INDEPENDENCE TAX CREDIT PLUS PROGRAM - 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, 2000

OR

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

Commission File Number 0-20476

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

Delaware 13-3589920
- - - - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

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

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

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

None

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

Beneficial Assignment Certificates (including underlying Limited
Partnership Interests)

(Title of Class)

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

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

DOCUMENTS INCORPORATED BY REFERENCE

None
Index to exhibits may be found on page 97
Page 1 of 109

PART I

Item 1. Business.

GENERAL

Independence Tax Credit Plus L.P. (the "Partnership") is a limited partnership
which was formed under the laws of the State of Delaware on November 7, 1990.
The general partner of the Partnership is Related Independence Associates L.P.,
a Delaware limited partnership (the "General Partner"). The general partner of
the General Partner is Related Independence Associates Inc., a Delaware
corporation.

On July 1, 1991, 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"),
managed by Related Equities Corporation (the "Dealer Manager"), pursuant to a
prospectus dated July 1, 1991, as supplemented by Master Supplement No. 1a
thereto dated April 28, 1992 and Master Supplement No. 2a thereto dated November
3, 1992 (as so supplemented, the "Prospectus").

The Partnership received $76,786,000 of Gross Proceeds from the Offering from
5,351 investors and no further issuance of BACs is anticipated.

The Partnership's was formed to invest in other partnerships ("Local
Partnerships") owning apartment 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, some of which may also be
eligible for the historic rehabilitation tax credit ("Historic Tax Credit" and
together with Housing Tax Credits, "Tax Credits"). The partnership investment in
each Local Partnership represents from 98% to 98.99% of the Partnership's
interests in the Local Partnership. As of March 31, 2000, the Partnership had
acquired interests in twenty-eight Local Partnerships. As of March 31, 2000,
approximately $59,700,000 (not including acquisition fees of approximately
$4,500,000) of net proceeds have been invested in Local Partnerships of which
approximately $292,000 remains to be paid to the Local Partnerships, as certain
benchmarks such as occupancy levels must be attained prior to the release of the
funds. The Partnership does not intend to acquire additional properties. See
Item 2, Properties, below.

The investment objectives of the Partnership are to:

1. 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 placed
in service; referred to herein as the "Credit Period") with respect to each
Apartment Complex.

2. Preserve and protect the Partnership's capital.

3. Participate in any capital appreciation in the value of the Properties and
provide distributions of Sale or Refinancing Proceeds upon the disposition of
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 Tax
Credits over the Credit Period. Each of the Local Partnerships in which the
Partnership has acquired an inter-

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est has been allocated by the relevant state credit agencies 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 such period.
Once a Local Partnership has become eligible to recognize Tax Credits, it may
lose such eligibility and suffer an event of "recapture" if its Property fails
to remain in compliance with the Tax Credit requirements. None of the Local
Partnerships in which the Partnership has acquired an interest has suffered an
event of recapture.

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

The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 21%
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 owner's equity
contribution. The Partnership cannot sell or substantially liquidate its
investments in subsidiary partnerships during the period that the subsidy
agreements are in existence, without HUD's approval. Furthermore, there may not
be market demand for apartments at full market rents when the rental assistance
contracts expire.

COMPETITION
The real estate business is highly competitive and substantially all of the
properties acquired by the Partnership 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 Partner and/or
its affiliates to engage in businesses which may be competitive with the
Partnership.

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

Item 2. Properties.

The Partnership holds a 98.99% limited partnership interest in twenty-seven and
a 98% limited partnership interest in one Local Partnership as of March 31,
2000. Set forth below is a schedule of the Local Partnerships including certain
information concerning their respective Apartment Complexes (the "Local
Partnership Schedule"). Further information concerning these Local Partnerships
and their properties, including any encumbrances affecting the properties, may
be found in Item 14, Schedule III.

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LOCAL PARTNERSHIP SCHEDULE

Name and Location % of Units Occupied At May 1,
---------------------------------------
(Number of Units) Date Acquired 2000 1999 1998 1997 1996
- - - - ----------------- ------------- ---- ---- ---- ---- ----

Harbor Court Limited Partnership December 1991 98% 95% 93% 98% 100%
Staten Island, NY (40)

Old Public Limited Partnership December 1991 48% 87% 80% 76% 77%
Lawrenceburg, TN (30)

Lancaster Terrace Limited Partnership February 1992 97% 99% 97% 98% 99%
Salem, OR (104)

655 North Street Limited Partnership March 1992 80% 74% 81% 84% 83%
Baton Rouge, LA (195)

Landreth Venture March 1992 90% 90% 94% 94% 96%
Philadelphia, PA (47)

Homestead Apartments Associates Ltd. March 1992 96% 94% 91% 94% 93%
Homestead, FL (123)

Bethel Villa Associates, L.P. April 1992 96% 100% 100% 100% 100%
Wilmington, DE (150)

West Diamond Street Associates May 1992 100% 93% 100% 89% 96%
Philadelphia, PA (28)

Susquehanna Partners May 1992 85% 87% 94% 96% 100%
Philadelphia, PA (47)

Boston Bay Limited Partnership August 1992 98% 98% 98% 99% 100%
Boston, MA (130)

Morrant Bay Limited Partnership August 1992 98% 99% 97% 100% 97%
Boston, MA (130)

Hope Bay Limited Partnership August 1992 98% 98% 100% 98% 98%
Boston, MA (45)

Lares Apartments Limited Partnership August 1992 100% 100% 100% 100% 100%
Lares, PR (102)

Lajas Apartments Limited Partnership August 1992 100% 100% 100% 100% 100%
Lajas, PR (99)

Arlington-Rodeo Properties August 1992 100% 100% 100% 100% 100%
Los Angeles, CA (29)

Conifer Bateman Associates August 1992 83% 92% 88% 100% 100%
Lowville, NY (24)

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LOCAL PARTNERSHIP SCHEDULE (continued)

Name and Location % of Units Occupied At May 1,
----------------------------------------
(Number of Units) Date Acquired 2000 1999 1998 1997 1996
- - - - ----------------- ------------- ---- ---- ---- ---- -----
Hampden Hall Associates, L.P. September 1992 100% 93% 97% 100% 99%
St. Louis, MO (75)

Chester Renaissance Associates September 1992 100% 100% 100% 100% 100%
Chester, PA (20)

Homestead Apts. II LTD October 1992 96% 94% 94% 95% 92%
Homestead, FL (112)

P.S. 157 Associates, L.P. November 1992 100% 100% 99% 100% 96%
New York, NY (73)

Cloisters Limited Partnership II November 1992 95% 100% 94% 100% 94%
Philadelphia, PA (65)

Creative Choice Homes II, LTD December 1992 97% 98% 98% 99% 99%
Opa-Locka, FL (328)

Milford Crossing Associates L.P. December 1992 100% 99% 95% 99% 96%
Milford, DE (73)

BX-7F Associates, L.P. January 1993 95% 99% 94% 95% 98%
Bronx, NY (85)

Los Angeles Limited Partnership May 1993 100% 100% 100% 100% 98%
Rio Piedras, PR (124)

Christine Apartments, L.P. June 1993 88% 94% 97% 97% 100%
Buffalo, NY (32)

Plainsboro Housing Partners, L.P. July 1993 98% 98% 99% 100% 98%
Plainsboro, NJ (126)

Rolling Green Associates, L.P. October 1993 94% 92% 96% 91% 97%
Syracuse, NY (395)

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

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

Management continuously 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.

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Management annually reviews the insurance coverage of the properties and
believes such coverage is adequate.

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

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

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

Item 3. Legal Proceedings.

This information is incorporated by reference to the discussion of Old Public in
the Results of Operations of Certain Local Partnerships contained in Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

Item 4. Submission of Matters to a Vote of Security Holders.
None.

PART II

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

As of March 31, 2000, the Partnership had issued and outstanding 76,786 Limited
Partnership Interests, each representing a $1,000 capital contribution to the
Partnership, or an aggregate capital contribution of $76,786,000. All of the
issued and outstanding Limited Partnership Interests have been issued to
Independence Assignor Inc. (the "Assignor Limited Partner"), which has in turn
issued 76,786 BACs to the purchasers thereof for an aggregate purchase price of
$76,786,000. 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.

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 Partner has imposed limited
restrictions on the transferability of the BACs and the Limited Partnership
Interests in secondary market transactions. These restrictions should prevent a
public trading market from developing but may adversely affect the ability of an
investor to liquidate his or her investment quickly. It is expected that such
procedures will remain in effect until such time, if ever, as

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further revision of the Revenue Act of 1987 may permit the Partnership to lessen
the scope of the restrictions.

As of May 6, 2000, the Partnership has approximately 4,668 registered holders of
an aggregate of 76,786 BACs.

All of the Partnership's general partnership interests, representing an
aggregate capital contribution of $1,000, are held by the General Partner.

There are no material legal 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, 2000. The Partnership does not
anticipate providing cash distributions to its BACs holders other than from net
refinancing or sales proceeds.

-7-

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.

Year Ended March 31,
----------------------------------------------------------------------------
OPERATIONS 2000 1999 1998* 1997* 1996
- - - - ---------- ------------ ------------ ------------ ------------ ------------

Revenues $ 20,786,356 $ 20,525,657 $ 20,204,698 $ 19,663,105 $ 19,169,610

Operating expenses (26,611,223) (25,708,315) (24,944,950) (24,926,568) (24,084,097)
------------ ------------ ------------ ------------ ------------

Loss before (5,824,867) (5,182,658) (4,740,252) (5,263,463) (4,914,487)
minority interest

Minority interest in loss 20,636 17,208 35,144 33,343 32,193
of subsidiaries ------------ ------------ ------------ ------------ ------------

Net loss $ (5,804,231) $ (5,165,450) $ (4,705,108) $ (5,230,120) $ (4,882,294)
============ ============ ============ ============ ============

Net loss per $ (74.85) $ (66.61) $ (60.66) $ (67.43) $ (62.95)
weighted average BAC ============ ============ ============ ============ ============

*Reclassified for comparative purposes.

March 31,
----------------------------------------------------------------------------
FINANCIAL POSITION 2000 1999 1998 1997 1996
- - - - ------------------ ------------ ------------ ------------ ------------ ------------

Total assets $159,362,792 $164,969,973 $170,786,367 $177,448,837 $183,788,219
============ ============ ============ ============ ============

Total liabilities $117,620,369 $117,234,753 $118,016,288 $119,748,949 $120,702,900
============ ============ ============ ============ ============

Minority interest $ 6,412,604 $ 6,601,170 $ 6,470,579 $ 6,695,280 $ 6,850,591
============ ============ ============ ============ ============

Total partners' capital $ 35,329,819 $ 41,134,050 $ 46,299,500 $ 51,004,608 $ 56,234,728
============ ============ ============ ============ ============

During the years ended March 31, 2000 and 1999, total assets and liabilities
decreased primarily due to depreciation partially offset by a mortgage
refinancing (see Note 7). During the year ended March 31, 1998, total assets
decreased primarily due to depreciation and a loss on impairment of assets.
During the years ended March 31, 1997 and 1996, total assets decreased primarily
due to depreciation.

CASH DISTRIBUTIONS
The Partnership has made no distributions to the BACs holders as of
March 31, 2000.

-8-

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

LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary source of funds is the cash distributions from the
operations of the Local Partnerships. These funds, which remain relatively
immaterial, are available to meet obligations of the Partnership. Cash
distributions received from the Local Partnerships remain relatively immaterial.
Distributions of approximately $34,000, $66,000 and $143,000 were received
during the years ended March 31, 2000, 1999 and 1998, respectively. However,
management expects that the distributions received from the Local Partnerships
will increase, although not to a level sufficient to permit providing cash
distributions to BACs holders. These distributions, as well as the working
capital reserves and the continued deferral of fees payable to the General
Partner discussed below, will be used to meet the operating expenses of the
Partnership.

As of March 31, 2000, the Partnership has invested all of the net proceeds in
twenty-eight Local Partnerships. Approximately $292,000 of the purchase price
remains to be paid (all of which is held in escrow). During the year ended March
31, 2000, approximately $5,000 was paid from escrow.

Cash and cash equivalents of the Partnership and its twenty-eight consolidated
subsidiary partnerships increased approximately $475,000 during the year ended
March 31, 2000, due to cash provided by operating activities ($3,437,000) and
the writeoff of deferred costs ($224,000) which exceeded net repayments of
mortgage notes ($1,978,000), acquisitions of property and equipment ($375,000),
an increase in cash held in escrow for investing activities ($20,000), a net
decrease in due to local general partners and affiliates relating to investing
and financing activities ($538,000), an increase in deferred costs ($107,000),
and a decrease in capitalization of consolidated subsidiaries attributable to
minority interest ($168,000). Included in the adjustments to reconcile the net
loss to cash flow provided by operations in depreciation and amortization of
approximately $6,208,000.

The working capital reserve at March 31, 2000 and 1999 was approximately $18,000
and $21,000, respectively.

The Partnership has negotiated Operating Deficit Guaranty Agreements with all
Local Partnerships by which the general partners of the Local Partnerships have
agreed to fund operating deficits for a specified period of time. The terms of
the Operating Deficit Guaranty Agreements varied for each Local Partnership,
with maximum dollar amounts to be funded for a specified period of time,
generally three years, commencing on the break-even date. As of March 31, 2000
all operating deficit guarantees have expired. For the year ended March 31,
2000, nothing had been funded by the Local General Partners to meet such
obligations, which includes amounts held in escrow by the Local Partnerships.

Partnership management fees owed to the General Partner amounting to
approximately $2,299,000 were accrued and unpaid as of March 31, 2000. Without
the General Partner's advances and continued accrual without payment of certain
fees and expense reimbursements, the Partnership will not be in a position to
meet its obligations. The General Partner has continued advancing and allowing
the accrual without payment of these amounts but is under no obligation to
continue to do so.

For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships, below. Since the maximum
loss the Partnership would be liable for is its net investment in the respective
subsidiary partnerships, the resolution of the existing

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contingencies is not anticipated to impact future results of operations,
liquidity or financial condition in a material way. However, the Partnership's
loss of its investment in a Local Partnership will eliminate the ability to
generate future tax credits from such Local Partnership and may also result in
recapture of tax credits if the investment is lost before expiration of the
credit period.

Management is not aware of any trends or events, commitments or uncertainties,
which have not otherwise been disclosed, that will or are likely to impact
liquidity in a material way. Management believes the only impact would be from
laws that have not yet been adopted. The portfolio is diversified by the
location of the properties around the United States so that if one area of the
country is experiencing downturns in the economy, the remaining properties in
the portfolio may be experiencing upswings. However, the geographic
diversification of the portfolio may not protect against a general downturn in
the national economy. The Partnership has fully invested the proceeds of its
offering in 28 Local Partnerships, all of which fully have their Tax Credits in
place. The Tax Credits are attached to the project for a period of ten years,
and are transferable with the property during the remainder of the ten-year
period. If trends in the real estate market warranted the sale of a property,
the remaining Tax Credits would transfer to the new owner; thereby adding
significant value to the property on the market, which are not included in the
financial statement carrying amount.

RESULTS OF OPERATIONS
Property and equipment 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 cash
flows) when the property is considered to be impaired and the depreciated cost
exceeds estimated fair value.

At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated.

Through March 31, 2000, the Partnership has recorded approximately $500,000 as a
loss on impairment of assets.

The following is a summary of the results of operations of the Partnership for
the years ended March 31, 2000, 1999 and 1998 (the 1999, 1998 and 1997 Fiscal
Years, respectively.)

The Partnership's results of operations for the 1999, 1998 and 1997 Fiscal Years
consisted primarily of the results of the Partnership's investment in the
twenty-eight Local Partnerships. The majority of Local Partnership income
continues to be in the form of rental income with the corresponding expenses
being divided among operations, depreciation and mortgage interest.

The net loss for the 1999, 1998 and 1997 Fiscal Years totaled $5,804,231,
$5,165,450 and $4,705,108, respectively.

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The Partnership and BACs holders began to recognize Housing Tax Credits with
respect to a Property when the Credit Period for such Property commenced.
Because of the time required for the acquisition, completion and rent-up of
Properties, the amount of Tax Credits per BAC gradually increased over the first
three years of the Partnership. Housing Tax Credits not recognized in the first
three years will be recognized in the 11th through 13th years. The Partnership
generated $11,986,066, $11,979,284 and $11,977,461 of Housing Tax Credits during
the 1999, 1998 and 1997 tax years, respectively.

1999 VS. 1998
Rental income remained fairly consistent with an increase of approximately 1%
for the 1999 Fiscal Year as compared to the 1998 Fiscal Year due primarily to
rental rate increases.

Total expenses, excluding general and administrative, remained fairly consistent
with an increase of approximately 2%.

General and administrative increased approximately $495,000 for the 1999 Fiscal
Year as compared to the 1998 Fiscal Year primarily due to the write off of
organization costs that were expensed at one Local Partnership as well as an
increase in payroll and renting expenses at a second Local Partnership.

1998 VS. 1997
Rental income remained fairly consistent with an increase of approximately 2%
for the 1998 Fiscal Year as compared to the 1997 Fiscal Year due primarily to
rental rate increases.

Total expenses excluding general and administrative, general and
administrative-related parties, repairs and maintenance and loss on impairment
of assets remained fairly consistent with a decrease of approximately 3%.

General and administrative increased approximately $414,000 for the 1998 Fiscal
Year as compared to the 1997 Fiscal Year primarily due to the costs spent in
renovating and providing training in a Neighborhood Network Center at one Local
Partnership, an increase in renting expenses, office salaries and security
payroll at a second Local Partnership, and an increase in renting and bad debt
expenses at a third Local Partnership.

General and administrative-related parties increased approximately $854,000 for
the 1998 Fiscal Year, as compared to the 1997 Fiscal Year, due primarily to an
increase in partnership management fees payable to the General Partner.

Repairs and maintenance increased approximately $363,000 for the 1998 Fiscal
Year as compared to the 1997 Fiscal Year, primarily due to masonry work,
painting, cleaning and installation of kitchen cabinets at one Local
Partnership, upgrading apartment units at a second Local Partnership, and carpet
replacement and painting at a third Local Partnership.

RESULTS OF OPERATIONS OF CERTAIN LOCAL PARTNERSHIPS

OLD PUBLIC LIMITED PARTNERSHIP
Old Public Limited Partnership (the "Debtor") originally filed its bankruptcy
case in the United States Bankruptcy Court for the Southern District of New York
on November 17, 1998. The case was transferred to the United States Bankruptcy
Court for the Middle District of Tennessee, Columbia Division before Judge
George Paine, presiding as the result of a venue motion filed by the First
National Bank of Pulaski, Tennessee, the sole secured creditor of the Debtor
(the "Bank").

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The Second Amended Plan of Reorganization, as modified, was confirmed on
February 18, 2000. Pursuant to the plan the Debtor affirmed its obligations to
the Bank, paid the Bank on the Effective Date (ten days following confirmation)
(i) the arrearages due as to principal and interest through a cash infusion by
the current limited partners of the Debtor, (ii) an additional sum of $50,000
and (iii) execution of a three-year nine percent note in the amount of $30,700
in satisfaction of the Bank's accrued attorneys fees. As of March 31, 2000, the
Partnership has advanced approximately $376,000 to Old Public.

The former general partner of the Debtor, Old Public School, Inc. and two of its
principals, Lloyd Carroll and Jane Gay Carvell filed unsecured claims (the
"Litigation Claims") against the Debtor in the amount of approximately $900,000.
The court, on summary judgment filed by the Debtor, disallowed approximately
$750,000 of the asserted claims. The remainder of the claims asserted will be
treated as voluntary loans and will be satisfied in accordance with the terms of
the Partnership Agreement.

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

There also are substantial risks associated with the operations 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 the Department of Housing and Urban Development 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
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Inflation also affects the Local Partnerships
adversely by increasing operating costs, such as fuel, utilities and labor.

Item7A. Quantitative and Qualitative Disclosure About Market Risk.

Not Applicable.

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Item 8. Financial Statements and Supplementary Data.

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

(a) 1. Consolidated Financial Statements

Independent Auditors' Report 14

Consolidated Balance Sheets at March 31, 2000 and 1999 75

Consolidated Statements of Operations for the Years Ended March 31,
2000, 1999 and 1998 76

Consolidated Statements of Changes in Partners' Capital (Deficit) for
the Years Ended March 31, 2000, 1999 and 1998 77

Consolidated Statements of Cash Flows for the Years Ended March 31,
2000, 1999 and 1998 78

Notes to Consolidated Financial Statements 80

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INDEPENDENT AUDITORS' REPORT

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

We have audited the consolidated balance sheets of Independence Tax Credit Plus
L.P. and Subsidiaries (a Delaware Limited Partnership) as of March 31, 2000 and
1999, and the related consolidated statements of operations, changes in
partners' capital (deficit), and cash flows for the years ended March 31, 2000,
1999 and 1998 (the 1999, 1998 and 1997 Fiscal Years). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did not
audit the financial statements for twenty-eight (1999, 1998 and 1997 Fiscal
Years) subsidiary partnerships whose losses aggregated $3,986,583, $3,805,935
and $4,442,094 for the 1999, 1998 and 1997 Fiscal Years, respectively, and whose
assets constituted 99% of the Partnership's assets at March 31, 2000 and 1999,
presented in the accompanying consolidated financial statements. The financial
statements for twenty-seven of these subsidiary partnerships were audited by
other auditors whose reports thereon have been furnished to us and our opinion
expressed herein, insofar as it relates to the amounts included for these
subsidiary partnerships is based solely upon the reports of the other auditors.
The financial statements for one of these subsidiary partnerships were
unaudited.

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

In our opinion, based upon our audits, and the reports of the other auditors
referred to above, the consolidated financial statements referred to in the
first paragraph present fairly, in all material respects, the financial position
of Independence Tax Credit Plus L.P. and Subsidiaries at March 31, 2000 and
1999, and the results of their operations and their cash flows for the years
ended March 31, 2000, 1999 and 1998 in conformity with generally accepted
accounting principles.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 8, 2000

-14-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Harbor Court L.P.

We have audited the accompanying balance sheets of Harbor Court L.P. as of
December 31, 1999 and 1998, 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 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 Harbor Court L.P., as of
December 31, 1999 and 1998, and the results of its operations, the changes in
partners' equity and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ Reznick Fedder & Silverman
Boston, Massachusetts
January 24, 2000

-15-

[Letterhead of KPMG Peat Marwick LLP]

Independent Auditors' Report

The Partners
Harbor Court Limited Partnership:

We have audited the accompanying balance sheets of Harbor Court Limited
Partnership as of December 31, 1997 and 1996, and the related statements of
operations, changes in partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Harbor Court Limited
Partnership as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ KPMG Peat Marwick LLP
New York, New York
January 29, 1998

-16-

[Letterhead of Mack Roberts & Company, L.L.C.]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lancaster Terrace Limited Partnership
Salem, Oregon

We have audited the balance sheets of Lancaster Terrace Limited Partnership as
of December 31, 1999 and 1998, and the related statements of operations, changes
in partners' capital, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Lancaster Terrace Limited
Partnership as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Mack, Roberts & Co., L.L.C.
February 15, 2000

-17-

[Letterhead of Mack Roberts & Company, L.L.C.]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lancaster Terrace Limited Partnership
Salem, Oregon

We have audited the balance sheets of Lancaster Terrace Limited Partnership as
of December 31, 1998 and 1997, and the related statements of operations, changes
in partners' capital, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Lancaster Terrace Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Mack, Roberts & Co., L.L.C.
February 5, 1999

-18-

[Letterhead of Pailet, Meunier and LeBlanc, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
of 655 North Street Limited Partnership
New Orleans, Louisiana

We have audited the accompanying balance sheets of 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 1999 and 1998, and
the related statements of income, changes in partners' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 1999 and 1998 and the
results of its operations, changes in partners' equity, and cash flows for the
years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 23, 2000, on our
consideration of 655 North Street Limited Partnership's internal control, and
reports dated February 23, 2000, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to
Affirmative Fair Housing.

/s/ Pailet, Meunier and LeBlanc, L.L.P.
Metairie, Louisiana
February 23 2000

-19-

[Letterhead of Pailet, Meunier and LeBlanc, L.L.P.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
of 655 North Street Limited Partnership
New Orleans, Louisiana

We have audited the accompanying balance sheets of 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 1998 and 1997, and
the related statements of income, changes in partners' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 1998 and 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the years then ended in conformity with generally accepted accounting
principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 28, 1999, on our
consideration of 655 North Street Limited Partnership's internal control, and
reports dated January 28, 1999, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to
Affirmative Fair Housing.

/s/ Pailet, Meunier and LeBlanc, L.L.P.
Metairie, Louisiana
January 28, 1999

-20-

[Letterhead of Ziner, Kennedy, Lehan LLP

INDEPENDENT AUDITORS' REPORT

To the Partners of
Landreth Venture

We have audited the accompanying balance sheets of Landreth Venture (a
Pennsylvania limited partnership) as of December 31, 1999 and 1998 and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's general partners and contracted management agent. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Landreth Venture as of December
31, 1999 and 1998, and the results of its operations, changes in partners'
equity and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Ziner, Kennedy, Lehan LLP
Quincy, Massachusetts
January 20,2000

-21-

[Letterhead of Ziner, Kennedy, Lehan LLP

INDEPENDENT AUDITORS' REPORT

To the Partners of
Landreth Venture

We have audited the accompanying balance sheets of Landreth Venture (a
Pennsylvania limited partnership) as of December 31, 1998 and 1997 and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's general partners and contracted management agent. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Landreth Venture as of December
31, 1998 and 1997, and the results of its operations, changes in partners'
equity and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Ziner, Kennedy, Lehan LLP
Boston, Massachusetts
January 18, 1999

-22-

[Letterhead of Friedman, Alpern & Green LLP

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates, Ltd.

We have audited the accompanying balance sheets of Homestead Apartments
Associates, Ltd.(a limited partnership) as of December 31, 1999 and the related
statements of operations, partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Homestead Apartments
Associates, Ltd. as of December 31, 1999, and the results of its operations, and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Friedman, Alpren & Green LLP
New York, New York
January 26, 2000

-23-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates, Ltd.

We have audited the accompanying balance sheets of Homestead Apartments
Associates, Ltd., as of December 31, 1998 and 1997, and the related statements
of operations, partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Homestead Apartments
Associates, Ltd. as of December 31, 1998 and 1997, and the results of its
operations, and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 16
and 17 is presented for the purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
January 27, 1999

-24-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bethel Villa Associates, L.P.

We have audited the accompanying balance sheets of Bethel Villa Associates, L.P.
as of December 31, 1999 and 1998, the related statements of operations,
partners' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bethel Villa Associates, L.P.
as of December 31, 1999, and 1998 and the results of its operations, the changes
in partners' equity (deficit) and cash flows for the year then ended, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 26
through 30 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 18,
2000 on our consideration of Bethel Villa Associates, L.P.'s internal control
and on its compliance with specific requirements applicable to major HUD and
DSHA programs, and fair housing and non-discrimination.

/s/ Reznick Fedder & Silverman
Lead Auditor: Robert J. Denmark
Bethesda, Maryland
Federal Employer Identification Number: 52-1088612
January 18, 2000

-25-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bethel Villa Associates, L.P.

We have audited the accompanying balance sheets of Bethel Villa Associates, L.P.
as of December 31, 1997 and 1996, and the related statements of profit and loss
(on HUD Form No. 92410), partners' equity and cash flows for the years then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bethel Villa Associates, L.P.
as of December 31, 1997 and 1996, and the results of its operations, the changes
in partners' equity and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 27
through 32 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the 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 22,
1998 on our consideration of Bethel Villa Associates, L.P.'s internal control
and on its compliance with specific requirements applicable to DSHA programs,
fair housing and non-discrimination, and laws and regulations applicable to the
financial statements.

/s/ Reznick Fedder & Silverman
Audit Prncipal: Lester A. Kanis
Bethesda, Maryland
Federal Employer Identification Number: 52-1088612
January 22, 1998

-26-

[Letterhead of Asher & Company Ltd.]

Independent Auditors' Report

The Partners
West Diamond Street Associates
T/A Sedgley Park Apartments
Marlton, New Jersey

We have audited the accompanying balance sheets of West Diamond Street
Associates T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No.
O-0198, as of December 31, 1999 and 1998 and the related statements of profit
and loss, Partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West Diamond Street Associates
T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No. O-0198, as
of December 31, 1999 and 1998, and the results of its operations, changes in its
Partners' capital and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the 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 13, 2000 on our consideration of West Diamond Street Associates'
T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No. O-0198,
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants.

/s/ Asher & Company, Ltd.
Philadelphia, Pennsylvania
January 13, 2000

-27-

[Letterhead of Asher & Company]

Independent Auditors' Report

The Partners
West Diamond Street Associates
T/A Sledgey Park Apartments
Marlton, New Jersey

We have audited the accompanying balance sheets of West Diamond Street
Associates T/A Sedgly Park Apartments (A Limited Partnership), PHFA Project No.
O-0198, as of December 31, 1998 and 1997 and the related statements of profit
and loss, Partners' capital and cash flow 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 general accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes the assessing the accounting principles used and significant
estimates made by management, as well a evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West Diamond Street Associates
T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No. O-0198, as
of December 31, 1998 and 1997, and the results of its operations, changes in its
Partners' capital and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole . The accompanying supplementary
information is presented for a purposes of additional analysis and is not a
required part of basic financial statements. Such information has been subjected
to 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 22,1999 on our consideration of West Diamond Street Associates'
T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No. O-0198,
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants.

/s/ Asher & Company, Ltd
Philadelphia, Pennsylvania
January 22, 1999

-28-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Susquehanna Partners (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Susquehanna Partners (a
Limited Partnership) as of December 31, 1999 and 1998 and the related statements
of (loss), changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
partner and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Susquehanna Partners (a Limited
Partnership) at December 31, 1999 and 1998, and its results of operations,
changes in partners' equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ J.H. Williams & Co., LLP
Kingston, Pennsylvania
February 1, 2000

-29-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Susquehanna Partners (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Susquehanna Partners (a
Limited Partnership) as of December 31, 1998 and 1997 and the related statements
of (loss), changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
partner and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Susquehanna Partners (a Limited
Partnership) at December 31, 1998 and 1997, and its results of operations,
changes in partners' equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ J.H. Williams & Co., LLP
Kingston, Pennsylvania
February 11, 1999

-30-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R, as of December
31, 1999, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Boston Bay Limited Partnership
as of December 31, 1999, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 20, 2000 on our consideration of Boston Bay Limited Partnership's
internal control, a report dated January 20, 2000 on its compliance with laws
and regulations, and reports dated January 20, 2000 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency (MHFA) 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 20, 2000

-31-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R, as of December
31, 1998, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Boston Bay Limited Partnership
as of December 31, 1998, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 17, 1999 on our consideration of Boston Bay Limited Partnership's
internal control, a report dated January 17, 1999 on its compliance with laws
and regulations, and reports dated January 17, 1999 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency (MHFA) 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 17, 1999

-32-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R, as of December
31, 1997, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Boston Bay Limited Partnership
as of December 31, 1997, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 17, 1998 on our consideration of Boston Bay Limited Partnership's
internal control, a report dated January 17, 1998 on its compliance with laws
and regulations, and reports dated January 17, 1998 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency (MHFA) 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 17, 1998

-33-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R, as
of December 31, 1999, and the related statements of operations, partners'
capital, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Morrant Bay Limited Partnership
as of December 31, 1999, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 2000 on our consideration of Morrant Bay Limited Partnership's
internal control, a report dated January 22, 2000 on its compliance with laws
and regulations, and reports dated January 22, 2000 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 22, 2000

-34-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R, as
of December 31, 1998, and the related statements of operations, partners'
capital, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Morrant Bay Limited Partnership
as of December 31, 1998, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 19, 1999 on our consideration of Morrant Bay Limited Partnership's
internal control, a report dated January 19, 1999 on its compliance with laws
and regulations, and reports dated January 19, 1999 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 19, 1999

-35-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R, as
of December 31, 1997, and the related statements of operations, partners'
capital, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Morrant Bay Limited Partnership
as of December 31, 1997, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 20, 1998 on our consideration of Morrant Bay Limited Partnership's
internal control, a report dated January 20, 1998 on its compliance with laws
and regulations, and reports dated January 20, 1998 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency (MHFA) 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 20, 1998

-36-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R, as of December
31, 1999, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Hope Bay Limited Partnership as
of December 31, 1999, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 2000 on our consideration of Hope Bay Limited Partnership's
internal control, a report dated January 21,2000 on its compliance with laws and
regulations, and reports dated January 21,2000 on its compliance with specific
requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 21, 2000

-37-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R, as of December
31, 1998, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Hope Bay Limited Partnership,
as of December 31, 1998, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 19, 1999 on our consideration of Hope Bay Limited Partnership's
internal control, a report dated January 19, 1999 on its compliance with laws
and regulations, and reports dated January 19, 1999 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 19, 1999

-38-

[Letterhead of Robert Ercolini & Company LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R, as of December
31, 1997, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and 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 Hope Bay Limited Partnership as
of December 31, 1997, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 1998 on our consideration of Hope Bay Limited Partnership's
internal control, a report dated January 22, 1998 on its compliance with laws
and regulations, and reports dated January 22, 1998 on its compliance with
specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 15 through 28) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency 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/ Robert Ercolini & Company LLP
Boston, Massachusetts
January 22, 1998

-39-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lares Apartments Limited Partnership

I have audited the accompanying balance sheets of Lares Apartments Limited
Partnership, Rural Development Project No.: 63-034-660467896, as of December 31,
1999 and 1998, and the related statements of income, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the 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 Lares Apartments Limited
Partnership, as of December 31, 1999 and 1998, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 20 thru 31 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
San Juan, Puerto Rico
The stamp #1478493 of the CPA's College of PR was affixed to the original of
this report.
January 25, 2000

-40-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lares Apartments Limited Partnership

I have audited the accompanying balance sheets of Lares Apartments Limited
Partnership, Rural Development Project No.: 63-034-660467896, as of December 31,
1998 and 1997, and the related statements of income, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the 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 Lares Apartments Limited
Partnership, as of December 31, 1998 and 1997, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 21 thru 32 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
San Juan, Puerto Rico
The stamp #1478493 of the CPA's College of PR was affixed to the original of
this report.
February 4, 1999

-41-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lajas Apartments Limited Partnership

I have audited the accompanying balance sheets of Lajas Apartments Limited
Partnership, Rural Development Project No.: 63-017-660422313, as of December 31,
1999 and 1998, and the related statements of operations, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with generally accepted auditing standards
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 Lajas Apartments Limited
Partnership, as of December 31, 1999 and 1998, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 20 thru 31 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
San Juan, Puerto Rico
The stamp #1478496 of the CPA's College of PR was affixed to the original of
this report.
January 25, 2000

-42-

[Letterhead of Armando A. Suarez, CPA]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lajas Apartments Limited Partnership

I have audited the accompanying balance sheets of Lajas Apartments Limited
Partnership, Rural Development Project No.: 63-017-660422313, as of December 31,
1998 and 1997, and the related statements of income, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted my audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the 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 Lajas Apartments Limited
Partnership, as of December 31, 1998 and 1997, and the results of its
operations, changes in partners' capital (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.

My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 20 thru 31 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in my opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Armando A. Suarez, CPA
San Juan, Puerto Rico
The stamp #1478496 of the CPA's College of PR was affixed to the original of
this report.
February 4, 1999

-43-

[Letterhead of Ree & Kim]

To the Partners
Arlington - Rodeo Properties
(A California Limited Partnership)

We have audited the accompanying balance sheets of Arlington - Rodeo Properties
(A California Limited Partnership) as of December 31, 1999 and 1998 and the
related statements of operations, changes in partners' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We have 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 Arlington - Rodeo Properties as
of December 31, 1999 and 1998 and its results of operations, changes in
partner's equity and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ Ree & Kim
Los Angeles, California
February 25, 2000

-44-

[Letterhead of Ree & Kim]

To the Partners
Arlington - Rodeo Properties
(A California Limited Partnership)

We have audited the accompanying balance sheet of Arlington - Rodeo Properties
(A California Limited Partnership) as of December 31, 1997 and the related
statements of income, partners' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We have 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 Arlington - Rodeo Properties as
of December 31, 1997, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Ree & Kim
Los Angeles, California
February 25, 1998

-45-

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

INDEPENDENT AUDITORS' REPORT

To the Partners of
Conifer Bateman Associates
(A Limited Partnership)
Lowville, New York

We have audited the accompanying balance sheets of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 1999 and 1998 and the related statements
of changes in partners' equity, operations, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 1999 and 1998, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants
Rochester, New York
January 25, 2000

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

INDEPENDENT AUDITORS' REPORT

To the Partners of
Conifer Bateman Associates
(A Limited Partnership)
Lowville, New York

We have audited the accompanying balance sheets of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 1998 and 1997 and the related statements
of changes in partners' equity, operations, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 1998 and 1997, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Certified Public Accountants
Rochester, New York
January 19, 1999

-47-

[Letterhead of Mortland & Co. P.C.]

Independent Auditors' Report

To the Partners'
Hampden Hall Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 1999 and the related statements of loss, 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 this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require 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 balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet 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 Hampden Hall Associates, L.P.,
as of December 31, 1999 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Mortland & Co. P.C.
St. Louis, Missouri
February 15, 2000

-48-

[Letterhead of Mortland & Co. P.C.]

Independent Auditors' Report

To the Partners'
Hampden Hall Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 1998 and the related statements of income, 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 this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require 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 balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet 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 Hampden Hall Associates, L.P.,
as of December 31, 1998 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Mortland & Co. P.C.
St. Louis, Missouri
February 26, 1999

-49-

[Letterhead of Mortland & Co. P.C.]

Independent Auditors' Report

To the Partners
Hampden Hall Associates, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,