10-K 1 form10k_aug22002.txt ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) /X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended March 31, 2000 or / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________________ to ______________ Commission file number: 0-19258 BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Delaware 11-3022123 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) c/o Paul J. Maddock, Megan Asset Management, Inc. 1424 West Century Avenue, Suite 102, Bismarck, ND 58503 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (701) 223-2923 Securities registered pursuant to Section 12(b) of the Act: NONE. Securities registered pursuant to Section 12(g) of the Act: 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 / / No /X/ 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 of this Form 10-K. /X/ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. / / Yes / / No DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospects filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933: NONE This filing is a consolidated filing for the fiscal year ended March 31, 2000. Bayfield Low Income Housing Limited Partnership has not heretofore filed an Annual Report on Form 10-K for the fiscal year ended March 31, 2000, nor has it filed Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, September 30, and December 31, 1999. BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FORM 10-K FOR THE YEAR ENDED MARCH 31, 2000 INDEX PART I Item 1. Business 1 Item 2. Properties 8 Item 3. Legal Proceedings 23 Item 4. Submission of Matters to a Vote of Security Holders 23 PART II Item 5. Market for Registrant's Limited Partnership Interests and Related Security Holder Matters 23 Item 6. Selected Financial Data 25 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosure about Market Risks 39 Item 8. Financial Statements and Supplementary Data 39 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 40 PART III Item 10. Directors and Executive Officers of the Registrant 40 Item 11. Executive Compensation 42 Item 12. Security Ownership of Certain Beneficial Owners and Management 44 Item 13. Certain Relationships and Related Transactions 44 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 46 Signatures 48 48 PART I ITEM 1. BUSINESS ORGANIZATION Bayfield Low Income Housing Limited Partnership (the "Partnership") is a Delaware limited partnership organized as of July 1, 1990 pursuant to the provisions of a Joint Plan of Reorganization of 52 Debtors (investor limited partnerships - the "Debtor Investor Partnerships"), dated May 9, 1990, pursuant to the provisions of Chapter 11 of Title 11, United States Code, as confirmed July 13, 1990 and amended from time to time thereafter (the "Plan"). Each of the Debtor Investor Partnerships was a newly formed Delaware limited partnership which was originally formed to and did acquire equity interests in limited partnerships (the "Operating Partnerships"), each of which has developed and now owns and operates a multi-family apartment complex for low to moderate income tenants (each, a "Project"). (See "Item 2. Properties.") A majority of the Projects received financing under Section 515 of the Housing Act of 1949, (as amended "Section 515"), which authorized the Rural Housing Service, the successor agency to the Farmers Home Administration of the Department of Agriculture (collectively referred to here in as "RD") to provide direct below-market-rate mortgage loans for rural rental housing. The Partnership was created under the Plan as a master limited partnership into which all of the assets and liabilities of the Debtor Investor Partnerships were "rolled-up" as of July 1, 1990. Pursuant to the Plan, the Partnership has succeeded to the interests of the Debtor Investor Partnerships in the Operating Partnerships, and the Debtor Investor Partnerships were liquidated in 1990. The 52 Debtor Investor Partnerships were the following Delaware limited partnerships: ARLINGTON Estates Limited Partnership BARRINGTON Estates Limited Partnership BAYFIELD Estates Limited Partnership BEECHFIELD Estates Limited Partnership BIRCHFIELD Estates Limited Partnership BLAKEFIELD Estates Limited Partnership BRIGHTON Estates Limited Partnership BROOKLINE Estates Limited Partnership CANDLE RIDGE Estates Limited Partnership CANTERBURY Estates Limited Partnership CARLYSLE Estates Limited Partnership CHERRYWOOD Estates Limited Partnership CHESTERFIELD Estates Limited Partnership CLARKSON Estates Limited Partnership CLAYTON Estates Limited Partnership CLOVERFIELD Estates Limited Partnership COPPERFIELD Estates Limited Partnership CRESCENT Estates Limited Partnership DEERFIELD Estates Limited Partnership DELAFIELD Estates Limited Partnership EDENFIELD Estates Limited Partnership EMERALD Estates Limited Partnership EVEREST Estates Limited Partnership EVERGREEN Estates Limited Partnership FIRST Estates Limited Partnership GLENWOOD Estates Limited Partnership GREENFIELD Estates Limited Partnership GREENWOOD Estates Limited Partnership HARBORFIELD Estates Limited Partnership HOLLY Estates Limited Partnership HUNTER Estates Limited Partnership KEHRS MILL Estates Limited Partnership LITTLEFIELD Estates Limited Partnership LIVINGSTON Realty Investors Limited MEADOWFIELD Estates Limited Partnership MITCHELLFIELD Estates Limited Partnership NORTHFIELD Estates Limited Partnership NORWICH Estates Limited Partnership OLEANDER Estates Limited Partnership PINE HOLLOW Estates, A Delaware Ltd. Partnership PLAINFIELD Estates Limited Partnership PLANTINGFIELD Estates Limited Partnership REDWOOD Estates Limited Partnership ROSEWOOD Estates Limited Partnership SAGEWOOD Estates Limited Partnership SOUTHFIELD Estates Limited Partnership SPRINGFIELD Estates Limited Partnership SUMMERFIELD Estates Limited Partnership SYCAMORE Realty Investors Limited Partnership WALNUT Estates Limited Partnership WYNNFIELD Estates Limited Partnership WILSHIRE Estates Limited Partnership First American Holdings, Inc., a Delaware corporation ("First American"), was the sole general partner of each of the Debtor Investor Partnerships, and was the initial General Partner of the Partnership under the Plan. The Plan required that an independent manager that was not affiliated with First American take over the responsibility for the administration of the Partnership. A committee formed by the representatives of the three principal creditor classes in the bankruptcy proceedings (respectively, the "Developer Committee", the "Secured Lender Group", and the "Investors Committee") selected Megan Management Company, Inc. ("Megan Management") as the independent manager and entered into a management agreement with Megan Management as of July 10, 1990 (as amended by that Amended and Restated Management Agreement as of December 23, 1991 the "Management Agreement"). Effective December 23, 1991, First American withdrew as general partner, subject to the approval of the Limited Partners, pursuant to a Settlement Agreement (the "Settlement Agreement") with the Partnership and Megan Management. Among other things, the Settlement Agreement provided for certain amendments to the partnership agreement of the Partnership and, at the request of the Investors Committee, for the replacement of First American as General Partner of the Partnership by Megan Management or an affiliated company which were effected by the Second 2 Amended and Restated Agreement of Limited Partnership of Bayfield Low Income Housing Limited Partnership entered into as of the 23rd day of December, 1991 (the " Partnership Agreement"). The Settlement Agreement was approved by the bankruptcy court, and the Plan modified in accordance therewith, by an order entered June 22, 1992. Consent of the Limited Partners of the Partnership was obtained in October 1992. As of December 31, 1992, Megan Management's rights and obligations as General Partner and Independent Manager of the Partnership were assigned to, and assumed by, Megan Asset Management, Inc. ("Megan Asset Management" or the "Independent Manager"), a corporation which was under common ownership and control with Megan Management. The General Partner has full, exclusive and complete discretion in the management and control of the Partnership, except as limited by the Partnership Agreement, by the Plan or by the Management Agreement. Megan Asset Management, in its capacity as Independent Manager under the Plan, is responsible for the day-to-day management of the Partnership's operations. Each of the Debtor Investor Partnerships' offerings of Limited Partnership Interests (as hereinafter defined) had been closed prior to the organization of the Partnership. Accordingly, no additional interests in the Partnership are being made available and only limited transfers of Limited Partnership Interests in the Partnership are being effected in accordance with the Partnership Agreement. DESCRIPTION OF BUSINESS The Partnership's principal business is to maintain its investments in the form of Limited Partnership Interests in the Operating Partnerships (and, through such investments, in the Projects) and to carry out the provisions of the Plan. See "Business Objectives" under this Item. For Projects funded under Section 515 after December 21, 1979, which include substantially all of those in which the Partnership owns an interest, applicable law and regulations require the owner to utilize the housing for eligible low income tenants at restricted lower rents for a period of 20 years following closing of the RD mortgage. The direct below-market-rate mortgage loans for rural rental housing provided by RD under Section 515, in amounts up to 97% of an apartment complex's cost as determined pursuant to RD regulations and for terms up to 50 years, were extended to qualified sponsors/owners organized exclusively for the purpose of providing housing. In addition, RD provided each owner with mortgage interest subsidies, which effectively lowered the interest rate of the loan to 1% after the completion of the apartment complex, the benefits of which the owner must pass through to eligible tenants in the form of lower rents. RD regulations limit cash distributions to owners of apartment complexes which it finances to a maximum annual return of 8% per annum, on a non-cumulative basis, on the owner's equity contribution of 3% to 5% of the cost of the apartment complex. 3 RD approval is required if an owner wishes to sell a Project. In addition, applicable law and regulations also preclude prepayment of mortgage loans, except in certain very limited circumstances and unless the owner agrees to utilize the project for eligible tenants for a specified period. Each of the Projects indirectly owned by the Partnership qualified for the low income housing tax credits (the "Tax Credits"), under Section 42 of the Internal Revenue Code of 1986, as amended (the "Tax Code"), which was enacted by the United States Congress to promote the development of low income rental housing. In order to generate Tax Credits, properties must be rented to tenants whose incomes are below certain levels established by the federal government, and the rents which are permitted to be charged are strictly limited by government regulations. Since the inception of the Partnership, five of its Operating Partnerships became insolvent or bankrupt. A portion of the Tax Credits generated and to be generated by these Operating Partnerships were, therefore, lost. This loss of Tax Credits had a direct effect on the Limited Partners since one-third of the amount of Tax Credits allocated to the Limited Partners from these Operating Partnerships were recaptured and those to be generated and allocated to them were reduced correspondingly. Generation of Tax Credits by the Partnership and the receipt thereof by the Limited Partners was one of the primary business objectives of the Partnership. For the tax year ended December 31, 1999, the Partnership passed through an aggregate total of approximately $1,232,000 of Tax Credits to the Limited Partners. The annual anticipated Tax Credits, which the Partnership could have received from the Operating Partnerships, excluding those projects lost in prior years due to insolvency or bankruptcy, and passed through to the Limited Partners during the tax year ended December 31, 1999, was approximately $1,251,000. As of December 31, 1999, substantially all of the Tax Credits have been realized from the Operating Partnerships and passed through to the Limited Partners. With the realization that substantially all of the Tax Credits have been received from the Operating Partnerships by the Limited Partners, the General Partner began exploring various exit strategies, including the sale of the limited partnership interests in the Partnership, the sale and of the Partnership's interests in the Operating Partnerships which own the Projects and the sale/or refinancing by the Operating Partnerships of their Projects. However, various restrictions in connection with the RD mortgage loans, as well as continuing occupancy requirements with respect to the Tax Credits received (as explained above) and market conditions have severely restricted the Partnership's flexibility in considering various exit strategies and the value to be received from the exit strategies considered. In view of these governmental restrictions and requirements, as well as the resulting legal complexities and costs involved in exploring and attempting to structure various exit strategies, the annual payments to be received from the Operating Partnerships, in combination with the Partnership's reserves, are not presently and are not expected to be sufficient to permit the Partnership to meet its operating expenses until such time, if at all, that a complete exit strategy has been identified and implemented. Accordingly, to continue to maintain its operations as set forth in the section on "Liquidity" below, while it continues to review alternative exit strategies the Partnership has begun (see Item 2. Properties below) accepting offers it has received to sell the 4 Partnership's limited partnership interests in a number of Operating Partnerships which own the Projects to maintain the operations of the Partnership (the "Liquidity Program"). BUSINESS OBJECTIVES Although there was no assurance that the Partnership's purpose or objectives would be achieved, the sole purpose of the Partnership as set forth in the Partnership Agreement was (i) to acquire the Debtor Investor Partnerships' equity interests as a limited partner in each of the Operating Partnerships, which developed and were to own, hold, manage, operate, lease, mortgage, sell and otherwise deal with the Projects, (ii) to assume liabilities of the Debtor Investor Partnerships in accordance with the Plan, (iii) to fulfill such other undertakings of the Partnership as are set forth in the Plan, and (iv) to conduct such other activities as may be necessary or appropriate to carry out the foregoing. Purpose (i) - the acquisition of the Debtor Investor Partnerships' equity interests as a limited partner in each of the Operating Partnerships, which developed and were to own, hold, manage, operate, lease, mortgage, sell and otherwise deal with the Projects, was completed in July, 1990 (See Item 1. Business - Organization, above); Purpose (ii) - the liabilities of the Debtor Investor Partnerships were assumed by and have been substantially paid by the Partnership ( See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity", below); Purpose (iii) - in attempting to fulfill such other undertakings of the Partnership as are set forth in the Plan the Partnership has, among other things: a) used its capital resources, to maintain, to the extent possible, the Partnership's interests in the Operating Partnerships in order to provide Tax Credits to the Limited Partners. For the fiscal years ended March 31, 2000 (the "2000 Fiscal Year"), March 31, 1999 (the "1999 Fiscal Year") and March 31, 1998 (the "1998 Fiscal Year") the Partnership had cash and cash reserves totaling $807,285, $1,097,967 and $1,337,519, respectively. The Partnership used its capital resources during these periods to fund its operations, including the payment of fees to the Independent Manager under the Management Agreement and to make loans to certain financially troubled Operating Partnerships in order to attempt to insure that the Tax Credits, and other tax benefits, continued to flow from those Operating Partnerships to the Limited Partners (See "Item 2. Properties"; see, also, "Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity"). In order to generate Tax Credits and avoid recapture thereafter, there are significant continuing occupancy requirements with which each Project must comply for a 15-year compliance period. To the extent a Project does not 5 comply with the Tax Credit occupancy requirements, all of the Tax Credits previously generated by the non-complying dwelling units in the applicable Project, and used by the Limited Partners, would have to be recaptured. If this occurs the Limited Partners would have to pay a tax equal to one-third of the Tax Credits so generated and used by the Limited Partners to reduce their tax liability, together with possible penalties and interest. b) provided to the extent available cash distributions to the Limited Partners. The Partnership does not expect to make material distributions beyond those previously made, as its sources of liquidity are limited and are being used to meet its operating expenses, including attempts to preserve the Projects (See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" - "Liquidity" and "- Capital Resources"). Purpose (iv) - conduct such other activities as may be necessary or appropriate to carry out the foregoing, the Partnership has focused on the following long-term objectives: a) capital appreciation through increases in the value of the Partnership's investments in the Operating Partnerships; and b) providing cash distributions to the Limited Partners from the proceeds of the sale or refinancing of the Projects. Objective a) - The Partnership's investments are in Operating Partnerships which own the Projects and provide housing to low income tenants pursuant to government sponsored programs. Therefore, in addition to market-related risks, which any real estate investment is subject to, capital appreciation of the Partnership's investment in the Operating Partnerships is subject to the restrictions set by government policy. As further explained below, this makes it unlikely that the Projects owned by the Operating Partnerships and the Partnership's investment in the Operating Partnerships will significantly increase in value. The vast majority of the Projects owned by the Operating Partnerships are located in small rural communities. As such, the market rents in many of the Operating Partnerships' Project's areas are not significantly higher that the RD restricted rents eligible tenants are currently charged. Therefore, the valuation of many of the Operating Partnerships' Projects, even if based upon market rents, results in little or no appreciation from their valuation at the time the Partnership acquired its interest in the Operating Partnership. In the event that the projected cash flow from any of the Projects in a market rate environment is significantly greater than that in a restricted rent environment, the Operating Partnership can seek RD approval to prepay a specific Project's 50 year mortgage and then sell the Project or convert it to market rate property, or upon RD's refusal to allow prepayment, seek an equity loan from RD to use to repay a portion of the equity the Partnership contributed to the 6 Operating Partnership. However, the instances where market rents might be significantly higher are rare and there are numerous government restrictions in connection with such a course of action. In addition, most of the Operating Partnerships' Project's mortgages have an absolute restriction which will not allow prepayment until approximately 2009. Accordingly, based on current market conditions and government regulations, it does not appear that the value of the Projects owned by the Operating Partnerships and the Partnership's investment in the Operating Partnerships have or will increase significantly. The value of the Projects and the market conditions are adversely affected by the restricted use limitations which limit the amount of income a tenant may have and the amount of rent a Project can charge a tenant. Under current RD regulations, these restrictions will continue to be in place until the Projects are in their 20th year of existence or approximately the year 2009. These regulations make capital appreciation in the Partnership's Projects much more difficult than is the case with market rate properties. Objective b) - With respect to the Partnership's long-term objective to provide cash distributions to the Limited Partners from the proceeds of the sale or refinancing of the Projects, with the realization that substantially all of the Tax Credits have been received from the Operating Partnerships by the Limited Partners as of December 31, 1999, the General Partner began exploring various exit strategies, including the sale of the limited partnership interests in the Partnership, the sale of the Partnership's interests in the Operating Partnerships which own the Projects and the sale and/or refinancing by the Operating Partnerships of their Projects. However, the various restrictions in connection with the RD mortgage loans, as well as the continuing occupancy requirements with respect to the Tax Credits received and market conditions, have severely restricted the Partnership's flexibility in considering various exit strategies and the value to be received from the exit strategies considered (See "Item 1. Business - Description of Business" above). In early 2000, a third party (the "Third Party") expressed an interest in buying Megan Asset Management's General Partnership interest and its other interests in the Partnership (collectively "General Partnership Interests"). Megan Asset Management declined this proposal as it did not include an immediate offer to purchase each of the Partnership's limited partners' interests in the Partnership (the "Limited Partners" and "Limited Partnership Interests" and together with the General Partnership Interests the "Partnership Interests") as well. In July 2000, when the Third Party suggested a proposal which was to include the purchase of substantially all of the Limited Partnership Interests and the General Partnership Interests, and the assumption of approximately $1,800,000 owed by Bayfield to the Operating General Partners, the Partnership and Megan Asset Management entered into an agreement by which they agreed to negotiate exclusively with the Third Party with respect to said proposal through December 31, 2000 (the "Exclusivity Agreement"). Had this proposal materialized it was expected to yield $1,200 per 0.05% Limited Partnership Interest to the Limited Partners. However, prior to December 31, 2000, the Third Party indicated that it had been unable to raise sufficient funds and was no longer able to discuss a price in this amount and 7 could only discuss a price at approximately one-half of that amount. The revised proposal was unacceptable and the Exclusivity Agreement expired by its terms on December 31, 2000. Not having found any other parties interested in making an offer for the above Partnership Interests, in July 2001, the Partnership and Megan Asset Management entered into a second agreement with the Third Party to pursue a possible tender offer for some or all of the Limited Partnership Interests, as well as a possible purchase of the stock of Megan Asset Management, including its General Partnership Interest (the "Second Exclusivity Agreement") at the revised lower price. The Second Exclusivity Agreement expired by its terms on August 31, 2001. While further discussions followed, those discussions were not fruitful and were eventually curtailed. While it is not known to what extent other alternatives will be successful, the Partnership's search for and consideration of other alternatives is continuing. EMPLOYEES The Partnership has no employees. The day-to-day operations of the Partnership are conducted by the Independent Manager, which employs 2 people on a full-time basis. ITEM 2. PROPERTIES. Each Operating Partnership owns and operates a Project, which generated Tax Credits under Section 42 of the Tax Code over its initial 10-years of existence or slightly longer. A description of the Projects is contained in the following tables. Immediately following these tables, is a glossary which provides an explanation of certain terms used in the table headings, as well as a discussion of certain Projects. 8

~~UNITED~~Bayfield ~~STATES SECURITIES~~Low ~~AND~~Income ~~EXCHANGE~~Housing ~~COMMISSION WASHINGTON~~Limited Partnership Ownership Interest in Operating Partnerships ------------------------------------------------------------------------------------------------------------------------------------ Operating Partnership City State Number Project's Developer's of Apts. Mortgage Original Units Balance Equity ------------------------------------------------------------------------------------------------------------------------------------ AFM RRH Limited Ocala FL 36 $1,086,493 D$ 80,868 Alachua Villas, Ltd.C Alachua FL 35 1,050,979 51,575 Albany Commons, Ltd. ~~20549~~Albany KY 24 674,396 23,400 Anderson Country Estates, L.P. Palmyra MO 24 582,946 18,340 Aurora Limited Aurora IN 22 1,037,355 51,400 Baker Heights II, L.P. Martinsburg WV 32 978,437 53,000 Bayshore North Apts. Phase IV Brewerton NY 36 1,330,591 41,840 Belfast Housing Associates Belfast ME 24 1,123,609 60,500 Berea Summitt, Ltd. Shelbyville KY 15 414,923 5,856 Berkshire Apartments, Ltd. #2 Harrodsburg KY 22 672,583 36,150 Blades Limited Partnership Blades DE 33 1,232,056 66,000 Blanchard Seniors Apts. Partnership Blanchard LA 24 705,563 37,250 Brentwood Apartments, Ltd. Flatwoods KY 21 668,276 36,500 Briar Hill Apartments, Ltd. Barbourville KY 16 363,420 29,654 Broadway Terrace of Drew, L.P. Drew MS 48 1,339,330 73,650 Bunkie Seniors Apts. Partnership Bunkie LA 24 680,227 36,520 Canal Town Associates Canastota NY 6 242,011 12,991 Canyon Villas L.P. Fort Benton MT 10 333,853 10,500 Cedar Crest Apartments, L.P. Bourbon MO 16 386,812 12,200 Cedar Grove Apts. Limited II Shepherdsville KY 36 1,102,057 60,763 Citrus Terrace, Ltd. Sebring FL 42 1,445,044 71,885 Cle Elum Apartment Associates Cle Elum WA 20 620,094 34,000 Cleveland Courts, LTD Cleveland MS 18 521,425 27,750 Clifford Heights Apartments, Ltd. Stamping Grnd KY 12 380,186 20,564 Cottondale Villa Apartments, Ltd. Cottondale FL 24 671,130 35,700 Cottonwood Seniors Apts. PartnershipCottonport LA 24 688,107 21,432 Coushatta Seniors Apts. Partnership Coushatta LA 24 717,330 22,500 Cypress View Estates, Ltd. Shaw MS 24 701,643 37,500 Delta Terrace Estates, L.P. Sterlington LA 24 740,974 39,700 Diamond Court II L.P. Harrington DE 32 1,220,093 38,300 East Magnolia Village, L.P. Port Gibson MS 24 651,096 35,000 Edmonson Properties, Limited Brownsville KY 16 470,310 15,470

~~FORM~~------------------------------------------------------------------------------------------------------------------------------------ 10Operating Partnership Tax Capital Bayfield's Approx. Accum. Committed Anticipated 1999 LIHC (from Capital Federal LIHC Inception Items Events Contribution Credits Credits Bayfield) -K----------------------------------------------------------------------------------------------------------------------------------- AFM RRH Limited 99 50 $ 265,305 $ 1,585 $ 1,587 $ 455,434 Alachua Villas, Ltd. 99 50 224,387 -- -- 387,530 Albany Commons, Ltd. 99 50 177,929 32,325 32,318 315,405 Anderson Country Estates, L.P. 99 50 122,268 23,276 23,276 250,449 Aurora Limited 99 50 180,468 1,540 1,540 211,320 Baker Heights II, L.P. 95 50 241,438 -- -- 380,468 Bayshore North Apts. Phase IV 99 50 319,017 18,940 18,942 532,285 Belfast Housing Associates 99 50 282,195 5,332 5,332 470,699 Berea Summitt, Ltd. 99 50 45,134 8,118 8,116 79,126 Berkshire Apartments, Ltd. #2 95 50 163,186 -- -- 186,588 Blades Limited Partnership 99 50 301,958 8,788 8,788 505,176 Blanchard Seniors Apts. Partnership Blanchard 95 50 167,124 -- -- 228,002 Brentwood Apartments, Ltd. 99 50 160,800 -- -- 258,191 Briar Hill Apartments, Ltd. 95 50 88,475 724 724 133,047 Broadway Terrace of Drew, L.P. 95 50 301,536 63,351 60,791 541,493 Bunkie Seniors Apts. Partnership 95 50 164,759 -- -- 235,643 Canal Town Associates 95 50 57,391 -- -- 83,833 Canyon Villas L.P. 99 50 78,878 1,112 1,112 111,662 Cedar Crest Apartments, L.P. 99 50 95,472 18,793 18,793 170,115 Cedar Grove Apts. Limited II 95 50 275,938 817 818 381,514 Citrus Terrace, Ltd. 99 50 324,907 36,504 36,504 593,868 Cle Elum Apartment Associates 95 50 154,188 -- -- 216,836 Cleveland Courts, LTD 99 50 127,650 24,939 24,663 241,968 Clifford Heights Apartments, Ltd. 99 50 93,425 610 600 154,699 Cottondale Villa Apartments, Ltd. 99 50 166,138 754 754 271,465 Cottonwood Seniors Apts. PartnershipCottonport 99 50 164,527 -- -- 270,132 Coushatta Seniors Apts. Partnership Coushatta 99 50 171,159 -- -- 280,477 Cypress View Estates, Ltd. 95 50 166,414 8,180 8,202 286,240 Delta Terrace Estates, L.P. 95 50 180,474 -- -- 279,065 Diamond Court II L.P. 99 50 297,192 27,748 27,748 498,582 East Magnolia Village, L.P. 99 50 161,503 -- -- 245,039 Edmonson Properties, Limited 99 50 118,956 13,660 13,230 204,701 9

/Bayfield /Low ~~Transition~~Income ~~report~~Housing ~~pursuant~~Limited toPartnership ~~Section~~Ownership 13Interest orin ~~15(d)~~Operating ofPartnerships ~~the~~------------------------------------------------------------------------------------------------------------------------------------ ~~Securities~~Operating ~~Exchange~~Partnership ~~Act~~City State Number Project's Developer's of ~~1934~~Apts. ~~for~~Mortgage ~~the~~Original ~~transition~~Units ~~period~~Balance ~~from~~Equity ~~________________~~------------------------------------------------------------------------------------------------------------------------------------ toElliott ~~______________~~Manor, Ltd. Sandy Hook KY 24 761,499 23,960 Elmwood Estates, L.P. Monroe LA 32 1,036,131 32,550 Fieldcrest, Ltd. Lexington KY 16 436,056 23,275 Flambeau Village, L.P. Ladysmith WI 54 1,603,455 723,000 Folsom South Venture Folsom LA 12 376,133 20,073 Forest Park Apartments Ltd. Lake Butler FL 32 963,045 43,150 Franklin Vista II, Ltd. Anthony NM 28 881,505 47,250 Gaslight Square Apartments, Ltd. Versailles IN 24 705,683 39,474 Gatewood Apartments, Ltd. Bayou George FL 37 1,109,777 59,533 Gibsland Villas L.P. Gibsland LA 24 748,147 42,930 Gilman Seniors Apartments, L.P. Gilman City MO 6 159,553 5,000 Glenmora Apartments Partnership Glenmora LA 13 421,126 21,590 Greenleaf Gardens, Ltd. Orange City FL 47 1,264,283 67,650 Greenwood Associates L.P. Greenwood AL 40 1,277,219 66,700 Hagewood Apartments Ltd. Natchitoches LA 16 554,692 29,775 Hickory Square L.P. Little Rock AR 40 1,347,793 29,900 Hidden Hill Apartments, Ltd. Elizabethtown KY 16 494,748 26,796 Hilltop Manor RRH, Ltd. II Ocala FL 45 1,333,138 58,600 Hillwood, Ltd. Anderson AL 12 315,588 16,900 Hitchcock Housing, Ltd. Hitchcock TX 40 1,028,309 55,200 Houston Associates Lycoming Ctry PA 24 948,647 29,850 Hurricane, Ltd. Hurricane UT 24 826,349 70,250 Indianwood Apartments II, Ltd. Lafayette AL 24 617,799 32,800 Joaquin Apartments, Ltd. Joaquin TX 32 745,759 40,000 Jonesville Apts.Sr. Citizens Ptrshp.Jonesville LA 18 555,304 29,518 Kent Summit, Ltd. Shelbyville KY 8 243,410 3,330 Kingswood II, Ltd. Mount Olive MS 24 640,140 34,907 LaGrange Apartments-Phase II L.P. Lagrange MO 8 191,635 6,000 Lake City Village, Ltd. Lake City FL 36 1,122,067 63,040 Lakecrest, Ltd. Elizabethtown KY 36 1,040,340 58,620 Lakeview Estates, Ltd. Lakeview AR 33 1,025,122 54,700 Lakewood Apartments II, Ltd. Lake City FL 32 863,248 46,350

~~Commission~~------------------------------------------------------------------------------------------------------------------------------------ ~~file~~Operating ~~number: 0-19258 BAYFIELD~~Partnership ~~LOW~~Tax ~~INCOME~~Capital ~~HOUSING~~Bayfield's ~~LIMITED~~Approx. ~~PARTNERSHIP~~ Accum. Committed Anticipated 1999 LIHC (~~Exact~~from ~~name~~Capital ofFederal ~~registrant~~LIHC asInception ~~specified~~Items inEvents ~~its~~Contribution ~~charter~~Credits Credits Bayfield) ------------------------------------------------------------------------------------------------------------------------------------ Elliott Manor, Ltd. 99 50 184,831 34,372 34,370 327,919 Elmwood Estates, L.P. 99 50 94,754 5,121 5,121 132,485 Fieldcrest, Ltd. 99 50 114,667 -- -- 195,891 Flambeau Village, L.P. 99 50 779,080 26,665 -- 1,259,360 Folsom South Venture 99 50 90,324 -- -- 153,748 Forest Park Apartments Ltd. 99 50 212,871 -- -- 351,056 Franklin Vista II, Ltd. 95 50 216,093 -- -- 337,201 Gaslight Square Apartments, Ltd. 95 50 179,152 2,187 1,809 252,260 Gatewood Apartments, Ltd. 95 50 270,750 183 185 436,975 Gibsland Villas L.P. 95 50 206,022 15,098 15,083 326,117 Gilman Seniors Apartments, L.P. 99 50 35,221 6,565 6,565 47,597 Glenmora Apartments Partnership 99 50 96,605 -- -- 166,161 Greenleaf Gardens, Ltd. 99 50 304,975 -- -- 499,575 Greenwood Associates L.P. 95 50 292,301 2,469 2,469 484,156 Hagewood Apartments Ltd. 95 50 134,601 1,748 1,748 199,531 Hickory Square L.P. 95 50 284,550 -- -- 430,038 Hidden Hill Apartments, Ltd. 99 50 120,935 2,386 1,154 193,464 Hilltop Manor RRH, Ltd. II 99 50 326,541 58,164 58,165 605,974 Hillwood, Ltd. 99 50 86,050 -- -- 146,550 Hitchcock Housing, Ltd. 95 50 250,676 -- -- 373,163 Houston Associates 99 50 234,799 22,602 35,304 411,487 Hurricane, Ltd. 95 50 201,993 -- -- 297,917 Indianwood Apartments II, Ltd. 99 50 113,856 -- -- 176,116 Joaquin Apartments, Ltd. 99 50 181,777 -- -- 283,930 Jonesville Apts.Sr. Citizens Ptrshp.Jonesville 99 50 136,811 -- -- 216,123 Kent Summit, Ltd. 99 50 57,207 10,266 10,264 100,114 Kingswood II, Ltd. 95 50 152,206 -- -- 247,769 LaGrange Apartments-Phase II L.P. 99 50 45,711 5,829 5,829 85,295 Lake City Village, Ltd. 99 50 269,685 20,808 20,740 443,075 Lakecrest, Ltd. 95 50 266,539 4,671 4,671 354,708 Lakeview Estates, Ltd. 99 50 249,451 33,365 33,366 455,589 Lakewood Apartments II, Ltd. 95 50 212,000 681 682 341,784 10

~~Delaware~~Bayfield (Low Income Housing Limited Partnership Ownership Interest in Operating Partnerships ------------------------------------------------------------------------------------------------------------------------------------ Operating Partnership City State orNumber ~~other~~Project's ~~jurisdiction~~Developer's of ~~incorporation~~Apts. orMortgage ~~organization)~~Original 11Units Balance Equity -~~3022123~~----------------------------------------------------------------------------------------------------------------------------------- (Larue Properties, Limited Hodgenville KY 24 577,800 23,480 Las Rosas II, Ltd. Tularosa NM 28 911,221 48,820 Laurelwood Apartments, L.P. Collierville TN 35 1,078,124 73,050 Lead Bayou, Ltd. Cleveland MS 48 1,318,871 70,600 Lewis Apartments Company I Lowville NY 18 680,621 36,250 Lewistown Apartments L.RP.S Lewistown MO 12 283,328 15,053 Lillie Mae's Retirement Village Apts Chickasha OK 48 1,096,000 144,500 Lockport Seniors Apts. ~~Employer~~Partnership ~~Identification~~Donaldsonville ~~Number~~LA 32 850,995 45,400 Longview Terrace, Ltd. Decatur MS 24 687,177 36,700 Magnolia Plaza, Ltd. Magnolia TX 36 951,965 51,000 Manor Apts. Caddo Mills. Texas, Ltd.Caddo Mills TX 24 574,725 18,200 Many Seniors Apts. Partnership Many LA 32 955,438 29,850 Maple Hill Estates, Ltd. Lancaster KY 32 1,029,704 54,880 Maple Leaf Associates (Liberty Ter.)Watsontown PA 24 926,163 49,500 Marion September Housing, L.P. Marion KS 20 541,246 29,000 Meadowland Apartments, Ltd. Iowa LA 16 519,498 29,332 Mills-Shapley Partnership, L.P. Greenville MS 14 182,245 21,975 Mitchell II Limited Mitchell IN 24 738,318 38,370 Mosswood Apartments, Ltd. Start LA 24 748,761 36,700 Mountain View Apartments II, Ltd. Morehead KY 24 731,473 39,632 Munfordville Properties, Limited Munfordville KY 10 338,994 18,000 M-W Limited Partnership Westfield WI 8 236,312 12,740 New Caney Oaks, Ltd. New Caney TX 57 1,204,186 65,000 North Deer Creek, L.P. Hollandale MS 24 699,167 38,325 Oak Valley Place II, L.P. Knox IN 18 530,465 28,385 Oakdale Seniors Apts. Partnership Oakdale LA 26 762,774 40,950 Oakwood Apartments, L.P. Hannibal MO 24 579,146 18,186 Old Oak Estates, L.P. West Monroe LA 37 1,237,588 39,570 Onion Creek, Ltd. Buda TX 32 817,632 44,561 Orchard Commons, Ltd. Crab Orchard KY 16 420,613 16,110 P.D.C. Eighteen Limited Partnership Newport AR 32 1,046,753 32,570 P.D.C. Twenty Two Ltd. Partnership Cherry Valley AR 20 731,981 22,970

~~c/o~~------------------------------------------------------------------------------------------------------------------------------------ ~~Paul~~Operating JPartnership Tax Capital Bayfield's Approx. ~~Maddock~~Accum. Committed Anticipated 1999 LIHC (from Capital Federal LIHC Inception Items Events Contribution Credits Credits Bayfield) ------------------------------------------------------------------------------------------------------------------------------------ Larue Properties, ~~Megan~~Limited ~~Asset~~99 ~~Management~~50 185,145 ~~Inc~~18,533 18,533 288,602 Las Rosas II, Ltd. ~~1424~~ ~~West~~95 ~~Century~~50 ~~Avenue~~221,375 ~~Suite~~-- ~~102~~-- 343,126 ~~Bismarck~~Laurelwood Apartments, NDL.P. ~~58503 (Address~~95 of50 ~~principal~~259,302 ~~executive~~7,912 ~~offices)~~ 8,950 347,240 Lead Bayou, Ltd. 95 50 236,394 504 504 404,873 Lewis Apartments Company I 99 50 165,773 -- -- 275,041 Lewistown Apartments L.P. 95 50 67,666 6,674 6,673 118,457 Lillie Mae's Retirement Village Apts 99 50 299,293 49,758 49,767 485,489 Lockport Seniors Apts. Partnership Donaldsonville 99 50 217,714 -- -- 332,226 Longview Terrace, Ltd. 95 50 159,185 9,781 9,781 284,378 Magnolia Plaza, Ltd. 95 50 231,713 -- -- 336,222 Manor Apts. Caddo Mills. Texas, Ltd.Caddo Mills 99 50 128,510 -- -- 219,625 Many Seniors Apts. Partnership 99 50 230,490 -- -- 375,147 Maple Hill Estates, Ltd. 95 50 249,384 1,997 1,997 350,829 Maple Leaf Associates (~~Zip~~Liberty ~~Code~~Ter.)Watsontown 95 50 225,188 -- -- 360,777 Marion September Housing, L.P. 95 50 131,628 1,237 1,237 205,904 Meadowland Apartments, Ltd. 99 50 129,131 16,870 16,870 193,062 Mills-Shapley Partnership, L.P. 99 27.5 82,157 9,819 14,726 196,072 Mitchell II Limited 99 50 181,473 9,158 9,162 246,252 Mosswood Apartments, Ltd. 95 50 166,822 -- -- 262,529 Mountain View Apartments II, Ltd. 99 50 186,493 10,367 7,822 297,291 Munfordville Properties, Limited 95 50 81,248 2,038 2,038 113,453 M-W Limited Partnership 95 50 58,068 1,796 1,795 69,982 New Caney Oaks, Ltd. 95 50 293,148 -- -- 423,036 North Deer Creek, L.P. 95 50 174,358 -- -- 284,423 Oak Valley Place II, L.P. 99 50 122,084 -- -- 182,977 Oakdale Seniors Apts. Partnership 95 50 184,861 -- -- 262,436 Oakwood Apartments, L.P. 95 50 140,222 13,636 13,636 242,043 Old Oak Estates, L.P. 99 50 306,274 -- -- 492,942 Onion Creek, Ltd. 95 50 199,101 -- -- 306,875 Orchard Commons, Ltd. 99 50 122,449 22,606 22,606 220,516 P.D.C. Eighteen Limited Partnership Newport 95 50 236,615 41,500 41,468 404,486 P.D.C. Twenty Two Ltd. Partnership Cherry Valley 95 50 171,475 32,158 30,416 297,200 11

~~Registrant~~Bayfield Low Income Housing Limited Partnership Ownership Interest in Operating Partnerships ------------------------------------------------------------------------------------------------------------------------------------ Operating Partnership City State Number Project's ~~telephone~~Developer's ~~number~~of Apts. Mortgage Original Units Balance Equity ------------------------------------------------------------------------------------------------------------------------------------ Park Place East Associates Muncy PA 24 900,478 ~~including~~30,250 ~~area~~Park ~~code: (701)~~Place North Associates Muncy PA 16 601,096 32,300 Parkwood Associates, L.P. Stateline MS 24 668,222 20,920 Pecan Villa Apartments, L.P. Richwood LA 32 1,062,423 57,700 Pecanwood Apartments III, Ltd. Whitehouse TX 32 705,137 37,500 Perry Apartments L.P. Perry MO 8 183,767 9,895 Pocomoke Villas Limited Partnership Pocomoke City MD 37 1,479,296 78,947 Pontotoc Ridge, Ltd. Pontotoc MS 24 683,376 36,500 Regency Apts. of Reno, Texas, Ltd. Reno TX 24 573,920 18,000 Regency Associates, Ltd. Sumrall MS 24 649,978 34,778 Reservoir Hill Limited Partnership VBaltimore MD 18 655,938 200 Reynolds & Associates, First St., L.P. Durant OK 32 839,954 55,600 Reynolds & Assoc., N. Place III, L.P. Calera OK 16 438,801 23,500 Ridge View Apartments, Ltd. Crystal River FL 44 1,375,069 73,324 Ridgecrest Properties Ltd. Bridgeport AL 24 678,517 36,300 River View Apartments, L.P. Canton MO 8 56,823 9,950 Riverbend Apartments, Ltd. Delta LA 16 484,936 26,300 Rolling Meadow II L.P. Greensboro MD 26 987,942 53,000 Russell "September" Housing, L.P. Russell KS 12 323,325 17,400 Sacramento, Ltd. Cloudcraft NM 20 793,039 45,230 Sleepy Oaks Limited Partnership West Branch MI 12 299,309 25,265 Somerset Western Hills Ltd. Phase IISomerset KY 16 502,894 22,220 Southeastern Associates, Ltd. Hammond LA 42 1,348,878 72,400 Southern Apartments Partnership Iota LA 20 589,399 32,759 Spring Meadow Apartments Ltd. Russell Springs KY 24 731,094 55,537 St. Rose Associates, Ltd. Frankfort NY 24 760,223~~-2923~~ 29,803 Streamside Associates St. Rose LA 24 914,994 40,150 Sullivan Garden Apartments, L.P. Sullivan MO 23 196,764 9,275 Summer Place, Ltd. St. Helen MI 12 336,305 18,050 Sun Rise North Ltd. Guntersville AL 48 1,485,044 46,800 Sunrise Apartments L.P. Milton WV 12 378,886 77,000 Taft Gardens, Ltd. Taft TX 24 624,698 33,500

~~Securities~~------------------------------------------------------------------------------------------------------------------------------------ ~~registered~~Operating ~~pursuant~~Partnership toTax ~~Section~~Capital 12Bayfield's Approx. Accum. Committed Anticipated 1999 LIHC (bfrom Capital Federal LIHC Inception Items Events Contribution Credits Credits Bayfield) ------------------------------------------------------------------------------------------------------------------------------------ Park Place East Associates 99 50 241,188 38,462 38,460 375,183 Park Place North Associates 99 50 146,836 5,863 5,862 249,828 Parkwood Associates, L.P. 99 50 164,700 10,147 10,147 283,594 Pecan Villa Apartments, L.P. 95 50 262,777 -- -- 404,287 Pecanwood Apartments III, Ltd. 99 50 178,638 -- -- 266,191 Perry Apartments L.P. 95 50 44,222 -- -- 61,957 Pocomoke Villas Limited Partnership Pocomoke City 99 50 362,966 9,777 9,778 604,482 Pontotoc Ridge, Ltd. 95 50 164,502 -- -- 241,817 Regency Apts. of ~~the~~Reno, ~~Act: NONE~~Texas, Ltd. Reno 99 50 138,379 187 187 214,706 Regency Associates, Ltd. 95 50 158,045 -- -- 232,670 Reservoir Hill Limited Partnership VBaltimore 99 50 577,891 112,971 112,971 1,101,862 Reynolds & Associates, First St., L.P. 95 50 106,464 820 820 308,664 Reynolds & Assoc., N. Place III, L.P. 95 50 204,752 10,109 10,108 168,892 Ridge View Apartments, Ltd. 95 50 312,000 -- -- 458,553 Ridgecrest Properties Ltd. 95 50 164,784 -- -- 200,224 River View Apartments, L.P. 99 50 21,494 360 361 35,514 Riverbend Apartments, Ltd. 95 50 119,075 -- -- 173,454 Rolling Meadow II L.P. 99 50 244,480 -- -- 387,181 Russell "September" Housing, L.P. 95 50 78,492 -- -- 122,763 Sacramento, Ltd. 95 50 194,175 1,278 1,278 291,128 Sleepy Oaks Limited Partnership 95 50 82,239 3,087 3,248 113,242 Somerset Western Hills Ltd. Phase IISomerset 99 50 125,254 6,749 6,749 209,081 Southeastern Associates, Ltd. 99 50 314,798 3,182 3,182 493,637 Southern Apartments Partnership 95 50 142,358 -- -- 206,627 Spring Meadow Apartments Ltd. 99 50 183,090 -- -- 281,587 St. Rose Associates, Ltd. 99 50 182,093 -- -- 313,243 Streamside Associates 99 50 238,335 27,374 22,469 390,384 Sullivan Garden Apartments, L.P. 99 50 80,933 -- -- 133,267 Summer Place, Ltd. 95 50 81,457 587 587 117,832 Sun Rise North Ltd. 99 50 362,362 47,648 47,648 542,817 Sunrise Apartments L.P. 99 50 82,532 1,460 1,522 125,092 Taft Gardens, Ltd. 95 50 151,792 -- -- 212,300 12

~~Securities~~Bayfield ~~registered~~Low ~~pursuant~~Income toHousing ~~Section~~Limited ~~12(g)~~Partnership Ownership Interest in Operating Partnerships ------------------------------------------------------------------------------------------------------------------------------------ Operating Partnership City State Number Project's Developer's of ~~the~~Apts. ~~Act:~~Mortgage ~~LIMITED~~Original PARTNERSHIP INTERESTSUnits Balance Equity ------------------------------------------------------------------------------------------------------------------------------------ Taft Terrace, Ltd. Taft TX 32 832,929 44,700 Timberline Apartments Wilburton OK 24 620,039 33,400 Valley Limited, L.P. Vevay IN 24 689,606 22,500 Valley Place Associates Elysburg PA 32 1,286,394 67,200 Wayland Apartments, L.P. Wayland MO 8 190,300 10,211 West Meadow Apartments II, Ltd. Geneva AL 32 845,831 47,900 Wexford Associates Littleton ME 16 808,014 40,000 Willow Haven Apartments, L.P. Delhi LA 44 1,385,725 78,391 Wilson Lake Associates Wilton ME 34 1,614,846 85,900 Wolcott Associates Alport NY 40 1,424,251 77,936 Woodcrest Apartments, L.P. Lafayette TN 32 959,025 62,000 Housing Partners VI, L.P. N/A N/A N/A N/A N/A Housing Partners VIII, L.P. N/A N/A N/A N/A N/A Housing Partners IX, L.P. N/A N/A N/A N/A N/A Housing Partners XI, L.P. N/A N/A N/A N/A N/A Housing Partners XII, L.P. N/A N/A N/A N/A N/A Housing Partners XIII, L.P. N/A N/A N/A N/A N/A Housing Partners XV, L.P. N/A N/A N/A N/A N/A Housing Partners XVII, L.P. N/A N/A N/A N/A N/A Housing Partners IX, L.P. N/A N/A N/A N/A N/A --------------------------------------------------------- 3,548 $107,427,818 $6,101,579

------------------------------------------------------------------------------------------------------------------------------------ Operating Partnership Tax Capital Bayfield's Approx. Accum. Committed Anticipated 1999 LIHC (~~Title~~from Capital Federal LIHC Inception Items Events Contribution Credits Credits Bayfield) ------------------------------------------------------------------------------------------------------------------------------------ Taft Terrace, Ltd. 95 50 202,669 -- -- 300,130 Timberline Apartments 95 50 151,443 -- -- 215,113 Valley Limited, L.P. 99 50 128,592 25,643 25,643 243,608 Valley Place Associates 99 50 311,318 58,283 58,283 561,600 Wayland Apartments, L.P. 95 50 45,771 -- -- 70,896 West Meadow Apartments II, Ltd. 95 50 187,250 668 665 302,093 Wexford Associates 99 50 175,185 17,063 17,063 306,599 Willow Haven Apartments, L.P. 95 50 323,906 -- -- 495,071 Wilson Lake Associates 99 50 400,896 7,790 7,790 678,288 Wolcott Associates 99 50 353,080 -- -- 563,212 Woodcrest Apartments, L.P. 95 50 233,994 4,435 7,276 320,011 Housing Partners VI, L.P. 24,922 -- -- 34,823 Housing Partners VIII, L.P. 13,873 -- -- 16,467 Housing Partners IX, L.P. 57 57 13,972 22,270 22,270 37,450 Housing Partners XI, L.P. 39,093 -- -- 49,207 Housing Partners XII, L.P. 57,942 169 169 66,793 Housing Partners XIII, L.P. 29,603 -- -- 32,446 Housing Partners XV, L.P. 57,942 160 160 67,885 Housing Partners XVII, L.P. 57 57 28,371 28,371 28,371 Housing Partners IX, L.P. 38,703 -- -- 45,544 -------------------------------------------------------------------------------- $26,791,221 $1,251,530 $1,232,411 $42,775,357 GLOSSARY DEVELOPERS ORIGINAL EQUITY - The amount of ~~class~~original capital contributed or to have been contributed by the developer/general partner of the Operating Partnership. TAX ITEMS - The Partnership's allocation percentage of tax items from the Operating Partnerships, including income, gain, loss, deduction and tax credits. CAPITAL EVENTS - The Partnership's allocation percentage of proceeds to be realized by the Operating Partnership upon the sale, refinancing, transfer or other disposal of all or a substantial portion of the assets of the Operating Partnership. BAYFIELD'S COMMITTED CAPITAL CONTRIBUTION - The amount of original capital contribution paid or to be paid by the Partnership for its limited partnership ownership interest in the Operating Partnership. 13 Bayfield Low Income Housing Limited Partnership Ownership Interest in Operating Partnerships ------------------------------------------------------------------------------------------------------------------------------------ Operating City State Number Project's Developer's Tax Capital Bayfield's Approx. Accum. Partnership Committed Anticipated 1999 LIHC (from of Apts. Mortgage Original Capital Federal LIHC Inception Units Balance Equity Items Events Contribution Credits Credits Bayfield) ------------------------------------------------------------------------------------------------------------------------------------ APPROX. ANTICIPATED FEDERAL CREDITS - The maximum amount of Tax Credits contracted by the general partners of the Operating Partnerships to the Partnership for the 10-year period which commenced at varying times for each Operating Partnership over a three year period from 1987 through 1989. 1999 LIHC CREDITS - The amount of Low Income Housing Credits ("LIHC") generated by the Operating Partnerships and allocated to the Partnership for the tax year ending 12/31/99. ACCUMULATED LIHC (FROM INCEPTION OF BAYFIELD) - The amount of LIHC generated by the Operating Partnerships and allocated to the Partnership from the 7/1/90 inception of Bayfield through the tax year ending 12/31/99.

14 The following is additional information on certain Operating Partnerships which had operational or other financial problems either during or which the effects of which continued during the Fiscal Year ended March 31, 2000: ALACHUA VILLAS, LTD., CITRUS TERRACE, LTD. AND LAKE CITY VILLAGE, LTD. In the 1995 Fiscal Year, Megan Asset Management, as general partner of the Partnership, and the Partnership commenced an action in the Circuit Court of Alachua County, Florida as the sole limited partner of, and derivatively on behalf of, two Operating Partnerships, Lake City Village, Ltd. and Alachua Villas, Ltd., against John D. Carver ("Carver"), the general partner of these Operating Partnerships, and a management company affiliated with Carver, G & R Management Services, Inc. ("G & R"). The actions arose as a result of the acceleration by RD of the entire balance due on the mortgage against these Operating Partnerships. RD alleged various defaults under such Operating Partnership's loan agreements, promissory notes and mortgages with RD (the "RD Documents"), including failure to pay real estate taxes, failure to maintain account balances sufficient to pay current operating and maintenance expenses, failure to maintain adequate records and file required reports, and failure to correct deficiencies previously noted by RD during its supervisory visits to the housing projects. After extensive motion practice and discovery, on January 13, 1995, a settlement agreement was entered into ("Carver Settlement Agreement") providing for a designated representative of the Partnership (a company under common ownership and control with Megan Asset Management) to take over management of the affected Operating Partnerships and the replacement of Carver as general partner subject to the consent of RD (which was obtained in December, 1995). The Carver Settlement Agreement also provided for an audit of the two Operating Partnerships and Citrus Terrace Village Ltd., an Operating Partnership unaffiliated with Carver, but which G&R managed ("Citrus Terrace"). This audit uncovered possible claims of the two Operating Partnerships and Citrus Terrace against the defendants totaling $83,599, which amount was contested by Carver. Following a hearing on November 13, 1997, the Court ruled that it would enter summary judgment pursuant to the Carver Settlement Agreement in favor of the Partnership against Carver in the amount of $78,599 together with interest from January 24, 1996. Thereafter Carver appealed the Court's entry of judgment in favor of the Partnership. After the filing of briefs and hearing the arguments the Circuit Court of Appeal, First District, State of Florida dismissed Carver's appeal and the judgment in favor of the Partnership became final. Subsequently, the Partnership applied for an award of attorney's fees and cost pursuant to the terms of the Carver Settlement Agreement. By an order dated March 2, 2001, the Partnership's application for an award of attorneys' fees and costs was granted by the Court in the sum of $34,012.95 as attorney's fees and $787.00 as costs for the total sum of $34,799.95. While the Partnership has made attempts to recover against Carver with respect to the judgment and award of attorneys' fees and has taken asset discovery depositions of Carver, his wife and certain relatives, no asset against which the judgment or award of attorneys' fees can be collected have yet been discovered. Accordingly, there can be no assurance that any such amounts will be recovered by such Operating Partnerships or the Partnership. Further, in the 1996 Fiscal Year, in an attempt to recover upon its claims and the sums taken by Carver from the two Operating Partnerships, other than Citrus Terrace, the Partnership 15 commenced a further action in the Circuit Court of Alachua County, Florida against Mercurio & Bridgford, P.A. and John J. Mercurio (together, "Mercurio"), who provided auditing services to each of Lake City Village, Ltd., Alachua Villas, Ltd. and Citrus Terrace, based upon their failure to report the improper payments made by John D. Carver, Jr. from these two Operating Partnerships. After a jury trial in the Circuit Court of Alachua County, Florida, in November, 1998, the jury reach the verdict that these defendants had not caused the Partnership's and Operating Partnerships' financial loss. Following the jury's verdict, these defendants sought a $55,545 recovery for their costs and attorneys' fees against the Partnership. The Partnership and counsel to the Partnership did not believe the Partnership was obligated for defendants' cost and attorneys' fees and defended against such claim, however, the Court concluded that the Partnership would be liable for costs incurred by these defendants in the amount of $18,464.70. Subsequently, the Partnership reached a settlement agreement with these defendants and paid $13,000 to defendants in full settlement of all costs and attorney's fees due to these defendants. The Partnership further made loans of $24,655 and $25,310 in excess of its capital commitment to Lake City Village, Ltd. and Alachua Villas, Ltd. respectively, to enable them to pay certain outstanding real estate taxes in arrears. In consideration of the Partnership's making these loans, RD has not foreclosed on its mortgages to such Operating Partnerships and has restructured such mortgages to finance the payment of the balance of the past due real estate taxes unpaid by Carver and to permit such Operating Partnerships to remain in operation not withstanding the damages they suffered. This permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and to avoid any recapture on Tax Credits taken in prior years. Had RD foreclosed on its loans and the Partnership lost its interest in Lake City Village, Ltd. and Alachua Villas, the Partnership would not have been entitled to aggregate Tax Credits of $392,300 through 1999, or approximately $196 per 0.05% of Limited Partnership Interest. In addition, assuming that 100% of the Tax Credits previously allocated to the Limited Partners relating to these Operating Partnerships were used by them, it is estimated that the Limited Partners would have been subject to a total tax recapture with respect to these Operating Partnerships of $186,709 or approximately $93 per 0.05% of Limited Partnership Interest, plus interest and penalties, if any. In addition to the above loans in excess of its capital commitment, during the fiscal year ending March 31, 1998 the Partnership made an additional loan of $20,714 to Lake City Village to cover the cost of maintenance, which had been deferred by Carver, in an attempt to keep the units in this Project habitable and available for rent. While the Partnership has obtained a promissory note from each Operating Partnership and a security interest in the Operating General Partners' interests in each Operating Partnership, the repayment of the loans with accrued interest is subject to each Operating Partnership's having sufficient cash flow from operations to cover its ongoing operating expenses and fund the necessary reserves and RD's approval, there can be no assurance that any such amounts will be recovered from such Operating Partnerships. The Partnership has also paid professional fees on behalf of each Operating Partnership 16 relating to the litigation against the former general partner and takeover and workout of these Operating Partnerships in the amount of $55,462 on behalf of Alachua Villas and $55,638 on behalf of Lake City Village. Said payments have been reflected as a note payable to the Partnership on the financial statements of each Operating Partnership. Any sums recovered by the Operating Partnerships from the judgment obtained against Carver, the former general partner, will be paid to the Partnership in reduction of these loans, subject to the then financial condition of each Operating Partnership. Also in the 1995 Fiscal Year, the Partnership commenced a further action in the Circuit Court of Highlands County, Florida on behalf of Citrus Terrace substantially similar to that described above, against George T. Wheeler ("Wheeler"), individually and as the general partner of Citrus and against Carver, as Trustee of G & R, and G & R, which management company was also managing the Project owned by Citrus Terrace. A substantially similar settlement agreement was entered into and implemented in connection with and this litigation was also settled, except for the recovery of the sum of approximately $5,000 in an unauthorized loan taken by Carver from Citrus Terrace. It is not likely going to be economically feasible for the Partnership to attempt to recover this latter sum against Carver with respect to such claim. In consideration of an affiliate of Megan Asset Management becoming the substitute general partner of Citrus Terrace, RD did not foreclose on its mortgage to Citrus Terrace, and it has restructured the mortgage to finance the payment of past due real estate taxes not paid by Carver to permit this Operating Partnership to remain in operation, notwithstanding the damages suffered by it. This permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and to avoid any recapture on Tax Credits taken in prior years. If RD had foreclosed on its loans and had the Partnership lost its interest in this Operating Partnership, the Partnership would not have been entitled to aggregate Tax Credits of $283,136 through 1999, or approximately $142 per 0.05% of Limited Partnership Interest. In addition, assuming that 100% of the Tax Credits previously allocated to the Limited Partners relating to this Operating Partnership were used by them, it is estimated that the Limited Partners would have been subject to a total tax recapture with respect to this Operating Partnership of $115,731, or approximately $58 per 0.05% of Limited Partnership Interest, plus interest and penalties, if any. The Partnership has also paid professional fees on behalf of Citrus Terrace relating to the litigation against the former general partner and the takeover and workout of this Operating Partnership in the amount of $57,098. Said payments have been reflected as a note payable to the Partnership on the financial statements of the Operating Partnership. As the repayment of the fees for professional services paid by the Partnership on behalf of Citrus Terrace is subject to its having sufficient cash flow from operations to cover ongoing operating expenses and fund the necessary reserves and RD's approval, there can be no assurance that any such amounts will be recovered from this Operating Partnership by the Partnership. FLAMBEAU VILLAGE, L.P. The Partnership was made aware that the Internal Revenue Service (the "IRS") audited the 1993 and 1994 income tax returns for one of the Partnership's Operating Partnerships, Flambeau 17 Village, L.P. ("Flambeau Village"), the owner of a 53 unit, mixed income, elderly Project (26 units of low income housing tax credit restricted tenants and 27 units of unrestricted market rate income tenants) located in Ladysmith, Wisconsin. Flambeau Village was the Partnership's largest single producer of tax credits with approximately $163,000 in annual tax credits. Accordingly, the Partnership engaged legal and tax counsel and tax credit compliance experts to review the compliance by the Flambeau Village Developer/General Partner with Section 42 of the Internal Revenue Code ("IRC"), meet with the IRS and actively monitor the situation. As a result of a meeting between the professionals engaged by the Partnership and the IRS, the Partnership was informally informed that the IRS had concluded that Flambeau Village had failed to meet the minimum set-aside and rent restriction tests of Section 42 of the IRC and therefore, it had not qualified for and was not entitled Tax Credits for any year. The IRS however did not issued a formal report at the time and its investigation and the Developer/General Partner's negotiations with the IRS continued. In view of the above, the Partnership made the decision not to allocate any of the approximately $163,000 of Tax Credits of Flambeau Village for 1996 to its Limited Partners in order to minimize or make a provision for potential recapture, penalties and interest if the IRS ultimately should disallow some or all of the previous allocated Flambeau Village Tax Credits. As no report from the IRS was forthcoming and the Developer/General Partner continued to negotiate with the IRS, the Partnership did allocate the approximately $163,000 of Tax Credits from Flambeau Village for each of 1997 and 1998 to its Limited Partners, although it had not allocated any of the 1996 Tax Credits from Flambeau Village to its Limited Partners. Subsequently, in connection with the IRS's criminal investigation of the activities of principals, former officers of or persons related to Flambeau Village's Developer/General Partner, the Partnership learned that one of the Developer/General Partner's principals and former officers pleaded guilty to charges filed by the IRS relating to other activities (not involving the IRS's audit of Flambeau Village's 1993 and 1994 tax returns) and was sentenced to and served a two year jail sentence. In connection with the actions of the Developer/General Partner with respect to Flambeau Village, the IRS by letter dated September 29, 1999, formally notified Flambeau Village that it had determined that Flambeau Village is not entitled to claim any tax credits for any year that the Project was in existence. Since 1989, the Partnership has received a total of $1,663,311 in Tax Credits in connection with its Limited Partnership interest in Flambeau Village. Of these tax credits, $1,482,898 have been allocated to the Limited Partners of the Partnership. Although there can be no assurance that the IRS will not seek to recapture all of the Tax Credits generated by Flambeau Village, other than for the years 1993 and 1994, the Partnership's counsel believes, after considering the IRS letter which reflects that no adjustments will be proposed by the IRS either at the partnership level or individual partner level for 1993 and 1994, absent a finding of fraud by the IRS with respect to the activities of the Developer/General Partner with respect to Flambeau Village, and the fact that the statute of limitations has run for years prior to 1998, that the IRS will not likely make any adjustment for the Tax Credits allocated by Flambeau Village 18 to the Partnership and by the Partnership to its Limited Partners for the years 1989 through 1997. It is not known what position with respect to adjustments the IRS will take, if any, for the subsequent year 1998 for which Tax Credits were allocated to and passed through by the Partnership to its Limited Partners. No Tax Credits were passed through by the Partnership for the year 1996 and, in view of the above, the Partnership also elected not to pass through Tax Credits allocated by Flambeau Village to it in the amount of $17,727 for the year 1999, which was the last year the Partnership was entitled to Tax Credits. If the IRS takes the subsequent position that adjustments will be proposed at the partnership level, or individual partner level, for the years 1995, 1997 and 1998 (i.e. those years not covered by the IRS's September 29, 1999 letter) or the years prior to 1993 for which Tax Credits were allocated to the Partnership and passed through to its Limited Partners, assuming that 100% of the Tax Credits so allocated to the Limited Partners relating to Flambeau Village were used by the Limited Partners, it is estimated that the Limited Partners would be subject to recapture of Tax Credits with respect to Flambeau Village of an estimated $385,000 or approximately $200 per 0.05% of Limited Partnership Interest, plus interest and penalties, if any. As a result of the loss of the 1996 and 1999 Tax Credits not taken by the Partnership in the aggregate amount of $179,142 and the additional costs incurred by the Partnership of $117,815 to have its professionals review the compliance by the Flambeau Village Developer/General Partner with Section 42 of the Internal Revenue Code, meet with the IRS and actively monitor the situation, the Partnership reviewed the likelihood of successfully pursuing a claim against and attempting to recover compensatory damages for such losses from the Developer/General Partner of Flambeau Village and any affiliate deemed responsible under the terms of Flambeau Village Operating Partnership agreement, the Partnership's Plan and common law. However, in the event a claim was filed there was no assurance that any amounts could be recovered by the Partnership. In connection with its evaluation of the feasibility of pursuing a claim against the Developer/General Partner of Flambeau Village and any affiliate, the Independent Manager had an independent appraisal of the Project performed. The appraisal, dated as of January 4, 2000, showed an appraised value of $1,700,000. As of December 31, 1999, the Project had a mortgage payable of $1,603,455. Accordingly, the Project's appraised value appears to be only $96,545 above the Project's first mortgage loan. As the Partnership through its ownership of the limited partnership interests in Flambeau Village already owned a 50% interest in the equity of that Operating Partnership, should that Operating Partnership have a value, after offsetting other assets and other liabilities, of the net appraised value over the Project's mortgage or $96,545, the Developer/General Partner's 50% interest in the equity of the Operating Partnership would only be approximately $48,273. Accordingly, the Partnership did not commence an action to attempt to recover the damages the Partnership has suffered as a result of the breaches of the Operating Partnership Agreement by the Developer/General Partner of Flambeau Village, as the Partnership could not determine the availability of other assets of the Developer/General Partner of Flambeau Village from which a damage award could be satisfied. 19 As the repayment of the fees of $117,815 for professional services paid by the Partnership on behalf of Flambeau Village was subject to its having sufficient cash flow from operations to cover ongoing operating expenses and fund the necessary reserves, which this Operating Partnership did not have, and the Partnership was facing potential litigation against with the Developer/General Partner of Flambeau Village and there could be no assurance that any such amounts would be recovered by the Partnership, the Partnership chose to settle with the Developer/General Partner of Flambeau Village by accepting the payment of $100,000 in satisfaction of the fees of $117,815 for professional services paid by the Partnership on behalf of Flambeau Village and by agreeing to terminate the Partnership's interest in Flambeau Village. By way of terminating its interest in Flambeau Village, the Partnership agreed to sell its interests in this Operating Partnership first in the implementation of its Liquidity Program. Accordingly, by Agreement For Purchase And Sale Of Partnership Interest entered into on February 28, 2002, the Partnership sold thirty-three percent (33%) of its Partnership Interests in Flambeau Village for Ten Thousand Dollars ($10,000) and granted purchaser, Flambeau Village Properties, LL.C., a Wisconsin limited liability company, an option for Five Thousand Dollars ($5,000) to purchase the balance of the Partnership's Partnership Interests consisting of sixty-seven percent (67%) of the Partnership's limited partnership interests in Flambeau Village for an additional Fifteen Thousand Dollars ($15,000) subject to the exercise of the option and a final closing only after the expiration of Flambeau Village's 15-Year Tax Credit Compliance Period on January 1, 2004. Flambeau Village as of December 31, 2000 had an estimated remaining depreciable basis of $1,696,030, thirty-three percent (33%) of which the Partnership would have received in the way of passive losses proportionately over approximately 16.5 years from December 31, 2000 had thirty-three percent (33%) of its interest in Flambeau Village not been sold. Further the Partnership will not receive its interest in the balance of Flambeau Village's depreciable basis remaining after January 1, 2004 if the purchaser exercises the Option to purchase the remaining sixty-seven percent (67%) of the Partnership's interest in Flambeau Village. SULLIVAN GARDEN APARTMENTS, L.P. AND MILLS-SHAPLEY PARTNERSHIP, L.P. The Partnership also chose to sell its interests in two other Operating Partnerships which owned small, troubled Projects. The general partners of Operating Partnerships Sullivan Garden Apartments, L.P. ("Sullivan Garden") and Mills-Shapley Partnership, L.P. ("Mills-Shapley"), each sought to sell their Projects to third-parties prior to the expiration of each project's 15-Year Tax Credit Compliance Period as both Projects had substantial deferred maintenance and suffered from extremely high vacancies. While the Partnership could not approve the sale of either Project because of the potential recapture of Tax Credits, understanding the troubled nature of both Projects, the Partnership agreed to approve the transfer of the general partners' interests and to sell the purchasers a portion of the Partnership's limited partnership interests in each Operating Partnership at the present time and to grant the purchasers an option to purchase the balance of the Partnership's limited partnership interest after the expiration of the Project's 15-Year Tax Credit Compliance Period in an attempt to facilitate the purchasers' takeover and revitalization of each Project. 20 Accordingly, by Agreement For Purchase And Sale Of Partnership Interest entered into on or about January 1, 2002, the Partnership sold thirty-three percent (33%) of its interest in Sullivan Garden for Five Thousand Dollars ($5,000) and granted purchaser, Leslie D. Ray, an option for One Thousand Dollars ($1,000) to purchase the balance of the Partnership's interest consisting of sixty-seven percent (67%) of the Partnership's limited partnership interest in Sullivan Garden for an additional Ten Thousand Dollars ($10,000) subject to the exercise of the option and a final closing only after the expiration of Sullivan Garden's 15-Year Tax Credit Compliance Period on January 1, 2004. Sullivan Garden as of December 31, 2000 had an estimated remaining depreciable basis of $236,474, thirty-three percent (33%) of which the Partnership would have received in the way of passive losses proportionately over approximately 16.5 years from December 31, 2000 had thirty-three percent (33%) of its interest in Sullivan Gardens not been sold. Further, the Partnership will not receive its interest in the balance of Sullivan Garden's depreciable basis remaining after January 1, 2004 if the purchaser exercises the Option to purchase the remaining sixty-seven percent (67%) of the Partnership's interest in Sullivan Garden. Further, by Agreement For Purchase And Sale Of Partnership Interest entered into on or about February 1, 2002, the Partnership sold thirty-three percent (33%) of its interests in Mills-Shapley, which owned the more deeply troubled Project, for Fifty Dollars ($50) and granted purchasers, George R. and George A. Davis, an option for Ten dollars ($10) to purchase the balance of the Partnership's interests consisting of sixty-seven percent (67%) of the Partnership's limited partnership interest in Mills-Shapley for an additional One Hundred Dollars ($100) subject to the exercise of the option and a final closing only after the expiration of Mills-Shapley's 15-Year Tax Credit Compliance Period, also on January 1, 2004. Mills-Shapley as of December 31, 2000 had an estimated remaining depreciable basis of $237,402, thirty-three percent (33%) of which the Partnership would have received in the way of passive losses proportionately over approximately 16.5 years from December 31, 2000 had thirty-three percent (33%) of its interest in Mills-Shapley not been sold. Further, the Partnership will not receive its interest in the balance of Mills-Shapley's depreciable basis remaining after January 1, 2004 if the purchasers exercise the Option to purchase the remaining sixty-seven percent (67%) of the Partnership's interest in Mills-Shapley. BROADWAY TERRACE OF DREW, L.P., LONGVIEW TERRACE, LTD., AND PONTOTOC RIDGE, LTD. The sole operating general partner of three Operating Partnerships, Broadway Terrace of Drew, L.P., Longview Terrace, Ltd. and Pontotoc Ridge, Ltd. located in the state of Mississippi in which the Partnership owns the limited partnership interests, died during the fiscal year ended March 31, 1998. After several months of attempting to sell the deceased Operating General Partner's 5% general partner and 50% equity interests in these three Operating Partnerships, the estate of the deceased Operating General Partner advised the Partnership that it was abandoning its interest in the three Operating Partnerships. Thereupon, Megan Asset Management caused one of its affiliates to be appointed Operating General Partner of the three Operating Partnerships in an attempt to preserve the Partnership's interests therein. Two of the three Operating Partnerships, Broadway Terrace of Drew, L.P. and Pontotoc Ridge, Ltd., had severely underfunded reserves and were delinquent in several years real estate taxes and were subject to possible foreclosure by RD. 21 BROADWAY TERRACE OF DREW, L.P. At the time that an affiliate of Megan Asset Management began to manage Broadway Terrace of Drew it had severely under funded reserves and several years of delinquent real estate taxes. Further the Project had an entire building, containing 8 apartments, uninhabitable and unrentable due to severe vandalism, as a result of which RD commenced formal foreclosure proceedings. The Partnership engaged legal counsel on behalf of Broadway Terrace and was successful in stopping the foreclosure proceedings and getting RD to begin working with Megan Asset Management's affiliate to put a workout plan together toward saving the Project owned by this Operating Partnership. RD does not feel that Broadway Terrace will ever have sufficient income to service its $1,339,330 mortgage, pay its real estate taxes and fund its reserves annually. Accordingly, RD has proposed a 100% transfer of Broadway Terrace to a new entity, through which the Partnership would maintain its ownership interest and to write down Broadway Terrace's mortgage to approximately $700,000. The Partnership has consented to this effort to try and keep this Project viable and has engaged professionals to begin working on the 100% transfer and mortgage write-down. In the year a write-down is effected the Partnership will recognize a gain equal to the amount of the write-down, however, it is anticipated that the Partnership will have sufficient losses with which to off-set this gain so it will have no consequence to the Limited Partners other than reducing the amount of losses they will be allocated in the year of the write-down. LONGVIEW TERRACE, LTD. Although Longview Terrace, Ltd. was not delinquent on its real estate taxes, had the estate of the deceased Operating General Partner simply abandoned its general partnership interest in this Operating Partnership and an affiliate of Megan Asset Management not become the substitute general partner, the Project owned by Longview Terrace would likely have been subject to foreclosure by RD. In consideration of an affiliate of Megan Asset Management becoming the Operating General Partner of Longview Terrace, Ltd., RD has not foreclosed on its mortgage and is permitting this Operating Partnership to remain in operation. This permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and avoid recapture of previously taken and used Tax Credits. PONTOTOC RIDGE, LTD. Had the estate of the deceased Operating General Partner simply abandoned its general partnership interest in this Operating Partnership and an affiliate of Megan Asset Management not become the substitute general partner, the Project owned by Pontotoc Ridge would likely have been subject to foreclosure by RD. In consideration of the Partnership's making a loan of $14,985 in excess of its capital commitment to Pontotoc Ridge, to enable it to pay certain real estate taxes in arrears and having an affiliate of Megan Asset Management become the substitute general partner, RD has not foreclosed on its mortgage to Pontotoc Ridge and agreed to restructure its mortgage loan to finance the payment of the balance of the past due real estate taxes to permit this Operating 22 Partnership to remain in operation. This has permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and avoid recapture of previously taken and used Tax Credits. The Partnership has also paid professional fees in the amount of $122,125 on behalf of Broadway Terrace, Longview Terrace and Pontotoc Ridge, relating to the takeover and workout of these Operating Partnerships from the estate of the deceased Operating General Partner and successfully contesting the RD foreclosure proceedings with respect to Broadway Terrace. As the repayment of the fees for professional services paid by the Partnership on behalf of these Operating Partnerships is subject to their having sufficient cash flow from operations to cover ongoing operating expenses and fund the necessary reserves, which these Operating Partnerships do not currently have, and RD's approval, there can be no assurance that any such amounts will be recovered from such Operating Partnerships by the Partnership. ITEM 3. LEGAL PROCEEDINGS See discussion of applicable legal proceedings above in "Item 2. Properties" above. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS MARKET INFORMATION The Partnership is a limited partnership and thus has no common stock. There is no established public trading market for limited partnership interests in the Partnership ("Limited Partnership Interests") and it is not anticipated that any such public market will develop. Article XI of the Partnership Agreement effectively prevents the transfer of Limited Partnership Interests except under very limited circumstances. In order to transfer a Limited Partnership Interest, a Limited Partner must obtain the consent of the General Partner of the Partnership, which has the absolute right to refuse any request for a transfer. In addition, the Partnership Agreement requires the transferring Limited Partner to obtain a legal opinion from counsel, at his or her sole expense, as to certain tax and securities law matters with regard to the proposed transfer. In addition, the proposed transferee must meet all applicable suitability standards and agree to be bound by the Partnership Agreement. 23 APPROXIMATE NUMBER OF SECURITY HOLDERS As of December 31, 2001, there were approximately 1,840 holders of Limited Partnership Interests. DISTRIBUTIONS An aggregate of $286, $443 and $9,250 was distributed to Limited Partners for fiscal years ending March 31, 2000, March 31, 1999 and March 31, 1998 respectively, in the form of return of Partnership capital. 24 ITEM 6. SELECTED FINANCIAL DATA The information set forth below presents selected historical financial data of the Partnership for the years ended March 31, 2000, 1999, 1998, 1997 and 1996. This information has been derived from and is qualified by reference to the additional detailed information is set forth in the audited financial statements listed in Item 14 hereof and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included as Item 7 in this Report.

~~Indicate~~OPERATIONS byFor ~~check~~the ~~mark~~Year ~~whether~~For the ~~registrant~~Year (For the Year For the Year For the Year Ended Ended Ended Ended Ended MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1996 --------------- -------------- -------------- -------------- ---------------- Interest income $ 28,378 $ 63,763 $ 78,291 $ 80,997 $ 243,313 Other Income 1),334 ~~has~~1,600 ~~filed~~10,379 ~~all~~11,471 ~~reports~~40,891 ~~required~~--------------- to-------------- be-------------- ~~filed~~-------------- by---------------- ~~Section~~29,712 1365,363 or88,670 ~~15(d)~~92,468 284,204 Equity in Losses of ~~the~~Operating ~~Securities~~Partnerships ~~Exchange~~(142,167) ~~Act~~(51,639) of(873,489) ~~1934~~(1,551,846) ~~during~~(2,588,698) ~~the~~Expenses ~~preceding~~(418,424) 12(402,617) ~~months~~(471,868) (or447,424) ~~for~~(361,305) ~~such~~-------------- ~~shorter~~--------------- ~~period~~--------------- ~~that~~--------------- ~~the~~---------------- ~~registrant~~Net ~~was~~Loss ~~required~~$ to(530,879) ~~file~~$ ~~such~~(388,893) ~~reports~~$ (1,256,687) $ (1,906,802) ~~and~~$ (2,665,798) ~~has~~-------------- ~~been~~--------------- ~~subject~~--------------- to--------------- ~~such~~---------------- ~~filing~~Net ~~requirements~~Loss ~~for~~per ~~the~~0.05% ~~past~~Partnership 90Interest ~~days~~$ (265) $ (194) $ (628) $ (953) $ (1,333) Cash Distributions Per 0. ~~Yes~~05% /Partnership ~~/ No~~$ ~~/X/~~0 $ 0 $ 0 $ 0 $ 0 Interest As of As of As of As of As of BALANCE SHEET MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1996 ------------- -------------- -------------- -------------- -------------- -------------- Total Assets $ 2,267,963 $ 2,732,346 $ 3,077,98 $ 4,303,853 $ 6,166,549 Total Liabilities $ 160,143 $ 153,975 $ 147,8 $ 173,20 $ 169,116 Partners' Capital $ 2,107,820 $ 2,578,371 $ 2,930,12 $ 4,130,650 $ 5,997,432

25 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The Partnership was formed as of July 1, 1990, pursuant to the Plan. In 1992 its fiscal year-end for accounting purposes was changed to March 31, from December 31. The Partnership's fiscal year-end for tax purposes remains December 31. CAPITAL RESOURCES The Partnership was formed pursuant to the terms of the Plan, which mandates the Partnership's material commitments for expenditures and the anticipated sources of funds needed to fulfill such commitments. Commencing in calendar 1995, although funds from certain other sources were received during the 1996 and 1995 fiscal years (see "Liquidity" below), the Partnership's primary source of funds became the annual distributions from the Operating Partnerships in which the Partnership has an interest, which has been negotiated at $750 per year, per Operating Partnership, provided that such payment is not prohibited by any applicable agreement with a governmental agency or any applicable governmental agency rules or regulations. The total amount due annually to the Partnership from the $750 distributions from the Operating Partnerships is approximately $104,000. The Partnership has been receiving only approximately 50% of the distributions due from the Operating Partnerships. To the extent that such distributions or portion thereof are not paid in any year, the remainder accumulate and are to be paid at the earliest time permitted. As indicated above, many of the distributions are not being made do to limitations by governmental regulations. The Partnership also receives interest income on account balances. The ability of the Partnership to make all cash distributions to its Limited Partners contemplated by the Plan is dependent upon the receipt by the Partnership of sufficient proceeds from the sale or refinancing of its interests in the Operating Partnerships (the General Partner has actively begun exploring various exit strategies, including the sale and refinancing of the Partnership's interests in the Operating Partnerships - See "Item 1. - Description of Business" above). There can be no assurance that such proceeds, if any, from the sale or refinancing of the remaining Operating Partnerships will be sufficient to enable the Partnership to make all or any portion of such distributions. Further there can be no assurance that the application of funds available for distribution to Limited Partners which, from time to time, were deferred by the Independent Manager with the consent of the Investor Committee to pay certain costs and expenses of the Partnership or to purchase interests in partnerships which own, or are intended to own, projects which are intended to qualify for Tax Credits (see "Liquidity" subsection "(f)" below), will ultimately yield an economic benefit to the Limited Partners. 26 Prior to calendar 1995, the Partnership's primary source of funds was the payment by Limited Partners of the amounts owed to the Partnership for their capital contributions pursuant to their Investor Notes. Each of the Investor Notes was payable in semi-annual installments through December 31, 1994. As of March 31, 2000, an aggregate of $1,118,845, was owed pursuant to the Investor Notes. These notes are past due and are considered uncollectable. These amounts are not written off on the Partnership's financial statements as the amount is reflected as a negative in the Partners' Capital section of the balance sheet and since the defaulted investor units heretofore have not been cancelled. The aggregate amount outstanding and past due was $1,185,709 and $1,223,287 for the years ending March 31, 1999, and March 31, 1998. Other than the annual payment referred to above, the Partnership does not anticipate that it will receive material cash distributions from the operations of the Operating Partnerships, or that it will derive net cash from its operations generally. Aside from such payments, the Partnership does not have significant external sources of Capital Resources. All of the above-named sources of Capital Resources are being used to meet the operating expenses of the Partnership and to preserve and maintain the investment in its Projects. LIQUIDITY The Partnership's principal uses of funds are its operating expenses and, prior to December 31, 1994, were used for (i) capital contributions to the Operating Partnerships and (ii) payments to the Secured Lenders of the Debtor Investor Partnerships. The remaining unpaid balances of such contractual obligations at each of March 31, 2000, March 31, 1999 and March 31, 1998 were $94,535 with respect to the Operating Partnerships which were in default on their obligations to the Partnership. The Partnership also assumed certain accrued expenses pursuant to the Plan which were paid in full as of March 31, 1996. The Partnership also made distributions to certain Limited Partners that were in the original debtor Brighton Estates Limited Partnership as provided in the Plan. For the 2000 Fiscal Year, the 1999 Fiscal Year and the 1998 Fiscal Year gross cash amounts received by the Partnership were as follows: (i) $66,864, $37,578 and $91,765 respectively, from payments of capital contributions by Limited Partners pursuant to their Investor Notes; and (ii) $28,378, $63,763 and $78,291 respectively, of interest income on the Investor Notes and on deposits maintained in escrow accounts pursuant to the Plan. For the 2000 Fiscal Year, the 1999 Fiscal Year and the 1998 Fiscal Year respectively, the uses of funds by the Partnership were as follows: (a) $-0-, $-0- and $21,229 respectively, for capital contributions to the Operating Partnerships; (b) $292,179, $289,647 and $351,133 respectively, for professional fees for the 2000 Fiscal Year 27 which were attributable to professional costs related to analyzing and attempting to identify a structure for the liquidation of the Partnership and/or a purchaser for the Partnership Interests, litigation against a defaulted investor and for continued litigation against the CPA who performed the audit of three of the Operating Partnerships and costs related to keeping Rural Development from foreclosing on the projects owned by those Operating Partnerships, for professional fees for the 1999 Fiscal Year which were attributable to professional costs related to the litigation against the CPA who performed the audit of three of the Operating Partnerships and costs related to replacing a sole general partner and assuming the management of his three Operating Partnerships and for professional fees for the 1998 Fiscal Year which were attributable to professional costs related primarily to litigation against the CPA who performed the audit of three Operating Partnerships, professional costs for the site inspections of several troubled Operating Partnerships; (c) $120,078, $106,846 and $124,855 respectively, for operating expenses; and (d) $286, $443 and $9,250 respectively, for payments as a return of capital made to the Limited Partners in accordance with the Plan. The distributions to Limited Partners included a full distribution of the $1,014,628 contemplated by the Plan for the 1995 Fiscal Year, and a partial distribution for the 1994 Fiscal Year. In Fiscal 1994, $516,901 of the $1,014,628, contemplated by the Plan to be distributed, was distributed to the Limited Partners in such year. As permitted under the Plan and approved by the Investors Committee, undistributed amounts of $507,314 for the 1994 Fiscal Year, together with the entire $1,014,628 to have been distributed in the 1993 Fiscal Year, were deferred and were applied to meet the increased obligations of the Partnership. No such distributions are payable after December 31, 1994, except to the extent that the Independent Manager, in consultation with the Investors Committee, determines that the financial resources of the Partnership will permit payment of previously deferred distributions. It is not presently anticipated that any such payments will be made. (See "Item 10. Directors and Executive Officers of the Registrant - Investor Committee".) The net decrease in cash held by the Partnership amounted to $290,682 for the 2000 Fiscal Year, $239,552 for the 1999 Fiscal Year and $324,015 for the 1998 Fiscal Year. As discussed above in "Item 1. - Description of Business", the Partnership no longer anticipates that the annual payments to be received from the Operating Partnerships, in combination with the Partnership's reserves, will be sufficient to permit the Partnership to meet its operating expenses until such time, if at all, a complete exit strategy has been identified and implemented. Accordingly, in view of the Partnership's need to raise more capital to continue to maintain its operations as set forth herein, the Partnership has begun accepting offers it has received from Operating Partnerships to sell the Partnership's limited partnership interests in a number of those Operating Partnerships which own the Projects to maintain the operations of the Partnership. However, there can be no assurance in the future that the Partnership will be able to meet its obligations through this program should the implementation of an exit strategy extend beyond the originally anticipated 15-year compliance period of the Operating Partnerships, years 2002-2004, or if sufficient purchasers of the Operating Partnership interests are not available. 28 RESULTS OF OPERATIONS Expenses, comprised principally of depreciation expenses passed through to the Partnership from the Operating Partnerships, exceeded income, which is comprised principally of interest income, by $530,876 for the 2000 fiscal Year, $388,891 for the 1999 Fiscal Year and $1,256,682 for the 1998 Fiscal Year. As noted above under "Item 1. Business - Description of Business", the Partnership's principal business is the maintenance of its interests in the Operating Partnerships, and the Partnership does not expect to and does not have the funds available to make new investments or otherwise engage in additional activities. The Partnership's results of operations and its obligations are primarily determined by the results of operations of the Operating Partnerships, its obligations to the Independent Manager, and by expenses arising out of legal and professional fees related to its Operating Partnerships or business transactions. Accordingly, period-to-period comparisons of the results of operations of the Partnership may not be meaningful. The following discussion attempts to highlight certain elements of the results of operations of the Partnership for the periods discussed. It is estimated that, without additional acquisitions of interests in limited partnerships owning properties with or eligible for Tax Credits to replace interests lost through insolvency, bankruptcy or the settlement of litigation, for which the Partnership does not have funds available, the amount of Tax Credits generated or the minimal amount still to be generated by the Partnership will aggregate approximately $0.97 for every $1.00 invested by the Limited Partners, rather than the $1.10 for every $1.00 estimated in the Plan. Further the production of such Tax Credits will take slightly longer than the ten years estimated in the Plan. This includes Tax Credits passed through to the Limited Partners by the Debtor Investor Partnerships previous to the inception of the Partnership. Such estimate is based on the following assumptions: (i) the Partnership will be able to continue to attempt to preserve as much of its present portfolio of Projects as possible, will not purchase additional interests in limited partnerships owning Projects eligible for Tax Credits to replace lost Operating Partnerships and will dispose of the Partnership's interests in Operating Partnerships under its Liquidity Program in such a way so as to attempt to avoid causing recapture of Tax Credits, (ii) the current applicability of the tax laws and regulations and current interpretations of such laws and regulations by the courts, remain unchanged, (iii) the occupancy of each of the Projects with qualifying individuals will continue substantially unchanged throughout the applicable 15-year tax credit compliance period, and (iv) no substantial changes occur in the aggregate interest held by the Partnership in the Operating Partnerships as a group. In the tax year ended December 31, 1999, the Limited Partners were allocated approximately $1,232,441 in Tax Credits, or approximately $616 per 0.05% of Partnership Interest. Interest income decreased by approximately 55% for the 2000 Fiscal Year from the 1999 Fiscal Year and 19% for the 1999 Fiscal Year from the 1998 Fiscal Year due primarily to the decrease in the Partnership's cash balances. Interest income decreased by approximately 3% and 67% for the respective 1998 Fiscal Year and 1997 Fiscal Year primarily due to decrease in cash and reduction in the amount of late interest collected on defaulted Investor Notes. Due to the end of the investor pay-in period as of December 31, 1994 and the Partnership's collection of substantially all collectable payments due it from the Investor Notes, there will be no material interest income for 29 future periods from the Investor Notes. Equity in losses from Operating Partnerships was $142,000 for the 2000 Fiscal Year and $52,000 for the 1999 Fiscal Year or an increase of 273%. Equity in losses from Operating Partnerships was $52,000 for the 1999 Fiscal Year and $873,000 for the 1998 Fiscal Year, or a decrease of 94%. Equity in losses from Operating Partnerships was $873,000 for the 1998 Fiscal Year and $1,552,000 for the 1997 Fiscal Year, or a decrease of 44%. The equity in losses from Operating Partnerships fluctuate from year to year based on the results of operations from the Projects. For the 2000 Fiscal Year the total equity in losses from Operating Partnerships was over $3,5000,000, primarily consisting of depreciation expense, of which only $142,000 is recognized for financial accounting purposes. The Partnership uses the equity method of accounting for its investment in its Operating Partnerships and under the equity method losses in excess of aggregate investment in each Operating Partnership are not recognized. Therefore in recent years the reported losses from the Operating Partnerships have been declining due to basis limitation. For income tax reporting purposes 100% of the losses are permitted to be passed through to the Limited Partners on their K-1's and each Limited Partner is to calculate basis limitation separately. Management fees paid remained the same for the 2000 Fiscal Year, the 1999 Fiscal Year and the 1998 Fiscal Year. Professional fees of approximately $292,376 in the 2000 Fiscal Year included fees attributable to professional costs related to analyzing and attempting to identify a structure for the liquidation of the Partnership and/or a purchaser for the Partnership Interests, litigation against a defaulted investor and for continued litigation against the CPA who performed the audit of three of the Operating Partnerships and costs related to keeping Rural Development from foreclosing on the projects owned by those Operating Partnerships. Professional fees of approximately $281,000 in the 1999 Fiscal Year included fees incurred for litigation against the CPA who performed the audit of three of the Operating Partnerships and costs related to replacing a sole general partner and assuming the management of his three Operating Partnerships. Professional fees of approximately $347,000 in the 1998 Fiscal Year included fees incurred for litigation against a CPA who performed the audit of three Operating Partnerships, professional costs related to the site inspections of several troubled properties, and costs in connection with SEC filings. No interest expense was incurred in the 2000, 1999 and 1998 Fiscal Years as all indebtedness to the Secured Lenders was paid in full prior to the 1996 Fiscal Year. No amortization of organization costs were incurred in the 2000, 1999 and 1998 Fiscal Years due to the fact that amortization of all organization costs was completed in 1996. Other income of approximately $1,334 in the 2000 Fiscal Year and $1,600 was recorded in the 1999 Fiscal Year as a result of the receipt of a share of the management fees earned by an affiliate of the Independent Manager from Operating Partnerships pursuant to the Independent Manager's Management Agreement. Other income of approximately $10,000 was recorded for the 1998 Fiscal Year and was a result of a collection of a bad debt. 30 Pursuant to the Plan, amounts due and unpaid to Operating Partnerships by the Debtor Investor Partnerships prior to the implementation of the Plan in July 1990 accrued interest at the rate of eight percent (8%) until paid. As the non-payment of this interest is not a default under the Plan and any such unpaid interest becomes payable only as a first priority out of Capital Events, a contingent liability, or as a liability or debt of the Partnership prior to any distribution under the Partnership Agreement the Partnership is not paying this interest currently and is not accruing it on its financial statements. The amount of this interest which could be payable under the Plan as a first priority from Capital Events or as a liability or debt of the Partnership prior to any distribution under the Partnership Agreement is estimated at $1,800,000 and is subject to offsets of the amount of fees for professional services paid on behalf of certain Operating Partnerships (see "Item 2. Properties" above) and any unpaid or accrued annual distributions due the Partnership (see "Capital Resources" above) and a reduction by said sums payable to Operating Partnerships which have lost their Projects through foreclosure, bankruptcy or insolvency. The Partnership is organized as a limited partnership and is a "pass through" entity which does not, itself, pay federal income tax. However, the partners of the Partnership receive their proportionate share of Tax Credits and other tax benefits accruing to the Partnership. For the tax years ended December 31, 1999, 1998 and 1997 respectively, Limited Partners were allocated $1,232,441, $3,723,899 and $4,934,656 in Tax Credits, or approximately $616, $1,861 and $2,467 per 0.05% of Partnership Interest, respectively. The following is financial data for the Partnership which reflects the quarterly results of operations for the fiscal quarters ended June 30, September 30, and December 31, 1999. 31

~~Indicate~~BALANCE bySHEETS ~~check~~BAYFIELD ~~mark~~LOW ifINCOME ~~disclosure~~HOUSING ofLIMITED ~~delinquent~~PARTNERSHIP ~~filers~~ASSETS ~~pursuant~~----------------------------------------------------------------------------------- toDECEMBER ~~Item~~31, ~~405~~SEPTEMBER of30, ~~Regulation~~JUNE S30, DECEMBER 31, SEPTEMBER 30, JUNE 30, 1999 1999 1999 1998 1998 1998 -K---------------------------------------------------------------------------------- isINVESTMENTS ~~not~~IN ~~contained~~OPERATING ~~herein~~LIMITED PARTNERSHIPS $1,028,561 ~~and~~$1,110,061 ~~will~~$1,190,811 ~~not~~$ be745,859 ~~contained~~$ 969,443 to$1,183,958 ~~the~~OTHER ~~best~~ASSETS: ofCASH ~~registrant's~~870,962 ~~knowledge~~984,773 in1,015,164 ~~definitive~~1,146,718 ~~proxy~~1,207,169 or1,287,359 ~~information~~LOANS ~~statements~~TO ~~incorporated~~OPERATING byPARTNERSHIPS ~~reference~~355,562 in357,362 ~~Part~~382,537 ~~III~~286,824 of307,224 ~~this~~286,840 ~~Form~~---------- 10-K--------- or----------- ~~any~~---------- ~~amendment~~----------- of---------- ~~this~~$2,255,085 ~~Form~~$2,452,196 ~~10-K.~~$2,588,512 ~~/X/~~$2,179,401 $2,483,836 $2,758,157 ========== ========== =========== =========== =========== ==========

~~APPLICABLE~~LIABILITIES ~~ONLY~~AND PARTNERS' CAPITAL ---------------------------------------------------------------------------------- DECEMBER 31, SEPTEMBER 30, JUNE 30, DECEMBER 31, SEPTEMBER 30, JUNE 30, 1999 1999 1999 1998 1998 1998 ---------------------------------------------------------------------------------- LIABILITIES: ACCOUNTS PAYABLE & ACCRUED EXPENSES $ 38,043 $ 59,117 $ 66,885 $ 20,204 $ 11,787 $ 4,632 CONTRIBUTIONS PAYABLE TO ~~ISSUERS~~OPERATING ~~INVOLVED~~PARTNERSHIPS IN94,535 ~~BANKRUPTCY~~94,535 94,535 94,535 94,535 94,535 --------- --------- ---------- ---------- ---------- ---------- $ 132,578 $ 153,652 $ 161,420 $ 114,739 $ 106,322 $ 99,167 ========= ========== ========== ========== ========== ========== PARTNERS' CAPITAL: LIMITED PARTNERS 3,285,761 3,413,172 3,579,093 3,228,565 3,553,095 3,843,315 GENERAL PARTNER 14 15 16 17 18 19 SUBSCRIPTIONS RECEIVABLE (1,163,268) (1,077,336) (1,152,017) (1,163,920) (1,175,599) (1,184,344) ----------- ----------- ----------- ----------- ----------- ----------- 2,122,507 2,298,544 2,427,097 2,064,662 2,377,514 2,658,990 ----------- ------------ ----------- ----------- ------------ ----------- $2,255,085 $2,452,196 $2,588,512 $2,179,401 $2,483,836 $2,758,157 =========== =========== =========== =========== =========== ==========

32 STATEMENT OF OPERATIONS BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FOR THE THREE MONTHS ENDED ------------------ JUNE 30, JUNE 30, 1999 1998 ------------------------------ INTEREST INCOME $ 2,733 $ 9,772 OTHER - - --------------- -------------- - 2,733 9,772 EQUITY IN LOSSES OF OPERATING PARTNERSHIPS (80,000) (210,000) EXPENSES: MANAGEMENT FEES 29,875 29,875 PROFESSIONAL SERVICES 62,201 64,410 DEVELOPER CLASS REPRESENTATIVE 15,000 15,000 OTHER EXPENSE 628 126 ------------ ----------- 107,704 109,411 NET LOSS $ (184,971) $ (309,639) ============= ============ NET LOSS ALLOCATED TO GENERAL PARTNER $ (1) $ (1) ============ ============ NET LOSS ALLOCATED TO LIMITED PARTNERS $ (184,970) $ (309,638) ============ ============ NET LOSS PER .05% L. P. INTEREST $ (92) $ (155) ============ ============ 33

~~PROCEEDINGS~~STATEMENT ~~DURING~~OF OPERATIONS BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FOR THE ~~PRECEDING~~FOR ~~FIVE~~THE ~~YEARS~~THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 1999 1998 1999 1998 ----------------------------------------------------------------------- INTEREST INCOME $ 20,389 $ 29,430 $ 23,122 $ 39,202 OTHER 375 - 375 - --------- ---------- --------- --------- 20,764 29,430 23,497 39,202 EQUITY IN LOSSES OF OPERATING PARTNERSHIPS (80,000) (210,000) (160,000) (420,000) EXPENSES: MANAGEMENT FEES 37,375 29,875 74,750 59,750 PROFESSIONAL SERVICES 67,214 79,452 121,915 143,863 DEVELOPER CLASS REPRESENTATIVE - - 15,000 15,000 OTHER EXPENSE 2,097 324 2,726 450 ----------- ----------- ----------- ---------- 106,686 109,651 214,391 219,063 ----------- ----------- ----------- ---------- NET LOSS $ (165,922) $ (290,221) $(350,894) $(599,861) =========== ============ =========== ========== NET LOSS ALLOCATED TO GENERAL PARTNER $ (1) $ (1) $ (1) $ (2) =========== ============ =========== ========== NET LOSS ALLOCATED TO LIMITED PARTNERS $ (165,921) $ (290,220) $ (350,893) $(599,859) =========== ============ =========== ========== NET LOSS PER .05% L. P. INTEREST $ (83) $ (145) $ (175) $ (300) =========== ============ =========== ==========

~~Indicate~~STATEMENT byOF ~~check~~OPERATIONS ~~mark~~BAYFIELD ~~whether~~LOW ~~the~~INCOME ~~registrant~~HOUSING ~~has~~LIMITED ~~filed~~PARTNERSHIP ~~all~~FOR ~~documents~~THE ~~and~~FOR ~~reports~~THE ~~required~~THREE toMONTHS beENDED ~~filed~~NINE byMONTHS ~~Sections~~ENDED 12------------------ ----------------- DECEMBER 31, 13DECEMBER 31, orDECEMBER 31, DECEMBER 31, 1999 1998 1999 1998 -------------------------------------------------------------------- INTEREST INCOME $ 2,356 $ 2,009 $ 25,478 $ 41,211 OTHER 375 - 750 - ----------- ----------- ------------ ------------ 2,731 2,009 26,228 41,211 EQUITY IN LOSSES OF OPERATING PARTNERSHIPS (80,000) (210,000) (240,000) (630,000) EXPENSES: MANAGEMENT FEES 37,375 29,875 112,125 89,625 PROFESSIONAL SERVICES 4,619 86,022 126,534 229,886 DEVELOPER CLASS REPRESENTATIVE - - 15,000 15,000 OTHER EXPENSE 1,614 642 4,340 1,092 ------------ ----------- ------------ ----------- 43,608 116,539 257,999 335,603 ------------- ----------- ------------ ----------- NET LOSS $ (d120,877) of$ ~~the~~(324,530) ~~Securities~~$ ~~Exchange~~(471,771) ~~Act~~$(924,392) of============= ~~1934~~=========== ~~subsequent~~============ to=========== ~~the~~NET ~~distribution~~LOSS ofALLOCATED ~~securities~~TO ~~under~~GENERAL aPARTNER ~~plan~~$ ~~confirmed~~(0) by$ a(1) ~~court~~$ (2) $ (4) ============= =========== ============ =========== NET LOSS ALLOCATED TO LIMITED PARTNERS $ (120,877) $ 324,529) $ (471,769) $(924,388) ============= =========== ============ =========== NET LOSS PER .05% L. P. INTEREST $ (60) $ (162) $ (236) $ (462) ============= =========== ============ ===========

35 STATEMENT OF CASH FLOWS BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FOR THE THREE MONTHS ENDED ------------------ JUNE 30, JUNE 30, 1999 1998 -------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $ (184,972) $ (309,639) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY OPERATING ACTIVITIES: EQUITY IN LOSSES OF OPERATING PARTNERSHIPS 102,356 243,601 DECREASE (INCREASE) IN OTHER ASSETS - (16,636) INCREASE (DECREASE) IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES (33,879) 5,985 ----------- ----------- TOTAL ADJUSTMENTS 68,477 220,980 ----------- ----------- NET CASH USED BY OPERATING ACTIVITIES (116,495) (88,659) CASH FLOWS FROM FINANCING ACTIVITIES: CAPITAL CONTRIBUTION RECEIVED 33,692 38,943 DISTRIBUTIONS - (443) ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 33,692 38,500 ----------- ----------- NET INCREASE (DECREASE) IN CASH (82,803) (50,159) CASH BALANCE, BEGINNING OF PERIOD 1,097,967 1,337,519 ----------- ----------- CASH BALANCE, END OF PERIOD $ 1,015,164 $ 1,287,360 =========== =========== 36

/STATEMENT /OF ~~Yes /~~CASH /FLOWS NoBAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FOR THE FOR THE THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 1999 1998 1999 1998 ----------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(165,922) $(290,221) $(350,894) $(599,861) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY OPERATING ACTIVITIES: EQUITY IN LOSSES OF OPERATING PARTNERSHIPS 80,750 214,515 183,106 458,116 DECREASE (INCREASE) IN OTHER ASSETS - (20,385) - (37,021) INCREASE (DECREASE) IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES 17,407 7,155 (16,471) 1,171 ----------- ----------- ----------- ----------- TOTAL ADJUSTMENTS 98,157 201,285 166,635 422,266 ----------- ----------- ----------- ----------- NET CASH USED BY OPERATING ACTIVITIES (67,765) (88,936) (184,259) (177,595) CASH FLOWS FROM FINANCING ACTIVITIES: CAPITAL CONTRIBUTION RECEIVED 37,374 8,746 71,065 47,688 DISTRIBUTIONS - - - (443) ----------- ----------- ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 37,374 8,746 71,065 47,245 ----------- ----------- ----------- ----------- NET DECREASE IN CASH (30,391) (80,190) (113,194) (130,350) CASH BALANCE, BEGINNING OF PERIOD 1,015,164 1,287,359 1,097,967 1,337,519 ----------- ----------- ----------- ----------- CASH BALANCE, END OF PERIOD $ 984,773 $ 1,207,169 $ 984,773 $ 1,207,169 =========== =========== =========== ===========

~~DOCUMENTS~~STATEMENT ~~INCORPORATED~~OF CASH FLOWS BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FOR THE FOR THE THREE MONTHS ENDED NINE MONTHS ENDED ------------------ ----------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1999 1998 1999 1998 --------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $ (120,876) $ (324,531) $ (471,770) $ (924,392) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY ~~REFERENCE~~OPERATING ACTIVITIES: EQUITY IN LOSSES OF OPERATING PARTNERSHIPS 81,500 223,584 264,606 681,700 DECREASE (INCREASE) IN OTHER ASSETS - 20,400 - (16,621) INCREASE (DECREASE) IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES (19,275) 8,417 (35,746) 9,588 ----------- ----------- ----------- ----------- TOTAL ADJUSTMENTS 62,225 252,401 228,860 674,667 ----------- ----------- ----------- ----------- NET CASH USED BY OPERATING ACTIVITIES (58,651) (72,130) (242,910) (249,725) CASH FLOWS FROM FINANCING ACTIVITIES: CAPITAL CONTRIBUTION RECEIVED (48,624) 11,679 22,441 59,367 DISTRIBUTIONS (6,536) - (6,536) (443) ----------- ----------- ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES (55,160) 11,679 15,905 58,924 ----------- ----------- ----------- ----------- NET INCREASE IN CASH (113,811) (60,451) (227,005) (190,801) CASH BALANCE, BEGINNING OF PERIOD 984,773 1,207,169 1,097,967 1,337,519 ----------- ----------- ----------- ----------- CASH BALANCE, END OF PERIOD $ 870,962 $ 1,146,718 $ 870,962 $ 1,146,718 =========== =========== =========== ===========

38 The expenses for each quarter, which consist primarily of the Partnership's equity in losses passed through to the Partnership from the Operating Partnerships, exceeded income, comprised principally of interest income, for each quarter. For interim periods, the Partnership estimates its equity in losses of the Operating Partnerships based on their operations for the prior calendar year. The losses were $120,877 for the quarter ended December 31, 1999, $165,922 for the quarter ended September 30, 1999, and $184,971 for the quarter ended June 30, 1999, respectively, as compared to the losses of $324,530 for the quarter ended December 31, 1998, $290,221 for the quarter ended September 30, 1998, and $309,639 for the quarter ended June 30, 1998. The quarter-to-quarter comparison of interest income, which includes interest income on Investor Notes, may not be meaningful, as the Partnership's collection from the Investor Notes and the related interest were made on an semi-annual basis. Generally interest income has been decreasing due to decrease in cash and decrease in the amount of the Investor Notes outstanding. LOOKING FORWARD STATEMENTS Certain items discussed in this Report constitute forward-looking statements within the meaning of the Private Securities Litigation reform Act of 1995 and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You can identify such statements by the fact that they do not relate strictly to historical or current facts. Statements which make reference to the expectations or beliefs of the Partnership or any of its management are such forward-looking statements. These statements use words such as "believe", "expect", "should" and "anticipate". All such forward-looking statements speak only as of the date of this Report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. Not Applicable ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See Item 14 and Exhibit 12 for a list of the Partnership's Financial Statements filed as part of this report. 39 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 and has no employees of its own. GENERAL PARTNER The sole General Partner of the Partnership is Megan Asset Management, Inc., whose mailing address is 1424 West Century Ave., Suite 102, Bismarck, ND 58503. Megan Asset Management, which is also the Independent Manager of the Partnership, is a Delaware corporation whose executive officers are Gary L. Maddock, Chairman and Secretary, and Paul J. Maddock, President and Treasurer. The shareholders of Megan Asset Management are Gary L. Maddock (50%), and Paul J. Maddock (50%). Except as limited by the Partnership Agreement, by the Plan or by the Management Agreement, the General Partner has full, exclusive and complete discretion in the management and control of the Partnership. THE INDEPENDENT MANAGER In view of the need to have an independent manager that was not affiliated with First American take over the responsibility for the administration of the Partnership, a Management Agreement between the Partnership and the Independent Manager was entered into and provides for the Independent Manager to conduct and manage, on the Partnership's behalf, the Partnership's operations in connection with, among other things, collection, investment and disbursement of funds, maintenance of books and records, preparation of tax returns and review and coordination of related-party tax filings. Pursuant to the Management Agreement, the Independent Manager was appointed the exclusive agent of the Partnership to supervise and manage, on behalf of the Partnership, all of the operations of the Partnership under the Plan. (See "Item 1. Business - Organization" above) Even after the merger of both the General Partner's and Independent Manager's rights and obligations into Megan Management, and subsequently Megan Asset Management, the Management Agreement was kept in place because it outlined the compensation and duties to be performed more specifically than did the Partnership Agreement. The compensation of the Independent Manager is set forth under "Item 11. Executive Compensation." Gary L. Maddock, 61, Chairman of Megan Asset Management, is a real estate attorney, CPA and has been a licensed real estate broker. He also has extensive experience in other phases of real estate. Prior to July, 1989, Gary Maddock was Executive Vice President of First American 40 for two years, resigning in a management dispute. As a former partner of Burns, Summit, Rovins and Feldesman, and in his own subsequent law practice, he has represented owner/developers of projects ranging from a proposed $100 million Caribbean hotel, marina and condominium development to a 250-room urban hotel and conference center to a proposed $15 million residential waterfront development on Long Island, New York. As an officer of various companies affiliated with Megan Asset Management, he has consulted and assisted developers in (i) obtaining in excess of $20 million in debt financing, (ii) placing in excess of $60 million in Tax Credits and (iii) building hundreds of units of low to moderate income housing. He also has overseen the management of numerous projects with housing units for low income families and the elderly. He has been engaged in and continues to be engaged in the practice of law and has performed professional services for the Partnership. See "Item 13. Certain Relationships and Related Transactions". Paul J. Maddock, 49, President of Megan Asset Management, has been with the Independent Manager for ten years. Paul Maddock spends about 70% of his time working on and overseeing the management of the Partnership. He is a CPA and was formerly a tax manager for a regional CPA firm. THE INVESTOR COMMITTEE Pursuant to the Plan, the Investor Committee performed an oversight role in connection with the approval of the deferral of distributions to be made to the Limited Partners and the use thereof to pay costs and expenses for the administration and operation of the Partnership or to purchase interests in partnerships which own, or are intended to own, projects which are intended to qualify for Tax Credit and to maintain its investment in the Projects. (See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Capital Resources" and "Liquidity" above). The Investor Committee does not perform any management functions with respect to the Partnership. All but one of the current members of the Investors Committee are direct or indirect holders of an Interest in the Partnership. The members of the Investor Committee are as follows: Fran Hoaglund, Chair, 59. President of Tax Equity Associates for over10 years. Financial planner and tax specialist for more than 25 years. Holder of an Interest. David Apple, 47. President of David Apple, Ltd. (certified public accountants) for over 10 years. CPA for more than 15 years. Holder of an Interest. James Linna, 62. President of First Midwest Securities, Inc. and President of First Midwest Insurance Services, Inc. for over five years. National Association of Securities Dealers ("NASD") principal; licensed real estate broker; security representative for more than 20 years. Holder of an Interest. Joseph Schwartz, 35. Treasurer of Gregory Schwartz & Co. since 1991. Prior thereto Mr. Schwartz was employed as a certified public accountant with Arthur Andersen & Co. (1989-1991) 41 and Plante & Moran (1988), following his graduation from the University of Notre Dame in 1988. William Walczak, 61. CPA for the past 20 years and currently a member of the accounting firm of MacDonald & Walczak, CPAs, LLC. Holder of an Interest. THE DEVELOPER CLASS REPRESENTATIVE The Developer Class Representative is ERC Properties, Inc. located in Fort Smith, Arkansas which was the chairman of the Unofficial Committee of Developers during the Debtor Investor Limited Partnerships' bankruptcy proceedings (see "Item 1. Business - Organization" above) and continues to represent the approximately 139 Operating Partnerships. Pursuant to the Plan, the Developer Class Representative had and continues to have many responsibilities including but not limited to performing an oversight role in connection with the each Debtor Investor Limited Partnership's right to commence any action to avoid or recover any Pre-Petition transfer of property; negotiate with the Independent Manager as to the amount each Operating Partnership shall distribute to the Master Limited Partnership on or before April 1 of each year commencing in the year 2000 which shall not exceed $750; file any financing statement (without a Debtor Investor Limited Partnership's or the Master Limited Partnership's signature) which is reasonable or necessary to perfect any security interests granted to, or retained by, an Operating Partnership under the Plan; it was deemed to be a holder in due course of the Unfinanced Notes; is directed to execute and record any and all documents which are required to be executed and recorded under applicable nonbankruptcy law to effect the admission of the Master Limited Partnership as a limited partner of the Operating Partnerships; and under the Management Agreement to preapprove all withdrawals by the Independent Manager from the Escrow Account, including all checks drawn on and wire transfers made from the Escrow Account. The Developer Class Representative is to be exculpated from any and all liability that may arise out of any action or inaction by the Developer Class Representative under the Plan and Management Agreement unless caused by his gross negligence or willful misconduct. For its services, the Developer Class Representative is paid $15,000 per year by the Partnership. ITEM 11. EXECUTIVE COMPENSATION. The following table shows compensation for management services rendered in all capacities to the Partnership by Megan Asset Management, Inc. as Independent Manager during the periods indicated. SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION Fiscal Year All Other NAME AND PRINCIPAL POSITION ENDED FEE COMPENSATION (2) --------------------------- ----- ------ ---------------- Megan Asset Management, Inc. - 3/31/00 $ 131,732 $ 18,512 Independent Manager (1) 3/31/99 $ 119,500 $ 15,529 43 3/31/98 $ 134,352 $ 9,645 (1) The Independent Manager for periods prior to January 1, 1993 was Megan Management, a company under common ownership and control with Megan Asset Management. Megan Management assigned its rights and obligations as Independent Manager to Megan Asset Management as of December 31, 1992. (2) Consists of payment for reimbursement of expenses and services rendered other than pursuant to the Management Agreement. COMPENSATION OF THE INDEPENDENT MANAGER Commencing in calendar year 1995, the Independent Manager, under the Management Agreement, is entitled to receive $119,500 annually, plus $30,000 per year to cover the cost of preparation of tax returns and financial statements, for each of the years 1995 through 1998. Prior to calendar 1995, the Independent Manager was entitled to receive $396,000, plus $40,000 per year to cover the cost of preparation of tax returns and financial statements and $75,000 in relation to investor billings due to the Secured Lender refinancing. Commencing with calendar year 1999, the Independent Manager became entitled to an annual base fee of $119,500, together with an additional $30,000 to cover the cost of preparation of tax returns and financial statements, less $750 for each Operating Limited Partnership in which the Partnership ceases to own the limited partnership interest during 1999 and thereafter. The foregoing is in lieu of payment to the Independent Manager of amounts pursuant to the Plan sections 6(6)(c) (providing for annual payment from each Operating Partnership to the Partnership of $750 for each of the years 1995 through 1999) and 6(6)(d) (providing for annual payments from each Operating Partnership to the Partnership of an amount to be negotiated but not to exceed $750 for each year commencing with the year 2000) of the Plan. The Independent Manager is also entitled to receive an amount equal to 50% of any distributions originally payable to Continental Construction Management Corporation, a subsidiary of First American, under the Plan ("Continental Construction") and the Independent Manager is to pay to the Partnership an amount equal to 25% of gross fees, if any, earned by it or its Affiliates directly from any of the Operating Partnerships (not including amounts owed to the Independent Manager pursuant to the Management Agreement). The total amount originally due to Continental Construction, with 8% interest as provided in the Plan, as of June 30, 2002 is $4,630,000, of which, pursuant to the Settlement Agreement, 50% is due to the Independent Manager and 50% is due to the Partnership. With respect to the above 25% of gross fees earned from any of the Operating Partnership, $1,125 and $1,600 were due and paid to the Partnership for the 2000 and 1999 Fiscal Years. Subsequent to this reporting period, an aggregate of $2,025 was due and paid to the Partnership by the Independent Manager for fiscal period ending March 31, 2001, from fees earned by it or its Affiliates directly from the Operating Partnerships. The Management Agreement also provides for the Partnership to indemnify the Independent Manager and its officers, directors and employees against claims arising in connection with the formation of the Partnership and the performance of their duties, except to the extent arising from gross 44 negligence or willful misconduct. COMPENSATION OF THE GENERAL PARTNER Prior to December 31, 1994, pursuant to the Settlement Agreement, the General Partner was entitled to $10,000 per month ($120,000 per year) for performing the day-to-day obligations and duties as the general partner of the Partnership through December 31, 1994. Thereafter, the General Partner was to receive no additional amounts payable by the Partnership for the performance of such functions during the remaining term of the Partnership, except as otherwise provided in the Plan. If any such additional compensation is requested by the General Partner it will be subject to competitive bidding. No such additional sums have been paid or requested by the General Partner. COMPENSATION OF THE INVESTORS COMMITTEE The Investors Committee received an annual operating budget from the Partnership of up to $50,000, through December 31, 1994, but which was continued during subsequent periods including the periods in which the Partnership was considering exit or liquidation strategies pursuant to a budget approved by the General Partner, to cover the costs, fees and expenses of performing its oversight duties. Members of the Investors Committee receive $125.00 per hour, plus direct expenses, for time spent in the performance of their duties on behalf of the Investors Committee, including $1,000 for attendance at meetings of the Investors Committee. An aggregate of $9,334, $3,575, and $9,767 was paid to Investors Committee by the Partnership for fiscal periods ending March 31, 2000, March 31, 1999 and March 31, 1998. The members of the Investors Committee are also indemnified by the Partnership against claims arising in connection with the formation of the Partnership and the performance of their duties, except to the extent arising from gross negligence or willful misconduct the same as the Independent Manager and the Developers Class Representative. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. No partner is the holder of 5% or more in Limited Partnership Interests of the Partnership. Neither the General Partner, Independent Manager nor any of its officers or directors hold any Limited Partnership Interests. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. GARY L. MADDOCK P.C. Gary L. Maddock P.C. is a New York corporation of which Megan Asset Management's Chairman, Secretary and shareholder, Gary L. Maddock, is also the president and sole shareholder and through which he practices law and is the only full-time employee. The Partnership paid Gary L. Maddock P.C. approximately $190,564 in legal fees and expenses related to legal services rendered to the Partnership, during the 2000 Fiscal Year. 45 PAUL J. MADDOCK P.C. Paul J. Maddock P.C. is a North Dakota corporation of which Megan Asset Management's President, Treasurer and shareholder, Paul J. Maddock, is also the president and sole shareholder and through which he practices public accounting. The Partnership paid Paul J. Maddock P.C. approximately $40,525 in accounting fees during the 2000 Fiscal Year related to tax return services rendered to approximately 60 Operating Partnerships and the review of the tax returns of all other Operating Partnerships. Each Operating Partnership is responsible for and is billed for these accounting and review services which are, when and if collected, reimbursed to the Partnership. 46 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) Financial Statements and Financial Statement Schedules Reports of Independent Accountants Balance Sheets as of March 31, 2000, March 31, 1999 and March 31, 1998 Statements of Operations for the fiscal year ended March 31, 2000, March 31, 1999, March 31, 1998 and March 31, 1997 Statements of Changes in Partners' Capital for the fiscal year ended March 31, 2000, March 31, 1999, March 31, 1998 and March 31, 1997 Statements of Cash Flows for the fiscal year ended March 31, 2000, March 31, 1999, March 31, 1998 and March 31, 1997 Notes to Financial Statements as of March 31, 2000, (b) Exhibits (listed according to the number assigned in the table to Item 601 of Regulation S-K) *2a Joint Plan of Reorganization of 52 Debtors dated May 9, 1990 *2a(i) Order Confirming Plan of Reorganization of the Bankruptcy Court, dated July 10, 1990. *2a(ii)Order Amending Confirmation Order, dated October 3, 1990. *2b Order Clarifying Joint Plan dated December 11, 1990. *2c Order Modifying Joint Plan entered March 6, 1991. *2c(i) Order Amending Confirmation Order, dated April 8, 1991. *2d Second Order Modifying Joint Plan entered June 22, 1992. *2e Final Decree, dated May 20, 1993. *3a Certificate of Limited Partnership of Bayfield Low Income Housing Limited Partnership. *4a Amended and Restated Agreement of Limited Partnership of Bayfield Low Income Housing Limited Partnership. *10a Amended and Restated Management Agreement dated as of December 23, 1991. *10b Form of Partnership Interest Security Agreement with Developer. *10c Form of Unfinanced Note Security Agreement with Developers. *10d Form of Loan and Security Agreement. *10e Settlement Agreement dated December 4, 1991 between First American Holdings, Inc., Megan Management Company, Inc., Parkgate International Ltd., The Fidelity Management Company, Inc. andContinental Construction Management Corporation *10f Amendment dated December 23, 1991 to Settlement Agreement dated December 4, 1991 between First American Holdings, Inc., Megan Management Company, Inc., Parkgate International Ltd., The Fidelity Management Company, Inc. and Continental Construction Management Corporation 12 Report of Independent Accountants, Financial Statements and Notes thereto *28a Net Worth Formula and Allocation to Investors of Interests in Master Limited Partnership. *28b Investor Notes. *28c Agreements and Certificate of Limited Partnership of the Operating Partnerships. (c) Reports on Form 8-K None ------------------------- * Incorporated by reference to Exhibit of the same number to Form 10-K for the Fiscal Year Ended March 31, 1993 * * Incorporated by reference to Exhibit of the same number to Form 10-K for the Fiscal Year Ended March 31, 1993 ** Incorporated by reference to Exhibit of the same number to Form 10-K for the Fiscal Year Ended March 31, 1993 47 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: July 30, 2002 BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP By: MEGAN ASSET MANAGEMENT, INC. Independent Manager/General Partner By: /S/ GARY L. MADDOCK --------------------------- Gary L. Maddock, Chairman 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 dated indicated. Dated: July 30, 2002 By: /S/ GARY L. MADDOCK ---------------------------------- Chairman and Director, (Principal Executive Officer) Megan Asset Management, Inc. Dated: July 30, 2002 By: /S/ PAUL J. MADDOCK ---------------------------------- President and Director, (Principal Accounting Officer) Megan Asset Management, Inc. Dated: July 30, 2002 By: /S/ MICHELE MADDOCK --------------------------------- Director, Megan Asset Management, Inc. 48 BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FINANCIAL STATEMENTS March 31, 2000 Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 CONTENTS: Independent Auditors' Report F-1 Financial Statements Balance Sheets F-3 Statements of Operations F-4 Statements of Changes in Partners' Capital F-5 Statements of Cash Flows F-6 Notes to Financial Statements F-7 INDEPENDENT AUDITORS' REPORT To The Partners Bayfield Low Income Housing Limited Partnership We have audited the accompanying balance sheets of Bayfield Low Income Housing Limited Partnership ("the Master Limited Partnership") as of March 31, 2000 and March 31, 1999, and the related statements of operations, changes in partners' capital and cash flows for the years ended March 31, 2000, 1999 and 1998. These financial statements are the responsibility of the Master Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of 144 of 147 Operating Partnerships in 2000, 138 of 147 in 1999 and 140 of the 147 Operating Partnerships in 1998 in which Bayfield Low Income Housing Limited Partnership has invested. The financial statements of 50 in 2000, 44 in 1999 and 45 in 1998 of these Operating Partnerships were audited by other auditors whose reports have been furnished to us and our opinion, to the extent it relates to the amounts included for these Operating Partnership investments, is based solely on the reports of the other auditors. These investments comprised 18.8 percent and 21.3 percent of the Master Limited Partnership's total assets at March 31, 2000 and March 31, 1999, respectively, and 16.3, 6.5, and 36.1 percent, respectively, of the total loss of the Master Limited Partnership for the years ended March 31, 2000, March 31, 1999 and March 31, 1998. Except as discussed in the following paragraph, we conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion. The financial statements of 94 of the Operating Partnerships in 2000, 94 of the Operating Partnerships in 1999 and 95 of the Operating Partnerships in 1998 were not audited. These investments comprised 30.0 percent and 31.0 percent of the Master Limited Partnership's total assets at March 31, 2000 and March 31, 1999, respectively, and 10.5 percent, 6.8 percent and 33.4 percent, respectively, of the total loss of the Master Limited Partnership for the years ended March 31, 2000, March 31, 1999 and March 31, 1998. We were unable to satisfy ourselves about Bayfield Low Income Housing Limited Partnership's investment in these Operating Partnerships by means of other auditing procedures. F-1 INDEPENDENT AUDITORS' REPORT - Continued In our opinion, based on our audits and the reports of other auditors, except for the effects of such adjustments, if any, as might have been determined to be necessary had the 94 Operating Partnerships in 2000, 94 Operating Partnerships in 1999 and 95 Operating Partnerships in 1998 referred to in the preceding paragraph been audited, the financial statements referred to above present fairly, in all material respects, the financial position of Bayfield Low Income Housing Limited Partnership as of March 31, 2000 and March 31, 1999, and the results of its operations and its cash flows for the years ended March 31, 2000, March 31, 1999 and March 31, 1998, in conformity with generally accepted accounting principles. /s/ Smith & Radigan Atlanta, Georgia August 22, 2000 F-2 Balance Sheets BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP ASSETS March 31, 2000 1999 --------------------------- INVESTMENTS IN OPERATING LIMITED PARTNERSHIP OTHER ASSETS Cash $ 807,285 $ 1,097,967 Advances to operating partnerships 353,121 341,212 ---------- ----------- $ 2,267,963 $ 2,732,346 =========== =========== LIABILITIES AND PARTNERS' CAPITAL March 31, 2000 1999 -------------------------- Accounts payable and accrued expenses $ 65,608 $ 59,440 Contributions payable to operating partnerships 94,535 94,535 ----------- ----------- 160,143 153,975 Partners' capital Limited partners 3,226,650 3,764,062 General partner 15 18 Subscriptions receivable (1,118,845) (1,185,709) ----------- ----------- 2,107,820 2,578,371 $ 2,267,963 $ 2,732,346 =========== =========== The Notes to Financial Statements are an integral part of these Statements. F-3

~~List~~Statements ~~hereunder~~of ~~the~~Operations ~~following~~BAYFIELD ~~documents~~LOW ifINCOME ~~incorporated~~HOUSING byLIMITED ~~reference~~PARTNERSHIP ~~and~~For the ~~Part~~Year ofEnded ~~the~~March ~~Form~~31, --------------------------------------------------------- 2000 1999 1998 --------------------------------------------------------- Interest income $ 28,378 $ 63,763 $ 78,291 Other income 1,334 1,600 10,379 -K----------- ~~(e.g.~~------------- ------------ 29,712 ~~Part~~65,363 I88,670 ~~Part~~Equity IIin losses of operating partnerships (142,167) ~~etc.~~(51,639) ~~into~~(873,489) ~~which~~Expenses ~~the~~Management ~~document~~fees is119,500 ~~incorporated:~~119,500 119,500 Professional services 292,376 280,970 347,013 Other expenses 6,548 2,147 5,355 ------------ ------------ ------------- 418,424 402,617 471,868 ------------- ------------ ------------- Net loss $ (530,879) $ (388,893) $ (1,256,687) ~~Any~~============ ~~annual~~============ ~~report~~============= Net loss allocated to ~~security~~General ~~holders;~~Partner $ (3) $ (2) ~~Any~~$ ~~proxy~~(5) or============ ~~information~~============ ~~statement;~~============= ~~and~~Net ~~(3)~~loss ~~Any~~allocated ~~prospects~~to ~~filed~~limited ~~pursuant~~Partners to$ ~~Rule~~(530,876) ~~424~~$ (b388,891) or$ (c1,256,682) ~~under~~============ ~~the~~============ ~~Securities~~============= ~~Act~~Net ofloss ~~1933:~~per ~~NONE~~.05% limited Partnership interest $ (265) $ (194) $ (628) ============ ============ =============

The Notes to Financial Statements are an integral part of these Statements. F-4

~~This~~Statements ~~filing~~of isChanges ain ~~consolidated~~Partners' ~~filing~~Capital BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP Limited General Subscriptions Partners Partners Receivable Total ---------------------------------------------------------------------------- Partners' capital March 31, 1997 $ 5,445,677 $ 25 $ (1,315,052) $ 4,130,650 Net loss for the ~~fiscal~~ year ended March 31, ~~1999.~~1998 ~~Bayfield~~(1,256,682) ~~Low~~(5) ~~Income~~-0- ~~Housing~~(1,256,687) ~~Limited~~Distributions ~~Partnership~~(9,250) ~~has~~-0- ~~not~~-0- ~~heretofore~~(9,250) ~~filed~~Collections anand ~~Annual~~adjustments ~~Report~~(26,349) on-0- ~~Form~~91,765 1065,416 -K------------ ----------- -------------- ------------ Partners' capital March 31, 1998 4,153,396 20 (1,223,287) 2,930,129 Net loss for the ~~fiscal~~ year ended March 31, 1999 (388,891) ~~nor~~(2) ~~has~~-0- it(388,893) ~~filed~~Distributions ~~Quarterly~~(443) ~~Reports~~-0- on-0- ~~Form~~(443) 10Collections and adjustments -Q0- -0- 37,578 37,578 Partners' capital March 31, 1999 3,764,062 18 (1,185,709) 2,578,371 Net loss for the ~~quarterly~~year ~~periods~~ ended ~~June~~March 3031, ~~September~~2000 30(530,876) (3) -0- (530,879) Distributions (286) -0- -0- (286) Collections and ~~December~~adjustments (6,250) -0- 66,864 60,614 ------------- ------------ ------------- ------------ Partners' capital March 31, ~~1998.~~2000 $ 3,226,650 $ 15 $ (1,118,845) $ 2,107,820 ============= ============ =============== ============

The Notes to Financial Statements are an integral part of these Statements. F-5

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP FORM 10-K FOR THE YEAR ENDED MARCH 31, 1999
INDEX
PART I
Item 1.	Business	1
Item 2.	Properties	7
Item 3.	Legal Proceedings	22
Item 4.	Submission of Matters to a Vote of Security Holders	22
PART II
Item 5.	Market for Registrant's Limited Partnership Interests and Related Security Holder Matters	22
Item 6.	Selected Financial Data	23
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosure about Market Risks	37
Item 8.	Financial Statements and Supplementary Data	37
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	37
PART III
Item 10.	Directors and Executive Officers of the Registrant	37
Item 11.	Executive Compensation	40
Item 12.	Security Ownership of Certain Beneficial Owners and Management	42
Item 13.	Certain Relationships and Related Transactions	42
PART IV
Item 14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	43
Signatures		45

Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE A - ORGANIZATION Bayfield Low Income Housing Limited Partnership (the "Master Limited Partnership") was organized as of July 1, 1990 pursuant to the provisions of a Joint Plan of Reorganization of 52 debtor investor limited partnerships ("the Debtor Investor Partnerships"), dated May 9, 1990, pursuant to the provisions of Chapter 11 of Title 11, United States Code, as amended by an Order Clarifying the Joint Plan dated December 11, 1990 and an Order Modifying the Joint Plan entered March 6, 1991 or as may have been otherwise amended or modified by orders settling litigation with non-electing Developers with respect to those Developers or their Operating Partnerships ("the Plan"). The Master Limited Partnership was created under the Plan as the entity into which all of the assets and liabilities of the fifty-two Debtor Investor Partnerships were "rolled-up" as of July 1, 1990 and after which their assets and businesses would be managed.

~~PART~~The Ififty-two Debtor Investor Partnerships were the following Delaware limited partnerships: ARLINGTON Estates Limited Partnership EVERGREEN Estates Limited Partnership BARRINGTON Estates Limited Partnership FIRST Estates Limited Partnership BAYFIELD Estates Limited Partnership GLENWOOD Estates Limited Partnership BEECHFIELD Estates Limited Partnership GREENFIELD Estates Limited Partnership BIRCHFIELD Estates Limited Partnership GREENWOOD Estates Limited Partnership BLAKEFIELD Estates Limited Partnership HARBORFIELD Estates Limited Partnership BRIGHTON Estates Limited Partnership HOLLY Estates Limited Partnership BROOKLINE Estates Limited Partnership HUNTER Estates Limited Partnership CANDLE RIDGE Estates Limited Partnership KEHRS MILL Estates Limited Partnership CANTERBURY Estates Limited Partnership LITTLEFIELD Estates Limited Partnership CARLYSLE Estates Limited Partnership LIVINGSTON Realty Investors Limited CHERRYWOOD Estates Limited Partnership MEADOWFIELD Estates Limited Partnership CHESTERFIELD Estates Limited Partnership MITCHELLFIELD Estates Limited Partnership CLARKSON Estates Limited Partnership NORTHFIELD Estates Limited Partnership CLAYTON Estates Limited Partnership NORWICH Estates Limited Partnership CLOVERFIELD Estates Limited Partnership OLEANDER Estates Limited Partnership COPPERFIELD Estates Limited Partnership PINE HOLLOW Estates, A Delaware Ltd. Partnership CRESCENT Estates Limited Partnership PLAINFIELD Estates Limited Partnership DEERFIELD Estates Limited Partnership PLANTINGFIELD Estates Limited Partnership DELAFIELD Estates Limited Partnership REDWOOD Estates Limited Partnership EDENFIELD Estates Limited Partnership ROSEWOOD Estates Limited Partnership EMERALD Estates Limited Partnership SAGEWOOD Estates Limited Partnership EVEREST Estates Limited Partnership

F-7 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000

~~Item~~NOTE ~~1. Business~~A - ORGANIZATION - CONTINUED SOUTHFIELD Estates Limited Partnership WALNUT Estates Limited Partnership SPRINGFIELD Estates Limited Partnership WYNNFIELD Estates Limited Partnership SUMMERFIELD Estates Limited Partnership WILSHIRE Estates Limited Partnership SYCAMORE Realty Investors Limited Partnership

Each of the Debtor Investor Partnerships was organized as a Delaware limited partnership by First American Holdings, Inc. First American Holdings, Inc. a Delaware corporation, (sometimes referred to herein as "First American") was the sole general partner of each of the Debtor Investor Partnerships and general partner of the Master Limited Partnership. Each Debtor Investor Partnership was formed to acquire equity interests in limited partnerships (the "Operating Partnerships"), each of which was expected to develop, own and operate a multi-family apartment complex for low to moderate income tenants ("the Projects"). The Projects were expected to receive financing from the Rural Development, formerly known as the Farmers Home Administration, of the U.S. Department of Agriculture, and to receive interest credits and, in some cases, rental assistance payments under Section 515 of the Housing Act of 1949. Each Project was expected to qualify for the low income housing credit ("LIHC") under Section 42 of the Internal Revenue Code of 1986. Section 42 of the Tax Code was enacted by the United States Congress to promote the development of low and moderate income rental housing. In order to generate LIHC, properties must be rented to tenants whose incomes are below certain levels established by the federal government, and the rents which are permitted to be charged are strictly limited by government regulations. As a result of adverse economic conditions and increased competition, the Debtor Investor Partnerships were placed under the protection of Chapter 11 of the Bankruptcy Code. Principal provisions of the plan of reorganization, as approved July 1990 and amended ("the Plan"), follow: In consideration of their contribution of assets to the Master Limited Partnership, each of the Debtor Investor Partnerships received an allocable portion of the limited partnership interests in the Master Limited Partnership. The limited partnership interests in the Master Limited Partnership were then distributed by each of the Debtor Investor Partnerships to the Investors in such Debtor Investor Partnership and so registered in the books of the Master Limited Partnership. The distribution of the interests in the Master Limited Partnership to the Investors was to be complete on the registration of such interests in the books of the Master Limited Partnership, and no certificates of limited partnership interests were distributed to any party. The limited partnership interests in the Master Limited Partnership are subject to the security interests granted under the Plan to Secured Lenders and Developers, and the Master Limited Partnership shall make no transfer of any such limited partnership interest without the consent of the appropriate Secured Party. F-8 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE A - ORGANIZATION - CONTINUED All claims against and interests in the Debtor Investor Partnerships were divided into the following classes: (1) ADMINISTRATION CLASS consists of all allowed or bankruptcy court approved administration claims of a Debtor Investor Partnership, including, without limitation, the costs and expenses (including attorneys' and accountants' fees as approved by the bankruptcy court) of each official committee of the Debtor Investor Partnerships and the unofficial committee of developers. Each member of such class received on confirmation cash equal to the allowed amount of its administration claim, except to the extent it has agreed to different treatment. (2) SECURED LENDER CLASS consists of all allowed claims based on loan and security agreements giving rise to valid, duly perfected and non-avoidable pre-petition security interests in investor notes, to the extent of the value of a Debtor Investor Partnership's interest at confirmation of the plan in the collateral securing such claims, less payments made or applied on account of such claims during the course of the Chapter 11 case. Except to the extent a member of such class has agreed to different treatment, it: (a) Retained any existing duly perfected security interest until all payments due to it under the plan shall have been paid in full; (b) Received a note from the Master Limited Partnership, pursuant to the loan repayment and security agreement; (c) Received a security interest from the Master Limited Partnership pursuant to the loan repayment and security agreement, with respect to: 1) any property of the Debtors that was transferred to the Master Limited Partnership and in which such secured lender held a duly perfected security interest as of the filing of the petition; and 2) those interests in the Master Limited Partnership which were distributed to the Investors whose investor notes are held by such Secured Lender. Such security agreements provide that all property in which a holder receives a security interest shall serve as collateral for all obligations to such holder under the Plan; and (d) Received cash payments of principal and interest as set forth in the Secured Lender Payment Schedule (after credit for any payments made or applied during the course of the Chapter 11 case). F-9 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE A - ORGANIZATION - CONTINUED (3) DEVELOPER CLASS consists of all allowed claims held by Operating Partnerships (or the general partners thereof) against a Debtor Investor Partnership exclusive of those specifically included in subsection (b) of the "Other Creditor Class." Except for Developers holding the auction interests, each of the Developers received: (a) Payments at the times specified in the Plan in amounts determined by a developer payment formula, provided, however, any amount which would otherwise be payable to a non-electing Developer were reserved and will not be made until the entry of a final order determining all litigation between the debtor and such non-electing Developer and any funds so reserved may be used by the Master Limited Partnership in connection with such litigation; (b) Payments such that the total of all payments to a Developer shall be equal to the full amount of such Developer's allowed claim plus interest at a rate equal to eight percent (8%) per annum; and (c) To the extent a party held a duly perfected non-avoidable security interest in assets of a Debtor Investor Partnership, such party retained its perfected security interest in such of those assets of that Debtor Investor Partnership which were transferred to the Master Limited Partnership and received the costs and expenses, if any, fixed by a Final Order of the bankruptcy court. The limited partnership agreements between the Debtor Investor Partnerships and each of the Operating Partnerships were to be amended as follows: (a) The Master Limited Partnership shall become the limited partner of such Operating Partnership in place of the Debtor Investor Partnership; (b) Commencing January 1, 1995, except as noted below, any cash flow to which a Debtor Investor Partnership is entitled shall be retained by the Developers; (c) On or before April 1 of each of the five (5) years commencing 1995, each Operating Partnership shall distribute to the Master Limited Partnership $750 per year, provided that such payment is not prohibited by any applicable agreement with a governmental agency or any applicable governmental agency rules or regulations. To the extent the payment or any portion is not paid in any year, the remainder shall accumulate and be paid at the earliest time the payment is not prohibited; and F-10 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE A - ORGANIZATION - CONTINUED (d) On or before April 1 of each year commencing 2000, each Operating Partnership shall distribute to the Master Limited Partnership an amount to be negotiated by the Independent Manager and the Developer Class Representative which shall not exceed $750, provided that such payment is not prohibited by any applicable agreement with a governmental agency or any applicable governmental agency rules or regulations. To the extent the payment or any portion is not paid in any year, the remainder shall accumulate and be paid at the earliest time the payment is not prohibited. (4) OTHER CREDITOR CLASS consists of all: (a) Allowed claims held by creditors of a Debtor Investor Partnership that are not otherwise classified under the Plan; (b) Allowed claims (or those portions of allowed claims) which represent the amounts to be reimbursed to the Operating Partnerships (or the general partners thereof) in connection with the filing of an amended partnership agreement for such Operating Partnership prior to the filing of the Petitions; and (c) Allowed claims (or those portions of allowed claims) which represent the amounts to be paid to Investors in connection with checks which were issued to Investors prior to the filing of the petitions. Each holder of an allowed claim in such class received payment in full at confirmation of the Plan; provided, however, that if the aggregate total of allowed claims of this class exceeded $55,000, each member of the Class received a PRORATA share of $55,000 based on the amount of its allowed claim. (5) PRE-PETITION LEGAL CLASS consists of all allowed claims held by Stairs, Dillenbeck, Kelly & Merle, attorneys, against a Debtor Investor Partnership for services rendered prior to the filing of the Petition of such Debtor Investor Partnership and not in connection with the Chapter 11 cases of the Debtor Investor Partnerships. Each holder of an allowed claim in such class received payments in full of its allowed claim in ten equal semiannual installments commencing July 1990. F-11 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE A - ORGANIZATION - CONTINUED (6) FIDELITY CLASS consists of all allowed claims held by Fidelity Management Corporation, an affiliate of First American, or any broker or dealer whose claim arises out of the sale of a limited partnership interest in a Debtor Investor Partnership. Holders of the Fidelity Class Allowed Claims shall receive in full of its allowed claim in ten semiannual payments of $69,237 each commencing in July, 1990. (7) FIRST AMERICAN CLASS consists of all allowed claims (but not interests) held by First American against a Debtor Investor Partnership. Each holder of a First American Class allowed claim shall receive: (a) Three semiannual payments of $66,667 commencing upon confirmation of First American's plan of reorganization. (b) Additional amounts, if any, pursuant to Article 15 of the Plan. ("Payments from Capital Events") (Note F). Such amounts will only be paid AFTER payment in full of amounts due from such monies to the Secured Lender Class and Developer Class, and payments have been made to the Investor Class equal to: twenty percent (20%) of its net capital invested; plus interest at a rate of ten percent (10%) per annum from December 31, 1994; plus an additional one hundred percent (100%) of its net capital invested. (8) INVESTOR CLASS consists of all interests and allowed claims of parties which arise out of the purchase or holding of limited partnership interests in a Debtor Investor Partnership, exclusive of those specifically included in subsection (c) of the "Other Creditor Class." Except as noted below, each of the Investors shall receive: (a) Limited partnership interests in the Master Limited Partnership (including all rights to allocations and distributions to which a partner is entitled thereunder) equal to the result of the following formula: (i) the limited partnership units in a Debtor Investor Partnership owned by such investor divided by the total of the limited partnership units in such Debtor Investor Partnership; multiplied by (ii) the allocation of units in the Master Limited Partnership to a Debtor Investor Partnership as determined by an allocation formula; F-12 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE A - ORGANIZATION - CONTINUED (b) Within thirty (30) days after June 30 and December 31 of each year (commencing December 31, 1990 and terminating on December 31, 1994) payments of a return of capital equal to a PRORATA portion (based on Net Capital Invested) of $507,801 for each period. Upon written consent of the Investor Committee, payments to be made to Investors pursuant to the above may be deferred and instead paid to Developers or for other costs and expenses for the administration of the Master Limited Partnership. Pursuant to Articles 14 and 15 of the Plan, Investors are entitled to receive additional payments based on proceeds from capital events and other specified conditions. (Note F.) (9) GENERAL PARTNER CLASS consists of all interests held by First American in a Debtor Investor Partnership. The holder became the general partner of the Master Limited Partnership and was entitled to certain payments from the proceeds of capital events pursuant to Article 15 of the Plan. (Note F.) An order modifying the Plan was entered on March 6, 1991. Under such modification, the Master Limited Partnership, on the written consent of the Investor Committee, may defer payments otherwise to be made to the Investors semi-annually as a return of capital, and use such monies to make payment to the developers or for other costs and expenses for the administration or operation of the Master Limited Partnership or to purchase interests in additional limited partnerships which own, or are intended to own, projects which are intended to qualify for LIHC (including the payment of any costs or expenses incurred in connection with such purchases). Pursuant to an agreement entered into in December 1991, as amended, First American withdrew as the General Partner of the Master Limited Partnership, subject to the consent of the Limited Partners of the Master Limited Partnership. In connection therewith, First American received a total of $434,968 for the transfer or release of all rights or economic benefits owed by the Master Limited Partnership to First American or its subsidiaries and in full settlement of any outstanding claims. Megan Management Company ("Megan"), the Independent Manager, agreed to become or have an entity under common control with it become General Partner of the Master Limited Partnership in place of First American subject to the approval of the Limited Partners; pending receipt of such approval, First American immediately relinquished to the Independent Manager any remaining management powers and responsibilities as well as all of its rights to income tax items related to its one percent ownership interest in the Master Limited Partnership from January 1, 1991 to December 22, 1991. These tax items were allocated on a prorata basis to the remaining partners. Megan Asset Management, Inc. ("Megan Asset") assumed the one percent ownership interest of First American as of December 31, 1991, subject to the approval of the F-13 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE A - ORGANIZATION -- CONTINUED Limited Partners. The agreement also provided for an increase in the Independent Manager's fees in compensation for the additional duties that it had been performing and would perform pursuant to the agreement of $35,000 at closing (December 31, 1991) to cover its takeover costs and $10,000 per month on the first day of every month subsequent to closing through December 31, 1994, the right to receive an amount equal to one-half of the distributions with respect to capital events previously payable to Continental Construction Management (Note F) and would pay to the Master Limited Partnership an amount equal to twenty-five percent of gross fees, if any, earned by it or its affiliates directly from any of the Operating Partnerships and for an extension of the term of the management agreement. As of December 31, 1991, the agreement had been approved by the Investor Committee and the Developer Representative and those provisions of the agreement which did not require consent of the Limited Partners of the Master Limited Partnership were implemented promptly. Thereafter, Megan designated Megan Asset Management, Inc., a newly formed affiliate, to be the new General Partner of the Master Limited Partnership, made the required filings under the Securities and Exchange Act of 1934's proxy rules and solicited the consent of the Limited Partners. In September, 1992, the Master Limited Partnership received approval of a majority in interest of its Limited Partners. With the agreed withdrawal of First American and the transfer of all of its rights and responsibilities to the Master Limited Partnership and Megan, maintaining the Independent Manager and General Partner as separate entities was no longer necessary. Accordingly, as of December 31, 1992, Megan assigned to Megan Asset and Megan Asset assumed all of the rights, powers and obligations of the Independent Manager of the Master Limited Partnership. Gary L. Maddock, then President and sole shareholder of both corporations, reaffirmed his personal guarantee of the performance of the Management Agreement by Megan Asset. NOTE B - SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments to be cash equivalents. INVESTMENTS IN OPERATING LIMITED PARTNERSHIPS The Master Limited Partnership accounts for its investments in Operating Partnerships (including acquisition costs) using the equity method, under which the Master Limited Partnership's capital investment in each Operating Partnership is adjusted for its share of the Operating Partnership's income or losses and for any distributions received or accrued. Such income and losses are recognized on a calendar year basis. Losses in excess of the Master Limited Partnership's aggregate investment in each Operating Partnership are not recognized. F-14 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE B - SIGNIFICANT ACCOUNTING POLICIES - CONTINUED INVESTMENTS IN OPERATING LIMITED PARTNERSHIPS - CONTINUED Costs previously recorded by the Debtor Investor Partnerships for services provided or to be provided by the General Partner and its affiliates relating to acquisitions of Operating Partnerships, including syndication fees, agency fees, investor services fees, partnership operations fees and audit indemnification fees, have been included in the Master Limited Partnership's aggregate investment in each Operating Partnership. For annual reporting purposes, the recorded equity in income or losses is based on the calendar year basis financial information submitted by the Operating Partnerships. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. INCOME TAXES No provision has been made for income taxes in the financial statements, as the partners' shares of the results of the Master Limited Partnership's operations are included in their respective income tax returns. Losses, which were previously allocated one percent to the General Partner and ninety-nine percent to the Limited Partners, will now, pursuant to the agreement of December 1991, as amended, be allocated to all of the Partners in proportion to the outstanding positive balances of their respective capital accounts until their respective capital accounts are reduced to zero. After capital accounts have been reduced to zero, further losses and LIHC's would be allocated one percent to the General Partner and the remaining ninety-nine percent to all Limited Partners. CONTRIBUTIONS PAYABLE TO OPERATING PARTNERSHIPS Contributions payable to Operating Partnerships are recorded at the gross amount due pursuant to the Plan. When the Master Limited Partnership sells or assigns an interest in an Operating Partnership, any remaining balance of contributions payable is included in computing the gain or loss on sale or assignment. Pursuant to the Plan, amounts due and unpaid to Operating Partnerships by the Debtor Investor Partnerships after the implementation of the Plan in July, 1990, accrue interest at the rate of eight percent. Failure to pay this interest is not a default under the Plan and any such unpaid interest is contingently payable as a first priority out of Capital Events (Note F). The Master Limited Partnership has F-15 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE B - SIGNIFICANT ACCOUNTING POLICIES - CONTINUED CONTRIBUTIONS PAYABLE TO OPERATING PARTNERSHIPS - CONTINUED not made any payments of this interest and has not recorded such interest on the accompanying financial statements. The maximum amount of interest which may become payable under the Plan as a first priority from Capital Events is estimated at approximately $1,800,000. NOTE C - INVESTMENT IN OPERATING LIMITED PARTNERSHIPS A summary of the Master Limited Partnership's investments in Operating Partnerships accounted for on the equity method as of March 31, 2000 and March 31, 1999 (Note B) is as follows:

~~Organization~~At March 31, 2000 ----------------------------------------------------------------------------------------------------------------------- Operating Limited Capital Acquisition Equity in Net Contribution Accumulated Partnership Contributed Costs Income (Losses) Investment Payable ----------------------------------------------------------------------------------------------------------------------- PARTNERSHIPS WHICH WERE AUDITED AFM RRH, Ltd.* $ 318,000 $ 84,977 $(520,236) $ -0- $ -0- Alachua Villas 257,290 72,481 (540,706) -0- 40,689 Baker Heights II Ltd. 200,252 53,782 (382,637) -0- -0- Bayshore North Apts-IV 313,568 83,796 (501,173) -0- -0- Blades Limited Partnership 263,431 70,838 (528,410) -0- -0- Broadway Terrace, Ltd. 225,642 60,864 (674,250) -0- 18,772 Cedar Grove Apts. 282,032 77,001 (515,788) -0- -0- Citrus Terrace, Ltd. 199,270 43,284 (690,009) -0- 3,951 Diamond Court II LP 231,129 63,419 (391,318) -0- -0- Donaldsonville Seniors 297,323 79,316 (218,866) 157,773 -0- Elmwood Estates 295,860 79,205 (576,498) -0- -0- First Street Apts. 321,157 85,344 (328,320) 78,181 -0- Flambeau Village 775,330 204,642 (995,589) -0- -0- Forest Park Apts. 215,330 55,915 (537,152) -0- -0- Franklin Vista II 162,388 43,640 (360,986) -0- -0- Gatewood Apts. Ltd. 295,383 78,064 (517,387) -0- -0- Greenleaf Gardens * 217,714 57,187 (432,258) -0- -0- Greenwood Assoc. 291,628 76,779 (579,286) -0- -0- Hickory Square Apts. 94,754 24,889 (148,190) -0- -0- Hilltop Manor Apts. * 216,667 56,761 (622,233) -0- -0- Hitchcock Housing 268,500 71,118 (476,882) -0- -0- Joaquin Apts. 294,871 78,653 (319,109) 54,415 -0- Lake City Village 312,889 74,743 (789,199) -0- -0- Lakecrest Apts. 312,954 85,773 (394,456) 4,271 -0- Lakeview Estates 242,678 65,845 (535,709) -0- -0- Lakewood Apts. II 181,777 47,748 (385,851) -0- -0- Las Rosas II, Ltd. 261,635 70,012 (451,733) -0- -0- Laurel Wood-Capital 202,867 65,524 (338,614) -0- -0- Lead Bayou, Ltd. 212,000 55,686 (492,648) -0- -0- Lillie Mae's Retirement 225,252 58,149 (455,795) -0- -0- Magnolia Plaza Apts. 257,802 68,111 (523,446) -0- -0- Many Seniors Apts. 258,400 62,094 (251,432) 69,062 -0- Maple Hill Apts. 296,560 78,616 (418,239) -0- -0- New Caney Oaks 223,492 60,543 (438,316) -0- -0- Oakdale-T F Management 247,884 65,506 (281,970) 31,420 -0- Old Oak Estates 184,856 48,556 (492,024) -0- -0- Onion Creek 302,524 80,449 (457,932) -0- -0- PDC Eighteen LP 196,521 52,298 (383,565) -0- -0- Pecan Villa Apts. 234,202 62,152 (433,059) -0- -0- Pecanwoods Apts. III, Ltd. 261,277 69,024 (298,925) 31,376 -0- Pocomoke Villas Ltd. 173,638 46,923 (428,567) -0- -0- * Audited by Smith & Radigan, Certified Public Accountants, LLC F-16

Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE C - INVESTMENT IN OPERATING LIMITED PARTNERSHIPS - CONTINUED

~~Bayfield~~At ~~Low~~March ~~Income~~31, ~~Housing~~2000 ~~Limited~~--------------------------------------------------------------------------------------------------------------------------- ~~Partnership~~Equity ~~(the~~in ~~"Partnership")~~Contribution isOperating aLimited ~~Delaware~~Capital ~~limited~~Acquisition ~~partnership~~Accumulated ~~organized~~Net asPartnership ofContributed ~~July~~Costs 1,Income ~~1990~~(Losses) ~~pursuant~~Investment toPayable ~~the~~--------------------------------------------------------------------------------------------------------------------------- ~~provisions~~PARTNERSHIPS ofWHICH aWERE ~~Joint~~AUDITED ~~Plan~~-- ofCONTINUED ~~Reorganization~~Ridge ofView 52Apts. ~~Debtors~~359,216 95,341 (~~investor~~695,937) ~~limited~~-0- ~~partnerships~~ -0- ~~the~~Rolling ~~"Debtor~~Meadow ~~Investor~~II ~~Partnerships")~~L.P. 237,370 ~~dated~~64,218 ~~May~~(385,163) 9-0- -0- Southeastern Assoc. 314,798 ~~1990~~82,688 ~~pursuant~~(580,651) to-0- ~~the~~-0- ~~provisions~~Sun ofRise ~~Chapter~~Apts. 11North of352,063 ~~Title~~95,182 11(615,781) ~~United~~-0- ~~States~~-0- ~~Code,~~Taft asGardens ~~confirmed~~148,042 ~~July 13~~39,871 ~~1990~~(293,455) ~~and~~-0- ~~amended~~-0- ~~from~~Taft ~~time~~Terrace to198,919 ~~time~~53,235 ~~thereafter~~ (~~the "Plan"~~472,848). ~~Each~~-0- of-0- ~~the~~Valley ~~Debtor~~Place ~~Investor~~Assoc. ~~Partnerships~~306,818 ~~was~~81,774 a(602,967) ~~newly~~-0- ~~formed~~-0- ~~Delaware~~West ~~limited~~Meadow ~~partnership~~II ~~which~~Apts. ~~was~~182,234 ~~originally~~49,185 ~~formed~~(316,266) to-0- ~~and~~-0- ~~did~~Willow ~~acquire~~Haven-Cross ~~equity~~323,905 ~~interests~~85,080 in(705,954) ~~limited~~-0- ~~partnerships~~-0- ~~(the~~Wilson ~~"Operating~~Lake ~~Partnerships")~~397,146 ~~each~~105,304 of(676,590) ~~which~~-0- ~~has~~-0- ~~developed~~Wolcott ~~and~~Assoc. ~~now~~349,130 ~~owns~~92,691 ~~and~~(529,420) ~~operates~~-0- a-0- ~~multi~~Woodcrest 233,244 61,464 (509,457) -~~family~~0- ~~apartment~~-0- ~~complex~~------------ ~~for~~----------- ~~low~~------------ to----------- ~~moderate~~---------- ~~income~~14,029,612 ~~tenants~~3,725,740 (~~each~~25,493,252) a426,498 ~~"Project").~~63,412 ~~(See~~------------ ~~"Item~~----------- 2.------------ ~~Properties.")~~----------- ----------

APARTNERSHIPS ~~majority~~WHICH ofWERE ~~the~~UNAUDITED ~~Projects~~Albany ~~received~~Commons, ~~financing~~LTD ~~under~~172,706 ~~Section~~46,737 ~~515~~(204,736) of14,707 ~~the~~-0- Anderson County Estates 120,768 32,116 (210,637) -0- -0- Aurora Limited 60,308 24,540 (382,180) -0- -0- Belfast Housing ~~Act~~Assoc. of273,653 ~~1949~~74,124 (as453,917) ~~amended~~-0- ~~"Section~~-0- ~~515"~~Berea Summit, Ltd. 42,524 11,855 (105,373) -0- -0- Berkshire Apts. #2 134,933 ~~which~~35,898 ~~authorized~~(353,659) ~~the~~-0- ~~Rural~~-0- Blanchard Apts. 165,624 43,899 (252,820) -0- -0- Brentwood Apts. 157,800 42,237 (284,644) -0- -0- Briar Hill Apts. 86,275 23,240 (170,500) -0- -0- Bunkie Apts 164,009 43,277 (296,131) -0- -0- Canal Town Assoc. 55,141 15,075 (19,239) 50,977 -0- Canyon Hills Villas 74,694 20,719 (142,788) -0- -0- Cedar Crest Apts. 93,972 25,078 (61,417) 57,633 -0- Cherrywood (M & W) 55,199 15,253 (119,702) -0- -0- Cle Elum 149,034 40,501 (290,459) -0- -0- Cleveland Courts, Ltd. 124,589 33,530 (151,239) 6,880 -0- Clifford Heights Apts. 223,321 58,940 (374,950) -0- -0- Cottondale Villa Apts. 179,706 47,404 (348,013) -0- -0- Cottonwood Seniors Apts. 163,777 43,216 (317,252) -0- -0- Coushatta Seniors Apts. 168,909 44,958 (274,643) -0- -0- Cypress View Estates 164,942 43,712 (277,100) -0- -0- Delta Terrace 180,474 47,405 (207,725) 20,154 -0- East Magnolia Village 161,503 42,422 (344,907) -0- -0- Edmonson Prop. 113,362 31,246 (164,475) -0- -0- Elliott Manor, Ltd. 191,097 48,550 (307,565) -0- -0- Fieldcrest, Ltd. 114,667 30,120 (259,242) -0- -0- Folsom South Venture 89,912 23,725 (151,630) -0- -0- Gaslight Square 179,152 47,058 (345,987) -0- -0- Gibsland Villas Ltd. 206,022 54,116 (329,828) -0- -0- Gilman Senior Apts. 35,221 -0- (45,972) -0- 7,722 Glenora Apts. 95,855 25,375 (233,369) -0- -0- Hagewood Apts. 132,717 35,356 (282,747) -0- -0- Hidden Hills Apts. 116,682 31,766 (200,138) -0- -0- Hillwood Ltd. 86,050 22,603 (207,232) -0- -0- Housing ~~Service~~Partners IX 38,703 ~~the~~-0- ~~successor~~(54,036) ~~agency~~-0- to-0- ~~the~~Housing ~~Farmers~~Partners ~~Home~~IX ~~Administration~~13,872 of-0- ~~the~~(9,851) ~~Department~~4,021 of-0- ~~Agriculture~~Housing Partners VI 24,922 -0- (~~collectively~~13,113) ~~referred~~11,809 to-0- ~~here~~Housing inPartners asVIII ~~"RD"~~13,873 -0- (6,470) to7,403 ~~provide~~-0- ~~direct~~Housing ~~below~~Partners XI 39,093 -~~market~~0-~~rate~~ ~~mortgage~~(32,689) ~~loans~~6,404 ~~for~~-0- ~~rural~~Housing ~~rental~~Partners ~~housing~~XII 57,942 -0- (43,571) 14,371 -0- Housing Partners XIII 29,603 -0- (49,545) -0- -0- Housing Partners XV 57,942 -0- (44,014) 13,928 -0- Houston Assoc. 232,663 61,675 (293,976) 362 -0- Hurricane 189,130 53,058 (383,387) -0- -0- F-17

Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE C - INVESTMENT IN OPERATING LIMITED PARTNERSHIPS - CONTINUED

~~The~~At March 31, 2000 --------------------------------------------------------------------------------------------------------------------------- Operating Limited Capital Acquisition Equity in Net Contribution Accumulated Partnership ~~was~~Contributed ~~created~~Costs ~~under~~Income ~~the~~(Losses) ~~Plan~~Investment asPayable a--------------------------------------------------------------------------------------------------------------------------- ~~master~~PARTNERSHIPS ~~limited~~WHICH ~~partnership~~WERE ~~into~~UNAUDITED ~~which~~- ~~all~~CONTINUED ofIndianwood ~~the~~Apts. ~~assets~~II ~~and~~113,856 ~~liabilities~~29,907 of(285,038) ~~the~~-0- ~~Debtor~~-0- ~~Investor~~Jonesville ~~Partnerships~~Apts. ~~were~~for ~~"rolled~~Sr. 133,404 35,936 (167,107) 2,233 -~~up"~~0- asKent ofSummit, ~~July 1~~Ltd. 58,460 ~~1990~~15,552 (101,055) -0- -0- Kingswood II, Ltd. ~~Pursuant~~149,293 to39,980 ~~the~~(236,382) ~~Plan~~-0- -0- LaGrange Apts.-II 42,622 ~~the~~12,020 (69,819) -0- -0- Larue Properties, Ltd. 179,346 48,632 (137,770) 90,208 -0- Lewis Apts. Co. 160,206 43,544 (287,848) -0- -0- Lewistown Apts. 67,666 17,774 (130,585) -0- -0- Liberty Terrace Apts. 220,688 59,150 (358,305) -0- -0- Longview Terrace Ltd. 159,185 41,813 (318,209) -0- -0- Manor Apts-Caddo Mills 128,510 33,756 (312,593) -0- 9,900 Marion Housing 126,846 34,575 (238,850) -0- -0- Meadowland Apts. 129,131 33,919 (237,739) -0- -0- Mills-Shapley Partnership ~~has~~117,525 ~~succeeded~~21,580 to(187,308) ~~the~~-0- ~~interests~~9,766 Mitchell II Ltd. 179,973 47,668 (324,647) -0- -0- Mosswood Apt. 166,822 43,819 (321,664) -0- -0- Mountain View Apts. II 181,829 48,986 (273,989) -0- -0- Munfordville 82,613 21,341 (174,435) -0- -0- North Deer Creek, Ltd. 174,358 45,799 (300,729) -0- -0- Oak Valley Place II 113,459 32,068 (224,715) -0- -0- Oakwood Apartments Ltd. 137,972 36,832 (198,343) -0- -0- Orchard Commons, Ltd. 118,620 32,164 (132,745) 18,039 -0- Park Place East Assoc. 236,688 63,353 (326,113) -0- -0- Park Place North 142,326 38,570 (233,782) -0- -0- Parkwood Assoc. 159,799 43,262 (276,301) -0- -0- PDC Twenty Two LP 171,475 45,041 (304,977) -0- -0- Perry Apts. 44,222 11,616 (110,198) -0- -0- Pontontoc Ridge Apts. 164,502 43,210 (399,970) -0- 3,735 Regency Apts. of ~~the~~Reno ~~Debtor~~137,659 ~~Investor~~36,348 ~~Partnerships~~(253,257) in-0- ~~the~~-0- ~~Operating~~Regency ~~Partnerships~~Plaza 152,927 ~~and~~41,514 ~~the~~(242,556) ~~Debtor~~-0- ~~Investor~~-0- ~~Partnerships~~Reservoir ~~were~~Hill ~~liquidated~~L.P. in574,141 ~~1990~~151,795 (460,192) 265,744 -0- Reynolds & Assoc. 91,515 24,629 (155,741) -0- -0- Ridgecrest Apts. 312,000 81,953 (609,521) -0- -0- River View Apts. 21,494 5,646 (27,858) -0- -0- Riverbend Apts. 119,075 31,278 (253,830) -0- -0- Russell September Housing 74,165 20,618 (161,823) -0- -0- Sacramento, Ltd. 179,695 51,004 (264,907) -0- -0- Sleepy Oaks-Seshano 79,988 21,602 (81,585) 20,005 -0- Somerset West, Hills II 122,132 32,901 (191,805) -0- -0- Southern Apts. 140,107 37,393 (264,505) -0- -0- Spring Meadow Apts. 183,090 48,092 (300,157) -0- -0- Streamside Assoc. 237,135 62,604 (321,679) -0- -0- St. Rose Assoc. 181,343 47,831 (281,999) -0- -0- Sullivan Garden Apts. 80,183 21,259 (285,472) -0- -0- Summer Place-Deshano 79,257 21,410 (93,175) 7,492 -0- Sunrise Apts. 81,782 21,679 (288,632) -0- -0- Timberline 141,445 39,780 (283,859) -0- -0- Valley Limited 123,137 33,777 (88,225) 68,689 -0- Wayland Apts. 45,769 12,022 (95,984) -0- -0- Wexford Assoc. L.P. 167,786 46,016 (282,731) -0- -0- ------------ ----------- ------------- ------------ ----------- 12,419,562 3,233,802 (21,063,577) 681,059 31,123 ------------ ----------- ------------- ------------ ----------- $ 26,449,174 $ 6,959,542 $(46,556,829) $ 1,107,557 $ 94,535 ============ =========== ==-========== ============ =========== F-18

Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE C - INVESTMENT IN OPERATING LIMITED PARTNERSHIPS - CONTINUED

~~The~~At March 31, 1999 --------------------------------------------------------------------------------------------------------------------------- Operating Limited Capital Acquisition Equity in Net Contribution Accumulated Partnership Contributed Costs Income (Losses) Investment Payable --------------------------------------------------------------------------------------------------------------------------- PARTNERSHIPS WHICH WERE AUDITED AFM RRH, Ltd. * $ 318,000 $ 84,977 $ (472,073) $ -0- $ -0- Alachua Villas * 259,540 72,481 (499,267) -0- 40,689 Baker Heights II Ltd. 201,752 53,782 (344,683) -0- -0- Bayshore North Apts-IV 314,405 83,796 (469,930) -0- -0- Blades Limited Partnership 264,181 70,838 (481,628) -0- -0- Broadway Terrace, Ltd. * 225,642 60,864 (618,601) -0- 18,772 Cedar Grove Apts. 282,032 77,001 (483,727) -0- -0- Citrus Terrace, Ltd.* 199,270 43,284 (636,790) -0- 3,951 Diamond Court II LP 231,879 63,419 (360,032) -0- -0- Donaldsonville Seniors 298,073 79,316 (211,103) 166,286 -0- Elmwood Estates 295,860 79,205 (509,735) -0- -0- First Street Apts. 321,907 85,344 (336,785) 70,466 -0- Flambeau Village 776,080 204,642 (920,671) 60,051 -0- Forest Park Apts.* 215,330 55,915 (513,565) -0- -0- Franklin Vista II 163,888 43,640 (334,207) -0- -0- Gatewood Apts. Ltd. 295,383 78,064 (448,483) -0- -0- Greenleaf Gardens * 217,714 57,187 (396,376) -0- -0- Greenwood Assoc. 291,628 76,779 (522,720) -0- -0- Hickory Square Apts. 94,754 24,889 (132,945) -0- -0- Hilltop Manor Apts. * 216,667 56,761 (565,124) -0- -0- Hitchcock Housing * 269,250 71,118 (467,687) -0- -0- Joaquin Apts. 295,621 78,653 (321,492) 52,782 ~~Debtor~~-0- ~~Investor~~Lake ~~Partnerships~~City ~~were~~Village ~~the~~* ~~following~~312,889 ~~Delaware~~74,743 ~~limited~~(738,214) ~~partnerships:~~-0- -0- Lakecrest Apts. 313,704 85,773 (372,889) 26,588 -0- Lakeview Estates 243,761 65,845 (492,906) -0- -0- Lakewood Apts. II 181,777 47,748 (353,187) -0- -0- Las Rosas II, Ltd. 263,135 70,012 (415,516) -0- -0- Laurel Wood-Capital 202,867 65,524 (305,456) -0- -0- Lead Bayou, Ltd. 212,000 55,686 (412,972) -0- -0- Lillie Mae's Retirement 225,252 58,149 (417,072) -0- -0- Magnolia Plaza Apts. 257,802 68,111 (469,574) -0- -0- Many Seniors Apts. 259,150 62,094 (250,643) 70,601 -0- Maple Hill Apts. 296,560 78,616 (382,586) -0- -0- New Caney Oaks 223,492 60,543 (370,095) -0- -0- Oakdale-T F Management 248,634 65,506 (277,188) 36,952 -0- Old Oak Estates 184,856 48,556 (435,101) -0- -0- Onion Creek 304,574 80,449 (423,676) -0- -0- PDC Eighteen LP 196,521 52,298 (345,293) -0- -0- Pecan Villa Apts. 234,202 62,152 (376,089) -0- -0- Pecanwoods Apts. III, Ltd. 262,027 69,024 (288,397) 42,654 -0- Pocomoke Villas Ltd. 174,388 46,923 (382,281) -0- -0- Ridge View Apts. 359,216 95,341 (655,628) -0- -0- Rolling Meadow II L.P. 238,120 64,218 (353,829) -0- -0- Southeastern Assoc. 314,798 82,688 (537,223) -0- -0- Sun Rise Apts. North 352,063 95,182 (568,699) -0- -0- Taft Gardens 148,042 39,871 (277,949) -0- -0- Taft Terrace 198,919 53,235 (452,130) -0- -0- Valley Place Assoc. 307,568 81,774 (548,854) -0- -0- West Meadow II Apts. 182,234 49,185 (285,444) -0- -0- Willow Haven-Cross 323,905 85,080 (648,330) -0- -0- Wilson Lake 397,146 105,304 (617,537) -0- -0- Wolcott Assoc. 349,880 92,691 (482,525) -0- -0- Woodcrest 233,244 61,464 (481,959) -0- -0- ------------ ----------- ------------ ----------- ---------- 14,051,582 3,725,740 (23,466,866) 526,380 63,412 ------------ ----------- ------------- ----------- ---------- * Audited by Smith & Radigan, Certified Public Accountants, LLC F-19

Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE C - INVESTMENT IN OPERATING LIMITED PARTNERSHIPS - CONTINUED

~~Arlington~~At ~~Estates~~March ~~Limited~~31, ~~Partnership~~1999 ~~Barrington~~--------------------------------------------------------------------------------------------------------------------------- ~~Estates~~Operating Limited ~~Partnership~~Capital ~~Bayfield~~Acquisition ~~Estates~~Equity ~~Limited~~in Net Contribution Accumulated Partnership ~~Beechfield~~Contributed ~~Estates~~Costs ~~Limited~~Income ~~Partnership~~(Losses) ~~Birchfield~~Investment ~~Estates~~Payable ~~Limited~~--------------------------------------------------------------------------------------------------------------------------- ~~Partnership~~PARTNERSHIPS ~~Blakefield~~WHICH ~~Estates~~WERE ~~Limited~~UNAUDITED ~~Partnership~~Albany ~~Brighton~~Commons, ~~Estates~~LTD ~~Limited~~173,456 ~~Partnership~~46,737 ~~Brookline~~(200,821) 19,372 -0- Anderson County Estates ~~Limited~~120,768 ~~Partnership~~32,116 ~~Candle~~(185,321) ~~Ridge~~-0- ~~Estates~~-0- Aurora Limited ~~Partnership~~61,058 ~~Canterbury~~24,540 ~~Estates~~(359,615) ~~Limited~~-0- ~~Partnership~~-0- ~~Carlysle~~Belfast ~~Estates~~Housing ~~Limited~~Assoc. ~~Partnership~~273,653 74,124 (427,460) -0- -0- Berea Summit, Ltd. 42,992 11,855 (97,301) -0- -0- Berkshire Apts. #2 134,933 35,898 (337,240) -0- -0- Blanchard Apts. 166,374 43,899 (244,272) -0- -0- Brentwood Apts. 157,800 42,237 (255,210) -0- -0- Briar Hill Apts. 86,275 23,240 (163,739) -0- -0- Bunkie Apts 164,759 43,277 (285,345) -0- -0- Canal Town Assoc. 55,891 15,075 (26,617) 44,349 -0- Canyon Hills Villas 75,198 20,719 (131,595) -0- -0- Cedar Crest Apts. 93,972 25,078 (37,488) 81,562 -0- Cherrywood ~~Estates~~(M ~~Limited~~& ~~Partnership~~W) ~~Chesterfield~~55,199 ~~Estates~~15,253 ~~Limited~~(114,598) ~~Partnership~~-0- ~~Clarkson~~-0- ~~Estates~~Cle ~~Limited~~Elum ~~Partnership~~149,784 ~~Clayton~~40,501 ~~Estates~~(274,618) ~~Limited~~-0- ~~Partnership~~-0- ~~Cloverfield~~Cleveland ~~Estates~~Courts, ~~Limited~~Ltd. ~~Partnership~~124,589 ~~Copperfield~~33,530 ~~Estates~~(145,707) ~~Limited~~12,412 ~~Partnership~~-0- ~~Crescent~~Clifford ~~Estates~~Heights ~~Limited~~Apts. ~~Partnership~~223,321 ~~Deerfield~~58,940 ~~Estates~~(363,022) ~~Limited~~-0- ~~Partnership~~-0- ~~Delafield~~Cottondale ~~Estates~~Villa ~~Limited~~Apts. ~~Partnership~~179,706 ~~Edenfield~~47,404 ~~Estates~~(338,918) ~~Limited~~-0- ~~Partnership~~-0- ~~Emerald~~Cottonwood ~~Estates~~Seniors ~~Limited~~Apts. ~~Partnership~~164,527 ~~Everest~~43,216 ~~Estates~~(295,977) ~~Limited~~-0- ~~Partnership~~-0- ~~Evergreen~~Coushatta ~~Estates~~Seniors ~~Limited~~Apts. ~~Partnership~~169,659 ~~First~~44,958 ~~Estates~~(256,112) ~~Limited~~-0- ~~Partnership~~-0- ~~Greenfield~~Cypress View Estates ~~Limited~~164,942 ~~Partnership~~43,712 ~~Greenwood~~(262,585) ~~Estates~~-0- ~~Limited~~-0- ~~Partnership~~Delta ~~Harborfield~~Terrace ~~Estates~~180,474 ~~Limited~~47,405 ~~Partnership~~(314,242) ~~Holly~~-0- ~~Estates~~-0- ~~Limited~~East ~~Partnership~~Magnolia ~~Hunter~~Village ~~Estates~~161,503 ~~Limited~~42,422 ~~Partnership~~(316,814) ~~Kehrs~~-0- ~~Mill~~-0- ~~Estates~~Edmonson ~~Limited~~Prop. ~~Partnership~~114,112 ~~Littlefield~~31,246 ~~Estates~~(140,514) ~~Limited~~4,844 ~~Partnership~~-0- ~~Livingston~~Elliott ~~Realty~~Manor, ~~Investors~~Ltd. ~~Limited~~191,847 ~~Meadowfield~~48,550 ~~Estates~~(294,679) ~~Limited~~-0- ~~Partnership~~-0- ~~Mitchellfield~~Fieldcrest, ~~Estates~~Ltd. ~~Limited~~114,667 ~~Partnership~~30,120 ~~Northfield~~(230,166) ~~Estates~~-0- ~~Limited~~-0- ~~Partnership~~Folsom ~~Norwich~~South ~~Estates~~Venture ~~Limited~~89,912 ~~Partnership~~23,725 ~~Oleander~~(130,743) ~~Estates~~-0- ~~Limited~~-0- ~~Partnership~~Gaslight ~~Pine~~Square ~~Hollow~~179,152 ~~Estates~~47,058 A(326,130) ~~Delaware~~-0- -0- Gibsland Villas Ltd. ~~Partnership~~206,022 ~~Plainfield~~54,116 ~~Estates~~(309,221) ~~Limited~~-0- ~~Partnership~~-0- ~~Plantingfield~~Gilman ~~Estates~~Senior ~~Limited~~Apts. ~~Partnership~~35,221 ~~Redwood~~-0- ~~Estates~~(39,518) ~~Limited~~-0- ~~Partnership~~7,722 ~~Rosewood~~Glenora ~~Estates~~Apts. ~~Limited~~95,855 ~~Partnership~~25,375 ~~Sagewood~~(225,360) ~~Estates~~-0- ~~Limited~~-0- ~~Partnership~~Hagewood ~~Southfield~~Apts. ~~Estates~~132,717 ~~Limited~~35,356 ~~Partnership~~(266,686) ~~Springfield~~-0- ~~Estates~~-0- ~~Limited~~Hidden ~~Partnership~~Hills ~~Summerfield~~Apts. ~~Estates~~116,682 ~~Limited~~31,766 ~~Partnership~~(181,616) ~~Sycamore~~-0- ~~Realty~~-0- ~~Investors~~Hillwood ~~Limited~~Ltd. ~~Partnership~~86,050 ~~Walnut~~22,603 ~~Estates~~(190,195) ~~Limited~~-0- ~~Partnership~~-0- ~~Wynnfield~~Housing ~~Estates~~Partners ~~Limited~~IX ~~Partnership~~38,703 ~~Wilshire~~-0- ~~Estates~~(29,637) ~~Limited~~9,066 ~~Partnership~~-0- Housing Partners IX 13,872 -0- (9,851) 4,021 -0- Housing Partners VI 24,922 -0- (26,180) -0- -0- Housing Partners VIII 13,873 -0- (7,953) 5,920 -0- Housing Partners XI 39,093 -0- (35,135) 3,958 -0- Housing Partners XII 57,942 -0- (61,788) -0- -0- Housing Partners XIII 29,603 -0- (23,528) 6,075 -0- Housing Partners XV 57,942 -0- (63,196) -0- -0- Houston Assoc. 233,413 61,675 (272,699) 22,389 -0- Hurricane 190,630 53,058 (342,012) -0- -0- Indianwood Apts. II 113,856 29,907 (275,140) -0- -0- Jonesville Apts. for Sr. 133,404 35,936 (154,820) 14,520 -0- Kent Summit, Ltd. 58,711 15,552 (99,455) -0- -0- Kingswood II, Ltd. 149,293 39,980 (214,944) -0- -0- LaGrange Apts.-II 42,622 12,020 (60,941) -0- -0- Larue Properties, Ltd. 179,346 48,632 (127,911) 100,067 -0- Lewis Apts. Co. 161,706 43,544 (264,925) -0- -0- Lewistown Apts. 67,666 17,774 (120,360) -0- -0- Liberty Terrace Apts. 221,438 59,150 (329,384) -0- -0- Longview Terrace Ltd. 159,185 41,813 (290,125) -0- -0- F-20

Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE C - INVESTMENT IN OPERATING LIMITED PARTNERSHIPS - CONTINUED

~~First~~At ~~American~~March ~~Holdings~~31, ~~Inc~~1999 ---------------------------------------------------------------------------------------------------------------------------- Operating Limited Capital Acquisition Equity in Net Contribution Accumulated Partnership Contributed Costs Income (Losses) Investment Payable ---------------------------------------------------------------------------------------------------------------------------- PARTNERSHIPS WHICH WERE UNAUDITED - CONTINUED Manor Apts-Caddo Mills 128,510 33,756 (290,865) -0- 9,900 Marion Housing 127,596 34,575 (223,478) -0- -0- Meadowland Apts. 129,131 a33,919 ~~Delaware~~(218,700) ~~corporation~~-0- -0- Mills-Shapley Partnership 118,275 21,580 (~~"First~~167,990) ~~American"~~-0- 9,766 Mitchell II Ltd. 179,973 47,668 (299,911) -0- -0- Mosswood Apt. 166,822 ~~was~~43,819 ~~the~~(319,198) ~~sole~~-0- ~~general~~-0- ~~partner~~Mountain ofView ~~each~~Apts. ofII ~~the~~181,829 ~~Debtor~~48,986 ~~Investor~~(254,835) ~~Partnerships~~-0- -0- Munfordville 82,613 ~~and~~21,341 ~~was~~(159,799) ~~the~~-0- ~~initial~~-0- ~~General~~North ~~Partner~~Deer ofCreek, ~~the~~Ltd. ~~Partnership~~174,358 ~~under~~45,799 ~~the~~(275,087) ~~Plan~~-0- -0- Oak Valley Place II 113,459 32,068 (212,781) -0- -0- Oakwood Apartments Ltd. ~~The~~137,972 ~~Plan~~36,832 ~~required~~(179,792) ~~that~~-0- an-0- ~~independent~~Orchard ~~manager~~Commons, ~~that~~Ltd. ~~was~~119,370 ~~not~~32,164 ~~affiliated~~(130,625) ~~with~~20,909 ~~First~~-0- ~~American~~Park ~~take~~Place ~~over~~East ~~the~~Assoc. ~~responsibility~~237,438 ~~for~~63,353 ~~the~~(302,322) ~~administration~~-0- of-0- ~~the~~Park ~~Partnership~~Place North 143,076 38,570 (218,611) -0- -0- Parkwood Assoc. A159,799 ~~committee~~43,262 ~~formed~~(258,591) by-0- ~~the~~-0- ~~representatives~~PDC Twenty Two LP 171,475 45,041 (269,426) -0- -0- Perry Apts. 44,222 11,616 (97,531) -0- -0- Pontontoc Ridge Apts. 164,502 43,210 (382,654) -0- 3,735 Regency Apts. of ~~the~~Reno ~~three~~137,659 ~~principal~~36,348 ~~creditor~~(225,651) ~~classes~~-0- in-0- ~~the~~Regency ~~bankruptcy~~Plaza ~~proceedings~~152,927 41,514 (~~respectively~~229,127) ~~the~~-0- ~~"Developer~~-0- ~~Committee"~~Reservoir Hill L.P. 574,891 ~~the~~151,795 ~~"Secured~~(439,071) ~~Lender~~287,615 ~~Group"~~-0- Reynolds & Assoc. 92,265 ~~and~~24,629 ~~the~~(160,630) ~~"Investors~~-0- ~~Committee"~~-0- Ridgecrest Apts. 312,000 81,953 (583,590) ~~selected~~-0- ~~Megan~~-0- ~~Management~~River ~~Company~~View Apts. 21,494 ~~Inc~~5,646 (28,525) -0- -0- Riverbend Apts. 119,075 31,278 (~~"Megan~~236,416) ~~Management"~~-0- -0- Russell September Housing 74,915 20,618 (136,619) as-0- ~~the~~-0- ~~independent~~Sacramento, ~~manager~~Ltd. ~~and~~180,445 ~~entered~~51,004 ~~into~~(243,741) a-0- ~~management~~-0- ~~agreement~~Sleepy ~~with~~Oaks-Seshano ~~Megan~~79,988 ~~Management~~21,602 as(80,841) of20,749 ~~July~~-0- 10Somerset West, ~~1990~~Hills II 122,882 32,901 (176,586) -0- -0- Southern Apts. 140,857 37,393 (252,543) -0- -0- Spring Meadow Apts. 183,090 48,092 (284,167) -0- -0- Streamside Assoc. 237,135 62,604 (290,729) 9,010 -0- St. Rose Assoc. 181,343 47,831 (262,396) -0- -0- Sullivan Garden Apts. 80,183 21,259 (247,479) -0- -0- Summer Place-Deshano 79,257 21,410 (91,356) 9,311 -0- Sunrise Apts. 81,782 21,679 (275,464) -0- -0- Timberline 141,445 39,780 (266,937) -0- -0- Valley Limited 123,137 33,777 (66,276) 90,638 -0- Wayland Apts. 45,769 12,022 (89,477) -0- -0- Wexford Assoc. L.P. 167,786 46,016 (252,501) -0- -0- ------------ ----------- ------------- ----------- ---------- 12,441,035 3,233,802 (19,761,747) 766,787 31,123 ------------ ----------- -------------- ----------- ---------- $ 26,492,617 $ 6,959,542 $ (43,228,613) $ 1,293,167 $ 94,535 ============ ========== ============= =========== ========== All remaining contributions payable as ~~amended~~of March 31, 2000 represent payments which have been deferred for an indeterminate time until certain conditions are met by ~~that~~the ~~Amended~~Operating Partnerships involved. In addition to the above capital contributions, the Master Limited Partnerships made advances to certain Operating Limited Partnerships in the amount of $353,121 and ~~Restated~~$341,212 ~~Management~~at ~~Agreement~~March 31, 2000 and 1999, respectively. While the uncollectible amount cannot be estimated as of ~~December~~March 2331, ~~1991~~2000, the ~~"Management~~advances ~~Agreement")~~may be collectible, if at all, only from a capital event upon the sale of the projects. F-21

Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE D - SUBSCRIPTIONS RECEIVABLE When the investors were admitted as limited partners in one of the Debtor Investor Partnerships, each investor made a cash down payment for his or her limited partnership interest and executed a recourse promissory note for the balance. Contributions receivable represent the remaining balance of the recourse promissory notes executed by investors for their capital contributions which are payable to the Master Limited Partnership. While the majority of the notes were non-interest bearing, the notes for certain Debtor Investor Partnerships included interest at rates ranging from four and one-half percent to nine percent. Contributions receivable at March 31, 2000 consists of the following: Past due installments from defaulting investors $1,144,010 Amount representing unearned interest (25,165) ------- $1,118,845 The Master Limited Partnership has recourse against the defaulting investors and is pursuing collection of these amounts. While the uncollectible amount cannot be estimated as of March 31, 2000, it is probable that most of the past due amounts will not be collected. Subscriptions receivable are decreased with a corresponding decrease to the limited partners' capital accounts as such amounts are determined to be uncollectible. NOTE E - INDEPENDENT MANAGER The Plan provides for the employment of an independent manager for the Master Limited Partnership. The Amended and Restated Management Agreement provides for the automatic annual renewal of the management agreement subject to certain events, as defined. Effective July 10, 1990, Megan Management Company, Inc. ("Megan") was engaged to be the Independent Manager. As such, Megan became the Master Limited Partnership's exclusive agent for all operations under the Plan, including those in connection with or relating to (a) collection, investment and disbursement of all funds of the Master Limited Partnership as provided in the Plan and the Escrow Agreement through the Escrow Account maintained at Chemical Bank (formerly Manufacturers Hanover Trust), (b) maintenance of the books and records of the Partnership, (c) preparation of the Master Limited Partnership's tax returns and review of all tax returns relating to the Master Limited Partnership's interests in the Operating Partnerships and (d) furnishing assistance to the Investors with respect to tax information relating to the Investors'? interests in the Master Limited Partnership. As of December 31, 1992, all rights, powers and obligations of the Independent Manager were assigned to Megan Asset Management, Inc. (Note A). As compensation for its services, the Independent Manager received $119,500 for the years ended March 31, 2000, 1999 and 1998. The Independent Manager is also provided with amounts required to cover the costs of tax return preparation and audited financial statements. F-22 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE E - INDEPENDENT MANAGER - CONTINUED Megan Asset is compensated for work relating to defaulting investors. The Independent Manager's compensation for the year ended March 31, 2000 and 1999 was zero and $2,337 for the year ended March 31, 1998, for work relating to defaulting investors. NOTE F - CONTINGENCIES Article 15 of the Plan ("Payments from Capital Events") provides for certain further disbursements to the pre-petition creditors of funds resulting from the sale of interests in Operating Partnerships subsequent to December 31, 1994. Such payments, in order of priority, include the following: a) Prorata payments to the Operating Partnerships of the full amount due from the Debtor Investor Partnerships and assumed by the Master Limited Partnership, with interest at eight percent. At March 31, 2000, the amount due is approximately $1,900,000. b) In settlement of a claim filed by the Independent Manager against First American on behalf of the Partnership October 12, 1990, alleging possible fraudulent or preferential transfers, or other acts or omissions committed by First American as General Partner of the 52 Debtor Investor Partnerships, the Partnership and the Independent Manager each received an assignment of fifty percent of all sums to be paid to First American's wholly-owned subsidiary, Continental Construction Management Corporation ("Continental"), from Capital Events in accordance with Article 15(1)(6) of the Plan. In conjunction with the replacement of First American by the Independent Manager (Note A), the Partnership purchased from Continental its remaining rights to receive payments with respect to Capital Events under the Plan, in consideration of $234,968, paid in the form of the assumption of liabilities of First American in the amount of $97,050 and a cash payment of $50,000 as of the closing date and the remainder in cash installments paid through April 1, 1992. At March 31, 2000, the amount due is approximately $2,000,000. c) Prorata payments to investors until each has received an amount equal to twenty percent of its net capital investment plus interest at ten percent calculated from December 31, 1994. d) A return of capital to the investors until each has received one hundred percent of its capital invested, over and above the payments in c) above. e) Payment of the allowed claims of investors subordinated pursuant to the bankruptcy code. F-23 Notes to Financial Statements BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP March 31, 2000 NOTE F - CONTINGENCIES - CONTINUED f) Any remaining amounts in the percentage of ninety percent to the investors and ten percent to the general partner of the Master Limited Partnership. The accompanying financial statements do not include adjustments for any amounts that might become payable pursuant to the resolution of the above contingencies. NOTE G - RELATED PARTY ACTIVITY The Master Limited Partnership paid expenses for legal assistance relating to the proceedings with the Operating Partnerships to Gary L. Maddock, PC, a company wholly-owned by the sole stockholder of the Independent Manager and General Partner, totaling $190,564, $197,609 and $205,784 for the years ended March 31, 2000, 1999 and 1998, respectively. F-24 [LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC Independent Auditors' Report To the Partners AFM RRH, Limited We have audited the accompanying balance sheets of AFM RRH, Limited Hilltop Manor Apartments, USDA-RD Project No. 09-042-0260409707, as of December 31, 1999 and 1998, and the related statements of operations, partners' capital (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AFM RRH, Limited Hilltop Manor Apartments as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 16, 2000 on our consideration of the Partnership's internal controls and a report dated February 16, 2000 on its compliance with applicable laws, regulations, contracts and grants. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules and supporting data on pages 10-13 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in our 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/ Smith & Radigan Atlanta, Georgia February 16, 2000 [LETTERHEAD OF] The BCC Group., L.L.C Independent Auditors' Report To the Partners Alachua Villas, Ltd. Alachua, Florida We have audited the accompanying balance sheet of Alachua Villas, Ltd., (a Florida limited partnership), Rural Development Case No.: 09-001-0592892707, as of December 31, 1999, and the related statement of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence .supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alachua Villas, Ltd., as of December 31, 1999, and the results of its operations, changes in partners' deficit and 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 March 31, 2000 on our consideration of Alachua Villas, Ltd.'s internal control and on its compliance with laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying required supplementary information shown on pages 9-11 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ The BCC Group, L.L.C. Topeka, Kansas March 31, 2000 [LETTERHEAD OF] Albright, Crumbacker, Moul & Itell Independent Auditors' Report Partners Baker Heights II Limited Partnership d/b/a Baker Heights Apartments II Berkeley Springs, West Virginia We have audited the accompanying balance sheets of Baker Heights II Limited Partnership, d/b/a Baker Heights Apartments II (the Partnership), RD Project No. 57-002-550657348 as of December 31, 1999 and 1998 and the related statements of income, changes in partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of Baker Heights 11 Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 1999 and 1998, and the results of its operations, changes in partners' deficit and cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports dated May 23, 2000, on our consideration of the Baker Heights II Limited Partnership's internal control and a report dated May 23, 2000 on its compliance with specific requirements applicable to nonmajor RD program transactions. /s/ Albright Crumbacker Moul & Itell, LLP Hagerstown, Maryland May 23, 2000 [LETTERHEAD OF] DiMarco, Abiusi & Pascarella Independent Auditors' Report To The Partners Bayshore North Apartments - Phase IV Fayetteville, New York We have audited the accompanying balance sheets of Bayshore North Apartments - Phase IV (a Limited Partnership) as of December 31, 1999 and 1998, and the related statements of income, partners' deficiency and cash flows for the years then ended. These financial statements are the responsibility of the General Partners. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also included assessing the accounting principles used and significant estimates made by the partners, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bayshore North Apartments - Phase IV as of December 31, 1999 and 1998, and the results of its operations and cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 17, 2000, on our consideration of Bayshore North Apartments - Phase IV internal control and a report dated February 17, 2000, on its compliance with laws and regulations applicable to the basic financial statements. /s/ Dimarco, Abiusi & Pascarella, P.C. Syracuse, New York February 17, 2000 [LETTERHEAD OF] Grubman & Associates of Maryland, P C. Independent Auditor's Report To the Partners Blades Limited Partnership T/A Hunters Court We have audited the accompanying balance sheet of Blades Limited Partnership T/A Hunters Court, FmHA Project No.: 07-004-21529005 as of December 3l , 1999 and l998, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and generally accepted government auditing standards for financial and compliance audits 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 disclosure 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 Blades Limited Partnership T/A Hunters Court, Project No.: 07-004-521529005 as of December 3 1, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole /s/ Grubman & Associates of Maryland, PC Gaithersburg, Maryland January 26, 2000 [LETTERHEAD OF] The BCC Group, L.L.C. Independent Auditors' Report To the Partners Broadway Terrace of Drew, L.P. Drew, Mississippi We have audited the accompanying balance sheet of Broadway Terrace of Drew, L.P. (a Mississippi limited partnership), Rural Development Case No,: 28-083-640751369, as of December 31, 1999, and the related statements of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Broadway Terrace of Drew, L.P. as of December 31, 1999, and the results of its operations, changes in partners' deficit and cash flows for the year then ended in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern at December 31, 1999. As shown in the financial statements, the Partnership incurred a net loss during the year ended December 31, 1999 and, as of that date, had a working capital deficiency and partners' deficits. As described more fully in Note 4-c to the financial statements, the Partnership has experienced recurring operating losses along with the inability to pay required reserve deposits and property taxes without incurring additional loans. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also disclosed in Note 4-c. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In accordance with Government Auditing Standards, we have also issued a report dated March 31, 2000 on our consideration of Broadway Terrace of Drew, L.P.'s internal control and on its compliance with laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying required supplementary information shown on pages 9-11 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ The BCC Group, L.L.C, Topeka, Kansas March 31, 2000 [LETTERHEAD OF] Fister, Routh & Freeman, PSC Independent Auditors' Report General Partner Cedar Grove Apartments, Ltd. Shepherdsville, Kentucky 40165 We have audited the accompanying balance sheets of Cedar Grove Apartments, Ltd., a segment of Cedar Grove Apartments, Ltd. (a Kentucky limited partnership), as of December 31, 1999 and 1998, and the related statements of income, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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 Cedar Grove Apartments, Ltd., as of December 31, 1999, and the results of its operations and cash flows for the year ended December 31, 1999 in conformity with generally accepted accounting principles. /s/ Fister, Routh & Freeman Certified Public Accountants January 27, 2000 [LETTERHEAD OF] The BCC Group, L.L.C. Independent Auditors' Report To the Partners Citrus Terrace, Ltd. Sebring, Florida We have audited the accompanying balance sheet of Citrus Terrace, Ltd., ( a Florida limited partnership), Rural Development Case No. : 09-028-0262405142, as of December 31, 1999, and the related statement of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Citrus Terrace, Ltd., as of December 31, 1999, and the results of its operations, changes in partners' deficit and 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 March 31, 2000 on our consideration of Citrus Terrace, Ltd.'s internal control and on its compliance with laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying required supplementary information shown on pages 9-11 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ The BCC Group, L.L.C. Topeka, Kansas March 31, 2000 [LETTERHEAD OF] Grubman & Associates of Maryland, P.C. Independent Auditor's Report To the Partners Diamond Court II Limited Partnership T/A Diamond Court II We have audited the accompanying balance sheet of Diamond Court II Limited Partnership T/A Diamond Court II, FmHA Project No.: 07-001-521528112 as of December 31, 1999 and 1998, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and generally accepted government auditing standards for financial and compliance audits 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 disclosure 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 Diamond Court II Limited Partnership T/A Diamond Court II, Project No.: 07-001-521528112 as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Grubman & Associates of Maryland, PC Gaitherburg, Maryland January 20, 2000 [LETTERHEAD OF] Pailet, Meunier and LeBlanc, L.L.P. Independent Auditor's Report To the Partners DONALDSONVILLE SENIORS APARTMENTS We have audited the accompanying balance sheets of DONALDSONVILLE SENIORS APARTMENTS, RHS PROJECT NO. 22-003-721075739 as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 DONALDSONVILLE SENIORS APARTMENTS as of December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, 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 a report dated February 25, 2000 on our consideration of DONALDSONVILLE SENIORS APARTMENTS's internal control and a report dated February 25, 2000 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier & LeBlanc, LLP Metairie, Louisiana February 25, 2000 [LETTERHEAD OF] Rachel & Kostelka, LLC Independent Auditor's Report To the Partners Elmwood Estates, A Limited Partnership We have audited the accompanying balance sheets of Elmwood Estates, A Limited Partnership, as of December 31, 1999 and 1998, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Elmwood Estates, A Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Elmwood Estates, A Limited Partnership as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports dated March 24, 2000, on our consideration of Elmwood Estates, A Limited Partnership's internal control structure and on its compliance with laws and regulations /s/ Rachel & Kostelka, LLC Shreveport, Louisiana March 24, 2000 [LETTERHEAD OF] Casey J. Russell CPA, Inc. Independent Auditor's Report To the General Partner Reynolds and Associates DBA First Street Apartments II P. 0. Box I 00 Durant, OK 74701 I have audited the accompanying balance sheet of Reynolds and Associates, DBA First Street Apartments II FMHA Case Number 42-007-405924621 as of December 31, 1999, and the related statement of operations and partner's deficit and cash flows for the year then ended. These financial statements are the responsibility of Reynolds and Associates, DBA First Street Apartments III'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 Governmental 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 refer-red to above present fairly, in all respects, the financial position of Reynolds and Associates, DBA First Street Apartments II FMHA Case Number 42-007-405924621, at December 31, 1999 and the results of its operations and its cash flows for the year then ended in accordance with generally accepted accounting principles. In accordance with Government Auditing Standards, I have issued a report dated May 1, 2000 on my consideration of First Street Apartment II's internal control structure and on its compliance with laws and regulations. /s/ Casey J. Russell, CPA, Inc. May 1, 2000 [LETTERHEAD OF] Stienessen Schlegel & Co. Independent Auditor's Report To the Partners Flambeau Village, A Wisconsin Limited Partnership We have audited the accompanying balance sheets of Flambeau Village, A Wisconsin Limited Partnership, as of December 31, 1999 and 1998, and the related statements of operations and 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 Flambeau Village, A Wisconsin Limited Partnership, as of December 31, 1999 and 1998, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on page 9 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. Stienessen, Schlegel & Co. LLC January 27, 2000 EAU CLAIRE, WI [LETTERHEAD OF] The BCC Group, L.L.C. Independent Auditors' Report To the Partners Forest Park Apartments, Ltd. Lake Butler, Florida We have audited the accompanying balance sheet of Forest Park Apartments, Ltd., a Florida limited partnership), Rural Development Case No. : 09-063-592721007, as of December 31, 1999, and the related statement of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Pa2:tnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Forest Park Apartments, Ltd., as of December 31, 1998, were audited by other auditors whose report dated January 25, 1999, 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 Forest Park Apartments, Ltd., as of December 31, 1999, and the results of its operations, changes in partners, deficit and 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 August 11, 2000 on our consideration of Forest Park Apartments, Ltd. Is internal control and on its compliance with laws and regulations. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying required supplementary information shown on pages 9-11 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ The BCC Group, LLC Topeka, Kansas August 11, 2000, except for comparative 1998 financial information, for which the date is October 23, 2000. [LETTERHEAD OF] McGee & Associates, P.C. Independent Auditors' Report To the Partners Franklin-Vista II, Ltd. and USDA Rural Development We have audited the accompanying balance sheets of Franklin Vista II, Ltd. (a limited partnership) as of December 31, 1999 and 1998, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Franklin Vista II, Ltd. as of December 31, 1999 and 1998, and the results of its operations and the changes in partners' deficit and cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 28, 2000, on our consideration of Franklin Vista II, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental information included in the report is presented for purposes of additional analysis and is not a required part of the financial statements of Franklin Vista II, Ltd. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ McGee & Associates, P.C. January 28, 2000 Farmington, New Mexico [LETTERHEAD OF] Smith, Miles & Company, L.C. Independent Auditors' Report To the Partners Gatewood Apartments, Ltd. Panama City, Florida We have audited the accompanying balance sheets of Gatewood Apartments, Ltd. , USDA, Rural Development Project No:09-0030592782216, as of December 31, 1999 and 1998, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership Is 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 Gatewood Apartments, Ltd., as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Smith, Miles & Company, LC Panama City, Florida February 25, 2000 [LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC Independent Auditors' Report To the Partners Greenleaf Gardens, Ltd. We have audited the accompanying balance sheets of Greenleaf Gardens, Ltd. Greenleaf Gardens Apartments, USDA-RD Project No. 09-064-0592907502, as of December 31, 1999, and 1998 and the related statements of operations, partners' capital (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Greenleaf Gardens, Ltd. Greenleaf Gardens Apartments as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 16, 2000 on our consideration of the Partnership's internal controls and a report dated February 16, 2000 on its compliance with applicable laws, regulations, contracts and grants. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules and supporting data on pages 10-13 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in our 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/ Smith & Radigan Atlanta, Georgia February 16, 2000 [LETTERHEAD OF] Little & Banks LLC Independent Auditors' Report To the Partners Greenwood Associates Limited Partnership We have audited the accompanying balance sheets of Greenwood Associates Limited Partnership as of December 31, 1998 and 1997, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the Standards for Financial and Compliance Audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis; evidence supporting the amounts and disclosures in the financial statements, An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Greenwood Associates Limited Partnership as of December 31, 1998 and 1997, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 23, 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 a report dated February 3, 1999, on our consideration of Greenwood Associates Limited Partnership's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Little & Banks, LLC West Monroe, Louisiana February 3, 1999 [LETTERHEAD OF] Van Moore & Company, P.A. Independent Auditor's Report To the Partners Hickory Square Limited Partnership We have audited the accompanying balance sheets of Hickory Square Limited Partnership, RHS Project No.: 03001-710650913, as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. Those standards and the audit program 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 Hickory Square Limited Partnership, RHS Project No.: 03-001-710650913, as of December 31, 1999 and 1998 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on page 10 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 March 16, 2000 on our consideration of Hickory Square Limited Partnership's internal control and on its compliance with laws and regulations applicable to the financial statements. /s/ Van Moore & Company, PA Little Rock, Arkansas March 16, 2000 [LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC Independent Auditors' Report To the Partners Hilltop Manor RRH, Ltd. II We have audited the accompanying balance sheets of Hilltop Manor RRH, Ltd. II Hilltop Manor Apartments, USDA-RD Project No. 09-042-0592907501, as of December 31, 1999 and 1998, and the related statements of operations, partners' capital (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hilltop Manor RRH, Ltd. II Hilltop Manor Apartments as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 16, 2000 on our consideration of the Partnership's internal controls and a report dated February 16, 2000 on its compliance with applicable laws, regulations, contracts and grants. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules and supporting data on pages 10-13 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Smith & Radigan Atlanta, Georgia February 16, 2000 [LETTERHEAD OF] H. D. Morris Co., Inc., P.C. Independent Auditor's Report To The Partners: Hitchcock Housing, Ltd. We have audited the accompanying balance sheet of Hitchcock Housing, Ltd., FMHA Case No.: 49-084-760136950, as of December 31, 1999 and 1998, and the related statements of loss, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the partnership's 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 and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Hitchcock Housing, Ltd., as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information presented in the Year End Report/Analysis (Form FMHA 1930-8) Parts I through III and schedules of administrative, maintenance, utilities, and taxes and insurance expenses for the years ended December 31, 1999 and 1998, is presented for purposes of complying with the requirements of the Farmers Home Administration and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with , we have also issued our reports dated March 15, 2000, on our consideration of Hitchcock Housing, Ltd.'s internal control and on its compliance with laws and regulations. /s/ H. D. Morris Co., Inc., P.C. Houston, Texas March 15, 2000 [LETTERHEAD OF] Pailet, Meunier and LeBlanc, L.L.P. Independent Auditor's Report To the Partners JOAQUIN APARTMENTS, LTD. We have audited the accompanying balance sheets of JOAQUIN APARTMENTS, LTD., RHS PROJECT NO. 51-010-721050147 as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Audit 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 JOAQUIN APARTMENTS, LTD. as of December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, 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 a report dated February 26, 2000 on our consideration of JOAQUIN APARTMENTS, LTD.'s internal control and a report dated February 26, 2000 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier & LeBlanc, LLP Metairie, Louisiana February 26, 2000 [LETTERHEAD OF] The BCC Group, L.L.C. Independent Auditors' Report To the Partners Lake City Village, Ltd. Lake City, Florida We have audited the accompanying balance sheet of Lake City Village, Ltd.,( a Florida limited partnership), Rural Development Case No. : 09-012-0592892709, as of December 31, 1999, and the related statement of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Lake City Village, Ltd., as of December 31, 1998, were audited by other auditors whose report dated February 18, 1999, 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 Lake City Village, Ltd., as of December 31, 1999, and the results of its operations, changes in partners' deficit and cash flows for the year then ended in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern at December 31, 1999. As shown in the financial statements, the Partnership incurred a net loss during the year ended December 31, 1999 and, as of that date, had a working capital deficiency and partners' deficits. As described more fully in Note 4-d to the financial statements, the Partnership has experienced recurring operating losses along with the inability to pay required reserve deposits and property taxes without incurring loans from the partners. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also disclosed in Note 4-d. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In accordance with Government Auditing Standards, we have also issued a report dated March 31, 2000 on our consideration of Lake City Village, Ltd.'s internal control and on its compliance with laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying required supplementary information shown on pages 10-12 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ The BCC Group, L.L.C. Topeka, Kansas March 31, 2000 [LETTERHEAD OF] Abby P. Drane Independent Auditor's Report To the Partners Lakecrest, Ltd. Elizabethtown, Kentucky I have audited the accompanying balance sheet of Lakecrest, Ltd. (a Kentucky limited partnership), RECD Project No. 20-047-611059430, as of December 31, 1999 and the related statements of operations, partner' 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. The financial statements of Lakecrest, Ltd. as of December 31, 1998 were audited by other auditors whose report dated July 1, 1999, expressed an unqualified opinion on those statements. 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 Lakccrest, Ltd., as of December 3 1, 1999, and the results of its operation and cash flows for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, I have also issued a report dated March 31, 2000 on my consideration of Lakecrest, Ltd.'s internal control structure and my tests of its compliance with certain provisions of laws, regulations, contracts, and grants. /s/ Abby P. Drane March 31, 2000 [LETTERHEAD OF] Gillon and Company, Ltd. Report of Independent Certified Public Accountants To the Partners Lakeview Estates (A Limited Partnership) We have audited the accompanying balance sheets of Lakeview Estates (A Limited Partnership), as of December 31, 1999 and 1998, and the related statements of operations, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Lakeview Estates as of December 31, 1999 and 1998, 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 our reports dated February 11, 2000, on our consideration of Lakeview Estate's internal control and on its compliance with laws and regulations. /s/ Gillon & Company, Ltd. Natchez, Mississippi February 11, 2000 [LETTERHEAD OF] Smith, Miles & Company, L.C. Independent Auditors' Report To the Partners Lakewood Apartments, Ltd,, Phase II Panama City, Florida We have audited the accompanying balance sheets of Lakewood Apartments, Ltd., Phase II, USDA, Rural Development Project No: 09-012-592825075, as of December 31, 1999 and 1998, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership Is 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 Lakewood Apartments, Ltd., Phase II, as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Smith, Miles & Company, LC Panama City, Florida February 25, 2000 [LETTERHEAD OF] McGee & Associates, P.C. Independent Auditors' Report To the Partners Las Rosas II, Ltd. and USDA Rural Development We have audited the accompanying balance sheets of Las Rosas II, Ltd. (a limited partnership) as of December 31, 1999 and 1998, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standard, 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 Las Rosas II, Ltd. as of December 31, 1999 and 1998, and the results of its operations and the changes in partners' deficit and cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standard, we have also issued a report dated January 28, 2000, on our consideration of Las Rosas II, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental information included in the report is presented for purposes of additional analysis and is not a required part of the financial statements of Las Rosas II, Ltd. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ McGee & Associates, P.C. January 28, 2000 Farmington, New Mexico [LETTERHEAD OF] Miller, Mayer, Sullivan & Stevens LLP Independent Auditors' Report To the Partners Laurel Wood Apartments, Ltd. Rural Development Covington, Tennessee We have audited the accompanying balance sheets of Laurel Wood Apartments, Ltd., (a limited partnership) Case No. 48-079-611057371, as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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 Laurel Wood Apartments, Ltd. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated March 14, 2000 on our consideration of Laurel Wood Apartments, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Miller, Mayer, Sullivan & Stevens, LLP Lexington, Kentucky March 14, 2000 [LETTERHEAD OF] Gillon and Company, Ltd. Report of Independent Certified Public Accountants To the Partners Lead Bayou Apartments (A Limited Partnership) We have audited the accompanying balance sheets of Lead Bayou Apartments (A Limited Partnership), as of December 31, 1999 and 1998, and the related statements of operations, changes in partners' equity, and cash flows for tire 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Lead Bayou Apartments as of December 31, 1999 and 1998, and the results of its operations, changes in partners' equity, and cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our reports dated February 24, 2000, on our consideration of Lead Bayou Apartments' internal control and on its compliance with laws and regulations. /s/ Gillon and Company, Ltd. Natchez, Mississippi February 24, 2000 [LETTERHEAD OF] Beall Barclay & Company, PLC Independent Auditors' Report Lillie Mae's Retirement Village Apartments, Ltd. (A Limited Partnership) Inola, Oklahoma We have audited the accompanying balance sheets of Lillie Mae's Retirement Village Apartments, Ltd. (A Limited Partnership), FMHA Project No.: 42-026-0731282026, as of December 31, 1999 and 1998, and the related statements of operations, partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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 Lillie Mae's Retirement Village Apartments, Ltd. as of December,31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated January 14, 2000 on our consideration of Lillie Mae's Retirement Village Apartments, Ltd.'s internal control over financial reporting and on our tests of its compliance with certain laws, regulations, contracts, and grants. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 15 through 21 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The information presented on pages 15 and 16 excludes fees allocated to property and equipment related to partnership syndication amounts, and as such does not present financial position in conformity with generally accepted accounting principles. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, except for the effects of excluding the items described above, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Beall Barclay & Company, PLC Fort Smith, Arkansas January 14, 2000 [LETTERHEAD OF] H. D. Morris Co., Inc., P.C. Independent Auditor's Report To The Partners: Magnolia Plaza Apartments, Ltd. We have audited the accompanying balance sheet of Magnolia Plaza Apartments, Ltd., FMHA Case No.: 50-70-0760129844 as of December 31, 1999 and 1998, and the related statements of loss, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the partnership's 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 and the U. S. Department of Agriculture, Farmers Home Administration Audit Program. 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 statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Magnolia Plaza Apartments, Ltd., as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information presented in the Year End Report/Analysis (Form FMHA 1930-8) Parts I through III and schedules of administrative, maintenance, utilities, and taxes and insurance expenses for the years ended December 31, 1999 and 1998, are presented for purposes of complying with the requirements of the Farmers Home Administration and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Governmental Auditing Standards, we have issued reports dated May 31, 2000 on our consideration of Magnolia Plaza Apartments, Ltd.'s internal control and on its compliance with laws and regulations. /s/ H. D. Morris Co., Inc., P.C. Houston, TX May 31, 2000 [LETTERHEAD OF] Pailet, Meunier and LeBlanc, L.L.P. Independent Auditor's Report To the Partners MANY SENIORS APARTMENTS We have audited the accompanying balance sheets of MANY SENIORS APARTMENTS, RHS PROJECT NO. 22-043-721019060 as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 MANY SENIORS APARTMENTS as of December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, 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 a report dated February 26, 2000 on our consideration of MANY SENIORS APARTMENTS's internal control and a report dated February 26, 2000 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier & LeBlanc, LLP Metairie, Louisiana February 26, 2000 [LETTERHEAD OF] Miller, Mayer, Sullivan & Stevens LLP Independent Auditors' Report To the Partners Maple Hill Estates, Ltd. Rural Development London, Kentucky We have audited the accompanying balance sheets of Maple Hill Estates, Ltd., (a limited partnership) Case No. 20-040-611063882, as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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. Air 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 Maple Hill Estates, Ltd. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated February 9, 2000 on our consideration of Maple Hill Estates, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Miller, Mayer, Sullivan & Stevens, LLP Lexington, Kentucky February 9, 2000 [LETTERHEAD OF] Marshall, Shafer & Spalding, P.C. Independent Auditors' Report March 9, 2000 To the Partners New Caney Oaks Apartments (A Segment of New Caney Oaks, Ltd.) We have audited the accompanying balance sheet of New Caney Oaks Apartments (A Segment of New Caney Oaks, Ltd.) as of December 31, 1999 and 1998, and the related statements of operations, partners' equity (deficit), and cash flow for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally-accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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. As described in Note A to the financial statements, the financial statements referred to above includes the assets, liabilities, revenue and expenses which are shown in the accounting records of the apartment complex. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of New Caney Oaks Apartments (A Segment of New Caney Oaks, Ltd.) as of December 31, 1999 and 1998, and the results of its operation and its cash flows for the years then ended, in conformity with generally-accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our reports dated March 9, 2000, on our consideration of New Caney Oaks Apartments' (A Segment of New Caney Oaks, Ltd.) internal control and on its compliance with laws and regulations. /s/ Marshall, Shafer & Spalding, P.C. Houston, Texas [LETTERHEAD OF] Pailet, Meunier and LeBlanc, L.L.P. Independent Auditor's Report To the Partners OAKDALE SENIORS APARTMENTS We have audited the accompanying balance sheets of OAKDALE SENIORS APARTMENTS, RHS PROJECT NO. 22-002-721092070 as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 OAKDALE SENIORS APARTMENTS as of December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, 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 a report dated February 28, 2000 on our consideration of OAKDALE SENIORS APARTMENTS's internal control and a report dated February 28, 2000 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier & LeBlanc, LLP Metairie, Louisiana February 28, 2000 [LETTERHEAD OF] Rachel & Kostelka, LLC Independent Auditors' Report To the Partners Old Oak Estates, A Limited Partnership We have audited the accompanying balance sheets of Old Oak Estates, A Limited Partnership, as of December 31, 1999 and 1998, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Old Oak Estates, A Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Old Oak Estates, A Limited Partnership as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports dated March 24, 2000, on our consideration of Old Oak Estates, A Limited Partnership's internal control structure and on its compliance with laws and regulations. /s/ Rachel & Kostelka, LLC Shreveport, Louisiana March 24, 2000 [LETTERHEAD OF] Brenda P. McElwee, P.C. Independent Auditor's Report To the Partners Onion Creek, Ltd. We have audited the accompanying financial statements of Onion Creek, Ltd. as of December 31, 1999 and 1998, and for the years then ended, as listed in the table of contents. 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, and the U.S. Department of Agriculture, Rural Development's Audit Program. 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 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 Onion Creek, Ltd. as of December 31, 1999 and 1998, and the results of its operation for the years then ended and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our reports dated February 1, 2000 on our consideration of Onion Creek, Ltd.'s internal control and on its compliance with laws and regulations. /s/ Brenda P. McElwee, PC February 1, 2000 [LETTERHEAD OF] Little, Shaneyfelt, Marshall & Co. Independent Auditor's Report To the Partners P.D.C. Eighteen Limited Partnership We have audited the accompanying balance sheets of P.D.C. Eighteen Limited Partnership, RD Project No. 03-34-7106S2405 (the Partnership), as of December 31, 1999 and 1998, and the related statements of profit (loss), changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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 P.D.C. Eighteen Limited Partnership as of December 31, 1999 and 1998, and its results of operations, changes in partners, equity (deficit), and cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2000 on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Little, Shaneyfelt, Marshall & Company February 28, 2000 [LETTERHEAD OF] Rachel & Kostelka, LLC Independent Auditors' Report To the Partners Pecan Villa Apartments, A Limited Partnership We have audited the accompanying balance sheets of Pecan Villa Apartments, A Limited Partnership, as of December 31, 1999 and 1998, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Pecan Villa Apartments, A Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pecan Villa Apartments, A Limited Partnership as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports dated March 24, 2000, on our consideration of Pecan Villa, A Limited Partnership's internal control structure and on its compliance with laws and regulations. /s/ Rachel & Kostelka, LLC Shreveport, Louisiana March 24, 2000 [LETTERHEAD OF] Pailet,, Meunier and LeBlanc, L.L.P. Independent Auditor's Report To the Partners PECANWOOD APARTMENTS III, LTD. We have audited the accompanying balance sheets of PECANWOOD APARTMENTS III, LTD., RHS PROJECT NO. 51-012-721050149 as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 PECANWOOD APARTMENTS III, LTD. as of December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles, Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, 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 a report dated February 29, 2000 on our consideration of PECANWOOD APARTMENTS III, LTD.'s internal control and a report dated February 29, 2000 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier & LeBlanc, LLP Metairie, Louisiana February 29, 2000 [LETTERHEAD OF] Grubman & Associates of' Maryland, P C Independent Auditor's Report To the Partners Pocomoke Villas Limited Partnership T/A Pocomoke Villas We have audited the accompanying balance sheet of Pocomoke Villas Limited Partnership T/A Pocomoke Villas, FMHA Project No.: 24-024-521572645 as of December 31, 1999 and 1998, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and generally accepted government auditing standards for financial and compliance audits 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 disclosure 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 Pocomoke Villas Limited Partnership T/A Pocomoke Villas , Project No.: 24-024-521572645 as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole /s/ Grubman & Associates of Maryland, PC Gaithersburg, Maryland January 26, 2000 [LETTERHEAD OF] Smith, Miles & Company, L.C. Independent Auditors' Report To the Partners Ridgeview Apartments, Ltd. Panama City, Florida We have audited the accompanying balance sheets of Ridgeview Apartments, Ltd., USDA, Rural development Project No: 09-009592695879, as of December 31, 1999 and 1998, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ridgeview Apartments, Ltd., as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Smith, Miles & Company, L.C. Panama City, Florida February 22, 2000 [LETTERHEAD OF] Grubman & Associates of Maryland, P.C. Independent Auditor's Report To the Partners Rolling Meadow II Limited Partnership T/A Rolling Meadow fl We have audited the accompanying balance sheet of Rolling Meadow II Limited Partnership T/A Rolling Meadow II, FMHA Project No.: 24-006-521537063 as of December 31, 1999 and 1998, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and generally accepted government auditing standards for financial and compliance audits 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 disclosure 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 Meadow II Limited Partnership T/A Rolling Meadow II, Project No,: 24-006-521537063 as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole /s/ Grubman & Associates of Maryland, PC Gaithersburg, Maryland January 21, 2000 [LETTERHEAD OF] Pailet, Meunier and LeBlanc, L.L.P. Independent Auditor's Report To the Partners SOUTHEASTERN ASSOCIATES, LIMITED We have audited the accompanying balance sheets of SOUTHEASTERN ASSOCIATES, LIMITED, RHS PROJECT NO.: 22-053-721100096 as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government 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 SOUTHEASTERN ASSOCIATES, LIMITED as of December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 23, 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 Standards, we have also issued a report dated February 3, 2000 on our consideration of SOUTHEASTERN ASSOCIATES, LIMITED's internal control and a report dated February 3, 2000 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier & LeBlanc, LLP Metairie, Louisiana February 3, 2000 [LETTERHEAD OF] Donald W. Causey & Associates, P.C. Independent Auditors' Report To the Partners Sun Rise North, Ltd. Guntersville, Alabama We have audited the accompanying balance sheets of Sun Rise North, Ltd. a limited partnership, RIIS Project No.: 01-048-630963314 as of December 31, 1999 and 1998, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted the audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 the 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 Sun Rise North, Ltd., RHS Project No.: 01-048-630963314 as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. The audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 10 through 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FMHA 1930-8) Parts I and II for the year ended December 31, 1999 and 1998, is presented for purposes of complying with the requirements of the Rural Housing Services and is also not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated March 23, 2000 on our consideration of Sun Rise North, Ltd., internal control over financial reporting and on Our tests of its compliance with certain provisions of laws and regulations. /s/ Donald W. Causey & Associates, P.C. Gadsden, Alabama February 29, 2000 [LETTERHEAD OF] Brenda P. McElwee, P.C. Independent Auditor's Report To the Partners Taft Gardens, Ltd. We have audited the accompanying financial statements of Taft Gardens, Ltd. as of December 31, 1999 and 1998, and for the years then ended, as listed in the table of contents. 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, and the U.S. Department of Agriculture, Rural Development's Audit Program. 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 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 Taft Gardens, Ltd. as of December 31, 1999 and 1998, and the results of its operation for the years then ended and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our reports dated February 2, 2000 on our consideration of Taft Gardens, Ltd.'s internal control and on its compliance with laws and regulations. /s/ Brenda P. McElwee, P.C. February 2, 2000 [LETTERHEAD OF] Brenda P. McElwee, P.C. Independent Auditor's Report To the Partners Taft Terrace, Ltd. We have audited the accompanying financial statements of Taft Terrace, Ltd. as of December 31, 1999 and 1998, and for the years then ended, as listed in the table of contents. 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, and the U.S. Department of Agriculture, Rural Development's Audit Program. 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 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 Taft Terrace, Ltd. as of December 31, 1999 and 1998, and the results of its operation for the years then ended and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our reports dated February 3, 2000 on our consideration of Taft Terrace, Ltd.'s internal control and on its compliance with laws and regulations. /s/ Brenda P. McElwee, PC February 3, 2000 [LETTERHEAD OF] Parente Randolph, PC Independent Auditors' Report To the Partners of Valley Place Associates Turbotville, Pennsylvania: We have audited the accompanying balance sheets of Valley Place Associates (a limited partnership) (the "Partnership") as of December 31, 1999 and 1998, and the related statements of loss, changes in partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the management of Valley Place Associates. 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Valley Place Associates as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated February 3, 2000 on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Parente Randolph, PC Williamsport, Pennsylvania February 3, 2000 [LETTERHEAD OF] Smith, Miles & Company, L.C. Independent Auditors' Report To the Partners West Meadow Apartments II, Ltd. Panama City, Florida We have audited the accompanying balance sheets of West Meadow Apartments II, Ltd., USDA, Rural Development Project No: 01-031592806818 as of December 31, 1999 and 1998, and the related statements of operations, partners, deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership Is 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 Meadow Apartments II, Ltd., as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Smith, Miles & Company, LC Panama City, Florida February 17, 2000 [LETTERHEAD OF] Berry, Dunn, McNeil & Parker, LLC Independent Auditors' Report The Partners Wilson Lake Associates We have audited the balance sheets of Wilson Lake Associates (A Limited Partnership), RD Case No. 23004-010390750, as of December 31, 1999 and 1998, and the related statements of operations and partners' (deficit) 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wilson Lake Associates (A Limited Partnership) as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated January 26, 2000, on our consideration of Wilson Lake Associates' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, and contracts. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 10 through 12 is presented solely for the use of the U.S. Department of Agriculture, Rural Development (USDA-RD) and is not a required part of the basic financial statements. The supplementary information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Berry, Dunn, McNeil & Parker, LLC Portland, Maine January 26, 2000 [LETTERHEAD OF] Rachel & Kostelka, LLC Independent Auditors' Report To the Partners Willow Haven Apartments, A Limited Partnership We have audited the accompanying balance sheets of Willow Haven Apartments, A Limited Partnership, as of December 31, 1999 and 1998, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Willow Haven Apartments, A Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Willow Haven Apartments, A Limited Partnership as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports dated March 24, 2000, on our consideration of Willow Haven Apartments, A Limited Partnership's internal control structure and on its compliance with laws and regulations. /s/ Rachel & Kostelka, LLC Shreveport, Louisiana March 24, 2000 [LETTERHEAD OF] Bain, Brown & DeLaura Independent Auditor's Report To the Partners Wolcott Associates We have audited the accompanying balance sheets of Wolcott Associates, as of November 30, 1999 and 1998 and the related statements of operations, partners' capital and of cash flows for the years then ended. These financial statements are the responsibility of the general partners of Wolcott Associates. 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 the standards applicable to financial audits contained in Government Auditing Standards. issued by the Comptroller General of the United States. These 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 Wolcott Associates as of November 30, 1999 and 1998, and the results of operations and changes of partners' capital and of 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 17, 2000 on our consideration of Wolcott Associates' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Bain, Brown & DeLaura January 17, 2000 [LETTERHEAD OF] Miller, Mayer, Sullivan & Stevens LLP Independent Auditors' Report To the Partners Woodcrest Apartments, Ltd. Rural Development Cookeville, Tennessee We have audited the accompanying balance sheets of Woodcrest Apartments, Ltd., (a limited partnership) Case No. 48-056-611047118, as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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 Woodcrest Apartments, Ltd. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2000 on our consideration of Woodcrest Apartments, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Miller, Mayer, Sullivan, & Stevens, LLP Lexington, Kentucky January 19, 2000

Effective December 23, 1991, First American withdrew as general partner, subject to the approval of the Limited Partners, pursuant to a Settlement Agreement (the "Settlement Agreement") with the Partnership and Megan Management. Among other things, the Settlement Agreement provided for certain amendments to the partnership agreement of the Partnership and, at the request of the Investors Committee, for the replacement of First American as General Partner of the Partnership by Megan Management or an affiliated company which were effected by the Second Amended and Restated Agreement of Limited Partnership of Bayfield Low Income Housing Limited Partnership entered into as of the 23rd day of December, 1991 (the " Partnership Agreement"). The Settlement Agreement was approved by the bankruptcy court, and the Plan modified in accordance therewith, by an order entered June 22, 1992. Consent of the Limited Partners of the Partnership was obtained in October 1992.

As of December 31, 1992, Megan Management's rights and obligations as General Partner and Independent Manager of the Partnership were assigned to, and assumed by, Megan Asset Management, Inc. ("Megan Asset Management" or the "Independent Manager"), a corporation which was under common ownership and control with Megan Management.

The General Partner has full, exclusive and complete discretion in the management and control of the Partnership, except as limited by the Partnership Agreement, by the Plan or by the Management Agreement. Megan Asset Management, in its capacity as Independent Manager under the Plan, is responsible for the day-to-day management of the Partnership's operations.

Each of the Debtor Investor Partnerships' offerings of Limited Partnership Interests (as hereinafter defined) had been closed prior to the organization of the Partnership. Accordingly, no additional interests in the Partnership are being made available and only limited transfers of Limited Partnership Interests in the Partnership are being effected in accordance with the Partnership Agreement.

Description of Business

The Partnership's principal business is to maintain its investments in the form of Limited Partnership Interests in the Operating Partnerships (and, through such investments, in the Projects) and to carry out the provisions of the Plan. See "Business Objectives" under this Item.

For Projects funded under Section 515 after December 21, 1979, which include substantially all of those in which the Partnership owns an interest, applicable law and regulations require the owner to utilize the housing for eligible low income tenants at restricted lower rents for a period of 20 years following closing of the RD mortgage.

The direct below-market-rate mortgage loans, in amounts up to 97% of apartment complex costs as determined pursuant to RD regulations and for terms up to 50 years, for rural rental housing provided by RD under Section 515 were extended to qualified sponsors organized exclusively for the purpose of providing housing. In addition, RD provided each owner with mortgage interest subsidies, which effectively lower the interest rate of the loan to 1% after the completion of the apartment complex, the benefits of which the owner must pass through to eligible tenants in the form of lower rents. RD regulations limit cash distributions to owners of apartment complexes which it finances to a maximum annual return of 8% per annum, on a non-cumulative basis, on the owner's equity contribution of 3% to 5% of the cost of the apartment complex.

RD approval is required if an owner wishes to sell a Project. In addition, applicable law and regulations also preclude prepayment of mortgage loans, except in certain very limited circumstances and unless the owner agrees to utilize the project for eligible tenants for a specified period.

Each of the Projects indirectly owned by the Partnership qualified for the low income housing tax credits (the "Tax Credits"), under Section 42 of the Internal Revenue Code of 1986, as amended (the "Tax Code"), which was enacted by the United States Congress to promote the development of low income rental housing. In order to generate Tax Credits, properties must be rented to tenants whose incomes are below certain levels established by the federal government, and the rents which are permitted to be charged are strictly limited by government regulations. Since the inception of the Partnership, five of its Operating Partnerships became insolvent or bankrupt. A portion of the Tax Credits generated by these Operating Partnerships were, therefore, lost. This loss of Tax Credits has a direct effect on the Limited Partners since the amount of Tax Credits allocated to the Limited Partners is reduced correspondingly. Generation of Tax Credits by the Partnership and the receipt thereof by the Limited Partners is one of the primary business objectives of the Partnership.

For the tax year ended December 31, 1998, the Partnership passed through an aggregate total of approximately $3,724,000 of Tax Credits to the Limited Partners. The annual anticipated Tax Credits, which the Partnership could have received from the Operating Partnerships, excluding those projects lost in prior years due to insolvency or bankruptcy, and passed through to the Limited Partners during the tax year ended December 31, 1998, was approximately $3,754,000.

As of December 31, 1999, substantially all of the Tax Credits have been realized from the Operating Partnerships and passed through to the Limited Partners. With the realization that substantially all of the Tax Credits have been received from the Operating Partnerships by the Limited Partners, the General Partner began exploring various exit strategies, including the sale of the limited partnership interests in the Partnership and sale and/or refinancing of the Partnership's interests in the Operating Partnerships which own the Projects. However, various restrictions in connection with the RD mortgage loans, as well as continuing occupancy requirements with respect to the Tax Credits received and market conditions have severely restricted the Partnership's flexibility in considering various exit strategies and the value to be received from the exit strategies considered.

In view of these governmental restrictions and requirements, the resulting legal complexities and costs involved in exploring and attempting to structure various exit strategies, the Partnership no longer anticipates that the annual payments to be received from the Operating Partnerships, in combination with the Partnership's reserves, will be sufficient to permit the Partnership to meet its operating expenses until such time, if at all, a complete exit strategy has been identified and implemented. Accordingly, in view of the Partnership's need to raise more capital to continue to maintain its operations as set forth in the section on "Liquidity" below, the Partnership intends to begin accepting a limited number of offers it has received from Operating Partnerships to resell the Partnership's limited partnership interests in those Operating Partnerships which own the Projects to maintain the operations of the Partnership (the "Liquidity Program").

As only a small number of the Operating General Partners have offered to repurchase the Partnership's limited partnership interests in their Operating Partnerships, this alternative is seen only as a means of covering the Partnerships' operating cash flow needs and not as a viable alternative for the liquidation of the Partnership's interests in the Operating Partnerships which own the Projects as a whole.

Business Objectives

Although there can be no assurance that the Partnership's purpose or objectives will be achieved, the sole purpose of the Partnership as set forth in the Partnership Agreement was (i) to acquire the Debtor Investor Partnerships' equity interests as a limited partner in each of the Operating Partnerships, which developed and were to own, hold, manage, operate, lease, mortgage, sell and otherwise deal with the Projects, (ii) to assume liabilities of the Debtor Investor Partnerships in accordance with the Plan, (iii) to fulfill such other undertakings of the Partnership as are set forth in the Plan, and (iv) to conduct such other activities as may be necessary or appropriate to carry out the foregoing.

Purpose (i) - the acquisition of the Debtor Investor Partnerships' equity interests as a limited partner in each of the Operating Partnerships, which developed and were to own, hold, manage, operate, lease, mortgage, sell and otherwise deal with the Projects, was completed in July, 1990 (See Item 1. Business - Organization, above);

Purpose (ii) - the liabilities of the Debtor Investor Partnerships were assumed by and have been substantially paid by the Partnership. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity", below.

Purpose (iii) - in attempting to fulfill such other undertakings of the Partnership as are set forth in the Plan the Partnership has, among other things:

used its capital resources, to maintain, to the extent possible, the Partnership's interests in the Operating Partnerships in order to provide Tax Credits to the Limited Partners.

For the fiscal years ended March 31, 1999 (the "1999 Fiscal Year"), March 31, 1998 (the "1998 Fiscal Year") and March 31, 1997 (the "1997 Fiscal Year") the Partnership had cash and cash reserves totaling $1,097,967, $1,337,519 and $1,661,534 , respectively. The Partnership used its capital resources during these periods to fund its operations, including the payment of fees to the Independent Manager under the Management Agreement and to make loans to certain financially troubled Operating Partnerships in order to attempt to insure that the Tax Credits, and other tax benefits, continued to flow from those Operating Partnerships to the Limited Partners. See "Item 2. Properties"; see, also, "Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity".

In order to generate Tax Credits and avoid recapture thereafter, there are significant continuing occupancy requirements with which each Project must comply for a 15-year compliance period. To the extent a Project does not comply with the Tax Credit occupancy requirements, all of the Tax Credits previously generated by the non-complying dwelling units in the applicable Project, and used by the Limited Partners, would have to be recaptured. If this occurs the Limited Partners would have to pay a tax equal to one-third of the Tax Credits so generated and used by the Limited Partners to reduce their tax liability, together with possible penalties and interest.

provided to the extent available cash distributions to the Limited Partners.

The Partnership does not expect to make material distributions beyond those previously made, as its sources of liquidity are limited and are being used to meet its operating expenses, including attempts to preserve the Projects. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - "Liquidity" and "- Capital Resources".

Purpose (iv) - conduct such other activities as may be necessary or appropriate to carry out the foregoing, the Partnership has focused on the following long-term objectives:

a) capital appreciation through increases in the value of the Partnership's investments in the Operating Partnerships; and

b) providing cash distributions to the Limited Partners from the proceeds

of the sale or refinancing of the Projects.

Objective a) - The Partnership's investments are in apartment complexes which provide housing to low income tenants pursuant to government sponsored programs. Therefore, in addition to market-related risks, which any real estate investment is subject to, capital appreciation of a Limited Partnership interest is subject to the restrictions set by government policy. As explained below, this makes it unlikely that the Projects owned by the Operating Partnerships will significantly increase in value.

The vast majority of the Projects owned by the Partnership are located in small rural communities. As such, the market rents in many of the Partnership's Project areas are not significantly higher that the RD restricted rents eligible tenants are currently charged. Therefore, the valuation of many of the Partnership's Projects, even if based upon market rents, results in little or no appreciation from their valuation at the time the Partnership acquired them. In the event that the projected cash flow from any of the Projects in a market rate environment is significantly greater than that in a restricted rent environment, the Partnership can seek RD approval to prepay a specific Project's 50 year mortgage and then sell the Project or convert it to market rate property, or upon RD's refusal to allow prepayment, seek an equity loan from RD to use to repay a portion of the equity the Partnership contributed to the Operating Partnership. However, the instances where market rents might be significantly higher are rare and there are numerous government restrictions in connection with such a course of action. In addition, most of the Partnership's Project mortgages have an absolute restriction which will not allow prepayment until approximately 2009.

Accordingly, based on current market conditions and government regulations, it does not appear that the value of the Projects owned by the Partnership will increase significantly. The value of the Projects and the market conditions are adversely affected by the restricted use limitations which limit the amount of income a tenant may have and the amount of rent a Project can charge a tenant. Under current RD regulations, these restrictions will continue to be in place until the Projects are in their 20th year of existence or approximately the year 2009. These regulations make capital appreciation in the Partnership's Projects much more difficult than is the case with market rate properties.

Objective b) - With respect to the Partnership's long-term objective to provide cash distributions to the Limited Partners from the proceeds of the sale or refinancing of the Projects, with the realization that substantially all of the Tax Credits have been received from the Operating Partnerships by the Limited Partners as of December 31, 1999, the General Partner began exploring various exit strategies, including the sale of the limited partnership interests in the Partnership and sale and/or refinancing of the Partnership's interests in the Operating Partnerships which own the Projects. However, the various restrictions in connection with the RD mortgage loans, as well as the continuing occupancy requirements with respect to the Tax Credits received and market conditions, have severely restricted the Partnership's flexibility in considering various exit strategies and the value to be received from the exit strategies considered. See Item 1. Business - Description of Business, above. Nonetheless, the Partnership continues to consider exit strategies.

Employees

The Partnership has no employees. The day-to-day operations of the Partnership are conducted by the Independent Manager, which employs 2 people on a full-time basis.

Item 2. Properties.

Each Operating Partnership owns and operates a Project, which generated Tax Credits under Section 42 of the Tax Code over its initial 10-years of existence or slightly longer. A description of the Projects is contained in the following tables. Immediately following these tables, a glossary which provides an explanation of certain terms used in the table headings, as well as a discussion of certain Projects.

Bayfield Low Income Housing Limited Partnership
Ownership Interest in Operating Partnerships
Operating Partnership	City	State	Number of Apts. Units	Project's Mortgage Balance	Developer's Original Equity	Tax Items	Capital Events	Bayfield's Committed Capital Contribution	Approx. Avg. Annual Anticipated Federal Credits	1998 LIHC Credits	Accum. LIHC (from Inception of Bayfield)

AFM RRH LIMITED	Ocala	FL	36	$1,090,038	$80,868	99	50	$265,305	$43,618	$43,618	$453,847
Alachua Villas, Ltd.	Alachua	FL	35	1,053,929	51,575	99	50	224,387	44,421	44,414	387,530
Albany Commons, Ltd.	Albany	KY	24	682,973	23,400	99	50	177,929	32,342	32,334	283,087
Anderson Country Estates, L.P.	Palmyra	MO	24	584,505	18,340	99	50	122,268	31,398	27,909	227,173
Aurora Limited	Aurora	IN	22	1,040,007	51,400	99	50	180,468	1,413	1,413	209,780
Baker Heights II, L.P.	Martinsburg	WV	32	981,079	53,000	95	50	241,438	41,443	41,442	380,468
Bayshore North Apts. Phase IV	Brewerton	NY	36	1,334,128	41,840	99	50	319,017	58,892	58,892	513,343
Belfast Housing Associates	Belfast	ME	24	1,127,091	60,500	99	50	282,195	53,147	53,147	465,367
Berea Summitt, Ltd.	Shelbyville	KY	15	420,448	5,856	99	50	45,134	8,114	8,112	71,010
Berkshire Apartments, Ltd. #2	Harrodsburg	KY	22	674,485	36,150	95	50	163,186	13,976	13,976	186,588
Blades Limited Partnership	Blades	DE	33	1,234,927	66,000	99	50	301,958	57,861	57,861	496,388
Blanchard Seniors Apts. Partnership	Blanchard	LA	24	706,347	37,250	95	50	167,124	-	-	228,002
Brentwood Apartments, Ltd.	Flatwoods	KY	21	671,281	36,500	99	50	160,800	23,639	23,639	258,191
Briar Hill Apartments, Ltd.	Barbourville	KY	16	364,568	29,654	95	50	88,475	817	817	132,323
Broadway Terrace of Drew, L.P.	Drew	MS	48	1,339,909	73,650	99	50	301,536	63,342	60,783	480,702
Bunkie Seniors Apts. Partnership	Bunkie	LA	24	680,908	36,520	95	50	164,759	-	-	235,643
Canal Town Associates	Canastota	NY	6	242,625	12,991	95	50	57,391	2,402	2,402	83,833
Canyon Villas L.P.	Fort Benton	MT	10	334,631	10,500	99	50	78,878	13,462	13,462	110,550
Cedar Crest Apartments, L.P.	Bourbon	MO	16	387,801	12,200	99	50	95,472	20,058	18,794	151,322
Cedar Grove Apts. Limited II	Shepherdsville	KY	36	1,107,882	60,763	95	50	275,938	41,303	41,304	380,696
Citrus Terrace, Ltd.	Sebring	FL	42	1,372,797	71,885	99	50	324,907	61,688	61,688	557,364
Cle Elum Apartment Associates	Cle Elum	WA	20	623,225	34,000	95	50	154,188	4,221	4,221	216,836
Cleveland Courts, LTD.	Cleveland	MS	18	522,680	27,750	99	50	127,650	24,912	24,912	217,305
Clifford Heights Apartments, Ltd.	Stamping Ground	KY	12	381,576	20,564	99	50	93,425	17,598	17,598	154,099
Cottondale Villa Apartments, Ltd.	Cottondale	FL	24	672,669	35,700	99	50	166,138	30,927	30,927	270,711
Cottonwood Seniors Apts. Partnership	Cottonport	LA	24	688,353	21,432	99	50	164,527	25,663	25,664	270,132
Coushatta Seniors Apts. Partnership	Coushatta	LA	24	717,600	22,500	99	50	171,159	24,720	24,719	280,477
Cypress View Estates, Ltd.	Shaw	MS	24	703,494	37,500	95	50	166,414	31,765	31,753	278,038
Delta Terrace Estates, L.P.	Sterlington	LA	24	742,816	39,700	95	50	180,474	22,164	22,168	279,065
Diamond Court II L.P.	Harrington	DE	32	1,222,801	38,300	99	50	297,192	53,901	53,901	470,834
East Magnolia Village, L.P.	Port Gibson	MS	24	653,070	35,000	99	50	161,503	10,294	10,294	245,039
Edmonson Properties, Limited	Brownsville	KY	16	473,430	15,470	99	50	118,956	21,949	21,949	191,471
Elliott Manor, Ltd.	Sandy Hook	KY	24	763,546	23,960	99	50	184,831	34,372	34,372	293,549
Elmwood Estates, L.P.	Monroe	LA	32	1,038,565	32,550	99	50	94,754	14,944	14,947	127,364
Fieldcrest, Ltd.	Lexington	KY	16	437,242	23,275	99	50	114,667	20,756	23,351	195,891
Flambeau Village, L.P.	Ladysmith	WI	54	1,623,668	723,000	99	50	779,080	161,415	161,415	1,259,360
Folsom South Venture	Folsom	LA	12	377,259	20,073	99	50	90,324	17,574	17,574	153,748
Forest Park Apartments Ltd.	Lake Butler	FL	32	911,414	43,150	99	50	212,871	21,788	21,788	351,056
Franklin Vista II, Ltd.	Anthony	NM	28	883,940	47,250	95	50	216,093	28,542	28,542	337,201
Gaslight Square Apartments, Ltd.	Versailles	IN	24	707,942	39,474	95	50	179,152	4,637	4,637	250,451
Gatewood Apartments, Ltd.	Bayou George	FL	37	1,112,822	59,533	95	50	270,750	49,225	49,226	436,790
Gibsland Villas L.P.	Gibsland	LA	24	755,000	42,930	95	50	206,022	35,484	35,484	311,034
Gilman Seniors Apartments, L.P.	Gilman City	MO	6	160,003	5,000	99	50	35,221	6,565	6,565	41,032
Glenmora Apartments Partnership	Glenmora	LA	13	422,508	21,590	99	50	96,605	19,890	18,186	166,161
Greenleaf Gardens, Ltd.	Orange City	FL	47	1,267,362	67,650	99	50	304,975	23,426	23,425	499,575
Greenwood Associates L.P.	Greenwood	AL	40	1,280,780	66,700	95	50	292,301	55,007	55,006	481,687
Hagewood Apartments Ltd.	Natchitoches	LA	16	557,158	29,775	95	50	134,601	1,748	1,748	197,783
Hickory Square L.P.	Little Rock	AR	40	1,348,913	29,900	95	50	284,550	-	-	430,038
Hidden Hill Apartments, Ltd.	Elizabethtown	KY	16	496,494	26,796	99	50	120,935	22,371	22,371	192,310
Hilltop Manor RRH, Ltd. II	Ocala	FL	45	1,336,730	58,600	99	50	326,541	63,003	63,055	547,809
Hillwood, Ltd.	Anderson	AL	12	316,446	16,900	99	50	86,050	15,101	17,526	146,550
Hitchcock Housing, Ltd.	Hitchcock	TX	40	1,030,928	55,200	95	50	250,676	4,866	4,866	373,163
Houston Associates	Lycoming Country	PA	24	951,255	29,850	99	50	234,799	43,362	43,362	376,183
Hurricane, Ltd.	Hurricane	UT	24	828,802	70,250	95	50	201,993	-	-	297,917
Indianwood Apartments II, Ltd.	Lafayette	AL	24	619,051	32,800	99	50	113,856	-	-	176,116
Joaquin Apartments, Ltd.	Joaquin	TX	32	746,420	40,000	99	50	181,777	14,778	14,778	283,930
Jonesville Apts.Sr. Citizens Ptrshp.	Jonesville	LA	18	556,608	29,518	99	50	136,811	24,598	24,596	216,123
Kent Summit, Ltd.	Shelbyville	KY	8	243,980	3,330	99	50	57,207	10,266	10,264	89,850
Kingswood II, Ltd.	Mount Olive	MS	24	642,767	34,907	95	50	152,206	22,620	22,620	247,769
LaGrange Apartments-Phase II L.P.	Lagrange	MO	8	192,117	6,000	99	50	45,711	10,782	9,743	79,466
Lake City Village, Ltd.	Lake City	FL	36	1,125,116	63,040	99	50	269,685	48,476	48,476	422,335
Lakecrest, Ltd.	Elizabethtown	KY	36	1,040,340	58,620	95	50	266,539	27,608	27,608	350,037
Lakeview Estates, Ltd.	Lakeview	AR	33	1,027,954	54,700	99	50	249,451	48,220	48,220	422,223
Lakewood Apartments II, Ltd.	Lake City	FL	32	905,597	46,350	95	50	212,000	38,554	38,555	341,102
Larue Properties, Limited	Hodgenville	KY	24	600,636	23,480	99	50	185,145	30,839	30,843	270,069
Las Rosas II, Ltd.	Tularosa	NM	28	913,719	48,820	95	50	221,375	24,989	24,990	343,126
Laurelwood Apartments, L.P.	Collierville	TN	35	1,081,485	73,050	95	50	259,302	19,240	8,953	338,290
Lead Bayou, Ltd.	Cleveland	MS	48	1,322,313	70,600	95	50	236,394	17,993	17,987	404,369
Lewis Apartments Company I	Lowville	NY	18	682,416	36,250	99	50	165,773	31,411	31,411	275,041
Lewistown Apartments L.P.	Lewistown	MO	12	283,952	15,053	95	50	67,666	15,015	13,347	111,784
Lillie Mae's Retirement Village Apts., L.P.	Chickasha	OK	48	1,098,782	144,500	99	50	299,293	49,758	49,758	435,722
Lockport Seniors Apts. Partnership	Donaldsonville	LA	32	851,652	45,400	99	50	217,714	30,183	30,183	332,226
Longview Terrace, Ltd.	Decatur	MS	24	688,856	36,700	95	50	159,185	31,300	32,240	274,597
Magnolia Plaza, Ltd.	Magnolia	TX	36	954,661	51,000	95	50	231,713	3,241	3,241	336,222
Manor Apts. Caddo Mills. Texas, Ltd.	Caddo Mills	TX	24	578,000	18,200	99	50	128,510	20,276	20,081	219,625
Many Seniors Apts. Partnership	Many	LA	32	955,723	29,850	99	50	230,490	42,855	42,855	375,147
Maple Hill Estates, Ltd.	Lancaster	KY	32	1,031,753	54,880	95	50	249,384	8,593	8,594	348,832
Maple Leaf Associates (Liberty Ter.)	Watsontown	PA	24	928,772	49,500	95	50	225,188	23,180	23,179	360,777
Marion September Housing, L.P.	Marion	KS	20	542,965	29,000	95	50	131,628	11,849	11,850	204,667
Meadowland Apartments, Ltd.	Iowa	LA	16	520,897	29,332	99	50	129,131	20,295	20,295	176,192
Mills-Shapley Partnership, L.P.	Greenville	MS	14	191,376	21,975	99	27.5	82,157	23,713	23,713	181,346
Mitchell II Limited	Mitchell	IN	24	739,559	38,370	99	50	181,473	30,213	30,213	237,090
Mosswood Apartments, Ltd.	Start	LA	24	751,406	36,700	95	50	166,822	27,484	27,485	262,529
Mountain View Apartments II, Ltd.	Morehead	KY	24	734,112	39,632	99	50	186,493	33,081	33,081	289,469
Munfordville Properties, Limited	Munfordville	KY	10	339,741	18,000	95	50	81,248	4,457	4,457	111,415
M-W Limited Partnership	Westfield	WI	8	237,155	12,740	95	50	58,068	6,408	6,408	68,187
New Caney Oaks, Ltd.	New Caney	TX	57	1,208,509	65,000	95	50	293,148	-	-	423,036
North Deer Creek, L.P.	Hollandale	MS	24	701,206	38,325	95	50	174,358	31,371	31,371	284,423
Oak Leaf Partnership, Ltd.	Jackson	MS	16	-	115,600	99	50	63,090	-	-	93,128
Oak Valley Place II, L.P.	Knox	IN	18	531,839	28,385	99	50	122,084	18,298	18,295	182,977
Oakdale Seniors Apts. Partnership	Oakdale	LA	26	763,537	40,950	95	50	184,861	-	-	262,436
Oakwood Apartments, L.P.	Hannibal	MO	24	580,422	18,186	95	50	140,222	30,680	27,272	228,407
Old Oak Estates, L.P.	West Monroe	LA	37	1,241,087	39,570	99	50	306,274	51,431	51,422	492,942
Onion Creek, Ltd.	Buda	TX	32	819,891	44,561	95	50	199,101	30,162	30,162	306,875
Orchard Commons, Ltd.	Crab Orchard	KY	16	430,448	16,110	99	50	122,449	22,612	22,608	197,910
P.D.C. Eighteen Limited Partnership	Newport	AR	32	1,048,770	32,570	95	50	236,615	41,500	41,468	363,018
P.D.C. Twenty Two Limited Partnership	Cherry Valley	AR	20	733,531	22,970	95	50	171,475	32,150	30,416	266,784
Park Place East Associates	Muncy	PA	24	902,382	30,250	99	50	241,188	38,462	38,467	336,723
Park Place North Associates	Muncy	PA	16	602,796	32,300	99	50	146,836	27,863	27,863	243,966
Parkwood Associates, L.P.	Stateline	MS	24	669,718	20,920	99	50	164,700	31,225	31,225	273,447
Pecan Villa Apartments, L.P.	Richwood	LA	32	1,065,545	57,700	95	50	262,777	25,253	25,251	404,287
Pecanwood Apartments III, Ltd.	Whitehouse	TX	32	705,475	37,500	99	50	178,638	14,106	14,106	266,191
Perry Apartments L.P.	Perry	MO	8	184,320	9,895	95	50	44,222	2,159	-	61,957
Pocomoke Villas Limited Partnership	Pocomoke City	MD	37	1,483,070	78,947	99	50	362,966	68,794	68,794	594,704
Pontotoc Ridge, Ltd.	Pontotoc	MS	24	674,995	36,500	95	50	164,502	21,385	21,385	241,817
Regency Apts. of Reno, Texas, Ltd.	Reno	TX	24	575,247	18,000	99	50	138,379	24,675	24,673	214,519
Regency Associates, Ltd.	Sumrall	MS	24	651,830	34,778	95	50	158,045	8,611	8,611	232,670
Reservoir Hill Limited Partnership V	Baltimore	MD	18	699,022	200	99	50	577,891	112,969	112,969	988,891
Reynolds & Associates, First St., L.P.	Durant	OK	32	842,292	55,600	95	50	204,752	23,350	23,350	307,844
Reynolds & Associates, N. Place III, L.P.	Calera	OK	16	438,899	23,500	95	50	106,464	18,004	18,004	158,784
Ridge View Apartments, Ltd.	Crystal River	FL	44	1,378,547	73,324	95	50	312,000	20,915	22,856	458,553
Ridgecrest Properties Ltd.	Bridgeport	AL	24	680,218	36,300	95	50	164,784	-	-	200,224
River View Apartments, L.P.	Canton	MO	8	60,926	9,950	99	50	21,494	4,860	4,319	35,153
Riverbend Apartments, Ltd.	Delta	LA	16	486,945	26,300	95	50	119,075	8,544	9,320	173,454
Rolling Meadow II L.P.	Greensboro	MD	26	990,207	53,000	99	50	244,480	44,648	44,649	387,181
Russell "September" Housing, L.P.	Russell	KS	12	324,277	17,400	95	50	78,492	2,694	2,695	122,763
Sacramento, Ltd.	Cloudcraft	NM	20	795,498	45,230	95	50	194,175	33,090	33,090	289,850
Shaker Housing Credit L.P.	Cleveland	OH	39	-	728,428	99	50	335,771	-	-	390,047
Sleepy Oaks Limited Partnership	West Branch	MI	12	303,818	25,265	95	50	82,239	13,847	12,629	109,994
Somerset Western Hills Assoc. Ltd., II	Somerset	KY	16	504,029	22,220	99	50	125,254	23,728	23,728	202,332
Southeastern Associates, Ltd.	Hammond	LA	42	1,353,329	72,400	99	50	314,798	60,661	59,208	490,455
Southern Apartments Partnership	Iota	LA	20	589,974	32,759	95	50	142,358	-	-	206,627
Spring Meadow Apartments Ltd.	Russell Springs	KY	24	734,529	55,537	99	50	183,090	17,602	17,600	281,587
St. Rose Associates, Ltd.	St. Rose	LA	24	762,288	40,150	99	50	182,093	35,956	35,956	313,243
Streamside Associates	Frankfort	NY	24	920,534	29,803	99	50	238,335	44,775	41,729	367,915
Sullivan Garden Apartments, L.P.	Sullivan	MO	23	215,394	9,275	99	50	80,933	18,395	16,448	133,267
Summer Place, Ltd.	St. Helen	MI	12	337,411	18,050	95	50	81,457	5,001	5,001	117,245
Sun Rise North Ltd.	Guntersville	AL	48	1,489,395	46,800	99	50	362,362	56,611	56,607	495,169
Sunrise Apartments L.P.	Milton	WV	12	380,042	77,000	99	50	82,532	13,666	14,244	123,570
Taft Gardens, Ltd.	Taft	TX	24	626,682	33,500	95	50	151,792	8,173	8,173	212,300
Taft Terrace, Ltd.	Taft	TX	32	835,574	44,700	95	50	202,669	7,951	7,951	300,130
Timberline Apartments	Wilburton	OK	24	622,265	33,400	95	50	151,443	-	-	215,113
Valley Limited, L.P.	Vevay	IN	24	692,644	22,500	99	50	128,592	24,898	24,897	217,965
Valley Place Associates	Elysburg	PA	32	1,289,809	67,200	99	50	311,318	58,283	58,283	503,317
Wayland Apartments, L.P.	Wayland	MO	8	190,825	10,211	95	50	45,771	8,076	6,508	70,896
West Meadow Apartments II, Ltd.	Geneva	AL	32	848,114	47,900	95	50	187,250	34,300	34,300	301,428
Wexford Associates	Littleton	ME	16	810,157	40,000	99	50	175,185	33,352	33,354	289,536
Willow Haven Apartments, L.P.	Delhi	LA	44	1,390,479	78,391	95	50	323,906	17,549	17,549	495,071
Wilson Lake Associates	Wilton	ME	34	1,614,879	85,900	99	50	400,896	76,574	76,574	670,498
Wolcott Associates	Alport	NY	40	1,431,467	77,936	99	50	353,080	63,687	63,687	563,212
Woodcrest Apartments, L.P.	Lafayette	TN	32	961,741	62,000	95	50	233,994	13,480	13,480	312,735
Housing Partners VI, L.P.	N/A	N/A	N/A	N/A	N/A	4	4	24,922	4,800	4,800	34,823
Housing Partners VIII, L.P.	N/A	N/A	N/A	N/A	N/A	2	2	13,873	1,750	1,750	16,467
Housing Partners IX, L.P.	N/A	N/A	N/A	N/A	N/A	2	2	13,972	2,246	2,246	15,180
Housing Partners XI, L.P.	N/A	N/A	N/A	N/A	N/A	6	6	39,093	6,318	6,318	49,207
Housing Partners XII, L.P.	N/A	N/A	N/A	N/A	N/A	8	8	57,942	11,146	11,146	66,624
Housing Partners XIII, L.P.	N/A	N/A	N/A	N/A	N/A	4	4	29,603	5,450	5,450	32,446
Housing Partners XV, L.P.	N/A	N/A	N/A	N/A	N/A	8	8	57,942	11,324	11,324	67,725
Housing Partners IX, L.P.	N/A	N/A	N/A	N/A	N/A	6	6	38,703	6,735	6,735	45,544
			3,600	$107,749,559	$ 6,945,607			$ 27,190,082	$ 3,753,946	$3,723,899	$ 42,026,121

Glossary

Developers Original Equity

Tax Items

Capital Events

Bayfield's Committed Capital Contribution

Approx. Avg. Annual Anticipated Federal Credits

1998 LIHC Credits

Accumulated LIHC (from Inception of Bayfield)

The following is additional information on certain Operating Partnerships which had operational or other financial problems either during or which or the effects of which continued during the Fiscal Year ended March 31, 1999:

Shaker Housing Credit L.P

As a result of the loss of this Operating Partnership's Project the Partnership did not receive, or was not entitled to, anticipated aggregate Tax Credits of $210,000 from 1996 to 1998. Further, Tax Credits of $163,000 were subject to recapture along with $61,000 in interest, that were passed through to the Limited Partners on their 1996 Schedule K-1. Limited Partners are not expected to be subject to any further tax recapture or interest and penalties with respect to the loss of this Project.

Alachua Villas, Ltd., Citrus Terrace, Ltd. and Lake City Village, Ltd.

In the 1995 Fiscal Year, Megan Asset Management, as general partner of the Partnership, and the Partnership commenced an action in the Circuit Court of Alachua County, Florida as the sole limited partner of, and derivatively on behalf of, two Operating Partnerships, Lake City Village, Ltd. and Alachua Villas, Ltd., against John D. Carver ("Carver"), the general partner of these Operating Partnerships, and a management company affiliated with Carver, G & R Management Services, Inc. ("G & R"). The actions arose as a result of the acceleration by RD of the entire balance due on the mortgage against these Operating Partnerships. RD alleged various defaults under such Operating Partnership's loan agreements, promissory notes and mortgages with RD (the "RD Documents"), including failure to pay real estate taxes, failure to maintain account balances sufficient to pay current operating and maintenance expenses, failure to maintain adequate records and file required reports, and failure to correct deficiencies previously noted by RD during its supervisory visits to the housing projects.

After extensive motion practice and discovery, on January 13, 1995, a settlement agreement was entered into ("Carver Settlement Agreement") providing for a designated representative of the Partnership (a company under common ownership and control with Megan Asset Management) to take over management of the affected Operating Partnerships and the replacement of Carver as general partner subject to the consent of RD (which was obtained in December, 1995). The Carver Settlement Agreement also provided for an audit of the two Operating Partnerships and Citrus Terrace Village Ltd., an Operating Partnership unaffiliated with Carver, but which G&R managed ("Citrus Terrace"). This audit uncovered possible claims of the two Operating Partnerships and Citrus Terrace against the defendants totaling $83,599, which amount was contested by Carver. Following a hearing on November 13, 1997, the Court ruled that it would enter summary judgment pursuant to the Carver Settlement Agreement in favor of the Partnership against Carver in the amount of $78,599 together with interest from January 24, 1996. Thereafter Carver appealed the Court's entry of judgment in favor of the Partnership. After the filing of briefs and hearing the arguments the Circuit Court of Appeal, First District, State of Florida dismissed Carver's appeal and the judgment in favor of the Partnership became final. Subsequently, the Partnership applied for an award of attorney's fees and cost pursuant to the terms of the Carver Settlement Agreement. By an order dated March 2, 2001, the Partnership's application for an award of attorneys' fees and costs was granted by the Court in the sum of $34,012.95 as attorney's fees and $787.00 as costs for the total sum of $34,799.95. While the Partnership has made attempts to recover against Carver with respect to the judgment and award of attorneys' fees and has taken asset discovery depositions of Carver, his wife and certain relatives, no asset against which the judgment or award of attorneys' fees can be collected have yet been discovered. Accordingly, there can be no assurance that any such amounts will be recovered by such Operating Partnerships or the Partnership.

Further, in the 1996 Fiscal Year, in an attempt to recover upon its claims and the sums taken by Carver from the two Operating Partnerships, other than Citrus Terrace, the Partnership commenced a further action in the Circuit Court of Alachua County, Florida against Mercurio & Bridgford, P.A. and John J. Mercurio (together, "Mercurio"), who provided auditing services to each of Lake City Village, Ltd., Alachua Villas, Ltd. and Citrus Terrace, based upon their failure to report the improper payments made by John D. Carver, Jr.

After a jury trial in the Circuit Court of Alachua County, Florida, in November, 1998, the jury reach a verdict that these defendants had not caused the Partnership's and Operating Partnerships' financial loss. Following the jury's verdict, these defendants sought $55,545 recovery for their costs and attorneys' fees against the Partnership. The Partnership and counsel to the Partnership did not believe the Partnership was obligated for defendants' cost and attorneys' fees and defended against such claim, however, the Court concluded that the Partnership would be liable for costs incurred by these defendants in the amount of $18,464.70. Subsequently, the Partnership reached a settlement agreement with these defendants and paid $13,000 to defendants in full settlement of all costs and attorney's fees due to these defendants.

In consideration of the Partnership's making loans of $24,655 and $25,310 in excess of its capital commitment to Lake City Village, Ltd. and Alachua Villas, Ltd. respectively, to enable them to pay certain outstanding real estate taxes in arrears, RD has not foreclosed on its mortgages to such Operating Partnerships and has restructured such mortgages to finance the payment of the balance of the past due real estate taxes and to permit such Operating Partnerships to remain in operation. This permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and to avoid any recapture on Tax Credits taken in prior years. Had RD foreclosed on its loans and the Partnership lost its interest in Lake City Village, Ltd. and Alachua Villas, the Partnership would not have been entitled to aggregate Tax Credits of $392,300 through 1999, or approximately $196 per 0.05% of Limited Partnership Interest. In addition, assuming that 100% of the Tax Credits previously allocated to the Limited Partners relating to these Operating Partnerships were used by them, it is estimated that the Limited Partners would have been subject to a total tax recapture with respect to these Operating Partnerships of $186,709 or approximately $93 per 0.05% of Limited Partnership Interest, plus interest and penalties, if any.

In addition to the above loans in excess of its capital commitment, during the fiscal year ending March 31, 1998 the Partnership made an additional loan of $20,714 to Lake City Village to cover the cost of maintenance, which had been deferred by Carver, in an attempt to keep the units in this Project habitable and available for rent.

While the Partnership has obtained a promissory note from each Operating Partnership and a security interest in the Operating General Partners' interests in each Operating Partnership, the repayment of the loans with accrued interest is subject to each Operating Partnership's having sufficient cash flow from operations to cover its ongoing operating expenses and fund the necessary reserves and RD's approval, there can be no assurance that any such amounts will be recovered from such Operating Partnerships.

The Partnership has also paid professional fees on behalf of each Operating Partnership relating to the litigation against the former general partner and takeover and workout of these Operating Partnerships in the amount of $55,462 on behalf of Alachua Villas and $55,638 on behalf of Lake City Village. Said payments have been reflected as a note payable to the Partnership on the financial statements of each Operating Partnership. Any sums recovered by the Operating Partnerships from the judgment obtained against Carver, the former general partner, will be paid to the Partnership in reduction of these loans, subject to the then financial condition of each Operating Partnership.

Also in the 1995 Fiscal Year, the Partnership commenced a further action in the Circuit Court of Highlands County, Florida on behalf of Citrus Terrace substantially similar to that described above, against George T. Wheeler ("Wheeler"), individually and as the general partner of Citrus and against Carver, as Trustee of G & R, and G & R, which management company was also managing the Project owned by Citrus Terrace. A substantially similar settlement agreement was entered into and implemented in connection with and this litigation was also settled, except for the recovery of the sum of approximately $5,000 in an unauthorized loan taken by Carver from Citrus Terrace. It is not likely going to be economically feasible for the Partnership to attempt to recover this latter sum against Carver with respect to such claim.

In consideration of an affiliate of Megan Asset Management becoming the substitute general partner of Citrus Terrace, RD did not foreclose on its mortgage to Citrus Terrace, and it has restructured the mortgage to finance the payment of past due real estate taxes to permit this Operating Partnership to remain in operation, notwithstanding the damages suffered by it. This permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and to avoid any recapture on Tax Credits taken in prior years. If RD had foreclosed on its loans and had the Partnership lost its interest in this Operating Partnership, the Partnership would not have been entitled to aggregate Tax Credits of $283,136 through 1999, or approximately $142 per 0.05% of Limited Partnership Interest. In addition, assuming that 100% of the Tax Credits previously allocated to the Limited Partners relating to this Operating Partnership were used by them, it is estimated that the Limited Partners would have been subject to a total tax recapture with respect to this Operating Partnership of $115,731, or approximately $58 per 0.05% of Limited Partnership Interest, plus interest and penalties, if any.

The Partnership has also paid professional fees on behalf of Citrus Terrace relating to the litigation against the former general partner and the takeover and workout of this Operating Partnership in the amount of $57,098. Said payments have been reflected as a note payable to the Partnership on the financial statements of the Operating Partnership. As the repayment of the fees for professional services paid by the Partnership on behalf of Citrus Terrace is subject to its having sufficient cash flow from operations to cover ongoing operating expenses and fund the necessary reserves and RD's approval, there can be no assurance that any such amounts will be recovered from this Operating Partnership by the Partnership.

Flambeau Village, L.P.

The Partnership was made aware that the Internal Revenue Service (the "IRS") audited the 1993 and 1994 income tax returns for one of the Partnership's Operating Partnerships, Flambeau Village, L.P. ("Flambeau Village"), the owner of a 53 unit, mixed income, elderly Project (26 units of low income housing tax credit restricted tenants and 27 units of unrestricted market rate income tenants) located in Ladysmith, Wisconsin.

Flambeau Village was the Partnership's largest single producer of tax credits with approximately $163,000 in annual tax credits. Accordingly, the Partnership engaged legal and tax counsel and tax credit compliance experts to review the compliance by the Flambeau Village Developer/General Partner with Section 42 of the Internal Revenue Code ("IRC"), meet with the IRS and actively monitor the situation. As a result of a meeting between the professionals engaged by the Partnership and the IRS, the Partnership was informally informed that the IRS had concluded that Flambeau Village had failed to meet the minimum set-aside and rent restriction tests of Section 42 of the IRC and therefore, it had not qualified for and was not entitled Tax Credits for any year. The IRS however did not issued a formal report at the time and its investigation and the Developer/General Partner's negotiations with the IRS continued.

In view of the above, the Partnership made the decision not to allocate any of the approximately $163,000 of Tax Credits of Flambeau Village for 1996 to its Limited Partners in order to minimize or make a provision for potential recapture, penalties and interest if the IRS ultimately should disallow some or all of the previous allocated Flambeau Village Tax Credits. As no report from the IRS was forthcoming and the Developer/General Partner continued to negotiate with the IRS, the Partnership did allocate the approximately $163,000 of Tax Credits from Flambeau Village for each of 1997 and 1998 to its Limited Partners, although it had not allocated any of the 1996 Tax Credits from Flambeau Village to its Limited Partners.

Subsequently, in connection with the IRS's criminal investigation of the activities of principals, former officers of or persons related to Flambeau Village's Developer/General Partner, the Partnership learned that one of the Developer/General Partner's principals and former officers pleaded guilty to charges filed by the IRS relating to other activities (not involving the IRS's audit of Flambeau Village's 1993 and 1994 tax returns) and was sentenced to and served a two year jail sentence.

In connection with the actions of the Developer/General Partner with respect to Flambeau Village, the IRS by letter dated September 29, 1999, formally notified Flambeau Village that it had determined that Flambeau Village is not entitled to claim any tax credits for any year that the Project was in existence. Since 1989, the Partnership has received a total of $1,663,311 in Tax Credits in connection with its Limited Partnership interest in Flambeau Village. Of these tax credits, $1,482,898 have been allocated to the Limited Partners of the Partnership.

Although there can be no assurance that the IRS will not seek to recapture all of the Tax Credits generated by Flambeau Village, other than for the years 1993 and 1994, the Partnership's counsel believes, after considering the IRS letter which reflects that no adjustments will be proposed by the IRS either at the partnership level or individual partner level for 1993 and 1994, absent a finding of fraud by the IRS with respect to the activities of the Developer/General Partner with respect to Flambeau Village, and the fact that the statute of limitations has run for years prior to 1998, that the IRS will not likely make any adjustment for the Tax Credits allocated by Flambeau Village to the Partnership and by the Partnership to its Limited Partners for the years 1989 through 1997. It is not known what position with respect to adjustments the IRS will take, if any, for the subsequent year 1998 for which Tax Credits were allocated to and passed through by the Partnership to its Limited Partners. No Tax Credits were passed through by the Partnership for the year 1996 and, in view of the above, the Partnership also elected not to pass through Tax Credits allocated by Flambeau Village to it in the amount of $17,727 for the year 1999, which was the last year the Partnership was entitled to tax credits.

If the IRS takes the subsequent position that adjustments will be proposed at the partnership level, or individual partner level, for the years 1995, 1997 and 1998 (i.e. those years not covered by the IRS's September 29, 1999 letter) or the years prior to 1993 for which Tax Credits were allocated to the Partnership and passed through to its Limited Partners, assuming that 100% of the Tax Credits so allocated to the Limited Partners relating to Flambeau Village were used by the Limited Partners, it is estimated that the Limited Partners would be subject to recapture of Tax Credits with respect to Flambeau Village of an estimated $385,000 or approximately $250 per 0.05% of Limited Partnership Interest, plus interest and penalties, if any.

As a result of the loss of the 1996 and 1999 Tax Credits not taken by the Partnership in the aggregate amount of $179,142 and the additional costs incurred by the Partnership of $117,815 to have its professionals review the compliance by the Flambeau Village Developer/General Partner with Section 42 of the Internal Revenue Code, meet with the IRS and actively monitor the situation, the Partnership is reviewing the likelihood of successfully pursuing a claim against and attempting to recover compensatory damages for such losses from the Developer/General Partner of Flambeau Village and any affiliate deemed responsible under the terms of Flambeau Village Operating Partnership agreement, the Partnership's Plan and common law. However, in the event a claim is filed there can be no assurance that any amounts will be recovered by the Partnership.

In connection with its evaluation of the feasibility of pursuing a claim against the Developer/General Partner of Flambeau Village and any affiliate, the Independent Manager had an independent appraisal of the Project performed. The appraisal, dated as of January 4, 2000, showed an appraised value of $1,700,000. As of December 31, 1999, the Project had a mortgage payable of $1,603,455. Accordingly, the Project's appraised value appears to be only $96,545 above the Project's first mortgage loan.

As the Partnership through its ownership of the limited partnership interests in Flambeau Village already owns a 50% interest in the equity of that Operating Partnership, should that Operating Partnership have a value, after offsetting other assets and other liabilities, of the net appraised value over the Project's mortgage or $96,545, the Developer/General Partner's 50% interest in the equity of the Operating Partnership would only be approximately $45,773. Accordingly, the Partnership will not commence an action to attempt to recover the damages the Partnership has suffered as a result of the breaches of the Operating Partnership Agreement by the Developer/General Partner of Flambeau Village, unless the Partnership can first determine the availability of other assets of the Developer/General Partner of Flambeau Village from which a damage award could be satisfied.

As the repayment of the fees of $117,815 for professional services paid by the Partnership on behalf of Flambeau Village is subject to its having sufficient cash flow from operations to cover ongoing operating expenses and fund the necessary reserves, which this Operating Partnership presently does not have, and negotiations with or successful litigation against with the Developer/General Partner of Flambeau Village, there can be no assurance that any such amounts will be recovered by the Partnership.

Broadway Terrace of Drew, L.P., Longview Terrace, Ltd., and Pontotoc Ridge, Ltd.

The sole operating general partner of three Operating Partnerships, Broadway Terrace of Drew, L.P., Longview Terrace, Ltd. and Pontotoc Ridge, Ltd. located in the state of Mississippi in which the Partnership owns the limited partnership interests, died during the fiscal year ended March 31, 1998. After several months of attempting to sell the deceased Operating General Partner's 5% general partner and 50% equity interests in these three Operating Partnerships, the estate of the deceased Operating General Partner advised the Partnership that it was abandoning its interest in the three Operating Partnerships. Thereupon, Megan Asset Management caused one of its affiliates to be appointed Operating General Partner of the three Operating Partnerships in an attempt to preserve the Partnership's interests therein. Two of the three Operating Partnerships, Broadway Terrace of Drew, L.P. and Pontotoc Ridge, Ltd., had severely underfunded reserves and were delinquent in several years real estate taxes and were subject to possible foreclosure by RD.

Broadway Terrace of Drew, L.P.

At the time that an affiliate of Megan Asset Management began to manage Broadway Terrace of Drew it had severely under funded reserves and several years of delinquent real estate taxes. Further the Project had an entire building, containing 8 apartments, uninhabitable and unrentable due to severe vandalism, as a result of which RD commenced formal foreclosure proceedings. The Partnership engaged legal counsel on behalf of Broadway Terrace and was successful in stopping the foreclosure proceedings and getting RD to begin working with Megan Asset Management's affiliate to put a workout plan together toward saving the Project owned by this Operating Partnership. A workout plan is in the process of being negotiated.

Longview Terrace, Ltd.

Although Longview Terrace, Ltd. was not delinquent on its real estate taxes, had the estate of the deceased Operating General Partner simply abandoned its general partnership interest in this Operating Partnership and an affiliate of Megan Asset Management not become the substitute general partner, the Project owned by Longview Terrace would likely have been subject to foreclosure by RD.

In consideration of an affiliate of Megan Asset Management becoming the Operating General Partner of Longview Terrace, Ltd., RD has not foreclosed on its mortgage and is permitting this Operating Partnership to remain in operation. This permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and avoid recapture of previously taken and used Tax Credits.

Pontotoc Ridge, Ltd.

In consideration of the Partnership's making a loan of $14,985 in excess of its capital commitment to Pontotoc Ridge, to enable it to pay certain real estate taxes in arrears, RD has not foreclosed on its mortgage to Pontotoc Ridge and has restructured its mortgage loan to finance the payment of the balance of the past due real estate taxes to permit this Operating Partnership to remain in operation. This permitted the Partnership and its Limited Partners to continue to receive the benefit of the Tax Credits related thereto and avoid recapture of previously taken and used Tax Credits.

The Partnership has also paid professional fees on behalf of Broadway Terrace, Longview Terrace and Pontotoc Ridge, relating to the takeover and workout of these Operating Partnerships from the estate of the deceased Operating General Partner and successfully contesting the RD foreclosure proceedings with respect to Broadway Terrace in the amount of $122,125. As the repayment of the fees for professional services paid by the Partnership on behalf of these Operating Partnerships is subject to their having sufficient cash flow from operations to cover ongoing operating expenses and fund the necessary reserves, which these Operating Partnerships do not currently have, and RD's approval, there can be no assurance that any such amounts will be recovered from such Operating Partnerships by the Partnership.

Oak Leaf Partnership, Ltd.

Pursuant to a syndication agreement dated April 6, 1989 and an Amended and Restated Agreement and Certificate of Limited Partnership of Oak Leaf Partnership, Ltd., dated as of June 13, 1989 and filed June 8, 1990, in the office of the Secretary of State of Mississippi (the "Operating Partnership Agreement"), the Partnership, through its predecessor-in-interest, Clayton Estates Limited Partnership, one of the original 52 Debtor Investor Partnerships, acquired the sole limited partnership interest in Oak Leaf Partnership, Ltd. which was to own Purdy Apartments a 16 unit, scattered site (having buildings at more than one physical location), Project in Jackson, Mississippi. Purdy Apartments were awarded $134,980 of low income housing tax credits by the Mississippi Home Corporation on December 30, 1988. In accordance with the Operating Partnership Agreement and the Plan, the Partnership paid the Operating Partnership capital contributions totaling $62,090.

The Partnership, including its predecessor-in-interest, was allocated Tax Credits and losses from 1989 through 1996. During the fiscal year ending March 31, 1996, the Partnership learned that Oak Leaf Partnership, Ltd. was not registered as a limited partnership with the Mississippi Secretary of State; that title to the various scattered sites was in the name of Paul W. Purdy, the general partner of Oak Leaf Partnership, Ltd. and not in the name of this Operating Partnership; a physical inspection revealed one of the lots on which one of the apartment buildings was to be located, did not exist; and that Paul W. Purdy had apparently sold the same ownership interest in Tax Credits and losses which he had sold to the Partnership to another, third-party limited partnership.

Accordingly, by a Complaint for Damages and Injunctive Relief, filed in or about March, 1997, the Partnership commenced a lawsuit against Paul W. Purdy and Purdy Apartments Limited Partnership, in the Chancery Court of The First Judicial District of Hinds County, Mississippi.

Subsequently, during the prosecution of the lawsuit, the Partnership confirmed what it had learned as a result of its investigation and further that defendant Paul W. Purdy was in ill-health and had no assets. After evaluating all of the findings and conferring with legal and tax counsel, the Partnership determined that it was not economically feasible to continue to pursue the lawsuit and the Partnership abandoned its recovery efforts and abandoned its interest in the Oak Leaf project.

As a result of the foregoing, the Partnership lost its interest in this Operating Partnership, and the Partnership did not receive aggregate Tax Credits of $25,646 for 1997 and 1998, or approximately $13 per 0.05% of Limited Partnership Interest which it was entitled to receive. In addition, in view of the foregoing, the Partnership recaptured $40,156 in Tax Credits in 1997, along with $18,098 interest by passing both through to the Limited Partners on their 1997 Schedule K-1.

The Partnership has also paid professional fees on behalf of Oak Leaf Partnership, Ltd relating to its investigation and the litigation against the former general partner of this Operating Partnership in the amount of $12,890. Said payments have been written-off by the Partnership as uncollectible.

Item 3. Legal Proceedings

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

None.

PART II

Item 5. Market for Registrant's Limited Partnership Interests and Related Security Holder Matters

Market Information

The Partnership is a limited partnership and thus has no common stock. There is no established public trading market for limited partnership interests in the Partnership ("Limited Partnership Interests") and it is not anticipated that any such public market will develop.

Article XI of the Partnership Agreement effectively prevents the transfer of Limited Partnership Interests except under very limited circumstances. In order to transfer a Limited Partnership Interest, a Limited Partner must obtain the consent of the General Partner of the Partnership, which has the absolute right to refuse any request for a transfer. In addition, the Partnership Agreement requires the transferring Limited Partner to obtain a legal opinion from counsel, at his or her sole expense, as to certain tax and securities law matters with regard to the proposed transfer. In addition, the proposed transferee must meet all applicable suitability standards and agree to be bound by the Partnership Agreement.

Approximate Number of Security Holders

As of March 31, 2001, there were approximately 1,830 holders of Limited Partnership Interests.

Distributions

An aggregate of $443, $9,250 and $5,118 was distributed to Limited Partners for fiscal years ending March 31, 1999, March 31, 1998 and March 31, 1997 respectively, in the form of return of Partnership capital.

Item 6. Selected Financial Data

The information set forth below presents selected historical financial data of the Partnership for the years ended March 31, 1999, 1998, 1997, 1996 and 1995. This information has been derived from and is qualified by reference to the additional detailed information is set forth in the audited financial statements listed in Item 14 hereof and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included as Item 7 in this Report.

OPERATIONS
	For the Year Ended March 31, 1999	For the Year Ended March 31, 1998	For the Year Ended March 31, 1997	For the Year Ended March 31, 1996	For the Year Ended March 31,1995
Interest income	$ 63,763	$ 78,291	$ 80,997	$ 243,313	$ 164,178
Other Income	1,600	10,379	11,471	40,891	-0-
	65,363	88,670	92,468	284,204	164,178
Equity in Losses of Operating Partnerships	(51,639)	(873,489)	(1,551,846)	(2,588,698)	(3,675,489)
Expenses	(402,617)	(471,868)	(447,424)	(361,305)	(673,971)
Net Loss	$ (388,893)	$ (1,256,687)	$ (1,906,802)	$ (2,665,798)	$ (4,185,282)
Net Loss per 0.05% Partnership Interest	$ (194)	$ (628)	$ (953)	$ (1,333)	$ (2,093)
Cash Distributions Per 0.05% Partnership Interest	$ 0	$ 0	$ 0	$ 0	$ 515
Balance Sheet	As of March 31, 1999	As of March 31, 1998	As of March 31, 1997	As of March 31, 1996	As of March 31, 1995
Total Assets	$ 2,732,346	$ 3,077,981	$ 4,303,853	$ 6,166,549	$ 8,889,077
Total Liabilities	$ 153,975	$ 147,852	$ 173,203	$ 169,116	$ 323,869
Partners' Capital	$ 2,578,371	$ 2,930,129	$ 4,130,650	$ 5,997,432	$ 8,565,208

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

The Partnership was formed as of July 1, 1990, pursuant to the Plan. In 1992 its fiscal year-end for accounting purposes was changed to March 31, from December 31. The Partnership's fiscal year-end for tax purposes remains December 31.

Capital Resources

The Partnership was formed pursuant to the terms of the Plan, which mandates the Partnership's material commitments for expenditures and the anticipated sources of funds needed to fulfill such commitments.

Commencing in calendar 1995, although funds from certain other sources were received during the 1996 and 1995 fiscal years (see "Liquidity" below), the Partnership's primary source of funds became the annual distributions from the Operating Partnerships in which the Partnership has an interest, which has been negotiated at $750 per year, per Operating Partnership, provided that such payment is not prohibited by any applicable agreement with a governmental agency or any applicable governmental agency rules or regulations.

The total amount due annually to the Partnership from the $750 distributions from the Operating Partnerships is $104,754. The Partnership has been receiving only approximately 50% of the distributions due from the Operating Partnerships. For the 1998 calendar year $47,000 of the distributions is outstanding and due to the Partnership. To the extent that such distributions or portion thereof are not paid in any year, the remainder accumulate and are to be paid at the earliest time permitted. As indicated above, many of the distributions are not being made do to limitations by governmental regulations.

The Partnership also receives interest income on account balances.

The ability of the Partnership to make all cash distributions to its Limited Partners contemplated by the Plan is dependent upon the receipt by the Partnership of sufficient proceeds from the sale or refinancing of its interests in the Operating Partnerships (the General Partner has actively begun exploring various exit strategies, including the sale and refinancing of the Partnership's interests in the Operating Partnerships - See "Item 1. - Description of Business" above). There can be no assurance that such proceeds, if any, from the sale or refinancing of the remaining Operating Partnerships will be sufficient to enable the Partnership to make all or any portion of such distributions. Further there can be no assurance that the application of funds available for distribution to Limited Partners which, from time to time, were deferred by the Independent Manager with the consent of the Investor Committee to pay certain costs and expenses of the Partnership or to purchase interests in partnerships which own, or are intended to own, projects which are intended to qualify for Tax Credits (see "Liquidity" subsection "(f)" below), will ultimately yield an economic benefit to the Limited Partners.

Prior to calendar 1995, the Partnership's primary source of funds was the payment by Limited Partners of the amounts owed to the Partnership for their capital contributions pursuant to their Investor Notes. Each of the Investor Notes was payable in semi-annual installments through December 31, 1994. As of March 31, 1999, an aggregate of $1,185,709 was owed pursuant to the Investor Notes. These notes are past due and are considered uncollectable. These amounts are not written off on the Partnership's financial statements as the amount is reflected as a negative in the Partners' Capital section of the balance sheet and since the defaulted investor units heretofore have not been cancelled. The aggregate amount outstanding and past due was $1,223,287 and $1,315,052 for the years ending March 31, 1998, and March 31, 1997.

Other than the annual payment referred to above, the Partnership does not anticipate that it will receive material cash distributions from the operations of the Operating Partnerships, or that it will derive net cash from its operations generally. Aside from such payments, the Partnership does not have significant external sources of Capital Resources. All of the above-named sources of Capital Resources are being used to meet the operating expenses of the Partnership and to preserve and maintain the investment in its Projects.

Liquidity

The Partnership's principal uses of funds are its operating expenses and, prior to December 31, 1994, were used for (i) capital contributions to the Operating Partnerships and (ii) payments to the Secured Lenders of the Debtor Investor Partnerships. The remaining unpaid balances of such contractual obligations at each of March 31, 1999 and March 31, 1998 were $94,535 with respect to the Operating Partnerships. The remaining unpaid balances of such contractual obligations at March 31, 1997 were $115,764 with respect to the Operating Partnerships. The Partnership also assumed certain accrued expenses pursuant to the Plan which were paid in full as of March 31, 1996. The Partnership also made distributions to certain Limited Partners that were in the original debtor Brighton Estates Limited Partnership as provided in the Plan.

For the 1999 Fiscal Year, 1998 Fiscal Year and 1997 Fiscal Year gross cash amounts received by the Partnership were as follows:

(i) $37,578, $91,765 and $70,741 respectively, from payments of capital contributions by Limited Partners pursuant to their Investor Notes; and

(ii) $63,763, $78,291 and $80,997 respectively, of interest income on the Investor Notes and on deposits maintained in escrow accounts pursuant to the Plan.

For the 1999 Fiscal Year, 1998 Fiscal Year and 1997 Fiscal Year respectively, the uses of funds by the Partnership were as follows:

(a) $-0-, $21,229 and $21,149 respectively, for capital contributions to the Operating Partnerships;

(b) $289,647, $351,133 and $310,301 respectively, for professional fees for the 1999 Fiscal Year which were attributable to professional costs related to the litigation against the CPA who performed the audit of three of the Operating Partnerships and costs related to replacing a sole general partner and assuming the management of his three Operating Partnerships, for professional fees for the 1998 Fiscal Year which were attributable to professional costs related primarily to litigation against the CPA who performed the audit of three Operating Partnerships, professional costs for the site inspections of several troubled Operating Partnerships and professional costs related to the preparation and filing of the Form 10-K, professional fees for the 1997 Fiscal Year which were attributable to professional costs related primarily to litigation and the removal of the general partners of three of the Operating Partnership and subsequent litigation against the CPA who performed the audit of the three properties, professional costs related to the IRS audit of one of the operating partnerships and collection actions against Limited Partners who defaulted on the payment of their Investor Notes;

(d) $443, $9,250 and $5,118 respectively, for payments as a return of capital made to the Limited Partners in accordance with the Plan.

The distributions to Limited Partners included a full distribution of the $1,014,628 contemplated by the Plan for the 1995 Fiscal Year, and a partial distribution for the 1994 Fiscal Year. In Fiscal 1994, $516,901 of the $1,014,628, contemplated by the Plan to be distributed, was distributed to the Limited Partners in such year. As permitted under the Plan and approved by the Investors Committee, undistributed amounts of $507,314 for the 1994 Fiscal Year, together with the entire $1,014,628 to have been distributed in the 1993 Fiscal Year, were deferred and were applied to meet the increased obligations of the Partnership.

No such distributions are payable after December 31, 1994, except to the extent that the Independent Manager, in consultation with the Investors Committee, determines that the financial resources of the Partnership will permit payment of previously deferred distributions. It is not presently anticipated that any such payments will be made. (See "Item 10. Directors and Executive Officers of the Registrant - Investor Committee".)

The net decrease in cash held by the Partnership amounted to $239,552 for the 1999 Fiscal Year, a net decrease in cash of $324,015 for the 1998 Fiscal Year and a net decrease in cash of $297,896 for the 1997 Fiscal Year. As discussed above in "Item 1. - Description of Business", the Partnership no longer anticipates that the annual payments to be received from the Operating Partnerships, in combination with the Partnership's reserves, will be sufficient to permit the Partnership to meet its operating expenses until such time, if at all, a complete exit strategy has been identified and implemented. Accordingly, in view of the Partnership's need to raise more capital to continue to maintain its operations as set forth herein, the Partnership intends to begin accepting a limited number of offers it has received from Operating Partnerships to resell the Partnership's limited partnership interests in those Operating Partnerships which own the Projects to maintain the operations of the Partnership. However, there can be no assurance in the future that the Partnership will be able to meet its obligations through this program should the implementation of an exit strategy extend beyond the originally anticipated 15-year compliance period of the Operating Partnerships, years 2002-2004, or if sufficient purchasers of the Operating Partnership interests are not available.

Results of Operations

Expenses, comprised principally of depreciation expenses passed through to the Partnership from the Operating Partnerships, exceeded income, which is comprised principally of interest income, by $388,893 for the 1999 Fiscal Year, $1,256,687 for the 1998 Fiscal Year and $1,906,802 for the 1997 Fiscal Year.

As noted above under "Item 1. Business - Description of Business", the Partnership's principal business is the maintenance of its interests in the Operating Partnerships, and the Partnership does not expect to and does not have the funds available to make new investments or otherwise engage in additional activities. The Partnership's results of operations and its obligations are primarily determined by the results of operations of the Operating Partnerships, its obligations to the Independent Manager, and by expenses arising out of legal and professional fees related to its Operating Partnerships or business transactions. Accordingly, period-to-period comparisons of the results of operations of the Partnership may not be meaningful. The following discussion attempts to highlight certain elements of the results of operations of the Partnership for the periods discussed.

It is estimated that, without additional acquisitions of interests in limited partnerships owning properties with or eligible for Tax Credits to replace interests lost through insolvency, bankruptcy or the settlement of litigation, for which the Partnership does not have funds available, the amount of Tax Credits generated or the minimal amount still to be generated by the Partnership will aggregate approximately $0.97 for every $1.00 invested by the Limited Partners, rather than the $1.10 for every $1.00 estimated in the Plan. Further the production of such Tax Credits will take slightly longer than the ten years estimated in the Plan. This includes Tax Credits passed through to the Limited Partners by the Debtor Investor Partnerships previous to the inception of the Partnership. Such estimate is based on the following assumptions: (i) the Partnership will be able to continue to attempt to preserve as much of its present portfolio of Projects as possible, will not purchase additional interests in limited partnerships owning Projects eligible for Tax Credits to replace lost Operating Partnerships and will dispose of the Partnership's interests in Operating Partnerships under its Liquidity Program in such a way so as to attempt to avoid causing recapture of Tax Credits, (ii) the current applicability of the tax laws and regulations and current interpretations of such laws and regulations by the courts, remain unchanged, (iii) the occupancy of each of the Projects with qualifying individuals will continue substantially unchanged throughout the applicable Tax Credit compliance period, and (iv) no substantial changes occur in the aggregate interest held by the Partnership in the Operating Partnerships as a group. In the tax year ended December 31, 1998, the Limited Partners were allocated approximately $3,724,000 in Tax Credits, or approximately $1,862 per 0.05% of Partnership Interest.

Interest income decreased by approximately 19% for the March 1999 Fiscal Year from the 1998 Fiscal Year and is primarily due to decrease in Partnership's cash balances. Interest income decreased by approximately 3% and 67% for the respective 1998 Fiscal Year and 1997 Fiscal Year and is primarily due to decrease in cash and reduction in the amount of late interest collected on defaulted Investor Notes. Due to the end of the investor pay-in period as of December 31, 1994 and the Partnership's collection of substantially all collectable payments due it from the Investor Notes, there will be no material interest income for future periods from the Investor Notes.

Equity in losses from Operating Partnerships was $52,000 for the 1999 Fiscal Year and $873,000 for the 1998 Fiscal Year, or a decrease of 94%. Equity in losses from Operating Partnerships was $873,000 for the 1998 Fiscal Year and $1,552,000 for the 1997 Fiscal Year, or a decrease of 44%. Equity in losses from Operating Partnerships was $1,552,000 for the 1997 Fiscal Year and $2,589,000 for the 1996 Fiscal Year, or a decrease of 40%. The decrease in losses from Operating Partnership is principally caused by the limitation of recognizing losses under the equity method of accounting in which losses in excess of aggregate investment in each Operating Partnership are not recognized. As of March 31, 1999, approximately 90% of the losses from the Operating Partnerships were not recognized on the Partnership's books of account for financial purposes as the aggregate losses were in excess of the Partnership's investments in the Operating Partnerships, however, for tax purposes 100% of the losses are permitted to be passed through to the Limited Partners on their K-1's.

Management fees paid remained the same for the 1999 Fiscal Year, the 1998 Fiscal Year, and the 1997 Fiscal Year.

Professional fees of approximately $281,000 in the 1999 Fiscal Year included fees incurred for litigation against the CPA who performed the audit of three of the Operating Partnerships and costs related to replacing a sole general partner and assuming the management of his three Operating Partnerships. Professional fees of approximately $347,000 in the 1998 Fiscal Year included fees incurred for litigation against a CPA who performed the audit of three Operating Partnerships, professional costs related to the site inspections of several troubled properties, and costs in connection with SEC filings. Professional fees of approximately $317,000 in the 1997 Fiscal Year included fees incurred for the removal of the general partners of three of the Operating Partnerships and subsequent litigation against the CPA who performed the audit of the three properties, professional costs related to the IRS audit of one of the operating partnerships and collections actions against Limited Partners who defaulted on the payment of their Investor Notes.

No interest expense was incurred in the 1999, 1998 and 1997 Fiscal Years as all indebtedness to the Secured Lenders was paid in full prior to the 1996 Fiscal Year.

No amortization of organization costs were incurred in the 1999, 1998 and 1997 Fiscal Years due to the fact that amortization of all organization costs was completed in 1996.

Other income of approximately $1,600 was recorded in the 1999 Fiscal Year as a result of the receipt of a share of the management fees earned by an affiliate of the Independent Manager from Operating Partnerships pursuant to the Independent Managers Contract. Other income of approximately $10,000 for the 1998 Fiscal Year and was a result of a collection of a bad debt. Other income of approximately $11,000 was recorded in the 1997 Fiscal Year was a result of the recovery of bad debts and the recovery of expenses incurred to collect the bad debts.

Pursuant to the Plan, amounts due and unpaid to Operating Partnerships by the Debtor Investor Partnerships prior to the implementation of the Plan in July 1990 accrued interest at the rate of eight percent (8%) until paid. As the non-payment of this interest is not a default under the Plan and any such unpaid interest becomes payable only as a first priority out of Capital Events, a contingent liability, the Partnership is not paying this interest currently and is not accruing it on its financial statements. The amount of this interest which could be payable under the Plan as a first priority from Capital Events is estimated at $1,968,000 and is subject to offsets of the amount of fees for professional services paid on behalf of certain Operating Partnerships (see "Item 2. Properties" above) and any unpaid or accrued annual distributions due the Partnership (see "Capital Resources" above) and a reduction by said sums payable to Operating Partnerships which have lost their Projects through foreclosure, bankruptcy or insolvency.

The Partnership is organized as a limited partnership and is a "pass through" entity which does not, itself, pay federal income tax. However, the partners of the Partnership receive their proportionate share of Tax Credits and other tax benefits accruing to the Partnership. For the tax years ended December 31, 1998, 1997 and 1996 respectively, Limited Partners were allocated $3,723,899, $4,934,656 and $4,804,968 in Tax Credits, or approximately $1,861, $2,467 and $2,402 per 0.05% of Partnership Interest, respectively.

The following is financial data for the Partnership which reflects the quarterly results of operations for the fiscal quarters ended June 30, September 30, and December 31, 1998.

Balance Sheets
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	ASSETS
	December 31,	September 30,	June 30,	December 31,	September 30,	June 30,
	1998	1998	1998	1997	1997	1997
Investments in Operating Limited Partnerships	$ 745,859	$ 969,443	$ 1,183,958	$ 1,586,537	$ 1,836,313	$ 2,091,570
Other Assets:
Cash	1,146,718	1,207,169	1,287,359	1,474,802	1,532,618	1,548,421
Loans to Operating Partnerships	286,824	307,224	286,840	249,490	249,490	249,490
	$ 2,179,401	$ 2,483,836	$ 2,758,157	$ 3,310,829	$ 3,618,420	$ 3,889,481
	LIABILITIES AND PARTNERS' CAPITAL
	December 31,	September 30,	June 30,	December 31,	September 30,	June 30,
	1998	1998	1998	1997	1997	1997
Liabilities:
Accounts payable & accrued expenses	$ 20,204	$ 11,787	$ 4,632	$ 13,643	$ 20,978	$ (7,123)
Contributions payable to operating partnerships	94,535	94,535	94,535	96,785	102,038	102,038
	$ 114,739	$ 106,322	$ 99,167	$ 110,428	$ 123,016	$ 94,915
Partners' capital
Limited partners	$ 3,228,565	$ 3,553,095	$ 3,843,315	$ 4,370,215	$ 4,720,876	$ 5,059,613
General partner	17	18	19	21	22	23
Subscriptions receivable	(1,163,920)	(1,175,599)	(1,184,344)	(1,169,835)	(1,225,494)	(1,265,069)
	2,064,662	2,377,514	2,658,990	3,200,401	3,495,404	3,794,567
	$ 2,179,401	$ 2,483,836	$ 2,758,157	$ 3,310,829	$ 3,618,420	$ 3,889,481

Statement of Operations
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	For the
	Three Months Ended
	June 30,	June 30,
	1998	1997
Interest Income	$ 9,772	$ 21,824
Other	-	3,873
	9,772	25,697
Equity in losses of operating partnerships	(210,000)	(240,949)
Expenses:
Management fees	29,875	29,875
Professional services	64,410	115,542
Developer Class Representative	15,000	15,000
Other expense (income)	126	440
	109,411	160,857
Net loss	$ (309,639)	$ (376,109)
Net loss allocated to General Partner	$ (1)	$ (2)
Net loss allocated to Limited Partners	$ (309,638)	$ (376,107)
Net loss per .05% L. P. Interest	$ (155)	$ (188)

Statement of Operations
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	For the		For the
	Three Months Ended		Six Months Ended
	September 30,	September 30,	September 30,	September 30,
	1998	1997	1998	1997
Interest Income	$ 29,430	$ 16,834	$ 39,202	$ 38,658
Other	-	7,691	-	11,563
Investor Penalties	-	15	-	15
	29,430	24,540	39,202	50,236
Equity in losses of operating partnerships	(210,000)	(240,949)	(420,000)	(481,898)
Expenses:
Management fees	29,875	29,875	59,750	59,750
Professional services	79,452	101,481	143,863	217,023
Developer Class Representative	-	-	15,000	15,000
Other expense (income)	324	930	450	1,369
	109,651	132,286	219,063	293,142
Net loss	$ (290,221)	$ (348,695)	$ (599,861)	$ (724,804)
Net loss allocated to General Partner	$ (1)	$ (1)	$ (2)	$ (3)
Net loss allocated to Limited Partners	$ (290,220)	$ (348,694)	$ (599,859)	$ (724,801)
Net loss per .05% L. P. Interest	$ (145)	$ (174)	$ (300)	$ (362)

Statement of Operations
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	For the		For the
	Three Months Ended		Nine Months Ended
	December 31,	December 31,	December 31,	December 31,
	1998	1997	1998	1997
Interest Income	$ 2,009	$ 12,843	$ 41,211	$ 51,500
Other	-	(1,184)	-	10,379
Investor Penalties	-	51	-	66
	2,009	11,710	41,211	61,945
Equity in losses of operating partnerships	(210,000)	(240,949)	(630,000)	(722,847)
Expenses:
Management fees	29,875	29,875	89,625	89,625
Professional services	86,022	88,117	229,886	305,140
Developer Class Representative	-	-	15,000	15,000
Other expense (income)	642	883	1,092	2,252
	116,539	118,875	335,603	412,017
Net loss	$ (324,530)	$ (348,114)	$ (924,392)	$ (1,072,919)
Net loss allocated to General Partner	$ (1)	$ (1)	$ (4)	$ (4)
Net loss allocated to Limited Partners	$ (324,529)	$ (348,113)	$ (924,388)	$ (1,072,915)
Net loss per .05% L. P. Interest	$ (162)	$ (174)	$ (462)	$ (536)

Statement of Cash Flows
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	For the
	Three Months Ended
	June 30,	June 30,
	1998	1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (309,639)	$ (376,109)
Adjustments to reconcile net loss to net cash used by operating activities:
Equity in losses of operating partnerships	243,601	264,033
Decrease (increase) in other assets	(16,636)	-
Increase (decrease) in accounts payable and accrued expenses	(5,985)	(37,293)
Total adjustments	220,980	226,740
Net cash used by operating activities	(88,659)	(149,369)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Contributions paid to Operating Partnerships	-	(13,726)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution received	38,943	49,983
Distributions	(443)	-
Net cash provided by financing activities	38,500	49,983
NET INCREASE (DECREASE) IN CASH	(50,159)	(113,112)
CASH BALANCE, BEGINNING OF PERIOD	1,337,519	1,661,534
CASH BALANCE, END OF PERIOD	$ 1,287,360	$ 1,548,422

Statement of Cash Flows
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	For the				For the
	Three Months Ended				Six Months Ended
	September 30,		September 30,		September 30,		September 30,
	1998		1997		1998		1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss		$ (290,221)		$ (348,695)		$ (599,861)		$ (724,805)
Adjustments to reconcile net loss to net cash used by operating activities
Equity in losses of operating partnerships		214,515		255,257		458,116		519,290
Decrease (increase) in other assets		(20,385)		-		(37,021)		-
Increase (decrease) in accounts payable and accrued expenses		7,155		38,060		1,171		767
Total adjustments		201,285		293,317		422,266		520,057
Net cash used by operating activities		(88,936)		(55,378)		(177,595)		(204,748)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Contributions paid to Operating Partnerships		-		-		-		(13,726)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution received		$8,746		$39,575		$47,688		$89,557
Distributions		-		-		(443)		-
Net cash provided by financing activities		8,746		39,575		47,245		89,557
NET DECREASE IN CASH		(80,190)		(15,803)		(130,350)		(128,917)
CASH BALANCE, BEGINNING OF PERIOD		1,287,359		1,548,421		1,337,519		1,661,535
CASH BALANCE, END OF PERIOD		$ 1,207,169		$ 1,532,618		$ 1,207,169		$ 1,532,618

Statement of Cash Flows
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	For the		For the
	Three Months Ended		Nine Months Ended
	December 31,	December 31,	December 31,	December 31,
	1998	1997	1998	1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (324,531)	$ (348,114)	$ (924,392)	$ (1,072,919)
Adjustments to reconcile net loss to net cash used by operating activities
Equity in losses of operating partnerships	223,584	249,776	681,700	769,066
Decrease (increase) in other assets	20,400	-	(16,621)	-
Increase (decrease) in accounts payable and accrued expenses	8,417	(7,335)	9,588	(6,568)
Total adjustments	252,401	242,441	674,667	762,498
Net cash used by operating activities	(72,130)	(105,673)	(249,725)	(310,421)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Contributions paid to Operating Partnerships	-	(5,253)	-	(18,979)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution received	11,679	55,659	59,367	145,216
Distributions	-	(2,548)	(443)	(2,548)
Net cash provided by financing activities	11,679	53,111	58,924	142,668
NET INCREASE IN CASH	(60,451)	(57,815)	(190,801)	(186,732)
CASH BALANCE, BEGINNING OF PERIOD	1,207,169	1,532,617	1,337,519	1,661,534
CASH BALANCE, END OF PERIOD	$ 1,146,718	$ 1,474,802	$ 1,146,718	$ 1,474,802

The expenses for each quarter, which consist primarily of the Partnership's equity in losses passed through to the Partnership from the Operating Partnerships, exceeded income, comprised principally of interest income, for each quarter. For interim periods, the Partnership estimates its equity in losses of the Operating Partnerships based on their operations for the prior calendar year. The losses were $324,530 for the quarter ended December 31, 1998, $290,221 for the quarter ended September 30, 1998, and $309,639 for the quarter ended June 30, 1998, respectively, as compared to the losses of $348,114 for the quarter ended December 31, 1997, $348,695 for the quarter ended September 30, 1997, and $376,109 for the quarter ended June 30, 1997.

The quarter-to-quarter comparison of interest income, which includes interest income on Investor Notes, may not be meaningful: as the Partnership's collection from the Investor Notes and the related interest were made on an semi-annual basis. Generally interest income has been decreasing due to decrease in cash and decrease in the amount of the Investor Notes outstanding.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk.

Item 8. Financial Statements and Supplementary Data.

See Item 14 and Exhibit 12 for a list of the Partnership's Financial Statements filed as part of this report.

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

PART III

Item 10. Directors and Executive Officers of the Registrant.

The Partnership has no directors or executive officers and has no employees of its own.

General Partner

The sole General Partner of the Partnership is Megan Asset Management, Inc., whose mailing address is 1424 West Century Ave., Suite 102, Bismarck, ND 58503. Megan Asset Management, which is also the Independent Manager of the Partnership, is a Delaware corporation whose executive officers are Gary L. Maddock, Chairman and Secretary, and Paul J. Maddock, President and Treasurer. The shareholders of Megan Asset Management are Gary L. Maddock (25%), Michele Maddock (25%) and Paul J. Maddock (50%).

The Independent Manager

In view of the need to have an independent manager that was not affiliated with First American take over the responsibility for the administration of the Partnership, a Management Agreement between the Partnership and the Independent Manager was entered into and provides for the Independent Manager to conduct and manage, on the Partnership's behalf, the Partnership's operations in connection with, among other things, collection, investment and disbursement of funds, maintenance of books and records, preparation of tax returns and review and coordination of related-party tax filings. Pursuant to the Management Agreement, the Independent Manager was appointed the exclusive agent of the Partnership to supervise and manage, on behalf of the Partnership, all of the operations of the Partnership under the Plan. (See "Item 1. Business - Organization" above) Even after the merger of both the General Partner's and Independent Manager's rights and obligations into Megan Management, and subsequently Megan Asset Management, the Management Agreement was kept in place because it outlined the compensation and duties to be performed more specifically than did the Partnership Agreement. The compensation of the Independent Manager is set forth under "Item 11. Executive Compensation."

Gary L. Maddock, 61, Chairman of Megan Asset Management, is a real estate attorney, CPA and licensed real estate broker. He also has extensive experience in other phases of real estate. Prior to July, 1989, Gary Maddock was Executive Vice President of First American for two years, resigning in a management dispute. As a former partner of Burns, Summit, Rovins and Feldesman, and in his own subsequent law practice, he has represented owner/developers of projects ranging from a proposed $100 million Caribbean hotel, marina and condominium development to a 250-room urban hotel and conference center to a proposed $15 million residential waterfront development on Long Island, New York. As an officer of various companies affiliated with Megan Asset Management, he has consulted and assisted developers in (i) obtaining in excess of $20 million in debt financing, (ii) placing in excess of $60 million in Tax Credits and (iii) building hundreds of units of low to moderate income housing. He also has overseen the management of numerous projects with housing units for low income families and the elderly. He has been engaged in and continues to be engaged in the practice of law and has performed professional services for the Partnership. See "Item 13. Certain Relationships and Related Transactions".

Paul J. Maddock, 49, President of Megan Asset Management, has been with the Independent Manager for ten years. Paul Maddock spends about 70% of his time working on and overseeing the management of the Partnership. He is a CPA and was formerly a tax manager for a regional CPA firm.

The Investor Committee

Pursuant to the Plan, the Investor Committee performed an oversight role in connection with the approval of the deferral of distributions to be made to the Limited Partners and the use thereof to pay costs and expenses for the administration and operation of the Partnership or to purchase interests in partnerships which own, or are intended to own, projects which are intended to qualify for Tax Credit and to maintain its investment in the Projects. (See

The members of the Investor Committee are as follows:

Fran Hoaglund, Chair, 58. President of Tax Equity Associates for over10 years. Financial planner and tax specialist for more than 25 years. Holder of an Interest.

David Apple, 47. President of David Apple, Ltd. (certified public accountants) for over 10 years. CPA for more than 15 years. Holder of an Interest.

James Linna, 61. President of First Midwest Securities, Inc. and President of First Midwest Insurance Services, Inc. for over five years. National Association of Securities Dealers ("NASD") principal; licensed real estate broker; security representative for more than 20 years. Holder of an Interest.

Joseph Schwartz, 35. Treasurer of Gregory Schwartz & Co. since 1991. Prior thereto Mr. Schwartz was employed as a certified public accountant with Arthur Andersen & Co. (1989-1991) and Plante & Moran (1988), following his graduation from the University of Notre Dame in 1988.

William Walczak, 60. CPA for the past 20 years and currently a member of the accounting firm of MacDonald & Walczak, CPAs, LLC. Holder of an Interest.

The Developer Class Representative

The Developer Class Representative is ERC Properties, Inc. located in Fort Smith, Arkansas which was the chairman of the Unofficial Committee of Developers during the Debtor Investor Limited Partnerships' bankruptcy proceedings (see "Item 1. Business - Organization" above) and continues to represent the approximately 139 Operating Partnerships. Pursuant to the Plan, the Developer Class Representative had and continues to have many responsibilities including but not limited to performing an oversight role in connection with the each Debtor Investor Limited Partnership's right to commence any action to avoid or recover any Pre-Petition transfer of property; negotiate with the Independent Manager as to the amount each Operating Partnership shall distribute to the Master Limited Partnership on or before April 1 of each year commencing in the year 2000 which shall not exceed $750; file any financing statement (without a Debtor Investor Limited Partnership's or the Master Limited Partnership's signature) which is reasonable or necessary to perfect any security interests granted to, or retained by, an Operating Partnership under the Plan; it was deemed to be a holder in due course of the Unfinanced Notes; is directed to execute and record any and all documents which are required to be executed and recorded under applicable nonbankruptcy law to effect the admission of the Master Limited Partnership as a limited partner of the Operating Partnerships; and under the Management Agreement to preapprove all withdrawals by the Independent Manager from the Escrow Account, including all checks drawn on and wire transfers made from the Escrow Account.

For its services, the Developer Class Representative is paid $15,000 per year by the Partnership.

Item 11. Executive Compensation.

The following table shows compensation for management services rendered in all capacities to the Partnership by Megan Asset Management, Inc. as Independent Manager during the periods indicated.

	SUMMARY COMPENSATION TABLE
	Annual Compensation
Name and Principal Position	Fiscal Year Ended	Fee	All Other Compensation (2)
Megan Asset Management, Inc.-	3/31/99	$ 119,500	$ 15,529
Independent Manager (1)	3/31/98	$ 134,352	$ 9,645
	3/31/97	$ 127,460	$ 14,234

(1) The Independent Manager for periods prior to January 1, 1993 was Megan Management, a company under common ownership and control with Megan Asset Management. Megan Management assigned its rights and obligations as Independent Manager to Megan Asset Management as of December 31, 1992.

(2) Consists of payment for reimbursement of expenses and services rendered other than pursuant to the Management Agreement.

Compensation of the Independent Manager

Commencing in calendar year 1995, the Independent Manager, under the Management Agreement, is entitled to receive $119,500 annually, plus $30,000 per year to cover the cost of preparation of tax returns and financial statements, for each of the years 1995 through 1998. Prior to calendar 1995, the Independent Manager was entitled to receive $396,000, plus $40,000 per year to cover the cost of preparation of tax returns and financial statements and $75,000 in relation to investor billings due to the Secured Lender refinancing. Commencing with calendar year 1999, the Independent Manager became entitled to an annual base fee of $119,500, together with an additional $30,000 to cover the cost of preparation of tax returns and financial statements, less $750 for each Operating Limited Partnership in which the Partnership ceases to own the limited partnership interest during 1999 and thereafter. The foregoing is in lieu of payment to the Independent Manager of amounts pursuant to the Plan sections 6(6)(c) (providing for annual payment from each Operating Partnership to the Partnership of $750 for each of the years 1995 through 1999) and 6(6)(d) (providing for annual payments from each Operating Partnership to the Partnership of an amount to be negotiated but not to exceed $750 for each year commencing with the year 2000) of the Plan.

The Independent Manager is also entitled to receive an amount equal to 50% of any distributions with respect to Capital Events originally payable to Continental Construction Management Corporation, a subsidiary of First American, under the Plan ("Continental Construction") and the Independent Manager is to pay to the Partnership an amount equal to 25% of gross fees, if any, earned by it or its Affiliates directly from any of the Operating Partnerships (not including amounts owed to the Independent Manager pursuant to the Management Agreement).

The total amount originally due to Continental Construction, with 8% interest as provided in the Plan, as of September 30, 2000 is $4,301,000, of which, pursuant to the Settlement Agreement, 50% is due to the Independent Manager and 50% is due to the Partnership. With respect to the above 25% of gross fees earned from any of the Operating Partnership, $1,600 was due and paid to the Partnership for the 1999 Fiscal Year. Subsequent to this reporting period, an aggregate of $1,375 and $1,125 was due and paid to the Partnership by the Independent Manager for fiscal periods ending March 31, 2001, and March 31, 2000, from fees earned by it or its Affiliates directly from the Operating Partnerships.

The Management Agreement also provides for the Partnership to indemnify the Independent Manager and its officers, directors and employees against claims arising in connection with the formation of the Partnership and the performance of their duties, except to the extent arising from gross negligence or willful misconduct.

Compensation of the General Partner

Compensation of the Investors Committee

The Investors Committee received an annual operating budget from the Partnership of up to $50,000, through December 31, 1994, but which was continued during subsequent periods including the periods in which the Partnership was considering exit or liquidation strategies pursuant to a budget approved by the General Partner, to cover the costs, fees and expenses of performing its oversight duties. Members of the Investors Committee receive $125.00 per hour, plus direct expenses, for time spent in the performance of their duties on behalf of the Investors Committee, including $1,000 for attendance at meetings of the Investors Committee. An aggregate of $4,575, $19,267 and $24,178 was paid to Investors Committee by the Partnership for fiscal periods ending March 31, 1999, March 31, 1998 and March 31, 1997. The members of the Investors Committee are also indemnified by the Partnership against claims arising in connection with the formation of the Partnership and the performance of their duties, except to the extent arising from gross negligence or willful misconduct the same as the Independent Manager and the Developers Class Representative.

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

No partner is the holder of 5% or more in Limited Partnership Interests of the Partnership. Neither the General Partner, Independent Manager nor any of its officers or directors hold any Limited Partnership Interests.

Item 13. Certain Relationships and Related Transactions.

Development and Consulting Activities

Megan Management entered into a joint venture agreement with ERC Properties of Oklahoma, Inc., a company affiliated with ERC Properties, Inc., the Developer Class Representative under the Plan, for the identification, development and syndication of new projects intended to generate Tax Credits. This joint venture agreement was terminated in 1994. The Independent Manager does not presently intend to acquire on behalf of the Partnership any interest in any projects in which it is involved in the development.

Gary L. Maddock P.C.

Gary L. Maddock P.C. is a New York corporation of which Megan Asset Management's Chairman, Secretary and shareholder, Gary L. Maddock, is also the president and sole shareholder and through which he practices law and is the only full-time employee. The Partnership paid Gary L. Maddock P.C. approximately $203,602 in legal fees and expenses related to legal services rendered to the Partnership, during the 1999 Fiscal Year.

Paul J. Maddock P.C.

Paul J. Maddock P.C. is a North Dakota corporation of which Megan Asset Management's President, Treasurer and shareholder, Paul J. Maddock, is also the president and sole shareholder and through which he practices public accounting. The Partnership paid Paul J. Maddock P.C. approximately $40,975 in accounting fees during the 1999 Fiscal Year related to tax return services rendered to approximately 60 Operating Partnerships and the review of the tax returns of all other Operating Partnerships. Each Operating Partnership is responsible for and is billed for these accounting and review services which are, when and if collected, reimbursed to the Partnership.

PART IV

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

(a) Financial Statements and Financial Statement Schedules

Reports of Independent Accountants

Balance Sheets as of March 31, 1999 and March 31, 1998

Statements of Operations for the fiscal year ended March 31, 1999, March 31, 1998 and March 31, 1997

Statements of Changes in Partners' Capital for the fiscal year ended March 31, 1999,

March 31, 1998 and March 31, 1997

Statements of Cash Flows for the fiscal year ended March 31, 1999, March 31, 1998

and March 31, 1997

Notes to Financial Statements as of March 31, 1999

(b) Exhibits (listed according to the number assigned in the table to Item 601 of Regulation S-K)

*2a Joint Plan of Reorganization of 52 Debtors dated May 9, 1990

*2a(i) Order Confirming Plan of Reorganization of the Bankruptcy Court, dated

July 10, 1990.

*2a(ii) Order Amending Confirmation Order, dated October 3, 1990.

*2b Order Clarifying Joint Plan dated December 11, 1990.

*2c Order Modifying Joint Plan entered March 6, 1991.

*2c(i) Order Amending Confirmation Order, dated April 8, 1991.

*2d Second Order Modifying Joint Plan entered June 22, 1992.

*2e Final Decree, dated May 20, 1993.

*3a Certificate of Limited Partnership of Bayfield Low Income Housing Limited

Partnership.

*4a Amended and Restated Agreement of Limited Partnership of Bayfield Low

Income Housing Limited Partnership.

*10a Amended and Restated Management Agreement dated as of December 23, 1991.

*10b Form of Partnership Interest Security Agreement with Developer.

*10c Form of Unfinanced Note Security Agreement with Developers.

*10d Form of Loan and Security Agreement.

*10e Settlement Agreement dated December 4, 1991 between First American

Holdings, Inc., Megan Management Company, Inc., Parkgate International Ltd., The

Fidelity Management Company, Inc. and Continental Construction Management

Corporation

*10f Amendment dated December 23, 1991 to Settlement Agreement dated December

4, 1991 between First American Holdings, Inc., Megan Management Company, Inc.,

Parkgate International Ltd., The Fidelity Management Company, Inc. and Continental

Construction Management Corporation

12 Report of Independent Accountants, Financial Statements and Notes thereto

*28a Net Worth Formula and Allocation to Investors of Interests in Master Limited

Partnership.

*28b Investor Notes.

*28c Agreements and Certificate of Limited Partnership of the Operating Partnerships.

None

_________________________

* Incorporated by reference to Exhibit of the same number to Form 10-K for the Fiscal Year Ended March 31, 1993

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: December 3, 2001 BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP By: MEGAN ASSET MANAGEMENT, INC. Independent Manager/General Partner By: /s/ Gary L. Maddock Gary L. Maddock, Chairman

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 dated indicated.

Dated: December 3, 2001 By:/s/ Gary L. Maddock Chairman and Director, (Principal Executive Officer) Megan Asset Management, Inc.

Dated: December 3, 2001 By:/s/ Paul J. Maddock President and Director, (Principal Accounting Officer) Megan Asset Management, Inc.

Dated: December 3, 2001 By:/s/ Michele Maddock Director, Megan Asset Management, Inc.

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

FINANCIAL STATEMENTS

March 31, 1999

Financial Statements

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

CONTENTS:

Independent Auditors' Report	F-1
Financial Statements:
Balance Sheets	F-3
Statements of Operations	F-4
Statements of Changes in Partners' Capital	F-5
Statements of Cash Flows	F-6
Notes to Financial Statements	F-7

[LETTERHEAD OF]

SMITH & RADIGAN

INDEPENDENT AUDITORS' REPORT

To The Partners Bayfield Low Income Housing Limited Partnership

We have audited the accompanying balance sheets of Bayfield Low Income Housing Limited Partnership ("the Master Limited Partnership") as of March 31, 1999 and March 31, 1998, and the related statements of operations, changes in partners' capital and cash flows for the years ended March 31, 1999, 1998 and 1997. These financial statements are the responsibility of the Master Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of 138 of 147 Operating Partnerships in 1999 and 140 of the 147 Operating Partnerships in 1998 and 144 of the 148 Operating Partnerships in 1997 in which Bayfield Low Income Housing Limited Partnership has invested. The financial statements of 44 in 1999, 45 in 1998 and 48 in 1997 of these Operating Partnerships were audited by other auditors whose reports have been furnished to us and our opinion, to the extent it relates to the amounts included for these Operating Partnership investments, is based solely on the reports of the other auditors. These investments comprised 21.3 percent and 9.6 percent of the Master Limited Partnership's total assets at March 31, 1999 and March 31, 1998, respectively, and 6.5, 36.1 and 42.1 percent, respectively, of the total loss of the Master Limited Partnership for the years ended March 31, 1999, March 31, 1998 and March 31, 1997.

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

The financial statements of 94 of the Operating Partnerships in 1999, 95 of the Operating Partnerships in 1998 and 97 of the Operating Partnerships in 1997 were not audited. These investments comprised 31.0 percent and 36.8 percent of the Master Limited Partnership's total assets at March 31, 1999 and March 31, 1998, respectively, and 6.8 percent, 33.4 percent and 39.3 percent, respectively, of the total loss of the Master Limited Partnership for the years ended March 31, 1999, March 31, 1998 and March 31, 1997. We were unable to satisfy ourselves about Bayfield Low Income Housing Limited Partnership's investment in these Operating Partnerships by means of other auditing procedures.

F-1

In our opinion, based on our audits and the reports of other auditors, except for the effects of such adjustments, if any, as might have been determined to be necessary had the 94 Operating Partnerships in 1999, 95 Operating Partnerships in 1998 and 97 Operating Partnerships in 1997 referred to in the preceding paragraph been audited, the financial statements referred to above present fairly, in all material respects, the financial position of Bayfield Low Income Housing Limited Partnership as of March 31, 1999 and March 31, 1998, and the results of its operations and its cash flows for the years ended March 31, 1999, March 31, 1998 and March 31, 1997, in conformity with generally accepted accounting principles.

/s/ SMITH & RADIGAN

Atlanta, Georgia

June 13, 2000

F-2

Balance Sheets
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
ASSETS
	March 31,
	1999	1998
INVESTMENTS IN OPERATING LIMITED PARTNERSHIPS	$ 1,293,167	$ 1,427,558
OTHER ASSETS
Cash	1,097,967	1,337,519
Advances to operating partnerships	341,212	312,904
	$ 2,732,346	$ 3,077,981
LIABILITIES AND PARTNERS' CAPITAL
	March 31,
	1999	1998
Accounts payable and accrued expenses	$ 59,440	$ 53,317
Contributions payable to operating partnerships	94,535	94,535
	153,975	147,852
Partners' capital
Limited partners	3,764,062	4,153,396
General partner	18	20
Subscriptions receivable	(1,185,709)	(1,223,287)
	2,578,371	2,930,129
	$ 2,732,346	$ 3,077,981

The Notes to Financial Statements are an integral part of these Statements.

F-3

Statements of Operations
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	For the Year Ended March 31,
	1999	1998	1997
Income
Interest income	$ 63,763	$ 78,291	$ 80,997
Other income	1,600	10,379	11,471
	65,363	88,670	92,468
Equity in losses of operating
partnerships	(51,639)	(873,489)	(1,551,846)
Expenses
Management fees	119,500	119,500	119,500
Professional services	280,970	347,013	317,210
Other expense	2,147	5,355	10,714
	402,617	471,868	447,424
Net loss	$ (388,893)	$(1,256,687)	$(1,906,802)
Net loss allocated to General Partner	$ (2)	$ (5)	$ (8)
Net loss allocated to limited partners	$ (388,891)	$(1,256,682)	$(1,906,794)
Net loss per .05% limited partnership interest	$ (194)	$ (628)	$ (953)

The Notes to Financial Statements are an integral part of these Statements.

F-4

Statements of Changes in Partners' Capital
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP
	Limited Partners	General Partners	Subscription Receivable	Total
Partners' capital March 31, 1996	$ 7,383,192	$ 33	$ (1,385,793)	$ 5,997,432
Net loss for the year ended March 31, 1997	(1,906,794)	(8)	-0-	(1,906,802)
Distributions	(5,118)	-0-	-0-	(5,118)
Collections and adjustments	(25,603)	-0-	70,741	45,138
Partners' capital March 31, 1997	5,445,677	25	(1,315,052)	4,130,650
Net loss for the year ended March 31, 1998	(1,256,682)	(5)	-0-	(1,256,687)
Distributions	(9,250)	-0-	-0-	(9,250)
Collections and adjustments	(26,349)	-0-	91,765	65,416
Partners' capital March 31, 1998	4,153,396	20	(1,223,287)	2,930,129
Net loss for the year ended March 31, 1999	(388,891)	(2)	-0-	(388,893)
Distributions	(443)	-0-	-0-	(443)
Collections and adjustments	-0-	-0-	37,578	37,578
Partners' capital March 31, 1999	$ 3,764,062	$ 18	$ (1,185,709)	$ 2,578,371

The Notes to Financial Statements are an integral part of these Statements.

F-5

Statements of Cash Flows
BAYFIELD LOW INCOME HOUSING LIMITED PARTNERS
	For the Year Ended March 31,
	1999	1998	1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (388,893)	$(1,256,687)	$(1,906,802)
Adjustments to reconcile net loss to net cash used by operating activities:
Equity in losses of operating Partnerships	51,639	873,489	1,551,846
Decrease in other assets	54,444	2,019	8,174
Increase (decrease) in accounts payable and accrued expenses	6,123	(4,122)	4,412
Total adjustments	112,206	871,386	1,564,432
Net cash used by operating activities	(276,687)	(385,301)	(342,370)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital contributions paid to Operating Partnerships	-0-	(21,229)	(21,149)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions received	37,578	91,765	70,741
Repurchase of limited partnership unit	(443)	(9,250)	(5,118)
Net cash provided by financing activities	37,135	82,515	65,623
NET DECREASE IN CASH	(239,552)	(324,015)	(297,896)
CASH BALANCE, BEGINNING OF YEAR	1,337,519	1,661,534	1,959,430
CASH BALANCE, END OF YEAR	$ 1,097,967	$ 1,337,519	$ 1,661,534

The Notes to Financial Statements are an integral part of these Statements.

F-6

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization

Bayfield Low Income Housing Limited Partnership (the "Master Limited Partnership") was organized as of July 1, 1990 pursuant to the provisions of a Joint Plan of Reorganization of 52 debtor investor limited partnerships ("the Debtor Investor Partnerships"), dated May 9, 1990, pursuant to the provisions of Chapter 11 of Title 11, United States Code, as amended by an Order Clarifying the Joint Plan dated December 11, 1990 and an Order Modifying the Joint Plan entered March 6, 1991 or as may have been otherwise amended or modified by orders settling litigation with non-electing Developers with respect to those Developers or their Operating Partnerships ("the Plan").

The Master Limited Partnership was created under the Plan as the entity into which all of the assets and liabilities of the fifty-two Debtor Investor Partnerships were "rolled-up" as of July 1, 1990 and after which their assets and businesses would be managed.

The fifty-two Debtor Investor Partnerships were the following Delaware limited partnerships:

Arlington Estates Limited Partnership Evergreen Estates Limited Partnership Barrington Estates Limited Partnership First Estates Limited Partnership Bayfield Estates Limited Partnership Glenwood Estates Limited Partnership Beechfield Estates Limited Partnership Greenfield Estates Limited Partnership Birchfield Estates Limited Partnership Greenwood Estates Limited Partnership Blakefield Estates Limited Partnership Harborfield Estates Limited Partnership Brighton Estates Limited Partnership Holly Estates Limited Partnership Brookline Estates Limited Partnership Hunter Estates Limited Partnership Candle Ridge Estates Limited Partnership Kehrs Mill Estates Limited Partnership Canterbury Estates Limited Partnership Littlefield Estates Limited Partnership Carlysle Estates Limited Partnership Livingston Realty Investors Limited Cherrywood Estates Limited Partnership Meadowfield Estates Limited Partnership Chesterfield Estates Limited Partnership Mitchellfield Estates Limited Partnership Clarkson Estates Limited Partnership Northfield Estates Limited Partnership Clayton Estates Limited Partnership Norwich Estates Limited Partnership Cloverfield Estates Limited Partnership Oleander Estates Limited Partnership Copperfield Estates Limited Partnership Pine Hollow Estates, A Delaware Ltd. Partnership Crescent Estates Limited Partnership Plainfield Estates Limited Partnership Deerfield Estates Limited Partnership Plantingfield Estates Limited Partnership Delafield Estates Limited Partnership Redwood Estates Limited Partnership Edenfield Estates Limited Partnership Rosewood Estates Limited Partnership Emerald Estates Limited Partnership Sagewood Estates Limited Partnership Everest Estates Limited Partnership

F-7

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization - Continued

Southfield Estates Limited Partnership Springfield Estates Limited Partnership Walnut Estates Limited Partnership Summerfield Estates Limited Partnership Wynnfield Estates Limited Partnership Sycamore Realty Investors Limited Partnership Wilshire Estates Limited Partnership

The Projects were expected to receive financing from the Rural Development, formerly known as the Farmers Home Administration, of the U.S. Department of Agriculture, and to receive interest credits and, in some cases, rental assistance payments under Section 515 of the Housing Act of 1949. Each Project was expected to qualify for the low income housing credit ("LIHC") under Section 42 of the Internal Revenue Code of 1986. Section 42 of the Tax Code was enacted by the United States Congress to promote the development of low and moderate income rental housing. In order to generate LIHC, properties must be rented to tenants whose incomes are below certain levels established by the federal government, and the rents which are permitted to be charged are strictly limited by government regulations.

As a result of adverse economic conditions and increased competition, the Debtor Investor Partnerships were placed under the protection of Chapter 11 of the Bankruptcy Code. Principal provisions of the plan of reorganization, as approved July 1990 and amended ("the Plan"), follow:

In consideration of their contribution of assets to the Master Limited Partnership, each of the Debtor Investor Partnerships received an allocable portion of the limited partnership interests in the Master Limited Partnership. The limited partnership interests in the Master Limited Partnership were then distributed by each of the Debtor Investor Partnerships to the Investors in such Debtor Investor Partnership and so registered in the books of the Master Limited Partnership. The distribution of the interests in the Master Limited Partnership to the Investors was to be complete on the registration of such interests in the books of the Master Limited Partnership, and no certificates of limited partnership interests were distributed to any party. The limited partnership interests in the Master Limited Partnership are subject to the security interests granted under the Plan to Secured Lenders and Developers, and the Master Limited Partnership shall make no transfer of any such limited partnership interest without the consent of the appropriate Secured Party.

F-8

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization - Continued

All claims against and interests in the Debtor Investor Partnerships were divided into the following classes:

(1) Administration Class consists of all allowed or bankruptcy court approved administration claims of a Debtor Investor Partnership, including, without limitation, the costs and expenses (including attorneys' and accountants' fees as approved by the bankruptcy court) of each official committee of the Debtor Investor Partnerships and the unofficial committee of developers. Each member of such class received on confirmation cash equal to the allowed amount of its administration claim, except to the extent it has agreed to different treatment.

(2) Secured Lender Class consists of all allowed claims based on loan and security agreements giving rise to valid, duly perfected and non-avoidable pre-petition security interests in investor notes, to the extent of the value of a Debtor Investor Partnership's interest at confirmation of the plan in the collateral securing such claims, less payments made or applied on account of such claims during the course of the Chapter 11 case. Except to the extent a member of such class has agreed to different treatment, it:

(a) Retained any existing duly perfected security interest until all payments due to it under the plan shall have been paid in full;

(b) Received a note from the Master Limited Partnership, pursuant to the loan repayment and security agreement;

(c) Received a security interest from the Master Limited Partnership pursuant to the loan repayment and security agreement, with respect to: 1) any property of the Debtors that was transferred to the Master Limited Partnership and in which such secured lender held a duly perfected security interest as of the filing of the petition; and 2) those interests in the Master Limited Partnership which were distributed to the Investors whose investor notes are held by such Secured Lender. Such security agreements provide that all property in which a holder receives a security interest shall serve as collateral for all obligations to such holder under the Plan; and

(d) Received cash payments of principal and interest as set forth in the Secured Lender Payment Schedule (after credit for any payments made or applied during the course of the Chapter 11 case).

F-9

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization - Continued

(3) Developer Class consists of all allowed claims held by Operating Partnerships (or the general partners thereof) against a Debtor Investor Partnership exclusive of those specifically included in subsection (b) of the "Other Creditor Class." Except for Developers holding the auction interests, each of the Developers received:

(a) Payments at the times specified in the Plan in amounts determined by a developer payment formula, provided, however, any amount which would otherwise be payable to a non-electing Developer were reserved and will not be made until the entry of a final order determining all litigation between the debtor and such non-electing Developer and any funds so reserved may be used by the Master Limited Partnership in connection with such litigation;

(b) Payments such that the total of all payments to a Developer shall be equal to the full amount of such Developer's allowed claim plus interest at a rate equal to eight percent (8%) per annum; and

(c) To the extent a party held a duly perfected non-avoidable security interest in assets of a Debtor Investor Partnership, such party retained its perfected security interest in such of those assets of that Debtor Investor Partnership which were transferred to the Master Limited Partnership and received the costs and expenses, if any, fixed by a Final Order of the bankruptcy court.

The limited partnership agreements between the Debtor Investor Partnerships and each of the Operating Partnerships were to be amended as follows:

(a) The Master Limited Partnership shall become the limited partner of such Operating Partnership in place of the Debtor Investor Partnership;

(b) Commencing January 1, 1995, except as noted below, any cash flow to which a Debtor Investor Partnership is entitled shall be retained by the Developers;

(c) On or before April 1 of each of the five (5) years commencing 1995, each Operating Partnership shall distribute to the Master Limited Partnership $750 per year, provided that such payment is not prohibited by any applicable agreement with a governmental agency or any applicable governmental agency rules or regulations. To the extent the payment or any portion is not paid in any year, the remainder shall accumulate and be paid at the earliest time the payment is not prohibited; and

F-10

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization - Continued

(d) On or before April 1 of each year commencing 2000, each Operating Partnership shall distribute to the Master Limited Partnership an amount to be negotiated by the Independent Manager and the Developer Class Representative which shall not exceed $750, provided that such payment is not prohibited by any applicable agreement with a governmental agency or any applicable governmental agency rules or regulations. To the extent the payment or any portion is not paid in any year, the remainder shall accumulate and be paid at the earliest time the payment is not prohibited.

(4) Other Creditor Class consists of all:

(a) Allowed claims held by creditors of a Debtor Investor Partnership that are not otherwise classified under the Plan;

(b) Allowed claims (or those portions of allowed claims) which represent the amounts to be reimbursed to the Operating Partnerships (or the general partners thereof) in connection with the filing of an amended partnership agreement for such Operating Partnership prior to the filing of the Petitions; and

(c) Allowed claims (or those portions of allowed claims) which represent the amounts to be paid to Investors in connection with checks which were issued to Investors prior to the filing of the petitions.

Each holder of an allowed claim in such class received payment in full at confirmation of the Plan; provided, however, that if the aggregate total of allowed claims of this class exceeded $55,000, each member of the Class received a prorata share of $55,000 based on the amount of its allowed claim.

(5) Pre-Petition Legal Class consists of all allowed claims held by Stairs, Dillenbeck, Kelly & Merle, attorneys, against a Debtor Investor Partnership for services rendered prior to the filing of the Petition of such Debtor Investor Partnership and not in connection with the Chapter 11 cases of the Debtor Investor Partnerships. Each holder of an allowed claim in such class received payments in full of its allowed claim in ten equal semiannual installments commencing July 1990.

F-11

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization - Continued

(6) Fidelity Class consists of all allowed claims held by Fidelity Management Corporation, an affiliate of First American, or any broker or dealer whose claim arises out of the sale of a limited partnership interest in a Debtor Investor Partnership. Holders of the Fidelity Class Allowed Claims shall receive in full of its allowed claim in ten semiannual payments of $69,237 each commencing in July, 1990.

(7) First American Class consists of all allowed claims (but not interests) held by First American against a Debtor Investor Partnership. Each holder of a First American Class allowed claim shall receive:

(a) Three semiannual payments of $66,667 commencing upon confirmation of First American's plan of reorganization.

(b) Additional amounts, if any, pursuant to Article 15 of the Plan. ("Payments from Capital Events") (Note F). Such amounts will only be paid after payment in full of amounts due from such monies to the Secured Lender Class and Developer Class, and payments have been made to the Investor Class equal to: twenty percent (20%) of its net capital invested; plus interest at a rate of ten percent (10%) per annum from December 31, 1994; plus an additional one hundred percent (100%) of its net capital invested.

(8) Investor Class consists of all interests and allowed claims of parties which arise out of the purchase or holding of limited partnership interests in a Debtor Investor Partnership, exclusive of those specifically included in subsection (c) of the "Other Creditor Class." Except as noted below, each of the Investors shall receive:

(a) Limited partnership interests in the Master Limited Partnership (including all rights to allocations and distributions to which a partner is entitled thereunder) equal to the result of the following formula:

(i) the limited partnership units in a Debtor Investor Partnership owned by such investor divided by the total of the limited partnership units in such Debtor Investor Partnership; multiplied by

(ii) the allocation of units in the Master Limited Partnership to a Debtor Investor Partnership as determined by an allocation formula;

F-12

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization - Continued

(b) Within thirty (30) days after June 30 and December 31 of each year (commencing December 31, 1990 and terminating on December 31, 1994) payments of a return of capital equal to a prorata portion (based on Net Capital Invested) of $507,801 for each period.

Upon written consent of the Investor Committee, payments to be made to Investors pursuant to the above may be deferred and instead paid to Developers or for other costs and expenses for the administration of the Master Limited Partnership.

Pursuant to Articles 14 and 15 of the Plan, Investors are entitled to receive additional payments based on proceeds from capital events and other specified conditions. (Note F.)

(9) General Partner Class consists of all interests held by First American in a Debtor Investor Partnership. The holder became the general partner of the Master Limited Partnership and was entitled to certain payments from the proceeds of capital events pursuant to Article 15 of the Plan. (Note F.)

An order modifying the Plan was entered on March 6, 1991. Under such modification, the Master Limited Partnership, on the written consent of the Investor Committee, may defer payments otherwise to be made to the Investors semi-annually as a return of capital, and use such monies to make payment to the developers or for other costs and expenses for the administration or operation of the Master Limited Partnership or to purchase interests in additional limited partnerships which own, or are intended to own, projects which are intended to qualify for LIHC (including the payment of any costs or expenses incurred in connection with such purchases).

Pursuant to an agreement entered into in December 1991, as amended, First American withdrew as the General Partner of the Master Limited Partnership, subject to the consent of the Limited Partners of the Master Limited Partnership. In connection therewith, First American received a total of $434,968 for the transfer or release of all rights or economic benefits owed by the Master Limited Partnership to First American or its subsidiaries and in full settlement of any outstanding claims. Megan Management Company ("Megan"), the Independent Manager, agreed to become or have an entity under common control with it become General Partner of the Master Limited Partnership in place of First American subject to the approval of the Limited Partners; pending receipt of such approval, First American immediately relinquished to the Independent Manager any remaining management powers and responsibilities as well as all of its rights to income tax items related to its one percent ownership interest in the Master Limited Partnership from January 1, 1991 to December 22, 1991. These tax items were allocated on a prorata basis to the remaining partners. Megan Asset Management, Inc. ("Megan Asset") assumed the one percent ownership interest of First American as of December 31, 1991, subject to the approval of the

F-13

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note A - Organization - Continued

Limited Partners. The agreement also provided for an increase in the Independent Manager's fees in compensation for the additional duties that it had been performing and would perform pursuant to the agreement of $35,000 at closing (December 31, 1991) to cover its takeover costs and $10,000 per month on the first day of every month subsequent to closing through December 31, 1994, the right to receive an amount equal to one-half of the distributions with respect to capital events previously payable to Continental Construction Management (Note F) and would pay to the Master Limited Partnership an amount equal to twenty-five percent of gross fees, if any, earned by it or its affiliates directly from any of the Operating Partnerships and for an extension of the term of the management agreement.

As of December 31, 1991, the agreement had been approved by the Investor Committee and the Developer Representative and those provisions of the agreement which did not require consent of the Limited Partners of the Master Limited Partnership were implemented promptly. Thereafter, Megan designated Megan Asset Management, Inc., a newly formed affiliate, to be the new General Partner of the Master Limited Partnership, made the required filings under the Securities and Exchange Act of 1934's proxy rules and solicited the consent of the Limited Partners. In September, 1992, the Master Limited Partnership received approval of a majority in interest of its Limited Partners.

With the agreed withdrawal of First American and the transfer of all of its rights and responsibilities to the Master Limited Partnership and Megan, maintaining the Independent Manager and General Partner as separate entities was no longer necessary. Accordingly, as of December 31, 1992, Megan assigned to Megan Asset and Megan Asset assumed all of the rights, powers and obligations of the Independent Manager of the Master Limited Partnership. Gary L. Maddock, then President and sole shareholder of both corporations, reaffirmed his personal guarantee of the performance of the Management Agreement by Megan Asset.

Note B - Significant Accounting Policies

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments to be cash equivalents.

Investments in Operating Limited Partnerships

The Master Limited Partnership accounts for its investments in Operating Partnerships (including acquisition costs) using the equity method, under which the Master Limited Partnership's capital investment in each Operating Partnership is adjusted for its share of the Operating Partnership's income or losses and for any distributions received or accrued. Such income and losses are recognized on a calendar year basis. Losses in excess of the Master Limited Partnership's aggregate investment in each Operating Partnership are not recognized.

F-14

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note B - Significant Accounting Policies - Continued

Investments in Operating Limited Partnerships - Continued

Costs previously recorded by the Debtor Investor Partnerships for services provided or to be provided by the General Partner and its affiliates relating to acquisitions of Operating Partnerships, including syndication fees, agency fees, investor services fees, partnership operations fees and audit indemnification fees, have been included in the Master Limited Partnership's aggregate investment in each Operating Partnership.

For interim (quarterly) reporting on Form 10-Q, the Master Limited Partnership records its estimated equity in income or losses of the Operating Partnerships for the period presented. For annual reporting purposes, the recorded equity in income or losses is based on the calendar year basis financial information submitted by the Operating Partnerships.

Income Taxes

No provision has been made for income taxes in the financial statements, as the partners' shares of the results of the Master Limited Partnership's operations are included in their respective income tax returns. Losses, which were previously allocated one percent to the General Partner and ninety-nine percent to the Limited Partners, will now, pursuant to the agreement of December 1991, as amended, be allocated to all of the Partners in proportion to the outstanding positive balances of their respective capital accounts until their respective capital accounts are reduced to zero. After capital accounts have been reduced to zero, further losses and LIHC's would be allocated one percent to the General Partner and the remaining ninety-nine percent to all Limited Partners.

Contributions Payable to Operating Partnerships

Contributions payable to Operating Partnerships are recorded at the gross amount due pursuant to the Plan. When the Master Limited Partnership sells or assigns an interest in an Operating Partnership, any remaining balance of contributions payable is included in computing the gain or loss on sale or assignment.

Pursuant to the Plan, amounts due and unpaid to Operating Partnerships by the Debtor Investor Partnerships after the implementation of the Plan in July, 1990, accrue interest at the rate of eight percent. Failure to pay this interest is not a default under the Plan and any such unpaid interest is contingently payable as a first priority out of Capital Events (Note F). The Master Limited Partnership has not made any payments of this interest and has not recorded such interest on the accompanying financial statements. The maximum amount of interest which may become payable under the Plan as a first priority from Capital Events is estimated at approximately $1,800,000.

F-15

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note C - Investment in Operating Limited Partnerships

A summary of the Master Limited Partnership's investments in Operating Partnerships accounted for on the equity method as of March 31, 1999 and March 31, 1998 (Note B) is as follows:

At March 31, 1999
Operating Limited Partnership	Capital Contributed	Acquisition Costs	Equity in Accumulated Income (Losses)	Net Investment	Contribution Payable
Partnerships which were audited
AFM RRH, Ltd. *	$318,000	$84,977	$(472,073)	$-0-	$-0-
Alachua Villas *	259,540	72,481	(499,267)	-0-	40,689
Baker Heights II Ltd.	201,752	53,782	(344,683)	-0-	-0-
Bayshore North Apts-IV	314,405	83,796	(469,930)	-0-	-0-
Blades Limited Partnership	264,181	70,838	(481,628)	-0-	-0-
Broadway Terrace, Ltd. *	225,642	60,864	(618,601)	-0-	18,772
Cedar Grove Apts.	282,032	77,001	(483,727)	-0-	-0-
Citrus Terrace, Ltd.*	199,270	43,284	(636,790)	-0-	3,951
Diamond Court II LP	231,879	63,419	(360,032)	-0-	-0-
Donaldsonville Seniors	298,073	79,316	(211,103)	166,286	-0-
Elmwood Estates	295,860	79,205	(509,735)	-0-	-0-
First Street Apts.	321,907	85,344	(336,785)	70,466	-0-
Flambeau Village	776,080	204,642	(920,671)	60,051	-0-
Forest Park Apts.*	215,330	55,915	(513,565)	-0-	-0-
Franklin Vista II	163,888	43,640	(334,207)	-0-	-0-
Gatewood Apts. Ltd.	295,383	78,064	(448,483)	-0-	-0-
Greenleaf Gardens *	217,714	57,187	(396,376)	-0-	-0-
Greenwood Assoc.	291,628	76,779	(522,720)	-0-	-0-
Hickory Square Apts.	94,754	24,889	(132,945)	-0-	-0-
Hilltop Manor Apts. *	216,667	56,761	(565,124)	-0-	-0-
Hitchcock Housing *	269,250	71,118	(467,687)	-0-	-0-
Joaquin Apts.	295,621	78,653	(321,492)	52,782	-0-
Lake City Village *	312,889	74,743	(738,214)	-0-	-0-
Lakecrest Apts.	313,704	85,773	(372,889)	26,588	-0-
Lakeview Estates	243,761	65,845	(492,906)	-0-	-0-
Lakewood Apts. II	181,777	47,748	(353,187)	-0-	-0-
Las Rosas II, Ltd.	263,135	70,012	(415,516)	-0-	-0-
Laurel Wood-Capital	202,867	65,524	(305,456)	-0-	-0-
Lead Bayou, Ltd.	212,000	55,686	(412,972)	-0-	-0-
Lillie Mae's Retirement	225,252	58,149	(417,072)	-0-	-0-
Magnolia Plaza Apts.	257,802	68,111	(469,574)	-0-	-0-
Many Seniors Apts.	259,150	62,094	(250,643)	70,601	-0-
Maple Hill Apts.	296,560	78,616	(382,586)	-0-	-0-
New Caney Oaks	223,492	60,543	(370,095)	-0-	-0-
Oakdale-T F Management	248,634	65,506	(277,188)	36,952	-0-
Old Oak Estates	184,856	48,556	(435,101)	-0-	-0-
Onion Creek	304,574	80,449	(423,676)	-0-	-0-
PDC Eighteen LP	196,521	52,298	(345,293)	-0-	-0-
Pecan Villa Apts.	234,202	62,152	(376,089)	-0-	-0-
Pecanwoods Apts. III, Ltd.	262,027	69,024	(288,397)	42,654	-0-
Pocomoke Villas Ltd.	174,388	46,923	(382,281)	-0-	-0-
Ridge View Apts.	359,216	95,341	(655,628)	-0-	-0-
Rolling Meadow II L.P.	238,120	64,218	(353,829)	-0-	-0-
Southeastern Assoc.	314,798	82,688	(537,223)	-0-	-0-
Sun Rise Apts. North	352,063	95,182	(568,699)	-0-	-0-

* Audited by Smith & Radigan, Certified Public Accountants, LLC

F-16

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note C - Investment in Operating Limited Partnerships - Continued

At March 31, 1999
Operating Limited Partnership	Capital Contributed	Acquisition Costs	Equity in Accumulated Income (Losses)	Net Investment	Contribution Payable
Taft Gardens	148,042	39,871	(277,949)	-0-	-0-
Taft Terrace	198,919	53,235	(452,130)	-0-	-0-
Valley Place Assoc.	307,568	81,774	(548,854)	-0-	-0-
West Meadow II Apts.	182,234	49,185	(285,444)	-0-	-0-
Willow Haven-Cross	323,905	85,080	(648,330)	-0-	-0-
Wilson Lake	397,146	105,304	(617,537)	-0-	-0-
Wolcott Assoc.	349,880	92,691	(482,525)	-0-	-0-
Woodcrest	233,244	61,464	(481,959)	-0-	-0-
	14,051,582	3,725,740	(23,466,866)	526,380	63,412

Partnerships which were unaudited
Albany Commons, LTD	173,456	46,737	(200,821)	19,372	-0-
Anderson County Estates	120,768	32,116	(185,321)	-0-	-0-
Aurora Limited	61,058	24,540	(359,615)	-0-	-0-
Belfast Housing Assoc.	273,653	74,124	(427,460)	-0-	-0-
Berea Summit, Ltd.	42,992	11,855	(97,301)	-0-	-0-
Berkshire Apts. #2	134,933	35,898	(337,240)	-0-	-0-
Blanchard Apts.	166,374	43,899	(244,272)	-0-	-0-
Brentwood Apts.	157,800	42,237	(255,210)	-0-	-0-
Briar Hill Apts.	86,275	23,240	(163,739)	-0-	-0-
Bunkie Apts	164,759	43,277	(285,345)	-0-	-0-
Canal Town Assoc.	55,891	15,075	(26,617)	44,349	-0-
Canyon Hills Villas	75,198	20,719	(131,595)	-0-	-0-
Cedar Crest Apts.	93,972	25,078	(37,488)	81,562	-0-
Cherrywood (M & W)	55,199	15,253	(114,598)	-0-	-0-
Cle Elum	149,784	40,501	(274,618)	-0-	-0-
Cleveland Courts, Ltd.	124,589	33,530	(145,707)	12,412	-0-
Clifford Heights Apts.	223,321	58,940	(363,022)	-0-	-0-
Cottondale Villa Apts.	179,706	47,404	(338,918)	-0-	-0-
Cottonwood Seniors Apts.	164,527	43,216	(295,977)	-0-	-0-
Coushatta Seniors Apts.	169,659	44,958	(256,112)	-0-	-0-
Cypress View Estates	164,942	43,712	(262,585)	-0-	-0-
Delta Terrace	180,474	47,405	(314,242)	-0-	-0-
East Magnolia Village	161,503	42,422	(316,814)	-0-	-0-
Edmonson Prop.	114,112	31,246	(140,514)	4,844	-0-
Elliott Manor, Ltd.	191,847	48,550	(294,679)	-0-	-0-
Fieldcrest, Ltd.	114,667	30,120	(230,166)	-0-	-0-
Folsom South Venture	89,912	23,725	(130,743)	-0-	-0-
Gaslight Square	179,152	47,058	(326,130)	-0-	-0-
Gibsland Villas Ltd.	206,022	54,116	(309,221)	-0-	-0-
Gilman Senior Apts.	35,221	-0-	(39,518)	-0-	7,722
Glenora Apts.	95,855	25,375	(225,360)	-0-	-0-
Hagewood Apts.	132,717	35,356	(266,686)	-0-	-0-
Hidden Hills Apts.	116,682	31,766	(181,616)	-0-	-0-
Hillwood Ltd.	86,050	22,603	(190,195)	-0-	-0-
Housing Partners IX	38,703	-0-	(29,637)	9,066	-0-
Housing Partners IX	13,872	-0-	(9,851)	4,021	-0-
Housing Partners VI	24,922	-0-	(26,180)	-0-	-0-
Housing Partners VIII	13,873	-0-	(7,953)	5,920	-0-
Housing Partners XI	39,093	-0-	(35,135)	3,958	-0-
Housing Partners XII	57,942	-0-	(61,788)	-0-	-0-
Housing Partners XIII	29,603	-0-	(23,528)	6,075	-0-
Housing Partners XV	57,942	-0-	(63,196)	-0-	-0-
Houston Assoc.	233,413	61,675	(272,699)	22,389	-0-
Hurricane	190,630	53,058	(342,012)	-0-	-0-
F-17

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note C - Investment in Operating Limited Partnerships - Continued

At March 31, 1999
Operating Limited Partnership	Capital Contributed	Acquisition Costs	Equity in Accumulated Income (Losses)	Net Investment		Contribution Payable
Partnerships which were unaudited - Continued
Indianwood Apts. II	113,856	29,907	(275,140)	-0-	-0-
Jonesville Apts. for Sr.	133,404	35,936	(154,820)	14,520	-0-
Kent Summit, Ltd.	58,711	15,552	(99,455)	-0-	-0-
Kingswood II, Ltd.	149,293	39,980	(214,944)	-0-	-0-
LaGrange Apts.-II	42,622	12,020	(60,941)	-0-	-0-
Larue Properties, Ltd.	179,346	48,632	(127,911)	100,067	-0-
Lewis Apts. Co.	161,706	43,544	(264,925)	-0-	-0-
Lewistown Apts.	67,666	17,774	(120,360)	-0-	-0-
Liberty Terrace Apts.	221,438	59,150	(329,384)	-0-	-0-
Longview Terrace Ltd.	159,185	41,813	(290,125)	-0-	-0-
Manor Apts-Caddo Mills	128,510	33,756	(290,865)	-0-	9,900
Marion Housing	127,596	34,575	(223,478)	-0-	-0-
Meadowland Apts.	129,131	33,919	(218,700)	-0-	-0-
Mills-Shapley Partnership	118,275	21,580	(167,990)	-0-	9,766
Mitchell II Ltd.	179,973	47,668	(299,911)	-0-	-0-
Mosswood Apt.	166,822	43,819	(319,198)	-0-	-0-
Mountain View Apts. II	181,829	48,986	(254,835)	-0-	-0-
Munfordville	82,613	21,341	(159,799)	-0-	-0-
North Deer Creek, Ltd.	174,358	45,799	(275,087)	-0-	-0-
Oak Valley Place II	113,459	32,068	(212,781)	-0-	-0-
Oakwood Apartments Ltd.	137,972	36,832	(179,792)	-0-	-0-
Orchard Commons, Ltd.	119,370	32,164	(130,625)	20,909	-0-
Park Place East Assoc.	237,438	63,353	(302,322)	-0-	-0-
Park Place North	143,076	38,570	(218,611)	-0-	-0-
Parkwood Assoc.	159,799	43,262	(258,591)	-0-	-0-
PDC Twenty Two LP	171,475	45,041	(269,426)	-0-	-0-
Perry Apts.	44,222	11,616	(97,531)	-0-	-0-
Pontontoc Ridge Apts.	164,502	43,210	(382,654)	-0-	3,735
Regency Apts. of Reno	137,659	36,348	(225,651)	-0-	-0-
Regency Plaza	152,927	41,514	(229,127)	-0-	-0-
Reservoir Hill L.P.	574,891	151,795	(439,071)	287,615	-0-
Reynolds & Assoc.	92,265	24,629	(160,630)	-0-	-0-
Ridgecrest Apts.	312,000	81,953	(583,590)	-0-	-0-
River View Apts.	21,494	5,646	(28,525)	-0-	-0-
Riverbend Apts.	119,075	31,278	(236,416)	-0-	-0-
Russell September Housing	74,915	20,618	(136,619)	-0-	-0-
Sacramento, Ltd.	180,445	51,004	(243,741)	-0-	-0-
Sleepy Oaks-Seshano	79,988	21,602	(80,841)	20,749	-0-
Somerset West, Hills II	122,882	32,901	(176,586)	-0-	-0-
Southern Apts.	140,857	37,393	(252,543)	-0-	-0-
Spring Meadow Apts.	183,090	48,092	(284,167)	-0-	-0-
Streamside Assoc.	237,135	62,604	(290,729)	9,010	-0-
St. Rose Assoc.	181,343	47,831	(262,396)	-0-	-0-
Sullivan Garden Apts.	80,183	21,259	(247,479)	-0-	-0-
Summer Place-Deshano	79,257	21,410	(91,356)	9,311	-0-
Sunrise Apts.	81,782	21,679	(275,464)	-0-	-0-
Timberline	141,445	39,780	(266,937)	-0-	-0-
Valley Limited	123,137	33,777	(66,276)	90,638	-0-
Wayland Apts.	45,769	12,022	(89,477)	-0-	-0-
Wexford Assoc. L.P.	167,786	46,016	(252,501)	-0-	-0-
	12,441,035	3,233,802	(19,761,747)	766,78	31,123
	$26,492,617	$ 6,959,542	$ (43,228,613)	$ 1,293,167	$ 94,535

F-18

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note C - Investment in Operating Limited Partnerships - Continued

At March 31, 1998
Operating Limited Partnership	Capital Contributed	Acquisition Costs	Equity in Accumulated Income (Losses)	Net Investment	Contribution Payable
Partnerships which were audited
AMF RRH, Ltd.*	$318,000	$84,977	$(429,205)	$-0-	$-0-
Alachua Villas*	260,290	72,481	(476,550)	-0-	40,689
Baker Heights II Ltd.	202,502	53,782	(312,768)	-0-	-0-
Bayshore North Apts-IV	314,405	83,796	(403,170)	-0-	-0-
Blades Limited Partnership	264,931	70,838	(438,304)	-0-	-0-
Broadway Terrace, Ltd.	225,642	60,864	(541,660)	-0-	18,772
Cedar Grove Apts.	282,782	77,001	(435,915)	-0-	-0-
Citrus Terrace, Ltd.*	199,270	43,284	(588,940)	-0-	3,951
Diamond Court II LP	232,629	63,419	(333,183)	-0-	-0-
Donaldsonville Seniors	298,073	79,316	(370,084)	7,305	-0-
Elmwood Estates	295,860	79,205	(442,851)	-0-	-0-
First Street Apts.	322,657	85,344	(280,592)	127,409	-0-
Forest Park Apts*	215,330	55,915	(476,971)	-0-	-0-
Franklin Vista II	166,138	43,640	(306,849)	-0-	-0-
Gatewood Apts. Ltd.	295,383	78,064	(401,764)	-0-	-0-
Greenleaf Gardens*	217,714	57,187	(344,436)	-0-	-0-
Greenwood Assoc.	291,628	76,779	(489,685)	-0-	-0-
Hickory Square Apts.	94,754	24,889	(139,560)	-0-	-0-
Hilltop Manor Apts.*	216,667	56,761	(497,293)	-0-	-0-
Hitchcock Housing	270,750	71,118	(361,385)	-0-	-0-
Joaquin Apts.	295,621	78,653	(428,638)	-0-	-0-
Lake City Village*	312,889	74,743	(686,752)	-0-	-0-
Lakecrest Ltd.	315,204	85,773	(313,615)	87,362	-0-
Lakeview Estates	244,844	65,845	(466,705)	-0-	-0-
Lakewood Apts. II	181,777	47,748	(320,494)	-0-	-0-
Las Rosas II, Ltd.	263,135	70,012	(388,523)	-0-	-0-
Laurel Wood-Capital	205,867	65,524	(240,005)	31,386	-0-
Lead Bayou, Ltd.	212,000	55,686	(343,398)	-0-	-0-
Lillie Mae's Retirement	226,752	58,149	(378,909)	-0-	-0-
Magnolia Plaza Apts.	258,552	68,111	(402,140)	-0-	-0-
Many Seniors Apts.	259,150	62,094	(415,157)	-0-	-0-
Maple Hill Apts.	296,560	78,616	(341,278)	33,898	-0-
New Caney Oaks	225,742	60,543	(329,799)	-0-	-0-
Oakdale-T F Management	249,384	65,506	(413,342)	-0-	-0-
Old Oak Estates	184,856	48,556	(359,055)	-0-	-0-
Onion Creek	304,574	80,449	(404,857)	-0-	-0-
PDC Eighteen LP	196,521	52,298	(321,230)	-0-	-0-
Pecan Villa Apts.	234,202	62,152	(311,823)	-0-	-0-
Pecanwoods Apts. III, Ltd.	262,027	69,024	(401,114)	-0-	-0-
Pocomoke Villas Ltd.	175,138	46,923	(331,189)	-0-	-0-
Ridge View Apts.	359,216	95,341	(598,073)	-0-	-0-
Rolling Meadow II L.P.	238,870	64,218	(326,807)	-0-	-0-
Southeastern Assoc.	314,798	82,688	(497,956)	-0-	-0-
Sun Rise Apts. North	352,063	95,182	(553,076)	-0-	-0-
Taft Gardens	149,542	39,871	(254,799)	-0-	-0-
Taft Terrace	200,419	53,235	(412,976)	-0-	-0-
Valley Place Assoc.	309,068	81,774	(522,667)	-0-	-0-
West Meadow II Apts.	182,984	49,185	(250,067)	-0-	-0-
Willow Haven-Cross	323,905	85,080	(593,346)	-0-	-0-
Wilson Lake	400,896	105,304	(573,935)	-0-	-0-
Wolcott Assoc.	350,630	92,691	(435,867)	7,454	-0-
Woodcrest	233,244	61,464	(451,970)	-0-	-0-
	13,305,835	3,521,098	(21,140,727)	294,814	63,412

* Audited by Smith & Radigan, Certified Public Accountants, LLC

F-19

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note C - Investment in Operating Limited Partnerships - Continued

At March 31, 1998
Operating Limited Partnership	Capital Contributed		Acquisition Costs		Equity in Accumulated Income (Losses)		Net Investment		Contribution Payable
Partnerships which were unaudited
Albany Commons, LTD		174,206		46,737		(198,014)		22,929	-0-
Anderson County Estates		120,768		32,116		(165,635)		-0-	-0-
Aurora Limited		61,808		24,540		(350,438)		-0-	-0-
Belfast Housing Assoc.		277,403		74,124		(396,016)		-0-	-0-
Berea Summit, Ltd.		43,460		11,855		(93,493)		-0-	-0-
Berkshire Apts. #2		135,683		35,898		(316,362)		-0-	-0-
Blanchard Apts.		166,374		43,899		(229,208)		-0-	-0-
Brentwood Apts.		160,800		42,237		(231,302)		-0-	-0-
Briar Hill Apts.		88,475		23,240		(157,759)		-0-	-0-
Bunkie Apts		164,759		43,277		(266,190)		-0-	-0-
Canal Town Assoc.		56,641		15,075		(17,707)		54,009	-0-
Canyon Hills Villas		75,702		20,719		(114,659)		-0-	-0-
Cedar Crest Apts.		93,972		25,078		(13,622)		105,428	-0-
Cherrywood (M & W)		57,237		15,253		(108,121)		-0-	-0-
Cle Elum		152,034		40,501		(253,370)		-0-	-0-
Cleveland Courts, Ltd.		124,589		33,530		(133,218)		24,901	-0-
Clifford Heights Apts.		224,044		58,940		(332,935)		-0-	-0-
Cottondale Villa Apts.		179,706		47,404		(328,711)		-0-	-0-
Cottonwood Seniors Apts.		164,527		43,216		(282,360)		-0-	-0-
Coushatta Seniors Apts.		170,409		44,958		(246,141)		-0-	-0-
Cypress View Estates		164,942		43,712		(225,514)		-0-	-0-
Delta Terrace		180,474		47,405		(275,435)		-0-	-0-
East Magnolia Village		161,503		42,422		(300,182)		-0-	-0-
Edmonson Prop.		115,255		31,246		(120,784)		25,717	-0-
Elliott Manor, Ltd.		192,597		48,550		(291,941)		-0-	-0-
Fieldcrest, Ltd.		114,667		30,120		(223,145)		-0-	-0-
Flambeau Village		776,830		204,642		(856,241)		125,231	-0-
Folsom South Venture		89,912		23,725		(115,916)		-0-	-0-
Gaslight Square		179,152		47,058		(310,105)		-0-	-0-
Gibsland Villas Ltd.		206,022		54,116		(291,557)		-0-	-0-
Gilman Senior Apts.		35,221		-0-		(35,386)		-0-	7,722
Glenora Apts.		95,855		25,375		(205,274)		-0-	-0-
Hagewood Apts.		132,717		35,356		(247,713)		-0-	-0-
Hidden Hills Apts.		120,404		31,766		(162,123)		-0-	-0-
Hillwood Ltd.		86,050		22,603		(171,762)		-0-	-0-
Housing Partners IX		38,703		-0-		(34,326)		4,377	-0-
Housing Partners IX		13,872		-0-		(11,441)		2,431	-0-
Housing Partners VI		24,922		-0-		(22,180)		2,742	-0-
Housing Partners VIII		13,873		-0-		(6,953)		6,920	-0-
Housing Partners XI		39,093		-0-		(40,348)		-0-	-0-
Housing Partners XII		57,942		-0-		(53,425)		4,517	-0-
Housing Partners XIII		29,603		-0-		(22,394)		7,209	-0-
Housing Partners XV		57,942		-0-		(51,981)		5,961	-0-
Houston Assoc.		234,913		61,675		(244,365)		52,223	-0-
Hurricane		191,380		53,058		(286,444)		-0-	-0-
Indianwood Apts. II		113,856		29,907		(261,574)		-0-	-0-
Jonesville Apts. for Sr.		133,404		35,936		(140,673)		28,667	-0-
Kent Summit, Ltd.		58,711		15,552		(97,724)		-0-	-0-
Kingswood II, Ltd.		150,043		39,980		(196,625)		-0-	-0-
LaGrange Apts.-II		42,622		12,020		(52,563)		2,079	-0-
Larue Properties, Ltd.		180,468		48,632		(114,374)		114,726	-0-
Lewis Apts. Co.		161,706		43,544		(241,876)		-0-	-0-
Lewistown Apts.		67,666		17,774		(101,855)		-0-	-0-
Liberty Terrace Apts.		222,938		59,150		(302,999)		-0-	-0-
Longview Terrace Ltd.		159,185		41,813		(278,692)		-0-	-0-

F-20

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note C - Investment in Operating Limited Partnerships - Continued

At March 31, 1998
Operating Limited Partnership	Capital Contributed	Acquisition Costs	Equity in Accumulated Income (Losses)	Net Investment	Contribution Payable
Partnerships which were unaudited
Manor Apts-Caddo Mills	128,510	33,756	(271,886)	-0-	9,900
Marion Housing	129,096	34,575	(205,426)	-0-	-0-
Meadowland Apts.	129,131	33,919	(201,157)	-0-	-0-
Mills-Shapley Partnership	119,025	21,580	(150,383)	-0-	9,766
Mitchell II Ltd.	180,723	47,668	(275,662)	-0-	-0-
Mosswood Apt.	166,822	43,819	(323,102)	-0-	-0-
Mountain View Apts. II	184,828	48,986	(229,025)	4,789	-0-
Munfordville	82,613	21,341	(144,831)	-0-	-0-
North Deer Creek, Ltd.	174,358	45,799	(261,552)	-0-	-0-
Oak Valley Place II	114,209	32,068	(200,977)	-0-	-0-
Oakwood Apartments Ltd.	138,722	36,832	(166,270)	9,284	-0-
Orchard Commons, Ltd.	120,120	32,164	(129,388)	2,896	-0-
Park Place East Assoc.	238,938	63,353	(278,006)	24,285	-0-
Park Place North	144,576	38,570	(204,693)	-0-	-0-
Parkwood Assoc.	161,299	43,262	(244,460)	-0-	-0-
PDC Twenty Two LP	171,475	45,041	(253,318)	-0-	-0-
Perry Apts.	44,222	11,616	(86,842)	-0-	-0-
Pontontoc Ridge Apts.	164,502	43,210	(342,353)	-0-	3,735
Regency Apts. of Reno	137,659	36,348	(200,271)	-0-	-0-
Regency Plaza	154,427	41,514	(206,226)	-0-	-0-
Reservoir Hill L.P.	575,641	151,795	(434,380)	293,056	-0-
Reynolds & Assoc.	92,265	24,629	(133,090)	-0-	-0-
Rigecrest Apts.	312,000	81,953	(549,053)	-0-	-0-
River View Apts.	21,494	5,646	(26,910)	230	-0-
Riverbend Apts.	119,075	31,278	(216,831)	-0-	-0-
Russell September Housing	76,415	20,618	(120,780)	-0-	-0-
Sacramento, Ltd.	181,195	51,004	(228,700)	3,499	-0-
Sleepy Oaks-Seshano	79,988	21,602	(74,413)	27,177	-0-
Somerset West, Hills II	122,882	32,901	(160,526)	-0-	-0-
Southern Apts.	141,607	37,393	(234,758)	-0-	-0-
Spring Meadow Apts.	183,090	48,092	(264,705)	-0-	-0-
Streamside Assoc.	237,135	62,604	(268,488)	31,251	-0-
St. Rose Assoc.	181,343	47,831	(236,642)	-0-	-0-
Sullivan Garden Apts.	80,183	21,259	(211,856)	-0-	-0-
Summer Place-Deshano	79,257	21,410	(88,397)	12,270	-0-
Sunrise Apts.	81,782	21,679	(221,318)	-0-	-0-
Timberline	142,195	39,780	(241,648)	-0-	-0-
Valley Limited	125,387	33,777	(45,224)	113,940	-0-
Wayland Apts.	45,769	12,022	(78,923)	-0-	-0-
Wexford Assoc. L.P.	168,536	46,016	(225,383)	-0-	-0-
	13,269,534	3,438,444	(19,069,004)	1,132,744	31,123
	$26,575,369	$ 6,959,542	$ (40,209,731)	$1,427,558	$ 94,535

All remaining contributions payable as of March 31, 1999 represent payments which have been deferred for an indeterminate time until certain conditions are met by the Operating Partnerships involved.

F-21

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note D - Subscriptions Receivable

When the investors were admitted as limited partners in one of the Debtor Investor Partnerships, each investor made a cash down payment for his or her limited partnership interest and executed a recourse promissory note for the balance. Contributions receivable represent the remaining balance of the recourse promissory notes executed by investors for their capital contributions which are payable to the Master Limited Partnership. While the majority of the notes were non-interest bearing, the notes for certain Debtor Investor Partnerships included interest at rates ranging from four and one-half percent to nine percent.

Contributions receivable at March 31, 1999 consists of the following:

Past due installments from defaulting investors	$1,203,758
Amount representing unearned interest	(18,049)
	$1,185,709

The Master Limited Partnership has recourse against the defaulting investors and is pursuing collection of these amounts. While the uncollectible amount cannot be estimated as of March 31, 1999, it is probable that most of the past due amounts will not be collected. Subscriptions receivable are decreased with a corresponding decrease to the limited partners' capital accounts as such amounts are determined to be uncollectible.

Note E - Independent Manager

The Plan provides for the employment of an independent manager for the Master Limited Partnership. The Amended and Restated Management Agreement provides for the automatic annual renewal of the management agreement subject to certain events, as defined. Effective July 10, 1990, Megan Management Company, Inc. ("Megan") was engaged to be the Independent Manager. As such, Megan became the Master Limited Partnership's exclusive agent for all operations under the Plan, including those in connection with or relating to (a) collection, investment and disbursement of all funds of the Master Limited Partnership as provided in the Plan and the Escrow Agreement through the Escrow Account maintained at Chemical Bank (formerly Manufacturers Hanover Trust), (b) maintenance of the books and records of the Partnership, (c) preparation of the Master Limited Partnership's tax returns and review of all tax returns relating to the Master Limited Partnership's interests in the Operating Partnerships and (d) furnishing assistance to the Investors with respect to tax information relating to the Investors' interests in the Master Limited Partnership. As of December 31, 1992, all rights, powers and obligations of the Independent Manager were assigned to Megan Asset Management, Inc. (Note A).

As compensation for its services, the Independent Manager received $119,500 for the years ended March 31, 1999, 1998 and 1997. The Independent Manager is also provided with amounts required to cover the costs of tax return preparation and audited financial statements.

F-22

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note E - Independent Manager - Continued

Megan Asset is compensated for work relating to defaulting investors. The Independent Manager's compensation for the year ended March 31, 1999, 1998 and 1997 includes zero, $2,337 and $4,545, respectively, for work relating to defaulting investors.

Note F - Contingencies

Article 15 of the Plan ("Payments from Capital Events") provides for certain further disbursements to the pre-petition creditors of funds resulting from the sale of interests in Operating Partnerships subsequent to December 31, 1994. Such payments, in order of priority, include the following:

(a) Prorata payments to the Operating Partnerships of the full amount due from the Debtor Investor Partnerships and assumed by the Master Limited Partnership, with interest at eight percent. At March 31, 1999, the amount due is approximately $1,800,000.

(b) In settlement of a claim filed by the Independent Manager against First American on behalf of the Partnership October 12, 1990, alleging possible fraudulent or preferential transfers, or other acts or omissions committed by First American as General Partner of the 52 Debtor Investor Partnerships, the Partnership and the Independent Manager each received an assignment of fifty percent of all sums to be paid to First American's wholly-owned subsidiary, Continental Construction Management Corporation ("Continental"), from Capital Events in accordance with Article 15(1)(6) of the Plan. In conjunction with the replacement of First American by the Independent Manager (Note A), the Partnership purchased from Continental its remaining rights to receive payments with respect to Capital Events under the Plan, in consideration of $234,968, paid in the form of the assumption of liabilities of First American in the amount of $97,050 and a cash payment of $50,000 as of the closing date and the remainder in cash installments paid through April 1, 1992. At March 31, 1999, the amount due is approximately $2,000,000.

(c) Prorata payments to investors until each has received an amount equal to twenty percent of its net capital investment plus interest at ten percent calculated from December 31, 1994.

(d) A return of capital to the investors until each has received one hundred percent of its capital invested, over and above the payments in c) above.

(e) Payment of the allowed claims of investors subordinated pursuant to the bankruptcy code.

F-23

Notes to Financial Statements Continued

BAYFIELD LOW INCOME HOUSING LIMITED PARTNERSHIP

March 31, 1999

Note F - Contingencies - Continued

(f) Any remaining amounts in the percentage of ninety percent to the investors and ten percent to the general partner of the Master Limited Partnership.

The accompanying financial statements do not include adjustments for any amounts that might become payable pursuant to the resolution of the above contingencies.

Note G - Related Party Activity

The Master Limited Partnership paid expenses for legal assistance relating to the proceedings with the Operating Partnerships to Gary L. Maddock, PC, a company wholly-owned by the sole stockholder of the Independent Manager and General Partner, totaling $197,609 and $205,784 for the year ended March 31, 1999 and 1998, respectively.

F-24

[LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC

We have audited the accompanying balance sheet of AFM RRH, Limited Hilltop Manor Apartments, USDA-RD Project No. 09-042-0260409707, as of December 31, 1997, and the related statements of operations, partners' capital (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AFM RRH, Limited Hilltop Manor Apartments as of December 31, 1997, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated March 4, 1998 on our consideration of the Partnership's internal controls and a report dated March 4, 1998 on its compliance with applicable laws, regulations, contracts and grants.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules and supporting data on pages 10-15 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in our 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/ Smith & Radigan Atlanta, Georgia March 4, 1998

[LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC

We have audited the accompanying balance sheet of Alachua Villas, Ltd., (a limited partnership), USDA-RD Project No. 09-001-592892707, as of December 31, 1997, and the related statements of operations, partners' capital (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Except as discussed in the following paragraph, 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 Alachua Villas, Ltd. as of December 31, 1997, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated March 6, 1998 on our consideration of the Partnership's internal controls and a report dated March 6, 1998 on its compliance with applicable laws, regulations, contracts and grants.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules and supporting data on pages 11-16 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in our 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/ Smith & Radigan Atlanta, Georgia March 6, 1998

[LETTERHEAD OF] Albright Crumbacker Harrell & Moul, LLP

We have audited the accompanying balance sheets of Baker Heights II Limited Partnership, d/b/a Baker Heights Apartments II (the Partnership), RD Project No.: 57-002-550657348 as of December 31, 1997 and 1996, and the related statements of income, changes in partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Baker Heights II Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 1997 and 1996, and the results of operations 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 May 18, 1998 on our consideration of the Partnership's internal control structure and a report dated May 18, 1998 on its compliance with laws and regulations.

/s/ Albright Crumbacker Harrell & Moul, LLP May 18, 1998

[LETTERHEAD OF] Testone, Marchall & Discenza LLP

We have audited the accompanying balance sheets of Bayshore North Apartments - Phase IV (A Limited Partnership) as of December 31, 1997 and 1996, and the related statements of operations and partners' capital (deficiency in assets), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bayshore North Apartments - Phase IV as of December 31, 1997 and 1996, and the results of its operations and cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated April 14, 1998 on our consideration of the internal control structure of Bayshore North Apartments - Phase IV and a report dated April 14, 1998 on its compliance with applicable laws and regulations and Farmers Home Administration requirements.

/s/ Testone, Marshall & Discenza, LLP April 14,1998 Syracuse, New York

[LETTERHEAD OF] Grubman & Associates of Maryland, P.C.

We have audited the accompanying balance sheet of Blades Limited Partnership T/A Hunters Court, FMHA Project No.: 07-004-521529005 as of December 31, 1997 and 1996, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards and generally accepted government auditing standards for financial and compliance audits 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 disclosure 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 Blades Limited Partnership T/A Hunters Court, Project No.: 07-004-521529005 as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

/s/ Grubman & Associates of Maryland P.C. Gaithersburg, Maryland January 20, 1998

[LETTERHEAD OF] Piltz, Williams, LaRosa & Company

We have audited the accompanying balance sheets of Broadway Terrace Of Drew, L.P. (A Mississippi Limited Partnership), as of December 31, 1997 and 1996, and the related statements of income (loss), changes in partners' deficit, 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 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 Broadway Terrace of Drew, L.P. (A Mississippi Limited Partnership), at December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 5, 1998, on our consideration of the project's internal control structure and a report dated February 5, 1998, on its compliance with laws and regulations.

The accompanying financial statements have been prepared assuming that the Project will continue as a going concern. As discussed in Note C to the financial statements, the Project is two years in arrears on the payment of its property taxes, primarily as a result of insufficient operating cash flows to fund the payment of the taxes. The Project's temporary general partner, through the management company, is commencing negotiations with Rural Economic and Community Development in an effort to devise a workout plan whereby a portion of the regularly scheduled mortgage payment can be abated and the abated funds used to pay the property taxes. Project management cannot predict what the outcome of these negotiations will be. These conditions raise substantial doubt about the Project's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information, including the Schedule of Federal Financial Assistance and the Schedule of Federal Financial Assistance Loans, included in this report (shown on Pages 11-14) is presented for the purposes of additional analysis and is not a required part of the financial statements of the Project. 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/ Piltz, Williams, LaRosa & Co. Certified Public Accountants Biloxi, Mississippi February 5, 1998

[LETTERHEAD OF] Fister, Routh & Freeman PSC

We have audited the accompanying balance sheets of Cedar Grove Apartments, Ltd., a segment of Cedar Grove Apartments, Ltd. (a Kentucky limited partnership), as of December 31 1997 and 1996, and the related statements of income, partners' equity, and cash flows for the years then ended, These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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 managements 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 Cedar Grove Apartments, Ltd., as of December 31, 1997, and the results of its operations and cash flows for the year ended December 1, 1997 in conformity with generally accepted accounting principles.

/s/ Fister, Routh & Freeman Certified Public Accountants January 27, 1998

[LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC

We have audited the accompanying balance sheet of Citrus Terrace, Ltd., (a limited partnership), USDA-RD Project No. 09-028-262405142, as of December 31, 1997, and the related statements of operations, partners' capital (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In accordance with Government Auditing Standards, we have also issued a report dated March 5, 1998 on our consideration of the Partnership's internal controls and a report dated March 5, 1998 on its compliance with applicable laws, regulations, contracts and grants.

/s/ Smith & Radigan Atlanta, Georgia March 5, 1998

[LETTERHEAD OF] Grubman & Associates of Maryland, P.C.

We have audited the accompanying balance sheet of Diamond Court II Limited Partnership, FMHA Project No.: 07-001-521528112 as of December 31, 1997 and 1996, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Diamond Court II Limited Partnership, Project No.: 07-001-521528112 as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

/s/ Grubman & Associates of Maryland PC Gaithersburg, Maryland

January 20, 1998

[LETTERHEAD OF] Cole, Evans & Peterson

February 16, 1998

We have audited the accompanying balance sheets of Donaldsonville Seniors Apartments at December 31, 1997 and December 31, 1996, and the related statements of income, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Projects 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 with Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Donaldsonville Seniors Apartments at December 31, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 16, 1998 on our consideration of Donaldsonville Seniors Apartments' internal control and a report dated February 16, 1998 on its compliance with laws and regulations.

/s/ Cole, Evans & Peterson Cole, Evans & Peterson

[LETTERHEAD OF]

James N. Rachel, CPA

I have audited the accompanying balance sheets of Elmwood Estates, A Limited Partnership, as of December 31, 1997 and 1996, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Elmwood Estates, A Limited Partnership's management, My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that I plan and perform the 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 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 Elmwood Estates, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, I have also issued reports dated March 19, 1998, on my consideration of Elmwood Estates, A Limited Partnership's internal control structure and on its compliance with laws and regulations

/s/ James N. Rachel Shreveport, Louisiana March 19, 1998

[LETTERHEAD OF]

Casey J. Russell CPA Inc.

I have audited the accompanying balance sheet of Reynolds and Associates, DBA First Street Apartments II FMHA Case Number 42007-405924621 as of December 31, 1997 and the related statement of operations and partner's deficit and cash flows for the year then ended. These financial statements are the responsibility of Reynolds and Associates, DBA First Street Apartment's II 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 Governmental 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 amount 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 Reynolds and Associates, DBA First Street Apartments II FMHA case number 42-007-405924621, at December 31, 1997 and the results of its operations and its cash flows for the year then ended in accordance with generally accepted accounting principles.

In accordance with Government Standards, I have issued a report dated March 26, 1998 on my consideration of First Street Apartment II's internal control structure and a report dated March 26, 1998 on its compliance with laws and regulations.

/s/ Casey J. Russell CPA Inc. March 26, 1998

[LETTERHEAD OF] Stienessen Schlegel & Co., LLC

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 Flambeau Village, A Wisconsin Limited Partnership, as of December 31, 1998, 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.

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 9 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.

[LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC

We have audited the accompanying balance sheet of Forest Park Apartments, Ltd., (a limited partnership), USDA-RD Project No. 09-063-502721007, as of December 31, 1997, and the related statements of operations, partners' capital (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In accordance with Government Auditing Standards, we have also issued a report dated March 11, 1998 on our consideration of the Partnership's internal controls and a report dated March 11, 1998 on its compliance with applicable laws, regulations, contracts and grants.

/s/ Smith & Radigan

Atlanta, Georgia

March 11, 1998

[LETTERHEAD OF] McGee & Associates, P.C.

We have audited the accompanying balance sheets of Franklin Vista II, Ltd. (a limited partnership) as of December 31, 1997 and 1996, and the related statements of operations, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the 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 Franklin Vista II, Ltd. as of December 31, 1997 and 1996, and the results of its operations and the changes in partners' equity (deficit) and cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 2, 1998, on our consideration of Franklin Vista II, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.

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

/s/ McGee & Associates, P.C. February 2, 1998 Farmington, New Mexico

[LETTERHEAD OF] Smith, Miles & Company, L.C.

We have audited the accompanying balance sheets of Gatewood Apartments, Ltd., FMHA Project No: 09-003-0592782216, as of December 31, 1997 and 1996, and the related statements of operations, partners, deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gatewood Apartments, Ltd., as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

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

/s/ Smith, Miles & Company, L.C. Panama City, Florida February 7, 1998

[LETTERHEAD OF] Smith & Radigan

We have audited the accompanying balance sheet of Greenleaf Gardens, Ltd. Greenleaf Gardens Apartments, USDA-RD Project No. 09-064-0592907502, as of December 31, 1997, and the related statements of operations, partners' capital (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

/s/ Smith & Radigan Atlanta, Georgia March 4, 1998

[LETTERHEAD OF] Little & Banks LLC

We have audited the accompanying balance sheet of Greenwood Associates Limited Partnership, (the Partnership) as of December 31, 1997, and the related statements of operation, 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. The financial statements of Greenwood Associates Limited Partnership, as of December 31, 1996, were audited by other auditors whose report dated January 31, 1997, expressed an unqualified opinion on those statements.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Greenwood Associates Limited Partnership, as of December 31, 1997, and the results of its operation 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 13, 1998, on its compliance with laws, and regulations.

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying schedules listed in the index are presented for the purpose of additional analysis and are not a required part of the financial statements of Greenwood Associates, Limited Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in relation to the financial statements taken as a whole.

/s/ Little & Banks, LLC West Monroe, Louisiana January 13, 1998

[LETTERHEAD OF] Van Moore & Company, P.A.

We have audited the accompanying balance sheets of Hickory Square Limited Partnership, USDA Rural Development Project No.: 03-001710650913, as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. Those standards and the audit program 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 Hickory Square Limited Partnership as of December 31, 1997 and 1996 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 reports dated February 9, 1998 on our consideration of Hickory Square Limited Partnership's internal control and on its compliance with laws and regulations applicable to the financial statements.

/s/ Van Moore & Company, P.A. Little Rock, Arkansas February 9, 1998

[LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC

We have audited the accompanying balance sheet of Hilltop Manor RRH, Ltd. II Hilltop Manor Apartments, USDA-RD Project No. 09-042-0592907501, as of December 31, 1997, and the related statements of operations, partners' capital (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

/s/ Smith & Radigan Atlanta, Georgia March 4, 1998

[LETTERHEAD OF] H. D. Morris Co., Inc., P.C.

To The Partners: Hitchcock Housing, Ltd.

We have audited the accompanying balance sheet of Hitchcock Housing, Ltd., FmHA Case No.: 49-084-760136950, as of December 31, 1997 and 1996, 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 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 and the U. S. Department of Agriculture, Farmers Home Administration Audit Program. 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 statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Hitchcock Housing, Ltd., as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information presented in the Year End Report/Analysis (Form FmHA 1930-8) Parts I through III and schedules of administrative, maintenance, utilities, and taxes and insurance expenses for the years ended December 31, 1997 and 1996, is presented for purposes of complying with the requirements of the Farmers Home Administration and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued our reports dated April 17, 1998, on our consideration of Hitchcock Housing, Ltd.'s internal control and on its compliance with laws and regulations.

/s/ H. D. Morris Co., Inc., P.C. Houston, Texas April 17, 1998

[LETTERHEAD OF] Cole, Evans & Peterson

February 2, 1998

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Joaquin Apartments, Ltd. at December 31, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 2, 1998 on our consideration of Joaquin Apartments' internal control and a report dated February 2, 1998 on its compliance with laws and regulations.

/s/ Cole, Evans & Peterson

[LETTERHEAD OF] Whelan, Doerr & Pike, PSC

To the Partners Lakecrest, Ltd. Elizabethtown, Kentucky

We have audited the accompanying balance sheet of Lakecrest, Ltd. ( a Kentucky limited partnership), RECD Project No.: 20-047-611059430, as of December 31, 1997, and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility. of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Lakecrest, Ltd. as of December 31 1996, were audited by other auditors whose report dated March 27, 1997, 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 on, the financial statements referred to above present fairly, in all material respects, the financial position of Lakecrest, Ltd., as of December 31, 1997, and the results of its operations, the changes in its 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 supplemental information on pages 10 and 11 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 a report dated July 1, 1998 on our consideration of Lakecrest, Ltd.'s internal control structure and a report dated July 1, 1998 on compliance with laws and regulations.

/s/ Whelan Doerr & Pike PSC Certified Public Accountants July 1, 1998

[LETTERHEAD OF] Smith & Radigan, Certified Public Accountants, LLC

We have audited the accompanying balance sheet of Lake City Village, Ltd., (a limited partnership), USDA-RD Project No. 09-012-0592892709, as of December 31, 1997, and the related statements of operations, partners' capital (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

/s/ Smith & Radigan Atlanta, Georgia

March 5, 1998

[LETTERHEAD OF] Gillon and Company, Ltd.

We have audited the accompanying balance sheets of Lakeview Estates (A Limited Partnership), as of December 31, 1997 and 1996, 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 and Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture Farmers Home Administration Audit Program. 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 Lakeview Estates as of December 31, 1997 and 1996, 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 our reports dated February 12, 1998, on our consideration of Lakeview Estate's internal control and on its compliance with laws and regulations.

/s/ Gillon and Company Ltd Natchez, Mississippi February 12, 1998

[LETTERHEAD OF] Smith, Miles & Company, L.C.

We have audited the accompanying balance sheets of Lakewood Apartments, Ltd., Phase II, FmHA Project No: 09-012-592825075, as of December 31, 1997 and 1996, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lakewood Apartments, Ltd., Phase II, as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

/s/ Smith, Miles & Company, L.C. Panama City, Florida February 10, 1998

[LETTERHEAD OF] McGee & Associates, P.C.

We have audited the accompanying balance sheets of Las Rosas II, Ltd. (a limited partnership) as of December 31, 1997 and 1996, and the related statements of operations, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the 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 Las Rosas II, Ltd. as of December 31, 1997 and 1996, and the results of its operations and the changes in partners' equity (deficit) and cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 2, 1998, on our consideration of Las Rosas II, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.

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

|/s/ McGee & Associates, P.C. February 2, 1998 Farmington, New Mexico

[LETTERHEAD OF] Miller, Mayer, Sullivan & Stevens LLP

To the Partners Laurel Wood Apartments, Ltd. and Rural Development Jackson, Tennessee

We have audited the accompanying balance sheets of Laurel Wood Apartments, Ltd., (a limited partnership) Case No. 48-079-611057371, as of December 31,1997 and 1996 and the related statements of operations, changes in partners' equity (deficit),and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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 Laurel Wood Apartments, Ltd. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated March 12, 1998 on our consideration of Laurel Wood Apartments, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants.

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

/s/ Miller, Mayer, Sullivan & Stevens Lexington, Kentucky March 12, 1998

[LETTERHEAD OF] Gillon and Company, Ltd.

We have audited the accompanying balance sheets of Lead Bayou Apartments (A Limited Partnership), as of December 31, 1997 and 1996, 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, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Lead Bayou Apartments as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity, and cash flows for the years their ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our reports dated February 28, 1998, on our consideration of Lead Bayou Apartments' internal control and on its compliance with laws and regulations.

/s/ Gillon and Company Ltd Natchez, Mississippi February 28, 1998

[LETTERHEAD OF] Beall Barclay & Company, PLC

We have audited the accompanying balance sheets of Lillie Mae's Retirement Village Apartments, Ltd. (A Limited Partnership), FMHA Project No.: 42-026-0731282026, as of December 31, 1997 and 1996, and the related statements of operations, partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lillie Mae's Retirement Village Apartments, Ltd. as of December 31, 1997 and 1996, and the results of its operations, changes in partners' capital (deficit), and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated January 13, 1998, on our consideration of Lillie Mae's Retirement Village Apartments, Ltd.'s internal control structure and a report dated January 13, 1998, on its compliance with laws and regulations.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 15 through 21 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The information presented on pages 15 and 16 excludes fees allocated to property and equipment

related to partnership syndication amounts, and as such does not present financial position in conformity with generally accepted accounting principles. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, except for the effects of excluding the items described above, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ BEALL BARCLAY & COMPANY, PLC

Certified Public Accountants Fort Smith, Arkansas January 13, 1998

[LETTERHEAD OF] H. D. Morris Co., Inc., P.C.

To The Partners: Magnolia Plaza Apartments, Ltd.

We have audited the accompanying balance sheet of Magnolia Plaza Apartments, Ltd., FMHA Case No.: 50-70-0760129844as of December 31, 1997 and 1996, 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 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 and the U. S. Department of Agriculture, Farmers Home Administration Audit Program. 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 statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Magnolia Plaza Apartments, Ltd., as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information presented in the Year End Report/Analysis (Form FmHA 1930-8) Parts I through III and schedules of administrative, maintenance, utilities, and taxes and insurance expenses for the years ended December 31, 1997 and 1996, are presented for purposes of complying with the requirements of the Farmers Home Administration and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

In accordance with Governmental Auditing Standards, we have issued reports dated March 3, 1998, on our consideration of Magnolia Plaza Apartments, Ltd.'s internal control and on its compliance with laws and regulations.

/s/ H.D. Morris Co., Inc., P.C. Houston, TX March 3, 1998

[LETTERHEAD OF] Cole, Evans & Petereson

February 12, 1998

We have audited the accompanying balance sheets of Many Seniors Apartments at December 31, 1997 and December 31, 1996, and the related statements of income, 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.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Many Seniors Apartments at December 31, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 12, 1998 on our consideration of Many Seniors Apartment's internal control and a report dated February 12, 1998 on its compliance with laws and regulations.

/s/ Cole, Evans & Peterson Cole, Evans & Peterson

[LETTERHEAD OF] Miller, Mayer, Sullivan & Stevens LLP

To the Partners Maple Hill Estates, Ltd. Rural Development London, Kentucky

We have audited the accompanying balance sheets of Maple Hill Estates, Ltd., (a limited partnership) Case No. 20-040-611063882, as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maple Hill Estates, Ltd. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated January 23, 1998 on our consideration of Maple Hill Estates, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information as been subjected to the 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.

/s/ Miller, Mayer, Sullivan, & Stevens Lexington, Kentucky January 23, 1998

[LETTERHEAD OF] Marshall& Shafer, P.C.

To the Partners New Caney Oaks Apartments (A Segment of New Caney Oaks, Ltd.)

We have audited the accompanying balance sheet of New Caney Oaks Apartments (A Segment of New Caney Oaks, Ltd.) as of December 31, 1997 and 1996, and the related statements of operations, partners' equity (deficit), and cash flow for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally-accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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.

As described in Note A to the financial statements, the financial statements referred to above includes the assets, liabilities, revenue and expenses which are shown in the accounting records of the apartment complex.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of New Caney Oaks Apartments (A Segment of New Caney Oaks, Ltd.) as of December 31, 1997 and 1996, and the results of its operation and its cash flows for the years then ended, in conformity with generally-accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our reports dated March 23, 1998, on our consideration of New Caney Oaks Apartments' (A Segment of New Caney Oaks, Ltd.) internal control and on its compliance with laws and regulations.

/s/ Marshall & Shafer, P.C. Houston, Texas

[LETTERHEAD OF] Cole, Evans & Peterson

February 17, 1998

We have audited the accompanying balance sheets of Oakdale Seniors Apartments at December 31, 1997 and December 31, 1996, and the related statements of income, 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.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oakdale Seniors Apartments at December 31, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 17, 1998 on our consideration of Oakdale Seniors Apartment's internal control and a report dated February 17, 1998 on its compliance with laws and regulations.

/s/ Cole, Evans & Peterson

[LETTERHEAD OF] James N. Rachel, CPA

I have audited the accompanying balance sheets of Old Oak Estates, A Limited Partnership, as of December 31, 1997 and 1996, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Old Oak Estates, A Limited Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that I plan and perform the 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 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 Old Oak Estates, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, I have also issued reports dated March 19, 1998, on my consideration of Old Oak Estates, A Limited Partnership's internal control structure and on its compliance with laws and regulations.

/s/ James N. Rachel Shreveport, Louisiana March 19, 1998

[LETTERHEAD OF] Brenda P. McElwee, P.C.

We have audited the accompanying financial statements of Onion Creek, Ltd. as of December 31, 1997 and 1996, and for the years then ended, as listed in the table of contents. 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, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program, 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 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 Onion Creek, Ltd. as of December 31, 1997 and 1996, and the results of its operation for the years then ended and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our reports dated March 3, 1998 on our consideration of Onion Creek, Ltd.'s internal control and on its compliance with laws and regulations.

/s/ Brenda P. McElwee, P.C. March 3, 1998

[LETTERHEAD OF] Little, Shaneyfelt, Marshall & Co.

P.D.C. Eighteen Limited Partnership

We have audited the accompanying balance sheets of P.D.C. Eighteen Limited Partnership, RD Project No. 03-34-710652405 (the Partnership), as of December 31, 1997 and 1996, and the related statements of profit (loss), changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of P.D.C. Eighteen Limited Partnership as of December 31, 1997 and 1996, and its results of operations, changes in partners' equity (deficit), and cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated March 20, 1998 on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.

/s/ Little, Shaneyfelt Marshall & Co March 20, 1998

[LETTERHEAD OF] James N. Rachel, CPA

I have audited the accompanying balance sheets of Pecan Villa Apartments, A Limited Partnership, as of December 31, 1997 and 1996, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Pecan Villa Apartments, A Limited Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pecan Villa Apartments, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, I have also issued reports dated March 19, 1998, on my consideration of Pecan Villa, A Limited Partnership's internal control structure and on its compliance with laws and regulations.

/s/ James N. Rachel Shreveport, Louisiana March 19, 1998

[LETTERHEAD OF] Cole, Evans & Peterson

February 17, 1998

We have audited the accompanying balance sheets of Pecanwood Apartments III, Ltd. at December 31, 1997 and December 31, 1996, and the related statements of income, 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.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pecanwood Apartments III, Ltd. at December 31, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated February 17, 1998 on our consideration of Pecanwood III Apartment's internal control and a report dated February 17, 1998 on its compliance with laws and regulations.

/s/ Cole, Evans & Peterson

[LETTERHEAD OF] Grubman & Associates of Maryland, P.C.

We have audited the accompanying balance sheet of Pocomoke Villas Limited Partnership, FmHA Project No.: 24-024-521572645 as of December 31, 1997 and 1996, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pocomoke Villas Limited Partnership, Project No.: 24-024-521572645 as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

/s/ Grubman & Associates of Maryland PC Gaithersburg, Maryland January 20, 1998

[LETTERHEAD OF] Smith, Miles & Company, L.C.

We have audited the accompanying balance sheets of Ridgeview Apartments, Ltd., FmHA Project No: 09-009592695879, as of December 31, 1997 and 1996, and the related statements of operations, partners, deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ridgeview Apartments, Ltd., as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

/s/ Smith, Miles & Company, L.C. Panama City, Florida February 13, 1998

[LETTERHEAD OF] Grubman & Associates of Maryland, P.C.

We have audited the accompanying balance sheet of Rolling Meadow II Limited Partnership, FmHA Project No.: 24-006-521537063 as of December 31, 1997 and 1996, and the related statements of income, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rolling Meadow II Limited Partnership, Project No.: 24-006-521537063 as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

/s/ Grubman & Associates of Maryland PC Gaithersburg, Maryland January 21, 1998

[LETTERHEAD OF] Pailet, Meunier and LeBlanc, L.L.P.

We have audited the accompanying balance sheets of Southeastern Associates, Ltd.-Pin Oak, RHS Project No: 22-053721100096 as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 Southeastern Associates, Ltd.-Pin Oak as of December 31, 1997 and 1996 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 a report dated February 1, 1998 on our consideration of Southeastern Associates, Ltd.-Pin Oak's internal control and a report dated February 1, 1998 on its compliance with laws and regulations applicable to the financial statements.

/s/ Pailet, Meunier & LeBlanc, L.L.P. Metairie, Louisiana February 1, 1998

[LETTERHEAD OF] Donald W. Causey, CPA, P.C.

I have audited the accompanying balance sheets of Sun Rise North, Ltd., a limited partnership, RHS Project No.: 01-048-630963314 as of December 31, 1997 and 1996, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted the audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 the 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 Sun Rise North, Ltd., RHS Project No.: 01-048-630963314 as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

The audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 10 through 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FMHA 1930-8) Parts I and II for the year ended December 31, 1997 and 1996, is presented for purposes of complying with the requirements of the Rural Housing Services and is also not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in my 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, I have also issued a report dated March 1, 1998 on my consideration of Sun Rise North, Ltd., internal control structure and a report dated March 1, 1998 on its compliance with laws and regulations.

/s/ Donald W. Causey, CPA, P.C. Gadsden, Alabama March 1, 1998

[LETTERHEAD OF] Brenda P. McElwee, P.C.

We have audited the accompanying financial statements of Taft Gardens, Ltd. as of December 31, 1997 and 1996, and for the years then ended, as listed in the table of contents. 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, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 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 Taft Gardens, Ltd. as of December 31, 1997 and 1996, and the results of its operation for the years then ended and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our reports dated March 4, 1998 on our consideration of Taft Gardens, Ltd.'s internal control and on its compliance with laws and regulations.

/s/ Brenda P. McElwee, P.C. March 4, 1998

[LETTERHEAD OF] Brenda P. McElwee, P.C.

We have audited the accompanying financial statements of Taft Terrace, Ltd. as of December 31, 1997 and 1996, and for the years then ended, as listed in the table of contents. 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, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 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 Taft Terrace, Ltd. as of December 31, 1997 and 1996, and the results of its operation for the years then ended and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our reports dated March 2, 1998 on our consideration of Taft Terrace, Ltd.'s internal control and on its compliance with laws and regulations.

/s/ Brenda P. McElwee, P.C. March 2, 1998

[LETTERHEAD OF] Parente Randolph Orlando Carey & Associates

We have audited the accompanying balance sheets of Valley Place Associates (a limited partnership) (the "Partnership") as of December 31, 1997 and 1996, and the related statements of loss, changes in partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the management of Valley Place Associates. 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

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

In accordance with Government Auditing Standards, we have also issued our report dated January 27, 1998 on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.

/s/ Parente, Randolph, Orlando, Carey & Associates Williamsport, Pennsylvania

January 27, 1998

[LETTERHEAD OF] Smith, Miles & Company, L.C.

We have audited the accompanying balance Sheets of West Meadow Apartments II, Ltd., FMHA Project No: 01-031592806818 as of December 31, 1997 and 1996, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership, s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of West Meadow Apartments II, Ltd., as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

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

/s/ Smith, Miles & Company, L.C. Panama City, Florida February 13, 1998

[LETTERHEAD OF] James N. Rachel

I have audited the accompanying balance sheets of Willow Haven Apartments, A Limited Partnership, as of December 31, 1997 and 1996, and the related statements of income, partnership equity, and cash flows for the years then ended. These financial statements are the responsibility of Willow Haven Apartments, A Limited Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Willow Haven Apartments, A Limited Partnership as of December 31, 1997 and t996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles,

In accordance with Government Auditing Standards, I have also issued reports dated March 19, 1998, on my consideration of Willow Haven Apartments, A Limited Partnership's internal control structure and on its compliance with laws and regulations.

/s/ James N. Rachel Shreveport, Louisiana March 19,1998

[LETTERHEAD OF] Berry, Dunn, McNeil & Parker

We have audited the accompanying balance sheets of Wilson Lake Associates (a limited partnership), RD Case No. 23-004-010390750, as of December 31, 1997 and 1996, and the related statements of operations and 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 Wilson Lake Associates, a limited partnership, as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 11 through 13 is presented solely for the use of U.S. Department of Agriculture, Rural Development (USDA-RD) 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 issued reports dated January 16, 1998, on our consideration of Wilson Lake Associates' internal control structure and its compliance with laws, regulations and contracts.

/s/ Berry Dunn McNeil & Parker Portland, Maine January 16, 1998

[LETTERHEAD OF] Bain, Brown & DeLaura

We have audited the accompanying balance sheets of Wolcott Associates, as of November 30, 1997 and 1996 and the related statements of operations and partners' capital and of cash flows for the years then ended. These financial statements are the responsibility of the general partners of Wolcott Associates. 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. These 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 Wolcott Associates as of November 30, 1997 and 1996, and the results of its operations and partners' capital and of 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 February 2, 1998 on our consideration of Wolcott Associates' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.

/s/ Bain Brown & DeLaura February 2, 1998

[LETTERHEAD OF] Miller, Mayer, Sullivan & Stevens LLP

To the Partners Woodcrest Apartments, Ltd. and Rural Development Cookeville, Tennessee

We have audited the accompanying balance sheets of Woodcrest Apartments, Ltd., (a limited partnership) Case No. 48-056-611047118, as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Woodcrest Apartments, Ltd. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated January 22, 1998 on our consideration of Woodcrest Apartments, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants.

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