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, 1998
OR

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

Commission File Number 0-24652

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

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

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

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

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

None

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

Title of Class
Beneficial Assignment Certificates and Limited Partnership Interests

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

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

DOCUMENTS INCORPORATED BY REFERENCE
None

Index to exhibits may be found on page 105

Page 1 of 116

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. Prior to such
purchase the Freedom General Partner was an affiliate of Lehman Brothers.

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 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/Government Incentives

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, 1998, the Partnership had
acquired interests in forty-two Local Partnerships. As of March 31, 1998,
approximately $58,000,000 of net proceeds have been invested in such properties,
representing all of the Partnership's net proceeds available for investment.
Subsequent to March 31, 1998 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.

2

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

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

There can be no assurance that the Partnership will achieve all of its
investment objectives.

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

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

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.

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

% of Units Occupied at May 1,
Name and Location ---------------------------------
(Number of Units) Date Acquired 1998 1997 1996 1995 1994
- - ----------------- ------------- ---- ---- ---- ---- ----

Parkside Townhomes
York, PA (53) September 1990 98% 91% 98% 100% 100%

Twin Trees
Layton, UT (43) October 1990 93% 100% 100% 100% 100%

3

Local Partnership Schedule
(continued)

% of Units Occupied at May 1,
Name and Location ---------------------------------
(Number of Units) Date Acquired 1998 1997 1996 1995 1994
- - ----------------- ------------- ---- ---- ---- ---- ----

Bennion (Mulberry)
Taylorsville, UT (80) October 1990 99% 99% 100% 100% 99%

Hunters Chase
Madison, AL (91) October 1990 94% 97% 97% 83% 92%

Wilshire Park
Huntsville, AL (65) October 1990 95% 92% 92% 89% 86%

Bethel Park
Bethel, OH (84) October 1990 86% 95% 93% 96% 96%

Zebulon Park
Owensville, OH (66) October 1990 89% 88% 97% 92% 94%

Tivoli Place
Murphreesboro, TN (61) October 1990 98% 97% 100% 100% 100%

Northwood (Hartwood)
Jacksonville, FL (110) October 1990 100% 100% 100% 99% 97%

Oxford Trace
Aiken, SC (29) October 1990 90% 100% 100% 100% 93%

Ivanhoe Apts.
Salt Lake City, UT (19) January 1991 89% 84% 100% 100% 100%

Washington Brooklyn
Brooklyn, NY (24) January 1991 100% 92% 96% 100% 100%

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

Davidson Court
Staten Island, NY (38) March 1991 92% 97% 97% 92% 87%

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

Oaks Village
Whiteville, NC (40) March 1991 100% 95% 100% 95% 100%

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

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

4

Local Partnership Schedule
(continued)

% of Units Occupied at May 1,
Name and Location ---------------------------------
(Number of Units) Date Acquired 1998 1997 1996 1995 1994
- - ----------------- ------------- ---- ---- ---- ---- ----

Victoria Manor
Riverside, CA (112) April 1991 89% 91% 97% 97% 98%

Ogontz Hall
Philadelphia, PA (35) April 1991 94% 90% 87% 97% 100%

Eagle Ridge
Stoughton, WI (54) May 1991 83% 72% 91% 94% 96%

Nelson Anderson
Bronx, NY (81) June 1991 98% 99% 93% 98% 100%

Abraham Lincoln Apts.
Irondequoit, NY (69) September 1991 100% 100% 97% 100% 97%

Wilson Street Apts. (Middletown)
Middletown, PA (44) September 1991 100% 96% 100% 96% 98%

Lauderdale Lakes
Lauderdale Lakes, FL (172) October 1991 98% 98% 100% 99% 100%

Flipper Temple
Atlanta, GA (163) October 1991 100% 100% 100% 100% 99%

220 Cooper Street
Camden, NJ (29) December 1991 100% 77% 97% 100% 97%

Pecan Creek
Tulsa, OK (47) December 1991 100% 100% 98% 98% 97%

Vendome
Brooklyn, NY (24) December 1991 100% 100% 96% 100% 100%

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

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

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

Brookwood Apts.
Foley, AL (38) December 1991 100% 100% 100% 100% 100%

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

5

Local Partnership Schedule
(continued)

% of Units Occupied at May 1,
Name and Location ---------------------------------
(Number of Units) Date Acquired 1998 1997 1996 1995 1994
- - ----------------- ------------- ---- ---- ---- ---- ----

Shadowood Apts.
Stevenson, AL (24) December 1991 92% 92% 92% 100% 88%

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

Hidden Valley Apts.
Brewton, AL (40) December 1991 100% 95% 100% 100% 100%

Westbrook Square
Carthage, MS (32) December 1991 97% 88% 100% 97% 81%

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

West Hill Square
Gordo, AL (24) December 1991 100% 100% 100% 96% 100%

Elmwood Manor
Picayune, MS (24) December 1991 96% 100% 100% 100% 100%

Harmony Gate Apts.
Los Angeles, CA (70) March 1992 97% 94% 96% 94% 98%

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

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

Management periodically reviews the physical state of the properties and budgets
improvements when required which are generally funded from cash flow from
operations or release of replacement reserve escrows.

Management 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.

In connection with investments in development-stage Apartment Complexes, the
General Partners generally required that the general partners of the Local
Partnerships ("Local General

6

Partners") provide completion guarantees and/or undertake to repurchase the
Partnership's interest in the Local Partnership if construction or
rehabilitation was not completed substantially on time or on budget
("Development Deficit Guarantees"). Since the properties are no longer under
construction and are in the operating stage, the Development Deficit Guarantees
have expired and the operating deficit guarantees have come into effect. The
Development Deficit Guarantees generally also required the Local General Partner
to provide any funds necessary to cover net operating deficits of the Local
Partnership until such time as the Apartment Complex had achieved break-even
operations. The General Partners also generally required that the 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. In cases where the General
Partners deemed it appropriate, the obligations of a Local General Partner under
the Development Deficit and Operating Deficit Guarantees were secured by letters
of credit and/or cash escrow deposits.

The original amount of the Operating Deficit Guarantees aggregated approximately
$9,500,000 of which approximately $9,000,000 had expired as of March 31, 1998.
As of March 31, 1998, approximately $494,000 had been funded by the Local
General Gartners to meet such obligations. Amounts funded under such agreements
are treated as non-interest bearing loans.

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. In
certain cases, the Partnership acquired its interest in a Local Partnership
after the Local Partnership had placed its Apartment Complex in service. In
these cases, the Partnership may be allocated Housing Tax Credits only beginning
in the month following the month in which it acquired its interest.

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, 1998, 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 pay-

7

ment of transfer costs not to exceed $100), but Limited Partnership Interests so
acquired are not thereafter convertible into BACs. As of May 7, 1998, the
Partnership has 4,088 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, 1998. The Partnership does not
anticipate providing cash distributions to its BACs holders other than from net
refinancing or sales proceeds.

There has recently been an increasing number of requests for the list of BACs
holders of limited partnerships such as the Partnership. Often these requests
are made by a person who, only a short time before making the request, acquired
merely a small number of BACs in the Partnership and seeks the list for an
improper purpose, a purpose that is not in the best interest of the Partnership
or is harmful to the Partnership. In order to best serve and protect the
interests of the Partnership and all of its investors, the General Partners of
the Partnership have adopted a policy with respect to requests for the
Partnership's list of BACs holders. This policy is intended to protect investors
from unsolicited and coercive offers to acquire BACs holders' interests and does
not limit any other rights the General Partners may have under the Partnership
Agreement or applicable law.

8

Item 6. Selected Financial Data.

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

For the Years ended March 31,
------------------------------------------------------------
OPERATIONS 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------

Revenues $13,504,955 $13,270,634 $12,999,861 $12,714,134 $12,743,936
Expenses 18,672,456 18,666,634 18,120,329 17,520,409 17,309,022
Loss on impairment
of assets 1,100,000 0 0 0 0
----------- ----------- ----------- ----------- -----------

Loss before (6,267,501) (5,396,000) (5,120,468) (4,806,275) (4,565,086)
minority interest
Minority interest
69,986 59,470 58,131 50,461 56,776
----------- ----------- ----------- ----------- -----------

Loss before (6,197,515) (5,336,530) (5,062,337) (4,755,814) (4,508,310)
extraordinary
item
Extraordinary item
forgiveness of 0 87,262 0 0 0
indebtedness ----------- ----------- ----------- ----------- -----------

Net loss $(6,197,515) $(5,249,268) $(5,062,337)$(4,755,814) $(4,508,310)
============ ========== =========== ========== ==========
Per BAC:
Basic loss before $ (84.17) $ (72.48) $ (68.75)$ (64.59) $ (61.23)
extraordinary
item

Extraordinary item 0.00 1.19 0.00 0.00 0.00
----------- ---------- ----------- ----------- -----------

Basic net loss $ (84.17) $ (71.29) $ (68.75)$ (64.59) $ (61.23)
============ ========== =========== ========== ==========

March 31,
-------------------------------------------------------------
OPERATIONS 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------

Total assets $116,339,040 $122,394,464 $127,623,516 $133,237,559 $138,872,814
============ =========== =========== =========== ===========

Mortgage notes $ 71,068,616 $ 71,673,532 $ 72,249,613 $ 73,019,371 $ 73,518,550
payable ============ =========== =========== =========== ===========

Total liabilities $ 79,548,347 $ 79,120,739 $ 79,110,848 $ 79,311,502 $ 79,988,589
============ =========== =========== =========== ===========
Total partners' $ 29,133,636 $ 35,327,274 $ 40,582,160 $ 45,631,256 $ 50,389,210
capital ============ =========== =========== =========== ===========

9

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

Liquidity and Capital Resources

General

The Partnership's primary source of funds was the proceeds of its public
offering. During the year ended March 31, 1998, the primary sources of liquidity
included working capital reserves, interest earned on working capital reserves,
and distributions received from the Local Partnerships.

A working capital reserve of approximately $417,000 remains as of March 31,
1998. The reserve is used to pay operating expenses of the Partnership,
including Partnership management fees payable to the General Partners and
advances to Local Partnership if warranted.

During the fiscal year ended March 31, 1998, cash and cash equivalents of the
Partnership and its forty-two Local Partnerships decreased approximately
$269,000 as a result of capital improvements ($364,000), repayments of mortgage
loans ($605,000), an increase in marketable securities ($40,000) and a decrease
in the capitalization of consolidated subsidiaries attributable to minority
interest ($219,000) which exceeded cash flow provided by operating activities
($762,000) and a net decrease in due to local general partners and affiliates
($198,000). Included in the adjustments to reconcile the net loss to cash flow
provided by operating activities is a loss on impairment of assets ($1,100,000)
and depreciation and amortization ($5,228,000).

During the years ended March 31, 1998 ("Fiscal Year 1998"), March 31, 1997
("Fiscal Year 1997") and March 31, 1996 ("Fiscal Year 1996") the amounts
received from the Local Partnerships were $15,709, $116,296 and $116,626,
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.

The original amount of the Operating Deficit Guarantees aggregated approximately
$9,500,000 of which approximately $9,000,000 had expired as of March 31, 1998.
As of March 31, 1998, 1997 and 1996, approximately $494,000, $494,000, and
$494,000, respectively, had been funded by the Local General Partners to meet
such obligations. All remaining operating deficit guarantees expire within the
next year. Management does not expect a material impact on liquidity, based on
prior years' fundings.

Partnership management fees owed to the General Partners amounting to
approximately $2,202,000 and $1,526,000 were accrued and unpaid as of March 31,
1998 and March 31, 1997, respectively. The General Partners have continued
allowing the accrual without payment of these amounts but are under no
obligation to continue to do so.

HUD previously released the American Community Partnerships Act (the "ACPA").
The ACPA is HUD's blueprint for providing for the nation's housing needs in an
era of static or decreasing budget authority. Two key proposals in the ACPA that
could affect the Local Partnerships are: a discontinuation of project-based
Section 8 subsidy payments, and an attendant reduction in debt on properties
that were supported by the Section 8 payments.

The ACPA calls for a transition during which the project-based Section 8
payments would be converted to a tenant-based voucher system. Any FHA insured
debt would then be "marked-to-market" that is revalued in light of the reduced
income stream, if any.

10

Several industry sources have commented to HUD and Congress that in the event
the ACPA were fully enacted in its present form, the reduction in mortgage
indebtedness would be considered taxable income to owners such as the limited
partners in the Partnership. Legislative relief has been proposed to exempt such
debt reduction from cancellation of indebtedness income treatment. At present,
there are several bills pending in Congress to address this tax relief issue.
Additionally, in the interim, HUD has agreed to short term extensions of any
expiring project-based Section 8 contracts, but there is no guarantee that such
extensions will be available in the future.

In September 1997, Congress enacted the Multi-family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRAA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals instead of the above-market rentals which is generally the case
under existing Section 8 Contracts. As a result, Section 8 Contracts that are
renewed in the future in projects insured by the Federal Housing Administration
("FHA") may not provide sufficient cash flow to permit owners of properties to
meet the debt service requirements of these existing FHA-insured mortgages.
MAHRAA also provides for the restructuring of these mortgage loans so that the
annual debt service on the restructured loan (or loans) can be supported by
Section 8 rents established at the market rents. The restructured loans will be
held by the current lender or another lender. There can be no assurance that a
property owner will be permitted to restructure its mortgage indebtedness
pursuant to the new rules implementing MAHRAA or that an owner would choose to
restructure the mortgage if it were able to participate. MAHRAA is supposed to
go into effect on October 28, 1998; regulations implementing the program must be
issued prior to that time. It should be noted that there are many uncertainties
as to the economic and tax impact on a property owner because of the combination
of the reduced Section 8 contract rents and the restructuring of the existing
FHA-insured mortgage loan under MAHRAA. Only 2 of the 42 Local Partnerships will
be affected by such legislation.

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
Partnership, 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 will 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.

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. 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.

11

Results of Operations

In March 1995, the Financial Accounting Standards Board ("FASB") issued
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." Under SFAS No. 121, 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. Impairment of properties to be held and used is determined to exist
when estimated amounts recoverable through future operations on an undiscounted
basis are below the properties' carrying value. If a property is determined to
be impaired, it is written down to its estimated fair value. Effective April 1,
1996, the Partnership adopted SFAS No. 121, consistent with the required
adoption period.

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 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 quarter ended March 31, 1998, the
Partnership has recorded $1,100,000 as a loss on impairment of assets.

The following is a summary of the results of operations of the Partnership for
the fiscal years ended March 31, 1998, 1997 and 1996.

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 receives rental subsidies
which amounted to approximately $2,336,000, $2,406,000 and $2,384,000 for the
years ended March 31, 1998, 1997 and 1996, respectively. The related rental
subsidy programs have expiration that either expire subsequent to the year 2000
or terminate upon total disbursement of the assistance obligation.

The Partnership has negotiated Operating Deficit Guaranty Agreements with all
Local Partnerships, by which the Local General Partners have agreed to funds
operating deficits for a specified period of time commencing at break-even.
Amounts received under Operating Deficit Guarantees from the Local General
Partners are treated as operating loans which will not bear interest and will be
repaid only out of 50% of available cash flow or out of available net sale or
refinancing proceeds.

1998 vs. 1997

Rental income increased approximately 3% for the year ended March 31, 1998 as
compared to 1997 primarily due to rental rate increases.

12

No major expense categories, excluding the loss on impairment of assets, changed
more than 8% for the year ended March 31, 1998 as compared to 1997.

A loss on impairment of assets amounting to $1,100,000 was recorded in the 1998
Fiscal Year (see comments above).

1997 vs. 1996

Rental income increased approximately 2% for the year ended March 31, 1997 as
compared to 1996 primarily due to rental rate increases.

Total expenses, excluding repairs and maintenance and general and
administrative-related parties, increased less than 1% for the year ended March
31, 1997 as compared to 1996.

Repairs and maintenance increased approximately $199,000 for the year ended
March 31, 1997 as compared to 1996. This increase was primarily due to the
replacement of roofs damaged by a hurricane at one Local Partnership for which
insurance proceeds were received and are included in other income, the
repainting of the building at another Local Partnership, the repainting of the
trim and an increase in landscaping expenses at a third Local Partnership as
well as small increases at three other Local Partnerships.

General and administrative-related parties increased approximately $330,000 for
the year ended March 31, 1997 as compared to 1996 primarily due to an increase
in partnership management fees payable to the General Partners.

An extraordinary item for forgiveness of indebtedness amounting to approximately
$87,000 relating to the cancellation of a loan due to withdrawing general
partners at Eagle Ridge was recorded in the 1997 Fiscal Year.

Results of Operations of a Certain Local Partnership

Wilshire Park Limited Partnership

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. In 1997, management of Wilshire Park ("Wilshire") completed a
recoverability review of the carrying value of the property based on an estimate
of undiscounted future cash flows expected to result from its use and eventual
disposition. As of December 31, 1997, management concluded that the sum of the
undiscounted future cash flows estimated to be generated by the apartment
project is less than the carrying value and, as a result, the partnership
recorded a loss on impairment of $1,100,000, which reduced the carrying value to
its estimated fair value. The estimated fair value was determined by using a
discounted cash flow analysis and an estimate of the fair value of the remaining
tax credits.

Eagle Ridge Limited Partnership

Eagle Ridge Limited Partnership ("Eagle Ridge") has entered into a Forbearance
Agreement with Wisconsin Housing and Economic Development Authority ("WHEDA") as
a result of Eagle Ridge's failure to pay all the required installment payments
under the mortgage note. Under the terms of the agreement, WHEDA has agreed to
temporarily forego the enforcement of its rights and remedies against Eagle
Ridge through December 31, 1998 and to continue to

13

extend Eagle Ridge financing provided that Eagle Ridge complies with certain
conditions. The conditions of the agreement consist of, but are not limited to:
(1) monthly payments of escrow and reserve deposits, (2) monthly payments of
principal and interest limited to the lower of 100% of net operating income
("NOI") or 5% of the regularly scheduled monthly note payment (base payment),
(3) 75% of the monthly NOI in excess of the base payment for principal and
interest and (4) the remaining 35% of NOI in excess of the base payment is to be
paid as an incentive management to the management agent. The Partnership's
investment in Eagle Ridge at March 31, 1998 and 1997 was approximately $46,000
and $278,000, respectively, and the minority interest balance was approximately
$160,000 and $163,000, respectively. The Partnership's share of Eagle Ridge's
net loss amounted to approximately $232,000, $137,000 and $174,000 for the 1998,
1997 and 1996 Fiscal Years, respectively.

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, 1998, 1997 and 1996, the Housing Tax Credits received by
the Partnership totaled $11,208,964, $11,208,966 and $11,208,869, respectively.
There were no Historic Tax Credits received in Fiscal Years 1998, 1997 and 1996.

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, 1998, no such distributions have been made.

There has recently been an increasing number of requests for the list of BAC
holders of limited partnerships such as the Partnership. Often these requests
are made by a person who, only a short time before making the request, acquired
merely a small number of BACs in the Partnership and seeks the list for an
improper purpose, a purpose that is not in the best interest of the Partnership
or is harmful to the Partnership. In order to best serve and protect the
interests of

14

the Partnership and all of its investors, the General Partners of the
Partnership have adopted a policy with respect to requests for the Partnership's
list of BAC holders. This policy is intended to protect investors from
unsolicited and coercive offers to acquire BAC holders' interests and does not
limit any other rights the General Partners may have under the Partnership
Agreement or applicable law.

Recent Accounting Pronouncements

In June 1997, SFAS No. 130, Reporting Comprehensive Income, and SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, were
issued. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements.
Reclassification of financial statements for earlier periods, provided for
comparative purposes, is required. The statement also requires the accumulated
balance of other comprehensive income to be displayed separately from Limited
and General Partners' capital in the Partners' Capital section of the statement
of financial position.

SFAS No. 131 establishes standards for reporting information about operating
segments in annual and interim financial statements. Operating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. Categories required to be reported as well as reconciled to the
financial statements are segment profit or loss, certain specific revenue and
expense items, and segment assets. SFAS No. 130 and No. 131 are effective for
fiscal years beginning after December 15, 1997.

Both SFAS No. 130 and 131 are disclosure related only and therefore will have no
impact on the Partnership's financial position or results of operations.

Year 2000 Compliance

As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date.
Failure to adequately address this issue could have potentially serious
repercussions. The General Partners are in the process of working with the
Partnership's service providers to prepare for the year 2000. Based on
information currently available, the Partnership does not expect that it will
incur significant operating expenses or be required to incur material costs to
be year 2000 compliant.

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

Not applicable for fiscal year 1998

15

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

Independent Auditors' Report 17

Consolidated Balance Sheets as of March 31,
1998 and 1997 85

Consolidated Statements of Operations for the
years ended March 31, 1998, 1997 and 1996 86

Consolidated Statements of Changes in
Partners' Capital for the years ended March
31, 1998, 1997 and 1996 87

Consolidated Statements of Cash Flows for the
years ended March 31, 1998, 1997 and 1996 88

Notes to Consolidated Financial Statements 90

16

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, 1998 and 1997,
and the related consolidated statements of operations, changes in partners'
capital, and cash flows for each of the years in the three-year period ended
March 31, 1998. 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 27 of the consolidated partnerships, which statements
reflect combined assets constituting 49% and 48% and combined revenues
constituting 43% and 49% of the related consolidated totals for 1998 and 1997,
respectively. Those statements were audited by other auditors whose reports have
been furnished to us, and our opinion, insofar as it relates to the amounts
included for those partnerships, is based solely on the reports of the other
auditors.

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 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, 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended March 31, 1998, in conformity with generally accepted accounting
principles. 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 Peat Marwick LLP
- - -------------------------
KPMG Peat Marwick LLP

New York, New York
June 4, 1998

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, 1996 and
1995, and the related consolidated statements of operations, changes in
partners' capital and cash flows for each of the years in the three-year
period ended March 31, 1996. 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 28 of the consolidated partnerships, which statements
reflect combined assets constituting 49% and combined revenues constituting
49% of the related consolidated totals for 1996 and 1995. 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 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 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, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended March 31, 1996, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

New York New York
June 18, 1996

[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, 1997 and 1996, 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, 1997 and 1996, 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 4, 1998 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 4, 1998

[McKONLY & ASBURY LETTERHEAD]

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, 1996 and 1995, 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, 1996 and 1995, 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 2, 1997 on our consideration of Parkside Townhomes Associates
internal control structure and a report dated February 2, 1997 on its compliance
with laws and regulations.

/s/ McKONLY & ASBURY

Harrisburg, Pennsylvania
February 2, 1997

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, 1997 and 1996 and the
related statements of operations, changes in partners' capital and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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, 1997 and 1996, 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

Lake, Hill & Myers

Salt Lake City, Utah
February 5, 1998

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, 1996 and 1995 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, 1996 and 1995, and the results of its operations and
cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Lake, Hill & Company
- - -------------------------
Lake, Hill & Company

Salt Lake City, Utah
January 17, 1997

[Letterhead of Rubin & Katz 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, 1997, and the related statements of operations,
changes in partners' capital and cash flows for the year then ended. These
financial statements are the representation 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, 1997 and the results of its operations, changes
in partners' capital and cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ Rubin & Katz LLP

New York, New York
February 18, 1998

[RUBIN & KATZ LLP LETTERHEAD]

INDEPENDENT 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, 1996, and the related statements of operations,
changes in partners' capital and cash flows for the year then ended. These
financial statements are the representation 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, 1996 and the results of its operations, changes
in partners' capital and cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ RUBIN & KATZ LLP

New York, New York
February 26, 1997

[RUBIN & KATZ LLP LETTERHEAD]

INDEPENDENT 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, 1995, and the related statements of operations,
changes in partners' capital and cash flows for the year then ended. These
financial statements are the representation 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, 1995 and the results of its operations, changes
in partners' capital and cash flows for the year then ended in conformity with
generally accepted accounting principles.

/s/ RUBIN & KATZ LLP

New York, New York
February 23, 1996

[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, 1997 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, 1997 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 27, 1998

[RICHARD J. KLINKOWITZ LETTERHEAD]

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, 1996 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, 1996 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 24 ,1997

[Letterhead of Richard J. Klinkowitz Certified Public Accountant]

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, 1995 and the
related statement of operations, partners' capital and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on 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, 1995 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 19, 1996

[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,
1997, 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, 1997, and the results of its operations
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 23, 1998

[HAEFELE, FLANAGAN & CO. P.C. LETTERHEAD]

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, 1996, 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, 1996, and the results of its operations 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 31, 1997

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

INDEPENDENT AUDITORS' REPORT

To the Partners
Magnolia Mew Limited Partnership
Philadelphia, Pennsylvania

We have audited the accompanying balance sheet of MAGNOLIA MEWS LIMITED
PARTNERSHIP (a Pennsylvania Limited Partnership) as of December 31, 1995, 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, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ Haefele, Flanagan & Co. p.c.

Moorestown, New Jersey
February 2, 1996

[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, 1997 and
1996, 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 Oaks Village Limited 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 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 The Oaks Village Limited
Partnership, Project No. 38-024-561572445

as of December 31, 1997 and 1996, 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 13
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued a
report dated January 24, 1998 on our consideration of The Oaks Village Limited
Partnership's internal control and a report dated January 24, 1998 on its
compliance with laws and regulations applicable to the financial statements.

/s/ Snipes, Gower & Assoc., P.A.

Dunn, North Carolina
January 24, 1998

[SNIPES, GOWER & ASSOCIATES, P.A. LETTERHEAD]

The Partners
The Oaks Village Limited Partnership
Dunn, North Carolina

Gentlemen:

We have audited the accompanying balance sheets of The Oaks Village Limited
Partnership, Dunn, North Carolina (a North Carolina limited partnership),
Project No.: 38-024-561572445 as of December 31, 1996 and 1995, 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 Oaks
Village Limited Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Oaks Village Limited
Partnership, Dunn, North Carolina

as of December 31, 1996 and 1995, 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.

In accordance with Government Auditing Standards, we have also issued a
report dated January 23, 1997 on our consideration of The Oaks Village Limited
Partnership's internal control structure and a report dated January 23, 1997 on
its compliance with laws and regulations applicable to the financial statements.

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 13
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

Respectfully submitted,

/s/ Snipes, Gower & Associates, P. A.
-------------------------------------
Snipes, Gower & Associates, P. A.

Dunn, North Carolina
January 23, 1997

-3-

[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, Project No 38-043-561614646, as of December 31, 1997 and
1996, 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 Greenfield Village Limited 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 as of December 31, 1997 and 1996, 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 supplemental information on Page 13
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 24, 1998 on our consideration of Greenfield Village Limited
Partnership's internal control and a report dated January 24, 1998 on its
compliance with laws and regulations applicable to the financial statements.

/s/ Snipes, Gower & Associates, P.A.

Dunn, North Carolina
January 24, 1998

[SNIPES, GOWER & ASSOCIATES, P.A. LETTERHEAD]

The Partners

Greenfield Village Limited Partnership

Dunn, North Carolina

Gentlemen:

We have audited the accompanying balance sheets of Greenfield Village
Limited Partnership, Dunn, North Carolina (a North Carolina limited
partnership), Project No.: 38-043 561614646, as of December 31, 1996 and 1995,
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 Greenfield Village Limited 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.

-2-

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Greenfield Village Limited
Partnership, Dunn, North Carolina as of December 31, 1996 and 1995, 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.

In accordance with Government Auditing Standards. we have also issued a
report dated January 23, 1997 on our consideration of Greenfield Village Limited
Partnership's internal control structure and a report dated January 23, 1997 on
its compliance with laws and regulations applicable to the financial statements.

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 13
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.

Respectfully submitted,

/s/ Snipes, Gower & Associates, P. A.
-------------------------------------
Snipes, Gower & Associates, P. A.

Dunn, North Carolina

January 23, 1997

-3-

[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, 1997 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We 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, 1997 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 14, 1998

[KOCH GERINGER & CO. LLP LETTERHEAD]

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, 1996 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We 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, 1996 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 7, 1997

-2-

[Letterhead of Koch Geringer & Company]

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, 1995 and the related statements of operations,
changes in partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We 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, 1995 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/ Koch Geringer & Company
Certified Public Accountants

New York, New York

January 18, 1996

[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, 1997 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, 1997, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP

/s/ Nanas, Stern, Biers, Neinstein and Co. LLP

January 22, 1998

Beverly Hills, California

[Letterhead of Nanas, Stern, Biers, Neinstein and Co.
- Beverly Hills, California]

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, 1995 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, 1995, 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.
NANAS, STERN, BIERS, NEINSTEIN AND CO.

January 8, 1996

[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, 1997 and
1996, 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, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

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 February 2, 1998, on our consideration of Ogontz Hall Investors'
internal control structure and a report dated February 2, 1998, on compliance.

/s/ Fishbein & Company, P.C.

Elkins Park, PA
February 2, 1998

[FISHBEIN & COMPANY, P.C. LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

February 4, 1997

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, 1996 and 1995,
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, 1996 and 1995, 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 February 4, 1997, on our consideration of Ogontz Hall Investors'
internal control structure and a report dated February 4, 1997, on compliance.

/s/ Fishbein & Company, P.C.

Elkins Park, PA
February 4, 1997

[Letterhead of Suby, Von Haden & Associates, S.C.]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

We have audited the accompanying balance sheets of WHEDA Project No. 011/001138
of Eagle Ridge Limited Partnership as of December 31, 1997 and 1996, and the
related statements of 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. 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, 1997 and 1996, 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.

January 14, 1998 /s/ Suby, Von Haden & Associates, S.C.
Madison, Wisconsin

[Letterhead of Morton, Nehls & Tierney, S.C.]

INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL STRUCTURE

To the Partners
Eagle Ridge Limited Partnership
Madison, Wisconsin

In planning and performing our audit of the financial statements of Eagle Ridge
Limited Partnership as of and for the year ended December 31, 1995, we
considered its internal control structure in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial statements
and not to provide assurance on the internal control structure. However, we
noted a certain matter involving the internal control structure and its
operation that we consider to be a reportable condition under standards
established by the American Institute of Certified Public Accountants.
Reportable conditions involve matters coming to our attention relating to
significant deficiencies in the design or operation of the internal control
structure that, in our judgment, could adversely affect the Partnership's
ability to record, process, summarize, and report financial data consistent with
the assertions of management in the financial statements.

The reportable condition we noted was that there is not an adequate overall
internal control structure design because there is little segregation of duties.
A system of internal control procedures contemplates an adequate segregation of
duties so that no one individual handles a transaction from its inception to its
completion. While we recognize your entity may not be large enough to permit an
adequate segregation of duties in all respects for an effective system of
internal control procedures, it is important you are aware of this condition.

We also noted matters involving the internal control structure and its operation
that we have reported to the management of the Partnership in a separate
communication.

This report is intended for the information of the owners, management and the
Wisconsin Housing and Economic Development Authority.

/s/ Morton, Nehls & Tierney, S.C.

Madison, Wisconsin
February 29, 1996

[Letterhead of Reznick Fedder & Silverman]

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, 1997, 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, 1997, 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/ Reznick Fedder & Silverman

Bethesda, Maryland
January 31, 1998

[Letterhead of Coopers & Lybrand L.L.P.]

Report of Independent Accountants

To the Partners
Conifer Irondequoit Associates

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

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

The accompanying supplemental footnote information worksheets and computation of
cash flow amounts available for cash distributions on pages 11 through 17 are
presented for purposes of additional analysis and are not a required part of the
basic financial statements. Such information has been subjected to the 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 financial
statements taken as a whole.

/s/ Coopers & Lybrand L.L.P.

Rochester, New York
February 5, 1998

[Letterhead of Coopers & Lybrand]

Report of Independent Accountants

To the Partners
Conifer Irondequoit Associates

We have audited the accompanying balance sheets of Conifer Irondequoit
Associates (A Limited Partnership), as of December 31, 1995 and 1994, 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 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
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.

/s/ Coopers & Lybrand

Rochester, New York
February 2, 1996

[Letterhead of ZINER & COMPANY, P.C.]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates

We have audited the accompanying balance sheet of Middletown Associates (a
Pennsylvania limited partnership) as of December 31, 1997 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 general partners and contracted management agent. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Middletown Associates as of December 31,
1996 were audited by other auditors whose report, dated January 17, 1997,
expressed an unqualified opinion on those financial statements.

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 the
Partnership's general partners and contracted management agent, 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 Middletown Associates at
December 31, 1997, 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/ ZINER & COMPANY, P.C.

January 17, 1998
Boston, Massachusetts

[J.H. WILLIAMS & CO., LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Middletown Associates (a Limited Partnership)
Middletown, Pennsylvania

We have audited the accompanying balance sheets of Middletown Associates (a
Limited Partnership) as of December 31, 1996 and 1995 and the related statements
of (loss), statements of changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership 'a 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's general 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 (a
Limited Partnership) at December 31, 1996 and 1995, 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/ J.H. WILLIAMS & CO., LLP

Kingston, Pennsylvania
February 13, 1997

[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, 1996, and the related statements of profit
and loss (on HUD Form No. 92410), 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 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, 1996, and the results of its operations, the changes in
partners' equity 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 22
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.

-6-

In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issue