INDEPENDENCE TAX CREDIT PLUS LP IV - 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, 2002

OR

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

Commission File Number 33-89968

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

Delaware 13-3809869
- -------------------------------- -------------------
(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:

Limited Partnership Interests and Beneficial Assignment Certificates

(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

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

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

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PART I

Item 1. Business.

General
- -------

Independence Tax Credit Plus L.P. IV (the "Partnership") is a limited
partnership which was formed under the laws of the State of Delaware on February
22, 1995. The general partner of the Partnership is Related Independence L.L.C.,
a Delaware limited liability company (the "General Partner").

On July 6, 1995, 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 6, 1995 (the "Prospectus").

The Partnership has received $45,844,000 of Gross Proceeds of the Offering from
2,759 investors ("BACs holders"). The solicitation for the subscription of BACs
was terminated as of May 22, 1996 and the final closing occurred on August 15,
1996.

The Partnership's business is primarily 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";
together with Housing Tax Credits, "Tax Credits"). As of March 31, 2002, the
Partnership has acquired an interest in fourteen Local Partnerships, all of
which have been consolidated. The Partnership's investments in Local
Partnerships represent from 98.99% to 99.89% interests except for one investment
which is a 58.12% interest. As of March 31, 2002, the Partnership has invested
approximately $37,814,000 (including approximately $1,161,000 classified as a
loan repayable from sale/refinancing proceeds in accordance with the
Contribution Agreement and not including acquisition fees of approximately
$1,771,000) of net proceeds in fourteen Local Partnerships of which
approximately $1,829,000 remains to be paid to the Local Partnerships (including
approximately $741,000 being held in escrow) as certain benchmarks, such as
occupancy level, are attained prior to the release of the funds. The Partnership
has completed acquiring properties, but the Partnership may be required to fund
potential purchase price adjustments based on tax credit adjustor clauses. See
Item 2, Properties, below.

The Partnership has been formed to invest in Apartment Complexes that are
eligible for the Housing Tax Credit enacted in the Tax Reform Act of 1986. Some
Apartment Complexes may also be eligible for Historic Rehabilitation Tax Credits
("Historic Complexes"). The investment objectives of the Partnership are
described below.

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

-3-

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

One of the Partnership's objectives is to entitle qualified BACs holders to
Housing Tax Credits over the Credit Period. Each of the Local Partnerships in
which the Partnership has acquired an interest 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 and poor economic
conditions.

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

The real estate business is highly competitive and substantially all of the
properties acquired by the Partnership are expected to have 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 the General Partner and its affiliates. The General
Partner receives compensation in the 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 from 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.

As of March 31, 2002, the Partnership has acquired an interest in fourteen Local
Partnerships, all of which have been consolidated. Except for the interest in
New Zion Apartments, L.P. ("New Zion"), the Partnership's investment in each
Local Partnership represents 98.99% or 99.89% of the partnership interests in
the Local Partnership. The Partnership's investment in New Zion represents
58.12% of the partnership interest in the subsidiary partnership (the other
41.86% limited partnership interest is owned by an affiliate of the Partnership,
with the same management). Through the rights of the Partnership and/or an
affiliate of the General Partner, which affiliate has a contractual obligation
to act on behalf of the Partnership, to remove the general partner and to
approve certain major operating and financial decisions, the Partnership has a
controlling financial interest in all of the Local Partnerships it has invested.
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 the Local Partnerships
and their properties, including any encumbrances affecting the properties may be
found in Item 14. Schedule III .

-4-

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

* Properties still in construction phase.
** Project substantially completed but no certificate of occupancy received.

-5-

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

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.

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 less than 1% of the aggregate cost of the properties as shown in
Schedule III to the financial statements included herein.

Housing Tax Credits with respect to a given Apartment Complex are available for
a ten-year period that commences when the property is rented to qualified
tenants. 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.

None

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

PART II

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

As of March 31, 2002, the Partnership had issued and outstanding 45,844 Limited
Partnership Interests, each representing a $1,000 capital contribution to the
Partnership, or an aggregate capital contribution of $45,844,000. 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 45,844 BACs to the purchasers thereof for an aggregate purchase price of
$45,844,000. 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 plans to impose limited
re-

-6-

strictions on the transferability of the BACs and the Limited Partnership
Interests in secondary market transactions. Implementation of the restrictions
should prevent a public trading market from developing and may adversely affect
the ability of an investor to liquidate his or her investment quickly. It is
expected that such procedures will remain in effect until such time, if ever, as
further revision of the Revenue Act of 1987 may permit the Partnership to lessen
the scope of the restrictions.

As of May 2, 2002, the Partnership has approximately 2,499 registered holders of
an aggregate of 45,844 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,
2002. The Partnership does not anticipate providing cash distributions to its
BACs holders other than from net refinancing or sales proceeds.

In January 2001, affiliates of Everest Properties, Inc. ("Everest") conducted a
tender offer for up to 1,336.16 BACs. In connection with a prior tender offer
for BACs, an affiliate of the General Partner entered into a standstill
agreement dated as of April 23, 1997 (The "Standstill"), which precluded Everest
from independently soliciting BACs (by tender offer or otherwise). At Everest's
request, the General Partner caused its affiliate to release Everest from the
Standstill for the limited purpose of permitting Everest to make its tender
offer. In connection with such arrangements, Everest agreed to cover all of the
Partnership's expenses with respect to processing the tender offer including
mailing costs, legal fees and other administrative costs incurred by the
Partnership. These reimbursements resulted in aggregate payments to the
Partnership of $41,344 which are reflected as "other income" on the financial
statements for Fiscal Year 2000.

-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
financial statements in Item 8 hereof.

During the years ended March 31, 2002 and 2001, total assets decreased
approximately $2,176,000 and $5,446,000 due to depreciation and amortization and
a reduction in investments available for sale. During the years ended March 31,
2000, 1999 and 1998 total assets increased primarily due to the proceeds from
mortgage and construction loans which were utilized in the investment of Local
Partnerships amounting to approximately $10,500,000, $3,400,000 and $11,900,000,
respectively. For the years ended March 31, 2000, 1999 and 1998 total assets and
liabilities increased primarily due to the continued acquisition of Local
Partnerships. For the year ended March 31, 2002 and 2001, property and equipment
decreased approximately $1,376,000 and $1,152,000 primarily due to depreciation
expense, and for the years ended March 31, 2000, 1999 and 1998 property and
equipment increased approximately $28,900,000, $12,100,000 and $14,000,000,
respectively. During the years ended March 31, 2002, 2001, 2000, 1999 and 1998
mortgage notes increased approximately $79,000, $1,100,000, $5,000,000,
$1,400,000 and $8,100,000, respectively.

-8-

Selected Quarterly financial Data (Unaudited)

* Reclassified for comparative purposes.

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

The Partnership has made no distributions to the BACs holders as of
March 31, 2002.

-9-

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

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

The Partnership's primary source of funds include (i) interest earned on Gross
Proceeds which are invested in tax-exempt money market instruments pending
acquisition of Local Partnerships and (ii) working capital reserve and interest
thereon. All these sources are available to meet obligations of the Partnership.

The Partnership has received $45,844,000 in gross proceeds for BACs pursuant to
a public offering, resulting in net proceeds available for investment of
approximately $36,446,000 after volume discounts, payment of sales commissions,
acquisition fees and expenses, organization and offering expenses and
establishment of a working capital reserve.

As of March 31, 2002, the Partnership has invested approximately $37,814,000
(including approximately $1,161,000 classified as a loan repayable from
sale/refinancing proceeds in accordance with the Contribution Agreement and not
including acquisition fees of approximately $1,771,000) of net proceeds in
fourteen Local Partnerships of which approximately $1,829,000 remains to be paid
to the Local Partnerships (including approximately $741,000 being held in
escrow) as certain benchmarks, such as occupancy level, are attained prior to
the release of the funds. During the year ended March 31, 2002, approximately
$669,000 was paid to Local Partnerships, including purchase price adjustments.
The Partnership has completed acquiring additional properties, but the
Partnership may be required to fund potential purchase price adjustments based
on tax credit adjustor clauses. Such adjustments resulted in a net increase in
purchase price of approximately ($101,000) during the year ended March 31, 2002.

For the year ended March 31, 2002, cash and cash equivalents of the Partnership
and its fourteen consolidated Local Partnerships decreased approximately
($1,244,000) due to cash used in operating activities ($148,000), repayments of
mortgage loans ($467,000), acquisition of property and equipment ($1,082,000)
and an increase in escrow deposits relating to investing activities ($246,000)
which exceeded a net increase in due to local general partners and affiliates
relating to investing activities ($517,000) and an increase in capitalization of
consolidated subsidiaries attributable to minority interest ($181,000). Included
in the adjustments to reconcile the net loss to cash used in operations is
depreciation and amortization of approximately $2,548,000.

A working capital reserve has been established from the Partnership's funds
available for investment, which includes amounts which may be required for
potential purchase price adjustments based on tax credit adjustor clauses. At
March 31, 2002, approximately $423,000 of this reserve remained unused. The
General Partner believes that these reserves, plus any cash distributions
received from the operations of the Local Partnerships, will be sufficient to
fund the Partnership's ongoing operations for the foreseeable future. During the
year ended March 31, 2002, distributions from Local Partnerships amounted to
approximately $1,000. Management anticipates receiving distributions in the
future, although not to a level sufficient to permit providing cash
distributions to the BACs holders.

The Partnership had negotiated Operating Deficit Guaranty Agreements with the
development stage Local Partnerships by which the general partners of such Local
Partnerships and/or their affiliates have agreed to fund operating deficits for
a specified period of time. The terms of the Operating Deficit Guaranty
Agreements vary for each of these Local Partnerships, 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, 2002 and 2001, the gross
amounts of the Operating Deficit Guarantees aggregate approximately $2,659,000
and $3,332,000, respectively.

-10-

All current Operating Deficit Guarantees expire within the next two years. As of
March 31, 2002, nothing has been funded under the Operating Deficit Guaranty
Agreements. Amounts funded under such agreements will be treated as non-interest
bearing loans, which will be paid only out of 50% of available cash flow or out
of available net sale or refinancing proceeds.

Partnership management fees owed to the General Partner amounting to
approximately $955,000 and $720,000 were accrued and unpaid as of March 31, 2002
and 2001, respectively.

The Partnership has invested all of the net proceeds available for investment in
fourteen Local Partnerships, of which all will generate tax credits in 2002. Due
to increased market demand for investments in properties that were eligible to
receive tax credits at the time the Partnership was investing its capital and
limitations on the types of investments which may be obtained by the Partnership
the purchase price for interests in Local Partnerships which are qualified for
purchase by the Partnership have increased. As a result of these changes,
management does not believe that the Partnership has been able to invest the
proceeds available for investment in a manner which will enable the Partnership
to achieve tax credits in the range of $140-150 for each $1,000 BAC each year in
which the Partnership is receiving its full entitlement of tax credits.

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 will be 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 tax credits will be attached to the project for a
period of ten years, and will be transferable with the property during the
remainder of such ten-year period. If the General Partner determines that a sale
of a property is warranted, the remaining tax credits would transfer to the new
owner; thereby adding significant value to the property on the market, which
potential increase in value is 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.

Through March 31, 2002, the Partnership has not recorded any loss on impairment
of assets or reductions to estimated fair value.

The net loss for the 2001, 2000 and 1999 Fiscal Years totaled $3,306,462,
$3,773,666 and $3,180,438, respectively.

-11-

The Partnership and BACs holders began recognizing 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 has 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 $5,356,758, $5,506,354 and $4,846,123 of Housing Tax
Credits and $0, $0 and $6,450,724 Historic Tax Credits during the 2001, 2000 and
1999 tax years, respectively.

The Partnership's results of operations for the years ended March 31, 2002, 2001
and 2000 consisted primarily of the results of the Partnership's investment in
fourteen consolidated 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.

2002 vs. 2001
- -------------
Rental income increased approximately 4% for the year ended March 31, 2002 as
compared to the corresponding period ended March 31, 2001, primarily due to
rental rate increases.

Other income decreased approximately $373,000 for the year ended March 31, 2002
as compared to the corresponding period ended March 31, 2001, primarily due to
the abatement of prior year's real estate tax at two Local Partnerships and a
decrease in interest earned on cash and cash equivalents due to smaller balances
at the Partnership level.

Total expenses, excluding general and administrative, repairs and maintenance,
operating and interest, remained fairly consistent with an increase of
approximately 1% for the year ended March 31, 2002 as compared to the
corresponding period ended March 31, 2001.

General and administrative decreased approximately $449,000 for the year ended
March 31, 2002 as compared to the corresponding period ended March 31, 2001,
primarily due to the elimination of development fees due to the completion of
the rehabilitation phase at one Local Partnership, reduced management fees at a
second Local Partnership and the reduction of legal expense due to no properties
being purchased at the Partnership level.

Repairs and maintenance increased approximately $164,000 for the year ended
March 31, 2002 as compared to the corresponding period ended March 31, 2001,
primarily due to an increase in security at one Local Partnership, interior
painting and leak repairs at a second Local Partnership and exterminating costs
at a third Local Partnership.

Operating increased approximately $82,000 for the year ended March 31, 2002 as
compared to the corresponding period ended March 31, 2001, primarily due to an
increase in utility cost and usage at three Local Partnerships and an
underaccrual in 2000 at a forth Local Partnership.

Interest decreased approximately $459,000 for the year ended March 31, 2002 as
compared to the corresponding period ended March 31, 2001, primarily due to the
conversion of construction loans to mortgages at two Local Partnerships,
underaccruals in 1999 at a third and fourth Local Partnership and a rate
reduction at a fifth Local Partnership.

2001 vs. 2000
- -------------
For the twelve months ended March 31, 2001 as compared to the corresponding
period in 2000, all categories of income and expenses increased except for real
estate taxes which decreased approximately $79,000 primarily due to the reversal
of accrued taxes that were subsequently abated at one Local Partnership. The
results of operations are not comparable due to construction and rent up of
properties, and are not reflective of future operations of the Partnership due
to uncompleted property construction and rent up of properties. In addition,
interest income

-12-

will continue to decrease in future periods since a substantial portion of the
proceeds from the Offering will be included in or released to Local
Partnerships.

Other
- -----

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

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------

None.

-13-

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

Independent Auditors' Report 15

Consolidated Balance Sheets at March 31, 2002 and 2001 46

Consolidated Statements of Operations for the Years
Ended March 31, 2002, 2001 and 2000 47

Consolidated Statements of Changes in Partners' Capital
(Deficit) for the Years Ended March 31, 2002, 2001 and 2000 48

Consolidated Statements of Cash Flows for the Years Ended
March 31, 2002, 2001 and 2000 49

Notes to Consolidated Financial Statements 51

-14-

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of
Independence Tax Credit Plus L.P. IV and Subsidiaries

We have audited the accompanying consolidated balance sheets of Independence Tax
Credit Plus L.P. IV and Subsidiaries (a Delaware limited partnership) as of
March 31, 2002 and 2001, and the related consolidated statements of operations,
changes in partners' capital and cash flows for the years ended March 31, 2002,
2001 and 2000 (the 2001, 2000 and 1999 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 of thirteen, twelve and twelve subsidiary
partnerships (2001, 2000 and 1999 fiscal years), whose losses aggregated
$2,718,128, $3,049,692 and $2,675,329 for the years ended March 31, 2002, 2001
and 2000, respectively, and whose assets constituted 92% and 87% of consolidated
assets at March 31, 2002 and 2001, respectively. Those statements were audited
by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for these subsidiary partnerships,
is based solely on the reports of the other auditors.

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

In our opinion, based on our audits and the reports of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Independence Tax Credit Plus L.P.
IV and Subsidiaries as of March 31, 2002 and 2001, and the results of their
operations and their cash flows for the years ended march 31, 2002 and 2001, and
the results of their operations and their cash flows for the years ended March
31, 2002, 2001 and 2000 in conformity with accounting principles generally
accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
Friedman Alpren & Green LLP

New York, New York
June 3, 2002

-15-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
BX 8A Team Associates, L.P.

We have audited the accompanying balance sheet of BX 8A Team Associates, L.P.
for the year ended December 31, 2001, and the related statements of operations,
statements of partners' equity (deficit) and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of BX 8A Team
Associates, L.P. as of December 31, 2000 were audited by other auditors whose
report dated February 9, 2001 expressed an unqualified opinion on those
financial statements.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BX 8A Team Associates, L.P. as
of December 31, 2001, and the results of its operations, the changes in its
partners' equity (deficit) and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

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

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
February 7, 2002

-16-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Westminster Park Plaza

We have audited the accompanying balance sheets of Westminster Park Plaza, L.P.
as of December 31, 2001 and 2000, and the related statements of operations,
partners' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the 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 Westminster Park Plaza, L.P. as
of December 31, 2001 and 2000, and the results of its operations, partners'
equity (deficit) and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

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

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
January 30, 2002

-17-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Westminster Park Plaza

We have audited the accompanying balance sheets of Westminster Park Plaza (a
California limited partnership) as of December 31, 2000 and 1999, and the
related statements of operations, partners' equity (deficit) and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with 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 statements presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Park Plaza as of
December 31, 2000 and 1999, and the results of its operations, partners' equity
(deficit) 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 is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
January 31, 2001

-18-

[LETTERHEAD OF MCDANIEL & HALLSTROM]

To the Partners
FAWCETT STREET LIMITED PARTNERSHIP
Tacoma, Washington

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying balance sheets of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2001 and 2000, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2001 and 2000, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

/s/ McDaniel & Hallstrom, CPA's
Belfair, Washington
February 4, 2002

-19-

[LETTERHEAD OF MCDANIEL & HALLSTROM]

To the Partners
FAWCETT STREET LIMITED PARTNERSHIP
Tacoma, Washington

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying balance sheets of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2000 and 1999, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ McDaniel & Hallstrom, CPA's
Tacoma, Washington
February 7, 2001

-20-

[LETTERHEAD OF CLIFFORD R. BENN]

INDEPENDENT AUDITOR'S REPORT

General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California

I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2001, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2001 and the results of its operations for the year
then ended in conformity with generally accepted accounting principles.

/s/ Clifford Benn, CPA
February 27, 2002
Carson, California

-21-

[LETTERHEAD OF CLIFFORD R. BENN]

INDEPENDENT AUDITOR'S REPORT

General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California

I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2000, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2000 and the results of its operations for the year
then ended in conformity with generally accepted accounting principles.

/s/ Clifford Benn, CPA
Carson, California
February 9, 2001

-22-

[LETTERHEAD OF CLIFFORD R. BENN]

INDEPENDENT AUDITOR'S REPORT

General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California

I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 1999, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 1999 and the results of its operations for the year
then ended in conformity with generally accepted accounting principles.

/s/ Clifford Benn, CPA
Carson, California
February 25, 2000

-23-

[LETTERHEAD OF CLIFFORD R. BENN]

INDEPENDENT AUDITOR'S REPORT

General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California

I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2001, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2001 and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.

/s/ Clifford Benn, CPA
January 31, 2002
Carson, California

-24-

[LETTERHEAD OF CLIFFORD R. BENN]

INDEPENDENT AUDITOR'S REPORT

General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California

I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2000, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2000 and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.

/s/ Clifford Benn, CPA
Carson, California
February 14, 2001

-25-

[LETTERHEAD OF CLIFFORD R. BENN]

INDEPENDENT AUDITOR'S REPORT

General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California

I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
1999, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 1999 and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.

/s/ Clifford Benn, CPA
Carson, California
February 23, 2000

-26-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership

We have audited the accompanying balance sheets of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2001 and 2000,
and the related statements of operations, partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the 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 Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2001 and 2000,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 19, 2002

-27-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Belmont/McBride Apartments Limited Partnership

We have audited the accompanying balance sheets of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2000 and 1999,
and the related statements of operations, partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2000 and 1999,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 21, 2001

-28-

[LETTERHEAD OF COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION

To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana

We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2001, 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 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 in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December
31, 2001 and the results of its operations, changes in capital, and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.

Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2001 taken as a whole. The
supplementary Schedules 1, 2 and 3 are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with GOVERNMENT AUDITING STANDARDS 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 8, 2002 on our
consideration of New Zion Apartments Limited Partnership's internal control, and
reports dated February 8, 2002, on its compliance with laws and regulations,
compliance with specific requirements applicable to Fair Housing and
Non-Discrimination, and compliance with specific requirements applicable to
major HUD-assisted programs. Those reports are an integral part of an audit
performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in
conjunction with this report in considering the results of our audit.

/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 8, 2002

-29-

[LETTERHEAD OF COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION

To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana

We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2000, 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 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 in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December
31, 2000 and the results of its operations, changes in capital, and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2000 taken as a whole. The
supplementary Schedules 1, 2 and 3 are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

In accordance with GOVERNMENT AUDITING STANDARDS 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 16, 2001 on our
consideration of New Zion Apartments Limited Partnership's internal control, and
reports dated February 16, 2001, on its compliance with laws and regulations,
compliance with specific requirements applicable to Fair Housing and
Non-Discrimination, and compliance with specific requirements applicable to
major HUD-assisted programs. Those reports are an integral part of an audit
performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in
conjunction with this report in considering the results of our audit.

/s/ Cole, Evans & Peterson
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 16, 2001
Shreveport, Louisiana

-30-

[LETTERHEAD OF COLE, EVANS & PETERSON]

INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION

To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana

We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 1999, 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 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 in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December
31, 1999 and the results of its operations, changes in capital, and cash flows
for the year then ended in conformity with generally accepted accounting
principles.

Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 1999 taken as a whole. The
supplementary Schedules 1, 2 and 3 are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

As discussed in Note 13 to the financial statements, the Partnership has changed
its method of accounting for organization costs.

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 12, 2000 on our
consideration of New Zion Apartments Limited Partnership's internal control, and
reports dated February 12, 2000, on its compliance with laws and regulations,
compliance with specific requirements applicable to Fair Housing and
Non-Discrimination, and compliance with specific requirements applicable to
major HUD-assisted programs.

/s/ Cole, Evans & Peterson
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 12, 2000
Shreveport, Louisiana

-31-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bakery Village Urban Renewal Associates, L.P.

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

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the 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 Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2001, and the results of its operations, the
changes in partners' equity and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January, 17, 2002

-32-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bakery Village Urban Renewal Associates, L.P.

We have audited the accompanying balance sheet of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2000, and the related statements of
operations, partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2000, 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
Baltimore, Maryland
January, 12, 2001

-33-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bakery Village Urban Renewal Associates, L.P.

We have audited the accompanying balance sheet of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 1999, and the related statements of
operations, partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 1999, 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
Baltimore, Maryland
January 20, 2000

-34-

[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners
Marlton Housing Partnership, L.P.

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

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the 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 2001 financial statements referred to above present fairly,
in all material respects, the financial position of Marlton Housing Partnership,
L.P. at December 31, 2001, and the results of its operations, the changes in its
partners' equity (deficit) and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 25, 2002

-35-

[LETTERHEAD OF ZINER, KENNEDY & LEHAN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Marlton Housing Partnership, L.P.

We have audited the accompanying balance sheets of Marlton Housing Partnership,
L.P. (a Pennsylvania limited partnership) as of December 31, 2000 and 1999, 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. 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, 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 Marlton Housing Partnership,
L.P. at December 31, 2000 and 1999, and the results of its operations, the
changes in its partners' equity and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ Ziner, Kennedy, &Lehan LLP
January 26, 2001
Boston, Massachusetts

-36-

[LETTERHEAD OF DWYER PEMBERTON AND COULSON, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners
GP Kaneohe Limited Partnership

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

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

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

In accordance with GOVERNMENT AUDITING STANDARDS and the CONSOLIDATED AUDIT
GUIDE FOR AUDITS OF HUD PROGRAMS, issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 18, 2002, on our
consideration of GP Kaneohe Limited Partnership's internal control, and reports
dated January 18, 2002, on its compliance specific requirements applicable to
major HUD programs and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting data required by HUD shown
on pages 10 and 11 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 our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.

/s/ Dwyer, Pemberton & Coulson
Tacoma, Washington
January 18, 2002

-37-

[LETTERHEAD OF DWYER PEMBERTON AND COULSON, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
GP Kaneohe Limited Partnership

We have audited the accompanying balance sheet of GP Kaneohe Limited
Partnership, as of December 31, 2000 and the related statements of operations,
changes in partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the entity'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 GP Kaneohe Limited Partnership
as of December 31, 2000, and the results of its operations, the changes in its
partners' capital and its 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 10, 2001, on our
consideration of GP Kaneohe Limited Partnership's internal control, and reports
dated January 10, 2001, on its compliance specific requirements applicable to
major HUD programs and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
this report on page 9 is presented for purposes of additional analysis and is
not a required part of the basic financial statements for GP Kaneohe Limited
Partnership. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

/s/ Dwyer, Pemberton & Coulson
Tacoma, Washington
January 10, 2001

-38-

[LETTERHEAD OF DWYER PEMBERTON AND COULSON, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
GP Kaneohe Limited Partnership

We have audited the accompanying balance sheet of GP Kaneohe Limited
Partnership, as of December 31, 1999 and the related statements of income,
changes in partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the entity'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 GP Kaneohe Limited Partnership
as of December 31, 1999, and the results of its operations, the changes in its
partners' capital and its 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 29, 2000 on our
consideration of GP Kaneohe Limited Partnership's internal control, and reports
dated February 29, 2000, on its compliance specific requirements applicable to
major hud programs and specific requirements applicable to Fair Housing and
Non-Discrimination

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
this report on pages 9 through 11 is presented for purposes of additional
analysis and is not a required part of the basic financial statements for GP
Kaneohe Limited Partnership. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

/s/ Dwyer, Pemberton & Coulson
Tacoma, Washington
February 29, 2000

-39-

[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
KSD Village Apartments, Phase II, Ltd,

We have audited the accompanying balance sheets of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2001 and 2000, and the related statements of
operations, partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2001 and 2000, and the results of its operations,
changes in partners' equity (deficit) and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.

/s/ Miller, Mayer, Sullivan, & LLP
Lexington, Kentucky
January 21, 2002

-40-

[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
KSD Village Apartments, Phase II, Ltd,

We have audited the accompanying balance sheet of KSD Village Apartments, Phase
II, Ltd. as of December 31, 1999 and the related statements of operations,
partners' equity (deficit),and cash flows for the for the period inception
September 18,1999 through December 31,1999. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of KSD Village Apartments, Phase
II, Ltd. as of December 31, 1999, and the results of its operations, partners'
equity (deficit) and its cash flows for the period then ended, in conformity
with generally accepted accounting principles.

/s/ Miller, Mayer, Sullivan, & LLP
Lexington, Kentucky
January 31, 2000

-41-

[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Kanisa Apartments Ltd.

We have audited the accompanying balance sheets of Kanisa Apartments, Ltd.,
complex no. 083-98017-YHA, as of December 31, 2001 and 2000, and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kanisa Apartments, Ltd., as of
December 31, 2001 and 2000, and the results of its operations, changes in
partners' equity (deficit), and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing Standards 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 29, 2002, on our
consideration of Kanisa Apartments, Ltd.'s internal controls and reports dated
January 29, 2002, on its compliance with specific requirements applicable to
major HUD programs and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audits.

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

/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 2, 2001
EIN: 61-0866166
Lead Auditor: Darren C. Johnson, CPA
Audit Principal: John T. Miller, CPA

-42-

[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
of Kanisa Apartments Ltd.

We have audited the accompanying balance sheet of Kanisa Apartments, Ltd., (a
limited partnership) as of December 31, 1999 and the related statements of
operations, partners' equity (deficit),and cash flows for the period inception
October 11, 1999 through December 31, 1999. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kanisa Apartments, Ltd., as of
December 31, 1999, and the results of its operations, partners' equity (deficit)
and its cash flows for the period inception October 11, 1999 through December
31, 1999, in conformity with generally accepted accounting principles.

/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 8, 2000

-43-

[LETTERHEAD OF THOMAS HANKINS]

INDEPENDENT ACCOUNTANT'S REPORT

Partners
Guymon Housing Partners Limited Partnership
d/b/a Blue Quail Apartments

I have audited the accompanying balance sheets of Guymon Housing Partners
Limited Partnership, d/b/a Blue Quail Apartments as of December 31, 2001 and
2000, 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. My responsibility is to express
an opinion on these financial statements based on my audit.

I conducted my 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.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Guymon Housing Partners Limited
Partnership, d/b/a Blue Quail Apartments as of December 31, 2001 and 2000, and
the results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.

/s/ Thomas Hankins
February 15, 2002
Fort Smith, Arkansas

-44-

[LETTERHEAD OF THOMAS HANKINS]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Guymon Housing Partners Limited Partnership
d/b/a Blue Quail Apartments

I have audited the accompanying balance sheets of Guymon Housing Partners
Limited Partnership, d/b/a Blue Quail Apartments as of December 31, 2000 and
1999 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. My responsibility is to express
an opinion on these financial statements based on my audit.

I conducted my 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 overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Guymon Housing Partners Limited
Partnership, d/b/a Blue Quail Apartments as of December 31, 2000 and 1999, and
the results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.

/s/ Thomas Hankins
Fort Smith, Arkansas
February 13, 2001

-45-

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS

The accompanying notes are an integral part of these consolidated financial
statements.

-46-

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these consolidated financial
statements.

-47-

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 2002, 2001 and 2000

The accompanying notes are an integral part of these consolidated financial
statements.

-48-

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS