FREEDOM TAX CREDIT PLUS LP - 10-K Annual Report

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

FORM 10-K
(Mark One)

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

For the fiscal year ended March 31, 2004

OR

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

Commission File Number 0-24652

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

Delaware 13-3533987
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
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:

Title of Class
Beneficial Assignment Certificates and Limited Partnership Interests

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

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

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
$4,509,000 based on Limited Partner equity as of such date.

Registrant's voting and non-voting common equity is not publicly traded.

DOCUMENTS INCORPORATED BY REFERENCE

None

CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.

2

PART I

Item 1. Business.

General
- -------

Freedom Tax Credit Plus L.P. (the "Partnership") is a limited partnership which
was formed under the laws of the State of Delaware on August 28, 1989. The
General Partners of the Partnership are Related Freedom Associates L.P., a
Delaware limited partnership (the "Related General Partner"), and Freedom GP
Inc., a Delaware corporation (the "Freedom General Partner" and together with
the Related General Partner, the "General Partners"). The general partner of the
Related General Partner is Related Freedom Associates Inc., a Delaware
corporation. The General Partners are both affiliates of Related Capital
Company. On November 25, 1997, an affiliate of the Related General Partner
purchased 100% of the stock of the Freedom General Partner. On November 17,
2003, CharterMac acquired Related Capital Company, which is the indirect parent
of RCC Manager L.L.C., the sole shareholder of Related Freedom Associates, Inc.,
the general partner of the Related General Partner. 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 February 9, 1990, the Partnership commenced a public offering (the
"Offering") of Beneficial Assignment Certificates ("BACs") representing
assignments of limited partnership interests in the Partnership ("Limited
Partnership Interests"), pursuant to a prospectus dated February 9, 1990, as
supplemented by supplements thereto, dated December 7, 1990, May 10, 1991, July
10, 1991 and July 23, 1991 (as so supplemented, the "Prospectus").

The Partnership received $72,896,000 of the gross proceeds of the Offering from
4,780 investors, and the Offering was terminated on August 8, 1991. (See Item 8,
"Financial Statements and Supplementary Data," Note 1 of Notes to Consolidated
Financial Statements.)

The Partnership was formed to invest as a limited partner in other limited
partnerships ("Local Partnerships"), each of which owns one or more leveraged
low-income multi-family residential complexes ("Apartment Complexes" or
"Properties") that are eligible for the low-income housing tax credit ("Housing
Tax Credit") enacted in the Tax Reform Act of 1986, and some of which may also
be eligible for the historic rehabilitation tax credit ("Historic Tax Credit";
together with Housing Tax Credits, the "Tax Credits"). The Partnership's
investment in each Local Partnership represents 98% to 99% of the partnership
interests in the Local Partnership. As of March 31, 2004, the Partnership has
acquired interests in forty-two Local Partnerships. As of March 31, 2004,
approximately $58,000,000 of net proceeds had been invested in such Local
Partnerships, representing all of the Partnership's net proceeds available for
investment. Subsequent to March 31, 2004 and as of the date of this filing,
there have been no additional investments, nor are any other investments
expected. See Item 2, "Properties," below.

The investment objectives of the Partnership are described below.

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

2. Preserve and protect the Partnership's capital.

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

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

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

3

Partnership has an interest has been allocated by the relevant state credit
agency the authority to recognize Housing Tax Credits during the Credit Period,
provided that the Local Partnership satisfies the rent restriction, minimum
set-aside and other requirements for recognition of the Housing Tax Credits at
all times during the 15-year period (the "Compliance Period"). Once a Local
Partnership has become eligible to recognize Housing Tax Credits, it may lose
such eligibility and suffer an event of "recapture" if its Property fails to
remain in compliance with the Housing Tax Credit requirements. None of the Local
Partnerships in which the Partnership has acquired an interest has suffered an
event of recapture.

Housing Tax Credits with respect to a given Apartment Complex are available for
a ten-year period that commences when the property is leased to qualified
tenants. However, the annual Housing Tax Credits available in the year in which
the Apartment Complex is leased to qualified tenants must be prorated based upon
the months remaining in the year. The amount of the annual Housing Tax Credits
not available in the first year will be available in the eleventh year. Internal
Revenue Code Section 42 regulates the use of the Apartment Complexes as to
occupancy, eligibility, and unit gross rent, among other requirements. Each
Apartment Complex must meet the provisions of these regulations during each of
fifteen consecutive years (the "Compliance Period") in order to remain qualified
to receive the credits. Certain Apartment Complexes have extended compliance
periods of up to fifty years.

The Partnership generated $0, $1,710,233 and $6,782,384 in Tax Credits during
the 2003, 2002 and 2001 Fiscal Years, respectively. As of December 31, 2002 all
the Local Partnerships have completed their tax credit periods and the
Partnership has met its primary objective of generating Tax Credits for
qualified BACs holders. However, 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 the Tax Credits. The Compliance Period will end between
December 31, 2004 and December 31, 2007 with respect to the Properties depending
upon when the Credit Period commenced.

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.

As of March 31, 2004, cash distributions received from the Local Partnerships
have been relatively immaterial. Management expects that the distributions
received from the Local Partnerships will increase, although not to a level
sufficient to permit cash distributions to BACs holders. The Partnership does
not anticipate providing cash distributions to BACs holders in circumstances
other than refinancings or sales.

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

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

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

4

Item 2. Properties.

The Partnership holds a 99%, 98.99% and 98% limited partnership interest in
nine, ten and twenty-three Local Partnerships, respectively. Set forth below is
a schedule of these Local Partnerships including certain information concerning
the Apartment Complexes (the "Local Partnership Schedule"). Further information
concerning these Local Partnerships and their Properties, including any
encumbrances affecting the Properties, may be found in Item 15 (a) 2; Schedule
III.

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

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

Parkside Townhomes

York, PA (53) September 1990 98% 89% 87% 94% 98%

Twin Trees
Layton, UT (43) October 1990 95% 95% 98% 100% 98%

Bennion (Mulberry)
Taylorsville, UT (80) October 1990 93% 88% 96% 94% 90%

Hunters Chase
Madison, AL (91) October 1990 80% 95% 93% 95% 89%

Wilshire Park
Huntsville, AL (65) October 1990 91% 88% 94% 95% 94%

Bethel Park
Bethel, OH (84) October 1990 96% 89% 80% 86% 95%

Zebulon Park
Owensville, OH (66) October 1990 94% 94% 95% 97% 96%

Tivoli Place
Murphreesboro, TN (61) October 1990 90% 92% 89% 88% 95%

Northwood (Hartwood)
Jacksonville, FL (110) October 1990 97% 92% 100% 95% 96%

Oxford Trace
Aiken, SC (29) October 1990 96% 97% 79% 97% 93%

Ivanhoe Apts
Salt Lake City, UT (19) January 1991 100% 79% 95% 95% 100%

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

Manhattan B (C.H. Development)
New York, NY (35) January 1991 97% 100% 100% 97% 94%

Davidson Court
Staten Island, NY (38) March 1991 97% 100% 100% 100% 95%

Magnolia Mews
Philadelphia, PA (63) March 1991 95% 98% 100% 100% 100%

Oaks Village
Whiteville, NC (40) March 1991 100% 98% 100% 98% 98%

5

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

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

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

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

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

Ogontz Hall
Philadelphia, PA (35) April 1991 90% 100% 65%(a) 100% 84%

Eagle Ridge
Stoughton, WI (54) May 1991 87% 89% 93% 96% 91%

Nelson Anderson
Bronx, NY (81) June 1991 98% 98% 96% 98% 99%

Abraham Lincoln Apts
Irondequoit, NY (69) September 1991 86% 83% 94% 91% 100%

Wilson Street Apts. (Middletown)
Middletown, PA (44) September 1991 98% 98% 95% 91% 100%

Lauderdale Lakes
Lauderdale Lakes, FL (172) October 1991 99% 97% 96% 95% 94%

Flipper Temple
Atlanta, GA (163) October 1991 100% 97% 100% 96% 97%

220 Cooper Street
Camden, NJ (29) December 1991 100% 100% 93% 97% 100%

Pecan Creek
Tulsa, OK (47) December 1991 96% 92% 94% 98% 98%

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

Rainer Villas
New Augusta, MS (20) December 1991 100% 85% 100% 100% 100%

Pine Shadow Apts
Waveland, MS (48) December 1991 100% 98% 100% 100% 100%

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

Brookwood Apts
Foley, AL (38) December 1991 84% 95% 98% 95% 97%

6

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

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

Heflin Hills Apts
Heflin, AL (24) December 1991 100% 100% 100% 100% 96%

Shadowood Apts
Stevenson, AL (24) December 1991 100% 100% 100% 100% 91%

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

Hidden Valley Apts
Brewton, AL (40) December 1991 100% 100% 99% 100% 100%

Westbrook Square
Carthage, MS (32) December 1991 97% 97% 88% 88% 91%

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

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

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

Harmony Gate Apts
Los Angeles, CA (70) January 1992 97% 99% 97% 97% 96%

(a) Property undergoing renovations.

None of the Local Partnership's assets or revenue balances are greater than 10%
of the Partnership's total assets or revenue balances.

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

Commercial tenants (to which average rental per square foot applies) comprise
less than 5% of the rental revenues of the Local Partnerships. Rents for the
residential units are determined annually by the U.S. Department of Housing and
Urban Development ("HUD") and reflect increases, if any, in consumer price
indices in various geographic areas.

Management of the General Partners periodically 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.

Management of the General Partners periodically reviews the insurance coverage
of the Properties and believes such coverage is adequate.

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

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

7

The General Partners generally required that the general partners of the Local
Partnerships ("Local General Partners") undertake an obligation to fund
operating deficits of the Local Partnership (up to a stated maximum amount)
during a limited period of time (typically three to five years) following the
achievement of break-even operations ("Operating Deficit Guarantees"). Under the
terms of the Operating Deficit Guarantees, amounts funded are treated as
operating loans, which do not bear interest and which will be repaid only out of
50% of available cash flow or out of available net sale or refinancing proceeds.
As of March 31, 2004, all Operating Deficit Guarantees have expired and $288,259
of operating loans are outstanding.

Item 3. Legal Proceedings.

Washington Brooklyn
- -------------------
In or about September 2003, two putative mortgagees commenced a mortgage
foreclosure action in the Supreme Court of the State of New York, Kings County
(the "Court"), entitled 150 Beach 120th Street Inc. v. Washington Brooklyn
Limited Partnership, Index No. 35255/2003, seeking to foreclose on an alleged
$100,000 loan and mortgage against the real property (the "Apartment Complex")
owned by Washington Brooklyn Limited Partnership ("Washington"). Apparently, the
former general partner of Washington, BUFNY Houses of Brooklyn, Inc. ("BUFNY"),
allegedly granted two mortgages in the amounts of $225,000 and $100,000 secured
by the Apartment Complex. Each of the foregoing mortgages was granted without
the knowledge of Freedom SLP, L.P. (the "Special Limited Partner") or the
Partnership (collectively the "Freedom LPs") or the consent of the Special
Limited Partner, as required by Washington's Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement"). The Freedom LPs believe that
BUFNY did not use the alleged loan proceeds for the benefit of Washington or the
Apartment Complex. For these and other reasons, the Freedom LPs contend that the
alleged mortgages are invalid.

In addition, BUFNY allegedly failed to comply with the terms of either mortgage,
which resulted in the holders of the alleged $100,000 mortgage commencing the
foreclosure proceedings. BUFNY did not appear in or otherwise respond to the
foreclosure proceedings. The holders of the alleged $225,000 mortgage have not
yet, to the knowledge of the Freedom LPs, commenced any foreclosure proceedings.

Shortly after the Freedom LPs became aware of these foreclosure proceedings,
their counsel contacted counsel for the plaintiffs and mortgagees in an effort
to learn more about the alleged mortgages and to resolve the disputes relating
to the mortgages. When those efforts failed, the Freedom LPs filed a motion to
intervene in the foreclosure action and for leave to file a late answer on
behalf of themselves and Washington. The Freedom LPs contend that the mortgages
are invalid and that Washington is not liable for them or the underlying
indebtedness. A hearing on the Freedom LPs' motion was held on June 16, 2004 and
the Court reserved ruling on that motion, which is now fully submitted and
pending a decision by the Court. The Court, however, has stayed all further
proceedings in the foreclosure action until it decides the Freedom LPs' motion.
If the Court were to deny the Freedom LPs motion or reject their defenses on the
merits to the foreclosure action, it is possible that the Apartment Complex
might be foreclosed upon and the Partnership might lose its title to and
interests in the Apartment Complex. However, the final outcome of this case
cannot be determined at this time.

In addition, due to BUFNY's breach of fiduciary duties and breaches of the
Partnership Agreement, the Special Limited Partner exercised its rights under
the Partnership Agreement to remove BUFNY as Washington's general partner and to
substitute itself as the new replacement general partner, effective April 26,
2004.

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

None.

8

PART II

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

As of March 31, 2004, the Partnership had issued and has outstanding 72,896
Limited Partnership Interests, each representing a $1,000 capital contribution
to the Partnership, or an aggregate capital contribution of $72,896,000. All of
the issued and outstanding Limited Partnership Interests have been issued to
Freedom Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued
72,896 BACs to the purchasers thereof for an aggregate purchase price of
$72,896,000. Each BAC represents all of the economic and virtually all of the
ownership rights attributable to a Limited Partnership Interest held by the
Assignor Limited Partner. BACs may be converted into Limited Partnership
Interests at no cost to the holder (other than the payment of transfer costs not
to exceed $100), but Limited Partnership Interests so acquired are not
thereafter convertible into BACs. As of May 12, 2004, the Partnership has 4,126
registered holders of an aggregate of 72,896 BACs.

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

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

There are no material restrictions in the Partnership Agreement on the ability
of the Partnership to make distributions. The Partnership has made no
distributions to the BACs holders as of March 31, 2004. The Partnership does not
anticipate providing cash distributions to its BACs holders other than from net
refinancing or sales proceeds.

9

Item 6. Selected Financial Data.

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

For the Years Ended March 31,
---------------------------------------------------------------------------------
OPERATIONS 2004 2003 2002 2001 2000
- ----------------------- ------------- ------------- ------------- ------------- -------------

Revenues $ 16,373,601 $ 15,732,226 $ 15,417,026 $ 14,946,838 $ 14,333,134
Expenses (20,165,525) (19,523,423) (19,207,657) (19,238,172) (18,617,952)
Loss on impairment of
of assets 0 0 0 (2,065,000) (500,000)
------------- ------------- ------------- ------------- -------------

Loss before minority
interest (3,791,924) (3,791,197) (3,790,631) (6,356,334) (4,784,818)

Minority interest 36,960 37,450 39,461 48,280 50,054
------------- ------------- ------------- ------------- -------------

Net loss $ (3,754,964) $ (3,753,747) $ (3,751,170) $ (6,308,054) $ (4,734,764)
============= ============= ============= ============= =============

Per BAC:
Net loss $ (51.00) $ (50.98) $ (50.94) $ (85.67) $ (64.30)
============= ============= ============= ============= =============

For the Years Ended March 31,
---------------------------------------------------------------------------------
OPERATIONS 2004 2003 2002 2001 2000
- ----------------------- ------------- ------------- ------------- ------------- -------------

Total assets $ 89,939,866 $ 93,667,833 $ 97,175,105 $ 100,937,211 $ 107,181,062
============= ============= ============= ============= =============

Mortgage notes payable $ 66,285,158 $ 67,366,819 $ 68,063,227 $ 69,021,892 $ 69,914,088
============= ============= ============= ============= =============

Total liabilities $ 79,841,161 $ 79,736,876 $ 79,553,880 $ 79,602,583 $ 79,522,764
============= ============= ============= ============= =============

Total partners' capital $ 2,096,736 $ 5,851,700 $ 9,605,982 $ 13,357,152 $ 19,669,754
============= ============= ============= ============= =============

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

The Partnership has made no distributions to the BACs holders as of March 31,
2004.

10

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

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

General
- -------

During the year ended March 31, 2004, the primary sources of liquidity included
working capital, interest earned on working capital, and distributions received
from the Local Partnerships. None of these sources generated substantial amounts
of funds.

Working capital of approximately $19,000, exclusive of Local Partnerships'
working capital, remains as of March 31, 2004. It is used to pay operating
expenses of the Partnership, including Partnership management fees payable to
the General Partners and advances to Local Partnerships if warranted.

During the fiscal year ended March 31, 2004, cash and cash equivalents of the
Partnership and its forty-two Local Partnerships increased approximately
$246,000 due to cash provided by operating activities ($2,601,000) and a
decrease in marketable securities ($109,000) which exceeded capital improvements
($1,014,000), a net decrease in due to local general partners and affiliates
relating to investing and finance activities ($324,000), increase in deferred
costs ($5,000), a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($40,000) and net repayments of mortgage loans
($1,082,000). Included in the adjustments to reconcile the net loss to cash
provided by operating activities is depreciation and amortization ($4,979,000).

During the years ended March 31, 2004 ("Fiscal Year 2004"), March 31, 2003
("Fiscal Year 2003"), and March 31, 2002 ("Fiscal Year 2002") the amounts
received from the Local Partnerships were $15,544, $54,649 and $3,637,
respectively. Cash distributions from Local Partnerships are not expected to
reach a level sufficient to permit cash distributions to BACs holders. These
distributions, as well as the working capital reserves referred to in the
paragraph above, will be used to meet the operating expenses of the Partnership.

Partnership management fees owed to General Partners amounting to approximately
$6,208,000 and $5,532,000 were accrued and unpaid as of March 31, 2004 and 2003,
respectively. Without the General Partners continued accrual without payment,
the Partnership will not be in a position to meet its obligations. The General
Partners have continued allowing the accrual without payment of these amounts,
but are under no obligation to continue to do so. The Partnership is dependent
upon the support of the General Partners and certain of its affiliates in order
to meet its obligations at the Partnership level. The General Partners and these
affiliates have agreed to continue such support for the foreseeable future.

Effective January 1, 1999 the State of California requires owners of a property
benefiting from FHA insured mortgages under Section 236 or 221(a)(3) to provide
a nine month notice of contract termination or prepayment of the FHA insured
loan. In addition, with respect to the Partnership's California investments, the
owner must offer the properties for sale to those entities who agree to maintain
the property as affordable housing.

On October 20, 1999 President Clinton signed the Fiscal Year 2000 VA, the HUD
Independent Agencies Appropriations Act (the "Appropriations Act"). The
Appropriations Act contains revisions to the HUD Mark-to-Market Program and
other HUD programs concerning the preservation of the HUD housing stock. On
December 29, 1999 HUD issued Notice H99-36 addressing "Project Based Section 8
Contracts Expiring in Fiscal Year 2000," reflecting the changes in the
Appropriations Act and superceding earlier HUD Notices 98-34, 99-08, 99-15,
99-21 and 99-32. Notice 99-36 clarifies many of the earlier uncertainties with
respect to the earlier HUD Section 8 Mark-to-Market Programs and continued the
Mark-to-Market Program which allows owners with Section 8 contracts to increase
the rents to market levels where contract rents are currently below market. As
of March 31, 2004, none of the Local Partnerships have opted to enter the
Mark-to-Market Program and therefore this has no impact on the Partnership.

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

11

diversified by the location of the Properties around the United States so that
if one area of the country is experiencing downturns in the economy, the
remaining Properties in the portfolio may not be affected. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.

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

In January 2003, the Financial Accounting Standards Board 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. The Partnership has not entered into any transactions with
variable interest entities. 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.

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
- ---------------------

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

During the years ended March 31, 2004, 2003 and 2002, the Partnership did not
record a loss on impairment of assets. Through March 31, 2004, the Partnership
has recorded an aggregate of $3,665,000 of losses on impairment of assets.

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

Rental income is recognized as rent becomes due. Rental payments received in
advance are deferred until earned. The Partnership received rental subsidies
which amounted to approximately $3,326,225, $3,178,000 and $2,953,000 for the
years ended March 31, 2004, 2003 and 2002, respectively. The related rental
subsidy programs have expiration dates that terminate upon total disbursement of
the assistance obligation.

12

2004 vs. 2003
- -------------

Rental income increased approximately 4% for the year ended March 31, 2004 as
compared to 2003, primarily due to rental rate increases.

Total expenses, excluding repairs and maintenance, remained fairly consistent
with an increase of approximately 2% for the year ended March 31, 2004 as
compared to 2003.

Repairs and maintenance increased approximately $298,000 for the year ended
March 31, 2004 as compared to 2003, primarily due to exterior painting and the
replacement of awnings at one Local Partnership and the replacement of carpets,
interior painting and fire damage repairs at a second Local Partnership.

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

Rental income increased approximately 4% for the year ended March 31, 2003 as
compared to 2002, primarily due to rental rate increases.

Other income decreased approximately $225,000 for the year ended March 31, 2003
as compared to 2002, primarily due to lower interest rates on cash and cash
equivalent balances at the Local Partnership level.

Total expenses, excluding operating and other, remained fairly consistent with
an increase of less than 1% for the year ended March 31, 2003, as compared to
2002.

Operating and other increased approximately $302,000 for the year ended March
31, 2003 as compared to 2002, primarily due to an increase in insurance premiums
at the Local Partnerships.

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) $66,285,158 1,129,517 $3,243,42 $20,794,47 $41,117,743
=========== ========= ========= ========== ===========

(a) The mortgage notes are payable in aggregate monthly installments of
approximately $450,000 including principal and interest with rates varying
from 0% to 13.50% per annum and have maturity dates ranging from 2005
through 2042. The loans are collateralized by the land and buildings of the
subsidiary partnerships, the assignment of certain subsidiary partnerships'
rents, leases, and replacement reserves, and are without further recourse.

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

The Partnership has no off-balance sheet arrangements.

Critical Accounting Estimates
- -----------------------------

The preparation of consolidated financial statements requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following accounting estimate is
considered critical by the Partnership.

The Partnership is required to assess potential impairments to its long-lived
assets, which is primarily property and equipment. If impairment indicators are
present, the Partnership must measure the fair value of the assets to determine
if adjustments are to be recorded.

13

Other
- -----

As of December 31, 2002, the Tax Credit Period for all of the Properties has
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 the Tax Credits. During the years ended March 31, 2004, 2003 and
2002, the Housing Tax Credits received by the Partnership for income tax
purposes totaled $0, $1,710,233 and $6,782,384, respectively.

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

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

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

The Partnership does not anticipate that it will be in a position to make cash
distributions at any time prior to the disposition of the Properties. If
distributions of operating cash flow are made, it is expected that they will be
limited. As of March 31, 2004, no such distributions have been made.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk.

The Partnership does not have any market sensitive instruments.

14

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

Reports of Independent Registered Public Accounting Firms 16

Consolidated Balance Sheets as of March 31, 2004 and 2003 109

Consolidated Statements of Operations for the years ended
March 31, 2004, 2003 and 2002 110

Consolidated Statements of Changes in Partners' Capital
(Deficit) for the years ended March 31, 2004, 2003 and
2002 111

Consolidated Statements of Cash Flows for the years ended
March 31, 2004, 2003 and 2002 112

Notes to Consolidated Financial Statements 114

15

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

TO THE PARTNERS OF
FREEDOM TAX CREDIT PLUS L.P.

We have audited the accompanying consolidated balance sheets of FREEDOM
TAX CREDIT PLUS L.P. AND SUBSIDIARIES as of March 31, 2004 and 2003 and the
related consolidated 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 audit. We did not
audit the financial statements of forty-two and forty subsidiary partnerships,
whose losses aggregated $2,809,693 and $3,382,460 for the years ended March 31,
2004 and 2003, and whose assets constituted 99% and 91% of consolidated assets
at March 31, 2004 and 2003, respectively. Those statements were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for these subsidiary partnerships, is based
solely on the reports of the other auditors.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (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 and the reports of the other auditors provide a reasonable basis for our
opinion.

In our opinion, based on our audit and the reports of the other
auditors, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FREEDOM TAX CREDIT
PLUS L.P. AND SUBSIDIARIES as of March 31, 2004 and the results of their
operations and their cash flows for the year ended March 31, 2004 in conformity
with accounting principles generally accepted in the United States of America.

/s/ Friedman, Alpren & Green, LLP
New York, New York
May 17, 2004, except for the information under the heading "Washington Brooklyn"
in Note 9, as to which the date is June 16, 2004.

16

Report of Independent Registered Public Accounting Firm

The Partners
Freedom Tax Credit Plus L.P.:

We have audited the accompanying consolidated statements of operations, changes
in partners' capital (deficit), and cash flows of Freedom Tax Credit Plus L.P.
and consolidated partnerships for the year ended March 31, 2002. In connection
with our audit of the consolidated financial statements, we also have audited
the financial statement schedules for the year ended March 31, 2002. These
consolidated financial statements and financial statement schedules are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements and the financial
statement schedules based on our audit. We did not audit the financial
statements and financial statement schedules of 25 of the consolidated
partnerships, which financial statements reflect combined revenues constituting
40% of the related consolidated totals. Those financial statements and financial
statement schedules were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts included
for those partnerships, is based solely on the reports of the other auditors.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (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 and the reports of
other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the results of operations and the cash flows of Freedom Tax
Credit Plus L.P. and consolidated partnerships for the year ended March 31,
2002, in conformity with U.S. generally accepted accounting principles. Also in
our opinion, based on our audit and the reports of other auditors, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

/s/ KPMG LLP

New York, New York
May 18, 2002

17

[Letterhead of McKonly & Asbury LLP]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Parkside Townhomes Associates Pennsylvania Housing Finance Agency
Lancaster, Pennsylvania Harrisburg, Pennsylvania

We have audited the accompanying balance sheets of Parkside Townhomes Associates
(a limited partnership), PHFA Project No. 0 - 90 as of December 31, 2003 and
2002, and the related statements of profit and loss, partners' equity, and cash
flows, for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parkside Townhomes Associates
at December 31, 2003 and 2002, and its profit and loss, partners' equity, and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

In accordance with Government Auditing Standards and Pennsylvania Housing
Finance Agency's Financial Reporting Manual, we have also issued our report
dated January 27, 2004 on our consideration of Parkside Townhomes Associates'
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, PHFA regulations, contracts and grants and have
rendered our reports thereon on pages 25 and 26. 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 made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information on pages 18
through 24 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

/s/ McKonly & Asbury LLP
Harrisburg, Pennsylvania
January 27, 2004

18

[Letterhead of McKonly & Asbury LLP]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Parkside Townhomes Associates Pennsylvania Housing Finance Agency
Lancaster, Pennsylvania Harrisburg, Pennsylvania

We have audited the accompanying balance sheets of Parkside Townhomes Associates
(a limited partnership), PHFA Project No. 0 - 90 as of December 31, 2002 and
2001, and the related statements of profit and loss, partners' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parkside Townhomes Associates
at December 31, 2002 and 2001, and its profit and loss, partners' equity, and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

In accordance with Government Auditing Standards and Pennsylvania Housing
Finance Agency's Financial Reporting Manual, we have also issued our report
dated February 6, 2003 on our consideration of Parkside Townhomes Associates'
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, PHFA regulations, contracts and grants and have
rendered our reports thereon on pages 25 and 26. 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 made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information on pages 18
through 24 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

/s/ McKonly & Asbury LLP
Harrisburg, Pennsylvania
February 6, 2003

19

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Twin Trees Apartments, A Limited Partnership:

We have audited the accompanying balance sheets of Twin Trees Apartments, A
Limited Partnership (the Partnership) as of December 31, 2003 and 2002, and the
related statements of loss, partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Twin Trees Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

20

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Twin Trees Apartments, A Limited Partnership:

We have audited the accompanying balance sheets of Twin Trees Apartments, A
Limited Partnership as of December 31, 2002 and 2001, and the related statements
of loss, partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Twin Trees Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

21

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Bennion Park Apartments, A Limited Partnership:

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

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Bennion Park Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

22

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Bennion Park Apartments, A Limited Partnership:

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

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Bennion Park Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

23

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Hunters Chase Apartments, A Limited Partnership:

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

We conducted our audits in accordance with 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Hunters Chase Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

24

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Hunters Chase Apartments, A Limited Partnership:

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

We conducted our audits in accordance with 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Hunters Chase Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

25

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Wilshire Apartments, A Limited Partnership:

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

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Wilshire Apartments, A 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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

26

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Wilshire Apartments, A Limited Partnership:

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

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Wilshire Apartments, A 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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

27

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Bethel Park Apartments, A Limited Partnership:

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

We conducted our audits in accordance with 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bethel Park Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

28

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Bethel Park Apartments, A Limited Partnership:

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

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bethel Park Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

29

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Zebulon Park Apartments, A Limited Partnership:

We have audited the accompanying balance sheet of Zebulon Park Apartments, A
Limited Partnership (the Partnership) as of December 31, 2003, and 2002, and the
related statements of loss, partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Zebulon Park Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

30

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Zebulon Park Apartments, A Limited Partnership:

We have audited the accompanying balance sheet of Zebulon Park Apartments, A
Limited Partnership as of December 31, 2002, and 2001, and the related
statements of loss, partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Zebulon Park Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

31

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Tivoli Place Apartments, A Limited Partnership:

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

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Tivoli Place Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

32

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Tivoli Place Apartments, A Limited Partnership:

We have audited the accompanying balance sheets of Tivoli Place Apartments, A
Limited Partnership as of December 31, 2002, and 2001, and the related
statements of loss, partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Tivoli Place Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

33

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Northwood Apartments of Georgia,
A Limited Partnership:

We have audited the accompanying balance sheets of Northwood Apartments of
Georgia, A Limited Partnership as of December 31, 2003 and 2002 and the related
statements of loss, partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northwood Apartments of
Georgia, A 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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

34

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Northwood Apartments of Georgia,
A Limited Partnership:

We have audited the accompanying balance sheets of Northwood Apartments of
Georgia, A Limited Partnership as of December 31, 2002 and 2001 and the related
statements of loss, partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northwood Apartments of
Georgia, A 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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

35

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Oxford Trace Apartments,
A Limited Partnership:

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

We conducted our audits in accordance with 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Oxford Trace Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 6, 2004

36

[LETTERHEAD OF KPMG LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Oxford Trace Apartments,
A Limited Partnership:

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

We conducted our audits in accordance with 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
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Oxford Trace Apartments, A
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/ KPMG LLP
Atlanta, Georgia
February 7, 2003

37

INDEPENDENT AUDITORS' REPORT

To the Partners of
Ivanhoe Apartments Limited Partnership

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

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

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

/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 13, 2004

38

INDEPENDENT AUDITORS' REPORT

To the Partners of
Ivanhoe Apartments Limited Partnership

We have audited the accompanying balance sheet of Ivanhoe Apartments Limited
Partnership (a Limited Partnership) as of December 31, 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 audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

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

/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 9, 2003

39

[Letterhead of AGBIMSON & CO., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Washington Brooklyn Limited Partnership
(A State of Delaware Limited Partnership)

We have audited the accompanying balance sheet of Washington Brooklyn Limited
Partnership (A State of Delaware Limited Partnership) as of December 31, 2003,
and the related statements of operations, partners' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted the 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 a reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to in the first paragraph,
present fairly in all material respects, the financial position of Washington
Brooklyn 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
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 supplementary information in Schedule I 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 procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

/s/ AGBIMSON & CO., PLLC
Rockville Centre, New York
March 31, 2004

40

[Letterhead of Richard J. Klinkowitz]

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

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 2003 and the
related statement of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES as
of December 31, 2003 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Richard J. Klinkowitz
Far Rockaway, New York
February 18, 2004

41

[Letterhead of Richard J. Klinkowitz]

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

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 2002 and the
related statement of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES as
of December 31, 2002 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Richard J. Klinkowitz
Far Rockaway, New York
February 22, 2003

42

[Letterhead of Richard J. Klinkowitz]

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

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 2001 and the
related statement of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES as
of December 31, 2001 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Richard J. Klinkowitz
Far Rockaway, New York
February 22, 2002

43

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS'REPORT

To the Partners
Davidson Court, L.P.

We have audited the accompanying balance sheets of Davidson Court, L.P. 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. 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 Davidson Court, L.P., 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.

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

44

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS'REPORT

To the Partners
Davidson Court, L.P.

We have audited the accompanying balance sheets of Davidson Court, L.P. 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. 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 Davidson Court, L.P., 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.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 25, 2003

45

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mews Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania Limited Partnership) as of December 31, 2003, and
the related statements of operations, partners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with 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 MAGNOLIA MEWS LIMITED
PARTNERSHIP as of December 31, 2003, and the results of its operations, changes
in partners' equity and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ Haefele, Flanagan & Co., p.c.
Moorestown, New Jersey
February 9, 2004

46

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mews Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania Limited Partnership) as of December 31, 2002, and
the related statements of operations, partners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with 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 MAGNOLIA MEWS LIMITED
PARTNERSHIP as of December 31, 2002, and the results of its operations, changes
in partners' equity and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ Haefele, Flanagan & Co., p.c.
Moorestown, New Jersey
February 7, 2003

47

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mews Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania Limited Partnership) as of December 31, 2001, and
the related statements of operations, partners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

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

/s/ Haefele, Flanagan & Co., p.c.
Moorestown, New Jersey
February 8, 2002

48

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

To the Partners
The Oaks Village Limited Partnership

We have audited the accompanying balance sheets of The Oaks Village Limited
Partnership, RHS Project No. 38-024-561572445 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 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 The Oaks Village Limited
Partnership, RHS Project No. 38-024-561572445 as of December 31, 2003 and 2002,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

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

In accordance with Government Auditing Standards, we have also issued a report
dated January 28, 2004 on our consideration of The Oaks Village Limited
Partnership's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
That report is an integral part of an audit performed in accordance with
Government Auditing Standards, and should be read in conjunction with this
report in considering the results of our audit.

/s/ Snipes, Gower & Assoc., P.A.
Dunn, North Carolina
January 28, 2004

49

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

To the Partners
The Oaks Village Limited Partnership
Dunn, North Carolina

We have audited the accompanying balance sheets of The Oaks Village Limited
Partnership, RHS Project No. 38-024-561572445 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 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 The Oaks Village Limited
Partnership, RHS Project No. 38-024-561572445 as of December 31, 2002 and 2001,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

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

In accordance with Government Auditing Standards, we have also issued a report
dated January 24, 2003 on our consideration of The Oaks Village Limited
Partnership's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
That report is an integral part of an audit performed in accordance with
Government Auditing Standards, and should be read in conjunction with this
report in considering the results of our audit.

/s/ Snipes, Gower & Assoc., P.A.
Dunn, North Carolina
January 24, 2003

50

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

To the Partners
Greenfield Village Limited Partnership

We have audited the accompanying balance sheets of Greenfield Village Limited
Partnership, RHS Project No.: 38-043-561614646, 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 and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Greenfield Village Limited
Partnership, RHS Project No.: 38-043-561614646 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.

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

In accordance with Government Auditing Standards, we have also issued a report
dated January 20, 2004 on our consideration of Greenfield Village Limited
Partnership's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
This report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report
in considering the results of our audit.

/s/ Snipes, Gower & Associates, P.A.
Dunn, North Carolina
January 20, 2004

51

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

To the Partners
Greenfield Village Limited Partnership
Dunn, North Carolina

We have audited the accompanying balance sheets of Greenfield Village Limited
Partnership, RHS Project No.: 38-043-561614646, 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 and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Greenfield Village Limited
Partnership, RHS Project No.: 38-043-561614646 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.

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

In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 2003 on our consideration of Greenfield Village Limited
Partnership's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
This report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report
in considering the results of our audit.

/s/ Snipes, Gower & Associates, P.A.
Dunn, North Carolina
January 22, 2003

52

[Letterhead of KOCH GROUP & CO., LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners
CLM Equities

We have audited the accompanying balance sheet of CLM Equities (A Limited
Partnership) as of December 31, 2003 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's 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 CLM Equities (A Limited
Partnership) as of December 31, 2003 and the results of its operations, changes
in its partners' equity and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ Koch Geringer & Co., LLP
Certified Public Accountants
New York, New York
January 23, 2004

53

[Letterhead of KOCH GERINGER & CO., LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners
CLM Equities

We have audited the accompanying balance sheet of CLM Equities (A Limited
Partnership) as of December 31, 2002 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's 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 CLM Equities (A Limited
Partnership) as of December 31, 2002 and the results of its operations, changes
in its partners' equity and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ Koch Geringer & Co., LLP
Certified Public Accountants
New York, New York
January 9, 2003

54

[Letterhead of KOCH GERINGER & CO., LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners
CLM Equities

We have audited the accompanying balance sheet of CLM Equities (A Limited
Partnership) as of December 31, 2001 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's 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 CLM Equities (A Limited
Partnership) as of December 31, 2001 and the results of its operations, changes
in its partners' equity and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ KOCH GERINGER & CO., LLP
Certified Public Accountants
New York, New York
January 9, 2002

55

[Letterhead of NSBN LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Los Angeles, California

We have audited the accompanying balance sheet of Victoria Manor Associates (a
California limited partnership), as of December 31, 2003, and the related
statements of partners' equity, operations 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 Victoria Manor Associates 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/ NSBN LLP
March 19, 2004
Beverly Hills, California

56

[Letterhead of NSBN LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Los Angeles, California

We have audited the accompanying balance sheet of Victoria Manor Associates (a
California limited partnership), as of December 31, 2002, and the related
statements of partners' equity, operations 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 Victoria Manor Associates 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/ NSBN LLP
January 23, 2003
Beverly Hills, California

57

[Letterhead of NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP]

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Los Angeles, California

We have audited the accompanying balance sheet of Victoria Manor Associates (a
California limited partnership), as of December 31, 2001, and the related
statements of partners' equity, operations 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 Victoria Manor Associates 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/ Nanas, Stern, Biers, Neinstein and Co. LLP
January 25, 2002
Beverly Hills, California

58

[Letterhead of Joyce Miller & Associates, P.C.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
Ogontz Hall Investors
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Ogontz Hall Investors (A
Limited Partnership), PHFA changes in Project #O-116, as of December 31, 2003
and 2002, and the related statements of profit and loss, changes in partners'
capital and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards
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 Ogontz Hall Investors (A
Limited Partnership) 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.

Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report (shown
on pages 23 to 26) is presented for the purposes of additional analysis and is
not a required part of the basic financial statements of Ogontz Hall Investors
(A Limited Partnership). Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

In accordance with Government Auditing Standards, we have issued a separate
report dated February 15, 2004, on our consideration of Ogontz Hall Investors'
internal control over financial reporting and our test of its compliance with
certain provisions of laws, regulations, contracts and grants. That report is an
integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.

/s/ Joyce Miller & Associates, P.C.
Glenside, Pennsylvania
February 15, 2004

59

[Letterhead of Fishbein & Company, P.C.]

INDEPENDENT AUDITOR'S REPORT

To The Partners
Ogontz Hall Investors
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of OGONTZ HALL INVESTORS (A
Limited Partnership), PHFA Project No. 0-0116, as of December 31, 2001 and 2000,
and the related statements of profit and loss, partners' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with 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 Ogontz Hall Investors (A
Limited Partnership) as of December 31, 2001 and 2000, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting data included in this
report (shown on pages 19 through 23) is presented for purposes of additional
analysis and is not a required part of the basic financial statements of Ogontz
Hall Investors. Such information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 18, 2002, on our consideration of Ogontz Hall Investors' (A
Limited Partnership) internal control and over financial reporting and our test
of its compliance with certain provisions of laws, regulations, contracts and
grants. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report
in considering the results of our audit.

/s/ Fishbein & Company, P.C.
Elkins Park, PA
January 18, 2002

60

INDEPENDENT AUDITORS' REPORT

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

We have audited the accompanying balance sheets of Eagle Ridge Limited
Partnership as of December 31, 2003 and 2002 and the related statements of
operations, 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 Eagle Ridge Limited Partnership
as of December 31, 2003 and 2002, and the results of its operations and cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information provided, as
identified in the table of contents, 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/ Virchow, Krause & Company, LLP
Madison, Wisconsin
January 21, 2004

61

[Letterhead of Virchow, Krause & Company, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

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

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

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

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information provided, as
identified in the table of contents, 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/ Virchow, Krause & Company, LLP
Madison, Wisconsin
January 19, 2003

62

[Regen, Benz, MacKenzie & Anopolsky, C.P.A's, P.C. Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Nelson Anderson Affordable Housing
Limited Partnership

We have audited the accompanying balance sheet of Nelson Anderson Affordable
Housing 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. 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
used 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 Nelson Anderson Affordable
Housing Limited Partnership as of December 31, 2003, and the results of its
operations, the changes in partners' capital and cash flows for the year then
ended, in conformity with generally accepted accounting principles used in the
United States of America.

/s/ Regen, Benz, MacKenzie & Anopolsky, C.P.A's, P.C.
New York, New York
February 25, 2004

63

[Regen, Benz, MacKenzie & Anopolsky, C.P.A's, P.C. Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Nelson Anderson Affordable Housing
Limited Partnership

We have audited the accompanying balance sheet of Nelson Anderson Affordable
Housing Limited Partnership 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 generally accepted auditing standards
used 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 Nelson Anderson Affordable
Housing Limited Partnership as of December 31, 2002, and the results of its
operations, the changes in partners' capital and cash flows for the year then
ended, in conformity with generally accepted accounting principles used in the
United States of America.

/s/ Regen, Benz, MacKenzie & Anopolsky, C.P.A's, P.C.
New York, New York
February 21, 2003

64

[Regen, Benz, MacKenzie & Anopolsky, C.P.A's, P.C. Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Nelson Anderson Affordable Housing
Limited Partnership

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

We conducted our audit in accordance with generally accepted auditing standards
used 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 Nelson Anderson Affordable
Housing Limited Partnership as of December 31, 2001, and the results of its
operations, the changes in partners' capital and cash flows for the year then
ended, in conformity with generally accepted accounting principles used in the
United States of America.

/s/ Regen, Benz, MacKenzie & Anopolsky, C.P.A's, P.C.
New York, New York
February 15, 2002

65

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Conifer Irondequoit Associates
(A Limited Partnership)
Irondequoit, New York

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

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

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

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Rochester, New York
January 28, 2004

66

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Conifer Irondequoit Associates
(A Limited Partnership)
Irondequoit, New York

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

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

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

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Rochester, New York
February 11, 2003

67

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates

We have audited the accompanying balance sheets of Middletown 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 Middletown Associates as of
December 31, 2003 and 2002, and the results of its operations, changes in
partners' equity (deficit) and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued our report
for the year ended December 31, 2003, dated January 16, 2004, on our
consideration Middletown Associates' internal control over financial reporting
and on our tests of it 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 the report in considering the results of our audit.

Our audits was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 25 through 28
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
January 16, 2004

68

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates

We have audited the accompanying balance sheets of Middletown 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 audit.

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 Middletown Associates as of
December 31, 2002 and 2001, and the results of its operations, changes in
partners' equity (deficit) and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards, we have also issued our report
for the year ended December 31, 2002, dated January 17, 2003, on our
consideration Middletown Associates' internal control over financial reporting
and on our tests of it 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 the report in considering the results of our audit.

Our audits was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 23 through 26
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
January 17, 2003

69

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Lauderdale Lakes Associates, Ltd.

We have audited the accompanying balance sheets of Lauderdale Lakes Associates,
Ltd., as of December 31, 2003 and 2002, and the related statements of
operations, partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audit in accordance with the 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 Lauderdale Lakes Associates,
Ltd. at 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/ Reznick Fedder & Silverman
Atlanta, Georgia
January 27, 2004

70

[Letterhead of KPMG]

INDEPENDENT AUDITORS' REPORT

To the Partners
Lauderdale Lakes Associates, Ltd.

We have audited the accompanying balance sheet of Lauderdale Lakes Associates,
Ltd., as of December 31, 2001, and the related statements of operations,
partners' capital (deficit), and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with the 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 Lauderdale Lakes Associates,
Ltd. as of December 31, 2001, and the results of its operations and its cash
flows for the year for 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 supplementary information included in the
Schedule of Certain Expenses is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.

/s/ KPMG LLP
Greenville, SC
February 22, 2002

71

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Flipper Temple Associates, L.P.

We have audited the accompanying balance sheet of Flipper Temple Associates,
L.P., as of December 31, 2003, and the related statements of operations,
partners' equity (deficit) and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

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

In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 22,
2004 on our consideration of Flipper Temple Associates, L.P.'s internal control
and on its compliance with specific requirements applicable to major HUD
programs and fair housing and non-discrimination. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 24 through 37 is presented for purposes of additional analysis and is
not a required part of the basic financial statements of the partnership. Such
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is fairly stated in all
material respects, in relation to the basic financial statements taken as a
whole.

/s/ Reznick Fedder & Silverman
Taxpayer Identification Number: 52-1088612
Bethesda, Maryland
January 22, 2004
Lead Auditor: James P. Martinko

72

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Flipper Temple Associates, L.P.

We have audited the accompanying balance sheet of Flipper Temple Associates,
L.P., as of December 31, 2002, and the related statements of operations,
partners' equity (deficit) and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

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

In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 22,
2003 on our consideration of Flipper Temple Associates, L.P.'s internal control
and on its compliance with specific requirements applicable to major HUD
programs and fair housing and non-discrimination. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 23 through 27 is presented for purposes of additional analysis and is
not a required part of the basic financial statements of the partnership. Such
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is fairly stated in all
material respects, in relation to the basic financial statements taken as a
whole.

/s/ Reznick Fedder & Silverman
Taxpayer Identification Number: 52-1088612
Bethesda, Maryland
January 22, 2003
Lead Auditor: James P. Martinko

73

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Flipper Temple Associates, L.P.

We have audited the accompanying balance sheet of Flipper Temple Associates,
L.P., as of December 31, 2001, and the related statements of operations,
partners' equity (deficit) and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

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

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 23 through 27
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

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

/s/ Reznick Fedder & Silverman
Taxpayer Identification Number: 52-1088612
Bethesda, Maryland
January 31, 2002
Lead Auditor: James P. Martinko

74

[Letterhead of Heffler, Radetich & Saitta L.L.P]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of 220 Cooper Street, L.P., as
of December 31, 2003 and 2002, and the related statements of operations,
partners' equity and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 220 Cooper Street, 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/ Heffler, Radetich & Saitta L.L.P.
Mount Laurel, NJ
January 26, 2004

75

[Letterhead of Heffler, Radetich & Saitta L.L.P]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of 220 Cooper Street, L.P., as
of December 31, 2002 and 2001, and the related statements of operations,
partners' equity and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 220 Cooper Street, 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/ Heffler, Radetich & Saitta L.L.P.
Mount Laurel, NJ
January 28, 2003

76

[ARCHAMBO, MUEGGENBORG & DICK, INC. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pecan Creek Limited Partnership
Bartlesville, Oklahoma

We have audited the accompanying balance sheets of Pecan Creek Limited
Partnership, HUD Project No. FHA 118-35121 (a limited partnership), as of
December 31, 2003 and 2002 and the related statements of income, changes in
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

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

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued reports dated January 30, 2004 on our
consideration of Pecan Creek Limited Partnership's internal control, on its
compliance with specific requirements applicable to major HUD programs, specific
requirements applicable to non-major HUD program transactions, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance 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 financial
statements taken as a whole. The supplemental information shown on pages 15-17
and the information transmitted to the Department of Housing and Urban
Development (HUD) is prepared for the purpose of additional analysis and is not
a required part of the financial statements of Pecan Creek Limited Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly presented
in all material respects in relation to the basic financial statements taken as
a whole.

/s/ Archambo, Mueggenborg & Dick, Inc.
Deborah E. Mueggenborg, Audit Partner
Certified Public Accountants
73-1439902
Bartsville, Oklahoma
January 30, 2004

77

[ARCHAMBO, MUEGGENBORG & DICK, INC. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pecan Creek Limited Partnership
Bartlesville, Oklahoma

We have audited the accompanying balance sheets of Pecan Creek Limited
Partnership, HUD Project No. FHA 118-35121 (a limited partnership), as of
December 31, 2002 and 2001 and the related statements of income, changes in
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

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

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued reports dated February 13, 2003 on our
consideration of Pecan Creek Limited Partnership's internal control, on its
compliance with specific requirements applicable to major HUD programs, specific
requirements applicable to non-major HUD program transactions, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance 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 financial
statements taken as a whole. The supplemental information shown on pages 15-17
and the information transmitted to the Department of Housing and Urban
Development (HUD) is prepared for the purpose of additional analysis and is not
a required part of the financial statements of Pecan Creek Limited Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly presented
in all material respects in relation to the basic financial statements taken as
a whole.

/s/ Archambo, Mueggenborg & Dick, Inc.
Deborah E. Mueggenborg, Audit Partner
Certified Public Accountants
73-1439902
Bartsville, Oklahoma
February 13, 2003

78

[Letterhead of AGBIMSON & CO., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
363 Grand Vendome Associates, Limited Partnership

We have audited the accompanying balance sheet of 363 Grand Vendome Associates,
Limited Partnership, as of December 31, 2003, and the related statements of
Loss, Partners' Capital and Cash Flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 363 Grand Vendome Associates,
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 accounting
principles generally accepted in the United States of America.

/s/ Agbimson & Co., PLLC
Rockville Centre, New York
January 30, 2004

79

[Letterhead of AGBIMSON & CO., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
363 Grand Vendome Associates, Limited Partnership

We have audited the accompanying balance sheet of 363 Grand Vendome Associates,
Limited Partnership, as of December 31, 2002, and the related statements of
Loss, Partners' Capital and Cash Flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

Except as discussed in the following paragraph, we conducted our audit in
accordance with 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.

We are unable to obtain adequate support for the carrying value for the building
construction and rehabilitation costs included in the fixed assets at December
31, 2002, which also affected material amounts included in the Statements of
Loss and Partners' Capital for the year then ended as described in Note 10.

In our opinion, except for the effects on the financial statements of such
adjustments, if any, as might have been determined to be necessary had we been
able to examine evidence regarding the carrying value of building and
rehabilitation costs, the financial statements referred to in the first
paragraph above present fairly, in all material respects, the financial position
of 363 Grand Vendome Associates, Limited Partnership, as of December 31, 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/ Agbimson & Co., PLLC
Rockville Centre, New York
January 30, 2003

80

[Letterhead of AGBIMSON & CO., PLLC]

INDEPENDENT AUDITOR'S REPORT

To the Partners
363 Grand Vendome Associates, Limited Partnership

We have audited the accompanying balance sheet of 363 Grand Vendome Associates,
Limited Partnership, as of December 31, 2001, and the related statements of
Loss, Partners' Capital and Cash Flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

We are unable to obtain adequate support for the carrying value for the building
construction and rehabilitation costs included in the fixed assets at December
31, 2001, which also affected material amounts included in the Statements of
Loss and Partners' Capital for the year then ended as described in Note 10.

In our opinion, except for the effects on the financial statements of such
adjustments, if any, as might have been determined to be necessary had we been
able to examine evidence regarding the carrying value of building and
rehabilitation costs, the financial statements referred to in the first
paragraph above present fairly, in all material respects, the financial position
of 363 Grand Vendome Associates, Limited Partnership, as of December 31, 2001,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

/s/ Agbimson & Co., PLLC
Rockville Centre, New York
January 30, 2002

81

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of New Augusta Associates, Ltd.,
a limited partnership, RHS Project No.: 28-056-640665470 as of December 31, 2003
and 2002, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Augusta Associates, Ltd.,
RHS Project No.: 28-056-640665470 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 8, 2004 on our consideration of New Augusta Associates, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 8, 2004

82

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of New Augusta Associates, Ltd.,
a limited partnership, RHS Project No.: 28-056-640665470 as of December 31, 2002
and 2001, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Augusta Associates, Ltd.,
RHS Project No.: 28-056-640665470 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 8, 2003 on our consideration of New Augusta Associates, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 8, 2003

83

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Pine Shadow, Ltd.
Waveland, Mississippi

We have audited the accompanying balance sheets of Pine Shadow, Ltd. a limited
partnership, RHS Project No.: 28-023-640661063 as of December 31, 2003 and 2002,
and the related statements of operations, partners' capital and cash flows for
the years then ended. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pine Shadow, Ltd., RHS Project
No.: 28-023-640661063 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 27, 2004 on our consideration of Pine Shadow, Ltd.'s internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 27, 2004

84

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Pine Shadow, Ltd.
Waveland, Mississippi

We have audited the accompanying balance sheets of Pine Shadow, Ltd. a limited
partnership, RHS Project No.: 28-023-640661063 as of December 31, 2002 and 2001,
and the related statements of operations, partners' capital and cash flows for
the years then ended. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pine Shadow, Ltd., RHS Project
No.: 28-023-640661063 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 6, 2003 on our consideration of Pine Shadow, Ltd.'s internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 6, 2003

85

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Windsor Place, L.P. a limited
partnership, RHS Project No.: 01-056-631024917 as of December 31, 2003 and 2002,
and the related statements of operations, partners' capital and cash flows for
the years then ended. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Windsor Place, L.P., RHS
Project No.: 01-056-631024917 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 11
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 2004 on our consideration of Windsor Place, L.P.'s internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 26, 2004

86

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Windsor Place, L.P. a limited
partnership, RHS Project No.: 01-056-631024917 as of December 31, 2002 and 2001,
and the related statements of operations, partners' capital and cash flows for
the years then ended. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Windsor Place, L.P., RHS
Project No.: 01-056-631024917 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 17, 2003 on our consideration of Windsor Place, L.P.'s internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 17, 2003

87

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Brookwood Associates, Ltd.
Foley, Alabama

We have audited the accompanying balance sheets of Brookwood Associates, Ltd., a
limited partnership, RHS Project No.: 01-002-621394754 as of December 31, 2003
and 2002, and the related statements of operations, partners' deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brookwood Associates, Ltd., RHS
Project No.: 01-002-621394754 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 21, 2004 on our consideration of Brookwood Associates, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 21, 2004

88

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Brookwood Associates, Ltd.
Foley, Alabama

We have audited the accompanying balance sheets of Brookwood Associates, Ltd., a
limited partnership, RHS Project No.: 01-002-621394754 as of December 31, 2002
and 2001, and the related statements of operations, partners' deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brookwood Associates, Ltd., RHS
Project No.: 01-002-621394754 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 21, 2003 on our consideration of Brookwood Associates, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 21, 2003

89

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Heflin Hills Apartments,
Ltd., a limited partnership, RHS Project No.: 01-015-631039371 as of December
31, 2003 and 2002, and the related statements of operations, partners' deficit
and cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Heflin Hills Apartments, Ltd.,
RHS Project No.: 01-015-631039371 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 8, 2004 on our consideration of Heflin Hills Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 8, 2004

90

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Heflin Hills Apartments,
Ltd., a limited partnership, RHS Project No.: 01-015-631039371 as of December
31, 2002 and 2001, and the related statements of operations, partners' deficit
and cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Heflin Hills Apartments, Ltd.,
RHS Project No.: 01-015-631039371 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 8, 2003 on our consideration of Heflin Hills Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 8, 2003

91

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Shadowood Apartments, Ltd.
Stevenson, Alabama

We have audited the accompanying balance sheets of Shadowood Apartments, Ltd., a
limited partnership, RHS Project No.: 01-036-631030182 as of December 31, 2003
and 2002, and the related statements of operations, partners' deficit and
capital and cash flows for the years then ended. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, In
all material respects, the financial position of Shadowood Apartments, Ltd., RHS
Project No.: 01-036-631030182 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 20, 2004 on our consideration of Shadowood Apartments, Ltd's.,
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2004

92

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Shadowood Apartments, Ltd.
Stevenson, Alabama

We have audited the accompanying balance sheets of Shadowood Apartments, Ltd., a
limited partnership, RHS Project No.: 01-036-631030182 as of December 31, 2002
and 2001, and the related statements of operations, partners' deficit and
capital and cash flows for the years then ended. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, In
all material respects, the financial position of Shadowood Apartments, Ltd., RHS
Project No.: 01-036-631030182 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 25, 2003 on our consideration of Shadowood Apartments, Ltd's.,
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 25, 2003

93

[Letterhead of Donald W. Causey & Associates, P.C.]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Brittany Associates, L.P., a
limited partnership, RHS Project No.: 28-035-581896085 as of December 31, 2003
and 2002, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brittany Associates, L.P. RHS
Project No.: 28-035-581896085 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 20, 2004 on our consideration of Brittany Associates, L.P.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 20, 2004

94

[Letterhead of Donald W. Causey & Associates, P.C.]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Brittany Associates, L.P., a
limited partnership, RHS Project No.: 28-035-581896085 as of December 31, 2002
and 2001, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brittany Associates, L.P. RHS
Project No.: 28-035-581896085 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 24, 2003 on our consideration of Brittany Associates, L.P.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 24, 2003

95

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Hidden Valley Apartments,
Ltd. a limited partnership, RHS Project No.: 01-027-631025600 as of December 31,
2003 and 2002, and the related statements of operations, partners' capital and
cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hidden Valley Apartments, Ltd.
RHS Project No.: 01-027-631025600 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 11
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 23, 2004 on our consideration of Hidden Valley Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 23, 2004

96

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Hidden Valley Apartments,
Ltd. a limited partnership, RHS Project No.: 01-027-631025600 as of December 31,
2002 and 2001, and the related statements of operations, partners' capital and
cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hidden Valley Apartments, Ltd.
RHS Project No.: 01-027-631025600 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 13 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 26, 2003 on our consideration of Hidden Valley Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 26, 2003

97

[Letterhead of Matthews, Cutrer & Lindsay, P.A.]

To the Partners of
Westbrook Square, LP

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying balance sheet of Westbrook Square, LP (a
Mississippi limited partnership), RHS Project No. 28-040-640770978 as of
December 31, 2003, and the related statements of operations, 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 audit. The
financial statements of Westbrook Square, LP, as of December 31, 2002, were
audited by other auditors whose report dated February 14, 2003, expressed an
unqualified opinion.

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 Westbrook Square, LP 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.

Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information is presented for the
purposes of additional analysis and is not a required part of the basic
financial statements. We have prepared the Multiple Family Housing Borrower
Balance Sheet (RHS Form RD 18930-8) and the Multiple Family Housing Project
Budget (RHS Form RD 1930-7). 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/ Matthews, Cutrer & Lindsay, P.A.
Ridgeland, Mississippi
February 27, 2004

98

[Letterhead of Bob T. Robinson]

To the Partners of
Westbrook Square, Ltd.

INDEPENDENT AUDITOR'S REPORT

I have audited the accompanying balance sheet of Westbrook Square, Ltd. (RD Case
number 28-040-640770978) 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. My responsibility is to express an opinion on these financial
statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Westbrook Square, Ltd. 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, I have also issued my report
dated February 14, 2003 on my consideration of Westbrook Square, Ltd.'s internal
control and on my tests of its compliance with certain provisions of laws,
regulations, contracts, and grants. This report is an integral part of the
audits 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 made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information is presented for the
purposes of additional analysis and is not a required part of the financial
statements of Westbrook Square, Ltd. Such information has been subjected to the
auditing procedures applied in the audit of the financial statements and, in my
opinion, is fairly presented in all material respects in relation to the
financial statements taken as a whole.

The annual budgets of Westbrook Square, Ltd. included in the accompanying
prescribed form RD 1930-7 (Rev 7-00) have not been compiled or examined by me,
and I do not express any form of assurance on them. In addition they may contain
departures from guidelines for presentation of prospective financial information
established by the American Institute of Certified Public Accountants. The
actual results may vary from the presentation and the variations may be
material.

/s/ Bob T. Robinson
Jackson, Mississippi
February 14, 2003

99

[Letterhead of DONALD W. CAUSEY, CPA, P.C.]

INDEPENDENT AUDITOR'S REPORT

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

I have audited the accompanying balance sheets of Warsaw Elderly Housing, Ltd.,
a limited partnership, RHS Project No.: 20-039-621409235 as of December 31, 2003
and 2002, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Warsaw Elderly Housing, Ltd., RHS
Project No.: 20-039-621409235 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 25, 2004 on my consideration of Warsaw Elderly Housing, Ltd.,
internal control over financial reporting and on my tests of its compliance with
certain provisions of laws and regulations. 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.

Donald W. Causey, CPA, P.C.
Gadsden, Alabama
February 25, 2004

100

[Letterhead of DONALD W. CAUSEY, CPA, P.C.]

INDEPENDENT AUDITOR'S REPORT

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

I have audited the accompanying balance sheets of Warsaw Elderly Housing, Ltd.,
a limited partnership, RHS Project No.: 20-039-621409235 as of December 31, 2002
and 2001, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Warsaw Elderly Housing, Ltd., RHS
Project No.: 20-039-621409235 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 9
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in my opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, I have also issued a report
dated February 24, 2003 on my consideration of Warsaw Elderly Housing, Ltd.,
internal control over financial reporting and on my tests of its compliance with
certain provisions of laws and regulations.

Donald W. Causey, CPA, P.C.
Gadsden, Alabama
February 24, 2003

101

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of West Hill Square, Ltd., a
limited partnership, RHS Project No.: 01-054-631010865 as of December 31, 2003
and 2002, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West Hill Square, Ltd., RHS
Project No.: 01-054-631010865 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 11
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 12, 2004 on our consideration of West Hill Square, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 12, 2004

102

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of West Hill Square, Ltd., a
limited partnership, RHS Project No.: 01-054-631010865 as of December 31, 2002
and 2001, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West Hill Square, Ltd., RHS
Project No.: 01-054-631010865 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 11
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 19, 2003 on our consideration of West Hill Square, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 19, 2003

103

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Elmwood Associates, L.P., a
limited partnership, RHS Project No.: 28-055-640804193 as of December 31, 2003
and 2002, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Elmwood Associates, L.P., RHS
Project No.: 28-055-640804193 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2003 and 2002, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 21, 2004 on our consideration of Elmwood Associates, L.P.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 21, 2004

104

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Elmwood Associates, L.P., a
limited partnership, RHS Project No.: 28-055-640804193 as of December 31, 2002
and 2001, and the related statements of operations, partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Elmwood Associates, L.P., RHS
Project No.: 28-055-640804193 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.

The audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 10
through 12 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The supplemental information
presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA
1930-8) Parts I and II for the year ended December 31, 2002 and 2001, is
presented for purposes of complying with the requirements of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, we have also issued a report
dated February 24, 2003 on our consideration of Elmwood Associates, L.P.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws and regulations.

/s/ Donald W. Causey & Associates, P.C.
Gadsden, Alabama
February 24, 2003

105

[Letterhead of Grant Thornton LLP]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Harmony Associates, L.P.

We have audited the accompanying balance sheet of Harmony Associates, L.P. as of
December 31, 2003, and the related statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 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 Harmony 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 generally accepted accounting principles.

/s/ Grant Thornton LLP
Los Angeles, California
January 14, 2004

106

[Letterhead of Grant Thornton LLP]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Harmony Associates, L.P.

We have audited the accompanying balance sheet of Harmony Associates, L.P. as of
December 31, 2002, and the related statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 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 Harmony Associates, L.P. 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/ Grant Thornton LLP
Los Angeles, California
January 24, 2003

107

s

[Letterhead of Grant Thornton LLP]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Harmony Associates, L.P.

We have audited the accompanying balance sheet of Harmony Associates, L.P. as of
December 31, 2001, and the related statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit 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 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 Harmony Associates, L.P. as of
December 31, 2001, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/ Grant Thornton LLP
Los Angeles, California
January 24, 2002

108

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 and 2003

ASSETS

2004 2003
------------ ------------

Property and equipment - (at cost, net of accumulated
depreciation of $63,733,516 and $58,927,642,
respectively) (Notes 4 and 6) $ 80,476,651 $ 84,274,411
Cash and cash equivalents 2,492,636 2,247,128
Investment in marketable securities (Note 2) 0 109,498
Cash held in escrow 4,743,491 4,654,612
Deferred costs (net of accumulated amortization of
$1,988,501 and $1,821,322, respectively) (Note 5) 979,385 1,141,493
Other assets 1,247,703 1,240,691
------------ ------------

Total Assets $ 89,939,866 $ 93,667,833
============ ============

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Liabilities:
Mortgage notes payable (Note 6) $ 66,285,158 $ 67,366,819
Accounts payable and other liabilities 1,771,574 1,411,077
Due to local general partners and affiliates (Note 7) 3,922,555 4,025,449
Due to general partners and affiliates (Note 7) 7,861,874 6,933,531
------------ ------------

Total Liabilities 79,841,161 79,736,876
------------ ------------

Minority interests 8,001,969 8,079,257
------------ ------------

Partners' Capital (Deficit):
Limited partners (72,896 BACs
issued and outstanding) 2,756,415 6,470,255
General partners (659,679) (622,165)
Accumulated other comprehensive income:
Unrealized gain on marketable securities 0 3,610
------------ ------------

Total Partners' Capital (Deficit) 2,096,736 5,851,700
------------ ------------

Commitments and Contingencies (Notes 7 and 9)

Total Liabilities and Partners' Capital (Deficit) $ 89,939,866 $ 93,667,833
============ ============

See accompanying notes to consolidated financial statements.

109

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 2004, 2003 and 2002

2004 2003 2002
------------ ------------ ------------

Revenues:
Rental income $ 14,797,158 $ 14,282,724 $ 13,742,506
Other 1,576,443 1,449,502 1,674,520
------------ ------------ ------------

Total Revenues 16,373,601 15,732,226 15,417,026
------------ ------------ ------------

Expenses:

Repairs and maintenance 2,832,897 2,534,896 2,569,601
Operating and other 2,267,403 2,094,185 1,791,861
Real estate taxes 959,803 995,566 986,059
Interest 4,335,979 4,509,840 4,565,170
Depreciation and amortization (Notes 4 and 5) 4,978,566 4,915,164 5,009,392
General and administrative 2,946,354 2,767,712 2,677,059
General and administrative-related parties
(Note 7) 1,844,523 1,706,060 1,608,515
------------ ------------ ------------

Total Expenses 20,165,525 19,523,423 19,207,657
------------ ------------ ------------

Loss before minority interest (3,791,924) (3,791,197) (3,790,631)

Minority interest in loss of subsidiaries 36,960 37,450 39,461
------------ ------------ ------------

Net loss $ (3,754,964) $ (3,753,747) $ (3,751,170)
============ ============ ============

Net loss - limited partners $ (3,717,414) $ (3,716,210) $ (3,713,658)
============ ============ ============

Number of BACs outstanding 72,896 72,896 72,896
============ ============ ============

Net loss per BAC $ (51.00) $ (50.98) $ (50.94)
============ ============ ============

See accompanying notes to consolidated financial statements.

110

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED MARCH 31, 2004, 2003 and 2002

Accumulated
Other
Limited General Comprehensive Comprehensive
Total Partners Partners Income (Loss) Loss
------------ ------------ ------------ ------------- -------------

Partners' capital (deficit) -
April 1, 2001 $ 13,357,152 $ 13,900,123 $ (547,116) $ 4,145

Comprehensive Loss:
Net Loss (3,751,170) (3,713,658) (37,512) 0 (3,751,170)
------------ ------------ ------------ ------------ ------------

Total Comprehensive Loss $ (3,751,170)
============

Partners' capital (deficit) -
March 31, 2002 9,605,982 10,186,465 (584,628) 4,145

Comprehensive Loss:
Net Loss (3,753,747) (3,716,210) (37,537) 0 (3,753,747)

Other Comprehensive Loss:
Net unrealized loss on
marketable securities (535) 0 0 (535) (535)
------------ ------------ ------------ ------------ ------------

Total Comprehensive Loss $ (3,754,282)
============

Partners' capital (deficit) -
March 31, 2003 $ 5,851,700 $ 6,470,255 $ (622,165) $ 3,610

Comprehensive Loss:
Net Loss (3,754,964) (3,717,414) (37,550) 0 (3,751,426)

Other Comprehensive Loss:
Net unrealized loss on
marketable securities 0 3,574 36 (3,610) $ 3,610
------------ ------------ ------------ ------------ ------------

Total Comprehensive Loss $ (3,747,816)
============

Partners' capital (deficit) -
March 31, 2004 $ 2,096,736 $ 2,756,415 $ (659,679) $ 0
============ ============ ============ ============

See accompanying notes to consolidated financial statements.

111

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2004, 2003 and 2002

2004 2003 2002
----------- ----------- -----------

Cash flows from operating activities:
Net loss $(3,754,964) $(3,753,747) $(3,751,170)

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

Depreciation and amortization 4,978,566 4,915,164 5,009,392
Minority interest in loss of subsidiaries (36,960) (37,450) (39,461)
Increase in other assets (7,012) (238,552) (5,698)
Increase (decrease) in accounts payable and other
liabilities 360,497 (238,880) (205,198)
(Increase) decrease in cash held in escrow (88,879) 16,647 (303,649)
Increase in due to general partners
and affiliates 928,343 912,768 918,843
Increase in due to local general partners
and affiliates 247,420 47,959 147,805
Decrease in due to local general partners
and affiliates (26,314) (134,954) (27,862)
----------- ----------- -----------

Net cash provided by operating activities 2,600,697 1,488,955 1,743,002
----------- ----------- -----------

Cash flows from investing activities:

Additions to property and equipment (1,013,627) (751,333) (772,121)
Decrease (increase) in marketable securities 109,498 (1,028) 0
Increase in due to local general partners
and affiliates 0 0 3,570
Decrease in due to local general partners
and affiliates (213,462) (17,863) (12,255)
----------- ----------- -----------

Net cash used in investing activities (1,117,591) (770,224) (780,806)
----------- ----------- -----------

112

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2004, 2003 and 2002
(continued)

2004 2003 2002
----------- ----------- -----------

Cash flows from financing activities:
Increase in deferred costs (5,071) (20,876) (3,071)
Repayments of mortgage loans - net (1,081,661) (696,408) (958,665)
Increase in due to local general partners
and affiliates 140,400 547,880 241,400
Decrease in due to local general partners
and affiliates (250,938) (237,506) (156,341)
(Decrease) increase in capitalization of
consolidated subsidiaries attributable to
minority interest (40,328) 101,464 77,228
----------- ----------- -----------

Net cash used in financing activities (1,237,598) (305,446) (799,449)
----------- ----------- -----------

Net increase in cash and cash equivalents 245,508 413,285 162,747

Cash and cash equivalents at beginning of year 2,247,128 1,833,843 1,671,096
----------- ----------- -----------

Cash and cash equivalents at end of year $ 2,492,636 $ 2,247,128 $ 1,833,843
=========== =========== ===========

Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 2,992,620 $ 3,303,877 $ 3,477,748
=========== =========== ===========

See accompanying notes to consolidated financial statements.

113

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

NOTE 1 - General

Freedom Tax Credit Plus L.P., a Delaware limited partnership (the
"Partnership"), was organized on August 28, 1989 and commenced its public
offering on February 9, 1990 (the "Offering"). The general partners of the
Partnership are Related Freedom Associates L.P. (the "Related General Partner"),
a Delaware limited partnership, and its affiliate, Freedom GP Inc. (the "Freedom
General Partner"), a Delaware corporation, together (the "General Partners"). On
November 17, 2003, CharterMac acquired Related Capital Company, which is the
indirect parent of RCC Manager LLC, the sole shareholder of Related Freedom
Associates, Inc., the general partner of the Related General Partner. 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 will terminate on December 31, 2030, unless
terminated sooner under the provision's of the partnership agreement.

The Partnership's business is to invest in other partnerships ("Local
Partnerships," "subsidiaries" or "subsidiary partnerships") owning leveraged
apartment complexes that are eligible for the low-income housing tax credit
("Tax Credit") enacted in the Tax Reform Act of 1986 and to entitle qualified
BACs holders to Tax Credits over the period of the Partnership's entitlement to
claim Tax Credits (for each Property, generally ten years from the date of
investment or, if later, the date the Property is leased to qualified tenants;
referred to herein as the "Credit Period"). Each of the Local Partnerships in
which the Partnership has an interest has been allocated by the relevant 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").

As of December 31, 2002, the Credit Period for all of the apartment complexes
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 the Tax Credits. During Fiscal Years 2004, 2003 and 2002, the
Partnership generated $0, $1,710,233 and $6,782,384, respectively, in Housing
Tax Credits.

The Partnership was authorized to issue a total of 200,000 Beneficial Assignment
Certificates ("BACs"), which had been registered with the Securities and
Exchange Commission for sale to the public. As of August 8, 1991 (the date on
which the Partnership held the final closing of the sale of BACs and on which
the offering was terminated), the Partnership had received $72,896,000 of gross
proceeds of the Offering from 4,780 investors.

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

NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Accounting and Presentation

The Partnership's fiscal year ends on March 31. All subsidiaries have calendar
year ends. Accounts of the subsidiaries have been adjusted for intercompany
transactions from January 1 through March 31. The Partnership's fiscal year ends
March 31 in order to allow adequate time for the subsidiaries financial
statements to be prepared and consolidated. The books and records of the
Partnership are maintained on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States.

114

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

b) Basis of Consolidation

The consolidated financial statements include the accounts of the Partnership
and 42 subsidiary partnerships, in which the Partnership is a limited partner,
with an ownership interest ranging from approximately 98% to 99%. All
intercompany accounts and transactions with the subsidiary partnerships have
been eliminated in consolidation. Through the rights of the Partnership and/or
an affiliate of the General Partners, which affiliate has a contractual
obligation to act on behalf of the Partnership, to remove the general partner of
the subsidiary partnerships and to approve certain major operating and financial
decisions, the Partnership has a controlling financial interest in the
subsidiary partnerships.

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

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

c) Cash and Cash Equivalents

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

d) Investment in Marketable Securities

Available-for-sale securities were carried at fair value with net unrealized
gain (loss) reported as a separate component of other comprehensive income until
realized. A decline in the market value of any available-for-sale security below
cost that is deemed other than temporary was charged to earnings resulting in
the establishment of a new cost basis for the security. During the year ended
March 31, 2004 the Partnership sold its marketable securities.

e) Cash Held in Escrow

Cash held in escrow includes cash held in escrow, replacement reserves and
tenant security deposits.

f) Property and Equipment

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

g) Rental income

Rental income is recognized as rent becomes due. Rental payments received in
advance are deferred until earned. The Partnership received rental subsidies
which amounted to approximately $3,326,225, $3,178,000 and $2,953,000 for the
years ended March 31, 2004, 2003 and 2002, respectively. The related rental
subsidy programs have expiration dates that terminate upon total disbursement of
the assistance obligation.

h) Income Taxes

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

115

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

i) Use of Estimates

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

j) Net Loss Per BAC

Net loss per BAC is computed based on the net loss for the period attributed to
BAC Holders, divided by the number of BACs outstanding for the period.

k) New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board 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. The Partnership has not entered into any transactions with
variable interest entities. 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.

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.

NOTE 3 - Fair Value of Financial Instruments

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

Cash and Cash Equivalents, Cash Held in Escrow, Accounts Payable and Other
- --------------------------------------------------------------------------------
Liabilities, Due to Local General Partners and Affiliates, and Due to General
- --------------------------------------------------------------------------------
Partners and Affiliates
- -----------------------
The carrying amount of cash and cash equivalents, cash held in escrow, accounts
payable and other liabilities approximates fair value. The fair values of Due to
Local General Partners and Affiliates and Due to General Partners and Affiliates
are not readily determinable because no market exists for these instruments.

116

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

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 $51,901,654 $51,768,160 $40,794,694 $41,312,953
Not Practicable (a) $14,383,504 $26,572,125

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

NOTE 4 - Property and Equipment

The components of property and equipment are as follows:

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

Land $ 5,720,520 $ 5,720,520
Buildings and improvements 130,814,666 130,371,548
Other 7,674,981 7,109,985
------------- -------------

144,210,167 143,202,053
Less: Accumulated depreciation (63,733,516) (58,927,642)
------------- -------------
$ 80,476,651 $ 84,274,411
============= =============

Depreciation expense for the years ended March 31, 2004, 2003 and 2002 amounted
to $4,811,387, $4,749,489 and $4,834,147, respectively. Additionally, $5,513 of
accumulated depreciation on dispositions was written-off in the year ended March
31, 2004.

NOTE 5 - Deferred Costs

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

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

Financing expenses $ 2,967,886 $ 2,962,815
Less: Accumulated amortization (1,988,501) (1,821,322)
----------- -----------

$ 979,385 $ 1,141,493
=========== ===========

117

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

Financing expenses are being amortized over the life of the related mortgages,
ranging from 15 to 50 years, using a method approximating the interest method.

Amortization of deferred costs for the years ended March 31, 2004, 2003 and 2002
amounted to $167,179, $165,675 and $175,245, respectively.

NOTE 6 - Mortgage Notes Payable

The mortgage notes are payable in aggregate monthly installments of
approximately $450,000 including principal and interest with rates varying from
0% to 13.50% per annum and have maturity dates ranging from 2005 through 2042.
The loans are collateralized by the land and buildings of the subsidiary
partnerships, the assignment of certain subsidiary partnerships' rents, leases,
and replacement reserves, and are without further recourse.

Annual principal payment on the permanent debt requirements for mortgage notes
payable for each of the next five fiscal years and thereafter are as follows:

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

2005 $ 1,129,517
2006 1,223,569
2007 2,019,853
2008 19,929,553
2009 864,923
Thereafter 41,117,743
-----------

Total $66,285,158
===========

On August 7, 2002, Ogontz Hall refinanced its first mortgage payable to Citizens
Bank of Pennsylvania. The former loan with Sovereign Bank with a balance of
$100,411, was paid off with proceeds from its new first mortgage in an amount of
$340,600 with an annual interest rate of 6.75%. Interest is payable only from
inception through August 2003 and afterward monthly payments are due in an
amount of $2,590, including principal and interest through August 2007. On
December 31, 2001, Ogontz Hall consolidated its support mortgage from
Pennsylvania Housing Finance Agency ("PHFA") of $284,592 into the support
mortgage from PHFA through the Housing Opportunities Make Economic Sense
("HOMES"). The new loan bears no interest and principal payments are to be made
from any excess of revenues over expenses until maturity in March 2017.

On March 27, 2002, Pecan Creek refinanced its outstanding mortgage. The new
mortgage in the amount of $1,025,800 is payable in monthly installments of
$6,859, including principal and interest at the rate of 7.05% through March 27,
2032.

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

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

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

118

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

a) Due to Local General Partners and Affiliates

At March 31, 2004 and 2003, a majority of the following fees were incurred in
connection with the development of the property and have been included in the
basis of the building.

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

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

Operating advances $1,666,763 $1,730,281
Development fees 1,272,449 1,485,911
Operating deficit loans (i) 288,259 314,838
Long-term note payable 63,713 84,154
Management and other fees 631,371 410,265
---------- ----------

$3,922,555 $4,025,449
========== ==========

(i) Operating deficit loans consist of the following:

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

Wilshire Park $191,775 $191,775

This loan to fund operating deficits is unsecured, non-interest bearing and is
payable out of available surplus cash of the respective subsidiary partnership,
or at the time of sale or refinancing.

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

Parkside Townhomes $ 87,035 $ 84,635
Ogontz Hall 9,449 38,428

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

119

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

b) Other Expenses

The costs incurred to related parties for the years ended March 31, 2004, 2003
and 2002 were as follows:

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

Partnership management fees (a) $ 676,000 $ 676,000 $ 676,000
Expense reimbursement (b) 178,723 155,977 118,659
Local administrative fee (d) 53,000 53,000 53,000
---------- ---------- ----------
Total general and administrative-
General Partners 907,723 884,977 847,659
---------- ---------- ----------
Property management fees
incurred to affiliates of the
subsidiary partnerships'
general partners (c) 936,800 821,083 760,856
---------- ---------- ----------
Total general and administrative-
related parties $1,844,523 $1,706,060 $1,608,515
========== ========== ==========

(a) The General Partners are entitled to receive a partnership management fee,
after payment of all Partnership expenses, which together with the annual local
administrative fees will not exceed a maximum of 0.5% per annum of Invested
Assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. Subject to the foregoing limitation, the partnership
management fee will be determined by the General Partners in their sole
discretion based upon their review of the Partnership's investments. Unpaid
partnership management fees for any year will be accrued without interest and
will be payable from working capital reserves or to the extent of available
funds after the Partnership has made distributions to the Limited Partners and
BACs holders of sale or refinancing proceeds equal to their original capital
contributions plus a 10% priority return thereon (to the extent not theretofore
paid out of Cash Flow). Partnership management fees owed to General Partners
amounting to approximately $6,208,000 and $5,532,000 were accrued and unpaid as
of March 31, 2004 and 2003, respectively. Without the General Partners continued
accrual without payment, the Partnership will not be in a position to meet its
obligations. The General Partners have continued allowing the accrual without
payment of these amounts, but are under no obligation to continue to do so. The
Partnership is dependent upon the support of the General Partner and certain of
its affiliates in order to meet its obligations at the Partnership level. The
General Partner and these affiliates have agreed to continue such support for
the foreseeable future.

(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.

(c) Property management fees incurred by subsidiary partnerships amounted to
$1,108,295, $1,071,815 and $1,051,546 for the 2004, 2003 and 2002 Fiscal Years,
respectively. Of these fees, $936,800, 821,083 and $760,856 were incurred to
affiliates of the subsidiary partnerships.

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

120

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

NOTE 8 - Income Taxes

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

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

Financial statement
Net loss $(3,754,964) $(3,753,747) $(3,751,170)

Difference resulting from parent company having
a different fiscal year for income tax and
financial reporting purposes (17,957) 4,268 (56,796)

Difference between depreciation and amortization
expense recorded for financial statement and
income tax reporting purposes 386,864 (682,390) (657,137)

Tax-exempt interest income (25) (39) (86)

Other 48,724 1,317,852 (146,329)
----------- ----------- -----------

Net loss as shown on the Partnership's income tax
returns $(3,337,358) $(3,114,056) $(4,611,518)
=========== =========== ===========

NOTE 9 - Commitments and Contingencies

Washington Brooklyn
- -------------------
In or about September 2003, two putative mortgagees commenced a mortgage
foreclosure action in the Supreme Court of the State of New York, Kings County
(the "Court"), entitled 150 Beach 120th Street Inc. v. Washington Brooklyn
Limited Partnership, Index No. 35255/2003, seeking to foreclose on an alleged
$100,000 loan and mortgage against the real property (the "Apartment Complex")
owned by Washington Brooklyn Limited Partnership ("Washington"). Apparently, the
former general partner of Washington, BUFNY Houses of Brooklyn, Inc. ("BUFNY"),
allegedly granted two mortgages in the amounts of $225,000 and $100,000 secured
by the Apartment Complex. Each of the foregoing mortgages was granted without
the knowledge of Freedom SLP, L.P. (the "Special Limited Partner") or the
Partnership (collectively the "Freedom LPs") or the consent of the Special
Limited Partner, as required by Washington's Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement"). The Freedom LPs believe that
BUFNY did not use the alleged loan proceeds for the benefit of Washington or the
Apartment Complex. For these and other reasons, the Freedom LPs contend that the
alleged mortgages are invalid.

In addition, BUFNY allegedly failed to comply with the terms of either mortgage,
which resulted in the holders of the alleged $100,000 mortgage commencing the
foreclosure proceedings. BUFNY did not appear in or otherwise respond to the
foreclosure proceedings. The holders of the alleged $225,000 mortgage have not
yet, to the knowledge of the Freedom LPs, commenced any foreclosure proceedings.

Shortly after the Freedom LPs became aware of these foreclosure proceedings,
their counsel contacted counsel for the plaintiffs and mortgagees in an effort
to learn more about the alleged mortgages and to resolve the disputes relating
to the mortgages. When those efforts failed, the Freedom LPs filed a motion to
intervene in the foreclosure action and for leave to file a late answer on

121

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

behalf of themselves and Washington. The Freedom LPs contend that the mortgages
are invalid and that Washington is not liable for them or the underlying
indebtedness. A hearing on the Freedom LPs' motion was held on June 16, 2004 and
the Court reserved ruling on that motion, which is now fully submitted and
pending a decision by the Court. The Court, however, has stayed all further
proceedings in the foreclosure action until it decides the Freedom LPs' motion.
If the Court were to deny the Freedom LPs motion or reject their defenses on the
merits to the foreclosure action, it is possible that the Apartment Complex
might be foreclosed upon and the Partnership might lose its title to and
interests in the Apartment Complex. However, the final outcome of this case
cannot be determined at this time.

In addition, due to BUFNY's breach of fiduciary duties and breaches of the
Partnership Agreement, the Special Limited Partner exercised its rights under
the Partnership Agreement to remove BUFNY as Washington's general partner and to
substitute itself as the new replacement general partner, effective April 26,
2004.

Other
- -----

The Partnership is subject to risks incident to potential losses arising from
the management and ownership of improved real estate. The Partnership can also
be affected by poor economic conditions generally, however no more than 24% of
the properties are located in any single state. There are also substantial risks
associated with owning properties receiving government assistance, for example
the possibility that Congress may not appropriate funds to enable HUD to make
rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owners' equity
contribution. The Partnership cannot sell or substantially liquidate its
investments in subsidiary partnerships during the period that the subsidy
agreements are in existence, without HUD's approval. Furthermore there may not
be market demand for apartments at full market rents when the rental assistance
contract expires.

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

122

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004, 2003 and 2002

NOTE 10 - Selected Quarterly Financial Data (Unaudited)

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

Revenues $ 3,991,288 $ 4,037,962 $ 4,035,354 $ 4,308,997

Operating expense (5,057,470) (4,973,610) (4,881,673) (5,252,772)
----------- ----------- ----------- -----------

Loss before minority
interest (1,066,182) (935,648) (846,319) (943,775)

Minority interest in
loss of subsidiaries 11,698 9,275 7,923 8,064
----------- ----------- ----------- -----------

Net loss $(1,054,484) $ (926,373) $ (838,396) $ (935,711)
=========== =========== =========== ===========

Net loss per BAC $ (14.32) $ (12.58) $ (11.39) $ (12.71)
=========== =========== =========== ===========

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

Revenues $ 3,801,174 $ 3,949,289 $ 3,921,013 $ 4,060,750

Operating expense (4,855,206) (4,915,151) (4,810,530) (4,942,536)
----------- ----------- ----------- -----------

Loss before
minority
interest (1,054,032) (965,862) (889,517) (881,786)

Minority interest in
loss of subsidiaries 10,814 9,219 9,468 7,949
----------- ----------- ----------- -----------

Net loss $(1,043,218) $ (956,643) $ (880,049) $ (873,837)
=========== =========== =========== ===========

Net loss per BAC $ (14.17) $ (12.99) $ (11.95) $ (11.87)
=========== =========== =========== ===========

123

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 Principal Executive
Officer and Principal Financial Officer of Related Freedom Associates L.P. and
Freedom G.P. Inc., the general partners of the Partnership, 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 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 Partnership's
affairs are managed and controlled by the General Partners. On November 25,
1997, an affiliate of the Related General Partner purchased 100% of the stock of
the Freedom General Partner. Prior to such purchase the Freedom General Partner
was an affiliate of Lehman Brothers. 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 the
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 the general partner
of the Related General Partner. Pursuant to the acquisition, CharterMac acquired
controlling interests in the General Partners. Alan P. Hirmes replaced Stephen
M. Ross as Director of the Related General Partner and also replaced Michael
Brenner as Director of the Freedom General Partner, each 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 each of
the General Partners is set forth below.

The Related General Partner
- ---------------------------

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

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

124

ALAN P. HIRMES, 49, is the Director and President of the Related General
Partner. Mr. Hirmes has been a certified public accountant in New York since
1978. Prior to joining Related Capital in October 1983, Mr. Hirmes was employed
by Weiner & Co., certified public accountants. Mr. Hirmes is also the Managing
Director of Related. 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
Related 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, is responsible both for financial restructurings of real
estate properties and directing Related's acquisition of properties generating
Housing Tax Credits. Mr. Schnitzer received a Masters of Business Administration
from The Wharton School of the University of Pennsylvania in December 1987
before joining Related in January 1988. From 1983 to January 1986, he was a
financial analyst for the First Boston Corporation in New York. Mr. Schnitzer
graduated summa cum laude with a Bachelor of Science in Business Administration
from the School of Management at Boston University in May 1983. 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
Related-sponsored corporate, public and private equity and debt funds. Prior to
joining Related in 1990, Ms. Kiley had experience acquiring, financing and asset
managing multifamily residential properties. From 1981 through 1985 she was an
auditor with PricewaterhouseCoopers. Ms. Kiley holds a Bachelor of Science in
Accounting from Boston College. Ms. Kiley also serves on the Board of Trustees
of CharterMac.

GLENN F. HOPPS, 41, joined Related 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 Related in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski graduated from Pace University with a Bachelor of Arts Degree in
Accounting.

The Freedom General Partner
- ---------------------------

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

125

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

Item 11. Executive Compensation.

The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the General Partners for their services. However, under the terms of
the Partnership Agreement , the General Partners and their affiliates are
entitled to receive compensation from the Partnership in consideration of
certain services rendered to the Partnership by such parties. In addition, the
General Partners collectively hold a 1% interest in all profits, losses and
distributions attributable to operations and a subordinated 15% interest in such
items attributable to sales and refinancings. Certain directors and officers of
the General Partners receive compensation from the General Partner and their
affiliates for services performed for various affiliated entities which may
include services performed for the Partnership. The maximum annual partnership
management fee paid to the General Partner is 0.5% of invested assets. See Note
7 to the Financial Statements in Item 8 above, which is incorporated herein by
reference.

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

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

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

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

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

Freedom SLP L.P., a limited partnership whose general partners are the General
Partners of the Partnership and which acts as the special limited partner of
each Local Partnership, has either a .01% or 1% interest in each Local
Partnership.

Except as set forth below, no person (other than the Assignor Limited Partner)
was known by the Partnership to be the beneficial owner of more than five
percent of the Limited Partnership Interests and/or BACs and neither the General
Partners nor any director or officer of the General Partners owns any Limited
Partnership Interests or BACs.

Amount and Nature of Percentage
Name of Beneficial Owner (1) Beneficial Ownership of Class
- -------------------------------------------- -------------------- ----------

Lehigh Tax Credit Partners, Inc. 8,375.66(2)(3) 11.5%
J. Michael Fried 8,375.66(2)(3)(4) 11.5%
Alan P. Hirmes 8,375.66(2)(3)(4) 11.5%
Stuart J. Boesky 8,375.66(2)(3)(4) 11.5%
Marc D. Schnitzer - -
Denise L. Kiley - -
Glenn F. Hopps - -
All directors and executive officers of RFAI 8,375.66(2)(3)(4) 11.5%
and The Freedom General Partner as a
group (seven persons)

126

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

(2) As set forth in schedule 13D filed by the Partnership, Lehigh Tax Credit
L.L.C. (Lehigh) and Lehigh Tax Credit Partners, Inc. (the "Managing Member") on
October 24, 1997 with the Securities and Exchange Commission (the "Commission")
and pursuant to a letter agreement dated August 26, 1997 among the Partnership,
Lehigh and Related Freedom Associates L.P. ("RFA") (the "Standstill Agreement"),
Lehigh agreed that, prior to August 26, 2007 (the "Standstill Expiration Date"),
it will not and it will cause certain affiliates (including Lehigh Tax Credit
Partners II, LLC ("Lehigh II")), not to (i) acquire, attempt to acquire or make
a proposal to acquire, directly or indirectly, more than 45% (including BACs
acquired through all other means) of the outstanding BACs, (ii) seek to propose
to enter into, directly or indirectly, any merger, consolidation, business
combination, sale or acquisition of assets, liquidation, dissolution or other
similar transaction involving the Partnership, (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" or
"consents" (as such terms are used in the proxy rules of the Securities and
Exchange Commission (the "Commission")) to vote any voting securities of the
Partnership, (iv) form, join or otherwise participate in a "group" (within the
meaning of Section 13(d)(3) of the Act) with respect to any voting securities of
the Partnership, except that those affiliates bound by the Standstill Agreement
will not be deemed to have violated it and formed a "group" solely by acting in
accordance with the Standstill Agreement, (v) disclose in writing to any third
party any intention, plan or arrangement inconsistent with the terms of the
Standstill Agreement, or (vi) loan money to, advise, assist or encourage any
person in connection with any action inconsistent with the terms of the
Standstill Agreement. In addition, Lehigh agreed that until the Standstill
Expiration Date it will not sell any BACs acquired by it unless the buyer of
such BACs agrees to be bound by the Standstill Agreement; provided, however,
Lehigh may make transfers in the secondary market to any purchaser which
represents that following such sale it will not own three (3%) percent or more
of the BACs outstanding. By the terms of the Standstill Agreement, Lehigh also
agreed to vote its BACs in the same manner as a majority of all voting BACs
holders; provided, however, Lehigh is entitled to vote its BACs as it determines
with regard to any proposal (i) to remove RFA as a general partner of the
Partnership or (ii) concerning the reduction of any fees, profits, distributions
or allocations for the benefit of RFA or its affiliates.

(3) As of May 21, 2004, Lehigh held 4,192.83 BACs and Lehigh II held 4,182.83
BACs which constitutes approximately 11.5% of the outstanding BACs owned.

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

Item 13. Certain Relationships and Related Transactions.

The Partnership has and will continue to have certain relationships with the
General Partners and their affiliates, as discussed in Item 11 which is
incorporated herein by reference thereto. However, there have been no direct
financial transactions between the Partnership and the directors and officers of
the General Partners.

127

Item 14. Principal Accountant Fees and Services

Audit Fees
- ----------
The aggregate fees billed by Friedman, Alpren & Green, LLP and their respective
affiliates (collectively, "Friedman") for professional services rendered for the
audit of our annual financial statements for the years ended December 31, 2003
and 2002 and for the reviews of the financial statements included in the
Registrant's Quarterly Reports on Form 10-Q for those years were $52,000 and
$47,200, 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 $8,300 and $8,000, respectively.

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

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

128

PART IV

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

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

(a) 1. Financial Statements
--------------------
Reports of Independent Registered Public Accounting Firms 16

Consolidated Balance Sheets as of March 31, 2004 and 2003 109

Consolidated Statements of Operations for the years ended
March 31, 2004, 2003 and 2002 110

Consolidated Statements of Changes in Partners' Capital
(Deficit) for the years ended March 31, 2004, 2003 and
2002 111

Consolidated Statements of Cash Flows for the years ended
March 31, 2004, 2003 and 2002 112

Notes to Consolidated Financial Statements 114

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

Report of Independent Registered Public Accounting Firm 137

Schedule I - Condensed Financial Information of Registrant 138

Schedule III - Real Estate and Accumulated Depreciation 141

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

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

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

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

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

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

129

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

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

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

(21) Subsidiaries of the Registrant 131

(31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a). 134

(32.1) Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b)
and Section 1350 of Title 18 of the United States
Coded (18 U.S.C. 1350). 136

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

No reports on Form 8-K were filed during the year ended March 31, 2004.

130

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

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

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

(d) Not Applicable
--------------

131

SIGNATURES
----------

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

FREEDOM TAX CREDIT PLUS L.P.

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

By: RELATED FREEDOM ASSOCIATES INC.,
general partner

Date: June 24, 2004

By: /s/ Alan P. Hirmes
------------------
Alan. P. Hirmes,
Director and President

By: FREEDOM GP INC.
a general partner

Date: June 24, 2004

By: /s/ Alan P. Hirmes
------------------
Alan. P. Hirmes,
Director and President

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

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

Director and President (Principal
Executive and Financial
/s/ Alan P. Hirmes Officer) of Related Freedom June 24, 2004
- ------------------ Associates, Inc. and Freedom -------------
Alan P. Hirmes GP Inc.

/s/ Glenn F. Hopps Treasurer (Principal Accounting
- ------------------ Officer) of Related Freedom
Glenn F. Hopps Associates, Inc. June 24, 2004
-------------

Exhibit 31.1

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

I, Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer
of Related Freedom Associates L.P. and Freedom GP Inc. (the "General Partners"),
each of which is a general partner of Freedom Tax Credit Plus L.P. (the
"Partnership"), hereby certify that:

1. I have reviewed this annual report on Form 10-K for the period ended
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 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 controls 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 controls over financial reporting.

Date: June 24, 2004
-------------

By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Principal Executive Officer and
Principal 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 Freedom Tax Credit Plus L.P. (the
"Partnership") on Form 10-K for the period ending March 31, 2004 as filed with
the Securities and Exchange Commission ("SEC") on the date hereof (the
"Report"), I, Alan P. Hirmes, Principal Executive Officer and Principal
Financial Officer of Related Freedom Associates L.P. and Freedom GP Inc., each
of which is the general partner of the Partnership, 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
Principal Executive Officer and Principal Financial Officer
June 24, 2004

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
ON FINANCIAL STATEMENT SCHEDULES
--------------------------------

TO THE PARTNERS OF
FREEDOM TAX CREDIT PLUS L.P. AND SUBSIDIARIES

In connection with our audit of the consolidated financial statements of FREEDOM
TAX CREDIT PLUS L.P. AND SUBSIDIARIES included in the Form 10-K as presented in
our opinion dated May 17, 2004, which is based in part on the reports of other
auditors, we have also audited supporting Schedule I as of March 31, 2004 and
2003 and for the years ended 2004 and 2003, and Schedule III as of March 31,
2004 and 2003 and for the years ended March 31, 2004 and 2003. In our opinion,
based on our audits and the reports of the other auditors, these schedules
present fairly, when read in conjunction with the related financial statements,
the financial data required to be set forth therein.

/s/ Friedman, Alpren & Green LLP
New York, New York
May 17, 2004, except for the information under the heading "Washington Brooklyn"
in Note 9 to the financial statements, as to which the date is June 16, 2004.

137

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

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

CONDENSED BALANCE SHEETS

ASSETS

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

Cash and cash equivalents $ 18,980 $ 45,019
Investment in subsidiary partnerships,
carried on an equity basis 9,557,394 12,382,543
----------- -----------

Total assets $ 9,576,374 $12,427,562
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL

Due to general partner and affiliates $ 7,430,649 $ 6,530,020
Accounts payable and other liabilities 44,916 45,307
----------- -----------

Total liabilities 7,475,565 6,575,327
----------- -----------

Partners' capital 2,100,809 5,852,235
----------- -----------

Total liabilities and partners' capital $ 9,576,374 $12,427,562
=========== ===========

138

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

CONDENSED STATEMENTS OF OPERATIONS

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

Income

Other income $ 35,374 $ 237 $ 10,245
----------- ----------- -----------

Expenses

Equity in losses of subsidiary partnerships 2,813,143 2,808,962 2,839,620
General and administrative 69,472 60,045 74,136
General and administrative-related parties 907,723 884,977 847,659
----------- ----------- -----------

Total Expenses 3,790,338 3,753,984 3,761,415
----------- ----------- -----------

Net loss $(3,754,964) $(3,753,747) $(3,751,170)
=========== =========== ===========

139

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

CONDENSED STATEMENTS OF CASH FLOWS

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

Net loss $(3,751,426) $(3,753,747) $(3,751,170)
----------- ----------- -----------

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

Equity in losses of subsidiary partnerships 2,809,605 2,808,962 2,839,620

Increase (decrease) in liabilities:

Due to general partner and affiliates 900,629 920,768 894,743
Accounts payable and other liabilities (391) (6,792) (4,501)
----------- ----------- -----------

Total adjustments 3,709,843 3,722,938 3,729,862
----------- ----------- -----------

Net cash used in operating activities (41,583) (30,809) (21,308)
----------- ----------- -----------

Cash flows from investing activities:

Distributions from subsidiaries 15,544 54,651 3,635
----------- ----------- -----------

Net (decrease) increase in cash and
cash equivalents (26,039) 23,842 (17,673)

Cash and cash equivalents, beginning of year 45,019 21,177 38,850
----------- ----------- -----------

Cash and cash equivalents, end of year $ 18,980 $ 45,019 $ 21,177
=========== =========== ===========

140

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
MARCH 31, 2004

Initial Cost to Partnership Cost
-------------------------------- Capitalized
Buildings and Subsequent to
Description Encumbrances Land Improvements Acquisition
- ------------ ------------ ------------ ------------ ------------

Properties:

Parkside Townhouses
York, PA $ 1,560,395 $ 263,231 $ 4,439,564 $ 51,289
Twin Trees
Layton, UT 1,097,499 112,401 2,668,179 214,800
Bennion (Mulberry)
Taylorsville, UT 2,089,936 258,000 4,934,447 749,899
Hunters Chase
Madison, AL 2,406,317 411,100 5,616,330 (1,443,915)
Bethel Park
Bethel, OH 1,842,604 141,320 5,365,882 426,559
Zebulon Park
Owensville, OH 1,549,297 165,000 4,187,880 379,894
Tivoli Place
Murphreesboro, TN 1,476,746 267,500 4,146,759 361,104
Northwood
Jacksonville, FL 2,667,080 494,900 6,630,321 513,215
Oxford Trace
Aiken, SC 689,713 162,000 1,725,512 (601,668)
Wilshire
Huntsville, AL 1,649,943 178,497 4,014,281 (832,126)
Ivanhoe
Salt Lake City, UT 401,287 41,000 1,136,915 33,554
Washington Avenue
Brooklyn, NY 0 42,485 2,843,351 73,904
C.H. Development
(Manhattan B)
New York, NY 1,418,874 3 3,294,688 46,902
Davidson Court
Staten Island, NY 0 96,892 773,052 37,064
Magnolia Mews
Philadelphia, PA 1,610,309 200,000 668,007 2,361,024
Oaks Village
Whiteville, NC 1,451,077 63,548 1,799,849 194,262
Greenfield Village
Dunn, NC 1,459,297 78,296 1,806,126 159,208
Morris Avenue
(CLM Equities)
Bronx, NY 2,254,361 2 4,767,049 384,304
Victoria Manor
Riverside, CA 2,228,145 615,000 5,340,962 (153,198)

Purchase Price Gross Amount at which Carried at Close of Period
Adjustments(B) ----------------------------------------------------
Buildings and Buildings and
Description Improvements Land Improvements Total(A)
- ------------ ------------ ------------ ------------ ------------

Properties:

Parkside Townhouses
York, PA $ 0 $ 265,796 $ 4,488,288 $ 4,754,084
Twin Trees
Layton, UT (47,642) 115,125 2,832,613 2,947,738
Bennion (Mulberry)
Taylorsville, UT (22,842) 260,565 5,658,939 5,919,504
Hunters Chase
Madison, AL (713,028) 413,665 3,456,822 3,870,487
Bethel Park
Bethel, OH (846,229) 143,885 4,943,647 5,087,532
Zebulon Park
Owensville, OH (542,936) 167,565 4,022,273 4,189,838
Tivoli Place
Murphreesboro, TN (207,625) 270,065 4,297,673 4,567,738
Northwood
Jacksonville, FL (294,886) 497,465 6,846,085 7,343,550
Oxford Trace
Aiken, SC (161,049) 164,564 960,231 1,124,795
Wilshire
Huntsville, AL (432,405) 181,060 2,747,187 2,928,247
Ivanhoe
Salt Lake City, UT 0 42,677 1,168,792 1,211,469
Washington Avenue
Brooklyn, NY 0 44,162 2,915,578 2,959,740
C.H. Development
(Manhattan B)
New York, NY 0 1,680 3,339,913 3,341,593
Davidson Court
Staten Island, NY 0 98,569 808,439 907,008
Magnolia Mews
Philadelphia, PA 0 201,677 3,027,354 3,229,031
Oaks Village
Whiteville, NC 0 65,225 1,992,434 2,057,659
Greenfield Village
Dunn, NC 0 79,973 1,963,657 2,043,630
Morris Avenue
(CLM Equities)
Bronx, NY 0 1,679 5,149,676 5,151,355
Victoria Manor
Riverside, CA 0 616,677 5,186,087 5,802,764

Life on which
Depreciation in
Year of Latest Income
Accumulated Construction/ Date Statements are
Description Depreciation Renovation Acquired Computed(C)(D)
- ------------ ------------ ---------- ---------- --------------

Properties:

Parkside Townhouses
York, PA $ 2,158,496 1989 Sept. 1990 27.5
Twin Trees
Layton, UT 1,453,002 1989 Oct. 1990 27.5
Bennion (Mulberry)
Taylorsville, UT 2,957,728 1989 Oct. 1990 27.5
Hunters Chase
Madison, AL 2,453,135 1989 Oct. 1990 27.5
Bethel Park
Bethel, OH 2,719,404 1989 Oct. 1990 27.5
Zebulon Park
Owensville, OH 2,149,962 1989 Oct. 1990 27.5
Tivoli Place
Murphreesboro, TN 2,267,682 1989 Oct. 1990 27.5
Northwood
Jacksonville, FL 3,586,450 1989 Oct. 1990 27.5
Oxford Trace
Aiken, SC 794,846 1989 Oct. 1990 27.5
Wilshire
Huntsville, AL 1,696,474 1989 Oct. 1990 27.5
Ivanhoe
Salt Lake City, UT 517,083 1991 Jan. 1991 27.5
Washington Avenue
Brooklyn, NY 1,222,243 1991 Jan. 1991 27.5
C.H. Development
(Manhattan B)
New York, NY 1,778,725 1991 Jan. 1991 27.5
Davidson Court
Staten Island, NY 314,038 1991 Mar. 1991 27.5
Magnolia Mews
Philadelphia, PA 1,311,305 1991 Mar. 1991 27.5
Oaks Village
Whiteville, NC 949,526 1991 Mar. 1991 27.5
Greenfield Village
Dunn, NC 929,437 1991 Mar. 1991 27.5
Morris Avenue
(CLM Equities)
Bronx, NY 2,295,182 1991 Apr. 1991 27.5
Victoria Manor
Riverside, CA 2,357,649 1991 Apr. 1991 27.5

141

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
MARCH 31, 2004

Initial Cost to Partnership Cost
-------------------------------- Capitalized
Buildings and Subsequent to
Description Encumbrances Land Improvements Acquisition
- ------------ ------------ ------------ ------------ ------------

Ogontz Hallz
Philadelphia, PA 2,193,162 0 328,846 3,426,133
Eagle Ridge
Stoughton, WI 1,533,001 321,594 2,627,385 152,581
Nelson Anderson
Bronx, NY 3,352,242 2 6,524,096 236,374
Conifer Irondequoit
(Abraham Lincoln)
Irondequoit, NY 2,772,500 20,000 5,407,108 96,415
Wilson Street Apts
(Middletown)3,434,674
Middletown, PA 1,673,496 38,449 0 3,434,674
Lauderdale Lakes
Lauderdale Lakes, FL 4,805,084 873,973 3,976,744 5,777,145
Flipper Temple
Atlanta, GA 2,508,807 70,519 4,907,110 699,720
220 Cooper Street
Camden, NJ 940,479 41,000 0 3,669,791
Vendome
Brooklyn, NY 2,590,330 12,000 4,867,584 220,536
Pecan Creek
Tulsa, OK 1,008,186 50,000 1,484,923 232,054
New Augusta Ltd.
(Rainer Villas)
New Augusta, AL 706,469 15,000 939,681 111,779
Pine Shadow Apts
Waveland, MS 1,620,554 74,550 2,117,989 176,261
Windsor Place Apts
Wedowee, AL 755,322 40,000 904,888 53,111
Brookwood Apts
Foley, AL 1,250,128 68,675 1,517,190 78,692
Heflin Hills Apts
Heflin, AL 733,159 50,000 841,300 45,804
Shadowood Apts
Stevenson, AL 735,995 27,000 898,800 14,471
Brittany Apartments
DeKalb, MS 679,879 20,000 843,592 41,031
Hidden Valley Apts
Brewton, AL 1,220,129 68,000 1,637,840 76,019
Westbrook Square L.P.
Carthage, MS 1,013,639 40,000 1,254,957 44,921
Warsaw Elderly Housing Ltd.
Warsaw, KY 1,123,628 98,819 1,333,606 17,310
West Hill Square Apts. Ltd.
Gordo, AL 759,126 60,000 954,020 46,245

Purchase Price Gross Amount at which Carried at Close of Period
Adjustments(B) ----------------------------------------------------
Buildings and Buildings and
Description Improvements Land Improvements Total(A)
- ------------ ------------ ------------ ------------ ------------

Ogontz Hallz
Philadelphia, PA 0 1,677 3,753,302 3,754,979
Eagle Ridge
Stoughton, WI 0 323,271 2,778,289 3,101,560
Nelson Anderson
Bronx, NY 0 1,679 6,758,793 6,760,472
Conifer Irondequoit
(Abraham Lincoln)
Irondequoit, NY 0 21,677 5,501,846 5,523,523
Wilson Street Apts
(Middletown)3,434,674
Middletown, PA 0 40,126 3,432,997 3,473,123
Lauderdale Lakes
Lauderdale Lakes, FL 0 875,668 9,752,194 10,627,862
Flipper Temple
Atlanta, GA 0 72,196 5,605,153 5,677,349
220 Cooper Street
Camden, NJ 0 42,677 3,668,114 3,710,791
Vendome
Brooklyn, NY 0 13,677 5,086,443 5,100,120
Pecan Creek
Tulsa, OK 0 50,161 1,716,816 1,766,977
New Augusta Ltd.
(Rainer Villas)
New Augusta, AL 0 15,161 1,051,299 1,066,460
Pine Shadow Apts
Waveland, MS 0 74,711 2,294,089 2,368,800
Windsor Place Apts
Wedowee, AL 0 40,161 957,838 997,999
Brookwood Apts
Foley, AL 0 68,836 1,595,721 1,664,557
Heflin Hills Apts
Heflin, AL 0 50,161 886,943 937,104
Shadowood Apts
Stevenson, AL 0 27,161 913,110 940,271
Brittany Apartments
DeKalb, MS 0 20,161 884,462 904,623
Hidden Valley Apts
Brewton, AL 0 68,161 1,713,698 1,781,859
Westbrook Square L.P.
Carthage, MS 0 40,161 1,299,717 1,339,878
Warsaw Elderly Housing Ltd.
Warsaw, KY 0 98,980 1,350,755 1,449,735
West Hill Square Apts. Ltd.
Gordo, AL 0 60,161 1,000,104 1,060,265

Life on which
Depreciation in
Year of Latest Income
Accumulated Construction/ Date Statements are
Description Depreciation Renovation Acquired Computed(C)(D)
- ------------ ------------ ---------- ---------- --------------

Ogontz Hallz
Philadelphia, PA 1,608,447 1990 Apr. 1991 27.5
Eagle Ridge
Stoughton, WI 1,594,395 1991 May 1991 27.5
Nelson Anderson
Bronx, NY 2,932,275 1991 June 1991 27.5
Conifer Irondequoit
(Abraham Lincoln)
Irondequoit, NY 2,524,840 1991 Sept. 1991 27.5
Wilson Street Apts
(Middletown)3,434,674
Middletown, PA 1,368,963 1991 Sept. 1991 27.5
Lauderdale Lakes
Lauderdale Lakes, FL 3,081,393 1991 Oct. 1991 40
Flipper Temple
Atlanta, GA 2,163,376 1991 Oct. 1991 27.5
220 Cooper Street
Camden, NJ 1,623,124 1991 Dec. 1991 27.5
Vendome
Brooklyn, NY 2,950,334 1991 Dec. 1991 20
Pecan Creek
Tulsa, OK 630,846 1991 Dec. 1991 27.5
New Augusta Ltd.
(Rainer Villas)
New Augusta, AL 348,180 1991 Dec. 1991 27.5
Pine Shadow Apts
Waveland, MS 935,520 1991 Dec. 1991 27.5
Windsor Place Apts
Wedowee, AL 329,580 1991 Dec. 1991 27.5
Brookwood Apts
Foley, AL 556,635 1991 Dec. 1991 27.5
Heflin Hills Apts
Heflin, AL 324,009 1991 Dec. 1991 27.5
Shadowood Apts
Stevenson, AL 315,158 1991 Dec. 1991 27.5
Brittany Apartments
DeKalb, MS 304,460 1990 Dec. 1991 27.5
Hidden Valley Apts
Brewton, AL 599,337 1991 Dec. 1991 27.5
Westbrook Square L.P.
Carthage, MS 447,123 1990 Dec. 1991 27.5
Warsaw Elderly Housing Ltd.
Warsaw, KY 437,505 1991 Dec. 1991 27.5
West Hill Square Apts. Ltd.
Gordo, AL 335,550 1991 Dec. 1991 27.5

142

FREEDOM TAX CREDIT PLUS L.P.
AND CONSOLIDATED PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
MARCH 31, 2004

Initial Cost to Partnership Cost
-------------------------------- Capitalized
Buildings and Subsequent to
Description Encumbrances Land Improvements Acquisition
- ------------ ------------ ------------ ------------ ------------

Elmwood Assoc
Picayune, MS 700,034 81,500 829,183 38,117
Harmony Gate Assoc
Los Angeles, CA 3,756,929 0 9,757,807 57,491
------------ ------------ ------------ ------------

$ 66,285,158 $ 5,662,256 $120,113,803 $ 21,702,750
============ ============ ============ ============

Purchase Price Gross Amount at which Carried at Close of Period
Adjustments(B) ----------------------------------------------------
Buildings and Buildings and
Description Improvements Land Improvements Total(A)
- ------------ ------------ ------------ ------------ ------------

Elmwood Assoc
Picayune, MS 0 81,661 867,139 948,800
Harmony Gate Assoc
Los Angeles, CA 0 161 9,815,137 9,815,298
------------ ------------ ------------ ------------

$ (3,268,642) $ 5,720,520 $138,489,647 $144,210,167
============ ============ ============ ============

Life on which
Depreciation in
Year of Latest Income
Accumulated Construction/ Date Statements are
Description Depreciation Renovation Acquired Computed(C)(D)
- ------------ ------------ ---------- ---------- --------------

Elmwood Assoc
Picayune, MS 281,308 1991 Dec. 1991 27.5
Harmony Gate Assoc
Los Angeles, CA 4,128,791 1992 Jan. 1992 27.5
------------

$ 63,733,516
============

(A) Aggregate cost for federal income tax purposes, $146,576,191.
(B) Rental guarantees and development deficit guarantees for GAAP purposes are
treated as a reduction of the asset.
(C) Furniture and fixtures, included with buildings and improvements, are
depreciated primarily by the straight line method over the estimated useful
lives ranging from 5 to 7 years.
(D) Since all properties were acquired as operating properties, depreciation is
computed using primarily the straight line method over the estimated useful
lives determined by the Partnership from date of acquisition.
(E) Reconciliation of Real Estate owned:

Cost of Property and Equipment Accumulated Depreciation
------------------------------------------------ ------------------------------------------------
Years Ended March 31,
----------------------------------------------------------------------------------------------------
2004 2003 2002 2004 2003 2002
------------- ------------- ------------- ------------- ------------- -------------

Balance at beginning of year $ 143,202,053 $ 142,450,720 $ 141,678,599 $ 58,927,642 $ 54,178,153 $ 49,344,006
Additions during year:
Improvements 1,017,659 751,333 772,121
Dispositions (9,545) 0 0 (5,513) 0 0
Depreciation expense 4,811,387 4,749,489 4,834,147
Loss on impairment of asset 0 0 0
------------- ------------- ------------- ------------- ------------- -------------

Balance at close of year $ 144,210,167 $ 143,202,053 $ 142,450,720 $ 63,733,516 $ 58,927,642 $ 54,178,153
============= ============= ============= ============= ============= =============

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

143