857,088) (8,243,086)

Minority interest in loss of
subsidiaries 1,189,196 199,013 137,083 238,349 254,205

Extraordinary item - forgive-
ness of indebtedness 0 0 1,802,622 695,154 0
------------- ------------- ------------- ------------- -------------

Net loss $ (7,470,002) $ (7,961,377) $ (6,183,026) $ (6,923,585) $ (7,988,881)
============= ============= ============= ============= =============

Per unit amounts:

Loss before extraordinary
item per BAC (63.80) (67.99) (68.20) (65.07) (68.23)

Extraordinary item per BAC 0 0 15.40 5.94 0
------------- ------------- ------------- ------------- -------------

Net loss per BAC $ (63.80) $ (67.99) $ (52.80) $ (59.13) $ (68.23)
============= ============= ============= ============= =============



Year Ended March 31,
---------------------------------------------------------------------------------
FINANCIAL POSITION 2004 2003 2002 2001 2000
- ------------------ ------------- ------------- ------------- ------------- -------------


Total assets $ 138,055,440 $ 153,051,595 $ 163,751,533 $ 172,524,072 $ 180,071,778
============= ============= ============= ============= =============

Total liabilities $ 137,513,369 $ 144,869,224 $ 147,385,098 $ 149,472,020 $ 149,572,808
============= ============= ============= ============= =============

Minority interest $ 2,123,287 $ 2,293,585 $ 2,516,272 $ 3,018,863 $ 3,542,196
============= ============= ============= ============= =============
Total partners' (deficit)
capital $ (1,581,216) $ 5,888,786 $ 13,850,163 $ 20,033,189 $ 26,956,774
============= ============= ============= ============= =============


During the years ended March 31, 2000 through 2002, total assets decreased
primarily due to depreciation, partially offset by net additions to property and
equipment. During the years ended March 31, 2003 and 2004, total assets and
liabilities decreased primarily due to the sale of Local Partnerships.

9


Selected Quarterly Financial Data (Unaudited)
---------------------------------------------



Quarter Ended
--------------------------------------------------------
June 30, September 30, December 31, March 31,
OPERATIONS 2003 2003 2003 2004
- ------------------ ----------- ----------- ----------- -----------

Revenues $ 6,783,183 $ 6,942,050 $ 6,224,651 $ 6,493,283

Operating expenses (8,860,744) (8,986,207) (9,163,251) (8,092,163)
----------- ----------- ----------- -----------

Loss before minority
interest (2,077,561) (2,044,157) (2,938,600) (1,598,880)

Minority interest in
loss of subsidiaries 105,529 57,197 914,190 112,280
----------- ----------- ----------- -----------

Net loss $(1,972,032) $(1,986,960) $(2,024,410) $(1,486,600)
=========== =========== =========== ===========

Per unit amounts:

Net loss per BAC $ (16.84) $ (16.97) $ (17.29) $ (12.70)
=========== =========== =========== ===========



Quarter Ended
--------------------------------------------------------
June 30, September 30, December 31, March 31,
OPERATIONS 2002 2002 2002 2003
- ------------------ ----------- ----------- ----------- -----------

Revenues $ 6,725,438 $ 6,809,809 $ 6,845,034 $ 6,859,253

Operating expenses (8,363,754) (9,265,411) (9,188,186) (8,582,573)
----------- ----------- ----------- -----------

Loss before minority
interest (1,638,316) (2,455,602) (2,343,152) (1,723,320)

Minority interest in
loss of subsidiaries 79,132 37,094 3,625 79,162
----------- ----------- ----------- -----------


Net loss $(1,559,184) $(2,418,508) $(2,339,527) $(1,644,158)
=========== =========== =========== ===========

Per unit amounts:

Net loss per BAC $ (13.32) $ (20.66) $(19,98) $ (14.04)
=========== =========== =========== ===========


10


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

Liquidity and Capital Resources
- -------------------------------
The Partnership's capital has been invested in twenty-seven Local Partnerships.
During the fiscal year ended March 31, 2004, the property and the related assets
and liabilities of two Local Partnerships were sold. Through the fiscal year
ended March 31, 2004, the properties and the related assets and liabilities of
three Local Partnerships were sold. For a discussion of these sales, see Sale of
Properties (Note 10 in Item 8).

During the year ended March 31, 2004, the Partnership's primary sources of funds
included: (i) working capital reserves; (ii) interest earned on the working
capital reserves; and (iii) cash distributions from operations of the Local
Partnerships. Such funds are available to meet the obligations of the
Partnership but are not expected to be significant.

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

During the years ended March 31, 2004, 2003 and 2002, respectively, cash
distributions received from operations of the Local Partnerships were
approximately $42,000, $156,000 and $235,000. The General Partners believe that
cash distributions received from the operations of the Local Partnerships are
sufficient to fund the Partnership's ongoing operations for the foreseeable
future (assuming the General Partners continue to defer payment of their
management fees).

During the year ended March 31, 2004, cash and cash equivalents of the
Partnership and its consolidated Local Partnerships increased approximately
$261,000. This increase was due to cash provided by operating activities
($2,303,000), proceeds from sale of properties ($7,840,000), an increase in due
to selling partners ($117,000) and an increase in capitalization of consolidated
subsidiaries attributable to minority interest ($1,019,000) which exceeded an
increase in deferred costs ($150,000), cost paid relating to sale of properties
($136,000), acquisitions of property and equipment ($933,000), an increase in
cash held in escrow relating to investing activities ($32,000), repayments of
mortgage notes ($8,120,000) and a net decrease in due to local general partners
and affiliates ($1,647,000). In the adjustments to reconcile the net loss to
cash provided by operating activities are loss on sale of properties ($547,000)
and depreciation and amortization ($7,768,000).

Partnership management fees owed to the General Partners amounting to
approximately $12,713,000 and $11,268,000 were accrued and unpaid as of March
31, 2004 and 2003, respectively. Without the General Partners' continued accrual
without payment of these fees, the Partnership will not be in a position to meet
its obligations. The General Partners have allowed for the accrual without
payment of these amounts but are under no obligation to continue to do so.

For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships below. Since the maximum
loss the Partnership would be liable for is its net investment in the respective
Local Partnerships, the resolution of the existing contingencies are 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 may result in recapture of Tax Credits if the investment
is lost before the expiration of the 15-year period during which the Properties
must comply with various rent and other restrictions.

Except as described above, management is not aware of any trends or events,
commitments or uncertainties which have not otherwise been disclosed that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the Properties around the United States so that
if one area of the country is experiencing downturns in the economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.

11


Tabular Disclosure of Contractual Obligations

The following table summarizes the Partnership's commitments as of March 31,
2004 to make future payments under its debt agreements and other contractual
obligations.



Less than 1 - 3 3 -5 More than
Total 1 Year Years Years 5 Years
----------- ----------- ----------- ----------- -----------

Mortgage notes payable (a) $96,557,630 $11,681,309 $ 6,487,839 $ 3,870,536 $74,517,946
Notes payable to local
general partners (b) 202,062 202,062 0 0 0
----------- ----------- ----------- ----------- -----------

Total $96,759,692 $11,883,371 $ 6,487,839 $ 3,870,536 $74,517,946
=========== =========== =========== =========== ===========


(a) The mortgage notes are payable in aggregate monthly installments of
approximately $505,000 including principal and interest at rates varying
from 1% to 10.75% per annum, through 2042. Each subsidiary partnership's
mortgage note payable is collateralized by the land and buildings of the
respective subsidiary partnership and the assignment of certain subsidiary
partnership's rents and leases and is without further recourse.

(b) See Note 8(f) in Item 8. Financial Statements and Supplementary Data.

Off Balance Sheet Arrangements
- ------------------------------

The Partnership has no off-balance sheet arrangements.

Critical Accounting Policies
- ----------------------------

In preparing the consolidated financial statements, management has made
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Set forth below is a summary of the accounting policies
that management believes are critical to the preparation of the consolidated
financial statements. The summary should be read in conjunction with the more
complete discussion of the Partnership's accounting policies included in Note 2
to the consolidated financial statements in this annual report on Form 10-K.

Property and Equipment
- ----------------------

Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring such property and equipment. The cost
of property and equipment is depreciated over their estimated useful lives using
accelerated and straight-line methods. Expenditures for repairs and maintenance
are charged to expense as incurred; major renewals and betterments are
capitalized. At the time property and equipment are retired or otherwise
disposed of, the cost and accumulated depreciation are eliminated from the
assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings. The Partnership complies with Statement of
Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". A loss on impairment of assets is recorded when
management estimates amounts recoverable through future operations and sale of
the Property on an undiscounted basis are below depreciated cost. Property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows) when the Property is considered to be impaired and the
depreciated cost exceeds estimated fair value. During the year ended March 31,
2004, the Partnership did not record a loss on impairment of assets. Through
March 31, 2004, the Partnership has recorded approximately $5,407,000 as a loss
on impairment of assets.

At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. Such
assets would be classified as property and equipment-held for sale and are not
depreciated. There were no assets classified as property and equipment-held for
sale at March 31, 2004 and 2003, respectively.


12


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.

New Accounting Pronouncements
- -----------------------------

In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable immediately for variable interest entities created after
January 31, 2003. For variable interest entities created before February 1,
2003, the provisions of FIN 46 are applicable no later than December 15, 2003.
The Partnership has not created any variable interest entities after January 31,
2003. In December 2003, the FASB redeliberated certain proposed modifications
and revised FIN 46 ("FIN 46 (R)"). The revised provisions are applicable no
later than the first reporting period ending after March 15, 2004. The adoption
of FIN 46 (R) is not anticipated to have a material impact on the Partnership's
financial reporting and disclosures.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
changes the accounting for certain financial instruments that, under previous
guidance, could be classified as equity or "mezzanine" equity, by now requiring
those instruments to be classified as liabilities (or assets in some
circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150
requires disclosure regarding the terms of those instruments and settlement
alternatives. The guidance in SFAS No. 150 generally was effective for all
financial instruments entered into or modified after May 31, 2003, and was
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it
does not have an impact on the Partnership's financial reporting and
disclosures.

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

The following is a summary of the results of operations of the Partnership for
the years ended March 31, 2004, 2003 and 2002 (the 2003, 2002 and 2001 Fiscal
Years, respectively).

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

The net loss for the 2003, 2002 and 2001 Fiscal Years totaled $7,470,002,
$7,961,377 and $6,183,026, respectively.

The Partnership no longer continues to meet its primary objective of generating
Tax Credits for qualified BACs holders. The Partnership generated $14,364,
$20,509 and $1,725,324 in Tax Credits during the 2003, 2002 and 2001 Fiscal
Years, respectively.

2003 vs. 2002
- -------------

Rental income increased approximately 1% for the 2003 Fiscal Year as compared to
the 2002 Fiscal Year. Excluding Polynesian Apartments Associates, Ltd.
("Polynesian"), Seagrape Village Associates, Ltd. ("Seagrape") and Campeche Isle
Apartments, Limited Partnership ("Campeche") which sold their properties and the
related assets and liabilities ("2003 Sold Assets"), rental income decreased
approximately 1%.

Total expenses, excluding the 2003 Sold Assets, repairs and maintenance,
operating, insurance, and depreciation and amortization, remained fairly
consistent with a decrease of approximately 1% for the 2003 Fiscal Year as
compared to the 2002 Fiscal Year.

Repairs and maintenance increased approximately $763,000 for the 2003 Fiscal
Year as compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets,
repairs and maintenance increased approximately $732,000 primarily due to

13


sealing the building foundation at one Local Partnership, increased security
costs, painting and wall repairs at a second Local Partnership and increased
security costs and fire damage related repairs at a third Local Partnership.

Operating and other increased approximately $286,000 for the 2003 Fiscal Year as
compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets, operating and
other increased approximately $316,000 primarily due to an increase in natural
gas, water and sewer costs at several Local Partnerships.

Insurance increased approximately $208,000 for the 2003 Fiscal Year as compared
to the 2002 Fiscal Year. Excluding the 2003 Sold Assets, insurance increased
approximately $243,000 primarily due to an increase in premiums at the Local
Partnerships.

Depreciation and amortization decreased approximately $1,027,000 for the 2003
Fiscal Year as compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets,
depreciation and amortization decreased approximately $933,000 primarily due to
the write-off of deferred financing fees relating to refinancings at three Local
Partnerships in 2002.

Financial decreased approximately $803,000 for the 2003 Fiscal Year as compared
to the 2002 Fiscal Year primarily due to decreases related to the 2003 Sold
Assets.

A loss on sale of properties was recorded during the 2003 Fiscal Year (see Note
10).

2002 vs. 2001
- -------------

Rental income decreased approximately 2% for the 2002 Fiscal Year as compared to
the 2001 Fiscal Year. Excluding Campeche (the "2002 Sold Asset"), rental income
increased approximately 2% due to rental rate increases.

Other income decreased approximately $1,375,000 for the 2002 Fiscal Year as
compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, other income
decreased approximately $764,000 primarily due to a write-off of accrued
letter-of-credit fees at one Local Partnership and a decrease in grants received
by another Local Partnership.

Total expenses, excluding the 2002 Sold Asset, operating, insurance, financial
and depreciation and amortization remained fairly consistent with a decrease of
approximately 1% for the 2002 Fiscal Year as compared to the 2001 Fiscal Year.

Operating decreased approximately $648,000 for the 2002 Fiscal Year as compared
to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, operating expenses
decreased approximately $537,000 primarily due to two Local Partnerships
changing their service providers to reduce utility costs.

Insurance increased approximately $292,000 for the 2002 Fiscal Year as compared
to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, insurance expense
increased approximately $380,000 primarily due to increased premiums at the
Local Partnerships.

Financial decreased approximately $1,054,000 for the 2002 Fiscal Year as
compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, financial
expense decreased approximately $743,000 primarily due to a decrease in interest
rates and refinancings at several Local Partnerships.

Depreciation and amortization increased approximately $733,000 for the 2002
Fiscal Year as compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset,
depreciation and amortization increased approximately $854,000 primarily due to
the write-off of deferred financing costs at several Local Partnerships in 2002.

A loss on sale of property was recorded during the 2002 Fiscal Year (see Note
10).

14


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

(a) Subsidiary Partnerships - Going Concerns and Uncertainties

Whittier Plaza Associates
- -------------------------
The financial statements for Whittier Plaza Associates Limited Partnership
("Whittier") have been prepared assuming that Whittier will continue as a going
concern. Whittier has sustained continuous losses since commencement of
operations in 1988. Whittier has experienced higher vacancies and lower rents
than those originally projected, resulting in increased difficulty in meeting
both operating and debt service obligations. The Local General Partner, pursuant
to a development deficit guarantee agreement, has advanced approximately $8,000
and $12,000 in the 2003 and 2002 Fiscal Years, respectively, and approximately
$469,000 since 1988 to fund operating cash shortfalls. In addition, Whittier's
management company, an affiliate of the Local General Partner, has deferred
receipt of various fees since 1991 totaling approximately $99,000. These items
raise substantial doubt about Whittier's ability to continue as a going concern.
The Partnership's investment in Whittier at March 31, 2004 and 2003 was reduced
to zero as a result of prior years' losses and the minority interest balance was
$0 at each date. Whittier's net loss after minority interest amounted to
approximately $27,000, $29,000 and $37,000 for the 2003, 2002 and 2001 Fiscal
Years.

Alexis Park Apartments
- ----------------------
The financial statements for Alexis Park Apartments ("Alexis") have been
prepared in conformity with U.S. generally accepted accounting principles,
assuming the continuation of the Local Partnership as a going concern. However,
negative performance indicators and the environmental issue raise substantial
doubt about the Local Partnership's ability to continue as a going concern.

A hazardous waste issue has affected Alexis for nearly 13 years. Although this
environmental issue is in many respects beyond its control, management believes
that the selected remedy of the United States Environmental Protection Agency is
practical and is not likely to cause significant disruption to the apartment
project's operations beyond what it has experienced over the last several years.
The Local Partnership's congressman, U.S. Senators and the Mayor of Bossier City
have assisted Alexis in preventing this issue from escalating unnecessarily and
management believes that no escalation will occur in the near term. Further, all
indications are that an oil company will bear all costs of remediation and that
the Local Partnership will not be called upon to share in those costs.
Accordingly, management believes the Local Partnership has the opportunity to
continue as a going concern during 2004.

For the year ended December 31, 2003, the Local Partnership sustained a net loss
of approximately $149,000. At December 31, 2003, the Local Partnership's current
liabilities exceed its current assets by approximately $4,949,000. Management
expects operating income to improve for 2004 as a result of both increased
occupancy and slightly reduced expenses. Current liabilities in the amount of
$4,699,000 is attributable to the Partnership's first mortgage note that is
expected to be refinanced on a long-term basis during 2004. In addition,
included in current liabilities are obligations to the management company
totaling approximately $252,000 that are not expected to require payment beyond
Alexis' ability to pay. Management believes, that if necessary, it can obtain
funds to supplement operating cash flows for 2004 to enable Alexis to meet its
liabilities and subject to the environmental uncertainty enable Alexis to
continue as a going concern for at least one year.

These items raise substantial doubt about Alexis' ability to continue as a going
concern. The maximum loss for which the Partnership would be liable is its net
investment in Alexis. The Partnership's investment in Alexis at March 31, 2004
and 2003 was reduced to zero as a result of prior years' losses and the minority
interest balance was $0 at each date. Alexis' net loss after minority interest
amounted to approximately $149,000, $172,000 and $340,000, for the 2003, 2002
and 2001 Fiscal Years, respectively.

Westminster Place II - Olive Site, L.P.
- ---------------------------------------
The financial statements for Westminster Place II - Olive Site, L.P.
("Westminster") have been prepared assuming that Westminster will continue as a
going concern. Westminster's rental subsidy will be depleted during 2004. This
subsidy represents approximately 16% of Westminster's rental revenue.
Westminster has submitted a rent increase to the Missouri Housing Development
Commission and is awaiting response. Without this increase or the rental
subsidy, it will be increasingly difficult to meet the financial obligations of
Westminster.

15


These items raise substantial doubt about Westminster's ability to continue as a
going concern. The maximum loss for which the Partnership would be liable is its
net investment in Westminster. The Partnership's investment in Westminster at
March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses
and the minority interest balance was $0 at each date. Westminster's net loss
after minority interest amounted to approximately $115,000, $95,000 and $112,000
for the 2003, 2002 and 2001 Fiscal Years, respectively.

b) Subsidiary Partnerships - Other

Property Development Associates, L.P.
- -------------------------------------
Property Development Associates, L.P. ("Property Development") is involved as a
defendant in a pending litigation case. This case was filed by the plaintiffs on
December 18, 2002 and served on the defendants on January 6, 2003. As of the
date of the Auditor's report, discovery is ongoing. The trial has been postponed
to a date not yet determined by the court. The plaintiff's petition consists of
claims against Property Development for assault, battery, constructive eviction,
negligent hiring, negligent retention, misuse of Housing and Urban Development
funds, slander, retaliatory eviction, and breach of implied warranty of
habitability. The potential verdict in this case ranges from complete defense
verdict up through the $2 million sought by the plaintiffs. The potential
damages, other than those for the alleged intentional acts of assault and
battery, are covered by insurance. Property Development denies each of these
allegations and intends to contest the case vigorously.

Gramco Development Limited Dividend Partnership, L.P.
- -----------------------------------------------------
Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net
funds of $4,867,000 by the Municipality of Bayamon (the "Municipality") and HUD.
In the event of a substantial violation to the provisions of certain agreements
between Gramco and the Municipality and between the Municipality and HUD, the
funds shall become immediately due and payable at the election of HUD and the
Municipality. Otherwise, the principal amount of the obligation together with
any interest will be forgiven. Proceeds from the loan have been deducted from
fixed assets.

Williamsburg Residential, L.P.
- ------------------------------
In November 1996, the Local General Partner of Williamsburg Residential, L.P.
("Williamsburg") stopped making the mortgage note payments which constituted an
event of default. A Reinstatement and Modification Agreement was entered into
effective March 1, 1997. The Partnership has advanced Williamsburg the necessary
funds to keep the mortgage and escrows current during 2003 and is expected to
continue to do so during 2004.

The Partnership's investment in Williamsburg has been written down to $0 by
prior years' losses and the minority interest balance was approximately $724,000
and $726,000 at March 31, 2004 and 2003, respectively. Williamsburg's net loss
after minority interest amounted to approximately $229,000, $142,000 and
$128,000 for the 2003, 2002, and 2001 fiscal years, respectively. As of March
31, 2004, the Partnership has advanced Williamsburg approximately $1,155,000.

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

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

The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher

16


operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs as, for example, for such items as fuel, utilities and labor.

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

The Partnership does not have any market risk sensitive instruments.


17



Item 8. Financial Statements and Supplementary Data.
Sequential
Page
(a) 1. Consolidated Financial Statements ----------

Report of Independent Registered Public Accounting Firm 19

Consolidated Balance Sheets at March 31, 2004 and 2003 79

Consolidated Statements of Operations for the Years Ended
March 31, 2004, 2003 and 2002 80

Consolidated Statements of Changes in Partners'(Deficit)
Capital for the Years Ended March 31, 2004, 2003 and 2002 81

Consolidated Statements of Cash Flows for the Years Ended
March 31, 2004, 2003 and 2002 82

Notes to Consolidated Financial Statements 84


18


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------

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

We have audited the consolidated balance sheets of Liberty Tax Credit Plus II
L.P. and Subsidiaries (A Delaware Limited Partnership) as of March 31, 2004 and
2003, and the related consolidated statements of operations, changes in
partners' (deficit) capital, and cash flows for the years ended March 31, 2004,
2003 and 2002 (the 2003, 2002 and 2001 Fiscal Years). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did not
audit the financial statements for 26 (2003 Fiscal Year) and 27 (2002 and 2001
Fiscal Years) subsidiary partnerships whose losses aggregated $6,756,365,
$4,342,013 and $2,587,660 for the 2003, 2002 and 2001 Fiscal Years,
respectively, and whose assets constituted 98% of the Partnership's assets at
March 31, 2004 and 2003, presented in the accompanying consolidated financial
statements. The financial statements for 26 (2003 Fiscal Year) and 27 (2002 and
2001 Fiscal Years) of these subsidiary partnerships were audited by other
auditors whose reports thereon have been furnished to us and our opinion
expressed herein, insofar as it relates to the amounts included for these
subsidiary partnerships, is based solely upon the reports of the other auditors.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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, based upon our audits, and the reports of the other auditors
referred to above, the accompanying consolidated financial statements referred
to in the first paragraph present fairly, in all material respects, the
financial position of Liberty Tax Credit Plus II L.P. and Subsidiaries at March
31, 2004 and 2003, and the results of their operations and their cash flows for
the years ended March 31, 2004, 2003 and 2002, in conformity with U.S. generally
accepted accounting principles.

As discussed in Note 11(a), the consolidated financial statements include the
financial statements of three limited partnerships with significant
contingencies and uncertainties. The financial statements of these subsidiary
partnerships were prepared assuming that each will continue as a going concern.
The three subsidiary partnerships' net losses aggregated $291,300 (Fiscal 2003),
$296,077 (Fiscal 2002) and $487,648 (Fiscal 2001) and their assets aggregated
$10,294,875 and $10,762,336 at March 31, 2004 and 2003, respectively. These
matters raise substantial doubt about these subsidiary partnerships' abilities
to continue as going concerns. Management's plans in regard to these matters are
also described in Note 11(a). The accompanying consolidated financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 15, 2004


19


[Letterhead of FRIEDMAN ALPREN & GREEN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Polynesian Apartments Associates, Ltd.

We have audited the accompanying statements of operations, changes in partners`
capital and cash flows of POLYNESIAN APARTMENTS ASSOCIATES, LTD. (a limited
partnership), FHA Project No. FL29-K005-015-152, for the period January 1, 2003
to December 18, 2003 (date of dissolution). These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of the operations and cash flows of
POLYNESIAN APARTMENTS ASSOCIATES, LTD. for the period January 1, 2003 to
December 18, 2003 (date of dissolution), in conformity with accounting
principles generally accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, New York
December 18, 2003

20


[Letterhead of FRIEDMAN ALPREN & GREEN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Polynesian Apartments Associates, Ltd.

We have audited the accompanying balance sheet of POLYNESIAN APARTMENTS
ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-152, as
of December 31, 2002, and the related statements of operations, changes in
partners' capital and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of POLYNESIAN APARTMENTS
ASSOCIATES, LTD. as of December 31, 2002 and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, New York
January 27, 2003


21


[Letterhead of FRIEDMAN ALPREN & GREEN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Polynesian Apartments Associates, Ltd.

We have audited the accompanying balance sheet of POLYNESIAN APARTMENTS
ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-152, as
of December 31, 2001, and the related statements of operations, changes in
partners' capital and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of POLYNESIAN APARTMENTS
ASSOCIATES, LTD. as of December 31, 2001 and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, New York
February 4, 2002

22


[Letterhead of FRIEDMAN ALPREN & GREEN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Seagrape Village Associates, Ltd.

We have audited the accompanying statements of operations, changes in partners'
capital deficiency and cash flows of SEAGRAPE VILLAGE ASSOCIATES, LTD. (a
limited partnership), FHA Project No. FL29-K005-015-151, for the period January
1, 2003 to December 18, 2003 (date of dissolution). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of the operations and the cash flows of
SEAGRAPE VILLAGE ASSOCIATES, LTD. for the period January 1, 2003 to December 18,
2003 (date of dissolution), in conformity with accounting principles generally
accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, New York
December 18, 2003

23


[Letterhead of FRIEDMAN ALPREN & GREEN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Seagrape Village Associates, Ltd.

We have audited the accompanying balance sheet of SEAGRAPE VILLAGE ASSOCIATES,
LTD. (a limited partnership), FHA Project No. FL29-K005-015-151, as of December
31, 2002, and the related statements of operations, changes in partners' capital
deficiency and cash flows for the year then ended. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 SEAGRAPE VILLAGE ASSOCIATES,
LTD. as of December 31, 2002 and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, New York
January 27, 2003

24


[Letterhead of FRIEDMAN ALPREN & GREEN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Seagrape Village Associates, Ltd.

We have audited the accompanying balance sheet of SEAGRAPE VILLAGE ASSOCIATES,
LTD. (a limited partnership), FHA Project No. FL29-K005-015-151, as of December
31, 2001, and the related statements of operations, changes in partners' capital
deficiency and cash flows for the year then ended. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 SEAGRAPE VILLAGE ASSOCIATES,
LTD. as of December 31, 2001 and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, New York
February 5, 2002


25


[Letterhead of JOSE E. ROSARIO & CO.]

INDEPENDENT AUDITOR'S REPORT

To the Partners Puerto Rico Housing Finance Corporation
Metropolitan Towers Associates, LP San Juan, Puerto Rico
Rio Piedras, Puerto Rico

I have audited the accompanying balance sheets of Metropolitan Towers
Associates, LP, HUD Project No. RQ-46K-051-005, as of December 31, 2003 and
2002, and the related statements of loss, changes in partners' capital, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.

I conducted my audits in accordance with auditing standards generally accepted
in the United States of America and Puerto Rico 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 Metropolitan Towers Associates,
L.P., as of December 31, 2003 and 2002 and the results of its operations,
changes in partners' capital, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United State of
America and Puerto Rico.

In accordance with GOVERNMENT AUDITING STANDARDS, I have also issued a report
dated January 30, 2004, on my consideration of Metropolitan Towers Associates,
L.P.'s internal control and on my tests of its compliance with certain
provisions of laws, regulations, contracts, and grants. Those reports are an
integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of my audits.

My audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 13 to 19 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of Metropolitan
Towers Associates, L.P.. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Jose E. Rosario & Co.
License No. 961
Expires December 1, 2004
San Juan, Puerto Rico
January 30, 2004

Stamp No. 1931869 of the Puerto Rico College of CPA was affixed to the original.


26


[Letterhead of JOSE E. ROSARIO & CO.]

INDEPENDENT AUDITOR'S REPORT

To the Partners Puerto Rico Housing Finance Corporation
Metropolitan Towers Associates, LP San Juan, Puerto Rico
Rio Piedras, Puerto Rico

I have audited the accompanying balance sheets of Metropolitan Towers
Associates, LP, HUD Project No. RQ-46-K-051005, as of December 31, 2002 and
2001, and the related statements of income (loss), changes in partner's 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 my audits in accordance with auditing standards generally accepted
in the United States of America and Puerto Rico and Government Auditing
Standards issued by the Comptroller General of the United States. Those
standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Metropolitan Towers Associates, LP,
as of December 31, 2002 and2001, and the results of its operations and the
changes in partner's capital, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United State of
America and Puerto Rico.

In accordance with Government Auditing Standards, I have also issued a report
dated January 31, 2003, on my consideration of Metropolitan Towers Associates,
LP's internal control and on my tests of its compliance with certain provisions
of laws, regulations, contracts, and grants. Those reports are an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of my
audits.

My audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 13 to 19 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of Metropolitan
Towers Associates, LP. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Jose E. Rosario & Co.
License No. 961
Expires December 1, 2004
San Juan, Puerto Rico
January 31, 2003

Stamp No. 1780475 of the Puerto Rico College of CPA was affixed to the original.


27


[Letterhead of RBG & Co.]

S2100-020

Independent Auditors' Report

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

We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., Project No. 085-35415-PM, a limited partnership, as of December 31,
2003 and 2002, and the related statements of income, partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Place II - Olive
Site, L.P. as of December 31, 2003 and 2002 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our
reports dated February 2, 2004 on our consideration of Westminster Place II -
Olive Site, L.P.'s internal controls and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. Those reports are
an integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audits.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 13 to 22) 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 financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 6 to the
financial statements, the Partnership's rental subsidy will be depleted during
2004 which will raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters are described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


/s/ Rubin, Brown, Gornstein & Co. LLP
February 2, 2004
St. Louis, Missouri


28


[Letterhead of RBG & Co.]

S2100-020

Independent Auditors' Report

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

We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., Project No. 085-35415-PM, a limited partnership, as of December 31,
2002 and 2001 and the related statements of income, partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Place II - Olive
Site, L.P. as of December 31, 2002 and 2001 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our
reports dated January 16, 2003 on our consideration of Westminster Place II -
Olive Site, L.P.'s internal controls and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. Those reports are
an integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audit.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 13 to 22) 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 financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.

/s/ Rubin, Brown, Gornstein & Co. LLP
January 16, 2003
St. Louis, Missouri


29


[Letterhead of RBG & Co.]

Independent Auditors' Report

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

We have audited the accompanying balance sheet of Property Development
Associates, L.P., a limited partnership, as of December 31, 2003 and 2002, and
the related statements of income, partners' equity and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Property Development
Associates, L.P. as of December 31, 2003 and 2002, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
February 5, 2004


30


[Letterhead of RBG & Co.]

Independent Auditors' Report

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

We have audited the accompanying balance sheet of Property Development
Associates, L.P., a limited partnership, as of December 31, 2002 and 2001 and
the related statements of income, partners' equity and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Property Development
Associates, L.P. as of December 31, 2002 and 2001, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
February 8, 2003

31


[Letterhead of RBG & Co.]

S2100-020

Independent Auditors' Report

To The Partners
Whittier Plaza Associates Limited Partnership
St. Louis, Missouri

We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, Project No. 085-35412-PM-SR, a limited partnership, as of
December 31, 2003 and 2002, and the related statements of income, partners'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whittier Plaza Associates
Limited Partnership as of December 31, 2003 and 2002, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our
reports dated January 30, 2004 on our consideration of Whittier Plaza Associates
Limited Partnership's internal control and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. Those reports are
an integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audit.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 15 to 24) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership has sustained recurring losses from
operations, excessive vacancies, and has continually required a general partner
to fund deficits. These items raise substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 30, 2004


32


[Letterhead of RBG & Co.]

S2100-020

Independent Auditors' Report

To The Partners
Whittier Plaza Associates Limited Partnership
St. Louis, Missouri

We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, Project No. 085-35412-PM-SR, a limited partnership, as of
December 31, 2002 and 2001, and the related statements of income, partners'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whittier Plaza Associates
Limited Partnership as of December 31, 2002 and 2001, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted.

In accordance with Government Auditing Standards, we have also issued our
reports dated January 13, 2003 on our consideration of Whittier Plaza Associates
Limited Partnership's internal control and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. Those reports are
an integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 15 to 24) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership has sustained recurring losses from
operations, excessive vacancies, and has continually required a general partner
to fund deficits. These items raise substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 13, 2003

33


[Letterhead of Habif, Arogeti & Wynne, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
United - Glenarden I Limited Partnership

We have audited the accompanying balance sheet of United - Glenarden I Limited
Partnership as of December 31, 2003, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United - Glenarden I Limited
Partnership as of December 31, 2003, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.

/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
January 28, 2004

34


[Letterhead of Habif, Arogeti & Wynne, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
United - Glenarden I Limited Partnership

We have audited the accompanying balance sheet of United - Glenarden I Limited
Partnership as of December 31, 2002, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United - Glenarden I Limited
Partnership as of December 31, 2002, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.

/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 6, 2003

35


[Letterhead of Habif, Arogeti & Wynne, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
United - Glenarden I Limited Partnership

We have audited the accompanying balance sheet of United - Glenarden I Limited
Partnership as of December 31, 2001, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

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

/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 15, 2002


36


[Letterhead of Habif, Arogeti & Wynne, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
United - Glenarden II Limited Partnership

We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2003, and the related statements of operations,
changes in partners' equity (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2003, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.

/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
January 28, 2004

37



[Letterhead of Habif, Arogeti & Wynne, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
United - Glenarden II Limited Partnership

We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2002, and the related statements of operations,
changes in partners' equity (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2002, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 6, 2003

38


[Letterhead of Habif, Arogeti & Wynne, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
United - Glenarden II Limited Partnership

We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2001, and the related statements of operations,
changes in partners' equity (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2001, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in Note O to the
financial statements, as shown in the financial statements, the Project is in
default of its loan agreement at December 31, 2001 primarily as a result of
non-payment of the required mortgage payments. These conditions raise
substantial doubt about the Project's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 13, 2002

39


[Letterhead of SOLOMON & ASSOCIATES LLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
ROLLING GREEN LIMITED PARTNERSHIP
D/B/A Prairie View Apartments
Libertyville, IL

We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, and the related statements of
income, changes in partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, and the results of its operations,
changes in partners' equity (deficit) and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Solomon & Associates LLC
Chicago, IL
January 23, 2004

40



[Letterhead of SOLOMON, BAERSON, WITONSKI, PATEL & KASKEL, LTD.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
ROLLING GREEN LIMITED PARTNERSHIP
D/B/A Prairie View Apartments
Libertyville, IL

We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2002 and 2001, and the related statements of
income, changes in partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2002 and 2001, and the results of its operations,
changes in partners' equity (deficit) and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Solomon, Baerson, Witonski, Patel & Kaskel, Ltd.
Chicago, IL
January 30, 2003


41



[Letterhead of ZAYAS, MORAZZANI & CO.]

Independent Auditors' Report

To the Partners
Santa Juanita II Limited Partnership:

We have audited the accompanying balance sheet of Santa Juanita II Limited
Partnership, as of December 31, 2003, and the related statements of profit and
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.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Santa Juanita II Limited
Partnership as of December 31, 2003, and the results of its operations, changes
in partners' equity, and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 6, 2004, on our
consideration of Santa Juanita II Limited Partnership's internal control, a
report dated February 6, 2004, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to major
HUD programs, and a report dated February 6, 2004 on its compliance with
specific requirements applicable to Affirmative Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 24
through 33 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.

/s/ Zayas, Morazzani & Co.

February 6, 2004

Stamp No. 1935132 of the Puerto Rico Society of Certified Public Accountants was
affixed to original.

Federal Employer Identification Number: 66-0365844


42

- -

[Letterhead of ZAYAS, MORAZZANI & CO.]

Independent Auditors' Report

To the Partners
Santa Juanita II Limited Partnership:

We have audited the accompanying balance sheet of Santa Juanita II Limited
Partnership, as of December 31, 2002, and the related statements of profit and
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.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Santa Juanita II Limited
Partnership as of December 31, 2002, and the results of its operations, changes
in partners' equity, and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 10, 2003, on our
consideration of Santa Juanita II Limited Partnership's internal control, a
report dated February 10, 2003, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to major
HUD programs, and a report dated February 10, 2003 on its compliance with
specific requirements applicable to Affirmative Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 24
through 33 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.

/s/ Zayas, Morazzani & Co.

February 10, 2003

Stamp No. 1843230 of the Puerto Rico Society of Certified Public Accountants was
affixed to original.

Federal Employer Identification Number: 66-0365844


43


[Letterhead of ZAYAS, MORAZZANI & CO.]

Independent Auditors' Report

To the Partners
Santa Juanita II Limited Partnership:

We have audited the accompanying balance sheet of Santa Juanita II Limited
Partnership, as of December 31, 2001, and the related statements of profit and
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.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Santa Juanita II Limited
Partnership as of December 31, 2001, and the results of its operations, changes
in partners' equity, and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 11, 2002, on our
consideration of Santa Juanita II Limited Partnership's internal control, a
report dated February 11, 2002, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to major
HUD programs, and a report dated February 11, 2002 on its compliance with
specific requirements applicable to Affirmative Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 23
through 32 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.

/s/ Zayas, Morazzani & Co.

February 11, 2002

Stamp No. 1781861 of the Puerto Rico Society of Certified Public Accountants was
affixed to original.

Federal Employer Identification Number: 66-0365844


44


[Letterhead of Berdon, LLP]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Spring Creek Associates, L.P.
(a Delaware Limited Partnership) as of December 31, 2003 and 2002, and the
related statements of operations changes in partners' capital (deficit), and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spring Creek Associates, L.P.
as of December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

/s/ Berdon, LLP
Certified Public Accountants

New York, N.Y.
January 21, 2004

45


[Letterhead of Berdon, LLP]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Spring Creek Associates, L.P.
(a Delaware Limited Partnership) as of December 31, 2002 and 2001, and the
related statements of operations changes in partners' capital (deficit), and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spring Creek Associates, L.P.
as of December 31, 2002 and 2001, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

/s/ Berdon, LLP
Certified Public Accountants

New York, N.Y.
February 3, 2003

46


[Letterhead of Sunil J. Shah]

INDEPENDENT AUDITORS' REPORT

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

I have audited the accompanying consolidated balance sheet of East Two
Thirty-Five Associates, L.P. and subsidiary as (Delaware limited partnerships)
as of December 31, 2003, and the related consolidated statements of operations,
changes in partners' capitaln (deficit), and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
consolidated financial statements based on my audit. The consolidated financial
statements of East Two Thirty-Five Associates, L.P. and subsidiary as of
December 31, 2002 were audited by other auditors whose report dated February 10,
2003 expressed an unqualified opinion on those statements.

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

In my opinion, the December 31, 2003 consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
East Two Thirty-Five Associates, L.P. and subsidiary as of December 31, 2003,
and the results of their operations and their cash flows for the year then ended
in conformity with accounting principles generally accepted in the United States
of America.

/s/ Sunil J. Shah CPA, PC
New York, N.Y.
February 10, 2004


47


[Letterhead of Berdon, LLP]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of East Two
Thirty-Five Associates, L.P. and subsidiary as (Delaware limited partnership) as
of December 31, 2002 and 2001, and the related consolidated statements of
operations, changes in partners' capital, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of East Two Thirty-Five
Associates, L.P. and subsidiary as of December 31, 2002 and 2001, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.

/s/ Berdon, LLP
New York, N.Y.
February 10, 2003


48


[Letterhead of Sunil J. Shah]

INDEPENDENT AUDITORS' REPORT

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

I have audited the accompanying balance sheet of Upper Fifth Avenue Residential
Associates, L.P. (a Delaware limited partnership) as of December 31, 2003, and
the related statement of operations, changes in partners' capital (deficit), and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on our audit. The Financial
statements of Upper Fifth Avenue Residential Associates, L.P. as of December 31,
2002, we audited by other auditors whose report dated January 28, 2003 expressed
an unqualified opinion on those statements.

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

In my opinion, the 2003 financial statements referred to above present fairly,
in all material respects, the financial position of Upper Fifth Avenue
Residential Associates, L.P. as of December 31, 2003 and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

/s/ Sunil J. Shah CPA, P.C.
Certified Public Accountants

Iselin, New Jersey
February 6, 2004


49


[Letterhead of Berdon, LLP]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Upper Fifth Avenue
Residential Associates, L.P. (a Delaware limited partnership) as of December 31,
2002 and 2001, and the related statements of operations, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits 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 Upper Fifth Avenue Residential
Associates, L.P. as of December 31, 2002 and 2001, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Berdon, LLP
Certified Public Accountants

New York, N.Y.
January 28, 2003


50


[Letterhead of Sunil J. Shah]

INDEPENDENT AUDITORS' REPORT

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

I have audited the accompanying balance sheet of West 107th Street Associates,
L.P. (a Delaware Limited Partnership) as of December 31, 2003, 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. My responsibility is to express an opinion on these
financial statements based on my audit. The financial statements of West 107th
Street Associates, L.P. as of December 31, 2002 were audited by other auditors
whose report dated January 9, 2003 expressed an unqualified opinion on those
statements.

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

In my opinion, the December 31, 2003 financial statements referred to above
present fairly, in all material respects, the financial position of West 107th
Street Associates, L.P. as of December 31, 2003 and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

/s/ Sunil J. Shah CPA, PC
Certified Public Accountants

New York, N.Y.
January 19, 2004

51


[Letterhead of Berdon, LLP]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of West 107th Street Associates,
L.P. (a Delaware Limited Partnership) as of December 31, 2002 and 2001, and the
related statements of operations, changes in partners' capital, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West 107th Street Associates,
L.P. as of December 31, 2002 and 2001 and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

/s/ Berdon, LLP
Certified Public Accountants

New York, N.Y.
January 9, 2003


52


[Letterhead of Sunil J. Shah]

INDEPENDENT AUDITORS' REPORT

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

I have audited the accompanying consolidated balance sheet of General Atlantic
Second Avenue Associates, L.P. and subsidiary (a Delaware Limited Partnership)
as of December 31, 2003, and the related consolidated statements of operations,
changes in partners' capital (deficit) and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
consolidated financial statements based on my audit. The consolidated financial
statements of General Atlantic Second Avenue Associates, L.P. and subsidiary as
of December 31, 2002 were audited by other auditors whose report dated January
31, 2003 expressed an unqualified opinion on those statements.

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

In my opinion, the December 31, 2003 consolidated financial statements referred
to above present fairly, in all material respects, the consolidated financial
position of General Atlantic Second Avenue Associates, L.P. and subsidiary as of
December 31, 2003 and the results of their operations and their cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.

/s/ Berdon, LLP
Certified Public Accountants

New York, N.Y.
February 3, 2004

53


[Letterhead of Berdon, LLP]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of General Atlantic
Second Avenue Associates, L.P. and subsidiary (a Delaware Limited Partnership)
as of December 31, 2002 and 2001, and the related consolidated statements of
operations, changes in partners' capital (deficit), and cash flows for the year
then ended. These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits. The consolidated
financial statements of General Atlantic Second Avenue Associates, L.P. as of

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of General
Atlantic Second Avenue Associates, L.P. and subsidiary as of December 31, 2002
and 2001 and the consolidated results of their operations and their cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/ Berdon, LLP
Certified Public Accountants

New York, N.Y.
January 31, 2003


54


[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Church Lane Associates

We have audited the accompanying balance sheets of Church Lane Associates as of
December 31, 2003 and 2002, and the related statements of profit and loss,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Church Lane Associates as of
December 31, 2003 and 2002, and the results of its operations, the changes in
partners' equity (deficit) and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued our report
for the year ended December 31, 2003, dated January 23, 2004, on our
consideration of Church Lane Associates' internal control over financial
reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

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

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 23, 2004


55


[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Church Lane Associates

We have audited the accompanying balance sheets of Church Lane Associates as of
December 31, 2002 and 2001, and the related statements of profit and loss,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Church Lane Associates as of
December 31, 2002 and 2001, and the results of its operations, the changes in
partners' equity (deficit) and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued our report
for the year ended December 31, 2002, dated January 24, 2003, on our
consideration of Church Lane Associates' internal control over financial
reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 26
through 29 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 24, 2003


56



[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Campeche Isle Apartments Limited Partnership

We have audited the accompanying statement of changes in net assets in
liquidation of Campeche Isle Apartments Limited Partnership for the period
January 1, 2002 through January 18, 2002. This financial statement is the
responsibility of the partnership's management. Our responsibility is to express
an opinion on this financial statement based on our audit.

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

In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation of for the period
January 1, 2002 through January 18, 2002, in conformity with accounting
principles generally accepted in the United States of America.

As described in note A to the financial statements during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On January 18, 2002, the partnership sold the rental
property. As a result, the partnership's financial statement is presented on the
liquidation basis of accounting.

Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on page 7 is presented
for purposes of additional analysis and is not a required part of the basic
financial statement. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statement taken as a whole.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
August 14, 2002


57


[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Campeche Isle Apartments Limited Partnership

We have audited the accompanying statement of net assets in liquidation of
Campeche Isle Apartments Limited Partnership as of December 31, 2001, and the
related statement of changes in net assets in liquidation for the period January
1, 2001 through December 31, 2001. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

As described in note A to the financial statements, during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On April 18, 2002, the partnership sold the rental
property. As a result, the partnership's financial statements are presented on
the liquidation basis of accounting.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Campeche Isle Apartments
Limited Partnership as of December 31, 2001, and the changes in net assets in
liquidation for the period January 1, 2001 through December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
March 6, 2002


58


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 2003 and 2002, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robin Housing Associates as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

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

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 23, 2004


59


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 2002 and 2001, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robin Housing Associates as of
December 31, 2002 and 2001, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 31, 2003

60


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concourse Artists Housing
Associates as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

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

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 23, 2004


61


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 2002 and 2001, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concourse Artists Housing
Associates as of December 31, 2002 and 2001, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 31, 2003


62


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 2051 Grand Concourse Housing
Associates as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

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

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 23, 2004


63


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 2002 and 2001, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 2051 Grand Concourse Housing
Associates as of December 31, 2002 and 2001, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 31, 2003


64


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Willoughby-Wyckoff Housing
Associates as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with conformity with
accounting principles generally accepted in the United States of America.

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

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 23, 2004


65


[Letterhead of MARDEN, HARRISON & KREUTER]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 2002 and 2001, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Willoughby-Wyckoff Housing
Associates as of December 31, 2002 and 2001, and the results of its operations
and its cash flows for the years then ended in conformity with conformity with
accounting principles generally accepted in the United States of America.

/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.

White Plains, New York
January 31, 2003


66


[Letterhead of WOLFE NILGES NAHORSKI]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, 2003 and 2002, and the related statements of
Income (loss), partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Goodfellow Place Limited
Partnership as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.

/s/ Wolfe Nilges Nahorski
A Professional Corporation

January 22, 2004
St. Louis, Missouri


67


[Letterhead of WOLFE NILGES NAHORSKI]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, 2002 and 2001, and the related statements of
Income (loss), partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Goodfellow Place Limited
Partnership as of December 31, 2002 and 2001, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.

/s/ Wolfe Nilges Nahorski
A Professional Corporation

January 23, 2003
St. Louis, Missouri


68


[Letterhead of HAMILTON & MUSSER, P.C.]

INDEPENDENT AUDITOR'S REPORT

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

We have audited the accompanying balance sheets of Penn Alto Associates, Limited
Partnership as of December 31, 2003 and 2002 and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Penn Alto Associates, Limited
Partnership, as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information on pages
9 and 10 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.

/s/ Hamilton & Musser
Certified Public Accountants
Mechanicsburg, Pennsylvania
February 19, 2004


69



[Letterhead of HAMILTON & MUSSER, P.C.]

INDEPENDENT AUDITOR'S REPORT

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

We have audited the accompanying balance sheets of Penn Alto Associates, Limited
Partnership as of December 31, 2002 and 2001 and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Penn Alto Associates, Limited
Partnership, as of December 31, 2002 and 2001, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information on pages
9 and 10 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.

/s/ Hamilton & Musser
Certified Public Accountants
Mechanicsburg, Pennsylvania
February 14, 2003


70


[Letterhead of Torres Llompart, Sanchez Ruiz & Co.]

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

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS

We have audited the accompanying balance sheets of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2003 and 2002, and the related statements of profit and loss, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2003 and 2002, and the results of its operations, changes in partners'
capital and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for audits of HUD Programs, issued by the US Department of Housing and
Urban Development, we have also issued a report dated January 21, 2004, on our
consideration of the Partnership's internal control and on our tests on its
compliance with specific requirements applicable to major HUD programs; and
compliance with specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of the audits.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements, taken as a whole. The accompanying supplementary
information included in the report on pages 24 to 27 is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project
No. 056-35140-LD (HODAG). Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements for the year
ended December 31, 2003, and in our opinion, is fairly stated in all material
respects in relation to the basic financial statements for the year ended
December 31, 2003, taken as a whole.

/s/ Torres Llompart, Sanchez Ruiz & Co.
January 21, 2004
License No. 169
San Juan, Puerto Rico
Stamp number 1943068 was affixed to the original of this report.


71


[Letterhead of Torres Llompart, Sanchez Ruiz & Co.]

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

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS

We have audited the accompanying balance sheets of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2002 and 2001, and the related statements of profit and loss, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2002 and 2001, and the results of its operations, changes in partners'
capital and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for audits of HUD Programs, issued by the US Department of Housing and
Urban Development, we have also issued a report dated February 14, 2003, on our
consideration of the Partnership's internal control structure and reports dated
January 22, 2002, on its compliance with specific requirements applicable to
major HUD programs; compliance with laws, regulations, contracts, loan covenants
and agreements; and compliance with specific requirements applicable to Fair
Housing and Non-Discrimination. Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of the audits.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements, taken as a whole. The accompanying supplementary
information included in the report on pages 24 to 27 is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project
No. 056-35140-LD (HODAG). Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements for the year
ended December 31, 2002, and in our opinion, is fairly stated in all material
respects in relation to the basic financial statements for the year ended
December 31, 2002, taken as a whole.

/s/ Torres Llompart, Sanchez Ruiz & Co.
February 14, 2003
License No. 169
San Juan, Puerto Rico
Stamp number 1780551 was affixed to the original of this report.


72



[Letterhead of COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at December 31, 2003 and December 31, 2002
and the related statements of income, partners' capital and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with U.S. generally accepted 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 in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at December 31, 2003 and
December 31, 2002, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed at Note 11 to the
financial statements, there are uncertainties that affect the Partnership
concerning the existence of hazardous waste and negative performance indicators
that raise substantial doubt about the Partnership's ability to continue as a
going concern. Management's position in regard to these matters is also
discussed at Note 11. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the years ended December 31, 2003 and December 31, 2002
taken as a whole. The supplementary Schedule 1 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 audit procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.

/s/ Cole, Evans & Peterson
Shreveport, Louisiana
February 2, 2004

73


[Letterhead of COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at December 31, 2002 and December 31, 2001
and the related statements of income, partners' capital and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at December 31, 2002 and
December 31, 2001, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed at Note 11 to the
financial statements, there are uncertainties that affect the Partnership
concerning the existence of hazardous waste and negative performance indicators
that raise substantial doubt about the Partnership's ability to continue as a
going concern. Management's position in regard to these matters is also
discussed at Note 11. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the years ended December 31, 2002 and December 31, 2001
taken as a whole. The supplementary Schedule 1 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 audit procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.

/s/ Cole, Evans & Peterson
Shreveport, Louisiana
February 12, 2003


74


[Letterhead of Dickey, Wolf & Humbard, LLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Williamsburg Residential, L.P.

We have audited the balance sheets of Williamsburg Residential, L.P. (a Kansas
Limited Partnership) as of December 31, 2003 and 2002, and the related
statements of operations, partners' equity/(deficit), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 Williamsburg Residential, L.P.
as of December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

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

Harrisonville, MO
January 9, 2004

75


[Letterhead of Dickey, Wolf & Humbard, LLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Williamsburg Residential, L.P.

We have audited the balance sheets of Williamsburg Residential, L.P. (a Kansas
Limited Partnership) as of December 31, 2002 and 2001, and the related
statements of operations, partners' equity/(deficit), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 Williamsburg Residential, L.P.
as of December 31, 2002 and 2001, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

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

Harrisonville, MO
January 9, 2003


76


[Letterhead of MAYER HOFFMAN MCCANN P.C.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Victory Apartments

We have audited the balance sheet of Victory Apartments - F.H.A. Project No.
071-35701 as of December 31, 2003, and the related statements of income, changes
in partners' capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements as of December 31, 2002, were audited by
other auditors whose report dated January 21, 2003, expressed an unqualified
opinion on those statements.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Victory Apartments, F.H.A.
Project No. 071-35701 as of December 31, 2003, and the results of its operations
and its cash flows for the years then ended in conformity with U.S. generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 29, 2004, on our consideration of the Partnership's internal
control and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
read in conjunction with this report in considering the results of our audits.


/s/ Mayer Hoffman McCann P.C.
Chicago, Illinois
January 29, 2004


77



[Letterhead of PHILIP ROOTBERG & COMPANY, LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Victory Apartments

We have audited the accompanying balance sheet of Victory Apartments (a limited
partnership) - F.H.A. Project No. 071-35701 as of December 31, 2002 and 2001,
and the related statements of profit and loss, partners' capital, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Victory Apartments, F.H.A.
Project No. 071-35701 as of December 31, 2002 and 2001, and the results of its
operations, changes in its partners' capital and its cash flows for the years
then ended in conformity with U.S. generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 2003, on our consideration of the Partnership's internal
control and on our test of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
read in conjunction with this report in considering the results of our audits.

Our 2002 audit was conducted for the purpose of forming an opinion on the basic
2002 financial statements taken as a whole. The accompanying supplemental
schedules listed on the preceding contents page are presented for purposes of
additional analysis to comply with HUD reporting requirements and are not a
required part of the basic 2002 financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic 2002
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic 2002 financial statements taken as a whole.

/s/ Philip Rootberg & Company, LLP
Chicago, Illinois
January 21, 2003


78


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




March 31,
------------------------------
2004 2003
------------- -------------

ASSETS

Property and equipment, at cost, less accumulated
depreciation (Notes 2, 4 and 7) $ 121,262,827 $ 136,014,414
Cash and cash equivalents (Notes 2, 3 and 11) 1,838,615 1,577,939
Cash held in escrow (Notes 2, 3 and 5) 8,314,043 8,395,528
Deferred costs - less accumulated amortization (Notes 2 and 6) 2,333,029 2,516,958
Other assets 4,306,926 4,546,756
------------- -------------

Total assets $ 138,055,440 $ 153,051,595
============= =============


LIABILITIES AND PARTNERS' (DEFICIT) CAPITAL

Liabilities
Mortgage notes payable (Notes 3 and 7) $ 96,557,630 $ 104,624,793
Accounts payable and other liabilities (Note 11) 7,948,887 7,513,253
Due to local general partners and affiliates (Note 8) 14,797,705 16,444,523
Due to general partners and affiliates (Note 8) 15,634,778 13,829,040
Due to selling partners 2,574,369 2,457,615
------------- -------------

Total liabilities 137,513,369 144,869,224
------------- -------------

Minority interests (Note 2) 2,123,287 2,293,585
------------- -------------

Commitments and contingencies (Notes 8 and 11)

Partners' (deficit) capital
Limited partners ( 115,917.5 BACs issued and
outstanding) (Note 1) (534,720) 6,860,582
General partners (1,046,496) (971,796)
------------- -------------

Total partners' (deficit) capital (1,581,216) 5,888,786
------------- -------------

Total liabilities and partners' (deficit) capital $ 138,055,440 $ 153,051,595
============= =============



See accompanying notes to consolidated financial statements.


79


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



Year Ended March 31,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------

Revenues
Rental income $ 26,022,919 $ 26,351,826 $ 27,011,085
Other (Note 11) 966,982 932,591 2,308,047
Loss on sale of properties (Note 10) (546,734) (44,883) 0
------------ ------------ ------------
26,443,167 27,239,534 29,319,132
------------ ------------ ------------

Expenses
General and administrative 6,106,103 5,809,535 6,389,195
General and administrative-related parties
(Note 8) 2,569,673 2,545,072 2,571,815
Repairs and maintenance 6,952,487 6,189,051 6,235,426
Operating and other 3,072,098 2,785,744 3,433,542
Real estate taxes 1,093,642 1,141,269 1,174,277
Insurance 1,880,369 1,671,901 1,379,465
Financial, primarily interest 5,660,179 6,462,890 7,516,734
Depreciation and amortization 7,767,814 8,794,462 8,061,598
Loss on impairment of assets (Notes 2 and 4) 0 0 679,811
------------ ------------ ------------

Total expenses 35,102,365 35,399,924 37,441,863
------------ ------------ ------------

Loss before minority interest and
extraordinary item (8,659,198) (8,160,390) (8,122,731)

Minority interest in loss of subsidiaries 1,189,196 199,013 137,083
------------ ------------ ------------

Loss before extraordinary item (7,470,002) (7,961,377) (7,985,648)
Extraordinary item-forgiveness of
indebtedness income (Note 7) 0 0 1,802,622
------------ ------------ ------------

Net loss $ (7,470,002) $ (7,961,377) $ (6,183,026)
============ ============ ============

Limited partners share:
Loss before extraordinary item $ (7,395,302) $ (7,881,763) $ (7,905,792)
Extraordinary item 0 0 1,784,596
------------ ------------ ------------

Net loss - limited partners $ (7,395,302) $ (7,881,763) $ (6,121,196)
============ ============ ============

Number of BACs outstanding 115,917.5 115,917.5 115,917.5
============ ============ ============

Loss before extraordinary item per
BAC $ (63.80) $ (67.99) $ (68.20)
Extraordinary item per BAC 0 0 15.40
------------ ------------ ------------

Loss per BAC $ (63.80) $ (67.99) $ (52.80)
============ ============ ============



See accompanying notes to consolidated financial statements.


80


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


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

Partners' capital (deficit) - April 1, 2001 $ 20,033,189 $ 20,863,541 $ (830,352)
Net loss (6,183,026) (6,121,196) (61,830)
------------ ------------ ------------

Partners' capital (deficit) - March 31, 2002 13,850,163 14,742,345 (892,182)
Net loss (7,961,377) (7,881,763) (79,614)
------------ ------------ ------------

Partners' capital (deficit) - March 31, 2003 5,888,786 6,860,582 (971,796)
Net loss (7,470,002) (7,395,302) (74,700)
------------ ------------ ------------

Partners' deficit - March 31, 2004 $ (1,581,216) $ (534,720) $ (1,046,496)
============ ============ ============



See accompanying notes to consolidated financial statements.

81



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



Year Ended March 31,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------

Cash flows from operating activities:
Net loss $ (7,470,002) $ (7,961,377) $ (6,183,026)
------------ ------------ ------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Loss on sale of properties 546,734 44,883 0
Extraordinary item - forgiveness of
indebtedness income 0 0 (1,802,622)
Depreciation and amortization 7,767,814 8,794,462 8,061,598
Loss on impairment 0 0 679,811
Minority interest in loss of subsidiaries (1,189,196) (199,013) (137,083)
Accrued interest added to principal of
mortgage note payable 52,872 52,876 52,872
(Increase) decrease in assets:
Cash held in escrow 68,302 (374,289) (24,764)
Other assets 239,830 62,431 (755,982)
Increase (decrease) in liabilities:
Accounts payable and other liabilities 480,828 (196,919) (784,859)
Due to general partners and affiliates 1,805,738 1,837,961 1,429,314
------------ ------------ ------------

Total adjustments 9,772,922 10,022,392 6,718,285
------------ ------------ ------------

Net cash provided by operating activities 2,302,920 2,061,015 535,259
------------ ------------ ------------

Cash flows from investing activities:
Proceeds from sale of properties 7,840,000 4,625,000 0
Costs paid relating to sale of properties (136,254) (129,688) 0
Acquisition of property and equipment (932,748) (942,496) (904,425)
(Increase) decrease in cash held in escrow (31,844) (745,014) 491,269
------------ ------------ ------------

Net cash provided by (used in) investing
activities 6,739,154 2,807,802 (413,156)
------------ ------------ ------------

Cash flows from financing activities:
Increase in deferred costs (150,197) (465,596) (145,997)
Proceeds from mortgage notes 0 30,838,245 0
Repayments of mortgage notes (8,120,035) (34,713,615) (6,842,672)
Increase in due to local general partners
and affiliates 361,350 170,648 5,978,211
Decrease in due to local general partners
and affiliates (2,008,168) (458,128) (216,236)
Increase in due to selling partners 116,754 107,520 99,070
Increase (decrease) in capitalization of
consolidated subsidiaries attributable to
minority interest 1,018,898 (23,674) (365,508)
------------ ------------ ------------

Net cash used in financing activities (8,781,398) (4,544,600) (1,493,132)
------------ ------------ ------------

Net increase (decrease) in cash and
cash equivalents 260,676 324,217 (1,371,029)



82


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



Year Ended March 31,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------


Cash and cash equivalents at
beginning of year 1,577,939 1,253,722 2,624,751
------------ ------------ ------------
Cash and cash equivalents
at end of year $ 1,838,615 $ 1,577,939 $ 1,253,722
============ ============ ============

Supplemental disclosure of cash flows
information:
Cash paid during the year for interest $ 6,043,819 $ 6,037,438 $ 6,912,381

Supplemental disclosures of noncash
investing and financing activities:
Increase in property and equipment -
held for sale reclassified from property
and equipment $ 0 $ 0 $ 4,420,312
Increase in other assets from property
and equipment deferred loss 0 0 47,133

Forgiveness of indebtedness
income:
Decrease in mortgage notes payable $ 0 $ 0 $ (1,802,622)

Summarized below are the
components of the loss on sale
of properties (Note 10):

Decrease in property and
equipment - net of accumulated
depreciation $ 8,250,647 $ 0 $ 0
Decrease in property and
equipment - held for sale -
net of accumulated depreciation 0 4,420,312 0
Decrease in cash held in escrow 45,027 110,641 0
Decrease in other assets 0 163,704 0
Decrease in accounts payable and other
liabilities (45,194) (155,463) 0
Increase in due to general
partners and affiliates 0 1,001 0



See accompanying notes to consolidated financial statements.

83



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


NOTE 1 - General

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

The general partners of the Partnership are Related Credit Properties II L.P., a
Delaware limited partnership (the "Related General Partner"), Liberty Associates
II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP
II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the
"Liberty General Partner" and together with the Related General Partner and
Liberty Associates, the "General Partners"). The general partner of the Related
General Partner is Related Credit Properties II Inc., a Delaware corporation.
The general partners of Liberty Associates are Related Credit Properties II
Inc., and the Liberty General Partner. Liberty Associates is also the special
limited partner of the Partnership. On November 17, 2003, CharterMac acquired
Related Capital Company, which is the indirect parent of RCC Manager LLC, the
sole shareholder of Related Credit Properties II Inc. Pursuant to the
acquisition, CharterMac acquired controlling interests in the General Partners.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partners' management team remained unchanged.

The Partnership's business is to invest in other limited partnerships ("Local
Partnerships", "subsidiaries" or "subsidiary partnerships") owning leveraged
low-income multifamily residential complexes ("Apartment Complexes") that are
eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in
the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning
properties ("Rehabilitation Projects" and together with the Apartment Complexes,
the "Properties") that are eligible for the historic rehabilitation tax credit.
The Partnership's investment in each Local Partnership represents a 20% to 98%
interest in that Local Partnership. The Partnership had originally invested in
27 Local Partnerships. During the year ended March 31, 2004, the Partnership
sold the properties and the related assets and liabilities of two Local
Partnerships. Through the year ended March 31, 2004, the Partnership has sold
the properties and the related assets and liabilities of three Local
Partnerships (see Note 10).

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

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

NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Consolidation

The consolidated financial statements include the accounts of the Partnership
and 26, 27 and 27 subsidiary partnerships in which the Partnership is a limited
partner for the years ended March 31, 2004, 2003 and 2002 (the 2003, 2002 and
2001 "Fiscal Years"), respectively. Through the rights of the Partnership and/or
a General Partner (which has a contractual obligation to act on behalf of the
Partnership) to remove the general partner of the subsidiary local partnerships
and to approve certain major operating and financial decisions, the Partnership
has a controlling financial interest in the subsidiary local partnerships.

84



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


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

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

The Partnership's investment in each subsidiary partnership is equal to the
respective subsidiary partners' equity less minority interest capital, if any.
Losses attributable to minority interests which exceed the minority interest's
investment in a subsidiary partnership have been charged to the Partnership.
Such losses aggregated approximately $0, $564,000 and $625,000 for the years
ended March 31, 2004, 2003 and 2002 (the 2003, 2002 and 2001 Fiscal Years),
respectively. In consolidation, all subsidiary partnership losses are included
in the Partnership's capital account except for losses allocated to minority
interest capital.

b) Cash and Cash Equivalents

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

c) Property and Equipment

Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring such property and equipment. The cost
of property and equipment is depreciated over their estimated useful lives using
accelerated and straight-line methods. Expenditures for repairs and maintenance
are charged to expense as incurred; major renewals and betterments are
capitalized. At the time property and equipment are retired or otherwise
disposed of, the cost and accumulated depreciation are eliminated from the
assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings. A loss on impairment of assets is recorded
when management estimates amounts recoverable through future operations and sale
of the Property on an undiscounted basis are below depreciated cost. Property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows) when the Property is considered to be impaired and the
depreciated cost exceeds estimated fair value. During the year ended March 31,
2004, the Partnership did not record a loss on impairment of assets. Through
March 31, 2004, the Partnership has recorded approximately $5,407,000 as a loss
on impairment of assets.

At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. Such
assets would be classified as property and equipment-held for sale and are not
depreciated. There were no assets classified as property and equipment-held for
sale at March 31, 2004 and 2003, respectively.

d) Offering Costs

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

85



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


e) Income Taxes

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

f) Loss Contingencies

The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated. In
addition, the Partnership evaluates a potential environmental liability
independently from any potential claim for recovery.

g) Use of Estimates

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


NOTE 3 - Fair Value of Financial Instruments

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

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

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

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


March 31, 2004 March 31, 2003
------------------------- -------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
----------- ----------- ----------- -----------

Mortgage notes payable for which it is:
Practicable to estimate fair value $34,390,205 $34,192,920 $35,300,343 $35,284,195
Not practicable $62,167,425 * $69,324,450 *


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

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

86



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004



NOTE 4 - Property and Equipment

The components of property and equipment and their estimated useful lives are as
follows:



March 31, Estimated
------------------------------ Useful Lives
2004 2003 (Years)
------------- ------------- -------------


Land $ 12,323,699 $ 13,987,183 -
Building and improvements 205,124,742 215,016,895 15 to 40
Other 5,819,617 6,223,824 5 to 15
------------- -------------
223,268,058 235,227,902
Less: Accumulated depreciation (102,005,231) (99,213,488)

$ 121,262,827 $ 136,014,414
============= =============


Included in property and equipment are $6,955,050 of acquisition fees paid or
accrued to the General Partners and $1,606,014 of acquisition expenses as of
March 31, 2004 and 2003. In addition, as of March 31, 2004 and 2003, buildings
and improvements include $7,015,991 of capitalized interest.

Depreciation expense for the years ended March 31, 2004, 2003 and 2002 amounted
to $7,433,688, $7,517,957 and $7,545,850, respectively.

In connection with the rehabilitation of the Properties, the subsidiary
partnerships have incurred developer's fees of $20,563,695 to the local general
partners and affiliates. Such fees have been included in the cost of property
and equipment.

During the 2003 and 2002 Fiscal Years, there was a decrease in accumulated
depreciation in the amounts of $218,940 and $53,335, respectively, due to
write-offs on dispositions.

During the 2003 Fiscal Year, a decrease in accumulated depreciation in the
amount of $4,423,005 resulted from the sales of Polynesian Apartments
Associates, Limited Partnership and Seagrape Village Associates, Limited
Partnership.

During the 2002 Fiscal Year, a decrease in accumulated depreciation of property
and equipment held for sale in the amount of $3,147,094 resulted from the sale
of Campeche Isle Apartments, Limited Partnership (see Note 10).


NOTE 5 - Cash Held in Escrow

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


March 31,
-----------------------
2004 2003
---------- ----------

Real estate taxes, insurance, reconstruction and other $3,713,774 $3,844,604
Reserve for replacements 3,465,131 3,433,287
Tenant security deposits 1,135,138 1,117,637
---------- ----------

$8,314,043 $8,395,528
========== ==========


87



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004



NOTE 6 - Deferred Costs

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



March 31,
-----------------------------------------
2004 2003 Period
----------- ----------- -----------


Financing expenses $ 3,907,517 $ 3,926,041 *
Other 639,858 639,858 Various
----------- -----------
4,547,375 4,565,899
Less: Accumulated amortization (2,214,346) (2,048,941)
----------- -----------

$ 2,333,029 $ 2,516,958
=========== ===========


*Over the life of the respective related mortgages.

Amortization expense for the years ended March 31, 2004, 2003 and 2002 amounted
to $334,126, $1,276,505 and $515,748, respectively. During the years ended March
31, 2004 and 2003, respectively, $168,721 and $2,255,620 of fully amortized
deferred costs were written off.


NOTE 7 - Mortgage Notes Payable

The mortgage notes are payable in aggregate monthly installments of
approximately $505,000 including principal and interest at rates varying from 1%
to 10.75% per annum, through 2042. Each subsidiary partnership's mortgage note
payable is collateralized by the land and buildings of the respective subsidiary
partnership and the assignment of certain subsidiary partnership's rents and
leases and is without further recourse.

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



Fiscal Year Ending Amount
- ------------------ -----------

2004 $11,681,309
2005 2,812,922
2006 3,674,917
2007 1,921,946
2008 1,948,590
Thereafter 74,517,946
-----------

$96,557,630
===========


Property Development Associates, L.P.
- -------------------------------------
During 2002, Property Development Associates L.P. ("Property Development") was
notified that certain defaults had occurred with the mortgage note payable. As
of December 31, 2002, the Mortgagee was pursuing all of its rights and remedies
for default, including, without limitation, acceleration of the maturity date of
the Loan and demand for payment of the entire outstanding balance of the Loan.
On March 5, 2003, the mortgage note payable was purchased by an affiliate of the
management company (which is not affiliated with the Local General Partner or
the General Partners). The purchase of this note remedied the defaults and the
note terms were modified. The Maturity Date was extended from May 1, 2004 to
August 1, 2004, and the interest rate was changed from 6% to 7%. The borrower
has the option to extend the maturity date to February 1, 2005. Additionally,
commencing on April 1, 2003 and continuing through the Maturity Date, the
subsidiary partnership will not be obligated to make the monthly principal
payments.

88



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004



United-Glen Arden I Limited Partnership
- ---------------------------------------
On September 3, 2002, United-Glen Arden I Limited Partnership ("Glen Arden I")
completed a mortgage restructuring through the Mark to Market program with the
Office of Multifamily Housing Assistance Restructuring ("OMHAR"). The original
mortgages were paid in full. In connection with the restructuring, two mortgages
were incurred as follows:

Effective September 3, 2002, the mortgage with the original amount of $7,333,600
is held by Greystone Servicing Corporation Inc. and is insured by HUD. The
mortgage is payable in monthly installments of $48,710, including interest at
7.0% per annum, through September 1, 2032 and is collateralized by the apartment
project.

The Mortgage Restructuring Note to OMHAR/HUD totaling $3,222,109 is
collateralized by the property. The mortgage note bears simple interest at the
rate of 5% to be paid annually on the unpaid principal balance until paid in
full. The maturity date of the mortgage note shall be September 1, 2032. Until
maturity, payments due under the Mortgage Restructuring Note shall be payable in
an amount equal to 85% of the "Surplus Cash" as defined. Upon maturity, the
entire outstanding indebtedness under the Mortgage Restructuring Note shall be
due and payable. Additionally, the note shall become immediately due and
payable, at the option of the holder in the event of a sale or default under the
note agreement.

Glen Arden I's prior indebtedness of approximately $10,326,000 was repaid from
the proceeds of the two new loans.

United-Glen Arden II Apartments Limited Partnership
- ---------------------------------------------------
Effective July 31, 2002, United-Glen Arden II Apartments Limited Partnership
("Glen Arden II") completed a mortgage restructuring through the Mark to Market
program with the Office of Multifamily Housing Assistance Restructuring. The
original mortgages were paid in full. In connection with the restructuring, two
mortgages were incurred as follows:

Effective July 31, 2002, the mortgage with the original amount of $6,960,400 is
held by Capstone Realty Advisors, LLC. The loan bears interest of 7% per annum
and matures on August 1, 2027.

The second restructuring note totaling $1,466,636 is collateralized by the
property and bears interest of 5% per annum and matures on September 1, 2027.
This note shall become immediately due and payable, at the option of the holder
in the event of a sale or default under the note agreement.

Glen Arden II's prior indebtedness of approximately $8,035,000 was repaid from
the proceeds of the two new loans.

Victory Apartments
- ------------------
On June 27, 2002, Victory Apartments ("Victory") refinanced its existing
indebtedness by borrowing $6,491,500 from Reinlein/Leiser/McGee. The loan bears
interest at 6.61% per annum and matures in July 2042. Victory Apartments' prior
indebtedness of approximately $6,201,622 was repaid from the proceeds of the new
loan.

Metropolitan Towers Associates L.P.
- -----------------------------------
On February 22, 2002, Metropolitan Towers Associates L.P. ("Metropolitan
Towers") refinanced its existing indebtedness by borrowing $5,364,000 from the
Puerto Rico Housing Finance Corporation ("PRHFC"). The loan bears interest at
the rate of 7% per annum and matures on February 1, 2032. Metropolitan Tower's
prior indebtedness of approximately $4,625,000 was repaid, and a Capital
Improvement Account of approximately $387,000 was established from the proceeds
of the new loan.

Goodfellow Place Limited Partnership
- ------------------------------------
During the year ended December 31, 2000, Goodfellow Place Limited Partnership
("Goodfellow") began negotiations with the St. Louis Community Development


89



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


Agency (CDA) to modify its non-interest bearing promissory note payable to CDA
in the amount of $1,827,622. The note was secured by a second deed of trust on
the property and principal was to be paid in an amount equal to 20% of surplus
cash. Any unpaid principal was due upon the earliest of September 2030, the
vacancy or abandonment of the property, full repayment of any note secured by a
deed of trust on the property or the transfer of the property or change in
ownership interest without CDA consent. As a part of its negotiation offer,
Goodfellow made a prepayment of $25,000 on the note in 2000. During 2001, CDA
agreed to accept the $25,000 prepayment in exchange for its forgiveness of the
remaining note balance of $1,802,622, resulting in cancellation of indebtedness
income of the same amount. Such amount was recognized during the year ended
March 31, 2002.


NOTE 8 - Related Party Transactions

Related Party Fees

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

The General Partners and their affiliates perform services for the Partnership.
The costs incurred for the years ended March 31, 2004, 2003 and 2002 are as
follows:


Year Ended March 31,
------------------------------------
2004 2003 2002
---------- ---------- ----------

Partnership management fees (a) $1,445,000 $1,460,000 $1,496,000
Expense reimbursement (b) 180,477 149,966 134,815
Property management fees incurred to
affiliates of the General Partners (c) 370,181 362,942 355,825
Local administrative fee (d) 49,000 51,500 54,000
---------- ---------- ----------

Total general and administrative-General
Partners 2,044,658 2,024,408 2,040,640
---------- ---------- ----------

Property management fees incurred to
Affiliates of the Local General Partners (c) 525,015 520,664 531,175
---------- ---------- ----------

Total general and administrative-related
parties $2,569,673 $2,545,072 $2,571,815
========== ========== ==========


(a) The General Partners are entitled to receive a partnership management fee,
after payment of all Partnership expenses, which together with the local annual
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. The partnership management fee, subject to the foregoing
limitation, will be determined by the General Partners in their sole discretion
based upon their review of the Partnership's investments. Partnership management
fees owed to the General Partners amounting to approximately $12,713,000 and
$11,268,000 were accrued and unpaid as of March 31, 2004 and March 31, 2003.
Without the General Partner's continued accrual without payment, the Partnership
will not be in a position to meet its obligations. The General Partners have
allowed for the accrual without payment of these amounts but are under no
obligation to do so.

(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.

90



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


(c) Property management fees incurred by subsidiary partnerships amounted to
$1,552,819, $1,570,624 and $1,636,460 for the 2003, 2002 and 2001 Fiscal Years,
respectively. Of these fees $895,196, $883,606 and $887,000 were incurred to
affiliates of the Local General Partners. Included in amounts incurred to
affiliates of the Local General Partners are $370,181, $362,942 and $355,825,
respectively, which were also incurred to affiliates of the Partnership.

(d) Liberty Associates, a special limited partner of the subsidiary
partnerships, is entitled to receive a local administrative fee of up to $2,500
per year from each subsidiary partnership.

Liberty Associates has a 1% interest as the special limited partner in each of
the subsidiary partnerships. Liberty Associates received cash distributions of
approximately $1,000, $4,000 and $5,900 during the 2003, 2002 and 2001 Fiscal
Years, respectively.

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

(e) Due to Local General Partners and affiliates at March 31, 2004 and 2003
consists of the following:



March 31,
-------------------------
2004 2003
----------- -----------

Operating advances $ 6,643,817 $ 6,409,351
Development fee payable 2,391,797 2,399,079
Operating deficit advances 4,978,835 4,885,335
Management and other fees 581,194 710,603
Notes payable (f) 202,062 1,207,603
Interest notes payable 0 832,552
----------- -----------
$14,797,705 $16,444,523
=========== ===========
(f) Notes payable consist of the following:

Polynesian $ 0 $ 316,370
- ----------
This promissory note bore interest at 11% with
a maturity date of June 1, 2003. The note and unpaid
interest was satisfied on August 15, 2003 with the
proceeds from the sale of the project. Interest
expense of $21,750 and $34,800 was incurred for
the years ended March 31, 2004 and 2003

Seagrape 0 649,171
- --------
This promissory note bore interest at 11% with a
maturity date of December 31, 2003. Unpaid interest
of $558,885 was paid on August 15, 2003 with proceeds
from the sale of the project. The liability for the
remaining balance of $649,171 and unpaid interest
of $161,023 was cancelled and has been reflected
as a capital contribution from the local general
partner. Interest expense of $0 and $71,409 was
incurred for the years ended March 31, 2004 and 2003

Alexis 202,062 242,062
- ------ ----------- -----------
This unsecured promissory note bears interest at
2% above prime and is due on demand. Interest expense
of $12,910 and $17,676 was incurred for the years ended
March 31, 2004 and 2003


$ 202,062 $ 1,207,603
=========== ===========



91


LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


NOTE 9 - Income Taxes

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



Year Ended December 31,
-----------------------------------------
2003 2002 2001
----------- ----------- -----------

Financial statement
Net loss $(7,470,002) $(7,961,377) $(6,183,026)

Difference resulting from parent company
having a different fiscal year for income
tax and financial reporting purposes 43,581 (43,872) 13,539

Difference between depreciation and
amortization expense recorded for financial
reporting purposes and the accelerated cost
recovery system utilized for income
tax purposes (2,045,563) (2,207,445) (2,083,063)

Difference between loss on sale of properties
reported for financial reporting purposes and
income tax purposes 1,195,211 0 0

Excess losses allocated to minority interest
for income tax purposes 134,118 643,157 1,329,287

Other 5,626 5,759 (66,177)
----------- ----------- -----------

Net loss as shown on the income tax return
for the calendar year ended $(8,137,029) $(9,563,778) $(6,989,440)
=========== =========== ===========



NOTE 10 - Sale of Properties

On March 2, 2004, a letter of intent was received that constitutes a proposal
from the purchaser to purchase the property and the related assets and
liabilities of Goodfellow Place Limited Partnership for a purchase price of
$100,000 plus the existing debt. No assurance can be given that the closing will
actually occur.

On August 15, 2003, the property and the related assets and liabilities of
Polynesian Apartments Associates, Limited Partnership ("Polynesian") were sold
to an unaffiliated third party for $2,700,000, resulting in a loss of
approximately $287,000.

On August 15, 2003, the property and the related assets and liabilities of
Seagrape Village Associates, Limited Partnership ("Seagrape") were sold to an
unaffiliated third party for $5,140,000, resulting in a loss of approximately
$260,000.

On January 18, 2002, the property and the related assets and liabilities of
Campeche Isle Apartments, Limited Partnership ("Campeche") were sold to an
unaffiliated third party for $4,625,000, resulting in a loss of approximately
$45,000.

92


LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004



NOTE 11 - Commitments and Contingencies

a) Subsidiary Partnerships - Going Concerns and Uncertainties

The auditors for three subsidiary partnerships, Whittier Plaza Associates
Limited Partnership, Alexis Park Apartments and Westminster Place II - Olive
Site, L.P. modified their reports on the 2003 Fiscal Year financial statements
due to the uncertainty of each subsidiary partnership's ability to continue as a
going concern. The financial statements do not include any adjustments that
would be necessary in the event the subsidiary partnerships are unable to
continue as going concerns.

Whittier Plaza Associates
- -------------------------
The financial statements for Whittier Plaza Associates Limited Partnership
("Whittier") have been prepared assuming that Whittier will continue as a going
concern. Whittier has sustained continuous losses since commencement of
operations in 1988. Whittier has experienced higher vacancies and lower rents
than those originally projected, resulting in increased difficulty in meeting
both operating and debt service obligations. The Local General Partner, pursuant
to a development deficit guarantee agreement, has advanced approximately $8,000
and $12,000 in the 2003 and 2002 Fiscal Years, respectively, and approximately
$469,000 since 1988 to fund operating cash shortfalls. In addition, Whittier's
management company, an affiliate of the Local General Partner, has deferred
receipt of various fees since 1991 totaling approximately $99,000. These items
raise substantial doubt about Whittier's ability to continue as a going concern.
The Partnership's investment in Whittier at March 31, 2004 and 2003 was reduced
to zero as a result of prior years' losses and the minority interest balance was
$0 at each date. Whittier's net loss after minority interest amounted to
approximately $27,000, $29,000 and $37,000 for the 2003, 2002 and 2001 Fiscal
Years.

Alexis Park Apartments
- ----------------------
The financial statements for Alexis Park Apartments ("Alexis") have been
prepared in conformity with U.S. generally accepted accounting principles,
assuming the continuation of the Local Partnership as a going concern. However,
negative performance indicators and the environmental issue raise substantial
doubt about the Local Partnership's ability to continue as a going concern.

A hazardous waste issue has affected Alexis for nearly 13 years. Although this
environmental issue is in many respects beyond its control, management believes
that the selected remedy of the United States Environmental Protection Agency is
practical and is not likely to cause significant disruption to the apartment
project's operations beyond what it has experienced over the last several years.
The Local Partnership's congressman, U.S. Senators and the Mayor of Bossier City
have assisted Alexis in preventing this issue from escalating unnecessarily and
management believes that no escalation will occur in the near term. Further, all
indications are that an oil company will bear all costs of remediation and that
the Local Partnership will not be called upon to share in those costs.
Accordingly, management believes the Local Partnership has the opportunity to
continue as a going concern during 2004.

For the year ended December 31, 2003, the Local Partnership sustained a net loss
of approximately $149,000. At December 31, 2003, the Local Partnership's current
liabilities exceed its current assets by approximately $4,949,000. Management
expects operating income to improve for 2004 as a result of both increased
occupancy and slightly reduced expenses. Current liabilities in the amount of
$4,699,000 is attributable to the Partnership's first mortgage note that is
expected to be refinanced on a long-term basis during 2004. In addition,
included in current liabilities are obligations to the management company
totaling approximately $252,000 that are not expected to require payment beyond
Alexis' ability to pay. Management believes, that if necessary, it can obtain
funds to supplement operating cash flows for 2004 to enable Alexis to meet its
liabilities and subject to the environmental uncertainty enable Alexis to
continue as a going concern for at least one year.

These items raise substantial doubt about Alexis' ability to continue as a going
concern. The maximum loss for which the Partnership would be liable is its net

93


LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


investment in Alexis. The Partnership's investment in Alexis at March 31, 2004
and 2003 was reduced to zero as a result of prior years' losses and the minority
interest balance was $0 at each date. Alexis' net loss after minority interest
amounted to approximately $149,000, $172,000 and $340,000, for the 2003, 2002
and 2001 Fiscal Years, respectively.

Westminster Place II - Olive Site, L.P.
- ---------------------------------------
The financial statements for Westminster Place II - Olive Site, L.P.
("Westminster") have been prepared assuming that Westminster will continue as a
going concern. Westminster's rental subsidy will be depleted during 2004. This
subsidy represents approximately 16% of Westminster's rental revenue.
Westminster has submitted a rent increase to the Missouri Housing Development
Commission and is awaiting response. Without this increase or the rental
subsidy, it will be increasingly difficult to meet the financial obligations of
Westminster.

These items raise substantial doubt about Westminster's ability to continue as a
going concern. The maximum loss for which the Partnership would be liable is its
net investment in Westminster. The Partnership's investment in Westminster at
March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses
and the minority interest balance was $0 at each date. Westminster's net loss
after minority interest amounted to approximately $115,000, $95,000 and $112,000
for the 2003, 2002 and 2001 Fiscal Years, respectively.

b) Subsidiary Partnerships - Other

Property Development Associates, L.P.
- -------------------------------------
Property Development Associates, L.P. ("Property Development") is involved as a
defendant in a pending litigation case. This case was filed by the plaintiffs on
December 18, 2002 and served on the defendants on January 6, 2003. As of the
date of the Auditor's Report, discovery is ongoing. The trial has been postponed
to a date not yet determined by the court. The plaintiff's petition consists of
claims against Property Development for assault, battery, constructive eviction,
negligent hiring, negligent retention, misuse of Housing and Urban Development
funds, slander, retaliatory eviction, and breach of implied warranty of
habitability. The potential verdict in this case ranges from complete defense
verdict up through the $2 million sought by the plaintiffs. The potential
damages, other than those for the alleged intentional acts of assault and
battery, are covered by insurance. Property Development denies each of these
allegations and intends to contest the case vigorously.

Gramco Development Limited Dividend Partnership, L.P.
- -----------------------------------------------------
Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net
funds of $4,867,000 by the Municipality of Bayamon (the "Municipality") and HUD.
In the event of a substantial violation to the provisions of certain agreements
between Gramco and the Municipality and between the Municipality and HUD, the
funds shall become immediately due and payable at the election of HUD and the
Municipality. Otherwise, the principal amount of the obligation together with
any interest will be forgiven. Proceeds from the loan have been deducted from
fixed assets.

Williamsburg Residential, L.P.
- ------------------------------
In November 1996, the Local General Partner of Williamsburg Residential, L.P.
("Williamsburg") stopped making the mortgage note payments which constituted an
event of default. A Reinstatement and Modification Agreement was entered into
effective March 1, 1997. The Partnership has advanced Williamsburg the necessary
funds to keep the mortgage and escrows current during 2003 and is expected to
continue to do so during 2004.

The Partnership's investment in Williamsburg has been written down to $0 by
prior years' losses and the minority interest balance was approximately $724,000
and $726,000 at March 31, 2004 and 2003, respectively. Williamsburg's net loss
after minority interest amounted to approximately $229,000, $142,000 and
$128,000 for the 2003, 2002, and 2001 fiscal years, respectively. As of March
31, 2004, the Partnership has advanced Williamsburg approximately $1,155,000.

94


LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004


c) Uninsured Cash and Cash Equivalents

The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. As of March 31, 2004, uninsured cash and cash
equivalents approximated $1,281,000.

d) Other

The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally. However, no more than
38% of the Properties are located in any single state. There are also
substantial risks associated with owning Properties receiving government
assistance, such as the possibility that Congress may not appropriate funds to
enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owner's equity contribution. The Partnership cannot sell or substantially
liquidate its investments in subsidiary partnerships during the period that the
subsidy agreements are in existence without HUD's approval. Furthermore, there
may not be market demand for apartments at market rents when the rental
assistance contracts expire.

e) Tax Credits

As of December 31, 2003, the Tax Credit Period for each Local Partnership has
expired. A portion of the Housing Tax Credits are subject still to recapture in
future years if (i) a Local Partnership ceases to meet qualification
requirements, or (ii) if there is a decrease in the qualified basis of the Local
Partnership's Property, or (iii) if there is a reduction in the Local
Partnership interest in the Property at any time during the 15-year Compliance
Period that began with the first tax year of the Credit Period.

95


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

None

Item 9A. Controls and Procedures

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Chief Executive
Officer and Chief Financial Officer of Related Credit Properties II, Inc., the
general partner of Related General Partner, has evaluated the effectiveness of
the Partnership's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended ("Exchange Act") as of the end of the period covered by this report.
Based on such evaluation, such officer has concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.

(b) INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes
in the Partnership's internal control over financial reporting during the fiscal
year to which this report relates that have materially affected, or are
reasonably likely to materially affect, the Partnership's internal control over
financial reporting.

PART III

Item 10. Directors and Executive Officers of the Registrant.

The Partnership has no directors or executive officers. The general partners of
the Partnership are Related Credit Properties II L.P., a Delaware limited
partnership (the "Related General Partner"), Liberty Associates II L.P., a
Delaware limited partnership ("Liberty Associates"), and Liberty GP II Inc.
(formerly Shearson Liberty GP II Inc.), a Delaware corporation (the "Liberty
General Partner" and together with the Related General Partner and Liberty
Associates, the "General Partners"). The general partner of the Related General
Partner is Related Credit Properties II Inc., a Delaware corporation. The
general partners of Liberty Associates are Related Credit Properties II Inc.,
and the Liberty General Partner. Liberty Associates is also the special limited
partner of the Partnership. The Partnership's affairs are managed and controlled
by the General Partners. The Partnership has not adopted a separate code of
ethics because the Partnership has no directors or executive officers. However,
the parent company of Related Capital Company, which controls our General
Partners, has adopted a code of ethics. See http://www.chartermac.com.
-------------------------

On November 17, 2003, CharterMac acquired Related Capital Company, which is the
indirect parent of RCC Manager LLC, the sole shareholder of Related Credit
Properties II Inc. Pursuant to the acquisition, CharterMac acquired controlling
interests in the General Partners. Alan P. Hirmes replaced Stephen M. Ross as
Director of Related Credit Properties II Inc. effective April 1, 2004 as a
result of this acquisition. This acquisition did not affect the Partnership or
its day-to-day operations, as the majority of the General Partners' management
team remained unchanged.

Certain information concerning the directors and executive officers of the
Liberty General Partner and of Related Credit Properties II, Inc., is set forth
below.

Related Credit Properties II, Inc.
- ----------------------------------

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

Alan P. Hirmes Director and President

Stuart J. Boesky Senior Vice President

Marc D. Schnitzer Vice President

Denise L. Kiley Vice President

Glenn F. Hopps Treasurer

Teresa Wicelinski Secretary

96


ALAN P. HIRMES, 49, has been a Certified Public Accountant in New York since
1978. Prior to joining Related Capital Company ("Capital") in October 1983, Mr.
Hirmes was employed by Weiner & Co., certified public accountants. Mr. Hirmes is
also a Vice President of Capital. Mr. Hirmes graduated from Hofstra University
with a Bachelor of Arts degree. Mr. Hirmes also serves on the Board of Trustees
of CharterMac and American Mortgage Acceptance Company ("AMAC").

STUART J. BOESKY, 48, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984 Mr. Boesky practiced law with the Boston law firm of
Kaye, Fialkow, Richard & Rothstein (which subsequently merged with Strook &
Strook & Lavan), and from 1978 to 1980 was a consultant specializing in real
estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from
Michigan State University with a Bachelor of Arts degree and from Wayne State
School of Law with a Juris Doctor degree. He then received a Master of Laws
degree in Taxation from Boston University School of Law. Mr. Boesky also serves
on the Board of Trustees of CharterMac and AMAC.

MARC D. SCHNITZER, 43, joined Capital in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, in Business Administration, from the School of Management at
Boston University in May 1983. Mr. Schnitzer also serves on the Board of
Trustees of CharterMac.

DENISE L. KILEY, 44, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in Capital
sponsored corporate, public and private equity and debt funds. Prior to joining
Capital in 1990, Ms. Kiley had experience acquiring, financing and asset
managing multifamily residential properties. From 1981 through 1985, she was an
auditor with Price Waterhouse. Ms. Kiley holds a Bachelor of Science degree in
Accounting from Boston College. Ms. Kiley also serves on the Board of Trustees
of CharterMac.

GLENN F. HOPPS, 41, joined Capital in December 1990, and prior to that date, was
employed by Marks Shron & Company and Weissbarth, Altman and Michaelson,
certified public accountants. Mr. Hopps graduated from New York State University
at Albany with a Bachelor of Science degree in Accounting.

TERESA WICELINSKI, 38, joined Capital in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski graduated from Pace University with a Bachelor of Arts degree in
Accounting.

Liberty GP II Inc.
- ------------------

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

Alan P. Hirmes Director and President

Stuart J. Boesky Executive Vice President

Marc D. Schnitzer Vice President

Denise L. Kiley Vice President

Glenn F. Hopps Treasurer

Teresa Wicelinski Secretary

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

97



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

Under the terms of the Partnership Agreement, the General Partners and their
affiliates are entitled to receive compensation from the Partnership in
consideration of certain services rendered to the Partnership by such parties.
Such arrangements include, but are not limited to, the payment of an accountable
operating expense reimbursement, an annual partnership management fee not to
exceed 0.5% of invested assets and subordinated disposition fees. In addition,
the General Partners are entitled to 1% of all cash distributions and Housing
Tax Credit allocations and a subordinated 15% interest in net sales or
refinancing proceeds. Also see Note 8 to the Financial Statements in Item 8 for
a presentation of the types and amounts of compensation paid to the General
Partners and their affiliates, which is incorporated by reference thereto.

Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The level 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.

The general partnership interests and BACs in the Partnership are owned in the
manner indicated on the chart below.

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

No person is known by the Partnership to be the beneficial owner of more than 5%
percent of the Limited Partnership Interests and/or the BACs; and none of the
General Partners nor any director or executive officer of the Liberty General
Partner or of the general partner of the Related General Partner owns any
Limited Partnership Interests or BACs, except as noted in the chart below.



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

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

General Partnership Liberty GP II, Inc. $500 capital contribution 49%
Interest in the 625 Madison Avenue - directly owned
Partnership New York, NY 10022

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


98





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


BACs Lehigh Tax Credit 2,239 (1) 1.9%
Partners, Inc.
625 Madison Avenue
New York, NY 10022

BACs Alan P. Hirmes 2,239 (1)(2) 1.9%
625 Madison Avenue
New York, NY 10022

BACs Stuart J. Boesky 2,239 (1)(2) 1.9%
625 Madison Avenue
New York, NY 10022

BACs Marc D. Schnitzer 0 0%
625 Madison Avenue
New York, NY 10022

BACs Denise L. Kiley 0 0%
625 Madison Avenue
New York, NY 10022

BACs Glenn F. Hopps 0 0%
625 Madison Avenue
New York, NY 10022

BACs Teresa Wicelinski 0 0%
625 Madison Avenue
New York, NY 10022

BACs All directors and 2,239 (1)(2) 1.9%
executive officers
of the general partner
of the Related General
Partner as a group
(seven persons)
625 Madison Avenue
New York, NY 10022



(1) All such BACs represent BACs owned directly by Lehigh Tax Credit Partners
L.L.C. ("Lehigh I") and Lehigh Tax Credit Partners II L.L.C. ("Lehigh II") for
which Lehigh Tax Credit Partners, Inc. (the "Managing Member") serves as
managing member. As of May 4, 2004, Lehigh I held 1,080.5 BACs and Lehigh II
held 1,161.5 BACs.

(2) Each such party serves as a director and executive officer of the Managing
Member, and owns an equity interest therein.

Item 13. Certain Relationships and Related Transactions.

The Partnership has and will continue to have certain relationships with the
General Partners and their affiliates, as discussed in Item 11 and also Note 8
to the Financial Statements in Item 8 above, which are incorporated herein by
reference thereto. However, there have been no direct financial transactions
between the Partnership, on the one hand, and the directors or executive
officers of the Liberty General Partner or the general partner of the Related
General Partner, on the other.

99


Item 14. Principal Accountant Fees and Services.

Audit Fees
- ----------
The aggregate fees billed by Trien Rosenberg Rosenberg Weinberg Ciullo and
Fazzari LLP and their respective affiliates (collectively, "Trien") for
professional services rendered for the audit of our annual financial statements
for the years ended March 31, 2004 and 2003 and for the reviews of the financial
statements included in the Partnership's Quarterly Reports on Form 10-Q for
those years were $54,800 and $54,800, respectively.

Audit Related Fees
- ------------------
None.

Tax Fees
- --------
The aggregate fees billed by Weiser LLP (formerly, Rubin and Katz LLP) and their
respective affiliates (collectively, "Weiser") for professional services
rendered for the preparation of our annual tax returns for the years ended
December 31, 2003 and 2002 were $9,800 and $9,500, respectively.

All Other Fees
- --------------
None.

The Partnership is not required to have, and does not have, a stand-alone audit
committee.

100


PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

Sequential
Page
----------
(a) 1. Financial Statements
--------------------

Report of Independent Registered Public Accounting Firm 19

Consolidated Balance Sheets at March 31, 2004 and 2003 79

Consolidated Statements of Operations for the Years
Ended March 31, 2004, 2003 and 2002 80

Consolidated Statements of Changes in Partners'(Deficit)
Capital for the Years Ended March 31, 2004, 2003 and
2002 81

Consolidated Statements of Cash Flows for the Years Ended
March 31, 2004, 2003 and 2002 82

Notes to Consolidated Financial Statements 84

(a) 2. Financial Statement Schedules
-----------------------------

Report of Independent Registered Public Accounting Firm 108

Schedule I - Condensed Financial Information of Registrant 109

Schedule III - Real Estate and Accumulated Depreciation 112

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

(a) 3. Exhibits
--------

(3B) Form of Amended and Restated Agreement of Limited
Partnership of Liberty Tax Credit Plus II L.P.(incorporated
by reference to exhibits filed with Amendment No. 1 to
Liberty Tax Credit Plus II L.P.'s Registration Statement
on Form S-11 Registration No. 33-21429)

(21) Subsidiaries of the Registrant 102

(31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a). 105

(32.1) Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b)
and Section 1350 of Title 18 of the United States
Code (18 U.S.C. 1350). 107

(b) Reports on Form 8-K
-------------------

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

101


Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(continued)

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

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

(d) Not applicable


102


SIGNATURES
----------


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

LIBERTY TAX CREDIT PLUS II L.P.
(Registrant)

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

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

Date: June 15, 2004
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President and
Chief Executive Officer
(Principal Executive Officer)

and

By: LIBERTY GP II, INC.,
a General Partner

Date: June 15, 2004
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President

and

By: LIBERTY ASSOCIATES II, L.P.,
a General Partner

By: Related Credit Properties II, Inc.,
its General Partner

Date: June 15, 2004
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President

By: Liberty GP II, Inc.,
its General Partner


By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President





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


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

President and Chief Executive Officer
(Principal Executive and Financial
Officer) of Related Credit Properties
II Inc., (general partner of each
of Related Credit Properties II L.P.
and Liberty Associates II, L.P.,
General Partners of Registrant)
and Liberty GP II, Inc. (general
partner of Liberty Associates II, L.P,
a General Partner of Registrant)

Director of Related Credit Properties
II Inc., (general partner of each
/s/ Alan P. Hirmes of Related Credit Properties II L.P.
- ------------------ and Liberty Associates II, L.P., each
Alan P. Hirmes a General Partner of Registrant) June 15, 2004




Treasurer (Principal Accounting
Officer) of Related Credit Properties
II Inc., (general partner of each
of Related Credit Properties II L.P.
and Liberty Associates II, L.P.,
General Partners of Registrant)
/s/ Glenn F. Hopps and Liberty GP II, Inc. (general
- ------------------ partner of Liberty Associates II, L.P.,
Glenn F. Hopps a General Partner of Registrant) June 15, 2004






Exhibit 31.1


CERTIFICATION PURSUANT TO RULE
13a-14(a) OR RULE 15d-14(a)


I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of
Related Credit Properties II Inc. the general partner of Related Credit
Properties II L.P. and of Liberty GP II Inc., each of which is a General Partner
of Liberty Tax Credit Plus II L.P. (the "Partnership"), hereby certify that:

1. I have reviewed this annual report on Form 10-K for the period ending
March 31, 2004 of the Partnership;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Partnership as of, and for, the periods presented in
this annual report;

4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and I
have:

a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the Partnership
including its consolidated subsidiaries, is made known to me by others
within those entities, particularly during the period in which this
annual report was being prepared;

b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles; and

c) evaluated the effectiveness of the Partnership's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this annual report based on such evaluation;
and

d) disclosed in this annual report any change in the Partnership's
internal control over financial reporting that occurred during the
period ending March 31, 2004 that has materially affected, or is
reasonably likely to materially affect, the Partnership's internal
control over financial reporting; and






5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the Partnership's auditors and to
the boards of directors of the General Partners:

a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Partnership's ability to
record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Partnership's
internal control over financial reporting.


Date: June 15, 2004
-------------
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and
Chief Financial Officer






Exhibit 32.1


CERTIFICATION PURSUANT
TO RULE 13a-14(b) OR RULE 15d-14(b)
AND SECTION 1350 OF TITLE 18
OF THE UNITED STATES CODE (18 U.S.C. 1350)


In connection with the Annual Report of Liberty Tax Credit Plus II L.P. (the
"Partnership") on Form 10-K for the year ending March 31, 2004 as filed with the
Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I,
Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of Related
Credit Properties II Inc. (general partner of each of Related Credit Properties
II L.P. and Liberty Associates II, L.P., General Partners of Registrant) and
Liberty GP II, Inc. (general partner of Liberty Associates II, L.P.), certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:


(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and


(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.

A signed original of this written statement required by Section 906 has been
provided to the Partnership and will be retained by the Partnership and
furnished to the SEC or its staff upon request.



By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and
Chief Financial Officer
June 15, 2004






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------

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


In connection with our audits of the consolidated financial statements of
Liberty Tax Credit Plus II L.P. and Subsidiaries (A Delaware Limited
Partnership) included in this Form 10-K as presented in our opinion dated June
15, 2004 on page 19, and based on the reports of other auditors, we have also
audited supporting Schedule I for the 2003, 2002 and 2001 Fiscal Years and
Schedule III at March 31, 2004. In our opinion, and based on the reports of the
other auditors, these consolidated schedules present fairly, when read in
conjunction with the related consolidated financial statements, the financial
data required to be set forth therein.

As discussed in Note 11(a), the consolidated financial statements include the
financial statements of three limited partnerships with significant
contingencies and uncertainties. The financial statements of these subsidiary
partnerships were prepared assuming that each will continue as a going concern.
The three subsidiary partnerships' net losses aggregated $291,300 (Fiscal 2003),
$296,077 (Fiscal 2002) and $487,648 (Fiscal 2001) and their assets aggregated
$10,294,875 and $10,762,336 at March 31, 2004 and 2003, respectively. These
matters raise substantial doubt about these subsidiary partnerships' abilities
to continue as going concerns. Management's plans in regard to these matters are
also described in Note 11(a). The accompanying consolidated financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.


TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP



New York, New York
June 15, 2004


108



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



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



CONDENSED BALANCE SHEETS


ASSETS



March 31,
-------------------------
2004 2003
----------- -----------

Cash and cash equivalents $ 6,539 $ 9,646
Investment and advances in subsidiary partnerships 36,642,410 39,161,808
Other assets 208,410 191,414
----------- -----------

Total assets $36,857,359 $39,362,868
=========== ===========


LIABILITIES AND PARTNERS' EQUITY



Due to general partner and affiliates $15,299,354 $13,336,984
Other liabilities 65,220 66,156
----------- -----------

Total liabilities 15,364,574 13,403,140
----------- -----------

Partners' equity 21,492,785 25,959,728
----------- -----------

Total liabilities and partners' equity $36,857,359 $39,362,868
=========== ===========



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

109



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



CONDENSED STATEMENTS OF OPERATIONS




Year Ended March 31,
-----------------------------------------
2004 2003 2002
----------- ----------- -----------

Revenues
Other $ 39,042 $ 38,721 $ 25,267
----------- ----------- -----------

Expenses
Administrative and management 196,497 580,974 180,876
Administrative and management-related parties 1,625,477 1,237,610 1,646,970
----------- ----------- -----------

Total expenses 1,821,974 1,818,584 1,827,846
----------- ----------- -----------

Loss from operations (1,782,932) (1,779,863) (1,802,579)
----------- ----------- -----------

Equity in loss of subsidiary partnerships (*) (2,684,011) (2,554,208) (2,129,865)
----------- ----------- -----------

Net loss $(4,466,943) $(4,334,071) $(3,932,444)
=========== =========== ===========



(*) Includes suspended prior year losses in excess of investment in accordance
with the equity method of accounting amounting to $(162,783), $0 and
$(811,399) for 2004, 2003, and 2002, respectively.


110


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


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



Year Ended March 31,
-----------------------------------------
2004 2003 2002
----------- ----------- -----------

Cash flows from operating activities:

Net loss $(4,466,943) $(4,334,071) $(3,932,444)
----------- ----------- -----------

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

Equity in loss of subsidiary partnerships 2,648,011 2,554,208 2,129,865

Increase in assets

Other assets (38,212) (4,725) (23,967)

Increase (decrease) in liabilities

Due to general partners and affiliates 1,962,370 1,824,617 1,463,240
Other liabilities (936) (2,136) 2,915
----------- ----------- -----------

Total adjustment 4,607,233 4,371,964 3,572,053
----------- ----------- -----------

Net cash provided by (used in) operating activities 140,290 37,893 (360,391)
----------- ----------- -----------

Cash flows from investing activities:

Distributions from subsidiaries 42,386 156,351 234,573
Advances and investments in
subsidiary partnerships (185,783) (216,476) (86,470)
----------- ----------- -----------

Net cash (used in) provided by investing
activities (143,397) (60,125) 148,103
----------- ----------- -----------

Net decrease in cash and cash equivalents (3,107) (22,232) (212,288)

Cash and cash equivalents, beginning of year 9,646 31,878 244,166
----------- ----------- -----------

Cash and cash equivalents, end of year $ 6,539 $ 9,646 $ 31,878
=========== =========== ===========


111



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2004



Cost Capitalized
Initial Cost to Partnership Subsequent to
----------------------------- Acquisition:
Buildings and Improvements
Description Encumbrances Land Improvements (Disposals)
- ----------- ------------- ------------- ------------- ----------------

Apartment Complexes

Polynesian Apartments Associates, Ltd.
Homestead, FL (d) $ 0 $ 386,180 $ 4,195,068 $ (4,581,248)
Seagrape Village Associates, LTD
Homestead, FL (d) 0 1,270,000 6,123,373 (7,393,373)
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 5,261,108 322,000 2,434,303 5,986,743
Westminster Place II- Olive Site, L.P.
St. Louis, MO 4,228,630 928,979 5,382,740 192,270
Property Development Associates, L.P.
Kansas City, MO 5,275,000 624,858 7,228,721 5,313,596
Whittier Plaza Associates, L.P.
St. Louis, MO 1,638,334 26,920 2,015,030 (391,316)
United-Glen Arden I L.P.
Glen Arden, MO 11,817,909 1,770,000 6,577,720 13,064,795
United-Glen Arden II L.P.
Glen Arden, MO 9,140,220 1,190,000 4,837,436 9,236,428
Rolling Green L.P.
Chicago, IL 5,638,421 466,683 4,533,670 4,150,568
Santa Juanita II L.P.
Bayamon, PR 792,271 115,000 2,085,485 1,899,969
Spring Creek Associates, L.P.
Brooklyn, NY 0 3,343,549 16,216,700 20,827,739
East Two Thirty-Five Associates L.P.
(14th Street)2,964,817
New York, NY 0 950,000 2,542,604 (527,787)
Concourse Artists Housing Associates, L.P.
Bronx, NY 1,462,489 5,750 2,246,560 85,343
2051 Grand Concourse Housing Associates
Bronx, NY 3,492,287 31,500 5,221,117 68,444
Robin Housing Associates
Bronx, NY 5,068,769 26,750 8,186,055 78,133
Willoughby-Wyckoff Housing Associates
Bronx, NY 4,091,290 17,000 6,126,088 100,448
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY 14,048,621 159,861 21,096,862 1,450,550
West 107th Street Associates, L.P.
Bronx, NY 0 305,813 3,850,928 132,299





Gross Amount at which Carried at Close of Period
------------------------------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
- ----------- ------------- ------------- ------------- -------------

Apartment Complexes

Polynesian Apartments Associates, Ltd.
Homestead, FL (d) $ 0 $ 0 $ 0 $ 0
Seagrape Village Associates, LTD
Homestead, FL (d) 0 0 0 0
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 327,292 8,415,754 8,743,046 (2,896,853)
Westminster Place II- Olive Site, L.P.
St. Louis, MO 916,669 5,587,320 6,503,989 (2,271,826)
Property Development Associates, L.P.
Kansas City, MO 606,704 12,560,471 13,167,175 (5,168,514)
Whittier Plaza Associates, L.P.
St. Louis, MO 32,261 1,618,373 1,650,634 (770,426)
United-Glen Arden I L.P.
Glen Arden, MO 1,775,293 19,637,222 21,412,515 (11,688,029)
United-Glen Arden II L.P.
Glen Arden, MO 1,195,293 14,068,571 15,263,864 (8,313,302)
Rolling Green L.P.
Chicago, IL 471,975 8,678,946 9,150,921 (3,653,441)
Santa Juanita II L.P.
Bayamon, PR 120,293 3,980,161 4,100,454 (1,966,236)
Spring Creek Associates, L.P.
Brooklyn, NY 2,595,782 37,792,206 40,387,988 (18,405,564)
East Two Thirty-Five Associates L.P.
(14th Street)2,964,817
New York, NY 462,662 2,502,155 2,964,817 (1,372,511)
Concourse Artists Housing Associates, L.P.
Bronx, NY 11,042 2,326,611 2,337,653 (1,271,004)
2051 Grand Concourse Housing Associates
Bronx, NY 36,792 5,284,269 5,321,061 (2,906,536)
Robin Housing Associates
Bronx, NY 32,042 8,258,896 8,290,938 (4,531,495)
Willoughby-Wyckoff Housing Associates
Bronx, NY 22,292 6,221,244 6,243,536 (3,403,808)
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY 166,763 22,540,510 22,707,273 (8,226,810)
West 107th Street Associates, L.P.
Bronx, NY 312,715 3,976,325 4,289,040 (2,150,278)




Life on which
Depreciation in
Year of Latest Income
Construction/ Date Statements is
Description Renovation Acquired Computed (a)(b)
- ----------- ------------ --------- ----------------

Apartment Complexes

Polynesian Apartments Associates, Ltd.
Homestead, FL (d) 1988 July 1988 27.5 years
Seagrape Village Associates, LTD
Homestead, FL (d) 1988 July 1988 27.5 years
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 1987 Dec. 1988 40 years
Westminster Place II- Olive Site, L.P.
St. Louis, MO 1988 Oct. 1988 20-40 years
Property Development Associates, L.P.
Kansas City, MO 1988 Dec. 1988 40 years
Whittier Plaza Associates, L.P.
St. Louis, MO 1987 Dec. 1988 20-40 years
United-Glen Arden I L.P.
Glen Arden, MO 1988 Dec. 1988 8-25 years
United-Glen Arden II L.P.
Glen Arden, MO 1988 Dec. 1988 15-25 years
Rolling Green L.P.
Chicago, IL 1988 Dec. 1988 7-39 years
Santa Juanita II L.P.
Bayamon, PR 1988 Dec. 1988 27.5 years
Spring Creek Associates, L.P.
Brooklyn, NY 1987 Dec. 1988 15-27.5 years
East Two Thirty-Five Associates L.P.
(14th Street)2,964,817
New York, NY 1988 Dec. 1988 27.5-31.5 years
Concourse Artists Housing Associates, L.P.
Bronx, NY 1988 Nov. 1988 27.5 years
2051 Grand Concourse Housing Associates
Bronx, NY 1988 Nov. 1988 27.5 years
Robin Housing Associates
Bronx, NY 1988 Nov. 1988 27.5 years
Willoughby-Wyckoff Housing Associates
Bronx, NY 1988 Nov. 1988 27.5 years
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY 1987 Jan. 1989 40 years
West 107th Street Associates, L.P.
Bronx, NY 1987 Jan. 1989 27.5-31.5 years





112



LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2004
(continued)



Cost Capitalized
Initial Cost to Partnership Subsequent to
----------------------------- Acquisition:
Buildings and Improvements
Description Encumbrances Land Improvements (Disposals)
- ----------- ------------- ------------- ------------- ----------------

General Atlantic Second Avenue Associates, L.P.
(96th Street)
Bronx, NY 0 246,495 2,689,395 167,710
Church Lane Associates
Germantown, PA 1,722,767 20,000 4,009,983 10,206
Campeche Isle Apartments L.P.
Galveston, TX (c) 0 450,000 6,792,005 (7,242,005)
Goodfellow Place L.P.
St. Louis, MO 1,948,324 160,000 4,581,787 (3,495,692)
Penn Alto Associates L.P.
Altoona, PA 3,763,117 60,000 2,731,082 9,201,262
Gramco Development Limited Dividend
Partnership, L.P. (Bayamon)
Bayamon, PR 4,105,120 1,322,887 7,609,024 (235,436)
Alexis Park Apartments
Bossier City, LA 4,699,447 640,000 7,297,925 514,802
Williamsburg Residential
Wichita, KS 1,921,006 136,974 831,584 1,878,957
Victory Apartments
Chicago, IL 6,442,500 161,500 4,929,133 5,263,576
------------- ------------- ------------- -------------

$ 96,557,630 $ 15,138,699 $ 152,372,378 $ 55,756,981
============= ============= ============= =============



Gross Amount at which Carried at Close of Period
------------------------------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
- ----------- ------------- ------------- ------------- -------------

General Atlantic Second Avenue Associates, L.P.
(96th Street)
Bronx, NY 253,397 2,850,203 3,103,600 (1,546,376)
Church Lane Associates
Germantown, PA 26,902 4,013,287 4,040,189 (2,227,307)
Campeche Isle Apartments L.P.
Galveston, TX (c) 0 0 0 0
Goodfellow Place L.P.
St. Louis, MO 41,102 1,204,993 1,246,095 (406,916)
Penn Alto Associates L.P.
Altoona, PA 97,907 11,894,437 11,992,344 (5,563,470)
Gramco Development Limited Dividend
Partnership, L.P. (Bayamon)
Bayamon, PR 1,329,788 7,366,687 8,696,475 (4,371,164)
Alexis Park Apartments
Bossier City, LA 646,902 7,805,825 8,452,727 (4,249,013)
Williamsburg Residential
Wichita, KS 673,429 2,174,086 2,847,515 (1,057,955)
Victory Apartments
Chicago, IL 168,402 10,185,807 10,354,209 (3,586,397)
------------- ------------- ------------- -------------

$ 12,323,699 $ 210,944,359 $ 223,268,058 $(102,005,231)
============= ============= ============= =============



Life on which
Depreciation in
Year of Latest Income
Construction/ Date Statements is
Description Renovation Acquired Computed (a)(b)
- ----------- ------------ --------- ----------------

General Atlantic Second Avenue Associates, L.P.
(96th Street)
Bronx, NY 1988 Jan. 1989 27.5-31.5 years
Church Lane Associates
Germantown, PA 1988 Feb. 1989 15 - 27.5 years
Campeche Isle Apartments L.P.
Galveston, TX (c) 1988 May 1989 27.5 years
Goodfellow Place L.P.
St. Louis, MO 1988 May 1989 10 - 40 years
Penn Alto Associates L.P.
Altoona, PA 1989 June 1989 27.5 - 40 years
Gramco Development Limited Dividend
Partnership, L.P. (Bayamon)
Bayamon, PR 1989 July 1989 25 years
Alexis Park Apartments
Bossier City, LA 1986 July 1989 27.5 years
Williamsburg Residential
Wichita, KS 1989 Aug. 1989 40 years
Victory Apartments
Chicago, IL 1988 Sept. 1989 40 years




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

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


(c) The property and the related assets and liabilities of this Local
Partnership was sold during the fiscal year ended March 31, 2002.

(d) The property and the related assets and liabilities of these Local
Partnerships were sold during the fiscal year ended March 31, 2004.



Cost of Property and Equipment Accumulated Depreciation
---------------------------------------------- -------------------------------------------------
Year Ended March 31,
--------------------------------------------------------------------------------------------------
2004 2003 2002 2004 2003 2002
------------- ------------- ------------- ------------- ------------- -------------

Balance at beginning of period $ 235,227,902 $ 241,906,148 $ 241,863,420 $ 99,213,488 $ 94,895,961 $ 87,484,864
Additions during period:
Improvements 933,142 947,397 904,425
Depreciation expense 7,433,688 7,517,957 7,545,850
Deductions during period:
Dispositions (12,892,986) (7,625,643) (181,886) (4,641,945) (3,200,430) (134,753)
Loss on impairment 0 0 (679,811) 0 0 0
------------- ------------- ------------- ------------- ------------- -------------
Balance at close of period $ 223,268,058 $ 235,227,902 $ 241,906,148 $ 102,005,231 $ 99,213,488 $ 94,895,961
============= ============= ============= ============= ============= =============


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


113