FREEDOM TAX CREDIT PLUS LP - 10-K Annual Report

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

FORM 10-K

(Mark One)

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

For the fiscal year ended March 31, 2002

OR

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

Commission File Number 0-24652

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

DELAWARE 13-3533987
- -------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

625 MADISON AVENUE, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)

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

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

None

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

Title of Class
Beneficial Assignment Certificates and Limited Partnership Interests

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

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

DOCUMENTS INCORPORATED BY REFERENCE

None

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

Freedom Tax Credit Plus L.P. (the "Partnership") is a limited partnership which
was formed under the laws of the State of Delaware on August 28, 1989. The
General Partners of the Partnership are Related Freedom Associates L.P., a
Delaware limited partnership (the "Related General Partner"), and Freedom GP
Inc., a Delaware corporation (the "Freedom General Partner" and together with
the Related General Partner, the "General Partners"). The general partner of the
Related General Partner is Related Freedom Associates Inc., a Delaware
corporation. The General Partners are both affiliates of Related Capital
Company. On November 25, 1997, an affiliate of the Related General Partner
purchased 100% of the stock of the Freedom General Partner.

On February 9, 1990, the Partnership commenced a public offering (the
"Offering") of Beneficial Assignment Certificates ("BACs") representing
assignments of limited partnership interests in the Partnership ("Limited
Partnership Interests"), pursuant to a prospectus dated February 9, 1990, as
supplemented by supplements thereto dated December 7, 1990, May 10, 1991, July
10, 1991 and July 23, 1991 (as so supplemented, the "Prospectus").

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

INVESTMENT OBJECTIVES

The Partnership was formed to invest as a limited partner in other limited
partnerships ("Local Partnerships"), each of which owns one or more leveraged
low-income multi-family residential complexes ("Apartment Complexes" or
"Properties") that are eligible for the low-income housing tax credit ("Housing
Tax Credit") enacted in the Tax Reform Act of 1986, and some of which may also
be eligible for the historic rehabilitation tax credit ("Historic Tax Credit";
together with Housing Tax Credits, the "Tax Credits"). The Partnership's
investment in each Local Partnership represents 98% to 99% of the partnership
interests in the Local Partnership. As of March 31, 2002, the Partnership had
acquired interests in forty-two Local Partnerships. As of March 31, 2002,
approximately $58,000,000 of net proceeds had been invested in such Local
Partnerships, representing all of the Partnership's net proceeds available for
investment. Subsequent to March 31, 2002 and as of the date of this filing,
there have been no additional investments, nor are any other investments
expected. See Item 2, "Properties," below.

The investment objectives of the Partnership are described below.

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

2. Preserve and protect the Partnership's capital.

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

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

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

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

The Partnership continues to meet its primary objective of generating Housing
Tax Credits. However, there can be no assurance that the Partnership will
continue to achieve any or all of its investment objectives.

The Partnership also continues to meet its objective of allocating passive
losses to individual BACs holders to offset passive income that they may realize
from rental real estate investments and other passive activities, and allocating
passive losses to corporate BACs holders to offset business income.

As of March 31, 2002, cash distributions received from the Local Partnerships
have been relatively immaterial. Management expects that the distributions
received from the Local Partnerships will increase, although not to a level
sufficient to permit cash distributions to BACs holders. The Partnership does
not anticipate providing cash distributions to BACs holders in circumstances
other than refinancings or sales.

SEGMENTS

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

COMPETITION

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

EMPLOYEES

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

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with the Partnership's Amended and Restated Agreement and Certificate of Limited
Partnership (the "Partnership Agreement").

Item 2. Properties.

The Partnership holds a 99%, 98.99% and 98% limited partnership interest in
nine, ten and twenty-three Local Partnerships, respectively. Set forth below is
a schedule of these Local Partnerships including certain information concerning
the Apartment Complexes (the "Local Partnership Schedule"). Further information
concerning these Local Partnerships and their Properties, including any
encumbrances affecting the Properties, may be found in Item 14 (a) 2; Schedule
III.

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LOCAL PARTNERSHIP SCHEDULE
(CONTINUED)

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LOCAL PARTNERSHIP SCHEDULE
(CONTINUED)

(a) Property undergoing renovations.

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

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

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

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

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

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

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

The General Partners generally required that the general partners of the Local
Partnerships ("Local General Partners") undertake an obligation to fund
operating deficits of the Local Partnership (up to a stated maximum amount)
during a limited period of time (typically three to five years) following the
achievement of break-even operations ("Operating Deficit Guarantees"). Under the
terms of the Operating Deficit Guarantees, amounts funded are treated as
operating loans which do not bear interest and which will be repaid only out of
50% of available cash flow or out of available net sale or refinancing proceeds.
As of March 31, 2002, all Operating Deficit Guarantees have expired and $319,638
of operating loans are outstanding. In cases where the General Partners deem it
appropriate, the obligations of a Local General Partner under the Operating
Deficit Guarantees have been secured by letters of credit and/or cash escrow
deposits.

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

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thereafter convertible into BACs. As of May 7, 2002, the Partnership has 4,120
registered holders of an aggregate of 72,896 BACs.

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

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

There are no material restrictions in the Partnership Agreement on the ability
of the Partnership to make distributions. The Partnership has made no
distributions to the BACs holders as of March 31, 2002. The Partnership does not
anticipate providing cash distributions to its BACs holders other than from net
refinancing or sales proceeds.

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Item 6. Selected Financial Data.

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

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

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

During the year ended March 31, 2002, net cash flow from property operations,
working capital, interest earned on working capital and distributions received
from the Local Partnerships represents the primary source of liquidity to fund
distributions, debt service, capital improvements and non-revenue enhancing
tenant improvements. Our net cash flow from property operations is dependent
upon the occupancy level of our properties, the collectibility of rent from our
tenants, the level of operating and other expenses, and other factors. Material
changes in these factors may adversely affect our net cash flow from property
operations. Such changes, in turn, would adversely affect our ability to fund
distributions, debt service, capital improvements and non-revenue enhancing
tenant improvements. In addition, a material adverse change in our net cash flow
from operations may affect the financial performance covenants under our
mortgage notes within each Local Partnership. If we fail to meet any of our
financial performance covenants, our mortgage notes may become due and in
default, or the interest charged on refinancing the notes may increase. Either
of these circumstances could adversely affect our ability to fund working
capital and revenue enhancing tenant improvements, and unanticipated cash needs.

Working capital of approximately $21,000 (unconsolidated) remains as of March
31, 2002. It is used to pay operating expenses of the Partnership, including
Partnership management fees payable to the General Partners and advances to
Local Partnerships if warranted. The Partnership is dependent upon the support
of the General Partners and certain of its affiliates in order to meet its
obligations at the Partnership level. The General Partners and these affiliates
have agreed to continue such support for the foreseeable future.

During the fiscal year ended March 31, 2002, cash and cash equivalents of the
Partnership and its forty-two Local Partnerships increased approximately
$163,000 due to cash provided by operating activities ($1,743,000), an increase
in capitalization of consolidated subsidiaries attributable to minority interest
($77,000) and a net increase in due to local general partners and affiliates
relating to investing and financing activities ($76,000) which exceeded capital
improvements ($772,000) and repayments of mortgage loans ($959,000). Included in
the adjustments to reconcile the net loss to cash provided by operating
activities is depreciation and amortization ($5,009,000).

During the years ended March 31, 2002 ("Fiscal Year 2002"), March 31, 2001
("Fiscal Year 2001") and March 31, 2000 ("Fiscal Year 2000") the amounts
received from the Local Partnerships were $3,637, $26,796 and $24,406,
respectively. Cash distributions from Local Partnerships are not expected to
reach a level sufficient to permit cash distributions to BACs holders. These
distributions, as well as the working capital reserves referred to in the
paragraph above, will be used to meet the operating expenses of the Partnership.

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

On October 20, 1999 President Clinton signed the Fiscal Year 2000 VA, the HUD
Independent Agencies Appropriations Act (the "Appropriations Act"). The
Appropriations Act contains

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revisions to the HUD Mark-to-Market Program and other HUD programs concerning
the preservation of the HUD housing stock. On December 29, 1999 HUD issued
Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in Fiscal
Year 2000," reflecting the changes in the Appropriations Act and superceding
earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice 99-36 clarifies
many of the earlier uncertainties with respect to the earlier HUD Section 8
Mark-to-Market Programs and continued the Mark-to-Market Program which allows
owners with Section 8 contracts to increase the rents to market levels where
contract rents are currently below market. As of March 31, 2002, none of the
Local Partnerships have opted to enter the Mark-to-Market Program and therefore
this has no impact on the Partnership.

The Partnership's most critical accounting policy relates to the evaluation of
the fair value of real estate. Each Local Partnership evaluates the need for an
impairment loss on its real estate assets when indicators of impairment are
present and the undiscounted cash flows are not sufficient to recover the
asset's carrying amount. The impairment loss is measured by comparing the fair
value of the asset to its carrying amount. In addition, estimates are used when
accounting for the allowance for doubtful accounts, and contingent liabilities,
among others. These estimate are susceptible to change and actual results could
differ from these estimates. The affects of changes in these estimates are
recognized in the period they are determined.

CONTRACTUAL OBLIGATIONS

As of March 31, 2002, we were subject to the following contractual payment
obligations:

Each Local Partnership's mortgage note payable is collateralized by the land and
buildings of the respective Local Partnership, the assignment of certain Local
Partnership's rents, leases and replacement reserves and is without further
recourse.

COMMITMENTS AND CONTINGENCIES

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

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

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

The Partnership has fully invested the proceeds of its offering in 42 Local
Partnerships, all of which have their Housing Tax Credits in place. The Housing
Tax Credits are attached to the project for a period of ten years and are
transferable with the property during the remainder of the ten year period. If
trends in the real estate market warranted the sale of a property, the remaining
Housing Tax Credits would transfer to the new owner, thereby adding significant
value to the property on the market.

RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH GENERAL PARTNERS AND AFFILIATES

The Local General Partners may from time to time advance the Local Partnerships
money to fund certain property costs. These advances are to be repaid to the
Local General Partners without interest from available surplus cash of the
respective Local Partnership, or at the time of sale or refinancing. Unpaid
balance amounted to $3,819,933 and $3,623,616 at March 31, 2002 and 2001,
respectively, and is recorded as due to Local General Partners and affiliates on
the consolidated balance sheets.

Certain costs are also incurred by the Partnership payable to affiliates. The
General Partners are entitled to receive a partnership management fee, after
payment of all Partnership expenses, which together with the annual local
administrative fees will not exceed a maximum of 0.5% per annum of Invested
Assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. Subject to the foregoing limitation, the partnership
management fee will be determined by the General Partners in their sole
discretion based upon their review of the Partnership's investment. Partnership
management fee amounted to $676,000 for each of the fiscal years ended March 31,
2002, 2001 and 2000. Unpaid partnership management fees for any year will be
accrued without interest and will be payable from working capital reserves or to
the extent of available funds after the Partnership has made distributions to
the Limited Partners and BACs holders of sale or refinancing proceeds equal to
their original capital contributions plus a 10% priority return thereon (to the
extent not theretofore paid out of Cash flow). Partnership management fees owed
to General Partners amounting to approximately $4,856,000 and $4,180,000 were
accrued and unpaid as of March 31, 2002 and 2001, respectively. Without the
General Partners continued accrual without payment, the Partnership will not be
in a position to meet its obligations. The General Partners have continued
allowing the accrual without payment of these amounts, but are under no
obligation to continue to do so. The Partnership is dependent upon the support
of the General Partner and certain of its affiliates in order to meet its
obligations at the Partnership level. The General Partner and these affiliates
have agreed to continue such support for the foreseeable future.

Furthermore, the Partnership reimburses the General Partners and their
affiliates for actual Partnership operating expenses incurred by the General
Partners and their affiliates on the Partnership's behalf. The amount of
reimbursement from the Partnership is limited by the provision of the
Partnership Agreement and could fluctuate from year to year depending upon the
level of activities and transactions for the year. Services performed by these
affiliates include monitoring of partnership assets, site visits and evaluations
of local partnership performance. Amount of reimbursement amounted to
approximately $119,000, $244,000 and $179,000 for the fiscal years ended March
31, 2002, 2001 and 2000, respectively.

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RESULTS OF OPERATIONS

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", the Partnership is required to review long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the book value of an asset may not be recoverable.
The Partnership periodically compares the carrying value of its Properties to
its estimate of the sum of undiscounted future cash flows and the fair value of
remaining Tax Credits, to determine if the carrying value of the Property is
impaired. If the Property is considered impaired based on this analysis, an
impairment loss is recorded in order to write down the Property to its fair
value. The determination of fair value is based not only upon future cash flows,
which rely upon estimates and assumptions including expense growth, occupancy
and rental rates, but also upon market capitalization and discount rates as well
as other market indicators. The General Partners believe that the estimates and
assumptions used are appropriate in evaluating the carrying amount of the
Partnership's interest in the Properties. However, changes in market conditions
and circumstances may occur in the near term which would cause these estimates
and assumptions to change, which, in turn, could cause the amounts ultimately
realized upon the sale or other disposition of the Properties to differ
materially from their estimated fair value. Such changes may also require
write-downs in future years. During the period April 1, 1999 through March 31,
2002, the Partnership has recorded $2,565,000 of losses on impairment of assets.

The following is a summary of the results of operations of the Partnership for
the fiscal years ended March 31, 2002, 2001 and 2000.

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

Rental income is recognized as rent becomes due. Rental payments received in
advance are deferred until earned. The Partnership received rental subsidies
which amounted to approximately $2,953,000, $2,904,000 and $2,827,000 for the
years ended March 31, 2002, 2001 and 2000, respectively. The related rental
subsidy programs have expiration dates that either expire subsequent to the year
2002 or terminate upon total disbursement of the assistance obligation.

2002 VS. 2001

Rental income increased approximately 3% for the year ended March 31, 2002 as
compared to 2001 primarily due to rental rate increases.

No major expense categories, other than the loss on impairment of assets,
changed more than 6% for the year ended March 31, 2002 as compared to 2001.

2001 VS. 2000

Rental income increased approximately 3% for the year ended March 31, 2001 as
compared to 2000 primarily due to rental rate increases.

Other increased approximately $266,000 for the year ended March 31, 2001 as
compared to 2000 primarily due to the underaccrual of interest income for the
years ended December 31, 1999 and prior at one Local Partnership.

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No major expense categories, excluding the loss on impairment of assets, changed
more than 8% for the year ended March 31, 2001 as compared to 2000.

OTHER

The Partnership continues to meet its primary objective of generating Housing
Tax Credits. Housing Tax Credits are generated by a Property over a ten-year
period commencing as each Property is leased to qualified tenants. During the
years ended March 31, 2002, 2001 and 2000, the Housing Tax Credits received by
the Partnership totaled $6,782,384, $11,106,285 and $11,200,999, respectively.
Based on the fact that all the Local Partnerships' tax credits will be expiring
in the year 2002, the Partnership expects the Tax Credits to be received in
fiscal year 2003 to be approximately $2,000,000.

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

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

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

The Partnership does not anticipate that it will be in a position to make cash
distributions at any time prior to the disposition of the Properties. If
distributions of operating cash flow are made, it is expected that they will be
limited. As of March 31, 2002, no such distributions have been made.

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 141 "Business Combinations" and No. 142
"Goodwill and Other Intangible Assets". SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001 and that the use of pooling-of-interest method is no longer allowed.
SFAS No. 142 requires that upon adoption, amortization of goodwill will cease
and instead, the carrying value of goodwill will be evaluated for impairment on
an annual basis. Identifiable intangible assets will continue to be amortized
over their useful lives and reviewed for impairment in accordance with SFAS No.
144 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". SFAS No. 142 is effective for fiscal years beginning
after December 15, 2001. The adoption of these standards will not have any
impact on the Partnership's consolidated financial position or results of
operations.

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Additionally, the Financial Accounting Standard Board has issued SFAS No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets" in August 2001
and SFAS No. 145 "Rescission of SFAS No. 4, 44, and 64, Amendment of SFAS No.
13, and Technical Corrections" in April 2002. SFAS No. 144 and 145 are effective
for fiscal years beginning after December 15, 2001 and May 15, 2002,
respectively. The adoption of these standards will not have any impact on the
Partnership's consolidated financial position or results of operations.

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

The Partnership is not exposed to market risk since its mortgage indebtedness
bears fixed rates of interest.

-16-

Item 8. Financial Statements and Supplementary Data.

-17-

INDEPENDENT AUDITORS' REPORT

The Partners
Freedom Tax Credit Plus L.P.:

We have audited the accompanying consolidated balance sheets of Freedom Tax
Credit Plus L.P. and consolidated partnerships as of March 31, 2002 and 2001,
and the related consolidated statements of operations, changes in partners'
capital (deficit), and cash flows for each of the years in the three-year period
ended March 31, 2002. In connection with our audits of the consolidated
financial statements, we also have audited the financial statement schedules.
These consolidated financial statements and the financial statement schedules
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements and the financial
statement schedules based on our audits. We did not audit the financial
statements of 25 and 26 of the consolidated partnerships, which statements
reflect combined assets constituting 46% and 44% as of March 31, 2002 and 2001,
and combined revenues constituting 40%, 47% and 37% for 2002, 2001 and 2000,
respectively, of the related consolidated totals. Those statements were audited
by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for those partnerships, is based
solely on the reports of the other auditors.

We conducted our audits in accordance with 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 Freedom Tax Credit Plus L.P. and
consolidated partnerships as of March 31, 2002 and 2001, and the results of
their operations and their cash flows for each of the years in the three-year
period ended March 31, 2002, in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

/s/ KPMG LLP

New York, New York
May 18, 2002

-18-

[Letterhead of McKonly & Asbury LLP]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Parkside Townhomes Associates
Lancaster, Pennsylvania

We have audited the accompanying balance sheets of Parkside Townhomes Associates
(a limited partnership), PHFA Project No. 0 - 90 as of December 31, 2001 and
2000, and the related statements of profit and loss, partners' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parkside Townhomes Associates
at December 31, 2001 and 2000, and its profit and loss, partners' equity, and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

In accordance with Government Auditing Standards and Pennsylvania Housing
Finance Agency's Financial Reporting Manual, we have also issued our report
dated January 17, 2002 on our consideration of Parkside Townhomes Associates
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, PHFA regulations, contracts and grants and have
rendered our reports thereon on pages 29 and 30. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audits.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information on pages 18
through 24 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

/s/ McKonly & Asbury LLP
Harrisburg, Pennsylvania
January 17, 2002

-19-

[Letterhead of McKonly & Asbury LLP]

INDEPENDENT AUDITOR'S REPORT

The Partners of
Parkside Townhomes Associates
Lancaster, Pennsylvania

We have audited the accompanying balance sheets of Parkside Townhomes Associates
(a limited partnership), as of December 31, 1999 and 1998, and the related
statements of income, partners' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parkside Townhomes Associates
at December 31, 1999 and 1998, and its income, partners' equity, and cash flows
for the years then ended in conformity with generally accepted accounting
principles.

In accordance with Government Auditing Standards and Pennsylvania Housing
Finance Agency's HOMES Financial Reporting Manual, we have also issued a report
dated February 11, 2000 on our consideration of Parkside Townhomes Associates
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts, and grants.

/s/ McKonly & Asbury LLP
Harrisburg, Pennsylvania
February 11, 2000

-20-

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ivanhoe Apartments Limited Partnership

We have audited the accompanying balance sheet of Ivanhoe Apartments Limited
Partnership (a Limited Partnership) as of December 31, 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. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

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

/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 14, 2002

-21-

INDEPENDENT ACCOUNTANTS' REPORT

To the Partners of
Ivanhoe Apartments Limited Partnership

We have audited the accompanying balance sheet of Ivanhoe Apartments Limited
Partnership (a Limited Partnership) as of December 31, 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. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ivanhoe Apartments Limited
Partnership at December 31, 2000 and 1999, and the results of its operations and
cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Lake, Hill & Myers
Salt Lake City, Utah
January 24, 2001

-22-

[Letterhead of Friedman Alpren & Green LLP]

INDEPEDENT AUDITOR'S REPORT

TO THE PARTNERS OF WASHINGTON BROOKLYN LIMITED PARTNERSHIP

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

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

/s/ Friedman Alpren & Green LLP
New York, New York
February 20, 2002

-23-

[Letterhead of Friedman Alpren & Green LLP]

INDEPEDENT AUDITOR'S REPORT

TO THE PARTNERS OF WASHINGTON BROOKLYN LIMITED PARTNERSHIP

We have audited the accompanying balance sheet of WASHINGTON BROOKLYN LIMITED
PARTNERSHIP as of December 31, 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 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 WASHINGTON BROOKLYN LIMITED
PARTNERSHIP as of December 31, 2000, and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, New York
February 20, 2001

-24-

[Letterhead of Friedman Alpren & Green LLP]

INDEPEDENT AUDITOR'S REPORT

TO THE PARTNERS OF WASHINGTON BROOKLYN LIMITED PARTNERSHIP

We have audited the accompanying balance sheet of WASHINGTON BROOKLYN LIMITED
PARTNERSHIP as of December 31, 1999, and the related statements of operations,
changes in partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

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

/s/ Friedman Alpren & Green LLP
New York, New York
January 28, 2000

-25-

[Letterhead of Richard J. Klinkowitz]

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

Gentlemen:

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

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

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

Respectfully submitted,

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

-26-

[Letterhead of Richard J. Klinkowitz]

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

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 2000 and the
related statement of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES as
of December 31, 2000 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Richard J. Klinkowitz
Far Rockaway, New York
February 22, 2001

-27-

[Letterhead of Richard J. Klinkowitz]

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

Gentlemen:

I have audited the accompanying balance sheet of C-H DEVELOPMENT GROUP
ASSOCIATES (a New York Limited Partnership) as of December 31, 1999 and the
related statement of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on the audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of C-H DEVELOPMENT GROUP ASSOCIATES as
of December 31, 1999 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

Respectfully submitted,

/s/ Richard J. Klinkowitz
Far Rockaway, New York
February 20, 2000

-28-

[Letterhead of Reznick Fedder & Silverman]

INDEPENDENT AUDITORS'REPORT

To the Partners Davidson Court, L.P.

We have audited the accompanying balance sheets of Davidson Court, L.P. as of
December 31, 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 statement presentation.
We believe that our audits provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Davidson Court, L.P., as of
December 31, 2000 and 1999, and the results of its operations, the changes in
partners' equity (deficit) and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 1, 2001

-29-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mews Limited Partnership
Philadelphia, Pennsylvania

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

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

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

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

-30-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mews Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania Limited Partnership) as of December 31, 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 MAGNOLIA MEWS LIMITED
PARTNERSHIP as of December 31, 2000, and the results of its operations, changes
in partners' equity and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

/s/ Haefele, Flanagan & Co., p.c.
Moorestown, New Jersey
January 26, 2001

-31-

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

The Partners
The Oaks Village Limited Partnership
Dunn, North Carolina

We have audited the accompanying balance sheets of The Oaks Village Limited
Partnership, Project No. 38-024-561572445 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
and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Oaks Village Limited
Partnership, Project No. 38-024-561572445 as of December 31, 2000 and 1999, and
the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended in conformity with generally accepted
accounting principles.

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

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 29, 2001 on our consideration of The Oaks Village Limited
Partnership's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
This report is an integral part of an audit performed in accordance with
GOVERNMENT AUDITING STANDARDS, and should be read in conjunction with this
report in considering the results of our audit.

/s/ Snipes, Gower & Assoc., P.A.
Dunn, North Carolina
January 29, 2001

-32-

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

The Partners
Greenfield Village Limited Partnership
Dunn, North Carolina

We have audited the accompanying balance sheets of Greenfield Village Limited
Partnership, RHS Project No.: 38-043-561614646, as of December 31, 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
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits, provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Greenfield Village Limited
Partnership RHS Project No.: 38-043-561614646 as of December 31, 2000 and 1999,
and the results of its operations, the changes in partners' equity (deficit) and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplement information on Page 14 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the 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 whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated January 23, 2001 on our consideration of Greenfield Village Limited
Partnership's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
This report is an integral part of an audit performed in accordance with
GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report
in considering the results of our audit.

/s/ Snipes, Gower & Associates, P.A.
Dunn, North Carolina
January 23, 2001

-33-

[Letterhead of KOCH GERINGER & CO., LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners
CLM Equities

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

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

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

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

-34-

[Letterhead of KOCH GERINGER & CO., LLP]

INDEPENDENT AUDITOR'S REPORT

To the Partners
CLM Equities

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

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

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

/s/ KOCH GERINGER & CO., LLP
Certified Public Accountants
New York, New York
January 18, 2000

-35-

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

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Los Angeles, California

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

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

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

/s/ Nanas, Stern, Biers, Neinstein and Co. LLP
January 25, 2002
Beverly Hills, California

-36-

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

INDEPENDENT AUDITORS' REPORT

The Partners
Victoria Manor Associates
Beverly Hills, California

We have audited the accompanying balance sheet of Victoria Manor Associates (a
California limited partnership), as of December 31, 1999, and the related
statements of partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

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

/s/ Nanas, Stern, Biers, Neinstein and Co. LLP
January 12, 2000
Beverly Hills, California

-37-

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

INDEPENDENT AUDITOR'S REPORT
Partners
Ogontz Hall Investors
Philadelphia, Pennsylvania

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

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

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

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

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

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

-38-

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

INDEPENDENT AUDITOR'S REPORT
Partners
Ogontz Hall Investors
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of OGONTZ HALL INVESTORS (A
Limited Partnership), PHFA Project No. 0-0116, as of December 31, 2000 and 1999,
and the related statements of profit and loss, partners' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ogontz Hall Investors as of
December 31, 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.

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

In accordance with Government Auditing Standards, we have also issued a report
dated January 19, 2001, on our consideration of Ogontz Hall Investors' internal
control and a report dated January 19, 2001, on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.

/s/ Fishbein & Company, P.C.
Elkins Park, PA
January 19, 2001

-39-

[Letterhead of Virchow, Krause & Company, LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

We have audited the accompanying balance sheets of Eagle Ridge Limited
Partnership as of December 31, 2000 and 1999, and the related statements of
operations, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eagle Ridge Limited Partnership
as of December 31, 2000 and 1999, and the results of its operations and cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

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

/s/ Virchow, Krause & Company, LLP
Madison, Wisconsin
January 18, 2001

-40-

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Nelson Anderson Affordable Housing
Limited Partnership

We have audited the accompanying balance sheet of Nelson Anderson Affordable
Housing Limited Partnership as of December 31, 1999, and the related statements
of operations, changes in partners' capital and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nelson Anderson Affordable
Housing Limited Partnership as of December 31, 1999, and the results of its
operations, the changes in partners' capital and cash flows for the year then
ended, in conformity with generally accepted accounting principles.

/s/ Regen, Benz & MacKenzie
New York, New York
February 25, 2000

-41-

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

REPORT OF INDEPENDENT ACCOUNTANTS

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

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

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer Irondequoit Associates
(A Limited Partnership) as of December 31, 2001 and 2000, and the results of its
operations and cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Rochester, New York
January 30, 2002

-42-

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

REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying balance sheets of Conifer Irondequoit
Associates (A Limited Partnership), as of December 31, 2000 and 1999 and the
related statements of changes in partners' equity, operations and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer Irondequoit Associates
(A Limited Partnership) as of December 31, 2000 and 1999, and the results of its
operations and cash flows for the year then ended in conformity with generally
accepted accounting principles.

Respectfully Submitted,

/s/ Insero, Kasperski, Ciaccia & Co., P.C.
Rochester, New York
January 23, 2001

-43-

[Letterhead of REZNICK FEDDER & SILVERMAN]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates

We have audited the accompanying balance sheet of Middletown Associates as of
December 31, 2001, and the related statements of profit and loss, changes in
partners' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statement of Middletown Associates for the year ended
December 31, 2000, were audited by other auditors whose report, dated January
18, 2001, expressed an unqualified opinion on those statements.

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

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

Our 2001 audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 24
through 27 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our report
for the year ended December 31, 2001, dated January 25, 2002, on our
consideration of Middletown Associates' internal control over financial
reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. That report is an integral part of an audit
performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in
conjunction with this report in considering the results of our audit.

/s/ REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
January 25, 2002

-44-

[Letterhead of ZINER, KENNEDY & LEHAN LLP]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates

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

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

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

/s/ ZINER, KENNEDY & LEHAN LLP
Quincy, Massachusetts
January 15, 2000

-45-

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Flipper Temple Associates, L.P.

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

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Flipper Temple Associates,
L.P., as of December 31, 2000, and the results of its operations, the changes in
partners' equity (deficit) and cash flows for the year then ended, in conformity
with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 23 through 28
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such supplemental information has been subjected
to the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

In accordance with GOVERNMENT AUDITING STANDARDS and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 25,
2001 on our consideration of Flipper Temple Associates, L.P.'s internal control
and on its compliance with specific requirements applicable to major HUD
programs and fair housing and non-discrimination. Those reports are an integral
part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and
should be read in conjunction with this report in considering the results of our
audit.

/s/ Reznick Fedder & Silverman
Taxpayer Identification Number: 52-1088612
Bethesda, Maryland
January 25, 2001
Lead Auditor: Robert J. Denmark

-46-

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of 220 Cooper Street, L.P., as
of December 31, 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 audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 220 Cooper Street, L.P. as of
December 31, 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/ Heffler, Radetich & Saitta L.L.P.
Mount Laurel, NJ
February 6, 2002

-47-

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of 220 Cooper Street, L.P., as
of December 31, 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 audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 220 Cooper Street, L.P. 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.

As discussed in Note 1 to the financial statements, an error resulting in
understatement of previously reported interest income was discovered by
management of the Partnership during the current year. Accordingly, an
adjustment has been made to partners' equity as of January 1, 1999, and to
interest income for the year ended December 31, 1999, to correct the error.

/s/ Heffler, Radetich & Saitta L.L.P.
Mount Laurel, NJ
February 9, 2001

-48-

[ARCHAMBO, MUEGGENBORG & DICK, INC. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pecan Creek Limited Partnership
Bartlesville, Oklahoma

We have audited the accompanying balance sheets of Pecan Creek Limited
Partnership, HUD Project No. FHA 118-35121 (a limited partnership), as of
December 31, 2001 and 2000 and the related statements of income, changes in
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

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

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued reports dated January 21, 2002 on our
consideration of Pecan Creek Limited Partnership's internal control, on its
compliance with specific requirements applicable to major HUD programs, specific
requirements applicable to nonmajor HUD program transactions, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance Government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.

Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information shown on pages 15-17
and the information transmitted to the Department of Housing and Urban
Development (HUD) is prepared for the purpose of additional analysis and is not
a required part of the financial statements of Pecan Creek Limited Partnership.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly presented
in all material respects in relation to the basic financial statements taken as
a whole.

/s/ Archambo, Mueggenborg & Dick, Inc.
Deborah E. Mueggenborg, Audit Partner
Certified Public Accountants
73-1439902
Bartsville, Oklahoma
January 21, 2002

-49-

[ARCHAMBO, MUEGGENBORG & DICK, INC. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Pecan Creek Limited Partnership
Bartlesville, Oklahoma

We have audited the accompanying balance sheets of Pecan Creek Limited
Partnership, HUD Project No. FHA 118-35121 (a limited partnership), as of
December 31, 2000 and 1999 and the related statements of income, changes in
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pecan Creek Limited Partnership
as of December 31, 2000 and 1999, and the results of its operations, changes in
its partners' equity, and cash flows for the years then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued reports dated January 22, 2001 on our
consideration of Pecan Creek Limited Partnership's internal control, on its
compliance with specific requirements applicable to major HUD programs, specific
requirements applicable to nonmajor HUD program transactions, and specific
requirements applicable to Fair Housing and Non-Discrimination. Those reports
are an integral part of an audit performed in accordance with this report in
considering the results of our audit.
<