10-K 1 f10k_pat-2003.txt 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, 2003 OR ------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-20638 PATRIOT TAX CREDIT PROPERTIES L.P. (formerly known as Prudential-Bache Tax Credit Properties L.P.) (Exact name of registrant as specified in its charter) Delaware 13-3519080 ------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 625 Madison Avenue, New York, New York 10022 -------------------------------------- ------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 421-5333 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Beneficial Unit Certificates (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes No X ------- ------- The approximate aggregate book value of the voting and non-voting common equity held by non-affiliates of the Registrant as of September 30, 2002, was ($3,325,000), based on Limited Partner equity (deficit) as of such date. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Business. General ------- Patriot Tax Credit Properties L.P. (the "Registrant"), a Delaware limited partnership, was formed on May 3, 1989 and will terminate on December 31, 2029 unless terminated sooner under the provisions of the Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"). The Registrant was formed to invest in low-income, multi-family residential complexes ("Apartment Complexes" or "Properties") and, to a lesser extent, in historic apartment complexes undergoing rehabilitation ("Historic Complexes" or "Properties") through the acquisition of interests (the "Local Partnership Interests") in local partnerships (the "Local Partnerships") that are the owners of the Properties. These investments were made with proceeds from the initial sale of 38,125 Beneficial Unit Certificates ("BUC$"). The Registrant's fiscal year for tax and financial reporting purposes ends on December 31 and March 31, respectively. The primary objectives of the Registrant are to provide the limited partners with low-income housing tax credits allowed under Section 42 of the Internal Revenue Code of 1986, as amended ("Housing Tax Credits") over the credit period for each Property in which the Registrant has invested and to a lesser extent, 10-year historic rehabilitation tax credits allowed under Section 48(g) of the Internal Revenue Code of 1986, as amended. The Registrant invested only in Local Partnerships that owned Properties which qualified for Housing Tax Credits. No properties were acquired from any entity in which Prudential-Bache Properties, Inc. (the former general partner) or any affiliate had an interest. The Registrant's investments are composed of limited partnership interests in Local Partnerships owning then newly constructed or existing structures that have undergone substantial rehabilitation. The Local Partnerships in which the Registrant has invested must be operated in accordance with the low-income housing rules and regulations to protect the related tax credits. It is not expected that any of the Local Partnerships in which the Registrant has invested will generate any significant cash flow to provide distributions to the holders of BUC$ ("BUC$ holders") or the limited partners. The Registrant expects that in order to avoid recapture of Housing Tax Credits, its holding period with respect to each Local Partnership Interest will be at least as long as the 15-year compliance period and may be substantially longer. The Registrant is in the final year of its 10-year Housing Tax Credit period, however, the compliance period is still in effect. Each Property in which the Registrant invested is substantially mortgaged. However, the aggregate indebtedness did not exceed 85% of the appraised fair market value of any Property at the time of acquisition. The first mortgage financing encumbering the Properties was arranged by the general partner of the Local Partnership (the "Local General Partner") owning the Properties prior to the time the Registrant became a limited partner therein. The Registrant acquired its Local Partnership Interest in each Local Partnership by purchasing it directly from the existing limited and/or general partner of the Local Partnership. In each of the Registrant's investments, the Local General Partner of the Local Partnership owning the complex was required to provide personal guarantees and/or establish cash escrows, financial bonds and/or letters of credit to protect the Registrant against, among other things, the failure to meet certain operating criteria. All of these guarantees and escrows have expired. 2 The Registrant is engaged solely in the business of investing in Local Partnerships that own Properties; therefore, presentation of industry segment information is not applicable. For more information regarding the Properties, see Item 2, Properties. For more information regarding the Registrant's operations, see Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations. One Property had income which exceeded 15% of the Registrant's total revenue. Income from Palm Beach Apartments Ltd. ("Summer Creek Villas") as a percentage of the Registrant's total revenue was 52.10%, 50.89% and 56.56% during the years ended March 31, 2003, 2002 and 2001, respectively. No single tenant accounted for 10% or more of the Registrant's total revenue for any of the three years in the period ended March 31, 2003. General Partner --------------- The general partner of the Registrant is RCC Partners 96 L.L.C. (the "General Partner") and is an affiliate of Related Capital Company ("RCC"). Independence SLP L.P. ("SLP"), an affiliate of RCC, is the special limited partner. Segments -------- The Registrant operates in one segment, which is the investment in multi-family residential property. Competition ----------- The General Partner has formed various entities to engage in businesses that may be competitive with the Registrant. The Registrant's business is affected by competition to the extent that the underlying Properties from which it derives tax credits may be subject to competition relating to rental rates and amenities from comparable neighboring properties. Employees --------- The Registrant has no employees. Management and administrative services for the Registrant are performed by the General Partner and its affiliates pursuant to the Partnership Agreement. See Notes 1, 3 and 6 to the consolidated financial statements set forth in Item 8. 3 Item 2. Properties. As of March 31, 2003, the Registrant holds interests in Local Partnerships which own the following Properties which continue to be operated in a manner to qualify for Housing Tax Credits:

~~REGISTRANT~~Registrant'Ss ~~LOW~~Low-~~INCOME~~Income ~~OCCUPANCY~~Occupancy ~~HOUSING~~Housing ~~TAX~~TaxCredit ~~CREDIT~~Number ~~NUMBER~~Rents ~~RENTS~~as ASof OFRate ~~RATE~~as ASof OFfor ~~FOR~~the ~~THE~~YearEnded ~~YEAR~~Property ~~ENDED PROPERTY~~ (a) OFof ~~UNITS~~Units ~~JUNE~~May 1, ~~2002~~2003 ~~JUNE~~May 1, ~~2002~~2003 ~~DECEMBER~~December 31, ~~2001~~2002 ------------ -------- ------------- ------------ ----------------- RMB Limited Partnership 196 $~~480~~494 -~~740~~ 95755 85% $ 0 (Hubbard's Ridge) Garland, TX Cutler Canal II 216 ~~385~~396 -~~667~~ 665 99% ~~19,484~~0 Associates, Ltd. Miami, FL Diamond Street Venture 48 473 - 540 98% 0 Philadelphia, PA Papillion Heights 48 ~~485-~~495 7988% ~~60,174~~0 Apartments L.P. Papillion, NE Hill Top Homes 171 ~~550~~560 -~~755~~ 93770 70% ~~177,304~~0 Apartments Limited Partnership Arlington, TX Palm Beach 770 ~~590~~605 -~~810~~ 89860 92% 144,~~319,990~~027 Apartments, Ltd. (Summer Creek Villas) West Palm Beach, FL Brookland Park Plaza 77 ~~526~~563 9192% ~~31,564~~0 Limited Partnership Richmond, VA Compton Townhouses 39 765 9791% ~~205~~82,~~620~~161 ~~Limited Partnership~~ ----------- Limited Partnership Cincinnati, OH $ 1126,~~814,136~~188 ~~-----------~~===========

(a) At March 31, 2003, the Registrant holds a 66.5% interest in Summer Creek Villas, a 98% interest in Hubbard's Ridge, Hill Top Homes and Compton Townhouses and a 98.99% interest in Cutler Canal II, Diamond Street, Papillion Heights and Brookland Park Plaza. Hubbard's Ridge is comprised of seven separate three-story buildings on approximately 6.5 acres. The buildings are wood-framed structures on post-tensioned flat slab grade foundations and have white stucco exteriors with asphalt shingles on sloped roofs. Each building contains an average of 28 units. The unit mix consists of 164 one-bedroom units ranging in size from 657 square feet to 783 square feet and 32 two-bedroom units ranging in size from 1,145 square feet to 1,167 square feet. Cutler Canal II is comprised of 216 units in 13 two-story garden-style residential buildings on approximately 9.4 acres. It borders on a Metro-Dade Water Management District Canal on the east with approximately 1,200 square feet of frontage giving certain units waterfront views. Each building has a laundry room and two storage rooms. There are three basic floor plans with sizes ranging 4 from 700 square feet for a one-bedroom apartment to 1,100 square feet for a three-bedroom unit. Diamond Street consists of 48 units in 16 buildings. The buildings are three-story brownstone row houses with historic features and similar layouts. Of the 48 apartment units, 46 are two-bedroom apartment units and two are efficiency apartment units. Papillion Heights consists of two buildings, each containing 24 units. The buildings are 2 1/2 stories of wood frame and brick exterior with pitched roofs. Of the total 48 apartment units, two are one-bedroom units and 46 are two-bedroom units. Hill Top Homes is comprised of a two-story building surrounded by 13 one-story fourplexes which are brick with wood siding and pitched roofs. The buildings are surrounded by a security gate of brick columns and wrought iron fencing with a guard house at the entrance. Of the total 171 apartment units, 18 are three-bedroom/one bath apartment units, each comprising approximately 925 square feet; 52 are two-bedroom/two bath apartment units, each comprising approximately 1,100 square feet; 98 are two-bedroom/one bath apartment units, each comprising approximately 936 square feet; and three are one-bedroom/one bath apartment units, each comprising approximately 1,000 square feet. Summer Creek Villas consists of 61 concrete block and stucco buildings housing 770 apartment units situated on approximately 60 acres of residential-planned unit-development zoned land. 182 of the units are one-bedroom/one-bath apartments, each comprising 570 square feet; 372 are two-bedroom/one-bath apartments, each comprising 773 square feet; 144 are three-bedroom/two-bath apartments, each comprising 980 square feet; and 72 are three-bedroom/two-bath villa units, each comprising 1,050 square feet. In September 1997, the Local General Partner for Summer Creek Villas decided to divide the apartment complex into two individual entities called the Arbors and the Crossings. Brookland Park Plaza is a three-level brick building and is a registered historic landmark. The building is comprised of stucco and brick exterior and a sloped red glazed tile roof. It is a 77-unit development with 68,564 net rentable square feet. All 77 units are one-bedroom apartment units each comprising approximately 890 square feet. Each unit contains a refrigerator, range oven, carpeting and air-conditioning. Brookland Park Plaza also maintains a community room for tenants. The Compton Townhouses consists of six two-story buildings containing a total of 39 townhouse units. Four of the buildings contain six units; one building has seven units; and one has eight units. All units have three bedrooms and two-and-one-half baths. Total gross building area is 52,595 square feet; net rentable area is 47,814 square feet. The average net area of the subject units is 1,226 square feet. For additional information describing the Registrant's properties and encumbrances, see Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and Schedule III - Real Estate and Accumulated Depreciation. Item 3. Legal Proceedings None. Item 4. Submission of Matters to a Vote of Limited Partners None. 5 PART II Item 5. Market for the Registrant's BUC$ and Related Limited Partner Matters As of May 9, 2003, there were 2,235 BUC$ holders of record owning a total of 38,125 BUC$. Additionally, the General Partner holds one BUC$. A significant secondary market for BUC$ has not developed, and it is not expected that one will develop in the future. There are also certain restrictions set forth in the Partnership Agreement limiting the ability of a limited partner to transfer BUC$. There are no material restrictions upon the Registrant's present or future ability to make distributions in accordance with the provisions of the Partnership Agreement; however, the Registrant has paid no distributions from operations or otherwise since inception. No distributions are anticipated in the foreseeable future. 6 Item 6. Selected Financial Data. The following table presents selected financial data of the Registrant. This data should be read in conjunction with the consolidated financial statements of the Registrant and the notes thereto set forth in Item 8.

~~FOR~~For ~~THE~~the ~~YEARS~~Years ~~ENDED~~ended ~~MARCH~~March 31, -------------------------------------------------------------------------- OPERATIONS 2003 2002 2001 2000 1999 ~~1998~~ ---------- ------------ ------------ ------------ ------------ ------------ Rental and other ~~income~~in- $ 10,803,448 $ 10,333,034 $ 9,761,295 $ 7,915,054 $ 9,079,891 $come ~~9,517,723~~ ============ ============ ============ ============ ============ Interest income $ 15,827 $ 38,065 $ 39,888 $ 24,826 $ 32,104 ~~$ 51,349~~ ============ ============ ============ ============ ============ Interest expense $ 4,747,765 $ 4,689,172 $ 4,729,740 $ 4,408,997 $ 4,354,244 ~~$ 4,362,919~~ ============ ============ ============ ============ ============ Depreciation and ~~amortization~~amor- tization expenses $ 2,429,909 $ 2,447,028 $ 2,445,646 $ 2,433,206 $ 2,428,529 ~~$ 2,448,723~~ ============ ============ ============ ============ ============ Loss before minority interest and ~~extraordinary~~extraord- inary item $ (4,776,862) $ (4,815,277) $ (5,563,134) $ (5,435,229) $ (4,270,762) ~~$(3,101,859)~~ ============ ============ ============ ============ ============ Minority interest in loss of local partnerships $ 1,139,863 $ 1,207,124 $ 1,135,959 $ 637,201 $ 496,863 ~~$ 428,961~~ ============ ============ ============ ============ ============ Loss before ~~extraordinary~~extraordi- nary item $ (3,636,999) $ (3,608,103) $ (4,427,175) $ (4,798,028) $ (3,773,899) ~~$(2,672,898)~~ ============ ============ ============ ============ ============ Extraordinary item -- forgiveness of ~~indebtedness~~indebt- edness $ 0 $ 0 $ 833,002 $ 1,656,843 $ 809,460 ~~$ 0~~ ============ ============ ============ ============ ============ Net loss $ (3,636,999) $ (3,608,103) $ (3,594,173) $ (3,141,185) $ (2,964,439) ~~$(2,672,898)~~ ============ ============ ============ ============ ============ Loss before ~~extraordinary~~extraordi- nary item per limited partnership unit $ (93.49) $ (94.17) $ (115.54) $ (125.22) $ (98.49) ~~$ (69.55)~~ Extraordinary item per limited partnership unit 0 0 21.74 43.24 21.13 0 ------------ ------------ ------------ ------------ ------------ Net loss per limited partner BUC$ $ (93.49) $ (94.17) $ (93.80) $ (81.98) $ (77.36) ~~$ (69.55)~~ ============ ============ ============ ============ ============ Total assets $ 58,143,529 $ 60,492,083 $ 62,137,819 $ 64,662,321 $ 65,885,709 ~~$68,835,813~~ ============ ============ ============ ============ ============ Mortgage notes payable $ 45,294,215 $ 46,015,770 $ 43,955,708 $ 44,569,822 $ 45,127,197 ~~$45,632,851~~ ============ ============ ============ ============ ============

7 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources ------------------------------- The Registrant invested in eight Local Partnerships that are owners of affordable multi-family residential complexes. The Local Partnerships are operated in accordance with the rules and regulations of Section 42 of the Internal Revenue Code in order to protect the Housing Tax Credits. The Registrant's primary source of funds is rental revenues, which are fully utilized at the property level. As of March 31, 2003, there was approximately $325,000 in working capital reserves available to fund Registrant level expenses. The Registrant is dependent upon the support of the General Partner and certain of its affiliates in order to meet its obligations at the Registrant level. The General Partner and these affiliates have agreed to continue such support for the foreseeable future. At the Local Partnership level, certain Local General Partners and/or their affiliates have made deficit guaranty agreements with respect to the Local Partnerships which, under certain circumstances, required the Local General Partners and/or their affiliates to fund cash flow deficits. These operating deficit advances do not bear interest and are repayable by the Local Partnership in accordance with the respective deficit guaranty agreements. In addition, the Registrant's financial statements as of March 31, 2003 and 2002 also reflect payables of $282,000 under operating deficit guaranty agreements at Hill Top Homes, which have expired. As of March 31, 2003, all operating deficit guaranty agreements have expired. Summer Creek Villas Local Partnership ------------------------------------- The Summer Creek Villas has experienced lower than expected economic occupancy levels over the course of the last several years, which has resulted in recurring losses from operations and has adversely affected the liquidity of Summer Creek Villas. Despite an increase in rent levels during 2002, Summer Creek Villas' operations are impeded by the inability to raise rents sufficiently to pay for the operating and debt costs. Summer Creek Villas has been unable to obtain maximum rents as potential residents are restricted based on county median income levels, which limit the maximum income that a prospective resident can earn. The Summer Creek Villas has been obligated, since 1996, to repay significant amounts of principal on its mortgage. During 2002 and 2001, in an effort to improve occupancy, the Summer Creek Villas invested funds to improve the physical condition of the property. Such improvements primarily consisted of painting, landscaping, new playground, asphalt repairs, and individual units fixture and finish replacements. The Local General Partner of Summer Creek Villas was formerly obligated to fund operating deficits under two separate operating deficit guaranty agreements. Total advances made by the Local General Partner under the operating deficit guaranties totaled $2,742,460. In addition, the Local General Partner has made voluntary loans in excess of its obligations under the guaranties to fund operations of $1,645,074, even though as of December 31, 1997, the Local General Partner was no longer required to fund operations of Summer Creek Villas. Effective January 1, 1999, Summer Creek Villas entered into a funding agreement with Palm Beach Investor, L.P. (the Class C limited partner) which provided for a series of loans to be made to Summer Creek Villas in each of the years 1999, 2000 and 2001, in amounts not to exceed $2,000,000 in the aggregate. On September 9, 2002, Summer Creek Villas entered into a second funding agreement with the Class C limited partner which provides for a second series of loans to Summer Creek Villas in the years 2002, 2003 and 2004, in amount not exceed $1,500,000 in aggregate. Although no formal agreements have been reached with the other partners, additional loans from the Registrant (which is the Class A 8 limited partner) are expected to be obtained in accordance with the loans to be provided under the funding agreement. Loans made in 2002 and 2001 under these funding agreements to fund operating deficit's total $2,774,980 and $1,525,000, respectively. Of such amounts, $2,046,565 and $1,175,000 were loaned by the Registrant in 2002 and 2001, respectively. These loans are expected to enable the Summer Creek Villas to continue operations and make payments on its mortgage while management endeavors to improve occupancy rates and rental rates to sufficient levels to sustain operations independent of such funding. During 2002, the management agent, an affiliate of the Local General Partner of Summer Creek Villas, was reimbursed by Summer Creek Villas for operating advances, made in the current and prior years, in the form of deferred management fees and unreimbursed payroll in the net amount of $720,678. As of December 31, 2002 and 2001, the management agent was due $491,988 and $1,212,666, respectively. The management agent is not obligated to provide such advances. As of March 31, 2003 and 2002, the consolidated financial statements include total assets of $30,772,961 and $32,067,406, respectively, total liabilities of $38,315,144 and $36,100,522, respectively, and a minority interest of $1,935,146 and $796,380, respectively, attributable to this Local Partnership. Summer Creek Villas' ability to continue its operations is dependent upon management achieving the plans described in the foregoing paragraphs. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Any adjustments would be limited solely to Summer Creek Villas' financial statements. Results of Operations --------------------- The operating results of the Local Partnerships consolidated herein are for the twelve-month periods ended December 31. Information disclosed below with respect to each Local Partnership is consistent with this method. Fiscal 2003 vs. Fiscal 2002 --------------------------- Rental income increased approximately $443,000 for the year ended March 31, 2003 as compared to 2002, primarily due to rental rate increases. Interest income decreased approximately $22,000 for the year ended March 31, 2003 as compared to 2002, primarily due to lower interest rates on cash and cash equivalent balances at the Local Partnerships and Registrant level. Taxes and insurance increased approximately $216,000 for the year ended March 31, 2003 as compared to 2002, primarily due to an increase in insurance premiums at the Local Partnerships. Fiscal 2002 vs. Fiscal 2001 --------------------------- Rental income increased approximately $524,000 for the year ended March 31, 2002 as compared to 2001, primarily due to rental rate increases and an increase in occupancy at Summer Creek Villas. No other operating accounts had significant changes. 9 Critical Accounting Estimates ----------------------------- The preparation of consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of accounting estimate considered critical by the Registrant. Impairment of Long-Lived Assets ------------------------------- The Registrant is required to assess potential impairments to its long-lived assets, which is primarily property and equipment. If impairment indicators are present, the Registrant must measure the fair value of the assets in accordance with Statement of Financial Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." to determine if adjustments are to be recorded. Taxes ----- The Partnership is not required to provide for, or pay, any Federal or state income taxes. Income tax attributes that arise from its operations are passed directly to the partners. The Partnership may be subject to other state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership's year ends on December 31. 10 Property Information -------------------- The Registrant currently holds interests in eight Local Partnerships. The following schedule gives specific details about the related Properties.

~~REGISTRANT~~Registrant'Ss ~~GROSS~~Gross ~~CARRYING~~Carrying ~~OCCUPANCY~~Occupancy ~~LOW~~Low-~~INCOME~~Income ~~VALUE~~Value OFof ~~RATE~~Rate ATat ~~HOUSING~~Housing ~~TAX~~Tax ~~CREDIT~~Credit ~~NUMBER~~Number ~~PROPERTY~~Property ATat ~~DECEMBER~~December 31, ~~FOR~~for ~~THE~~the ~~YEAR~~Year ~~ENDED~~Ended ~~PROPERTY~~Property (a) OFof ~~UNITS~~Units ~~MARCH~~March 31, 2003 2002 ~~2001~~ (c) ~~DECEMBER~~December 31, ~~2001~~2002 -------------------------- ----------- -------------- ------------ ------------------ RMB Limited Partnership 196 $ 5,310,849 9990% $ 0 (Hubbard's Ridge) Garland, TX Cutler Canal II 216 11,~~450~~489,~~136~~324 9997% ~~19,484~~0 Associates, Ltd. Miami, FL Diamond Street Venture (b) 48 2,912,536 9698% 0 Philadelphia, PA Papillion Heights 48 2,206,424 8590% ~~60,174~~0 Apartments L.P. Papillion, NE Hill Top Homes 171 8,104,661 9174% ~~177,304~~0 Apartments Limited Partnership Arlington, TX Palm Beach 770 40,832,871 93% 144,~~319,990~~027 Apartments, Ltd. (Summer Creek Villas) West Palm Beach, FL Brookland Park Plaza 77 6,449,682 9994% ~~31,564~~0 Limited Partnership Richmond, VA Compton Townhouses 39 2,445,632 97% ~~205~~82,~~620~~161 Limited Partnership -------------- ----------- Cincinnati, OH $ 79,~~712~~751,~~791~~979 $1 126,~~814,136~~188 ============== ===========

2003 2002 2001 ~~2000~~ ------------ ---------- ---------- Hubbard's Ridge $ ~~427~~329,000 $ ~~403~~427,000 $ ~~312~~403,000 Cutler Canal II ~~783~~737,000 ~~675~~783,000 ~~540~~675,000 Diamond Street 5471,000 1654,000 9616,000 Papillion Heights 6472,000 8964,000 7689,000 Hill Top Homes ~~429~~365,000 ~~437~~429,000 ~~387~~437,000 Summer Creek Villas ~~679~~871,000 99679,000 6399,000 Brookland Park Plaza ~~160~~192,000 ~~193~~160,000 ~~205~~193,000 Compton Townhouses ~~132~~151,000 ~~138~~132,000 ~~141~~138,000 ---------- ---------- ---------- $2,~~728~~788,000 $2,~~050~~728,000 $12,~~820~~050,000 ========== ========== ==========

Item 7A. Quantitative and Qualitative Disclosure About Market Risk. Not applicable. 12 Item 8. Financial Statements and Supplementary Data.

~~SEQUENTIAL~~Sequential ~~PAGE~~Page ----------~~---~~ (a) 1. Financial Statements Independent Auditors' Reports 14 Consolidated Balance Sheets as of March 31, ~~2002~~2003 and ~~2001~~2002 3233 Consolidated Statements of Operations for the years ended March 31, ~~2002~~2003, ~~2001~~2002 and ~~2000~~2001 3334 Consolidated Statements of Changes in Partners' Capital (Deficit) for the years ended March 31, ~~2002~~2003, ~~2001~~2002 and ~~2000~~2001 3435 Consolidated Statements of Cash Flows for the years ended March 31, ~~2002~~2003, ~~2001~~2002 and ~~2000~~2001 3536 Notes to Consolidated Financial Statements 3637

13 INDEPENDENT AUDITORS' REPORT To the Partners of Patriot Tax Credit Properties L.P. and Subsidiaries We have audited the accompanying consolidated balance sheets of Patriot Tax Credit Properties L.P. and Subsidiaries as of March 31, 2003 and 2002, and the related consolidated statements of operations, changes in partners' capital (deficit) and cash flows for the years ended March 31, 2003, 2002 and 2001. The consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Patriot Tax Credit Properties L.P. and Subsidiaries as of March 31, 2003, 2002, and the results of their operations, changes in Partners' capital (deficit), and their cash flows for the years ended March 31, 2003, 2002 and 2001, in conformity with accounting principles generally accepted in the United States of America. Our report on the 2003 financial statements of a subsidiary included an explanatory paragraph describing conditions that raised substantial doubt regarding its ability to continue as a going concern, as discussed in note 10 to the consolidated financial statements. REZNICK FEDDER & SILVERMAN Bethesda, Maryland May 15, 2003 14 [Letterhead of Dickey, Wolf & Humbard, LLC] INDEPENDENT AUDITORS' REPORT To The Partners RMB Limited Partnership We have audited the accompanying balance sheets of RMB LIMITED PARTNERSHIP (a Texas Limited Partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' equity/(deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RMB LIMITED PARTNERSHIP as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ DICKEY, WOLF & HUMBARD, LLC Certified Public Accountants Harrisonville, MO January 23, 2003 15 [Letterhead of Dickey, Wolf & Humbard, LLC] INDEPENDENT AUDITORS' REPORT To The Partners RMB Limited Partnership We have audited the accompanying balance sheets of RMB LIMITED PARTNERSHIP (a Texas Limited Partnership) as of December 31, 2001 and 2000, 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RMB LIMITED PARTNERSHIP as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ DICKEY, WOLF & HUMBARD, LLC Certified Public Accountants Harrisonville, MO January 23, 2002 16 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the General Partners Cutler Canal II Associates, Ltd. We have audited the accompanying balance sheet of Cutler Canal II Associates, Ltd. as of December 31, 2002, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Cutler Canal II Associates, Ltd. as of and for the year ended December 31, 2001, were audited by other auditors whose report dated February 13, 2002 expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cutler Canal II Associates, Ltd. as of December 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 17 through 18 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Reznick Fedder & Silverman Atlanta, Georgia January 20, 2003 17 [Letterhead of KPMG] INDEPENDENT AUDITORS' REPORT To the General Partners Cutler Canal II Associates, Ltd. We have audited the accompanying balance sheet of Cutler Canal II Associates, Ltd. as of December 31, 2001, 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cutler Canal II Associates, Ltd. as of December 31, 2002, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in the Schedule of Certain Expenses 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 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/ KPMG Greenville, South Carolina February 13, 2002 18 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the Partners Cutler Canal II Associates, Ltd. We have audited the accompanying balance sheets of Cutler Canal II Associates, Ltd., as of December 31, 2000 and 1999, 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. 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 Cutler Canal II Associates, Ltd., as of December 31, 2001 and 1999, and the results of its operations, and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 18 and 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Reznick Fedder & Silverman Atlanta, Georgia January 30, 2001 19 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the Partners Diamond Street Venture We have audited the accompanying balance sheet of Diamond Street Venture as of December 31, 2002 and 2001, and the related statements of profit and loss, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position Diamond Street Venture as of December 31, 2002 and 2001, and the results of its operations, the changes in partners' equity (deficit) and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards we have also issued our report for the year ended December 31, 2002, dated January 24, 2003, on our consideration of Diamond Street Venture's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audits were made for the purpose of forming an opinion on the basis financial statements taken as a whole. The supplemental information on pages 28 through 31 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Reznick Fedder & Silverman Baltimore, Maryland January 24, 2003 20 [Letterhead of Ziner, Kennedy & Lehan LLP] INDEPENDENT AUDITORS' REPORT To the Partners of Diamond Street Venture We have audited the accompanying balance sheets of Diamond Street Venture (a Pennsylvania limited partnership) as of December 31, 2000 and 1999, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners and contracted management agent, as well as evaluating the overall financial statement presentation. We believe that our audits 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 Street Venture as of December 31, 2001 and 1999, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Ziner, Kennedy & Lehan LLP Boston, Massachusetts January 29, 2001 21 [Letterhead of Schultz, Durham & Rapp, P.C.] INDEPENDENT AUDITOR'S REPORT To the Partners Papillion Heights Apartments, L.P. (A Limited Partnership) Springfield, Missouri We have audited the balance sheets of Papillion Heights Apartments, L.P. (a limited partnership), as of December 31, 2002 and 2001, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Papillion Heights Apartments, L.P. (a limited partnership) as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Schultz, Durham & Rapp, P.C. Springfield, Missouri February 6, 2003 22 [Letterhead of Schultz, Durham & Rapp, P.C.] INDEPENDENT AUDITOR'S REPORT To the Partners Papillion Heights Apartments, L.P. (A Limited Partnership) Springfield, Missouri We have audited the balance sheets of Papillion Heights Apartments, L.P. (a limited partnership), as of December 31, 2001 and 2000, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Papillion Heights Apartments, L.P. (a limited partnership) as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Schultz, Durham & Rapp, P.C. Springfield, Missouri February 12, 2002 23 [Letterhead of Dickey, Wolf & Humbard, LLC] INDEPENDENT AUDITORS' REPORT To the Partners Hill Top Homes Apartments Limited Partnership We have audited the accompanying balance sheets of HILL TOP HOMES APARTMENTS LIMITED PARTNERSHIP, (a Texas Limited Partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' equity/(deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of HILL TOP HOMES APARTMENTS LIMITED PARTNERSHIP as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Dickey, Wolf & Humbard, LLC Certified Public Accountants Harrisonville, MO January 23, 2003 24 [Letterhead of Dickey, Wolf & Humbard, LLC] INDEPENDENT AUDITORS' REPORT To the Partners Hill Top Homes Apartments Limited Partnership We have audited the accompanying balance sheets of HILL TOP HOMES APARTMENTS LIMITED PARTNERSHIP, (a Texas Limited Partnership) as of December 31, 2001 and 2000, and the related statements of operations, partners' equity/(deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the 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 HILL TOP HOMES APARTMENTS LIMITED PARTNERSHIP as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Dickey, Wolf & Humbard, LLC Certified Public Accountants Harrisonville, MO January 23, 2002 25 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the Partners Palm Beach Apartments, Ltd. We have audited the accompanying balance sheets of Palm Beach Apartments, Ltd. as of December 31, 2002 and 2001, and the related statements of operations, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the 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 Palm Beach Apartments, Ltd., as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note B to the financial statements, the Partnership has suffered recurring losses from operations and has a capital deficiency that raises substantial doubt regarding its ability to continue as a going concern. Management's plans in connection with these matters are also described in Note B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 18 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Reznick Fedder & Silverman Atlanta, Georgia February 7, 2003 26 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the Partners Palm Beach Apartments, Ltd. We have audited the accompanying balance sheets of Palm Beach Apartments, Ltd. as of December 31, 2001 and 2000, 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Palm Beach Apartments, Ltd., as of December 31, 2002 and 2001, 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. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note B to the financial statements, the Partnership has suffered recurring losses from operations and has a capital deficiency that raises substantial doubt regarding its ability to continue as a going concern. Management's plans in connection with these matters are also described in Note B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 19 and 20 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Reznick Fedder & Silverman Atlanta, Georgia February 5, 2002 27 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the Partners Brookland Park Plaza Limited Partnership We have audited the accompanying balance sheet of Brookland Park Plaza Limited Partnership as of December 31, 2002, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Brookland Park Plaza Limited Partnership as of December 31, 2002, and the results of its operations, the changes in partners' equity (deficit) and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs," we have also issued reports dated January 27, 2003 on our consideration of Brookland Park Plaza Limited Partnership's internal control and on its compliance with specific requirements applicable to major HUD programs and fair housing and non-discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information on pages 21 through 26 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/ Reznick Fedder & Silverman Bethesda, Maryland Taxpayer Identification Number: 52-1088612 January 27, 2003 Lead Auditor: Renee G. Scruggs 28 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the Partners Brookland Park Plaza Limited Partnership We have audited the accompanying balance sheet of Brookland Park Plaza Limited Partnership as of December 31, 2001, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Brookland Park Plaza Limited Partnership as of December 31, 2001, and the results of its operations, the changes in partners' equity (deficit) and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 21 through 25 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 and the "Consolidated Audit Guide for Audits of HUD Programs," we have also issued reports dated January 17, 2002 on our consideration of Brookland Park Plaza Limited Partnership's internal control and on its compliance with specific requirements applicable to major HUD programs and fair housing and non-discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. /s/ Reznick Fedder & Silverman Bethesda, Maryland Taxpayer Identification Number: 52-1088612 January 17, 2002 Lead Auditor: Renee G. Scruggs 29 [Letterhead of Reznick Fedder & Silverman] INDEPENDENT AUDITORS' REPORT To the Partners Brookland Park Plaza Limited Partnership We have audited the accompanying balance sheet of Brookland Park Plaza Limited Partnership as of December 31, 2000, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Brookland Park Plaza Limited Partnership as of December 31, 2000, and the results of its operations, the changes in partners' equity (deficit) and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 21 through 25 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 and the "Consolidated Audit Guide for Audits of HUD Programs," we have also issued reports dated January 16, 2001 on our consideration of Brookland Park Plaza Limited Partnership's internal control and on its compliance with specific requirements applicable to major HUD programs and fair housing and non-discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. /s/ Reznick Fedder & Silverman Bethesda, Maryland Taxpayer Identification Number: 52-1088612 January 16, 2001 Lead Auditor: Renee G. Scruggs 30 [Letterhead of Barnes, Dennig & Co., Ltd.] Report of Independent Certified Public Accountants To the Partners Compton Townhouses Limited Partnership (An Ohio Limited Partnership) We have audited the accompanying balance sheets of Compton Townhouses Limited Partnership (An Ohio Limited Partnership), as of December 31, 2002 and 2001, and the related statements of operations, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 Compton Townhouses Limited Partnership (An Ohio Limited Partnership), as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Barnes, Dennig & Co., Ltd. Cincinnati, Ohio January 20, 2003 31 [Letterhead of Barnes, Dennig & Co., Ltd.] Report of Independent Certified Public Accountants To the Partners Compton Townhouses Limited Partnership (An Ohio Limited Partnership) We have audited the accompanying balance sheets of Compton Townhouses Limited Partnership (An Ohio Limited Partnership), as of December 31, 2001 and 2000, and the related statements of operations, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 Compton Townhouses Limited Partnership (An Ohio Limited Partnership), as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Barnes, Dennig & Co., Ltd. Cincinnati, Ohio January 22, 2002 32 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS

~~MARCH~~March 31, ---------------------------- 2003 2002 ~~2001~~ ------------ ------------ Investment in property: Land $ 4,005,633 $ 4,005,633 Building and improvements 75,~~707~~746,~~158~~346 75,~~644~~707,~~277~~158 Accumulated depreciation (2426,~~091~~237,~~263~~792) (2124,~~934~~091,~~135~~263) ------------ ------------ Net investment in property 53,514,187 55,621,528 ~~57,715,775~~ Cash and cash equivalents 1,344,954 1,005,628 ~~667,371~~ Cash and cash equivalents held in escrow 1,~~681~~318,~~511~~344 1,~~487~~681,~~333~~511 Deferred financing costs, net 1,~~879~~596,~~582~~650 21,~~039~~879,~~513~~582 Other assets 369,394 303,834 ~~227,827~~ ------------ ------------ Total assets $ 6058,~~492~~143,~~083~~529 $ 6260,~~137~~492,~~819~~083 ============ ============ LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) Liabilities: Mortgage notes payable $ 4645,~~015~~294,~~770~~215 $ 4346,~~955~~015,~~708~~770 Accrued interest payable 2,~~040~~122,~~908~~418 2,~~043~~040,~~728~~908 Other accrued expenses and liabilities 12,~~775~~643,~~134~~043 1,~~523~~775,~~198~~134 Due to local general partners and affiliates of local partnerships 45,~~651~~085,~~838~~535 4,~~165~~651,~~340~~838 Development fees payable 1,151,510 1,~~450~~151,~~709~~510 Real estate taxes payable 179,876 81,878 ~~139,405~~ Due to General Partner and its affiliates 8,234,527 6,565,471 ~~5,834,513~~ ------------ ------------ Total liabilities 64,711,124 62,282,509 ~~59,112,601~~ ------------ ------------ Minority interests in local partnerships (1,746,771) (606,601) ~~600,940~~ ------------ ------------ Partners' capital (deficit): Limited partners (38,125 BUC$ issued and outstanding) (15,~~926~~545,~~627~~441) (1,~~663~~926,~~435~~627) General partner (1 BUC$ issued and outstanding) 724,617 742,802 ~~760,843~~ ------------ ------------ Total partners' capital (deficit) (4,820,824) (1,183,825) ~~2,424,278~~ ------------ ------------ Total liabilities and partners' capital (deficit) $ 6058,~~492~~143,~~083~~529 $ 6260,~~137~~492,~~819~~083 ============ ============

See accompanying notes to consolidated financial statements. 33 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

~~YEAR~~Year ~~ENDED~~Ended ~~MARCH~~March 31, -------------------------------------------- 2003 2002 2001 ~~2000~~ ------------ ------------ ------------ Revenues Rental income $ 9,~~530~~973,~~921~~773 $ 9,~~006~~530,~~505~~921 $ 79,~~389~~006,~~657~~505 Other income 829,675 802,113 754,790 ~~525,397~~ Interest income 15,827 38,065 39,888 ~~24,826~~ ------------ ------------ ------------ 10,819,275 10,371,099 9,801,183 ~~7,939,880~~ ------------ ------------ ------------ Expenses Interest 4,747,765 4,689,172 4,729,740 ~~4,408,997~~ Depreciation and amortization 2,429,909 2,447,028 2,445,646 ~~2,433,206~~ Operating and other 914,339 918,938 921,562 ~~929,421~~ Taxes and insurance 1,374,659 1,158,871 1,079,256 ~~1,012,106~~ Repairs and maintenance 2,749,023 2,540,544 2,618,238 ~~2,004,251~~ General and administrative 2,699,222 2,762,046 2,929,956 ~~2,028,747~~ Property management fees 440,564 424,360 395,297 ~~304,317~~ Partnership management fees 240,656 245,367 244,622 ~~254,064~~ ------------ ------------ ------------ Total expenses 15,596,137 15,186,326 15,364,317 ~~13,375,109~~ ------------ ------------ ------------ Loss before minority interest and extraordinary item (4,~~815~~776,~~277~~862) (54,~~563~~815,~~134~~277) (5,~~435~~563,~~229~~134) Minority interest in loss of local partnerships 1,139,863 1,207,124 1,135,959 ~~637,201~~ ------------ ------------ ------------ Loss before extraordinary item (3,~~608~~636,~~103~~999) (43,~~427~~608,~~175~~103) (4,~~798~~427,~~028~~175) Extraordinary item -- forgiveness of indebtedness income (Note 10) 0 0 833,002 ~~1,656,843~~ ------------ ------------ ------------ Net loss $ (3,~~608~~636,~~103~~999) $ (3,~~594~~608,~~173~~103) $ (3,~~141~~594,~~185~~173) ============ ============ ============ Loss before extraordinary item -- limited partners $ (3,~~590~~618,~~062~~814) $ (43,~~405~~590,~~039~~062) $ (4,~~774~~405,~~038~~039) Extraordinary item-limited partners 0 0 828,837 ~~1,648,559~~ ------------ ------------ ------------ Net loss-limited partners $ (3,~~590~~618,~~062~~814) $ (3,~~576~~590,~~202~~062) $ (3,~~125~~576,~~479~~202) ============ ============ ============ Number of limited partnership units outstanding 38,125 38,125 38,125 ============ ============ ============ Loss before extraordinary item per limited partnership unit $ (94.1792) $ (~~115~~94.5417) $ (~~125~~115.2254) Extraordinary item per limited partnership unit 0 0 21.74 ~~43.24~~ ------------ ------------ ------------ Net loss per limited partnership unit $ (94.1792) $ (9394.8017) $ (8193.9880) ============ ============ ============

See accompanying notes to consolidated financial statements. 34 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)

~~LIMITED~~Limited ~~GENERAL~~General ~~TOTAL~~Total ~~PARTNERS~~Partners ~~PARTNER~~Partner BUC$ ----------- ----------- ----------- ----------- Partners' capital April 1, ~~1999~~2000 $ 96,~~159~~018,~~636~~451 $ 85,~~365~~239,~~116~~637 $~~794~~ 778,~~520~~814 38,126 Net ~~loss~~Loss (3,~~141~~594,~~185~~173) (3,~~125~~576,~~479~~202) (1517,~~706~~971) 0 ----------- ----------- ----------- ----------- Partners' capital March 31, ~~2000~~2001 62,~~018~~424,~~451~~278 51,~~239~~663,~~637~~435 ~~778~~760,~~814~~843 38,126 Net Loss (3,~~594~~608,~~173~~103) (3,~~576~~590,~~202~~062) (1718,~~971~~041) 0 ----------- ----------- ----------- ----------- Partners' capital (deficit) March 31, ~~2001~~2002 2(1,~~424~~183,~~278~~825) (1,~~663~~926,~~435~~627) ~~760~~742,~~843~~802 38,126 Net Loss (3,~~608~~636,~~103~~999) (3,~~590~~618,~~062~~814) (18,~~041~~185) 0 ----------- ----------- ----------- ----------- Partners' capital (deficit) March 31, ~~2002~~2003 $(14,~~183~~820,~~825~~824) $(15,~~926~~545,~~627~~441) $~~742~~ 724,~~802~~617 38,126 =========== =========== =========== ===========

See accompanying notes to consolidated financial statements. 35 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

~~YEAR~~Year ~~ENDED~~Ended ~~MARCH~~March 31, ----------------------------------------- 2003 2002 2001 ~~2000~~ ----------- ----------- ----------- Cash flows from operating activities: Net loss $(3,~~608~~636,~~103~~999) $(3,~~594~~608,~~173~~103) $(3,~~141~~594,~~185~~173) ----------- ----------- ----------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,429,909 2,447,028 2,445,646 ~~2,433,206~~ Minority interest in loss of local partnerships (1,139,863) (1,207,124) (1,135,959) ~~(637,201)~~ Forgiveness of debt (Note 9) 0 0 (833,002) Decrease (~~1,656,843~~increase) ~~Increase~~ in cash held in escrow 363,167 (194,178) (203,440) ~~(275,974)~~Increase (~~Decrease~~decrease) ~~increase~~ in real estate taxes payable 97,998 (57,527) 15,391 ~~18,696~~Increase (~~Decrease~~decrease) ~~increase~~ in accrued interest payable 81,510 (2,820) 765,364 ~~384,984~~ (Increase) decrease in other assets (66,008) (76,455) 79,511 ~~(29,541)~~Increase (~~Increase~~decrease) ~~decrease~~ in other accrued expenses and liabilities 1,084,764 (390,253) (230,107) ~~36,834~~ ----------- ----------- ----------- Total adjustments 2,851,477 518,671 903,404 ~~274,161~~ ----------- ----------- ----------- Net cash used in operating activities (785,522) (3,089,432) (2,690,769) ~~(2,867,024)~~ ----------- ----------- ----------- Cash flows from investing activities: Investments in property (39,188) (62,881) (86,750) ~~(201,936)~~ ----------- ----------- ----------- Net cash used in investing activities (39,188) (62,881) (86,750) ~~(201,936)~~ ----------- ----------- ----------- Cash flows from financing activities Proceeds from mortgage notes 0 4,600,000 0 0 Payments on mortgage notes (721,555) (2,539,938) (614,114) ~~(557,375) Advances from Local General Partners 0 0 326,000 Advances from General Partner 0 0 18,000~~ Increase in deferred costs 0 (129,521) 0 0 Decrease in development fees payable 0 (299,199) 0 Advance from General Partner 1,452,201 1,373,146 0 Increase in due to Local General Partners and affiliates of Local Partnerships, General Partner and its affiliates 161,~~859~~202 557,~~645~~174 2,249,564 3Decrease in due to Local General Partners and affiliates of Local Partnerships,~~285~~ General Partner and its affiliates (355,~~292~~920) (420,675) 0 Advance from local limited partner ~~0 852~~728,~~935~~415 ~~700~~350,000 852,935 Distribution to minority interest (~~417~~307) (~~401~~417) (~~590~~401) ----------- ----------- ----------- Net cash provided by financing activities 1,164,036 3,490,570 2,487,984 ~~3,771,327~~ ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents 339,326 338,257 (289,535) ~~702,367~~ Cash and cash equivalents at beginning of year 1,005,628 667,371 956,906 ~~254,539~~ ----------- ----------- ----------- Cash and cash equivalents at end of year $ 1,344,954 $ 1,005,628 $ 667,371 ~~$ 956,906~~ =========== =========== =========== Supplemental disclosures of cash flow ~~information~~infor- mation: Interest paid $ 34,~~020~~666,~~853~~255 $ 3,~~570~~020,~~449~~853 $ 3,~~981~~570,~~754~~449 =========== =========== ===========

See accompanying notes to consolidated financial statements. 36 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 NOTE 1 - General Patriot Tax Credit Properties L.P., a Delaware limited partnership (the "Partnership"), was formed on May 3, 1989, and will terminate on December 31, 2029, unless terminated sooner under the provisions of the Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"). The Partnership was formed to invest as a limited partner in other partnerships ("Local Partnerships" or "subsidiaries") owning apartment complexes ("Apartment Complexes" or "Properties") that are eligible for the low-income housing tax credit or the historic rehabilitation tax credit ("Tax Credit"). The general partner of the Partnership is RCC Partners 96, L.L.C. (the "General Partner") and is an affiliate of Related Capital Company ("RCC"). Independence SLP L.P. ("SLP"), an affiliate of RCC, is the special limited partner. The SLP acts as special limited partner of each Local Partnership entitling it to certain rights with respect to the operation and management of each Local Partnership. At March 31, 2003, the Partnership has investments in eight Local Partnerships. NOTE 2 - Summary of Significant Accounting Policies a) Basis of Accounting and Principles of Consolidation The books and records of the Partnership are maintained on the accrual basis of accounting in accordance with accounting principle generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principle generally accepted in the United States of America requires the General Partner to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the assets, liabilities and results of operations of the subsidiaries. All subsidiaries have fiscal years ending December 31. Intercompany transactions have been eliminated. Minority interest in Local Partnerships represents the minority partners' share of the net assets of the Local Partnerships. b) Investment in Property The impairment of Properties to be held and used is determined to exist when estimated amounts recoverable through future operations on an undiscounted basis are below the Properties' carrying value. If a property is determined to be impaired, it is recorded at the lower of its carrying value or its estimated fair value. The determination of estimated fair value is based not only upon future cash flows, which rely upon estimates and assumptions including expense growth, occupancy and rental rates, and Tax Credits, but also upon market capitalization and discount rates as well as other market indicators. However, changes in market conditions and circumstances may occur in the near term which would cause these estimates and assumptions to change, which, in turn, could cause the 37 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 amounts ultimately realized upon the sale or other disposition of the Properties to differ materially from their estimated fair value. Such changes may also require write-downs in future years. The cost of buildings and improvements is depreciated using the straight-line method over their estimated useful lives, which range from 27.5 to 40 years. c) Cash and Cash Equivalents Cash and cash equivalents include money market funds whose cost approximates market value. d) Cash and Cash Equivalents Held in Escrow Cash and cash equivalents held in escrow include restricted funds held for payment of real estate taxes and insurance, tenant security deposits and replacement reserves. e) Taxes The Partnership is not required to provide for, or pay, any Federal or state income taxes. Income tax attributes that arise from its operations are passed directly to the partners. The Partnership may be subject to other state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership's year ends on December 31. f) Profits and Loss Allocations/Distributions Net income or loss is allocated 99.5% to the limited partners and .5% to the General Partner. Distributions of cash may be made in accordance with the Partnership Agreement and, if made, are allocated 99.5% to the limited partners and .5% to the General Partner. As of March 31, 2003, no distributions have been paid. g) Rental Income h) Reclassification Certain items in the 2002 financial statements have been reclassified to conform to the 2003 presentation. Rental income is recognized as rents become due. Rental payments received in advance are deferred until earned. All leases between the Partnership and the tenants of the property are operating leases. 38 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 NOTE 3 - Costs, Fees and Expenses a) Deferred Financing Costs Deferred financing costs include amounts paid for services rendered in arranging the financing for the Local Partnerships. These costs were capitalized and are being amortized over the lives of the related debt. The accumulated amortization as of March 31, 2003 and 2002 is, $3,716,137 and $3,433,205, respectively. b) Management Fees Each individual Property has a managing agent who performs the necessary functions in operating the Property. The property management fee is equal to a percentage of the annual gross revenues of a Property paid in consideration of the property management services provided (See Note 7). The General Partner is entitled to receive a partnership management fee, payable from operations and reserves, in an amount not to exceed the difference between .375% per annum of Invested Assets (as defined in the Partnership Agreement) and the local administrative fee payable to the SLP. This partnership management fee is for administering the affairs of the Partnership (See Note 6). Unpaid portions of the management fee for any year accrue without interest. c) General and Administrative The Partnership reimburses the General Partner and its affiliates for actual Partnership operating expenses payable by or allocable to the Partnership (See Note 6). The Partnership also pays amounts directly to unrelated third parties for certain operating expenses. 39 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 NOTE 4 - Investment in Property The Partnership's Properties and related debt at March 31 were:

~~NET~~Net ~~INVESTMENT~~Investment INin ~~PROPERTY~~Property ~~MORTGAGE~~Mortgage ~~NOTES~~Notes ~~PAYABLE~~Payable -------------------------- ------------------------- ~~DESCRIPTION~~Description (a) 2003 2002 ~~2001~~2003 2002 ~~2001~~ --------------- ----------- ----------- ----------- ----------- Apartment Complexes: RMB Limited Partnership $ 3,~~274~~104,~~780~~050 $ 3,~~445~~274,~~540~~780 $ 4,~~600~~562,~~000~~398 $ 14,~~852~~600,~~154~~000 (Hubbard's Ridge) Garland, TX Cutler Canal II 8,~~390~~131,~~718~~281 8,~~637~~390,~~004~~718 5,~~786~~733,~~090~~478 5,~~833~~786,~~480~~090 Associates, Ltd. Miami, FL Diamond Street Venture (b) 1,~~693~~610,~~504~~420 1,~~775~~693,~~726~~504 2,~~934~~913,~~097~~484 2,~~953~~934,~~299~~097 Philadelphia, PA Papillion Heights 1,~~543~~490,~~073~~423 1,~~595~~543,~~843~~073 958,143 972,787 ~~988,475~~ Apartments L.P. Papillion, NE Hill Top Homes 5,717,040 5,902,229 63,~~087~~207,~~713~~845 3,297,769 ~~3,379,941~~ Apartments Limited Partnership Arlington, TX Palm Beach 28,700,604 29,734,352 3024,~~768~~327,~~100~~859 24,776,886 ~~25,249,155~~ Apartments, Ltd. (Summer Creek Villas) West Palm Beach, FL Brookland Park Plaza 3,571,140 3,800,107 42,~~029~~348,~~609~~964 2,378,063 ~~2,405,392~~ Limited Partnership Richmond, VA Compton Townhouses 1,189,229 1,282,765 1,~~376~~242,~~240~~044 1,270,078 ~~1,293,812~~Limited Partnership ----------- ----------- ----------- ----------- ~~Limited Partnership~~ Cincinnati, OH $53,514,187 $55,621,528 $5745,~~715~~294,~~775~~215 $46,015,770 ~~$43,955,708~~ =========== =========== =========== ===========

(a) The Partnership holds a 66.5% interest in Summer Creek Villas, a 98% interest in Hubbard's Ridge, Hill Top Homes and Compton Townhouses and a 98.99% interest in Cutler Canal II, Diamond Street, Papillion Heights and Brookland Park Plaza. (b) The investment in property relating to the Diamond Street Venture was reduced by $2,700,000 as of March 31, 1995 representing a loss on impairment of assets. 40 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 NOTE 5 - Mortgage Notes Payable Mortgage notes are collateralized by land, buildings and improvements and leases related thereto. Annual principal payment requirements for each of the next five years ending December 31, the date at which the Local Partnerships are reporting, and thereafter are as follows:

~~AMOUNT~~Amount ----------- ~~2002~~2003 $ ~~758~~845,~~286~~997 ~~2003 838,250~~ 2004 ~~921~~928,~~918~~578 2005 3,~~513~~520,~~950~~427 2006 4,~~073~~079,~~655~~644 2007 1,990,858 Thereafter 3533,~~909~~928,711 ----------- $4645,~~015~~294,~~770~~215 ===========

Mortgage notes consist of both first mortgages and support loans (second and third mortgages). First mortgages amounting to $40,354,215 bear interest at rates ranging from 5.83% to 10.5% and have final maturities ranging from September 1, 2006 to May 1, 2031. First mortgages include $24,327,859 in the form of a guaranteed bond bearing interest at 10.451% (including a .125% service fee payable to an affiliate of the Local General Partner) maturing on June 20, 2008. The support loans include two loans totaling $2,440,000 maturing on May 1, 2016 and December 15, 2029, the latter of which bears interest at 1%, and the former being non-interest bearing, and a $2,500,000 loan bearing interest at a maximum rate of 9% and maturing on January 16, 2005. The $2,500,000 loan includes a base interest rate of 3% and an additional interest rate of 6%. The base interest rate is payable annually from Project Income, as defined in the loan agreement, and can be deferred if Project Income is inadequate. The additional interest is payable from Project Income, if available, and only after payment of a cumulative annual 12% return on capital to the limited partners of the Local Partnership. Currently, only the base interest rate is being paid; however, the additional interest of 6% continues to be accrued in the accompanying consolidated financial statements. On December 28, 2001, Hubbard's Ridge refinanced its outstanding mortgage note payable in the amount of $1,852,154. The new mortgage in the amount of $4,600,000 is payable in monthly installments of $31,131 including interest at the rate of 7.17% per annum through January 1, 2012, at which time the balance will be due. Proceeds from the new mortgage were used to pay the prior mortgage note payable, repay funds advanced from the Local General Partner and General Partner, establish escrows, pay refinancing costs and the remaining cash was available to the Partnership in the amount of approximately $1,955,000. The Partnership used the proceeds to repay affiliates of the General Partner. At March 31, 2003 and 2002, the estimated fair values of the mortgage notes payable were approximately $40,099,970 and $42,823,333, respectively. These estimates were based upon the present value of expected cash flows discounted at rates currently available to the Local Partnerships for similar loans. Fair value estimates are made at a specific point in time, based on relevant market information, and are subjective in nature and involve uncertainties and matters of significant judgment. Accordingly, the estimates presented herein are not 41 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 necessarily indicative of the amounts that the Local Partnerships would pay upon maturity or disposition of the loans. NOTE 6 - Related Parties During their respective ownership periods, the General Partner and its affiliates have performed and will continue to perform services for the Partnership which include, but are not limited to: accounting and financial management, registrar, transfer and assignment functions, asset management, investor communications, printing and other administrative services. The General Partner and its affiliates receive partnership management fees and reimbursements for general and administrative costs incurred in connection with these services, the amount of which is limited by the provisions of the Partnership Agreement. The costs and expenses incurred to the General Partner were:

~~YEAR~~Year ~~ENDED~~Ended ~~MARCH~~March 31, ------------------------------------- 2003 2002 2001 ~~2000~~ -------- -------- -------- Partnership management fees $240,656 $245,367 $244,622 ~~$254,064~~ Property management fees 157,983 149,693 126,630 ~~76,700~~ Local administrative fees 20,250 20,250 20,250 General and administrative 85,781 64,867 114,145 ~~94,417~~ Interest 378,534 365,789 330,667 ~~87,852~~ -------- -------- -------- $883,204 $845,966 $836,314 ~~$533,283~~ ======== ======== ========

The Partnership is dependent upon the support of the General Partner and certain of its affiliates in order to meet its obligations at the Partnership level. The General Partner and these affiliates have agreed to continue such support for the foreseeable future. During the year ended March 31, 2003, the General Partner and its affiliates advanced $1,669,056 to the Partnership and as of March 31, 2003 and 2002, total advances outstanding are $8,234,527 and $6,565,471, respectively. The advances are unsecured, and bear interest at prime +2% and due on demand. 42 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 NOTE 7 - Local General Partners and Affiliates of Local Partnerships Certain Local General Partners and their affiliates provided services in connection with the construction, financing and development of the Apartment Complexes. Interest is accrued on certain loans made by three of the Local General Partners during the years ended March 31, 2003, 2002 and 2001, respectively. Additionally, during the years ended March 31, 2003, 2002 and 2001, six of the Local Partnerships were managed by a Local General Partner or its affiliates and one Local Partnership was managed by an affiliate of the General Partner and Local General Partner. The costs were:

~~YEAR~~Year ~~ENDED~~Ended ~~MARCH~~March 31, ------------------------------------------ 2003 2002 2001 ~~2000~~ -------- -------- -------- Interest $199,058 $213,276 $240,174 ~~$ 99,468~~ Management fees 415,046 330,218 282,710 ~~203,597~~ -------- -------- -------- $614,104 $543,494 $522,884 ~~$303,065~~ ======== ======== ========

Due to Local General Partners and affiliates of Local Partnerships includes amounts payable for accrued interest, advances, property management fees and operating loans made in accordance with operating deficit guaranty agreements. The Local General Partner of Summer Creek Villas was formerly obligated to fund operating deficits under two separate operating deficit guaranty agreements. Total advances made by the Local General Partner under the operating deficit guaranties totaled $2,742,460. In addition, the Local General Partner has made voluntary loans in excess of its obligations under the guaranties to fund operations of $1,645,074, even though as of December 31, 1997, the Local General Partner was no longer required to fund operations of the Summer Creek Villas. Additional voluntary loans during the year ended March 31, 2003 and 2002 of $2,774,980 and $1,525,000, respectively, have been received from the Partnership and Palm Beach Investors, L.P. (Washington Mutual). At both March 31, 2003 and 2002, development fees of $1,151,510 were payable to various Local General Partners. 43 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 NOTE 8 - Quarterly Financial Information (Unaudited)

~~FIRST~~First ~~QUARTER~~Quarter ~~SECOND~~Second ~~QUARTER~~Quarter ~~THIRD~~Third ~~QUARTER~~Quarter ------------- -------------- ------------- Fiscal Year ~~2002~~2003 ----------------------- Total Revenue $ 2,~~473~~545,~~781~~134 $ 2,~~436~~543,~~074~~989 $ 2,~~439~~575,~~119~~969 Net ~~earnings (~~loss) (~~793~~749,~~678~~442) (~~583~~655,~~395~~482) (~~953~~663,~~288~~174) Fiscal Year ~~2001~~2002 ----------------------- Total Revenue $ 2,~~139~~473,~~895~~781 $ 2,~~269~~436,~~090~~074 $ 2,~~451~~439,~~897~~119 Net ~~earnings (~~loss) (~~984~~793,~~382~~678) (~~828~~583,~~069~~395) (~~849~~872,~~482~~262)

NOTE 9 - Concentration of Credit Risk The Partnership maintains its cash in several banks which are insured by the Federal Deposit Insurance Corporation (FDIC) for a balance up to $100,000. At times during 2003, the account balances exceeded the FDIC limit. NOTE 10 - Forgiveness of Indebtedness Income Summer Creek Villas Local Partnership ------------------------------------- During 2001, 2000 and 1999, various partners made voluntary loans to the Partnership. The Local General Partner also elected to treat portions of such loans in the amount of $593,589 as nonrepayable in 2001. During 2001, it was determined management fees in the amount of $239,413 payable to the former management agent would not be paid and such amounts were subsequently written off. These amounts were recorded as forgiveness of indebtedness income on the consolidated statements of operations of the Partnership for the year ended March 31, 2001. NOTE 11 - Commitments and Contingencies Subsidiary Partnership - Going Concern Summer Creek Villas Local Partnership ------------------------------------- Summer Creek Villas has experienced lower than expected economic occupancy levels over the course of the last several years, which has resulted in recurring losses from operations and has adversely affected the liquidity of Summer Creek Villas. Despite an increase in rent levels during 2002, Summer Creek Villas' operations are impeded by the inability to raise rents sufficiently to pay for the operating and debt costs. Summer Creek Villas has been unable to obtain maximum rents as potential residents are restricted based on county median income levels, which limit the maximum income that a prospective resident can earn. The Summer Creek Villas has been obligated, since 1996, to repay significant amounts of principal on its mortgage. During 2002 and 2001, in an effort to improve occupancy, Summer Creek Villas invested funds to improve the physical condition of the property. Such 44 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 improvements primarily consisted of painting, landscaping, new playground, asphalt repairs, and individual units fixture and finish replacements. The Local General Partner of Summer Creek Villas was formerly obligated to fund operating deficits under two separate operating deficit guaranty agreements. Total advances made by the Local General Partner under the operating deficit guaranties totaled $2,742,460. In addition, the Local General Partner has made voluntary loans in excess of its obligations under the guaranties to fund operations of $1,645,074, even though as of December 31, 1997, the Local General Partner was no longer required to fund operations of Summer Creek Villas. Effective January 1, 1999, Summer Creek Villas entered into a funding agreement with Palm Beach Investor, L.P. (the Class C limited partner) which provided for a series of loans to be made to Summer Creek Villas in each of the years 1999, 2000 and 2001, in amounts not to exceed $2,000,000 in the aggregate. On September 9, 2002, Summer Creek Villas entered into a second funding agreement with the Class C limited partner which provides for a second series of loans to Summer Creek Villas in the years 2002, 2003 and 2004, in amount not to exceed $1,500,000 in aggregate. Although no formal agreements have been reached with the other partners, additional loans from the Partnership (which is the Class A limited partner) are expected to be obtained in accordance with the loans to be provided under the funding agreement. Loans made in 2002 and 2001 under these funding agreements to fund operating deficit's total $2,774,980 and $1,525,000, respectively. Of such amounts, $2,046,565 and $1,175,000 were loaned by the Partnership in 2002 and 2001, respectively. These loans are expected to enable the Summer Creek Villas to continue operations and make payments on its mortgage while management endeavors to improve occupancy rates and rental rates to sufficient levels to sustain operations independent of such funding. During 2002, the management agent, an affiliate of Summer Creek Villas, was reimbursed by Summer Creek Villas for operating advances, made in the current and prior years, in the form of deferred management fees and unreimbursed payroll in the net amount of $720,678. As of December 31, 2002 and 2001, the management agent was due $491,988 and $1,212,666, respectively. The management agent is not obligated to provide such advances. As of March 31, 2003 and 2002, the consolidated financial statements include total assets of $30,772,961 and $32,067,406, respectively, total liabilities of $38,315,144 and $36,100,522, respectively, and a minority interest of $1,935,146 and $796,380, respectively, attributable to this subsidiary. Summer Creek Villas' ability to continue its operations is dependent upon management achieving the plans described in the foregoing paragraphs. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Any adjustments would be limited solely to Summer Creek Villas' financial statements included herein. 45 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of the Registrant. There are no directors or executive officers of the Registrant. The Registrant is managed by the General Partner. The Registrant, the Registrant's General Partner and its members and executive officers, and any persons holding more than ten percent of the Registrant's BUC$ are required to report their initial ownership of such BUC$ and any subsequent changes in that ownership to the Securities and Exchange Commission on Forms 3, 4 and 5. Such executive officers, directors, and persons who own greater than ten percent of the Registrant's BUC$ are required by Securities and Exchange Commission regulations to furnish the Registrant with copies of all Forms 3, 4 and 5 they file. All of these filing requirements were satisfied on a timely basis. In making these disclosures, the Registrant relied solely on written representations of the General Partner, and its members and certain officers, if any, or copies of the reports they have filed with the Securities and Exchange Commission during and with respect to its most recent fiscal year. In December 2002, Charter Municipal Mortgage Acceptance Company, ("CharterMac"), which is also managed by an affiliate of Related Capital Company, announced a proposed acquisition of Related Capital Company, an affiliate of the General Partner. Pursuant to the proposed acquisition, CharterMac will acquire controlling interests in the managing member of the General Partner. This acquisition is not anticipated to affect the Partnership on its day-to-day operations as management of the General Partner will not change. The members and executive officers of the General Partner and their positions with regard to managing the Registrant are as follows: Name Position ---- -------- Alan P. Hirmes Member, President and Chief Executive and Financial Officer Stuart J. Boesky Member, Executive Vice President and Chief Operating Officer Denise L. Kiley Vice President Mark J. Schlacter Vice President Marc D. Schnitzer Vice President Glenn F. Hopps Treasurer Teresa Wicelinski Secretary ALAN P. HIRMES, 48, is the sole stockholder of one of the general partners of RCC, the real estate finance affiliate of The Related Companies, L.P. ("TRCLP") Mr. Hirmes has been a Certified Public Accountant in New York since 1978. Prior 46 to joining Related in October 1983, Mr. Hirmes was employed by Wiener & Co., certified public accountants. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts degree. Mr. Hirmes also serves on the Board of Trustees of Charter Municipal Mortgage Acceptance Company and American Mortgage Acceptance Company. STUART J. BOESKY, 47, is the sole stockholder of one of the general partners of RCC, the real estate finance affiliate of TRCLP Mr. Boesky practiced real estate and tax law in New York City with the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined Related. From 1983 to 1984 Mr. Boesky practiced law with the Boston law firm of Kaye, Fialkow, Richmond & Rothstein (which subsequently merged with Strook & Strook & Lavan) and from 1978 to 1980 was a consultant specializing in real estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from Michigan State University with a Bachelor of Arts degree and from Wayne State School of Law with a Juris Doctor degree. He then received a Master of Laws degree in Taxation from Boston University School of Law. Mr. Boesky also serves on the Board of Trustees of Charter Municipal Mortgage Acceptance Company and American Mortgage Acceptance Company. DENISE L. KILEY, 43, is an Executive Vice President and Chief Underwriter for RCC, responsible for overseeing the investment underwriting and approval of all multifamily residential properties invested in RCC-sponsored corporate, public and private equity and debt funds. Ms. Kiley is also responsible for the strategic planning and implementation of the firm's mortgage financing programs. Prior to joining Related in 1990, Ms. Kiley had experience acquiring, financing, and managing the assets of multifamily residential properties. From 1981 through 1985 she was an auditor with a national accounting firm. Ms. Kiley holds a Bachelor of Science degree in Accounting from Boston College and is a Member of the Affordable Housing Roundtable. MARK J. SCHLACTER, 52, is a Vice President of Mortgage Acquisitions of RCC, and has been with Related since June 1989. Mr. Schlacter is responsible for the origination of Related's taxable participating debt programs and low-income housing tax credit debt programs. Prior to joining Related, Mr. Schlacter garnered 16 years of direct real estate experience covering commercial and residential construction, single and multifamily mortgage origination and servicing, commercial mortgage origination and servicing, multifamily property acquisition and financing, and multifamily mortgage lending program underwriting and development. He was a Vice President with Bankers Trust Company from 1986 to June 1989, and held prior positions with Citibank, Anchor Savings Bank and the Pyramid Companies covering the 1972-1986 period. Mr. Schlacter holds a Bachelor of Arts degree in Political Science from Pennsylvania State University and periodically teaches multifamily underwriting at the New York University School of Continuing Education, Real Estate Institute. MARK D. SCHNITZER, 42, is an Executive Vice President of RCC and Director of the firm's Tax Credit Acquisitions Group. Mr. Schnitzer received a Master of Business Administration degree from The Wharton School of the University of Pennsylvania in December 1987, and joined Related in January 1988. From 1983 to 1986, Mr. Schnitzer was a Financial Analyst in the Fixed Income Research department of The First Boston Corporation in New York. Mr. Schnitzer received a Bachelor of Science degree, summa cum laude, in Business Administration from the School of Management at Boston University. GLENN F. HOPPS, 40, joined RCC in December, 1990, and prior to that date was employed by Marks Shron & Company and Weissbarth, Altman and Michaelson, certified public accountants. Mr. Hopps graduated from New York State University at Albany with a Bachelor of Science degree in Accounting. 47 TERESA WICELINSKI, 37, joined RCC in June 1992, and prior to that date was employed by Friedman, Alpren & Green, certified public accountants. Ms. Wicelinski graduated from Pace University with a Bachelor of Arts Degree in Accounting. Item 11. Executive Compensation. The Registrant does not pay or accrue any fees, salaries or any other form of compensation to directors and officers of the General Partner for its services. Certain executive officers and directors of the General Partner receive compensation from affiliates of the General Partner, not from the Registrant, for services performed for various affiliated entities, which may include services performed for the Registrant; however, the General Partner believes that any compensation attributable to services performed for the Registrant is immaterial. See Item 13, Certain Relationships and Related Transactions, for information regarding compensation to the General Partner. Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in this annual report. As noted above, the Registrant has no executive officers. The levels of compensation payable to the General Partners and/or their affiliates is limited by the terms of the Partnership Agreement and may not be increased therefrom on a discretionary basis. Item 12. Security Ownership of Certain Beneficial Owners and Management. As of June 2, 2003, Messrs. Boesky and Hirmes own directly or beneficially 100% of the interest in the voting securities of the General Partner. As of June 2, 2003, no director or executive officer of the General Partner owns directly or beneficially any of the BUC$ issued by the Registrant. As of June 2, 2003, no limited partner beneficially owns more than five percent (5%) of the BUC$ issued by the Registrant. Item 13. Certain Relationships and Related Transactions. The Registrant has and will continue to have certain relationships with the General Partner and its affiliates. However, there have been no direct financial transactions between the Registrant and the directors or executive officers of the General Partner. Reference is made to Notes 1, 3, 6 and 7, to the consolidated financial statements in the Registrant's financial statements, which identify the related parties and discuss the services provided by these parties and the amounts paid or payable for their services. Item 14. Controls and Procedures. The Chief Executive Officer and Chief Financial Officer of RCC Partners 96, L.L.C., the General Partner of the Registrant, has evaluated the Registrant's disclosure controls and procedures relating to the Registrant's annual report on Form 10-K for the period ending March 31, 2003 as filed with the Securities and Exchange Commission and has judged such controls and procedures to be effective as of March 31, 2003 (the "Evaluation Date"). There have been no significant changes in the internal controls or in other factors that could significantly affect internal controls relating to the Registrant since the Evaluation Date. 48 PART IV Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

~~SEQUENTIAL~~Sequential ~~PAGE~~Page ----------~~---~~ (a) 1. Financial Statements Independent Auditors' Report 14 Consolidated Balance Sheets as of March 31, ~~2002~~2003 and ~~2001~~2002 3233 Consolidated Statements of Operations for the years ended March 31, ~~2002~~2003, ~~2001~~2002 and ~~2000~~2001 3334 Consolidated Statements of Changes in Partners' Capital (Deficit) for the years ended March 31, ~~2002~~2003, ~~2001~~2002 and ~~2000~~2001 3435 Consolidated Statements of Cash Flows for the years ended March 31, ~~2002~~2003, ~~2001~~2002 and ~~2000~~2001 3536 Notes to Consolidated Financial Statements 3637 (a) 2. ~~FINANCIAL~~Financial ~~STATEMENT~~Statement ~~SCHEDULES~~Schedules ~~AND~~and ~~INDEPENDENT~~Independent ~~AUDITORS~~Auditors' ~~REPORT~~Report ONon ~~SCHEDULES~~ -------------------------------------------------------------------- Schedules --------- Independent Auditors' Report on Schedules 5256 Schedule III - Real Estate and Accumulated Depreciation 5357 All other schedules have been omitted because they are not required or because the required information is contained in the financial ~~statements~~state- ments or notes thereto.

49 Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued)

~~SEQUENTIAL~~Sequential ~~PAGE~~Page ----------~~---~~ (a) 3. ~~EXHIBITS~~Exhibits (3.1) The Partnership's Agreement of Limited Partnership as adopted on May 3, 1989 and Amendments thereto dated May 25, 1989 and June 21, 1989* (3.2) ~~Amendment~~Amendmen Number 1 to Prudential-Bache Tax Credit Properties L.P. Amended and Restated Agreement of Limited Partnership, dated ~~October~~Oc- tober 1, 1997*** (3.3) Form of Amended and Restated Agreement of Limited Partnership (included in Prospectus as Exhibit A)** (3.4) Certificate of Limited Partnership as filed on May 3, 1989 and Amendments thereto dated May 25, 1989 and June 21, 1989* (3.5) Amendment to Certificate of Limited Partnership dated October 1, 1997*** (10.1) Form of Purchase and Sale Agreement pertaining to the Partnership's acquisition of Local Partnership Interests** (10.2) Form of Amended and Restated Agreement of Local Limited ~~Partnership~~Partner- ship of Local Partnerships** (21) Subsidiaries of the Registrant - the Local Partnerships set forth in Item 2 may be considered subsidiaries of the Registrant. 51 (99.1) Balance Sheet and Independent Auditors' Report, RCC Partners 96, L.L.C., March 31, 2003. 59 (99.2) Certification Pursuant to Title 18 U.S.C. Section 1350, as adopted pur- suant to Section 906 of the Sarbanes-Oxley Act of 2002. 5567 (b) ~~REPORTS~~Reports ONon ~~FORM~~Form 8-K Current report on Form 8-K dated April 28, 1999 was filed on May 13, 1999 relating to the change in Registrant's accountant. *Filed as an exhibit to Pre-Effective Amendment No. 1 to Form S-11 Registration Statement (No. 33-28571) and incorporated herein by ~~reference~~ref- erence. **Filed as an exhibit to Pre-Effective Amendment No. 2 to Form S-11 Registration Statement (No. 33-28571) and incorporated herein by ~~reference~~ref- erence. ***Filed as an exhibit to Registrants Current Report on Form 8-K dated October 1, 1997 and incorporated herein by reference.

50 Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued) Jurisdiction (c) Subsidiaries of the Registrant (Exhibit 21) of Organization ------------------------------ --------------- RMB Limited Partnership TX Culter Canal II Associates, Ltd. FL Diamond Street Venture PA Papillion Heights Apartments L.P. MO Hill Top Homes Apartments Limited Partnership TX Palm Beach Apartments, Ltd. FL Brookland Park Plaza Limited Partnership MD Compton Townhouses Limited Partnership OH 51 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PATRIOT TAX CREDIT PROPERTIES L.P. ---------------------------------- (Registrant) By: RCC PARTNERS 96, L.L.C., General Partner Date: June 23, 2003 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Member, President and Chief Executive and Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date ------------------- --------------------------------------- ------------- /s/ Alan P. Hirmes Member and President ------------------ (Chief Executive and Financial Officer) Alan P. Hirmes of RCC Partners 96., L.L.C. June 23, 2003 /s/ Stuart J. Boesky Member and Executive Vice President -------------------- (Chief Operating Officer) Stuart J. Boesky of RCC Partners 96., L.L.C. June 23, 2003 /s/ Glenn F. Hopps Treasurer ------------------ (Chief Accounting Officer) Glenn F. Hopps of RCC Partners 96., L.L.C. June 23, 2003 CERTIFICATION I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of RCC Partners 96 L.L.C. (the "General Partner"), the General Partner of Patriot Tax Credit Plus L.P. (the "Partnership"), hereby certify that: 1. I have reviewed this annual report on Form 10-K for the period ending March 31, 2003 of the Partnership; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this annual report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15-d-14) for the Partnership and I have: a) designed such disclosure controls and procedures to ensure that material information relating to the Partnership, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the Partnership's disclosure controls and procedures as of March 31, 2003 (the "Evaluation Date"); and c) presented in this annual report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the Partnership's auditors and to members of the General Partner: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Partnership's ability to record, process, summarize and report financial data and have identified for the Partnership's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership's internal controls; and 6. I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Chief Executive Officer and Chief Financial Officer June 23, 2003 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Patriot Tax Credit Properties L.P. and Subsidiaries In connection with our audit of the consolidated financial statements of Patriot Tax Credit Properties L.P. and Subsidiaries included in this Form 10-K, we have also audited supporting Schedule III for the year ended March 31, 2003. In our opinion, based on our audit and the reports of the other auditors, the consolidated schedule presents fairly, when read in conjunction with the related consolidated financial statements, the financial data required to be set forth therein. REZNICK FEDDER & SILVERMAN Bethesda, Maryland May 15, 2003 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION MARCH 31, 2003

~~SIGNATURE~~Initial ~~TITLE~~Cost ~~DATE~~to Partnership Cost Capitalized --------------------- ----------------------- Subsequent to Acquisition (7) Buildings and -------------- -----------------~~---~~ ~~Member,~~Description ~~President~~(4)(6) ~~and~~Encumbrances ~~Chief~~Land ~~/s/~~Improvements ~~Alan~~Improvements P.Carrying ~~Hirmes~~Costs ~~Executive~~------------------ ~~and~~------------ ~~Financial~~----------- ~~Officer~~------------- ------------ -------------- Apartment Complexes: RMB Limited Partnership (~~principal~~Hubbard's ~~executive~~Ridge)(1) ~~and~~Garland, ~~financial~~TX ~~Alan~~$ P4,562,398 $ 107,237 $ 965,136 $ 4,053,296 $ 185,180 Cutler Canal II Associates, Ltd.(2) ~~Hirmes~~Miami, ~~officer~~FL 5,733,478 807,071 1,388,350 9,226,175 67,728 Diamond Street Venture(3) ofPhiladelphia, ~~RCC~~PA ~~Partners~~2,913,484 ~~96.~~9,729 234,465 2,395,124 273,218 Papillion Heights Apartments L.P.(1) Papillion, NE 958,143 63,329 1,816,598 259,945 66,552 Hill Top Homes Apartments L.CP.(1) ~~June~~Arlington, 21TX 3,207,845 ~~2002~~553,841 ~~Member~~3,690,150 ~~Executive~~3,544,302 ~~Vice~~316,368 ~~President~~Palm ~~/s/~~Beach ~~Stuart~~Apartments JLtd,(1) (Summer Creek Villas) West Palm Beach, FL 24,327,859 2,396,876 10,578,563 25,980,637 1,876,795 Brookland Park Plaza L.P.(1) ~~Boesky~~Richmond, ~~and~~VA ~~Chief~~2,348,964 ~~Operating~~50,000 ~~Officer~~109,850 5,913,667 376,165 Compton Townhouses L.P.(1) Cincinnati, OH 1,242,044 17,550 476,708 1,923,171 28,203 ------------ ----------- ----------- ------------ ----------- $ 45,294,215 $ 4,005,633 $19,259,820 $ 53,296,317 $ 3,190,209 ============ =========== =========== ============ =========== Gross Amounts at which Carried At Close of Period (~~principal~~5) ~~operating~~-------------------------------------------- ~~officer~~Buildings and Description (4)(6) ofLand ~~Stuart~~Improvements JTotal ------------------ ----------- ------------- ------------ Apartment Complexes: RMB Limited Partnership (Hubbard's Ridge)(1) Garland, TX $ 107,237 $ 5,203,612 $ 5,310,849 Cutler Canal II Associates, Ltd.(2) ~~Boesky~~Miami, ~~RCC~~FL ~~Partners~~807,071 9610,682,253 11,489,324 Diamond Street Venture(3) Philadelphia, PA 9,729 2,902,807 2,912,536 Papillion Heights Apartments L.P.(1) Papillion, NE 63,329 2,143,095 2,206,424 Hill Top Homes Apartments L.P.(1) Arlington, TX 553,841 7,550,820 8,104,661 Palm Beach Apartments Ltd,(1) (Summer Creek Villas) West Palm Beach, FL 2,396,876 38,435,995 40,832,871 Brookland Park Plaza L.CP.(1) ~~June~~Richmond, 21VA 50,000 ~~2002~~6,399,682 ~~/s/~~6,449,682 ~~Glenn~~Compton FTownhouses L.P.(1) ~~Hopps~~Cincinnati, ~~Treasurer~~OH 17,550 2,428,082 2,445,632 ----------- ------------ ------------ $ 4,005,633 $ 75,746,346 $ 79,751,979 =========== ============ ============ Life on which Depreciation in Date Latest Income Accumulated Construction Date Statements are Description (~~principal~~4)(6) ~~accounting~~Depreciation ~~officer~~Completed Acquired Computed ------------------ ------------ ------------ -------- --------------- Apartment Complexes: RMB Limited Partnership (Hubbard's Ridge)(1) ofGarland, ~~Glenn~~TX F$ 2,206,799 5/90 12/89 30 Cutler Canal II Associates, Ltd.(2) ~~Hopps~~Miami, ~~RCC~~FL ~~Partners~~3,358,043 961/91 1/90 40 Diamond Street Venture(3) Philadelphia, PA 1,302,116 12/90 1/90 40 Papillion Heights Apartments L.P.(1) Papillion, NE 716,001 12/90 4/90 40 Hill Top Homes Apartments L.P.(1) Arlington, TX 2,387,621 12/90 6/90 40 Palm Beach Apartments Ltd,(1) (Summer Creek Villas) West Palm Beach, FL 12,132,267 8/91 6/90 40 Brookland Park Plaza L.CP.(1) ~~June~~Richmond, 21VA 2,878,542 ~~2002~~12/90 7/90 27.5 Compton Townhouses L.P.(1) Cincinnati, OH 1,256,403 6/92 1/92 40 ------------ $ 26,237,792 ============

(1) First mortgage (2) Includes first and second mortgages (3) Includes first, second and third mortgages (4) At March 31, 2003, the Registrant holds a 66.5% interest in the Local Partnerships of Summer Creek Villas, a 98% interest in Hubbard's Ridge, Hill Top Homes and Compton Townhouses and a 98.99% interest in Cutler Canal II, Diamond Street, Papillion Heights and Brookland Park Plaza. (5) The cost basis of Land and Buildings and Improvements for federal income tax purposes as of December 31, 2002 is $80,614,671. (6) The Registrant believes the properties are adequately insured. (7) Costs Capitalized Subsequent to Acquisition included a write-down of $2,700,000 for Diamond Street Venture recorded as of March 31, 1995. PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION MARCH 31, 2003

~~GROSS~~Cost ~~AMOUNTS~~of ~~INITIAL~~Property ~~COST~~and TOEquipment ~~PARTNERSHIP~~Accumulated ~~COSTS~~Depreciation ~~CAPITALIZED AT WHICH CARRIED AT CLOSE OF PERIOD (5)~~ --------------------------------------- ~~SUBSEQUENT TO ACQUISITION (7)~~ --------------------------------------- ~~BUILDINGS~~Year ~~AND~~Ended March 31, ---------------------------- ~~BUILDINGS AND DESCRIPTION (4)(6) ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS CARRYING COSTS LAND IMPROVEMENTS TOTAL~~ ------------------ ------------ ----------- ------------ Note A - Reconciliation 2003 2002 2001 2003 2002 2001 ----------------------- ----------- ----------- ----------- ----------- ----------- ----------- ~~Apartment~~Balance ~~Complexes:~~at ~~RMB~~beginning ~~Limited~~of ~~Partnership~~year ~~(Hubbard's Ridge)(1) Garland, TX~~ $ 479,~~600~~712,~~000~~791 $ ~~107~~79,~~237 $ 965~~649,~~136~~910 $ 479,~~053~~563,~~296~~160 $ ~~185~~24,~~180 $ 107~~091,~~237~~263 $ 521,~~203~~934,~~612~~135 $ 519,~~310~~762,~~849~~979 ~~Cutler~~Additions ~~Canal~~during IIyear: ~~Associates,~~Improvements ~~Ltd. (2) Miami~~39,188 ~~FL 5~~62,~~786,090~~881 ~~807~~86,~~071~~750 ~~1,388,350~~Depreciation ~~9,186,987~~expense ~~67,728 807,071 10,643,065 11,450,136 Diamond Street Venture~~ (~~3) Philadelphia, PA 2,934,097 9,729 234,465 2,395,124 273,218 9,729 2,902,807 2,912,536 Papillion Heights Apartments L.P. (~~1) ~~Papillion, NE 972,787 63,329 1,816,598 259,945 66,552 63,329~~ 2,~~143~~146,~~095~~529 2,~~206~~157,~~424~~128 Hill Top Homes Apartments L.P. (1) Arlington, TX 3,297,769 553,841 3,690,150 3,544,302 316,368 553,841 7,550,820 8,104,661 Palm Beach Apartments Ltd, (1) (Summer Creek Villas) West Palm Beach, FL 24,776,886 2,396,876 10,578,563 25,980,637 1,876,795 2,396,876 38,435,995 40,832,871 Brookland Park Plaza L.P. (1) Richmond, VA 2,378,063 50,000 109,850 5,913,667 376,165 50,000 6,399,682 6,449,682 Compton Townhouses L.P. (1) Cincinnati, OH 1,270,078 17,550 476,708 1,923,171 28,~~203~~156 ~~17,550 2,428,082 2,445,632~~ ----------- ---------- -~~----------~~ ----------- ---------- -~~---------~~ ----------- ----------- ~~$46,015,770~~Balance ~~$4,005,633~~at close of year $1979,~~259~~751,~~820~~979 $5379,~~257~~712,~~129~~791 $379,~~190~~649,~~209~~910 $426,~~005~~237,~~633~~792 $7524,~~707~~091,~~158~~263 $7921,~~712~~934,~~791~~135 =========== ========== =~~==========~~ =========== ========== =~~=========~~ =========== =========== LIFE ON WHICH DEPRECIATION IN DATE LATEST INCOME ACCUMULATED CONSTRUCTION DATE STATEMENTS ARE DESCRIPTION (4)(6) DEPRECIATION COMPLETED ACQUIRED COMPUTED ------------------ ------------ ------------ ------- --------------- Apartment Complexes: RMB Limited Partnership (Hubbard's Ridge)(1) Garland, TX $ 2,036,069 5/90 12/89 30 Cutler Canal II Associates, Ltd. (2) Miami, FL 3,059,418 1/91 1/90 40 Diamond Street Venture (3) Philadelphia, PA 1,219,032 12/90 1/90 40 Papillion Heights Apartments L.P. (1) Papillion, NE 663,351 12/90 4/90 40 Hill Top Homes Apartments L.P. (1) Arlington, TX 2,202,432 12/90 6/90 40 Palm Beach Apartments Ltd, (1) (Summer Creek Villas) West Palm Beach, FL 11,098,519 8/91 6/90 40 Brookland Park Plaza L.P. (1) Richmond, VA 2,649,575 12/90 7/90 27.5 Compton Townhouses L.P. (1) Cincinnati, OH 1,162,867 6/92 1/92 40 ----------- $24,091,263 ===========

(1) Refer to Notes 2 and 4 to the consolidated financial statements for additional information. Exhibit 99.1 BALANCE SHEET AND INDEPENDENT AUDITORS' REPORT RCC PARTNERS 96, L.L.C. MARCH 31, 2003 RCC Partners 96, L.L.C. TABLE OF CONTENTS PAGE INDEPENDENT AUDITORS' REPORT 3 FINANCIAL STATEMENTS BALANCE SHEET 4 NOTES TO BALANCE SHEET 5 INDEPENDENT AUDITORS' REPORT To the Members of RCC Partners 96, L.L.C. We have audited the accompanying balance sheet of RCC Partners 96, L.L.C. as of March 31, 2003. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on this balance sheet based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of RCC Partners 96, L.L.C. as of March 31, 2003, in conformity with accounting principles generally accepted in the United States of America. Bethesda, Maryland May 15, 2003 RCC Partners 96, L.L.C. BALANCE SHEET March 31, 2003

~~COST~~ASSETS OFInvestment ~~PROPERTY~~in ~~AND~~limited ~~EQUIPMENT~~partnership ~~ACCUMULATED~~$ ~~DEPRECIATION~~0 ~~---------------------------------------------~~Due ~~---------------------------------------------~~from ~~YEAR~~limited ~~ENDED~~partnership ~~MARCH 31~~676,972 --------~~----------------------------------------------------------------------------------------~~ ~~NOTE A - RECONCILIATION 2002 2001 2000 2002 2001 2000 ----------------------- ----------- ----------- ----------- ----------- ----------- ----------- Balance at beginning of year~~ $79676,~~649,910~~972 ~~$79,563,160~~======== ~~$79,361,224~~LIABILITIES ~~$21,934,135~~AND ~~$19,762,979~~MEMBERS' ~~$17,604,303~~EQUITY ~~Additions~~Due ~~during~~to ~~year:~~affiliate ~~Improvements 62~~$676,~~881~~972 ~~86,750~~Members' ~~201,936~~equity ~~Depreciation~~0 ~~expense (1) 2,157,128 2,171,156 2,158,676~~ --------~~---~~ ~~----------- ----------- ----------- ----------- ----------- Balance at close of year~~ $79676,~~712,791~~972 ~~$79,649,910 $79,563,160 $24,091,263 $21,934,135 $19,762,979~~ ========~~=== =========== =========== =========== =========== ===========~~

The accompanying notes are an integral part of this balance sheet RCC Partners 96, L.L.C. NOTES TO BALANCE SHEET March 31, 2003 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RCC Partners 96, L.L.C. (the "Company") was organized under the laws of the State of Delaware as of July 23, 1996, to act as the general partner of, and to acquire and hold a general partnership interest in Patriot Tax Credit Properties, L.P. ("Patriot"). On October 1, 1997, as part of a settlement of class litigation known as Prudential Securities Inc. Limited Partnership Litigation, MDL No. 1005, Prudential-Bache Properties, Inc. ("PBP") withdrew as the general partner and transferred its General Partner interest in the Partnership to the Company, an affiliate of Related Capital Company ("RCC") pursuant to a purchase agreement dated as of December 19, 1996 among PBP and its affiliates and RCC. Affiliates of the Company and RCC have had significant involvement with Patriot and the Local Partnerships, of which five are owned by RCC affiliates. RCC in the past provided, and will continue to provide ongoing monitoring services with respect to the Limited Partnership's investments pursuant to the Property Investment Monitoring Agreement. Investment in Limited Partnership --------------------------------- The Company accounts for its investment in Patriot using the equity method, whereby the Company adjusts the investment cost for its share of Patriot's results of operations and for any distributions received or accrued. The Company regularly assesses the carrying value of its investment in Patriot. If the carrying value is considered to exceed the estimated value derived by management (which contemplates remaining Low-income Tax Credits and potential residual value, among other things), the Company reduces its investment in Patriot. Use of Estimates ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. RCC Partners 96, L.L.C. NOTES TO BALANCE SHEET - CONTINUED March 31, 2003 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes ------------ The Company is not a taxpaying entity for income tax purposes and, accordingly, no provision has been made for income taxes. The member's allocable shares of the Company's taxable income or loss are reportable on their income tax returns. NOTE B - RELATED PARTY TRANSACTIONS Due to/from affiliates ---------------------- As of March 31, 2003, Patriot owes the Company $676,972 for partnership management fees pursuant to the Limited Partnership Agreement. The Company owes $676,972 to their affiliates as of March 31, 2003. NOTE C - INVESTMENT IN LIMITED PARTNERSHIP On October 1, 1997, the Company was admitted as the general partner in Patriot Tax Credit Properties, L.P. which was formed to invest as a limited partner in other partnerships owning apartment complexes that are eligible for the low-income housing tax credit or the rehabilitation tax credit. The investment in Limited Partnership is as follows:

RCC Partners 96, L.L.C. NOTES TO BALANCE SHEET - CONTINUED March 31, 2003 NOTE C - INVESTMENT IN LIMITED PARTNERSHIP (Continued) The summarized consolidated balance sheet at March 31, 2003 and the summarized consolidated statement of operations for the year then ended for Patriot Tax Credit Properties, L.P. are as follows:

RCC Partners 96, L.L.C. NOTES TO BALANCE SHEET - CONTINUED March 31, 2003 NOTE C - INVESTMENT IN LIMITED PARTNERSHIP (Continued)

NOTE D - CONTINGENCIES The Company is contingently liable for all debts, liabilities and other obligations of Patriot Tax Credit Properties L.P. to the extent not paid by the partnership. Exhibit 99.2 CERTIFICATION PURSUANT TO TITLE 18.U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Patriot Tax Credit Properties L.P. (the "Partnership") on Form 10-K for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of RCC Partners 96, L.L.C., the General Partner of the Partnership, certify, pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Chief Executive Officer and Chief Financial Officer June 23, 2003

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