INDEPENDENCE TAX CREDIT PLUS PROGRAM - 10-K Annual Report

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

FORM 10-K

(Mark One)

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

For the fiscal year ended March 31, 1997

OR

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

Commission File Number 0-20476

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

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

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

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

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

None

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

Beneficial Assignment Certificates (including underlying Limited Partnership
Interests)

(Title of Class)

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

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

DOCUMENTS INCORPORATED BY REFERENCE

None

Index to exhibits may be found on page 106

Page 1 of 117

PART I

Item 1. Business.

General

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

On July 1, 1991, the Partnership commenced a public offering (the
"Offering") of Beneficial Assignment Certificates ("BACs") representing
assignments of limited partnership interests in the Partnership ("Limited
Partnership Interests"), managed by Related Equities Corporation (the "Dealer
Manager"), pursuant to a prospectus dated July 1, 1991, as supplemented by
Master Supplement No. 1a thereto dated April 28, 1992 and Master Supplement No.
2a thereto dated November 3, 1992 (as so supplemented, the "Prospectus").

As of March 31, 1997, the Partnership has received $76,786,000 of
Gross Proceeds of the Offering from 5,351 investors and no further issuance of
BACs is anticipated.

The Partnership's business is primarily to invest in other
partnerships ("Local Partnerships") owning apartment complexes ("Apartment
Complexes" or "Properties") that are eligible for the low-income housing tax
credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, some of
which may also be eligible for the historic rehabilitation tax credit ("Historic
Tax Credit" and together with Housing Tax Credits, "Tax Credits"). The
Partnership's investment in each Local Partnership represents from 98% to 98.99%
of the partnership interests in the Local Partnership. As of March 31, 1997, the
Partnership had acquired interests in twenty-eight Local Partnerships. As of
March 31, 1997, approximately $59,700,000 (not including acquisition fees of
approximately $4,500,000) of net proceeds have been invested in Local
Partnerships of which approximately $987,000 remains to be paid to the Local
Partnerships, as certain benchmarks such as occupancy levels must be attained
prior to the release of the funds. The Partnership does not intend to acquire
additional properties, however, the Partnership may be required to pay for
potential purchase price adjustments based on tax credit adjustor clauses. See
Item 2, Properties, below.

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

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

2. Preserve and protect the Partnership's capital.

3. Participate in any capital appreciation in the value of the
Properties and provide distributions of Sale or Refinancing Proceeds upon the
disposition of the Properties.

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

One of the Partnership's objectives is to entitle qualified BACs
holders to Housing Tax Credits over the Credit Period. Each of the Local
Partnerships in which the Partnership has acquired an interest has been
allocated by the relevant state credit agencies the authority to recognize Tax
Credits during the Credit Period provided that the Local Partnership satisfies
the rent restriction, minimum set-aside and other requirements for

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recognition of the Tax Credits at all times during such period. Once a Local
Partnership has become eligible to recognize Tax Credits, it may lose such
eligibility and suffer an event of "recapture" if its Property fails to remain
in compliance with the Tax Credit requirements. None of the Local Partnerships
in which the Partnership has acquired an interest has suffered an event of
recapture.

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

The U.S. Department of Housing and Urban Development ("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.

Several industry sources have already commented to HUD and
Congress that in the event the ACPA was 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 "marked-to-market" debt 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
annual extensions of any expiring project-based Section 8 contracts, but there
is no guarantee that such extensions will be available in the future.

The Partnership is subject to the risks incident to potential
losses arising from the management and ownership of improved real estate. The
Partnership can also be affected by poor economic conditions generally, however
no more than 21% of the properties are located in any single state. There are
also substantial risks associated with owning properties receiving government
assistance, for example the possibility that Congress may not appropriate funds
to enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owners equity contribution. The Partnership cannot sell or substantially
liquidate its investments in subsidiary partnerships during the period that the
subsidy agreements are in existence, without HUD's approval. Furthermore there
may not be market demand for apartments at full market rents when the rental
assistance contracts expire.

Competition

The real estate business is highly competitive and substantially
all of the properties to be acquired by the Partnership are expected to be
subject to active competition from similar properties in their respective
vicinities. The Partnership will compete in the acquisition of property with
many other entities engaged in real estate investment activities, some of which
have greater assets than the Partnership. In addition, the number of entities
and the amount available for investment in properties of a type suitable for
investment by the Partnership may increase, resulting in increased competition
for such investments and possible increases in the prices paid. In addition,
various other limited partnerships may, in the future, be formed by the General
Partner and/or its affiliates to engage in businesses which may be competitive
with the Partnership.

Employees

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

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Item 2. Properties.

The Partnership holds a 98.99% limited partnership interest in
twenty-seven and a 98% limited partnership interest in one Local Partnership as
of March 31, 1997. Set forth below is a schedule of the Local Partnerships
including certain information concerning their respective Apartment Complexes
(the "Local Partnership Schedule"). Further information concerning these Local
Partnerships and their properties, including any encumbrances affecting the
properties, may be found in Item 14, Schedule III.

Local Partnership Schedule

% of Units Occupied at May 1
-----------------------------------------
Name and Location (Number of Units) Date Acquired 1997 1996 1995 1994 1993
- ----------------------------------- ------------- ---- ---- ---- ---- ----

Harbor Court Limited Partnership December 1991 98% 100% 88% 88% 100%
Staten Island, NY (40)

Old Public Limited Partnership December 1991 76% 77% 93% 87% 100%
Lawrenceburg, TN (30)

Lancaster Terrace Limited Partnership February 1992 98% 99% 99% 96% 100%
Salem, OR (104)

655 North Street Limited Partnership March 1992 84% 83% 89% 92% 95%
Baton Rouge, LA (195)

Landreth Venture March 1992 94% 96% 95% 100% 90%
Philadelphia, PA (47)

Homestead Apartments Associates Ltd. March 1992 94% 93% 95% 96% 50%*
Homestead, FL (123)

Bethel Villa Associates, L.P. April 1992 100% 100% 100% 99% 83%(1)
Wilmington, DE (150)

West Diamond Street Associates May 1992 89% 96% 96% 93% 60%(1)
Philadelphia, PA (28)

Susquehanna Partners May 1992 96% 100% 96% 100% 50%(1)
Philadelphia, PA (47)

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

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

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

Lares Apartments Limited Partnership August 1992 100% 100% 100% 100% 0%*
Lares, PR (102)

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

Arlington-Rodeo Properties August 1992 100% 100% 93% 100% 0%*
Los Angeles, CA (29)

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Local Partnership Schedule

% of Units Occupied at May 1
-----------------------------------------
Name and Location (Number of Units) Date Acquired 1997 1996 1995 1994 1993
- ----------------------------------- ------------- ---- ---- ---- ---- ----

Conifer Bateman Associates August 1992 100% 100% 100% 96% 100%
Lowville, NY (24)

Hampden Hall Associates, L.P. September 1992 100% 99% 89% 96% 0%*
St. Louis, MO (75)

Chester Renaissance Associates September 1992 100% 100% 96% 100% 25%(1)
Chester, PA (20)

Homestead Apts. II LTD. October 1992 95% 92% 95% 98% 0%*
Homestead, FL (112)

P.S. 157 Associates, L.P. November 1992 100% 96% 98% 100% 100%
New York, NY (73)

Cloisters Limited Partnership II November 1992 100% 94% 97% 98% 0%*
Philadelphia, PA (65)

Creative Choice Homes II, LTD. December 1992 99% 99% 100% 99% 0%*
Opa-Locka, FL (328)

Milford Crossing Associates L.P. December 1992 99% 96% 96% 100% 0%*
Milford, DE (73)

BX-7F Associates, L.P. January 1993 95% 98% 98% 99% 60%*(1)
Bronx, NY (85)

Los Angeles Limited Partnership May 1993 100% 98% 99% 0%*
Rio Piedras, PR (124)

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

Plainsboro Housing Partners, L.P. July 1993 100% 98% 99% 13%(1)
Plainsboro, NJ (126)

Rolling Green Associates, L.P. October 1993 91% 97% 90% 91%
Syracuse, NY (395)

*Properties still in construction phase.

(1) Properties are in rent-up phase.

Some of the Local Partnerships in which the Partnership has
invested own existing Apartment Complexes which receive either Federal or state
subsidies. HUD, through FHA, administers a variety of subsidies for low- and
moderate-income housing. FHA administers similar housing programs for non-urban
areas. The Federal programs generally provide one or a combination of the
following forms of assistance: (i) mortgage loan insurance, (ii) rental
subsidies and (iii) reduction of mortgage interest payments.

i) HUD provides mortgage insurance for rental housing projects
pursuant to a number of sections of Title II of the National Housing Act
("NHA"), including Section 236, Section 221(d)(4), Section 221(d)(3) and Section
220. Under all of these programs, HUD will generally provide insurance equal to
100% of

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the total replacement cost of the project to non-profit owners and 90%
of the total replacement cost to limited-distribution owners. Mortgages are
provided by institutions approved by HUD, including banks, savings and loan
companies and local housing authorities. Section 221(d)(4) of NHA provides for
federal insurance of private construction and permanent mortgage loans to
finance new construction of rental apartment complexes containing five or more
units. The most significant difference between the 221(d)(4) program and the
221(d)(3) program is the maximum amount of the loan which may be obtained. Under
the 221(d)(3) program, non-profit sponsors may obtain a permanent mortgage equal
to 100% of the total replacement cost; no equity contribution is required of a
non-profit sponsor. In all other respects the 221(d)(3) program is substantially
similar to the 221(d)(4) program.

ii) Many of the tenants in HUD insured projects receive some
form of rental assistance payments, primarily through the Section 8 Housing
Assistance Payments Program (the "Section 8 Program"). Apartment Complexes not
receiving assistance through the Section 8 Program ("Section 8 Payments") will
generally have limitations on the amounts of rent which may be charged. One
requirement imposed by HUD regulations effective for apartment complexes
initially approved for Section 8 payments on or after November 5, 1979 is to
limit the amount of the owner's annual cash distributions from operations to 10%
of the owner's equity investment in an apartment complex if the apartment
complex is intended for occupancy by families and to 6% of the owner's equity
investment in an apartment complex intended for occupancy by elderly persons.
The owner's equity investment in the apartment complex is 10% of the project's
replacement cost as determined by HUD.

iii) Section 236 Program. As well as providing mortgage
insurance, the Section 236 program also provides an interest credit subsidy
which reduces the cost of debt service on a project mortgage, thereby enabling
the owner to charge the tenants lower rents for their apartments. Interest
credit subsidy payments are made monthly by HUD directly to the mortgagee of the
project. Each payment is in an amount equal to the difference between (i) the
monthly interest payment required by the terms of the mortgage to pay principal,
interest and the annual mortgage insurance premium and (ii) the monthly payment
which would have been required for principal and interest if the mortgage loan
bore interest at the rate of 1%. These payments are credited against the amounts
otherwise due from the owner of the project, who makes monthly payments of the
balance.

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

Rents from commercial tenants (to which average rental per square
foot applies) comprise less than 5% of the rental revenues of the Partnership.
Rents for the residential units are determined annually by HUD and reflect
increases in consumer price indices in various geographic areas.

Management continuously 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. No
improvements are expected to require additional financing.

Management continuously 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 Partner generally requires that the general partners of
the Local Partnerships ("Local General Partners") provide completion guarantees
and/or undertake to repurchase the Partnership's interest in the Local
Partnership if construction or rehabilitation is not completed substantially on
time or on budget ("Development Deficit Guarantees"). The Development Deficit
Guarantees generally also require the Local General Partner to provide any funds
necessary to

-6-

cover net operating deficits of the Local Partnership until such time as the
Apartment Complex has achieved break-even operations. The General Partner
generally requires 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 Development and Operating Deficit
Guarantees, amounts funded will be treated as Operating Loans which will 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 some instances, the
Local General Partners are required to undertake an obligation to comply with
a Rent-Up Guaranty Agreement, whereby the Local General Partner agrees to pay
liquidating damages if predetermined occupancy rates are not achieved. These
payments are made without right of repayment. In cases where the General
Partner deems it appropriate, the obligations of a Local General Partner under
the Development Deficit, Operating Deficit and/or Rent-Up Guarantees are
secured by letters of credit and/or cash escrow deposits.

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

Item 3. Legal Proceedings.

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

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

None.

-7-

PART II

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

As of March 31, 1997, the Partnership had issued and outstanding
76,786 Limited Partnership Interests, each representing a $1,000 capital
contribution to the Partnership, or an aggregate capital contribution of
$76,786,000. All of the issued and outstanding Limited Partnership Interests
have been issued to Independence Assignor Inc. (the "Assignor Limited Partner"),
which has in turn issued 76,786 BACs to the purchasers thereof for an aggregate
purchase price of $76,786,000. Each BAC represents all of the economic and
virtually all of the ownership rights attributable to a Limited Partnership
Interest held by the Assignor Limited Partner. BACs may be converted into
Limited Partnership Interests at no cost to the holder (other than the payment
of transfer costs not to exceed $100), but Limited Partnership Interests so
acquired are not thereafter convertible into BACs.

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

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 Partner
of the Partnership has 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 Partner may have under the Partnership
Agreement or applicable law.

As of May 1, 1997, the Partnership has approximately 5,243
registered holders of an aggregate of 76,786 BACs.

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

There are no material legal restrictions in the Partnership
Agreement on the ability of the Partnership to make distributions. The
Partnership has made no distributions to the BACs holders as of March 31, 1997.
The Partnership does not anticipate providing cash distributions to its BACs
holders other than from net refinancing or sales proceeds.

-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
financial statements in Item 8 hereof.

For the Year Ended March 31
-----------------------------------------------------------------------------------
OPERATIONS 1997 1996 1995 1994 1993
------------- ------------- ------------- ------------ --------------

Revenues $ 19,592,514 $ 19,169,610 $ 18,061,137 $ 14,024,220 $ 3,816,728

Operating expenses 24,855,977 24,084,097 21,848,948 16,549,054 4,817,238
------------- ------------- ------------- ------------ --------------

Loss before minority
interest (5,263,463) (4,914,487) (3,787,811) (2,524,834) (1,000,510)

Minority interest in loss of
subsidiary partnerships 33,343 32,193 32,583 24,646 1,018
------------- ------------- ------------- ------------ --------------

Net loss $ (5,230,120) $ (4,882,294) $ (3,755,228) $ (2,500,188) $ (999,492)
============= ============= ============= ============ ==============
Net loss per weighted
average BAC $ (67.43) $ (62.95) $ (48.42) $ (32.23) $ (17.36)
============= ============= ============= ============ ==============
March 31
-----------------------------------------------------------------------------------
FINANCIAL POSITION 1997 1996 1995 1994 1993
------------- ------------- ------------- ------------ --------------

Total assets $177,448,837 $183,788,219 $189,946,896 $202,231,410 $ 145,354,121
============= ============= ============= ============ ==============
Total liabilities $119,748,949 $120,702,900 $121,484,923 $131,248,328 $ 71,077,055
============= ============= ============= ============ ==============
Minority interest $ 6,695,280 $ 6,850,591 $ 7,344,951 $ 6,110,832 $ 6,904,628
============= ============= ============= ============ ==============
Total partners' capital $ 51,004,608 $ 56,234,728 $ 61,117,022 $ 64,872,250 $ 67,372,438
============= ============= ============= ============ ==============

During the years ended March 31, 1997 and 1996, total assets
decreased primarily due to depreciation of approximately $6,000,000 for each
year. During the year ended March 31, 1995, total assets and total liabilities
decreased primarily due to the payment of accounts payable and other liabilities
and development fees and other amounts due to local general partners and
affiliates totaling approximately $11,000,000. During the years ended March 31,
1994 and 1993, total assets and liabilities increased primarily due to the
continued acquisition of Local Partnerships. Property and equipment increased
approximately $66,000,000 and $41,000,000 and construction in progress increased
approximately $16,000,000 and $28,000,000, respectively. Mortgage notes
increased approximately $39,000,000 and $28,000,000 and construction notes
increased approximately $20,000,000 and $26,000,000, respectively.

Cash Distributions

The Partnership has made no distributions to the BACs holders as
of March 31, 1997.

-9-

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

Liquidity and Capital Resources

The Partnership's primary source of funds include (i) working
capital reserves raised and interest earned thereon, and (ii) cash distributions
from the operations of the Local Partnerships. All these sources of funds are
available to meet obligations of the Partnership.

The Partnership received $76,786,000 in Gross Proceeds from the
sale of BACs pursuant to a public offering, resulting in net proceeds available
for investment, after volume discounts, establishment of a working capital
reserve, payment of sales commissions, acquisition fees and expenses, and
offering expenses, of $61,400,000.

As of March 31, 1997, the Partnership has invested approximately
$59,710,000 (not including acquisition fees of approximately $4,500,000) of net
proceeds in twenty-eight Local Partnerships of which approximately $987,000
remains to be paid to the Local Partnerships (which is being held in escrow) as
certain benchmarks, such as occupancy level, must be attained prior to the
release of the funds. During the year ended March 31, 1997, approximately
$322,000 was paid from escrow. The Partnership does not intend to acquire
additional properties, however, the Partnership may be required to fund
potential purchase price adjustments based on tax credit adjustor clauses.

Cash and cash equivalents of the Partnership and its twenty-eight
consolidated subsidiary partnerships decreased approximately $308,000 during the
year ended March 31, 1997, primarily due to net repayments of mortgage notes
($1,865,000), acquisitions of property and equipment ($254,000), an increase in
cash held in escrow for investing activities ($368,000) and a decrease in
capitalization of consolidated subsidiaries attributable to minority interest
($122,000) which exceeded cash provided by operating activities ($2,103,000) and
a net increase in due to local general partners and affiliates relating to
investing and financing activities ($198,000). Included in the adjustments to
reconcile the net loss to cash flow from operations is depreciation and
amortization of approximately $6,141,000.

An original working capital reserve of approximately $1,536,000
(2% of Gross Proceeds raised) was established from the Partnership's funds
available for investment. The working capital reserve at March 31, 1997 and 1996
was approximately $181,000 and $365,000, respectively, which includes amounts
which may be required for the potential purchase price adjustments based on tax
credit adjustor clauses.

Cash distributions received from the Local Partnerships remain
relatively immaterial. Distributions of approximately $52,000, $59,000 and
$3,000 were received during the years ended March 31, 1997, 1996, and 1995,
respectively. However, management expects that the distributions received from
the Local Partnerships will increase, although not to a level sufficient to
permit providing cash distributions to BACs holders. These distributions as well
as the working capital reserves referred to in the above paragraph will be used
to meet the operating expenses of the Partnership.

The Partnership has negotiated Operating Deficit Guaranty
Agreements with all Local Partnerships by which the general partners of the
Local Partnerships have agreed to fund operating deficits for a specified
period of time. The terms of the Operating Deficit Guaranty Agreements vary
for each Local Partnership, with maximum dollar amounts to be funded for a
specified period of time, generally three years, commencing on the break-even
date. The gross amount of the Operating Deficit Guarantees aggregates
approximately $8,566,000, of which $3,240,000, $200,000, and $0 had expired as
of March 31, 1997, 1996, and 1995, respectively. As of March 31, 1997, 1996,
and 1995, approximately $924,000, $824,000 and $799,000, respectively, had
been funded by the Local General Partners to meet such obligations, which
includes amounts held in escrow by the Local Partnerships. All operating
deficit guarantees expire within the next two years. Management does not
expect their expiration to have a material impact on liquidity, based on prior
years' fundings.

-10-

The Operating Deficit Guaranty Agreements were negotiated to
protect the Partnership's interest in the Local Partnerships and to provide
incentive to the Local General Partners to generate positive cash flow.

Partnership management fees owed to the General Partner
amounting to approximately $489,000 and $402,000 were accrued and unpaid as of
March 31, 1997 and 1996, respectively.

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.

Several industry sources have already commented to HUD and
Congress that in the event the ACPA was 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 "marked-to-market" debt 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
annual extensions of any expiring project-based Section 8 contracts, but there
is no guarantee that such extensions will be available in the future.

For a discussion of contingencies affecting certain Local
Partnerships, see Results of Operations of Certain Local Partnerships below.
Since the maximum loss the Partnership would be liable for is its net investment
the Local Partnership, the resolution of the existing contingency is not
anticipated to impact future results of operations, liquidity or financial
condition in a material way. However, the Partnership's loss of its investment
in a Local Partnership will eliminate the ability to generate future tax credits
from such Local Partnership and may also result in recapture of tax credits if
the investment is lost before 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 be experiencing
upswings. However, the geographic diversification of the portfolio may not
protect against a general downturn in the national economy. The Partnership has
fully invested the proceeds of its offering in 28 local partnerships, all of
which fully have their tax credits in place. The tax credits are attached to the
project for a period of ten years, and are transferable with the property during
the remainder of the ten year period. If trends in the real estate market
warranted the sale of a property, the remaining tax credits would transfer to
the new owner; thereby adding significant value to the property on the market,
which are not included in the financial statement carrying amount.

Results of Operations

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. An impairment loss should be recognized whenever the review
demonstrates that the book value of a long-lived asset is not recoverable.
Effective April 1, 1996, the Partnership adopted SFAS No. 121, consistent with
the required adoption period.

Property and equipment are carried at the lower of depreciated
cost or estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, and any other costs incurred in acquiring the properties. A
provision for loss on impairment of assets is recorded when estimated amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. Property investments themselves
are reduced to estimated fair value (generally using discounted cash flows) when
the property is considered to be impaired and the depreciated cost exceeds

-11-

estimated fair value. Through March 31, 1997, the Partnership has not recorded
any provisions for loss on impairment of assets or reduction to estimated fair
value.

The following is a summary of the results of operations of the
Partnership for the years ended March 31, 1997, 1996, and 1995 (the 1996, 1995,
and 1994 Fiscal Years, respectively.)

The Partnership's results of operations for the 1996, 1995 and
1994 Fiscal Years consisted primarily of the results of the Partnership's
investment in the twenty-eight Local Partnerships. The majority of Local
Partnership income continues to be in the form of rental income with the
corresponding expenses being divided among operations, depreciation and mortgage
interest.

The net loss for the 1996, 1995, and 1994 Fiscal Years totaled
$5,230,120, $4,882,294 and $3,755,228, respectively.

The Partnership and BACs holders will begin to recognize Housing
Tax Credits with respect to a Property when the Credit Period for such Property
commences. Because of the time required for the acquisition, completion and
rent-up of Properties, it is expected that the amount of Tax Credits per BAC
will gradually increase over the first three years of the Partnership. Housing
Tax Credits not recognized in the first three years will be recognized in the
11th through 13th years. The Partnership generated $11,971,306, $11,969,116 and
$9,809,218 Housing Tax Credits during the 1996, 1995 and 1994 tax years,
respectively.

1996 vs. 1995

Rental income remained fairly consistent with an increase of
approximately 2% for the 1996 Fiscal Year as compared to the 1995 Fiscal Year
primarily due to rental rate increases.

Total expenses excluding general and administrative, general and
administrative-related parties, repairs and maintenance and taxes remained
fairly consistent with a decrease of approximately 2% for the 1996 Fiscal Year
as compared to the 1995 Fiscal Year.

General and administrative expenses increased approximately
$661,000 for the 1996 Fiscal Year as compared to the 1995 Fiscal Year. This was
primarily due to an increase in security at two Local Partnerships, an increase
in bad debt expense at two other Local Partnerships, an increase in payroll and
bad debt expense at a fifth Local Partnership and small increases at three other
Local Partnerships.

General and administrative-related parties decreased approximately
$591,000 for the 1996 Fiscal Year as compared to the 1995 Fiscal Year primarily
due to a decrease in partnership management fees payable to the General Partner.

Repairs and maintenance increased approximately $393,000 for the
1996 Fiscal Year as compared to the 1995 Fiscal Year. This was primarily due to
increases at six Local Partnerships. A new security system was installed at one
Local Partnership. Two other Local Partnerships replaced the carpeting in the
apartments. Increases at a fourth Local Partnership were the result of
repainting apartments, heating and plumbing repairs and the installation of new
lighting. A fifth Local Partnership repainted the building. A sixth Local
Partnership redecorated some apartments and had an increase in snow removal due
to the harsh winter.

Taxes increased approximately $314,000 for the 1996 Fiscal Year as
compared to the 1995 Fiscal Year primarily due to an underaccrual of real estate
taxes at three Local Partnerships in 1995.

-12-

1995 vs. 1994

Rental income increased approximately 8% for the 1995 Fiscal Year
as compared to the 1994 Fiscal Year primarily due to income earned from one
additional Local Partnership in the 1995 Fiscal Year which was under
construction during the 1994 Fiscal Year and an increase in another Local
Partnership which was not rented up until the last quarter of the 1994 Fiscal
Year.

Other income decreased approximately $259,000 for the 1995 Fiscal
Year as compared to the 1994 Fiscal Year. Part of this decrease was due to two
Local Partnerships each having received proceeds from insurance claims (relating
to fire) during the 1994 Fiscal Year. The decrease was also the result of
payments by the Partnership, as well as from cash held in escrow, to the Local
Partnerships (which were subsequently used to fund payments to the Local General
Partners) which resulted in lower interest income during the 1995 Fiscal Year.

Total expenses excluding repairs and maintenance, operating and
other, and financial expenses remained fairly consistent with an increase of
approximately 5% for the 1995 Fiscal Year as compared to the 1994 Fiscal Year.

Repairs and maintenance increased approximately $403,000 for the
1995 Fiscal Year as compared to the 1994 Fiscal Year primarily due to four Local
Partnerships addressing the physical needs of their properties. Two Local
Partnerships repainted the exterior and replaced doors, repaired roofing and had
interior painting done for individual units as needed. Another Local Partnership
installed new security and fire doors on all units and replaced windows as
needed. The fourth Local Partnership was under construction in the 1994 Fiscal
Year and therefore incurred more repairs and maintenance expenses in the 1995
Fiscal Year.

Operating expenses increased approximately $196,000 for the 1995
Fiscal Year as compared to the 1994 Fiscal Year primarily due to an increase in
utilities at four Local Partnerships, one of which was the result of credits
received in the 1994 Fiscal Year for overcharges in the prior year.

Financial expenses increased approximately $1,054,000 for the 1995
Fiscal Year as compared to the 1994 Fiscal Year primarily due to increases at
two Local Partnerships which were under construction during part of the 1994
Fiscal Year as well as an underaccrual of interest at another Local Partnership
at December 31, 1994.

Results of Operations of Certain Local Partnerships

Rolling Green Associates, L.P. ("Rolling Green")

In October 1993, certain Federal Grand Jury subpoenas were served
upon employees of Rolling Green and upon Rolling Green's management agent as
custodian of records. The subpoenas are part of a United States Attorney and
Federal Grand Jury investigation into the propriety and accuracy of Section 8
Housing Assistance Payments ("HAP") rent subsidies claimed by Rolling Green
under its HAP Contract. The investigation dates back to mid 1993. Upon receiving
its subpoena, the management agent promptly turned over the requested records.
The management agent conducted its own investigation which resulted in the
discovery of tenancies that were incorrectly reported on earlier HAP subsidy
vouchers. On its December 1993 and January 1994 HAP subsidy vouchers, Rolling
Green returned to New York State Housing Finance Agency (the HAP contract
administrator) net adjustments approximating $91,000 to correct the previously
incorrectly reported tenancies. However, since this is an ongoing matter, no
estimate can be made of any further adjustments deemed appropriate by the United
States Attorney or New York State Housing Finance Agency. The United States
Attorney for the Northern District of New York has advised of his intent to
pursue a civil action seeking undetermined penalties and damages.

The Partnership's investment in Rolling Green was approximately
$2,497,000 and $2,883,000 at March 31, 1997 and 1996, respectively, and the
minority interest balance was $0 at each date. The net loss after minority
interest for Rolling Green amounted to approximately $385,000, $169,000, and
$329,000 for the years ended March 31, 1997, 1996, and 1995, respectively.

-13-

Other

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

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

The Local Partnerships are impacted by inflation in several ways.
Inflation allows for increases in rental rates generally to reflect the impact
of higher operating and replacement costs. Inflation also affects the Local
Partnerships adversely by increasing operating costs, such as fuel, utilities
and labor.

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 Partner
of the Partnership has 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 Partner may have under the Partnership
Agreement or applicable law.

-14-

Item 8. Financial Statements and Supplementary Data.

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

(a) 1. Consolidated Financial Statements

Independent Auditors' Report 16

Consolidated Balance Sheets at March 31, 1997 and 1996 87

Consolidated Statements of Operations for the Years Ended
March 31, 1997, 1996 and 1995 88

Consolidated Statements of Changes in Partners' Capital for the
Years Ended March 31, 1997, 1996 and 1995 89

Consolidated Statements of Cash Flows for the Years Ended
March 31, 1997, 1996 and 1995 90

Notes to Consolidated Financial Statements 92

-15-

INDEPENDENT AUDITORS' REPORT

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

We have audited the consolidated balance sheets of Independence
Tax Credit Plus L.P. and Subsidiaries (a Delaware Limited Partnership) as of
March 31, 1997 and 1996 and the related consolidated statements of operations,
changes in partners' capital and cash flows for the years ended March 31,
1997, 1996 and 1995 (the 1996, 1995 and 1994 Fiscal Years). These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements for twenty-eight (1996,
1995 and 1994 Fiscal Years) subsidiary partnerships whose losses aggregated
$4,657,401, $4,001,728 and $2,665,705 for the 1996, 1995 and 1994 Fiscal
Years, respectively, and whose assets constituted 99% of the Partnership's
assets at March 31, 1997 and 1996, presented in the accompanying consolidated
financial statements. The financial statements for twenty-eight (1996, 1995
and 1994 Fiscal Years) of these subsidiary partnerships were audited by other
auditors whose reports thereon have been furnished to us and our opinion
expressed herein, insofar as it related to the amounts included for these
subsidiary partnerships is based solely upon 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 provide a reasonable basis for our
opinion.

In our opinion, based upon our audits, and the reports of the
other auditors referred to above, the consolidated financial statements referred
to in the first paragraph present fairly, in all material respects, the
financial position of Independence Tax Credit Plus L.P. and Subsidiaries at
March 31, 1997 and 1996 and the results of their operations and their cash flows
for the years ended March 31, 1997, 1996 and 1995 in conformity with generally
accepted accounting principles.

Trien, Rosenberg, Rosenberg,
Weinberg, Ciullo & Fazzari, LLP

New York, New York
June 27, 1997

-16-

[KMPG Peat Marwick LLP Letterhead]

Independent Auditors' Report

The Partners
Harbor Court Limited Partnership:

We have audited the accompanying balance sheets of Harbor Court Limited
Partnership as of December 31, 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Harbor Court Limited
Partnership as of December 31, 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.

/s/ KPMG Peat Marwick LLP
-------------------------

New York, New York
January 31, 1997

[KPMG PEAT MARWICK LLP-LETTERHEAD]

Independent Auditors' Report

The Partners
Harbor Court Limited Partnership:

We have audited the accompanying balance sheets of Harbor Court Limited
Partnership as of December 31, 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 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 our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Harbor Court Limited
Partnership as of December 31, 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/ KPMG PEAT MARWICK LLP

January 31, 1996

[Crews and Company Letterhead]

Sheffield, Alabama

May l2, 1997

To the Partners
Old Public Limited Partnership
512 Hood Lakes Road
Lawrenceburg, Tennessee 38464

We have audited the accompanying balance sheet of Old Public Limited
Partnership, (a partnership) as of December 31, 1996, and the related statements
of operations, partners capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 Old Public 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/ Crews and Company
- ---------------------

[Letterhead of Crews and Company - Sheffield, Alabama]

May 30, 1996

To the Partners
Old Public Limited Partnership
512 Hood Lakes Road
Lawrenceberg, Tennessee 38464

We have audited the accompanying balance sheet of Old Public Limited
Partnership, (a partnership) as of December 31, 1995, and the related statements
of operations, partners capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 Old Public 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.

Crews and Company

[CREWS AND COMPANY - SHEFFIELD, ALABAMA - LETTERHEAD]

March 6, 1995

To the Partners
Old Public Limited Partnership
512 Hood Lakes Road
Lawrenceburg, Tennessee 38464

We have audited the accompanying balance sheet of Old Public Limited
Partnership, (a partnership) as of December 31, 1994, and the related statements
of operations, partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 Old Public Limited Partnership,
as of December 31, 1994, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.

/s/ CREWS AND COMPANY

[MACK ROBERTS Letterhead]

INDEPENDENT AUDITOR'S REPORT
----------------------------

The Partners
Lancaster Terrace Limited Partnership
Salem, Oregon

We have audited the balance sheets of Lancaster Terrace Limited Partnership as
of December 31, 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lancaster Terrace Limited
Partnership as of December 31, 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.

/s/ Mack, Roberts & Co., L.L.C.
- -------------------------------
MACK, ROBERTS & CO., L.L.C.
Portland, Oregon

February 18, 1997

[MERINA MCCOY GERRITZ, P.C. - WEST LINN, OREGON - LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
of Lancaster Terrace Limited Partnership

We have audited the accompanying balance sheets of Lancaster Terrace Limited
Partnership as of December 31, 1994 and 1993, 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 Lancaster Terrace Limited
Partnership as of December 31, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

/s/ MERINA MCCOY GERRITZ

Merina McCoy Gerritz, CPA's, P.C.
February 20, 1995

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

INDEPENDENT AUDITOR'S REPORT
----------------------------

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

We have audited the accompanying balance sheets of HUD Project No. 064-12001 of
the 655 North Street Limited Partnership, as of December 31, 1996 and 1995, and
the related statements of income, changes in partners' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 1996 and 1995, and
the results of its operations, changes in partners' equity, and cash flows for
the years then ended in conformity with generally accepted accounting
principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 22, 1997, on our
consideration of 655 North Street Limited Partnership's internal control
structure and reports dated January 22, 1997, on its compliance with specific
requirements applicable to major HUD programs and specific requirements
applicable to Affirmative Fair Housing.

Metairie, Louisiana /s/ Pailet, Meunier & LeBlanc, LLP
January 22, 1997 ----------------------------------

[PAILET, MEUNIER AND LEBLANC, L.L.P-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of HUD Project No. 064-12001 of
the 655 North Street Limited Partnership, as of December 31, 1994, and the
related statements of profit and loss, 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 655 North Street Limited
Partnership, HUD Project No. 064-12001, as of December 31, 1994, and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

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

/s/ PAILET, MEUNIER AND LEBLANC

Metairie, Louisiana
January 27, 1995

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

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

To the Partners of
Landreth Venture (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Landreth Venture (a Limited
Partnership) as of December 31, 1996 and 1995 and the related statements of
(loss), changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
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 Landreth Venture (a Limited
Partnership) at December 31, 1996 and 1995, and the results of its operations,
changes in partners' equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ J.H. Williams & Co., LLP
- ----------------------------

Kingston, Pennsylvania
February 12, 1997

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

INDEPENDENT AUDITORS' REPORT

To the Partners of
Landreth Venture (a Limited Partnership)
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Landreth Venture (a Limited
Partnership) as of December 31, 1995 and 1994 and the related statements of
income, changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
partners and contracted management agent. 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. 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 Landreth Venture (a Limited
Partnership) at December 31, 1995 and 1994, and the results of its operations,
changes in partners' equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ J.H. WILLIAMS & CO., LLP

Kingston, Pennsylvania
February 9, 1996

[Reznick Fedder & Silverman Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates, Ltd.

We have audited the accompanying balance sheets of Homestead Apartments
Associates, Ltd., as of December 31, 1996 and 1995, and the related statements
of operations, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Homestead Apartments
Associates, Ltd. 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.

/s/ Reznick Fedder & Silverman
------------------------------

Charlotte, North Carolina
January 20, 1997

3

[REZNICK FEDDER & SILVERMAN-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates, Ltd.

We have audited the accompanying balance sheets of Homestead Apartments
Associates, Ltd., as of December 31, 1995 and 1994, and the related statements
of operations, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Homestead Apartments
Associates, Ltd. 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/ REZNICK FEDDER & SILVERMAN
/s/ REZNICK FEDDER & SILVERMAN

Charlotte, North Carolina
January 19, 1996

[Reznick Fedder & Silverman Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bethel Villa Associates, L.P.

We have audited the accompanying balance sheets of Bethel Villa Associates,
L.P. as of December 31, 1996 and 1995, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the years then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bethel Villa Associates,
L.P. as of December 31, 1996 and 1995, and the results of its operations, the
changes in partners' equity and cash flows for the years then ended. in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 26
through 31 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.

-6-

In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 22, 1997 on our consideration of Bethel Villa Associates, L.P.'s
internal control structure and on its compliance with specific requirements
applicable to major DSHA programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.

/s/ Reznick Fedder & Silverman
------------------------------

Bethesda, Maryland Federal Employer
January 22, 1997 Identification Number:
52-1088612

Audit Principal: Lester A. Kanis

-7-

[REZNICK FEDDER & SILVERMAN-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Bethel Villa Associates, L.P.

We have audited the accompanying balance sheets of Bethel Villa Associates,
L.P. as of December 31, 1995 and 1994, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financia1
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bethel Villa Associates,
L.P. as of December 31, 1995 and 1994, and the results of its operations, the
changes in partners' equity and cash flows for the years then ended, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 27
through 32 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued
reports dated January 27, 1996 on our consideration of Bethel Villa Associates,
L.P.'s internal control structure and on its compliance with specific
requirements applicable to major DSHA programs, affirmative fair housing, and
laws and regulations applicable to the financial statements.

/s/ REZNICK FEDDER & SILVERMAN

Bethesda, Maryland Federal Employer
January 27, 1996 Identification Number:
52-1088612

Audit Principal: Lester A. Kanis

[Asher&Company, Ltd. Letterhead]

Independent Auditors' Report
----------------------------

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

We have audited the accompanying balance sheet of West Diamond Street
Associates T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No.
0-0198, as of December 31, 1996 and the related statements of profit and loss,
Partners' capital and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of West Diamond Street Associates T/A
Sedgley Park Apartments (A Limited Partnership), PHFA Project No. 0-0198, as of
December 31, 1995 were audited by other auditors, whose report dated January 29,
1996 expressed an unqualified opinion on those statements.

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 West Diamond Street
Associates T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project No.
0-0198, as of December 31, 1996, and the results of its operations, changes in
its Partners' capital and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a
report dated January 29, 1997 on our consideration of West Diamond Street
Associates' T/A Sedgley Park Apartments (A Limited Partnership), PHFA Project
No. 0-0198, internal control structure and a report dated January 29, 1997 on
its compliance with applicable laws and regulations.

Asher&Company, Ltd.

Page Two
The Partners
West Diamond Street Associates
T/A Sedgley Park Apartments

Our audit was made for the purpose of forming an opinion on the basic 1996
financial statements taken as a whole. The accompanying supplementary
information is presented for purposes of additional analysis and is not a
required part of the basic 1996 financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic 1996
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic 1996 financial statements taken as a whole.
The supplementary information for 1995 was subjected to the auditing procedures
applied in the audit of the basic 1995 financial statements by the other
auditors. Their report as of January 29, 1996, stated that, in their opinion,
such information was fairly stated in all material respects in relation to the
basic 1995 financial statements taken as a whole.

/s/ Asher & Company, Ltd.
-------------------------
ASHER & COMPANY, Ltd.

Philadelphia, Pennsylvania
January 29, 1997

[SHORE, AVRACH & COMPANY, P.C. - PHILADELPHIA, PENNSYLVANIA - LETTERHEAD]

Independent Auditor's Report on Basic Financial
Statements and Supplemental Data

To the Partners
West Diamond Street Associates
Marlton, New Jersey

We have audited the accompanying balance sheets of West Diamond Street
Associates T/A Sedgley Park Apartments (A Pennsylvania Limited Partnership), as
of December 31, 1995 and 1994, and the related statements of profit and loss,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of West Diamond Street
Associates T/A Sedgley Park Apartments 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. The supplemental data
included in this report (reflected on pages 18 through 24) has been subjected to
the same auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is presented fairly 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 the
following reports dated January 29, 1996 concerning West Diamond Street
Associates T/A Sedgley Park Apartments (1) on the internal control structure and
(2) on compliance with applicable laws and regulations.

/s/ SHORE, AVRACH & COMPANY, P.C.
Certified Public Accountants

January 29, 1996

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

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

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

We have audited the accompanying balance sheets of Susquehanna Partners (a
Limited Partnership) as of December 31, 1996 and 1995 and the related statements
of (loss) , changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership 'a general
partner and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits .

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Susquehanna Partners (a Limited
Partnership) at December 31, 1996 and 1995, and its results of operations,
changes in partners' equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ J.H. Williams & Co., LLP
- ----------------------------

Kingston, Pennsylvania
February 7, 1997

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

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Susquehanna Partners (a
Limited Partnership) as of December 31, 1995 and 1994 and the related statements
of income, changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
partner and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Susquehanna Partners (a Limited
Partnership) at December 31, 1995 and 1994, and its results of operations,
changes in partners' equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.

/s/ J. H. WILLIAMS & CO., LLP

Kingston, Pennsylvania
February 12, 1996

[Robert Ercolini & Company LLP Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R as of December
31, 1996, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Boston Bay Limited Partnership
as of December 31, 1996, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles

In accordance with Government Auditing Standards, we have also issued a report
dated January 28, 1997 on our consideration of Boston Bay Limited Partnership's
internal control structure, a report dated January 28, 1997 on its compliance
with laws and regulations, and reports dated January 28, 1997 on its compliance
with specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 13 through 26) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
- ---------------------------------

January 28, 1997
Boston, Massachusetts

[ROBERT ERCOLINI & COMPANY - BOSTON, MASSACHUSETTS - LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R as of December
31, 1995, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Boston Bay Limited Partnership
as of December 31, 1995, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 1996 on our consideration of Boston Bay Limited Partnership's
internal control structure, a report dated January 26, 1996 on its compliance
with laws and regulations, and reports dated January 26, 1996 on its compliance
with specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 13 through 26) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ ROBERT ERCOLINI & COMPANY

January 26, 1996

[ROBERT ERCOLINI & COMPANY - BOSTON, MASSACHUSETTS - LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Boston Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Boston Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-071-R as of December
31, 1994, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Boston Bay Limited Partnership
as of December 31, 1994, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 13 through 26) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole

/s/ ROBERT ERCOLINI & COMPANY

February 5, 1995

[Robert Ercolini & Company LLP Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R as
of December 31, 1996, and the related statements of operations, partners'
capital, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Morrant Bay Limited Partnership
as of December 31, 1996, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 27, 1997 on our consideration of Morrant Bay Limited Partnership's
internal control structure, a report dated January 27, 1997 on its compliance
with laws and regulations, and reports dated January 27, 1997 on its compliance
with specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 13 through 26) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
- ---------------------------------

January 27, 1997
Boston, Massachusetts

[ROBERT ERCOLINI & COMPANY - BOSTON, MASSACHUSETTS - LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R as
of December 31, 1995, and the related statements of operations, partners'
capital, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Morrant Bay Limited Partnership
as of December 31, 1995, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 29, 1996 on our consideration of Morrant Bay Limited Partnership's
internal control structure, a report dated January 29, 1996 on its compliance
with laws and regulations, and reports dated January 29, 1996 on its compliance
with specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ ROBERT ERCOLINI & COMPANY

January 29, 1996
(February 26, 1996
as to Note 14)

[ROBERT ERCOLINI & COMPANY - BOSTON, MASSACHUSETTS - LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Morrant Bay Limited partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Morrant Bay Limited
Partnership (a Massachusetts Limited Partnership), MHFA Project No. 70-095-R as
of December 31, 1994, and the related statements of income, partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Morrant Bay Limited Partnership
as of December 31, 1994, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 13 through 26) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ ROBERT ERCOLINI & COMPANY

February 5, 1995

[Robert Ercolini & Company LLP Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R as of December
31, 1996, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hope Bay Limited Partnership as
of December 31, 1996, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 1997 on our consideration of Hope Bay Limited Partnership's
internal control structure, a report dated January 21, 1997 on its compliance
with laws and regulations, and reports dated January 21, 1997 on its compliance
with specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 13 through 26) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ Robert Ercolini & Company LLP
- ---------------------------------

January 21, 1997
Boston, Massachusetts

[ROBERT ERCOLINI & COMPANY - BOSTON, MASSACHUSETTS - LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R as of December
31, 1995, and the related statements of operations, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hope Bay Limited Partnership as
of December 31, 1995, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 27, 1996 on our consideration of Hope Bay Limited Partnership's
internal control structure, a report dated January 27, 1996 on its compliance
with laws and regulations, and reports dated January 27, 1996 on its compliance
with specific requirements applicable to HUD programs.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 14 through 27) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ ROBERT ERCOLINI & COMPANY

January 27, 1996
(February 26, 1996
as to Note 13)

[ROBERT ERCOLINI & COMPANY - BOSTON, MASSACHUSETTS - LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Hope Bay Limited Partnership
Boston, Massachusetts

We have audited the accompanying balance sheet of Hope Bay Limited Partnership
(a Massachusetts Limited Partnership), MHFA Project No. 70-168-R as of December
31, 1994, and the related statements of income, partners' capital, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hope Bay Limited Partnership as
of December 31, 1994, and the results of its operations, changes in partners'
capital, and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in this report
(shown on pages 13 through 26) is presented for the purpose of additional
analysis and to comply with reporting requirements of the Massachusetts Housing
Finance Agency and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

/s/ ROBERT ERCOLINI & COMPANY

February 24, 1995

[ARMANDO A. SUAREZ, CPA Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lares Apartments Limited Partnership

I have audited the accompanying balance sheets of Lares Apartments Limited
Partnership (FmHA Project No.: 63-034-660467896) as of December 31, 1996 and
1995, and the related statements of operations, partners' equity (deficit), and
cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lares Apartments Limited
Partnership, FmHA Project No.: 63-034-660467896, as of December 31, 1996 and
1995, and the results of its operations, changes in partners' equity (deficit)
and cash flows for the years then ended in conformity with generally accepted
accounting principles.

My audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 21
and 29 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 my opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole

/s/ Armando A. Suarez, CPA
--------------------------
Armando A. Suarez, CPA
February 4, 1997
San Juan, Puerto Rico

The stamp #1379918 of the CPA's College of
PR was affixed to the original of this report.

[ARMANDO A. SUAREZ o CPA-LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lares Apartments Limited Partnership

I have audited the accompanying balance sheets of Lares Apartments Limited
Partnership (FmHA Project No.: 63-034-660467896) as of December 31, 1995 and
1994, and the related statements of operations, partners' equity (deficit), and
cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lares Apartments Limited
Partnership, FmHA Project No.: 63-034-660467896, as of December 31, 1995 and
1994, and the results of its operations, changes in partners' equity (deficit)
and cash flows for the years then ended in conformity with generally accepted
accounting principles.

My audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 21
and 29 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 my opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ ARMANDO A. SUAREZ
Armando A. Suarez, CPA

March 14, 1996
San Juan, Puerto Rico

The stamp #1328725 of the CPA's College of
PR was affixed to the original of this report.

[ARMANDO A. SUAREZ, CPA Letterhead]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lajas Apartments Limited Partnership

I have audited the accompanying balance sheets of Lajas Apartments Limited
Partnership 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 (FmHA Project No.: 63-017660422313) are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lajas Apartments Limited
Partnership, FmHA Project No.: 63-017660422313, as of December 31, 1996 and
1995, and the results of its operations, changes in partners' equity (deficit)
and cash flows for the years then ended in conformity with generally accepted
accounting principles.

My audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
and 30 is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in my opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.

/s/ Armando A. Suarez, CPA
--------------------------
Armando A.. Suarez,CPA

January 15, 1997 /
San Juan, Puerto Rico

The stamp #1379921 of the CPA's College of
PR was affixed to the original of this report.

[ARMANDO A. SUAREZ o CPA-LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Lajas Apartments Limited Partnership

I have audited the accompanying balance sheets of Lajas Apartments Limited
Partnership as of December 31, 1995 and 1994, and the related statements of
operations, partners' equity (deficit), and cash flows for the years then ended.
These financial statements (FmHA Project No.: 63-017-660422313) are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lajas Apartments Limited
Partnership, FmHA Project No.: 63-017-660422313, as of December 31, 1995 and
1994, and the results of its operations, changes in partners' equity (deficit)
and cash flows for the years then ended in conformity with generally accepted
accounting principles.

My audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
and 30 is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in my opinion, is fairly stated in all material respects in relation to the
basic financial statements and, in my opinion, is fairly seated in all material
respects in relation to the basic financial statements taken as a whole.

/s/ ARMANDO A. SUAREZ
Armando A. Suarez, CPA

March 14, 1996
San Juan, Puerto Rico

The stamp #1328728 of the CPA's College of
PR was affixed to the original of this report.

[REE & KIM Letterhead]

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

We have audited the accompanying balance sheet of Arlington - Rodeo Properties
(A California Limited Partnership) as of December 31, 1996 and the related
statements of income, partners' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Arlington - Rodeo Properties as
of December 31, 1996, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/Ree and Kim
- --------------

Los Angeles, California
February 25, 1997

[REE & KIM-LETTERHEAD]

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

We have audited the accompanying balance sheet of Arlington - Rodeo Properties
(A California Limited Partnership) as of December 31, 1995 and the related
statements of income, partners' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Arlington - Rodeo Properties as
of December 31, 1995, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ REE & KIM

Los Angeles, California
February 26, 1996

[REE & KIM-LETTERHEAD]

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

We have audited the accompanying balance sheet of Arlington - Rodeo Properties
(A California Limited Partnership) as of December 31, 1994 and the related
statements of income, partners' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Arlington - Rodeo Properties as
of December 31, 1994, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ REE & KIM

Los Angeles, California
February 24, 1995

[CORTLAND L. BROVITZ & CO., P.C. Letterhead]

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

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

We have audited the accompanying balance sheets of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 1996 and 1995 and the related statements
of changes in partners' equity, equity, operations, and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 1996 and 1995 and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

Respectfully Submitted,

/s/Cortland L. Brovitz & Co., P.C.
----------------------------------
Cortland L. Brovitz & Co., P.C.
Certified Public Accountants

Rochester, New York
January 27, 1997

1

[CORTLAND L. BROVITZ & CO., P.C.-LETTERHEAD]

INDEPENDENT AUDITORS' RETPORT

To the Partners of
Conifer Bateman Associates
(A Limited Partnership):

We have audited the accompanying balance sheets of Conifer Bateman Associates (A
Limited Partnership), as of December 31, 1995 and 1994 and the related
statements of changes in partners' capital, operations and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer Bateman Associates (A
Limited Partnership) as of December 31, 1995 and 1994, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

Respectfully Submitted,

/s/ CORTLAND L. BROVITZ & CO., P.C.

CORTLAND L. BROVITZ & CO., P.C.
Certified Public Accountants

Rochester, New York
January 21, 1996

[Mortland & Co. P.C. Letterhead]

Independent Auditors' Report
----------------------------

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

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 1996 and the related statements of income, partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this financial statement based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hampden Hall Associates, L.P.,
as of December 31, 1996 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Mortland & Co. P.C.
- -----------------------

St. Louis, Missouri
February 25, 1997

[MORTLAND & CO., P.C. - ST. LOUIS, MISSOURI - LETTERHEAD]

Independent Auditors' Report

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

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 1995 and the related statements of income, partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require 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 balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hampden Hall Associates, L.P.,
as of December 31, 1995 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ MORTLAND & CO., P.C.

February 26, 1996

[MORTLAND & CO., P.C. - ST. LOUIS, MISSOURI - LETTERHEAD]

Independent Auditors' Report

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

We have audited the accompanying balance sheet of Hampden Hall Associates, L.P.,
as of December 31, 1994 and the related statements of income, partners' capital,
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require 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 balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hampden Hall Associates, L.P.,
as of December 31, 1994 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ MORTLAND & CO., P.C.

February 28, 1995

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

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

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

We have audited the accompanying balance sheets of Chester Renaissance
Associates (a Limited Partnership) as of December 31, 1996 and 1995, and the
related statements of (loss), changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's general 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 Chester Renaissance 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 9, 1997

[J. H. WILLIAMS & CO.-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheets of Chester Renaissance
Associates (a Limited Partnership) as of December 31, 1995 and 1994, and the
related statements of income, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's 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 Chester Renaissance Associates
(a Limited Partnership) at December 31, 1995 and 1994, and the results of its
operations, changes in partners' equity and cash flows for the years then ended
in conformity with generally accepted accounting principles.

/s/ J. H. WILLIAMS & CO., LLP

Kingston, Pennsylvania
February 8, 1996

[Reznick Fedder & Silverman Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates II, Ltd.

We have audited the accompanying balance sheet of Homestead Apartments
Associates II, Ltd., as of December 31, 1996 and 1995, and the related statement
of operations, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Homestead Apartments
Associates II, Ltd. 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.

/s/ Reznick Fedder & Silverman
------------------------------

Charlotte, North Carolina
January 20, 1997

[REZNICK FEDDER & SILVERMAN-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Homestead Apartments Associates II, Ltd.

We have audited the accompanying balance sheet of Homestead Apartments
Associates II, Ltd., as of December 31, 1995 and 1994, and the related statement
of operations, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Homestead Apartments
Associates II, Ltd. 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/ REZNICK FEDDER & SILVERMAN

Charlotte, North Carolina
January 19, 1996

[Vengrove, Zapolsky, McCourt, Klein & Petitto, LLP Letterhead]

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

To the Partners
P.S. 157 Associates, L.P.
Brooklyn, NY

We have audited the accompanying balance sheets of P.S. 157 Associates, L.P. (a
limited partnership), as of December 31, 1996 and 1995 and the related
statements of operations, partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 P.S. 157 Associates, L.P. (a
limited partnership) 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.

/s/ Vengrove, Zapolsky, McCourt, Klein & Petitto, LLP
- -----------------------------------------------------

January 14, 1997
Great Neck, NY

-1-

[VENGROVE, ZAPOLSKY, MCCOURT, KLEIN & PETITTO, LLP-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
P.S. 157 Associates, L.P.
Brooklyn, NY

We have audited the accompanying balance sheets of P.S. 157 Associates, L.P. (a
limited partnership), as of December 31, 1995 and 1994 and the related
statements of operations, partners' capital, and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 P.S. 157 Associates, L.P. (a
limited partnership) 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/ VENGROVE, ZAPOLSKY, MCCOURT, KLEIN & PETITTO, LLP

February 8, 1996
Great Neck, NY

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

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

To the Partners of
Cloisters Limited Partnership II
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Cloisters Limited Partnership
II as of December 31, 1996 and 1995 and the related statements of (loss),
changes in partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's general partner
and contracted management agent. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cloisters Limited Partnership
II at December 31, 1996 and 1995, and its results of operations, changes in
partners' equity and cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ J.H. Williams & Co., LLP
- ----------------------------

Kingston, Pennsylvania
February 11, 1997

[J. H. WILLIAMS & CO.-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Cloisters Limited Partnership II
Philadelphia, Pennsylvania

We have audited the accompanying balance sheets of Cloisters Limited Partnership
II as of December 31, 1995 and 1994 and the related statements of income,
changes in partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's general partner
and contracted management agent. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cloisters Limited Partnership
II at December 31, 1995 and 1994, and its results of operations, changes in
partners' equity and cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ J. H. WILLIAMS & CO., LLP

Kingston, Pennsylvania
February 12, 1996

[Reznick Fedder & Silverman Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Creative Choice Homes II, Ltd.
(A Limited Partnership)
d/b/a The Gardens Apartments

We have audited the accompanying balance sheet of Creative Choice Homes II,
Ltd. (A Limited Partnership), d/b/a The Gardens Apartments 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 Creative Choice Homes II,
Ltd. (A Limited Partnership), d/b/a The Gardens Apartments 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 page 21
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.

-5-

In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
February 7, 1997 on our consideration of Creative Choice Homes II, Ltd. (A
Limited Partnership), d/b/a The Gardens Apartments' internal control structure
and on its compliance with specific requirements applicable to major HUD
programs, affirmative fair housing, and laws and regulations applicable to the
financial statements.

/s/ Reznick Fedder & Silverman
------------------------------
Bethesda, Maryland Federal Employer
February 7, 1997 Identification Number:
52-1088612

Audit Principal: Craig Birmingham

- 6 -

[REZNICK FEDDER & SILVERMAN-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Creative Choice Homes II, Ltd.
(A Limited Partnership)
d/b/a The Gardens Apartments

We have audited the accompanying balance sheet of Creative Choice Homes II,
Ltd. (A Limited Partnership) d/b/a The Gardens Apartments as of December 31,
1995, 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 Creative Choice Homes II,
Ltd. (A Limited Partnership) d/b/a The Gardens Apartments as of December 31,
1995, 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.

In accordance with Government Auditing Standards, we have also issued
reports dated February 13, 1996 on our consideration of Creative Choice Homes
II, Ltd. (A Limited Partnership) d/b/a The Gardens Apartments' internal control
structure and on its compliance with specific requirements applicable to major
HUD programs, affirmative fair housing, and laws and regulations applicable to
the financial statements.

/s/ REZNICK FEDDER & SILVERMAN

Bethesda, Maryland Federal Employer
February 13, 1996 Identification Number:
52-1088612

Audit Principal: Craig Birmingham

[MARK ESCOFFERY, P.A. - PALM BEACH GARDENS, FLORIDA - LETTERHEAD]

To the Partners
Creative Choice Homes II, Ltd.
Owners of The Gardens Apartments
Palm Beach Gardens, Florida

I have audited the accompanying balance sheet of Creative Choice Homes II, Ltd.
(FHA Project No.066-11-009, 066-11-010 AND 066-11-011) as of December 31, 1994,
and the related statements of profit and loss, changes in 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 my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Creative Choice Homes II, Ltd. as
of December 31, 1994, and the results of its operations, and the changes in its
partners' capital, and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

My audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental data on pages 15 to 20, inclusive,
is presented for purposes of additional analysis and is not a required part of
the financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the financial statements and, in my opinion,
is fairly stated in all material respects in relation to the financial
statements taken as a whole.

/s/ MARK ESCOFFERY, P.A.

February 25, 1995
Federal I.D.# 65-0069490
Lead Auditor for the Firm - Mark A.H. Escoffery, C.P.A.

[HALBERT, KATZ & CO., P. C.-Letterhead]

INDEPENDENT AUDITOR'S REPORT
----------------------------

To the Partners
Milford Crossing Associates, L.P
Wilmington, Delaware

We have audited the accompanying balance sheets of Milford Crossing Associates,
L.P. as of December 31, 1996 and 1995 and the related statements of income
partners' capital (capital deficiency) and cash flows for the years then ended.
These financial statements are the responsibility of the project's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 Milford Crossing Associates,
L.P., at December 31, 1996 and December 31, 1995 and the results of its
operations changes in partners' capital (capital deficiency) 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 supporting information included in
the report (shown on pages 11 to 12) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of Milford
Crossing Associates, L.P. 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/ Halbert, Katz & Co., P.C.
- -----------------------------

Philadelphia, Pennsylvania
January 30, 1997

1

[HALBERT, KATZ & CO., P.C. - PHILADELPHIA, PENNSYLVANIA - LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Milford Crossing Associates, L.P.
Wilmington, Delaware

We have audited the accompanying balance sheets of Milford Crossing Associates,
L.P., as of December 31, 1995 and December 31, 1994, and the related statements
of loss, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Milford Crossing Associates,
L.P. as of December 31, 1995 and December 31, 1994 and the results of its
operations, changes in partners' capital 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 30, 1996 on our consideration of Milford Crossing Associates,
L.P.'s internal control structure.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 12 to 14) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of Milford
Crossing Associates, L.P. 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/ HALBERT, KATZ & CO., P.C.

January 30, 1996

BERNHARDT, KARLITZ, HAYDEN & DECRUZE LLP lETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
BX-7F ASSOCIATES, L.P.
New York, New York

We have audited the accompanying balance sheets of BX-7F Associates, L.P. 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. 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 BX-7F Associates, L.P. 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.

/s/ Bernhardt, Karlitz, Hayden & DeCruze LLP
- --------------------------------------------
White Plains, NY
February 13, 1997

[BERNHARDT, KARLITZ, HAYDEN & DECRUZE, LLP
- WHITE PLAINS, NEW YORK - LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
BX-7F ASSOCIATES, L.P.
New York New York

We have audited the accompanying balance sheet of BX-7F Associates, L.P. (the
Partnership) as of December 31, 1994 and the related statements of income,
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 materia1
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 materia1 respects, the financial position of BX-7F Associates, L.P. as of
December 31, 1994, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/ BERNHARDT, KARLITZ, HAYDEN & DECRUZE

Bernhardt, Karlitz, Hayden & DeCruze
January 23, 1995

[Amilcar Torres Rivera, CPA Letterhead]

INDEPENDENT AUDITOR'S REPORT
----------------------------

To the Partners
Los Angeles Limited Partnership

I have audited the accompanying balance sheet of Los Angeles Limited Partnership
as of December 31, 1996, and the related statement of loss, changes in Partner's
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 my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Los Angeles Limited Partnership as
of December 31, 1996, and the results of its operations, cash flows and changes
in partner's equity for the year then ended in conformity with generally
accepted accounting principles.

/s/ Amilcar Torres Rivera, CPA
------------------------------
Stamp #1369539 of the Amilcar Torres Rivera, CPA
Puerto Rico Society of
CPA's has been affixed
to the original.

San Juan, Puerto Rico
February 12, 1997

[AMILCAR TORRES RIVERA, CPA-LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Los Angeles Limited Partnership

I have audited the accompanying balance sheet of Los Angeles Limited
Partnership as of December 31, 1995, and the related statement of loss, changes
in Partner's 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
my audit.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Los Angeles Limited
Partnership as of December 31, 1995, and the results of its operations, cash
flows and changes in partner's equity for the year then ended in conformity with
generally accepted accounting principles.

/s/ AMILCAR TORRES RIVERA, CPA

Amilcar Torres Rivera, CPA

Stamp #1320018 of the
Puerto Rico Society of
CPAs has been affixed
to the original.

San Juan, Puerto Rico
January 29, 1996

[AMILCAR TORRES RIVERA, CPA-LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

To the Partners
Los Angeles Limited Partnership
San Juan, Puerto Rico

I have audited the accompanying balance sheets of Los Angeles Limited
Partnership as of December 31, 1994 and the related statements of operations and
changes in Partner's equity, and cash flow for the years then ended. These
financial statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Los Angeles Limited
Partnership, at December 31, 1994 and the results of its operations, cash flows
and changes in partner's equity for the year then ended in conformity with
generally accepted accounting principles.

/s/ AMILCAR TORRES RIVERA, CPA

Amilcar Torres Rivera, CPA
License No. 1876

Stamp #1261776 was
affixed to the original

San Juan, Puerto Rico
February 3, 1995

[TOSKI, SCHAEFER & CO., P.C. Letterhead]

INDEPENDENT AUDITOR'S REPORT
----------------------------

The Partners
Christine Apartments, L.P.:

We have audited the accompanying balance sheets of Christine Apartments, L.P. as
of December 31, 1996 and 1995 and the related statements of operations,
partners' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing standards
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 Christine Apartments, L.P. as
of December 31, 1996 and 1995 and the results of its operations, changes in
partners' equity and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued reports
dated January 30, 1997 on our consideration of the Partnership's internal
control structure and on its compliance with laws and regulations.

/s/ Toski, Schaefer & Co., P.C.
-------------------------------

Williamsville, New York
January 30, 1997

1

[TOSKI, SCHAEFER & CO., P.C.-LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

The Partners
Christine Apartments, L.P.:

We have audited the accompanying balance sheets of Christine Apartments, L.P. as
of December 31, 1995 and 1994 and the related statements of operations,
partners' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing standards
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 Christine Apartments, L.P. as
of December 31, 1995 and 1994 and the results of its operations, changes in
partners' equity and cash flows for the years then ended, in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued reports
dated February 2, 1996 on our consideration of the Partnership's internal
control structure and on its compliance with laws and regulations.

/s/ TOSKI, SCHAEFER & CO., P.C.

Williamsville, New York
February 2, 1996

[Reznick Fedder & Silverman Letterhead]

INDEPENDENT AUDITORS' REPORT

To the Partners
Plainsboro Housing Partners
Limited Partnership

We have audited the accompanying balance sheets of Plainsboro Housing
Partners Limited Partnership as of December 31, 1996 and 1995, and the related
statements of revenue and expenses, changes in partners' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Plainsboro Housing Partners
Limited Partnership as of 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/ Reznick Fedder & Silverman
------------------------------

Baltimore, Maryland
January 24, 1997

-3-

[REZNICK FEDDER & SILVERMAN-LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Plainsboro Housing Partners
Limited Partnership

We have audited the accompanying balance sheet of Plainsboro Housing
Partners Limited Partnership as of December 31, 1994, and the related statements
of revenue and expenses, changes in partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Plainsboro Housing Partners
Limited Partnership as of December 31, 1994, and the results of its operations,
changes in partners' equity and cash flows for the year then ended in conformity
with generally accepted accounting principles.

/s/ REZNICK FEDDER & SILVERMAN

Baltimore, Maryland
January 20, 1995

[Asher&Company, Ltd. Letterhead]

Independent Auditors' Report
----------------------------

The Partners
Rolling Green Associates, L.P.
Marlton, New Jersey

We have audited the accompanying balance sheet of Rolling Green Associates,
L.P. (A Limited Partnership) as of December 31, 1996 and the related statements
of profit and loss, Partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Rolling Green
Associates, L.P. (A Limited Partnership) as of December 31, 1995 were audited by
other auditors whose report dated January 18, 1996 was qualified because they
were unable to confirm accounts receivable, government.

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 Rolling Green
Associates, L.P. (A Limited Partnership) as of December 31, 1996 and the
results of its operations, changes in its Partners' capital, and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

Asher&Company, Ltd.

Page Two
The Partners
Rolling Green Associates, L.P.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 23, 1997 on our
consideration of Rolling Green Associates, LP.'s (A Limited Partnership)
internal control structure, and reports dated January 23, 1997 on its compliance
with specific requirements applicable to major HUD programs and specific
requirements applicable to affirmative fair housing.

Our audit was made for the purpose of forming an opinion on the basic 1996
financial statements taken as a whole. The accompanying supplementary
information is presented for purposes of additional analysis and is not a
required part of the basic 1996 financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic 1996
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic 1996 financial statements taken as a whole.

/s/ Asher&Company, Ltd.
-----------------------
ASHER & COMPANY, Ltd.

Philadelphia, Pennsylvania
January 23, 1997

[SHORE, AVRACH & COMPANY, P.C. - PHILADELPHIA, PENNSYLVANIA - LETTERHEAD]

Independent Auditor's Report on Basic
Financial Statements and Supplemental Data

To the Partners
Rolling Green Associates, L.P.
Marlton, New Jersey

We have audited the accompanying balance sheets of Rolling Green
Associates, L.P. (A New York Limited Partnership), as of December 31, 1995 and
1994, and the related statements of profit and loss, partners' capital (deficit)
and cash flows for the year ended December 31, 1995. 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.

Except as discussed in the following paragraph, 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.

We were unable to confirm accounts receivable - government in the amounts
of $339,795 and $287,202 as of December 31, 1995 and 1994, respectively, due to
circumstances described in Note 9.

In our opinion, except for the effects of such adjustments, if any, as
might have been determined necessary had we been able to confirm the accounts
receivable - government, the financial statements referred to above present
fairly, in all material respects, the financial position of Rolling Green
Associates, L.P. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the year ended December 31, 1995, 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 data included in the
report (shown on pages 16 through 22) are presented for the 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 audits of the basic financial statements and, in our opinion, is
fairly presented in all material respects in relation to the basic financial
statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued the
follow1ng reports dated January 18, 1996 concerning Rolling Green Associates,
L.P. (1) on the internal control structure, (2) on compliance with specific
requirements applicable to major HUD programs, (3) on compliance with specific
requirements applicable to affirmative fair housing, and (4) on compliance with
applicable laws and regulations.

/s/ SHORE, AVRACH & COMPANY, P.C.

Certified Public Accountants

January 18, 1996

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

March 31
-------------------------------
1997 1996*
------------- -------------

ASSETS

Property and equipment at cost, less accumulated depreciation
(Notes 2 and 4) $161,897,905 $167,478,231
Cash and cash equivalents (Notes 2 and 10) 2,087,057 2,395,044
Cash held in escrow (Note 5) 8,777,109 8,730,403
Deferred costs, less accumulated amortization (Notes 2 and 6) 2,943,927 3,254,053
Other assets 1,742,839 1,930,488
------------ ------------

$177,448,837 $183,788,219
============ ============

LIABILITIES AND PARTNERS' CAPITAL

Liabilities
Mortgage notes payable (Note 7) $99,092,259 $100,916,832
Construction notes payable (Note 7) 6,740,018 6,740,018
Accounts payable and other liabilities 6,814,714 6,470,526
Due to local general partners and affiliates (Note 8) 6,341,448 6,009,525
Due to general partner and affiliates 760,510 565,999
------------ ------------

119,748,949 120,702,900

Minority interest 6,695,280 6,850,591
------------ ------------

Commitments and contingencies (Notes 8 and 10)

Partners' capital
Limited partners (76,786 BACs issued and outstanding) 51,177,436 56,355,255
General partner (172,828) (120,527)
------------ ------------

51,004,608 56,234,728
------------ ------------
$177,448,837 $183,788,219
============ ============

*Reclassified for comparative purposes
See accompanying notes to consolidated financial statements.

-17-

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

Year Ended March 31
----------------------------------------------
1997 1996* 1995*
----------- ----------- -----------

Revenues
Rental income $18,924,741 $18,552,471 $17,185,037
Other income 667,773 617,139 876,100
----------- ----------- -----------

19,592,514 19,169,610 18,061,137
----------- ----------- -----------

Expenses
General and administrative 3,828,769 3,168,207 3,155,215
General and administrative-related parties (Note 8) 1,165,168 1,756,654 1,830,282
Repairs and maintenance 3,252,181 2,859,589 2,456,673
Operating and other 1,989,111 1,916,038 1,719,919
Taxes 1,763,193 1,210,046 1,135,407
Insurance 951,050 979,238 917,174
Financial, principally interest 5,765,176 6,010,397 4,956,233
Depreciation and amortization 6,141,329 6,183,928 5,678,045
----------- ----------- -----------

24,855,977 24,084,097 21,848,948
----------- ----------- -----------

Loss before minority interest (5,263,463) (4,914,487) (3,787,811)

Minority interest in loss of subsidiary partnerships 33,343 32,193 32,583
----------- ----------- -----------

Net loss $(5,230,120) $(4,882,294) $(3,755,228)
=========== =========== ===========
Net loss-limited partnership interests $(5,177,819) $(4,833,471) $(3,717,676)
=========== =========== ===========
Number of BACs outstanding 76,786 76,786 76,786
=========== =========== ===========
Net loss per BAC $ (67.43) $ (62.95) $ (48.42)
=========== =========== ===========

*Reclassified for comparative purposes
See accompanying notes to consolidated financial statements.

-18-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

Limited General
Total Partners Partner
----------- ----------- ---------

Partners' capital - April 1, 1994 $64,872,250 $64,906,402 $(34,152)

Net loss (3,755,228) (3,717,676) (37,552)
----------- ----------- ---------

Partners' capital - March 31, 1995 61,117,022 61,188,726 (71,704)

Net loss (4,882,294) (4,833,471) (48,823)
----------- ----------- ---------
Partners' capital - March 31, 1996 56,234,728 56,355,255 (120,527)

Net loss (5,230,120) (5,177,819) (52,301)
----------- ----------- ---------
Partners' capital - March 31, 1997 $51,004,608 $51,177,436 $(172,828)
=========== =========== =========

See accompanying notes to consolidated financial statements.

-19-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Year Ended March 31
-----------------------------------------------
1997 1996* 1995*
------------ ------------- -------------

Cash flows from operating activities:
Net loss $ (5,230,120) $ (4,882,294) $ (3,755,228)
------------ ------------- -------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 6,141,329 6,183,928 5,678,045
Loss on sale of property and equipment 0 0 1,927
Minority interest in loss of subsidiaries (33,343) (32,193) (32,583)
(Increase) decrease in assets:
Cash held in escrow 321,640 (2,153,861) (7,613)
Deferred costs 3,150 0 0
Due from local general partners and affiliates 0 17,069 (100)
Other assets 187,649 433,216 (256,263)
Increase (decrease) in liabilities:
Accounts payable and other liabilities 384,693 927,143 (1,256,057)
Due to local general partners and affiliates 133,916 (138,924) (246,577)
Due to general partner and affiliates 194,511 789,823 680,047
------------ ------------- -------------
Total adjustments 7,333,545 6,026,201 4,560,826
------------ ------------- -------------
Net cash provided by operating activities 2,103,425 1,143,907 805,598
------------ ------------- -------------

Cash flows from investing activities:
Acquisition of property and equipment (254,027) (902,196) (918,518)
Increase in construction in progress 0 0 (8,973,171)
(Increase) decrease in cash held in escrow (368,346) (121,719) 4,668,524
Increase in deferred costs 0 0 (30,482)
Decrease in accounts payable and other liabilities 0 0 (1,350,274)
Decrease in due from local general
partners and affiliates 0 42,964 31,199
Increase in due to local general partners and affiliates 0 1,002,468 0
Decrease in due to local general partners and affiliates (196,795) (1,602,159) (7,324,235)
------------ ------------- -------------
Net cash used in investing activities (819,168) (1,580,642) (13,896,957)
------------ ------------- -------------

Cash flows from financing activities:
(Increase) decrease in deferred costs 0 (56,700) 556,732
Decrease in due from local general
partners and affiliates 0 0 225,157
Proceeds from construction notes 0 0 3,600,626
Repayment of construction notes 0 0 (13,804,268)
Decrease in due from general partner and affiliates 0 0 123,500
Proceeds from mortgage notes 0 58,120 17,667,975
Repayment of mortgage notes (1,865,078) (1,791,820) (7,547,050)
Increase in due to local general partners and affiliates 394,802 312,441 0
Decrease in due to local general partners and affiliates 0 (55,744) (602,311)
(Decrease) increase in capitalization of consolidated
subsidiaries attributable to minority interest (121,968) (462,167) 1,266,702
------------ ------------- -------------
Net cash (used in) provided by financing activities (1,592,244) (1,995,870) 1,487,063
------------ ------------- -------------

* Reclassified for comparative purposes
See accompanying notes to consolidated financial statements.

-20-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)

Year Ended March 31
-----------------------------------------------
1997 1996* 1995
------------ ------------ ------------

Net decrease in cash and cash equivalents (307,987) (2,432,605) (11,604,296)

Cash and cash equivalents at beginning of year 2,395,044 4,827,649 16,431,945
------------ ------------ ------------

Cash and cash equivalents at end of year $2,087,057 $2,395,044 $ 4,827,649
============ ============ ============

Supplemental disclosure of cash flows information:
Cash paid during the year for interest $4,807,010 $5,286,969 $ 4,881,152

Supplemental disclosure of noncash investing
and financing activities:
Property and equipment reclassified to
deferred costs $ 0 $ 451,335 $ 0
Decrease in due from general partner and affiliates
offset by due to general partner and affiliates 0 283,371 0
Increase in mortgage notes payable reclassified from
accounts payable and other liabilities 40,505 40,528 0
Construction in progress reclassified to
property and equipment 0 0 14,998,176
Construction notes payable satisfied through
mortgage notes payable 0 0 15,912,786
Increase in property and equipment through
mortgage notes payable 0 0 418,719

* Reclassified for comparative purposes
See accompanying notes to consolidated financial statements.

-21-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 1 - General

Independence Tax Credit Plus L.P., a Delaware limited partnership
(the "Partnership"), was organized on November 7, 1990, but had no activity
until May 31, 1991 (which date is considered to be inception for financial
accounting purposes) and commenced the public offering on July 1, 1991. The
general partner of the Partnership is Related Independence Associates L.P., a
Delaware limited partnership (the "General Partner").

The Partnership's business is to invest in other partnerships
("Local Partnerships," "subsidiaries" or "subsidiary partnerships") owning
leveraged Apartment Complexes that are eligible for the low-income housing tax
credit ("Tax Credit") enacted in the Tax Reform Act of 1986, some of which
complexes may also be eligible for the historic rehabilitation tax credit.

The Partnership has acquired interests in twenty-eight Local
Partnerships as of March 31, 1997.

The Partnership was authorized to issue a total of 200,000
Beneficial Assignment Certificates ("BACs") which have been registered with the
Securities and Exchange Commission for sale to the public. Each BAC represents
all of the economic and virtually all of the ownership rights attributable to a
limited partnership interest. As of March 31, 1997, the Partnership has raised a
total of $76,786,000 representing 76,786 BACs and no further issuance of BACs is
anticipated.

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

NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Accounting

The Partnership's fiscal year ends on March 31. All
subsidiaries have fiscal years ending December 31. Accounts of the subsidiaries
have been adjusted for intercompany transactions from January 1 through March
31. The books and records of the Partnership are maintained on the accrual basis
of accounting, in accordance with generally accepted accounting principles
("GAAP").

b) Basis of Consolidation

The consolidated financial statements include the accounts of
the Partnership and twenty-eight subsidiary partnerships in which the
Partnership is a limited partner. Through the rights of the Partnership and/or
an affiliate of the General Partner, which affiliate has a contractual
obligation to act on behalf of the Partnership, to remove the general partner of
the subsidiary local partnerships and to approve certain major operating and
financial decisions, the Partnership has a controlling financial interest in the
subsidiary local partnerships. All intercompany accounts and transactions with
the subsidiary partnerships have been eliminated in consolidation.

For financial reporting purposes, the Partnership's fiscal
year ends on March 31. All subsidiaries have fiscal years ending December 31.
Accounts of the subsidiaries have been adjusted for intercompany transactions
from January 1 through March 31.

-22-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 2 - Summary of Significant Accounting Policies (Continued)

b) Basis of Consolidation (Continued)

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

Losses attributable to minority interest which exceed the
minority interests' investment in a subsidiary have been charged to the
Partnership. Such losses aggregated approximately $34,000, $69,000 and $46,000
for the years ended March 31, 1997, 1996 and 1995, respectively (the 1996, 1995
and 1994 Fiscal Years, respectively). The Partnership's investment in each
subsidiary is equal to the respective subsidiary's partners' equity less
minority interest capital, if any. In consolidation, all subsidiary partnership
losses are included in the Partnership's capital account except for losses
allocated to minority interest capital.

c) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks,
and investments in short-term highly liquid instruments purchased with original
maturities of three months or less.

d) Property and Equipment

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. An impairment loss should be recognized whenever the review
demonstrates that the book value of a long-lived asset is not recoverable.
Effective April 1, 1996, the Partnership adopted SFAS No. 121, consistent with
the required adoption period.

Property and equipment are carried at the lower of depreciated
cost or estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, and any other costs incurred in acquiring the properties. The cost
of property and equipment is depreciated over their estimated useful lives using
accelerated and straight-line methods. Expenditures for repairs and maintenance
are charged to expense as incurred; major renewals and betterments are
capitalized. At the time property and equipment are retired or otherwise
disposed of, the cost and accumulated depreciation are eliminated from the
assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings. A provision for loss on impairment of
assets is recorded when estimated amounts recoverable through future operations
and sale of the property on an undiscounted basis are below depreciated cost.
Property investments themselves are reduced to estimated fair value (generally
using discounted cash flows) when the property is considered to be impaired and
the depreciated cost exceeds estimated fair value. Through March 31, 1997, the
Partnership has not recorded any provisions for loss on impairment of assets or
reduction to estimated fair value.

-23-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 2 - Summary of Significant Accounting Policies (Continued)

e) Income Taxes

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

f) Organization and Offering Costs

Costs incurred to organize the Partnership, including but not
limited to legal, accounting and registration fees, are considered organization
expenses. These costs are capitalized and amortized over a 60-month period.
Costs incurred to sell BACs, including brokerage and the nonaccountable expense
allowance, are considered selling and offering expenses. These costs are charged
directly to limited partners' capital.

g) Loss Contingencies

The Partnership records loss contingencies as a charge to
income when information becomes available which indicates that it is probable
that an asset has been impaired or a liability has been incurred as of the date
of the financial statements and the amount of loss can be reasonably estimated.

h) Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

i) Reclassification of Financial Statement Presentation

Certain reclassifications have been made to the Fiscal 1995
and Fiscal 1994 financial statements to conform with the Fiscal 1996 financial
statement presentation. Such reclassifications had no effect on net loss as
previously reported.

NOTE 3 - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the
fair value of each class of financial instruments (all of which are held for non
trading purposes) for which it is practicable to estimate that value:

Cash and Cash Equivalents and Cash Held in Escrow

The carrying amount approximates fair value.

Mortgage Notes Payable

The fair value of mortgage notes payable is estimated, where
practicable, based on the borrowing rate currently available for similar loans.

-24-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 3 - Fair Value of Financial Instruments (Continued)

The estimated fair values of the Partnership's mortgage notes
payable are as follows:

March 31, 1997 March 31, 1996
--------------------------- --------------------------
Carrying Carrying
Amount Fair Value Amount** Fair Value
------------ ----------- ----------- -----------

Mortgage notes payable for which it is:
Practicable to estimate fair value $22,882,616 $22,257,297 $23,393,761 $22,728,217
Not practicable 76,209,643 * 77,523,071 *

* Management believes it is not practical to estimate the fair
value of the mortgage notes payable because mortgage programs with similar
characteristics are not currently available to the partnerships.

**Reclassified for comparative purposes.

The carrying amount of other assets and liabilities reported on
the statement of financial position that require such disclosure approximates
fair value.

NOTE 4 - Property and Equipment

The components of property and equipment are as follows:

March 31 Estimated
------------------------------- Useful Lives
1997 1996 (Years)
------------------------------- ------------

Land $ 5,777,188 $ 5,777,188 -
Building and improvements 175,432,328 175,250,641 15-40
Furniture and fixtures 1,960,457 1,888,117 3-10
------------- -------------
183,169,973 182,915,946

Less: Accumulated depreciation (21,272,068) (15,437,715)
------------- -------------

$161,897,905 $167,478,231
============= =============

Included in property and equipment is approximately $4,500,000 of
acquisition fees paid to the general partner and $1,057,104 of acquisition
expenses as of March 31, 1997 and 1996. In addition, as of March 31, 1997 and
1996, building and improvements include approximately $4,378,000 of capitalized
interest.

In connection with the rehabilitation of the properties, the
subsidiary partnerships have incurred developer's fees of approximately
$14,500,000 to the local general partners and affiliates, net of approximately
$979,000 earned by the Partnership.
Such fees have been included in the cost of property and equipment.

During the 1995 Fiscal Year, one subsidiary partnership
reclassified $520,771and $69,436 from building and improvements and accumulated
depreciation, respectively, to deferred costs-financing expenses and accumulated
amortization.

Depreciation expense for the years ended March 31, 1997, 1996 and
1995 amounted to $5,834,353, $5,858,536 and $5,412,437, respectively.

-25-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 5 - Cash Held in Escrow

Cash held in escrow consists of the following:

March 31
-------------------------------
1997 1996
------------- ------------

Purchase price payments* $ 987,136 $ 1,309,529
Real estate taxes, insurance and other 5,028,968 5,309,406
Reserve for replacements 2,175,901 1,485,162
Tenant security deposits 585,104 626,306
------------- ------------
$ 8,777,109 $ 8,730,403
============= ============

*Represents amounts to be paid to seller after completion of
properties under construction and upon meeting specified rental achievement
criteria.

NOTE 6 - Deferred Costs

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

March 31
-----------------------------
1997 1996 Period
----------- ----------- ------

Financing expenses $ 3,468,810 $ 3,471,960 *
Organization expenses 664,154 664,154 60 months
----------- -----------
4,132,964 4,136,114
Less: Accumulated amortization (1,189,037) (882,061)
----------- -----------

$ 2,943,927 $ 3,254,053
=========== ===========

*Over the life of the related mortgages.

Amortization expense for the years ended March 31, 1997, 1996 and
1995 amounted to $306,976, $325,392 and $265,608, respectively. During the 1995
Fiscal Year, one subsidiary partnership reclassified $520,771 and $69,436 from
building and improvements and accumulated depreciation, respectively, to
deferred costs-financing expenses and accumulated amortization. During the 1994
Fiscal Year, two subsidiary partnerships wrote off fully amortized deferred
costs totaling $245,881.

NOTE 7 - Mortgage and Construction Notes Payable

The mortgage and construction notes are payable in aggregate
monthly installments of approximately $913,000, including principal and interest
at rates varying from 0% to 10.29% per annum, through the year 2048. Each
subsidiary partnership's mortgage or construction note payable is collateralized
by the land and buildings of the respective subsidiary partnership, the
assignment of certain subsidiary partnership's rents and leases and is without
further recourse.

-26-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 7 - Mortgage and Construction Notes Payable (Continued)

Certain mortgage notes with balances aggregating $11,159,590 and
$11,281,252 at December 31, 1996 and 1995, respectively, which bear interest at
rates ranging from 8.5% to 9% per annum, were eligible for interest rate
subsidies. Accordingly, the subsidiary partnerships paid only that portion of
the monthly payments that would be required if the interest rate was 1% and the
balance was subsidized under Sections 236 and 551(b) of the National Housing
Act.

Annual principal payment requirements, as of March 31, 1997, for
each of the next five fiscal years and thereafter, are as follows:

Fiscal Year Ending Amount
------------------ ------------
1997 $ 1,973,488
1998 2,063,988
1999 2,193,202
2000 2,336,057
2001 2,490,250
Thereafter 88,035,274
------------
$ 99,092,259
============

As of December 31, 1996 and 1995, one subsidiary partnership has a
construction loan commitment totaling $6,890,000. As of December 31, 1996 and
1995, such loan has an outstanding balance of $6,740,018.

The mortgage agreements require monthly deposits to replacement
reserves of approximately $65,000 and monthly deposits to escrow accounts for
real estate taxes, hazard and mortgage insurance and other (Note 5).

Old Public Limited Partnership

During the 1996 Fiscal Year, the Partnership and the general
partner of Old Public Limited Partnership ("Old Public") made voluntary loans of
$77,500 and $82,500, respectively, to Old Public, of which $134,467 was used to
reduce the principal balance of the mortgage in connection with a modification.
As part of the modification, the monthly installment of principal and interest
was reduced from $4,769.74 to $3,911.09 and the maturity date was changed from
December 31, 2017 to June 15, 2022. In addition, the interest rate was increased
from 8% to 8.25% and will be adjusted every three years to equal prime plus 1%;
however, such rate cannot exceed a cap of 11% until April 15, 2008.

NOTE 8 - Related Party Transactions

An affiliate of the General Partner, Independence SLP L.P., has a
1% interest as a special limited partner in each of the Local Partnerships. An
affiliate of the General Partner also has a minority interest in certain local
limited partnerships.

A) Guarantees

The Partnership has negotiated Operating Deficit Guaranty
Agreements with all Local Partnerships by which the general partners of the
Local Partnerships have agreed to fund operating deficits for a specified period
of time. The terms of the Operating Deficit Guaranty Agreements vary for each
Local Partnership,

-27-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 8 - Related Party Transactions (Continued)

with maximum dollar amounts to be funded for a specified period of time,
generally three years, commencing on the break-even date. The gross amount of
the Operating Deficit Guarantees aggregates approximately $8,566,000 as of
March 31, 1997 and 1996, of which $3,240,000 and $200,000 had expired,
respectively. As of March 31, 1997, 1996, and 1995, approximately $924,000,
$824,000 and $799,000, respectively, has been funded by the Local General
Partners to meet such obligations, which includes amounts held in escrow by
the Local Partnerships. Amounts funded under such agreements are treated as
non interest bearing loans, which will be repaid only out of 50% of available
cash flow or out of available net sale or refinancing proceeds.

During the year ended March 31, 1995, a Local General Partner
contributed his development fee of approximately $1,400,000 to the capital of
the Local Partnership.

The Operating Deficit Guaranty Agreements were negotiated to
protect the Partnership's interest in the local partnerships and to provide
incentive to the local general partners to generate positive cash flow.

B) Other Related Party Expenses

The General Partner and its affiliates perform services for
the Partnership. The costs incurred for the years ended March 31, 1997, 1996 and
1995 were as follows:

Year Ended March 31
-----------------------------------------------
1997 1996 1995
----------- ---------- ----------

Partnership management fees (i) $ 87,500 $ 685,165 $ 880,221
Expense reimbursement (ii) 84,913 84,912 106,374
Property management fees (iii) 905,401 914,499 784,794
Local administrative fee (iv) 87,354 72,078 58,893
----------- ---------- ----------
$1,165,168 $1,756,654 $1,830,282
=========== ========== ==========

(i) The General Partner is entitled to receive a partnership
management fee, after payment of all Partnership expenses, which together with
the local annual administrative fees will not exceed a maximum of 0.5% per annum
of invested assets (as defined in the Partnership Agreement), for administering
the affairs of the Partnership. Subject to the foregoing limitation, the
partnership management fee will be determined by the General Partner in its sole
discretion based upon its review of the Partnership's investments. Unpaid
partnership management fees for any year will be accrued without interest and
will be payable only to the extent of available funds after the Partnership has
made distributions to the limited partners of sale or refinancing proceeds equal
to their original capital contributions plus a 10% priority return thereon (to
the extent not theretofore paid out of cash flow). Partnership management fees
owed to the General Partner amounting to approximately $489,000 and $402,000
were accrued and unpaid as of March 31, 1997 and 1996, respectively.

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

-28-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 8 - Related Party Transactions (Continued)

(iii) Property management fees incurred to affiliates of the
subsidiary partnerships amounted to $905,401, $914,499 and $784,794 for the
1996, 1995 and 1994 Fiscal Years, respectively. Included in amounts incurred to
affiliates of the subsidiary partnerships were $63,289, $65,121, and $67,467 for
the 1996, 1995 and 1994 Fiscal Years, respectively, which were also incurred to
an affiliate of the General Partner.

(iv) Independence SLP L.P. is entitled to receive a local
administrative fee of up to $2,500 per year from each subsidiary partnership.

C) Due to Local General Partners and Affiliates

Due to local general partners and affiliates consists of the
following:

March 31
--------------------------------
1997 1996
------------- ------------

Development deficit advances $ 50,000 $ 50,000
Operating advances (i) 1,157,439 762,637
Development fee payable 3,081,984 3,227,075
Due to contractor 347,103 398,807
Long-term notes payable (ii) 1,272,848 1,272,848
Management and other fees 432,074 298,158
------------- ------------
$ 6,341,448 $ 6,009,525
============= ============
(i) Operating advances include the following loans:

Creative Choice Homes II, LTD.
This loan is non interest bearing and is payable $ 234,665 $ 234,665
from surplus cash.

This loan is non interest bearing and is payable $ 212,387 $ 0
from cash flow of the project with the approval
of HUD.

Christine Apartments, L.P.
This loan is non interest bearing and has no $ 166,800 $ 166,800
set repayment terms.

-29-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 8 - Related Party Transactions (Continued)

(ii) Long term notes payable consist of the following:

Creative Choice Homes II, LTD. $ 500,000 $ 500,000
------------------------------
This note bears interest at 12% payable monthly.
Principal on the loan is due and payable in full on
December 31, 2008.

Plainsboro Housing Partners, L.P. $ 772,848 $ 772,848
---------------------------------
This loan, dated December 11, 1992, accrues interest at
a rate of 7.34% per annum on the outstanding principal
balance for 20 years. Repayment of the principal and
interest shall be made from net cash flow to the extent
available pursuant to the promissory note. All accrued
interest and principal are due in a balloon payment in
December 2012.

Interest expense incurred on such long term notes payable
amounted to $118,773, $118,773, and $118,879 for the 1996,
1995 and 1994 Fiscal Years, respectively.

D) Other

Pursuant to the Partnership Agreement and the Local
Partnership Agreements, the General Partner and Independence SLP L.P. received
their pro rata share of profits, losses and tax credits.

-30-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 9 - Income Taxes

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

Year Ended December 31
------------------------------------------------
1996 1995 1994
------------- ------------- ------------

Financial statement net loss $ (5,230,120) $ (4,882,294) $ (3,755,228)

Differences between depreciation and amortization
expense recorded for financial reporting purposes
and the accelerated costs recovery system utilized
for income tax purposes (1,312,428) (1,301,987) (803,906)

Differences resulting from parent company having
a different fiscal year for income tax and financial
reporting purposes (24,937) (216,848) 735,090

Other 299,237 (116,476) (290,719)
------------- ------------- ------------

Net loss as shown on the income tax return
for the calendar year ended $ (6,268,248) $ (6,517,605) $ (4,114,763)
============= ============= ============

NOTE 10 - Commitments and Contingencies

a) Subsidiary Partnership

Rolling Green Associates, L.P. ("Rolling Green")

In October 1993, certain Federal Grand Jury subpoenas were
served upon employees of Rolling Green and upon Rolling Green's management agent
as custodian of records. The subpoenas are part of a United States Attorney and
Federal Grand Jury investigation into the propriety and accuracy of Section 8
Housing Assistance Payments ("HAP") rent subsidies claimed by Rolling Green
under its HAP Contract. The investigation dates back to mid 1993. Upon receiving
its subpoena, the management agent promptly turned over the requested records.
The management agent conducted its own investigation which resulted in the
discovery of tenancies which were incorrectly reported on earlier HAP subsidy
vouchers. On its December 1993 and January 1994 HAP subsidy vouchers, Rolling
Green returned to New York State Housing Finance Agency (the HAP contract
administrator) net adjustments approximating $91,000 to correct the previously
incorrectly reported tenancies. However, since this is an ongoing matter, no
estimate can be made of any further adjustments deemed appropriate by the United
States Attorney or New York State Housing Finance Agency. The United States
Attorney for the Northern District of New York has advised of his intent to
pursue a civil action seeking undetermined penalties and damages.

The Partnership's investment in Rolling Green was
approximately $2,497,000 and $2,883,000 at March 31, 1997 and 1996,
respectively, and the minority interest balance was $0 at each date. The net
loss after minority interest for Rolling Green amounted to approximately
$385,000, $169,000 and $329,000 for the years ended March 31, 1997, 1996, and
1995, respectively.

-31-

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997

NOTE 10 - Commitments and Contingencies (Continued)

b) Uninsured Cash and Cash Equivalents

The Partnership maintains its cash and cash equivalents in
various banks. Accounts at each bank are guaranteed by the Federal Deposit
Insurance Corporation up to $100,000. As of March 31, 1997, uninsured cash and
cash equivalents approximated $887,000.

c) Letters of Credit

As of December 31, 1996, the subsidiary partnerships were
contingently liable on open letters of credit as follows:

Description Amount
----------- --------
Working capital $100,000
Development contingency 79,000
Operating deficit 725,806

d) Other

The Partnership is subject to the risks incident to potential
losses arising from the management and ownership of improved real estate. The
Partnership can also be affected by poor economic conditions generally, however
no more than 21% of the properties are located in any single state. There are
also substantial risks associated with owning properties receiving government
assistance; for example the possibility that Congress may not appropriate funds
to enable the U.S. Department of Housing and Urban Development ("HUD") to make
rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owners equity
contribution. The Partnership cannot sell or substantially liquidate its
investments in subsidiary partnerships during the period that the subsidy
agreements are in existence, without HUD's approval. Furthermore, there may not
be market demand for apartments at full market rents when the rental assistance
contracts expire.

The Partnership and BACs holders will begin to recognize
Housing Tax Credits with respect to a Property when the Credit Period for such
Property commences. Because of the time required for the acquisition, completion
and rent-up of Properties, it is expected that the amount of Tax Credits per BAC
will gradually increase over the first three years of the Partnership. Housing
Tax Credits not recognized in the first three years will be recognized in the
11th through 13th years. The Partnership generated $11,971,306, $11,969,116 and
$9,809,218, Housing Tax Credits during the 1996, 1995 and 1994 tax years,
respectively.

-32-

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None

PART III

Item 10. Directors and Executive Officers of the Registrant.

The Partnership has no directors or executive officers. The
Partnership's affairs are managed and controlled by the General Partner. Certain
information concerning the directors and executive officers of Related
Independence Associates Inc. ("RIAI"), the sole general partner of Related
Independence Associates L.P., the General Partner, is set forth below.

Name Position
---- --------
Stephen M. Ross Director

J. Michael Fried President, Chief Executive
Officer and Director

Alan P. Hirmes Senior Vice President

Stuart J. Boesky Vice President

Marc D. Schnitzer Vice President

Richard A. Palermo Treasurer

Lynn A. McMahon Secretary

STEPHEN M. ROSS, 57, is a Director of RIAI. Mr. Ross is also
President, Director and shareholder of The Related Realty Group, Inc., the
General Partner of The Related Companies, L.P. He graduated from the University
of Michigan School of Business Administration with a Bachelor of Science degree
and from Wayne State University School of Law with a Juris Doctor degree. Mr.
Ross than received a Master of Laws degree in taxation from New York University
School of Law. He joined the accounting firm of Coopers & Lybrand in Detroit as
a tax specialist and later moved to New York, where he worked for two large Wall
Street investment banking firms in their real estate and corporate finance
departments. Mr. Ross formed the predecessor of The Related Companies, L.P. in
1972 to develop, manage, finance and acquire subsidized and conventional
apartment developments.

J. MICHAEL FRIED, 53, is President, Chief Executive Officer and
a Director of RIAI. Mr. Fried is the sole shareholder of one of the general
partners of Related Capital Corporation ("Capital"), a real estate finance and
acquisition affiliate of the General Partner. In that capacity, he is
responsible for all of Capital's syndication, finance, acquisition and
investor reporting activities. Mr. Fried practiced corporate law in New York
City with the law firm of Proskauer Rose Goetz & Mendelsohn from 1974 until he
joined Capital in 1979. Mr. Fried graduated from Brooklyn Law School with a
Juris Doctor degree, magna cum laude; from Long Island University Graduate
School with a Master of Science degree in Psychology; and from Michigan State
University with a Bachelor of Arts degree in History.

ALAN P. HIRMES, 42, is a Senior Vice President of RIAI. Mr.
Hirmes has been a Certified Public Accountant in New York since 1978. Prior to
joining Capital in October 1983, Mr. Hirmes was employed by Weiner & Co.,
Certified Public Accountants. Mr. Hirmes is also a Vice President of Capital.
Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts degree.

-33-

STUART J. BOESKY, 41, is a Vice President of RIAI. Mr. Boesky
practiced real estate and tax law in New York City with the law firm of
Shipley & Rothstein from 1984 until February 1986 when he joined Capital. From
1983 to 1984, Mr. Boesky practiced law with the Boston law firm of Kaye
Fialkow Richard & Rothstein (which subsequently merged with Strook & Strook &
Lavan) and from 1978 to 1980 was a consultant specializing in real estate at
the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from Michigan
State University with a Bachelor of Arts degree and from Wayne State School of
Law with a Juris Doctor degree. He then received a Master of Laws degree in
Taxation from Boston University School of Law.

MARC D. SCHNITZER, 36, is Vice President of RIAI. He is
responsible both for financial restructurings of real estate properties and
directing Capital's acquisitions of properties generating Housing Tax Credits.
Mr. Schnitzer received a Masters of Business Administration from The Wharton
School of the University of Pennsylvania in December 1987 before joining Related
in January 1988. From 1983 to January 1986, he was a financial analyst for the
First Boston Corporation in New York. Mr. Schnitzer graduated summa cum laude
with a Bachelor of Science in Business Administration from the School of
Management at Boston University in May 1983.

RICHARD A. PALERMO, 37, is Treasurer of RIAI. Mr. Palermo has
been a Certified Public Accountant in New York since 1985. Prior to joining
Related in September 1993, Mr. Palermo was employed by Sterling Grace Capital
Management from October 1990 to September 1993, Integrated Resources, Inc.
from October 1988 to October 1990 and E.F. Hutton & Company, Inc. from June
1986 to October 1988. From October 1982 to June 1986, Mr. Palermo was employed
by Marks Shron & Company and Mann Judd Landau, certified public accountants.
Mr. Palermo graduated from Adelphi University with a Bachelor of Business
Administration Degree.

LYNN A. McMAHON, 41, is Secretary of RIAI. Since 1983, she has
served as Assistant to the President of Capital. From 1978 to 1983 she was
employed at Sony Corporation of America in the Government Relations
Department.

-34-

Item 11. Executive Compensation.

The Partnership has no officers or directors. The Partnership
does not pay or accrue any fees, salaries or other forms of compensation to
directors or officers of the general partner of the General Partner for their
services. Under the terms of the Partnership Agreement, the General Partner
and its affiliates are entitled to receive compensation from the Partnership
in consideration of certain services rendered to the Partnership by such
parties. In addition, the General Partner is entitled to 1% of all cash
distributions and Tax Credit allocations and a subordinated 15% interest in
Net Sales or Refinancings Proceeds. See Note 8 to the Financial Statements in
Item 8 above for a presentation of the types and amounts of compensation paid
to the General Partner and its affiliates, which is incorporated herein by
reference thereto.

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

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

Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Owner of Class
- -------------- ------------------- -------------------- --------

General Partnership Related Independence $1,000 capital contribution 100%
Interest in the Partnership Associates L.P. -directly owned
625 Madison Avenue
New York, NY 10022

Independence SLP L.P., a limited partnership whose general
partner is the General Partner of the Partnership and which acts as the
special limited partner of each Local Partnership, holds a 1% limited
partnership interest in each Local Partnership. See Note 8 to the Financial
Statements in Item 8 above, which information is incorporated herein by
reference thereto.

No person is known by the Partnership to be the beneficial owner
of more than five percent of the Limited Partnership Interests and/or BACs,
and neither the General Partner nor any director or officer of the general
partner of the General Partner beneficially owns any Limited Partnership
Interests or BACs.

Item 13. Certain Relationships and Related Transactions.

The Partnership has and will continue to have certain
relationships with the General Partner and its affiliates, as discussed in
Item 11 and also Note 8 to the Financial Statements in Item 8 above, which is
incorporated herein by reference. However, there have been no direct financial
transactions between the Partnership and the directors and officers of the
general partner of the General Partner.

-35-

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

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

(a) 1. Consolidated Financial Statements

Independent Auditors' Report 16

Consolidated Balance Sheets at March 31, 1997 and 1996 87

Consolidated Statements of Operations for the Years Ended
March 31, 1997, 1996 and 1995 88

Consolidated Statements of Changes in Partners' Capital for the
Years Ended March 31, 1997, 1996 and 1995 89

Consolidated Statements of Cash Flows for the Years Ended
March 31, 1997, 1996 and 1995 90

Notes to Consolidated Financial Statements 92

(a) 2. Consolidated Financial Statement Schedules

Independent Auditors' Report 111

Schedule I- Condensed Financial Information of Registrant 112

Schedule III - Real Estate and Accumulated Depreciation 115

-36-

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(Continued)

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

(a) 3. Exhibits

(3A) Form of Amended and Restated Agreement of Limited Partnership of
Independence Tax Credit Plus L.P., attached to the Prospectus as
Exhibit A*

(3B) Amended and Restated Certificate of Limited Partnership of
Independence Tax Credit Plus L.P.*

(10A) Form of Subscription Agreement attached to the Prospectus as
Exhibit B*

(10B) Form of Purchase and Sales Agreement pertaining to the Partnership's
acquisition of Local Partnership Interests*

(10C) Form of Amended and Restated Agreement of Limited Partnership of
Local Partnerships*

(21) Subsidiaries of the Registrant 108

(27) Financial Data Schedule (filed herewith) 117

*Incorporated herein as an exhibit by reference to exhibits filed
with Pre-Effective Amendment No. 1 to the Independence Tax Credit
Plus L.P. Registration Statement on Form S-11
(Registration No. 33-37704)

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter.

-37-

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued)

(c) Subsidiaries of the Registrant (Exhibit 21)
Jurisdiction
of Organization
---------------
Harbor Court Limited Partnership NY
Old Public Limited Partnership TN
Lancaster Terrace Limited Partnership OR
655 North Street Limited Partnership LA
Landreth Venture PA
Homestead Apartments Associates Ltd. FL
Bethel Villa Associates, L.P. DE
West Diamond Street Associates PA
Susquehanna Partners PA
Boston Bay Limited Partnership MA
Morrant Bay Limited Partnership MA
Hope Bay Limited Partnership MA
Lares Apartments Limited Partnership PR
Lajas Apartments Limited Partnership PR
Arlington-Rodeo Properties CA
Conifer Bateman Associates NY
Hampden Hall Associates, L.P. MO
Chester Renaissance Associates PA
Homestead Apartments II, LTD. FL
P.S. 157 Associates, L.P. NY
Cloisters Limited Partnership II PA
Creative Choice Homes II, LTD. FL
Milford Crossing Associates L.P. DE
BX-7F Associates, L.P. NY
Los Angeles Limited Partnership PR
Christine Apartments, L.P. NY
Plainsboro Housing Partners, L.P. NJ
Rolling Green Associates, L.P. NY

(d) Not applicable

-38-

SIGNATURES

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

INDEPENDENCE TAX CREDIT PLUS L.P.
(Registrant)

By: RELATED INDEPENDENCE ASSOCIATES L.P.,
its General Partner

By: RELATED INDEPENDENCE ASSOCIATES INC.,
a General Partner

Date: June 27, 1997 By: /s/ J. Michael Fried
---------------------
J. Michael Fried
President, Chief Executive
Officer and Director
(Principal Executive Officer)

-41-

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

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

President and Chief Executive Officer
/s/ J. Michael Fried (principal executive officer) and Director of
- ---------------------------- Related Independence Associates Inc. June 27, 1997
J. Michael Fried

Senior Vice President
/s/ Alan P. Hirmes (principal financial officer) of
- ---------------------------- Related Independence Associates Inc. June 27, 1997
Alan P. Hirmes

/s/ Richard A. Palermo Treasurer (principal accounting officer) of
- ---------------------------- Related Independence Associates Inc. June 27, 1997
Richard A. Palermo

/s/ Stephen M. Ross
- ---------------------------- Director of Related Independence Associates Inc. June 27, 1997
Stephen M. Ross

-42-

INDEPENDENT AUDITORS' REPORT

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

In connection with our audits of the consolidated financial
statements of Independence Tax Credit Plus L.P. and Subsidiaries included in
the Form 10-K as presented in our opinion dated June 27, 1997 on page 16, and
based on the reports of other auditors, we have also audited supporting
Schedule I for the 1996, 1995 and 1994 Fiscal Years and Schedule III at March
31, 1997. In our opinion, and based upon the reports of the other auditors,
these consolidated schedules present fairly, when read in conjunction with the
related consolidated financial statements, the financial data required to be
set forth therein.

Trien, Rosenberg, Rosenberg,
Weinberg, Ciullo & Fazzari, LLP

New York, New York
June 27, 1997

-44-

INDEPENDENCE TAX CREDIT PLUS L.P.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(NOT INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)

CONDENSED BALANCE SHEETS

ASSETS

March 31
--------------------------------
1997 1996
------------- --------------

Cash and cash equivalents $ 180,902 $ 364,916
Investment in subsidiary partnerships 50,332,231 55,022,435
Cash held in escrow 987,136 1,309,529
Due from subsidiary partnership 752,907 669,441
Other assets 131,386 134,719
------------- --------------

Total assets $ 52,384,562 $ 57,501,040
============= ==============

LIABILITIES AND PARTNERS' CAPITAL

Other liabilities $ 3,090 $ 3,314
Due to general partners and affiliates 540,394 390,933
------------- --------------

Total liabilities 543,484 394,247

Partners' capital * 51,841,078 57,106,793
------------- --------------

Total liabilities and partners' capital $ 52,384,562 $ 57,501,040
============= ==============

Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.

* Condensed partners' capital includes $846,470 and $872,065 of related party
income at March 31, 1997 and 1996, respectively.

INDEPENDENCE TAX CREDIT PLUS L.P.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(NOT INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)

CONDENSED STATEMENTS OF OPERATIONS

Year Ended March 31
-----------------------------------------------
1997 1996 1995
------------ ------------ ------------

Revenues $ 13,679 $ 12,533 $ 98,628
------------ ------------ ------------

Expenses

Administrative and management 143,070 144,290 187,619
Administrative and management-related parties 172,413 770,077 986,595
Amortization 3,333 10,000 10,000
------------ ------------ ------------

Total expenses 318,816 924,367 1,184,214
------------ ------------ ------------

Loss from operations (305,137) (911,834) (1,085,586)

Equity in loss of subsidiary partnerships (4,960,578) (4,006,055) (2,705,237)
------------ ------------ ------------

Net loss $ (5,265,715) $ (4,917,889) $ (3,790,823)
============ ============ ============

INDEPENDENCE TAX CREDIT PLUS L.P.
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(NOT INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)

CONDENSED STATEMENTS OF CASH FLOWS

Year Ended March 31
-------------------------------------------------
1997 1996 1995
-------------- ------------- -------------

Cash flows from operating activities:

Net loss $ (5,265,715) $ (4,917,889) $ (3,790,823)
-------------- ------------- -------------

Adjustments to reconcile net loss to net cash
used in operating activities:

Equity in loss of subsidiary partnerships 4,960,578 4,006,055 2,705,237
(Decrease) increase in other liabilities (224) 1,023 (37,868)
Increase (decrease) in due from general partner
and affiliates 149,461 670,778 (182)
-------------- ------------- -------------

Total adjustments 5,109,815 4,677,856 2,667,187
-------------- ------------- -------------

Net cash used in operating activities (155,900) (240,033) (1,123,636)
-------------- ------------- -------------

Cash flows from investing activities:

Decrease in cash
held in escrow-purchase price payments 322,393 346,250 5,243,974
Decrease in other assets 3,333 10,000 209,033
Investment in subsidiary partnerships (322,393) (346,250) (7,554,058)
Distributions from subsidiaries 52,019 58,592 2,930
(Increase) decrease in due from subsidiary partnership (83,466) 30,000 0
-------------- ------------- -------------

Net cash provided by (used in) investing activities (28,114) 98,592 (2,098,121)
-------------- ------------- -------------

Cash flows from financing activities:

Decrease in due from general partner
and affiliates 0 0 123,500
-------------- ------------- -------------

Net decrease in cash and cash equivalents (184,014) (141,441) (3,098,257)

Cash and cash equivalents, beginning of year 364,916 506,357 3,604,614
-------------- ------------- -------------

Cash and cash equivalents, end of year $ 180,902 $ 364,916 $ 506,357
============== ============= ==============

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 1997

Initial Cost to Partnership Cost Capitalized
------------------------------ Subsequent to
Buildings and Acquisition:
Description Encumbrances Land Improvements Improvements
----------- ------------ ---------- -------------- --------------

Apartment Complexes

Harbor Court Limited Partnership
Staten Island, NY $ 0 $ 137,450 $ 1,007,966 $ 69,289
Old Public Limited Partnership
Lawrenceburg, TN 499,355 10,000 1,713,310 74,504
Lancaster Terrace Limited Partnership
Salem, OR 1,718,542 161,269 3,679,601 39,075
655 North Street Limited Partnership
Baton Rouge, LA 5,036,870 125,500 3,040,980 5,604,866
Landreth Venture
Philadelphia, PA 3,415,272 1,761 5,903,337 24,453
Homestead Apartments Associates Ltd.
Homestead, FL 3,583,835 329,402 0 5,916,800
Bethel Villa Associates, L.P.
Wilmington, DE 6,620,398 270,000 5,969,354 2,921,723
West Diamond Street Associates
Philadelphia, PA 1,576,000 30,829 3,444,649 42,569
Susquehanna Partners
Philadelphia, PA 1,921,131 16,000 0 3,973,428
Boston Bay Limited Partnership
Boston, MA 3,286,761 440,000 4,143,758 646,556
Morrant Bay Limited Partnership
Boston, MA 4,955,157 650,000 5,522,250 999,896
Hope Bay Limited Partnership
Boston, MA 1,487,818 225,000 1,435,185 501,915
Lares Apartments Limited Partnership
Lares, PR 4,504,862 137,000 0 5,470,581
Lajas Apartments Limited Partnership
Lajas, PR 4,153,343 110,090 4,952,929 58,079
Arlington-Rodeo Properties
Los Angeles, CA 3,543,123 624,052 0 5,022,966
Conifer Bateman Associates
Lowville, NY 1,097,789 15,000 2,525,729 53,225
Hampden Hall Associates, L.P.
St. Louis, MO 3,205,000 0 0 7,811,012
Chester Renaissance Associates
Chester, PA 853,000 33,667 168,333 1,772,585
Homestead Apartments II, LTD.
Homestead, FL 3,520,563 338,966 0 5,254,556
P.S. 157 Associates, L.P.
New York, NY 6,740,018 36,500 9,350,642 71,087
Cloisters Limited Partnership II
Philadelphia, PA 0 35,160 0 9,480,021
Creative Choice Homes II, LTD.
Opa-Locka, FL 12,126,171 0 0 21,411,509

Gross Amount at which Carried Life on which
At Close of Period Depreciation in
-------------------------------------- Year of Latest Income
Buildings and Accumulated Construction/ Date Statement is
Description Land Improvements Total Depreciation Renovation Acquired Computed*
----------- --------- ------------- ----------- ------------ ------------ -------- ---------------

Apartment Complexes

Harbor Court Limited Partnership
Staten Island, NY $ 140,813 $ 1,073,892 $ 1,214,705 $ 191,716 1991 Dec. 1991 27.5 years
Old Public Limited Partnership
Lawrenceburg, TN 13,640 1,784,174 1,797,814 320,133 1991 Dec. 1991 27.5 years
Lancaster Terrace Limited Partnership
Salem, OR 163,105 3,716,840 3,879,945 790,736 1992 Feb. 1992 15-27.5 years
655 North Street Limited Partnership
Baton Rouge, LA 127,751 8,643,595 8,771,346 1,308,613 1992 Mar. 1992 27.5 years
Landreth Venture
Philadelphia, PA 3,645 5,925,906 5,929,551 650,718 1992 Mar. 1992 40 years
Homestead Apartments Associates Ltd.
Homestead, FL 331,468 5,914,734 6,246,202 583,478 1992 Mar. 1992 40 years
Bethel Villa Associates, L.P.
Wilmington, DE 275,099 8,885,978 9,161,077 1,412,088 1992 Apr. 1992 27.5 years
West Diamond Street Associates
Philadelphia, PA 32,414 3,485,633 3,518,047 361,099 1992 May 1992 40 years
Susquehanna Partners
Philadelphia, PA 17,585 3,971,843 3,989,428 390,186 1992 May 1992 20-40 years
Boston Bay Limited Partnership
Boston, MA 441,585 4,788,729 5,230,314 846,636 1991 Aug. 1992 27.5 years
Morrant Bay Limited Partnership
Boston, MA 651,585 6,520,561 7,172,146 1,168,368 1991 Aug. 1992 27.5 years
Hope Bay Limited Partnership
Boston, MA 226,585 1,935,515 2,162,100 346,066 1991 Aug. 1992 27.5 years
Lares Apartments Limited Partnership
Lares, PR 151,585 5,455,996 5,607,581 621,199 1992 Aug. 1992 40 years
Lajas Apartments Limited Partnership
Lajas, PR 111,675 5,009,423 5,121,098 598,771 1992 Aug. 1992 40 years
Arlington-Rodeo Properties
Los Angeles, CA 625,637 5,021,381 5,647,018 595,075 1992 Aug. 1992 27.5 years
Conifer Bateman Associates
Lowville, NY 16,585 2,577,369 2,593,954 427,387 1990 Aug. 1992 15-27.5 years
Hampden Hall Associates, L.P.
St. Louis, MO 1,585 7,809,427 7,811,012 917,663 1992 Sep. 1992 27.5 years
Chester Renaissance Associates
Chester, PA 42,153 1,932,432 1,974,585 166,742 1992 Sep. 1992 20-40 years
Homestead Apartments II, LTD.
Homestead, FL 340,551 5,252,971 5,593,522 450,831 1992 Oct. 1992 40 years
P.S. 157 Associates, L.P.
New York, NY 38,085 9,420,144 9,458,229 975,015 1992 Nov 1992 40 years
Cloisters Limited Partnership II
Philadelphia, PA 36,745 9,478,436 9,515,181 874,939 1992 Nov 1992 40 years
Creative Choice Homes II, LTD.
Opa-Locka, FL 574,637 20,836,872 21,411,509 1,795,874 1988 Dec 1992 40 years

INDEPENDENCE TAX CREDIT PLUS L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral (Continued)
MARCH 31, 1997

Initial Cost to Partnership Cost Capitalized
------------------------------ Subsequent to
Buildings and Acquisition:
Description Encumbrances Land Improvements Improvements
----------- ------------ ---------- -------------- --------------

Apartment Complexes

Milford Crossing Associates L.P.
Milford, DE 2,681,817 203,006 0 4,467,373
BX-7F Associates, L.P.
Bronx, NY 3,862,761 4 5,705,064 46,696
Los Angeles Limited Partnership
Rio Piedras, PR 3,654,290 201,210 0 6,598,461
Christine Apartments, L.P.
Buffalo, NY 1,245,000 10,000 2,351,072 67,474
Plainsboro Housing Partners, L.P.
Plainsboro, NJ 4,105,901 800,000 0 8,840,683
Rolling Green Associates, L.P.
Syracuse, NY 16,437,500 180,000 19,583,101 309,465
------------ ---------- ----------- -----------
$105,832,277 $5,121,866 $80,497,260 $97,550,847
============ ========== =========== ===========

Gross Amount at which Carried Life on which
At Close of Period Depreciation in
-------------------------------------- Year of Latest Income
Buildings and Accumulated Construction/ Date Statement is
Description Land Improvements Total Depreciation Renovation Acquired Computed*
----------- --------- ------------- ----------- ------------ ------------ -------- --------------

Apartment Complexes

Milford Crossing Associates L.P.
Milford, DE 210,591 4,459,788 4,670,379 540,614 1992 Dec. 1992 27.5 years
BX-7F Associates, L.P.
Bronx, NY 2,178 5,749,586 5,751,764 495,279 1993 Jan. 1993 40 years
Los Angeles Limited Partnership
Rio Piedras, PR 203,384 6,596,287 6,799,671 469,985 1994 Apr. 1993 40 years
Christine Apartments, L.P.
Buffalo, NY 12,174 2,416,372 2,428,546 294,609 1993 June 1993 27.5 years
Plainsboro Housing Partners, L.P.
Plainsboro, NJ 802,174 8,838,509 9,640,683 797,495 1994 July 1993 27.5 years
Rolling Green Associates, L.P.
Syracuse, NY 182,174 19,890,392 20,072,566 2,880,753 1992 Oct. 1993 27.5 years
---------- ------------ ------------ -----------
$5,777,188 $177,392,785 $183,169,973 $21,272,068
========== ============ ============ ===========

*Personal property is depreciated over the estimated useful life ranging from 3
to 10 years.

Cost of Property and Equipment Accumulated Depreciation
------------------------------------------------ ----------------------------------------------
Year Ended March 31
----------------------------------------------------------------------------------------------------
1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ----------- ----------- ----------

Balance at beginning of period $ 182,915,946 $182,534,521 $166,201,677 $15,437,715 $ 9,648,615 $4,236,820

Additions during period:
Improvements 254,027 902,196 16,335,413
Depreciation expense 5,834,353 5,858,536 5,412,437
Deductions during period:

Dispositions 0 0 2,569 0 0 642
Adjustments 0 520,771 0 0 69,436 0
------------ ------------ ------------ ----------- ----------- ----------
Balance at close of period $183,169,973 $182,915,946 $182,534,521 $21,272,068 $15,437,715 $9,648,615
============ ============ ============ =========== =========== ==========

At the time the local partnerships were acquired by Independence Tax Credit Plus
L.P., the entire purchase price paid by Independence Tax Credit Plus L.P. was
pushed down to the local partnerships as property and equipment with an
offsetting credit to capital. Since the projects were in the construction phase
at the time of acquisition, the capital accounts were insignificant at the time
of purchase. Therefore, there are no material differences between the original
cost basis for tax and GAAP.