10-K 1 f10k_lib1-march2005.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 15, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-17015 LIBERTY TAX CREDIT PLUS L.P. (Exact name of registrant as specified in its charter) Delaware 13-3446500 -------------------------------- --------------------- (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) 317-5700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Beneficial Assignment Certificates and Limited Partnership Interests (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] 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 15, 2004, was ($36,440,000), based on Limited Partner equity (deficit) as of such date. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Business. General ------- Liberty Tax Credit Plus L.P. (the "Partnership") is a limited partnership which was formed under the laws of the State of Delaware on June 26, 1987. The general partners of the Partnership are Related Credit Properties L.P., a Delaware limited partnership (the "Related General Partner") and Liberty Associates III L.P., a Delaware limited partnership ("Liberty Associates", and together with the Related General Partner, the "General Partners"). The Related General Partner is also the special limited partner of the Partnership. The general partner of the Related General Partner is Credit Properties GP LLC ("Credit Properties"), a Delaware corporation. The general partner of Liberty Associates is the Related General Partner. On November 17, 2003, CharterMac acquired Related Capital Company, which is the indirect parent of RCC Manager L.L.C., the managing member of Credit Properties. Pursuant to the acquisition, CharterMac acquired controlling interests in the General Partners. This acquisition did not affect the Partnership or its day-to-day operations, as the majority of the General Partners' management team remained unchanged. On November 20, 1987, the Partnership commenced a public offering (the "Offering") of Beneficial Assignment Certificates ("BACs") representing assignments of limited partnership interests in the Partnership ("Limited Partnership Interests"), pursuant to a prospectus dated November 20, 1987, as supplemented by the supplements thereto dated January 14, 1988 and March 14, 1988 (as so supplemented, the "Prospectus"). As of April 4, 1988 (the date on which the Partnership held the final closing of the sale of BACs and on which the Offering was terminated), the Partnership had received $79,937,500 of gross proceeds of the Offering from 5,525 investors. The Partnership was formed to invest, as a limited partner, in other limited partnerships (referred to herein as "Local Partnerships," "subsidiaries" or "subsidiary partnerships") which own leveraged low and moderate-income multifamily residential complexes ("Apartment Complexes") that are eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning properties ("Rehabilitation Projects"), and together with the Apartment Complexes, the "Properties" that are eligible for the historic rehabilitation tax credit (the "Historic Rehabilitation Tax Credit", and together with the Housing Tax Credit, the "Tax Credits"). The Partnership's investment in each Local Partnership represents a 20% to 98% interest in each of the Local Partnerships. The Partnership does not anticipate making any additional investments. As of March 15, 2005, the Partnership has disposed of ten of its 31 original Properties. Subsequently on March 29, 2005, the property and the related assets and liabilities of Regent Street Associates, L.P. ("Regent Street") were sold. See Item 2, Properties, below. Liberty Associates is the special limited partner in all of the Local Partnerships, as well as a general partner of the Partnership. Liberty Associates has certain rights and obligations in its role as special limited partner, which permit it to exercise control over the management and policies of the Local Partnerships. The investment objectives of the Partnership are to: 1. Entitle qualified BACs holders to substantial Housing Tax Credits (and potentially Historic Rehabilitation Tax Credits) over the period of the Partnership's entitlement to claim Tax Credits (for each Property, ten years from the date of investment or, if later, the date the Property is placed in service); 2. Participate in any capital appreciation in the value of the Properties and provide distributions of sale or refinancing proceeds upon the disposition of Properties; 3. Preserve and protect the Partnership's capital; 4. Provide cash distributions, when available, from the operations of Properties; and 5. Allocate passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investments and other passive activities, and allocate passive losses to corporate BACs holders to offset active business income. One of the Partnership's objectives is to entitle qualified BACs holders to Tax Credits over the period of the Partnership's entitlement to claim Tax Credits (for each Property, generally ten years from the date of investment or, if later, the date the Property is leased to qualified tenants; referred to herein as the "Tax Credit Period"). Each of the Local Partnerships in which the Partnership has acquired an interest has been allocated by respective state credit agencies the authority to recognize Tax Credits during the Tax Credit Period provided that the Local Partnership satisfies the rent restriction, minimum set-aside and other requirements for recognition of the Tax Credits at all times during the 15-year period (the "Compliance Period") commencing at the beginning of the Tax Credit Period. Once a Local Partnership has become eligible to recognize Tax Credits, it may lose such eligibility and suffer an event of "recapture" if its Property fails to remain in compliance with the Tax Credit requirements at any time during the Compliance Period. None of the Local Partnerships in which the Partnership has acquired an interest has suffered an event of recapture. The Tax Credits are attached to a Local Partnership for the Tax Credit Period and are transferable with the property during the entirety of such ten year period. If trends in the real estate market warranted the sale of a property, the remaining Tax Credits would transfer to the new owner, thereby adding value to the property on the market. However, such value declines each year and is not included in the financial statement carrying amount. The Tax Credit Periods expired at various times through December 31, 2003 with respect to the Local Partnerships depending upon when the Tax Credit Period commenced. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time the property investments themselves are reduced to estimated fair value (generally using the 2 discounted cash flow valuation method). Through March 31, 2005, the Partnership has not recorded any loss on impairment of assets or reduction to estimated fair value. While the value of the remaining Tax Credits are a factor in calculating fair value, the expiration of the Tax Credit Period, in and of itself, is not the only factor in determining whether there is an impairment and generally does not have any adverse impact on the fair value of the Local Partnerships. The Partnership generated $686 and $21,629 in Tax Credits during the 2003 and 2002 Fiscal Years, respectively. As of December 31, 2003 all the Local Partnerships have completed their tax credit periods and the Partnership has met its primary objective of generating Tax Credits for qualified BACs holders. However, each Local Partnership must continue to comply with the Tax Credit requirements until the end of the Compliance Period in order to avoid recapture of the Tax Credits. The Compliance Period began to end on January 1, 2004 and will continue through December 31, 2008 with respect to the Properties depending upon when the Tax Credit Period commenced. The Partnership also continues to meet its objective of allocating passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investment and other passive activities, and allocating passive losses to the corporate BACs holders to offset business income. At this time, there can be no assurance that the Partnership will continue to meet this investment objective As of March 15, 2005, the Partnership has not met its investment objective of providing cash distributions from the operations of the Properties. The Partnership does not anticipate providing cash distributions to BACs holders other than distributions of sale or refinancing proceeds upon the disposition of Properties. Furthermore, at this time there can be no assurance that the Partnership will achieve this investment objective. Subsequently, on April 15, 2005, a distribution from sales proceeds was made to the BAC Holders for approximately $1,919,000 and to the general partner for approximately $19,000. The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally. However, no more than 25% of the Properties are located in any single state. The Partnership is the beneficiary of certain subsidy agreements pursuant to which the United States Department of Housing and Urban Development ("HUD") subsidizes the amount of rent that the Local Partnerships earn. There are substantial risks associated with owning properties receiving government assistance, such as the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owners' equity contribution. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence without HUD's approval. Furthermore, there may not be market demand for apartments at full market rents when the rental assistance contracts expire. Sales of Underlying Properties/Local Partnership Interests ---------------------------------------------------------- General ------- The Partnership is currently in the process of disposing of its investments. As of March 15, 2005, the Partnership had disposed of ten of its thirty-one original investments. Subsequently on March 29, 2005, the property and the related assets and liabilities of Regent Street were sold. Also subsequently on April 25, 2005, the Partnership entered into a contract to sell the Limited Partnership interest in Fox Glenn Investors, L.P. ("Fox Glenn"). There can be no assurance as to whether or when the sale will actually occur. On February 17, 2005, the partnership's limited Partnership Interest in Redwood Villa Associates ("Redwood") was sold to an unaffiliated third party purchaser for $60,000, resulting in a gain of approximately $1,700,000 which will be recognized in the Partnership's Form 10-Q for the quarter ended June 15, 2005. On January 5, 2005, the property and the related assets and liabilities of Lund Hill Associates, L.P. ("Lund Hill") were sold to an unaffiliated thirty party purchaser for $6,500,000, resulting in a gain of approximately $1,100,000 which will be recognized in the Partnership's Form 10-Q for the quarter ended June 15, 2005. On December 29, 2004, the Partnership entered into an agreement for the sale of its Limited Partnership Interest in Lancaster Towers Associates, LTD ("Lancaster") to an affiliate of the Local General Partner for a purchase price of $449,750. The sales documents have been executed and the funds are being held in escrow waiting for approval of the sale from the Department of Housing and Urban Development ("HUD"). No assurances can be given that HUD will approve the sale. Lancaster is being held as an Asset held for sale as of March 15, 2005. On September 24, 2004, the property and the related assets and liabilities of Autumn Park Associates, L.P. ("Autumn Park") were sold to an unaffiliated third party for approximately $4,800,000. The proceeds were used to settle the associated mortgage which had an outstanding balance of approximately $3,600,000, and the balance was distributed to the partners. This amount consisted of $900,000 paid in cash at the closing and $150,000 pursuant to one promissory note. The note compounds interest at 10% and is due on October 30, 2005. The sale resulted in a gain of approximately $2,100,000. On August 27, 2004, the property and the related assets and liabilities of 2108 Bolton Drive Associated, L.P. ("Bolton") were sold to an unaffiliated third party for $8,891,000, resulting in a gain of approximately $1,700,000. On July 30, 2004, the property and the related assets and liabilities of Tanglewood Apartments, L.P. ("Tanglewood") were sold to an unaffiliated third party for $3,425,000, resulting in a gain of approximately $1,100,000. The sale resulted in the liquidation of Tanglewood. On March 31, 2004, the Partnership's limited Partnership Interest in Walnut Park Plaza ("Walnut") was sold to the local general partner for a purchase price of $1 plus the assumption of all the related debt which totaled approximately $7,700,000 resulting in a general partner contribution of approximately $2,600,000. The sale resulted in the liquidation of Walnut. 3 On March 2, 2004, the Partnership signed a "Letter of Intent" with an unaffiliated third party to purchase the Partnership's limited partnership interest in Bayridge Associates, L.P. ("Bayridge") for a purchase price of $1,100,000 plus the assumption of the existing debt. The closing is expected to occur in 2006. No assurances can be given that the sale will actually occur. On May 19, 2003, the property and the related assets and liabilities of Silver Blue were sold to an unaffiliated third party for a purchase price of $3,500,000 resulting in a gain of approximately $400,000. Accrued interest on a note related to the Local Partnership was forgiven resulting in forgiveness of indebtedness income of approximately $114,000. The sale resulted in the liquidation of Silver Blue. On March 16, 2003, the Partnership recorded the transfer of the deed in lieu of foreclosure to Bryden Road, one of the properties owned by Shiloh to an unaffiliated third party. The outstanding mortgage balance paid by the third party on the day of transfer was $189,871 resulting in a gain of $104,000, which is included in gain on sale of properties. On January 23, 2003, the property and the related assets and liabilities of Ludlam Gardens Apartments, LTD. ("Ludlam") were sold to an unaffiliated third party for a purchase price of $3,900,000 resulting in a gain of approximately $1,000,000. The sale resulted in the liquidation of Ludlam. On January 16, 2003, the property and the related assets and liabilities of Dixie Apartment Associates, LTD. ("Dixie") were sold to an unaffiliated third party for a purchase price of $1,300,000 resulting in a gain of approximately $300,000. The sale resulted in the liquidation of Dixie. On December 18, 2002, the Partnership entered into an agreement with the local general partner to sell its remaining limited partnership interest in Shiloh for a purchase price of $175,000. No assurance can be given that the closing will actually occur. On May 31, 2002, the Partnership's Limited Partnership interest in Apple Creek Housing Associates, LTD. ("Apple Creek") was sold to an unaffiliated third party purchaser for $200,000 resulting in a gain of approximately $6,800,000, Segments -------- The Partnership operates in one segment, which is the investment in multi-family residential properties. Competition ----------- The real estate business is highly competitive and substantially all of the Properties acquired by the Partnership are subject to active competition from similar properties in their respective vicinities. In addition, various other limited partnerships may, in the future, be formed by the General Partners and/or their affiliates to engage in businesses which may be competitive with the Partnership. Employees --------- The Partnership does not have any direct employees. All services are performed for the Partnership by its General Partners and their affiliates. The General Partners receive compensation in connection with such activities as set forth in Items 11 and 13. In addition, the Partnership reimburses the General Partners and certain of their affiliates for expenses incurred in connection with the performance by their employees of services for the Partnership in accordance with the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"). Item 2. Properties The Partnership had acquired an interest as a limited partner in 31 Local Partnerships. During the fiscal year ended March 15, 2005, the property and the related assets and liabilities of four Local Partnerships were sold and the limited partnership interest in two Local Partnership was sold. Through the fiscal year ended March 15, 2005, the properties and the related assets and liabilities of seven Local Partnerships and the limited partnership interests in three Local Partnerships were sold. Subsequently on March 29, 2005, the property and the related assets and liabilities of Regent Street were sold (see Note 15 in Item 8). Set forth below is a schedule of the Local Partnerships including certain information concerning the Properties (the "Local Partnership Schedule"). Further information concerning those Local Partnerships and their Properties, including any encumbrances affecting the Properties, may be found in Item 15, Schedule III. Except for the seven Local Partnerships listed below, the following is the allocation of ownership percentage for each of the Local Partnerships: Local General Partner 1% Special Limited Partner 1% Limited Partner - Liberty Tax Credit Plus L.P. 98%

General Special Liberty Tax Other Partner(s) Limited Partners Credit Plus L.P. ~~Limited Partners~~LimitedPartners* ---------- ---------------- ---------------- ----------------- Shiloh Grove 5% 1% 94% 0% Concourse Artists 1% 1% 79% 19% Grand Concourse 1% 1% 79% 19% Robin Housing 1% 1% 79% 19% Willoughby - Wyckoff 1% 1% 79% 19% Penn Alto 1% 1% 19.60% 78.40% Sartain 1% 1% 71.54% 26.46%

*Each is an affiliate of the Partnership with the same management. 4

Local Partnership Schedule -------------------------- % of Units Occupied at May 1, Name and Location ----------------------------------------------- (Number of Units) Date Acquired 2005 2004 2003 2002 2001 ~~2000 1999~~ -------------------------------------- -------------- ------ ------ ------ ------ ------ B & C Housing Associates, L.P. December 1987 96 94 99 97 93 ~~92 91~~ Tulsa, OK (220) State Street 86 Associates, L.P. February 1988 99 100 98 99 97 ~~100 97~~ Camden, NJ (200) Fox Glenn Investors, L.P. March 1988 98 9596 9798 9395 97 Seat Pleasant, MD (172) Shiloh-Grove, L.P. (Mt. Vernon) February 1988 95 94 100 95 99 ~~94 97~~ Columbus, OH (394) Silver Blue Lake Apartments, LTD. February 1988 (c) (c) 96 93 87 ~~93 92~~ Miami, FL (123) Lancaster Towers Associates, LTD. May 1988 99100 100 99 100 100 99 Lancaster, NY (157) West Kinney Associates, L.P. June 1988 99 97 100 97 97 ~~94 98~~ Newark, NJ (114) Autumn Park Associates, L.P. June 1988 (d) 96 88 88 95 ~~93 83~~ Wilsonville, OR (144) Regent Street Associates, L.P. June 1988 (f) 94 90 100 94 ~~93 89~~ Philadelphia, PA (80) Magnolia Arms Associates, LTD. July 1988 89 92 98 99 90 ~~91 94~~ Jacksonville, FL (232) Greenleaf Associates, L.P. July 1988 97100 94100 97 9794 97 Kansas City, Mo (195) Alameda Towers Associates, L.P. July 1988 99 94 90 97 99 ~~99 96~~ San Juan, PR (150) Dixie Apartment Associates, LTD. July 1988 (a) ~~100~~(a) 97(a) 100 ~~100~~97 Miami, FL (29) Ludlam Gardens Apartments, LTD. July 1988 (a) (a) (a) 99 99 ~~97 97~~ Miami, FL (90) Grove Parc Associates, L.P. (Woodlawn) July 1988 96 96 98 92 94 ~~95 98~~ Chicago, IL (504) 2108 Bolton Drive Associates, L.P. July 1988 (d) 85 78 92 97 Atlanta, GA (358) Apple Creek Housing Associates, LTD. June 1988 (b) (b) (b) 93 99 Arvado, CO (195) Redwood Villa Associates September 1988 (e) 98 98 99 100 ~~Atlanta~~San Diego, GACA (~~358~~92) Charles Drew Court Associates, L.P. September 1988 100 97 100 95 97 Atlantic City, NJ (38) Walnut Park Plaza Associates, L.P. September 1988 (e) (e) 80 89 83 Philadelphia, PA (227) Bayridge Associates, L.P. December 1988 74 90 91 91 97 Beaverton, OR (246) United-Pennsylvanian, L.P. December 1988 99 95 99 97 99 Erie, PA (112)

Local Partnership Schedule -------------------------- ~~(continued)~~ % of Units Occupied at May 1, Name and Location ----------------------------------------------- (Number of Units) Date Acquired 2005 2004 2003 2002 2001 ~~2000 1999~~ ----------------- --------------------- -------------- ------ ------ ------ ------ Apple Creek Housing Associates, LTD. June 1988 (b) 93 99 98 90 Arvado, CO (195) Redwood Villa Associates September 1988 98 99 100 99 98 San Diego, CA (92) Charles Drew Court Associates, L.P. September 1988 100 95 97 100 100 Atlantic City, NJ (38) Walnut Park Plaza Associates, L.P. September 1988 80 89 83 89 86 Philadelphia, PA (227) Bayridge Associates, L.P. December 1988 91 91 97 90 96 Beaverton, OR (246) United-~~Pennsylvanian,~~----- ~~L.P. December 1988 99 97 99 99 98 Erie, PA (112)~~ 2051 Grand Concourse Associates, L.P. November 1988 97 95 98 91 100 ~~95 98~~ Bronx, NY (63) Concourse Artists Housing Associates, L.P. November 1988 96 100 96 96 100 96 Bronx, NY (23) Willoughby/Wycoff Housing Associates, L.P. November 1988 93 94 99 100 87 ~~87 93 Bronx~~Brooklyn, NY (68) Robin Housing Associates, L.P. November 1988 96 9899 9396 98 9893 Bronx, NY (100) Lund Hill Associates, L.P. January 1989 ~~100~~(d) 100 100 100 100 Superior, WI (150) Tanglewood Apartments, L.P. October 1988 (d) 97 94 98 93 ~~96 89~~ Joplin, MO (176) Quality Hill Historic District- Phase II-A, L.P. March 1989 94 94 92 9894 ~~100~~94 92 Kansas City, MO (49) Penn Alto Associates, L.P. June 1989 90 83 84 83 82 Altoona, PA (150) Sartain School Venture, L.P. August 1990 97 94 100 97 97 Philadelphia, PA (35)

(a) The properties and the related assets and liabilities were sold during the fiscal year ended March 15, 2003 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (b) The Partnership's limited partnership interest was sold during the fiscal year ended March 15, 2003 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (c) The property and the related assets and liabilities were sold during the fiscal year ended March 15, 2004 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (d) The property and the related assets and liabilities were sold during the fiscal year ended March 15, 2005 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (e) The Partnership's limited partnership interest was sold during the fiscal year ended March 15, 2005 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (f) The property and the related assets and liabilities were subsequently sold on March 29, 2005 (see Note 15 in Item 8. Financial Statements and Supplementary Data). All development deficit, rent-up and operating deficit guarantees with respect to the Properties have expired. All leases are generally for periods not greater than one to two years and no tenant occupies more than 10% of the rentable square footage. Commercial tenants (to which average rental per square foot applies) comprise less than 5% of the rental revenues of the Local Partnership. Maximum rents for the residential units are determined annually by HUD and reflect increases/decreases in consumer price indices in various geographic areas. Market conditions, however, determine the amount of rent actually charged. Management annually reviews the physical state of the Properties and budgets improvements when required, which improvements are generally funded from cash flow from operations or release of replacement reserve escrows to the extent available. Management continuously reviews the insurance coverage of the Properties and believes such coverage is adequate. See Item 1., Business, above for the general competitive conditions to which the Properties described above are subject. Real estate taxes are calculated using rates and assessed valuations determined by the township or city in which the property is located. Such taxes have approximated 1% of the aggregate cost of the properties as shown in Schedule III to the financial statements included herein. Item 3. Legal Proceedings None Item 4. Submission of Matters to a Vote of Security Holders None 6 PART II Item 5. Market for the Registrant's Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities The Partnership has issued 15,987.5 Limited Partnership Interests, each representing a $5,000 capital contribution to the Partnership, for aggregate gross proceeds of $79,937,500. All of the issued and outstanding Limited Partnership Interests have been issued to Liberty Credit Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued BACs to the purchasers thereof for an aggregate purchase price of $79,937,500. Each BAC represents all of the economic and virtually all of the ownership rights attributable to a Limited Partnership Interest held by the Assignor Limited Partner. BACs may be converted into Limited Partnership Interests at no cost to the holder (other than the payment of transfer costs not to exceed $100), but Limited Partnership Interests so acquired are not thereafter convertible into BACs. Neither the BACs nor the Limited Partnership Interests are traded on any established public trading market. Because of the provisions of the Revenue Act of 1987, unless there are further changes in such law, the Partnership does not intend to include the BACs for quotation on NASDAQ or for listing on any national or regional stock exchange or any other established securities market. The Revenue Act of 1987 contained provisions which have an adverse impact on investors in "publicly traded partnerships." Accordingly, the General Partners have imposed limited restrictions on the transferability of the BACs and the Limited Partnership Interests in secondary market transactions. The restrictions should prevent a public trading market from developing and may adversely affect the ability of an investor to liquidate his or her investment quickly. It is expected that such procedures will remain in effect until such time, if ever, as further revision of the Revenue Act of 1987 may permit the Partnership to lessen the scope of the restrictions. The Partnership has 5,614 registered holders of an aggregate of 15,987.5 BACs, as of May 4, 2005. All of the Partnership's general partnership interests, representing an aggregate capital contribution of $2,000, are held by the two General Partners. Certain Local Partnerships are subject to HUD restrictions which limit annual cash distributions to partners and restrict the Local Partnerships from selling or otherwise liquidating their assets without HUD's approval during the period that the agreement with HUD is in existence. There are no material legal restrictions in the Partnership Agreement on the ability to make distributions. However, the Partnership has made no distributions to the BACs holders as of March 15, 2005. The Partnership does not anticipate providing cash distributions to the BACs holders other than distributions of sale or refinancing proceeds upon the disposition of Properties. Subsequently, on April 15, 2005, a distribution from sales proceeds was made to the BAC Holders for approximately $1,919,000 and to the general partner for approximately $19,000. 7 Item 6. Selected Financial Data The information set forth below presents selected financial data of the Partnership. Additional financial information is set forth in the audited financial statements in Item 8 hereof.

~~Local~~Year ~~Partnership~~Ended ~~Schedule~~March 15, ---------------------------------------------------------------------------- OPERATIONS 2005 2004* 2003* 2002* 2001* ----------------------------------- ------------- ------------- ------------- ------------- ------------- Revenues $ 29,844,228 $ 26,689,044 $ 26,529,808 $ 26,758,300 $ 26,352,856 Operating expenses (~~continued~~33,310,695) %(33,539,433) (31,883,011) (33,080,255) (32,933,805) ------------- ------------- ------------- ------------- ------------- Loss from operations before minority interest (3,466,467) (6,850,389) (5,353,203) (6,321,955) (6,580,949) Minority interest in loss of ~~Units~~subsidiaries ~~Occupied~~from atoperations ~~May~~22,634 110,736 ~~Name~~377,948 ~~and~~411,863 ~~Location~~461,278 ------------- ------------- ------------- ------------- ------------- Loss from operations (~~Number~~3,443,833) (6,839,653) (4,975,255) (5,910,092) (6,119,671) Income (loss) from discontinued operations (including gain (loss) on sale of ~~Units~~properties, extraordinary item and minority interest) ~~Date~~(Note ~~Acquired~~12) ~~2003~~8,196,269 ~~2002~~(284,137) ~~2001~~4,375,326 ~~2000~~(2,010,058) ~~1999~~(1,841,453) ------------- ------------- ------------- ---- ---- ----- ---- --------- ~~Penn~~Net ~~Alto~~income ~~Associates,~~(loss) ~~L.P.~~$ ~~June~~4,752,436 ~~1989~~$ 84(7,123,790) 83$ 82(599,929) 82$ 89(7,920,150) ~~Altoona~~$ (7,961,124) PA============= ============= ============= ============= ============= Loss from operations per BAC $ (~~150~~213.25) ~~Sartain~~$ ~~School~~(423.53) ~~Venture~~$ (308,08) L$ (365.P97) $ (378.95) ~~August~~Income ~~1990~~(loss) ~~100~~from 97discontinued 97operations ~~100~~per 91BAC ~~Philadelphia~~507,54 PA(17.60) 270.93 (35124,47) (114.03) ------------- ------------- ------------- ------------- ------------- Net income (loss) per weighted average BAC $ 294.29 $ (441.13) $ (37.15) $ (490.44) $ (492.98) ============= ============= ============= ============= =============

~~For the~~ Year Ended March 15, ----------------------------------------------------------------------------~~-----~~ ~~OPERATIONS~~FINANCIAL POSITION 2005 2004* 2003 2002 2001 ~~2000 1999~~ ---------- ------------- ------------- ------------- ------------- ------------- ~~Revenues $ 43,490,483 $ 37,918,705 $ 37,421,097 $ 36,518,877 $ 36,007,881 Operating expenses (44,557,403) (46,267,377) (46,357,904) (45,568,571) (44,080,952)~~ ------------- ------------- ~~-------------~~Total ~~-------------~~assets ------------- Loss before minority interest and extraordi- nary item (1,066,920) (8,348,672) (8,936,807) (9,049,694) (8,073,071) Minority interest in loss of subsidiaries 466,991 428,522 475,683 461,338 344,685 ------------- ------------- ------------- ------------- ------------- Loss before extraordi- nary item (599,929) (7,920,150) (8,461,124) (8,588,356) (7,728,386) Extraordinary item 0 0 500,000 0 (530,379) ------------- ------------- ------------- ------------- ------------- Net loss $ ~~(599~~120,~~929) $ (7~~741,~~920,150)~~704 $ (7146,~~961~~186,~~124)~~305 $ (8,588,356) $ (8,258,765) ============= ============= ============= ============= ============= Loss before extra- ordinary item per BAC $ (37.15) $ (490.44) $ (523.94) $ (531.82) $ (478.57) Extraordinary item per BAC 0 0 30.96 0 (32.84) ------------- ------------- ------------- ------------- ------------- Net loss per weighted average BAC $ (37.15) $ (490.44) $ (492.98) $ (531.82) $ (511.41) ============= ============= ============= ============= ============= March 15, --------------------------------------------------------------------------------- FINANCIAL POSITION 2003 2002 2001 2000 1999 ------------------ ------------- ------------- ------------- ------------- ------------- Total assets $ 158,553,482 $ 170,552,302 $ 178,650,012 ~~$ 180,711,472 $ 186,633,608~~ ============= ============= ============= ============= ============= Total liabilities $(~~186~~153,~~336~~013,~~777~~354) $(~~197~~182,~~397~~204,~~871~~819) $(~~197~~186,~~201~~366,~~242~~777) $(~~190~~197,~~839~~397,~~539~~871) $(~~187~~197,~~558~~201,~~858~~242) ============= ============= ============= ============= ============= Minority interest $ (1321,~~743,507)~~605 $ (2662,~~111,304~~078) $ (21,~~485~~743,~~493~~507) $ (2,~~947~~111,~~532~~304) $ (32,~~561~~485,~~993~~493) ============= ============= ============= ============= ============= Total partners' deficit $ (2931,~~556~~950,~~802~~045) $ (2836,~~956~~680,~~873~~592) $ (2129,~~036~~556,~~723~~802) $ (1328,~~075~~956,~~599~~873) $ (421,~~487~~036,~~243~~723) ============= ============= ============= ============= =============

* Reclassified for comparative purposes. During the years ended March 15, 2001 and 2002, total assets decreased primarily due to depreciation, partially offset by net additions to property and equipment. During the years ended March 15, 2003 through 2005, total assets and liabilities decreased primarily due to the sale of Local Partnerships. 8 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources ------------------------------- The Partnership's capital has been invested in 31 Local Partnerships. As of March 15, 2005, the properties and the related assets and liabilities of eight Local Partnerships and the limited partnership interest in two Local Partnerships were sold (the "Sold Assets"). Subsequently on March 29, 2005, the property and the related assets and liabilities of Regent Street were sold. For a discussion of these sales, see Note 10 in Item 8. Short-Term ---------- The Partnership's primary source of funds is cash distributions from operations of the Local Partnerships in which the Partnership has invested. Such funds are available to meet the obligations of the Partnership. During the years ended March 15, 2005, 2004 and 2003, such distributions amounted to approximately $4,698,000, $124,000 and $855,000, respectively. In addition, certain fees and expense reimbursements owed to the General Partners amounting to approximately $7,846,000, $8,002,000 and $7,212,000 were accrued and unpaid as of March 15, 2005, 2004 and 2003, respectively. In particular, partnership management fees owed to the General Partners amounting to approximately $7,811,000 and $7,911,000 were accrued and unpaid as of March 15, 2005 and 2004, respectively. Furthermore, expense reimbursements and asset monitoring fees owed to the General Partners amounting to approximately $35,000 and $90,000 were accrued and unpaid as of March 15, 2005 and 2004, respectively. Without the General Partners' continued accrual without payment of the partnership management fees, the Partnership will not be in the position to meet its obligations. The General Partners have allowed for the accrual without payment of the partnership management fees but are under no obligation to continue to do so. During the year ended March 15, 2005, cash and cash equivalents of the Partnership decreased approximately $754,000. This decrease is attributable to an increase in property and equipment ($2,188,000) and principal repayments of mortgage notes ($5,923,000), which exceeded cash provided by operating activities ($4,389,000), a net increase in due to local general partners and affiliates ($1,768,000), a decrease in cash held in escrow ($666,000), an increase in due to selling partners ($119,000) and a decrease in capitalization of consolidated subsidiaries attributable to minority interest ($415,000). Included in the adjustments to reconcile net income to net cash provided by operating activities is depreciation and amortization of approximately $6,498,000 and income from discontinued operations $8,196,000. Total expenses for the years ended March 15, 2005 and 2004, excluding depreciation and amortization, interest and general and administrative - related parties, totaled $17,423,773 and $16,810,154, respectively. As of March 15, 2005 and 2004, accounts payable, accrued interest payable and security deposits payable were as follows:

~~Quarter Ended ------------------------------------------------------------ June 15, September 15, December 15,~~ March 15, ~~OPERATIONS 2002 2002 2002 2003~~ ---------- ------------ --------~~----~~ ~~------------~~2005 ~~------------~~2004 ~~Revenues $ 9,264,532 $ 15,822,189 $ 8,708,683 $ 9,695,079 Operating expenses (11,314,298) (10,703,674) (10,966,844) (11,572,587)~~ ------------ -~~-----------~~ ------------ ~~------------~~Accounts ~~Loss~~payable ~~before~~$ ~~minority interest (~~2,~~049~~436,~~766)~~882 ~~5,118,515~~$ (23,~~258~~710,~~161)~~915 ~~(1,877,508)~~Accrued ~~Minority~~ interest inpayable ~~loss of subsidiaries 128~~7,~~929 179~~885,~~148~~329 ~~113~~7,~~124 45~~625,~~790~~566 ~~------------~~Security ~~------------~~deposits ~~------------~~payable ~~------------ Net (loss) income $ (1~~624,~~920,837)~~852 ~~$ 5~~876,~~297,663~~745 $ (2,145,037) $ (1,831,718) ============ ============ ============ ============ Net (loss) income per weighted average BAC $ (118.94) $ 328.05 $ (132.82) $ (113.44) ============ ============ ============ ============ Quarter Ended -------------~~-----------------------------------------------~~ ~~June 15, September 15, December 15, March 15, OPERATIONS 2001 2001 2001 2001~~ ---------- --~~----------~~ ~~------------~~Total ~~------------ ------------ Revenues~~ $ 910,~~325~~947,~~958~~063 $ ~~9,256,789 $ 9,351,767 $ 9,984,191 Operating expenses (11,370,593) (11,075,276) (11,258,237) (~~12,~~563~~213,~~271)~~226 ------------ ------------ ------------ ------------ Loss before minority (2,044,635) (1,818,487) (1,906,470) (2,579,080) interest Minority interest in loss of subsidiaries 130,784 35,577 220,841 41,320 ------------ ------------ ------------ ------------ Net loss $ (1,913,851) $ (1,782,910) $ (1,685,629) $ (2,537,760) ============ =~~===========~~ ============ ~~============ Net loss per weighted average BAC $ (118.51) $ (110.40) $ (104.38) $ (157.15) ============ ============ ============ ============~~

Accounts payable are short term liabilities which are expected to be paid from operating cash flows, working capital balances at the Local Partnership level, local general partner advances and in certain circumstances advances from the Partnership. Because the provisions of the secondary loans defer the payment of accrued interest of the respective Local Partnerships, the Partnership believes it (and the applicable Local Partnerships) has sufficient liquidity and ability to generate cash and to meet existing and known or reasonably likely future cash requirements over both the short and long term. Accrued interest payable represents the accrued interest on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount indicated in the above table and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. In addition, each Local Partnership's mortgage notes are collateralized by the land and buildings of the respective Local Partnership, and are without further recourse to the Partnership. Security deposits payable are offset by cash held in security deposits, which are included in "Cash held in escrow" on the Consolidated Balance Sheets. A working capital reserve of approximately $5,796,000 remained unused at March 15, 2005. On April 15, 2005, a distribution from sales proceeds was made to the limited partners of approximately $1,919,000 and to the general partner of approximately $19,000. The Partnership is not expected to have access to additional sources of financing. Long-Term --------- On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent Agencies Appropriations Act. The Act contained revisions to the HUD Mark-to-Market Program and other HUD programs concerning the preservation of the HUD housing stock. On December 29, 1999, HUD issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in Fiscal Year 2000" reflecting the changes in the Act and superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice 99-36 clarified many of the earlier uncertainties with respect to the earlier HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market Program which allows owners with Section 8 contracts where contract rents are currently below market to increase the rents to market levels. 9 For a discussion of contingencies affecting certain Local Partnerships, see Results of Operations of Certain Local Partnerships below. Since the maximum loss the Partnership would be liable for is its net investment in the respective Local Partnerships, the resolution of the existing contingencies is not anticipated to impact future results of operations, liquidity or financial condition in a material way. However, the Partnership's loss of its investment in a Local Partnership may result in recapture of Tax Credits if the investment is lost before expiration of the Compliance Period. Except as described above, management is not aware of any trends or events, commitments or uncertainties which have not otherwise been disclosed that will or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. The portfolio is diversified by the location of the Properties around the United States so that if one area of the country is experiencing downturns in the economy, the remaining properties in the portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy. Sale of Underlying Properties/Local Partnership Interests --------------------------------------------------------- For a discussion of the sale of properties in which the Partnership owns direct and indirect interests, see Note 10 of the Financial Statements. Tabular Disclosure of Contractual Obligations --------------------------------------------- The following table summarized the Partnership's commitments as of March 15, 2005, to make future payments under its debt agreements and other contractual obligations.

~~March~~Less ~~15,~~than 1 - 3 3 -5 More than Total 1 Year Years Years 5 Years ------------~~----------------~~ 2003 2002* ------------- ------------- Property and equipment, at cost, less accumulated depreciation (Notes 2, 4, 7 and 11) $ 133,543,024 $ 144,303,061 Cash and cash equivalents (Notes 2, 3 and 11) 6,067,262 6,379,655 Cash held in escrow (Notes 3 and 5) 13,328,404 14,707,928 Accounts receivable - ~~tenants 780,278 704,001 Deferred costs, less accumulated amortization (Notes 2 and 6) 3,250,600 3,384,587 Other assets 1,583,913 1,073,070~~ ------------- ------------- ~~Total assets $ 158,553,481 $ 170,552,302 ============= ============= LIABILITIES AND PARTNERS' DEFICIT Liabilities~~ Mortgage notes payable (~~Notes 3 and 7~~a) $ ~~147~~97,~~794~~203,~~611~~309 $ ~~161~~5,~~496~~015,~~588~~281 ~~Accounts~~$ ~~payable and other liabilities 12~~5,~~746~~500,~~386~~112 12$ 14,~~336~~048,~~409~~508 ~~Due~~$ ~~to local general partners and affiliates (Note 8) 16~~72,~~794~~639,~~330~~408 ~~15,607,233~~Notes ~~Due~~payable to local general partners ~~and affiliates~~ (~~Note 8~~b) 79,~~727~~034,~~769~~498 63,~~723~~994,~~981~~498 ~~Due~~0 to0 ~~selling partners 1~~5,~~303~~040,~~680~~000 ~~1,233,660~~ ------------- ------------- ~~186,366,776 197,397,871 Minority interests (Note 2) 1,743,507 2,111,304~~ ------------- ------------- ~~Commitments and contingencies (Notes 7, 8 and 11) Partners' deficit Limited partners (15,987.5 BACs issued and outstanding) (Note 1) (28,531,390) (27,937,460) General partners (1,025,412) (1,019,413)~~ ------------- ~~-------------~~ Total ~~partners'~~$106,237,807 ~~deficit~~$ ~~(29~~9,~~556~~009,~~802)~~779 ~~(28~~$ 5,~~956~~500,~~873)~~112 ~~------------- ------------- Total liabilities and partners' deficit~~ $ ~~158~~14,~~553~~048,~~481~~508 $ ~~170~~77,~~552~~679,~~302~~408 ============ ============ ============ ============ ============

(a) The mortgage notes are payable in aggregate monthly installments of approximately $567,000 including principal and interest at rates varying from 1% to 12% per annum, through 2036. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnership's rents and leases is without further recourse. (b) See Note 8(g) in Item 8. Financial Statements and Supplementary Data. Off Balance Sheet Arrangements ------------------------------ The Partnership has no off-balance sheet arrangements. Critical Accounting Policies ---------------------------- In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. The summary should be read in conjunction with the more complete discussion of the Partnership's accounting policies included in Note 2 to the consolidated financial statements in this annual report on Form 10-K. Property and Equipment ---------------------- Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. In accordance with FASB 144, "Accounting for the Impairment of Disposal of Long-Lived Assets", the results of discontinued operations are reported as a separate component of income before extraordinary items on the Consolidated Statements of Operations. Discontinued operations include the results of operations and any gain or loss recognized for Local Partnerships that have been disposed of or are held for sale. A gain or loss recognized on the disposal is disclosed in the notes to the financials statements. Adjustments to amounts previously reported in operations that are directly related to the disposal of a Local Partnership are reclassified in the current period as discontinued operations for comparability purposes. Assets and liabilities of a Local Partnership that are classified as held for sale are presented separately in the asset and liability sections, respectively, of the Consolidated Balance Sheets. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time property investments themselves are reduced to estimated fair value (generally using discounted cash flows). Through March 15, 2005, the Partnership has not recorded any loss on impairment of assets or reduction to estimated fair value. 10 Revenue Recognition ------------------- Rental income is earned primarily under standard residential operating leases and is typically due the first day of each month, but can vary by property due to the terms of the tenant leases. Rental income is recognized when earned and charged to tenants' accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which it is earned. Other revenues are recorded when earned and consist of the following items: Interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income and other rental related items. Other revenues from operations include the following amounts at both the Partnership and Local Partnership level:

~~Year Ended~~ March 15, ----------------------------------------~~----~~ ~~2003~~2005 ~~2002~~2004 ~~2001~~2003 ------------ ------------ ------------ ~~Revenues~~Interest ~~Rental income~~ $ 35144,~~016,201~~236 $ 35115,~~847,433~~745 $ 35127,~~349,851~~427 Other ~~(Notes 7 and 11) 1~~484,~~711,157~~139 2500,~~071,272~~086 2563,~~071,246~~389 ~~Gain on sale of properties (Note 12) 6,763,125 0 0~~ ------------ ------------ ------------ Total ~~revenues~~other ~~43,490,483~~revenue 37,918,705 37,421,097 ------------ ------------ ------------ Expenses General and administrative 6,550,377 6,700,549 6,654,371 General and administrative- related parties 2,636,105 2,524,079 2,482,344 Repairs and maintenance 7,181,706 7,239,106 7,131,149 Operating 4,506,866 4,646,526 4,140,548 Taxes 1,784,791 1,621,544 1,805,936 Insurance 1,957,496 1,525,334 1,376,691 Interest 11,713,295 12,831,666 13,245,823 Depreciation and amortization 8,226,767 9,178,573 9,521,042 ------------ ------------ ------------ 44,557,403 46,267,377 46,357,904 ------------ ------------ ------------ Loss before minority interest and extraordinary item (1,066,920) (8,348,672) (8,936,807) Minority interest in loss of subsidiaries 466,991 428,522 475,683 ------------ ------------ ------------ Loss before extraordinary item (599,929) (7,920,150) (8,461,124) Extraordinary item-forgiveness of indebtedness income (Note 7) 0 0 500,000 ------------ ------------ ------------ Net loss $ ~~(599~~628,~~929)~~375 $ (7615,~~920,150)~~831 $ (7690,~~961,124)~~816 ============ ============ ============ Number of BACs outstanding 15,987.5 15,987.5 15,987.5 ============ ============ ============ Loss before extraordinary item- limited partners $ (593,930) $ (7,840,949) $ (8,376,513) Extraordinary item-limited partners 0 0 495,000 ------------ ------------ ------------ Net loss-limited partners $ (593,930) $ (7,840,949) $ (7,881,513) ============ ============ ============ Loss before extraordinary item per BAC $ (37.15) $ (490.44) $ (523.94) Extraordinary item per BAC 0 0 30.96 ------------ ------------ ------------ Net loss per BAC $ (37.15) $ (490.44) $ (492.98) ============ ============ ============

Other revenues from discontinued operations include the following amounts at both the Partnership and Local Partnership level:

~~Limited~~March ~~General~~15, ~~Total Partners Partners~~ ------------ ------------ ------------ ~~Partners' deficit~~ - ~~March 16, 2000 $(13,075,599) $(12,214,998) $ (860,601) Net loss, year ended March 15, 2001 (7,961,124) (7,881,513) (79,611)~~ ---~~---------~~ ~~------------~~2005 ~~------------~~2004 ~~Partners'~~2003 ~~deficit~~ - ~~March 15, 2001 (21,036,723) (20,096,511) (940,212) Net loss, year ended March 15, 2002 (7,920,150) (7,840,949) (79,201)~~ ---------~~---~~ ------------ ------------ ~~Partners'~~Interest ~~deficit~~$ ~~- March 15~~60,870 ~~2002~~$ ~~(28~~80,~~956,873)~~768 ~~(27,937,460)~~$ (193,~~019,413)~~398 ~~Net~~Other ~~loss~~282,021 ~~year ended March 15~~412,744 ~~2003 (599~~447,~~929)~~348 ~~(593,930) (5,999)~~ ------------ ------------ ------------ ~~Partners'~~Total ~~deficit~~other -revenue ~~March~~$ 15342,891 ~~2003~~ $~~(29,556,802)~~ ~~$(28~~493,~~531,390)~~512 $ (1540,~~025,412)~~746 ============ ============ ============

~~Year Ended~~ March 15, ----------------------------------------~~----~~ ~~2003~~2005 ~~2002~~2004 ~~2001~~2003 ------------ ------------ ------------ ~~Cash~~Subsidy ~~flows~~Income ~~from operating activities: Net loss~~ $ ~~(599~~4,~~929)~~007,686 $ (7501,~~920,150)~~511 $ (7479,~~961,124)~~595 ~~------------~~========== ~~------------~~========== ------------ Adjustments to reconcile net loss to net cash provided by operating activities: Gain on sale of properties (Note 12) (6,763,125) 0 0 Extraordinary item-forgiveness of debt 0 0 (500,000) Write-off of deferred costs 287,019 0 0 Cancellation of indebtedness income (68,571) (68,571) (68,571) Accrued interest added to principal of mortgage note payable 197,846 174,277 164,111 Depreciation and amortization 8,226,767 9,178,573 9,521,042 (Increase) decrease in assets: Cash held in escrow (464,404) (46,054) (115,500) Accounts receivable - tenants (80,267) 248,515 (161,723) Other assets (529,719) 235,297 (256,896) Increase (decrease) in liabilities: Accounts payable and other liabilities 448,700 560,243 992,382 Due to general partners and affiliates 1,041,768 666,187 965,332 Minority interest in loss of subsidiaries (466,991) (428,522) (475,683) ------------ ------------ ------------ Total adjustments 1,829,023 10,519,945 10,064,494 ------------ ------------ ------------ Net cash provided by operating activities 1,229,094 2,599,795 2,103,370 ------------ ------------ ------------ Cash flows from investing activities: Proceeds from sale of property 200,000 0 0 Decrease (increase) in cash held in escrow 1,488,901 500,824 (4,061,193) Improvements to property and equipment (3,112,269) (1,810,743) (1,038,585) ------------ ------------ ------------ Net cash used in investing activities (1,423,368) (1,309,919) (5,099,778) ------------ ------------ ------------ Cash flows from financing activities: Increase in deferred costs (663,074) (50,376) (1,106,120) Increase in due to local general partners and affiliates 1,638,028 1,581,611 349,101 Decrease in due to local general partners and affiliates (450,931) (342,271) (1,908,808) Increase in due to selling partners 70,020 91,570 83,833 Proceeds from mortgage notes 20,559,376 0 12,870,332 Repayment of mortgage notes (21,370,732) (2,904,963) (6,586,009) Decrease in capitalization of consolidated subsidiaries attributable to minority interest 99,194 54,333 13,644 ------------ ------------ ------------ Net cash (used in) provided by financing activities (118,119) (1,570,096) 3,715,973 ------------ ------------ ------------==========

The subsidy income is related to Charles Drew Court Associates, L.P. ("Charles Drew"). The Atlantic County Improvement Authority ("ACIA") entered into a pledge/security agreement with Bank of America (formerly Fleet Bank, N.A.), Charles Drew's mortgagor, under which ACIA pledged certificates of deposit originally in the amount of $4,772,500. The funds, including interest earned thereon, provided a subsidy to Charles Drew equal to the debt service on the mortgage. The funds were used to payoff the mortgage in September 2004. Income Taxes ------------ The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31. New Accounting Pronouncements ----------------------------- On December 16, 2004, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 153, Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29 ("SFAS No. 153"). The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal period beginning after June 15, 2005. The Company does not believe that the adoption of SFAS No. 153 on June 15, 2005 will have a material effect on the Company's consolidated financial statements. In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 was applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created before February 1, 2003, the provisions of FIN 46 are applicable no later than July 1, 2003. The Partnership has not created any variable interest entities after January 31, 2003. In December 2003 the FASB redeliberated certain proposed modifications and revised FIN 46 ("FIN 46 (R)"). The revised provisions were applicable no later than the first reporting period ending after March 15, 2004. The adoption of FIN 46 and FIN 46 (R) did not have a material impact on the Partnership's financial reporting and disclosures. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150 requires disclosure regarding the terms of those instruments and settlement alternatives. The guidance in SFAS No. 150 generally was effective for all 11 financial instruments entered into or modified after May 31, 2003, and was otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it does not have an impact on the Partnership's financial reporting and disclosures. Results of Operations --------------------- The following is a summary of the results of operations of the Partnership for the years ended March 15, 2005, 2004 and 2003 (the 2004, 2003 and 2002 Fiscal Years, respectively). The Partnership's revenues continue to consist primarily of the results of the Partnership's investment in consolidated Local Partnerships. Sixteen of the Local Partnerships receive HUD Section 8 subsidies which serve to stabilize the revenues of these Local Partnerships. The majority of the Local Partnership income continues to be in the form of rental income with the corresponding expenses being divided among operations, depreciation, and mortgage interest. The net income for the 2004 fiscal year totaled $4,752,436 and the net loss for the 2003 and 2002 Fiscal Years totaled $7,123,790 and $599,929, respectively. The 2003 fiscal year is net of an extraordinary gain of $113,565 which is included in discontinued operations for the year ended March 15, 2004. The Partnership generated $686 and $21,629 in Tax Credits during the 2003 and 2002 Fiscal Years, respectively. As of December 31, 2003 all the Local Partnerships have completed their tax credit periods and the Partnership has met its primary objective of generating Tax Credits for qualified BACs holders. However, each Local Partnership must continue to comply with the Tax Credit requirements until the end of the Compliance Period in order to avoid recapture of the Tax Credits. The Compliance Period began to end on January 1, 2004 and will continue through December 31, 2008 with respect to the Properties depending upon when the Tax Credit Period commenced. 2004 vs. 2003 ------------- Rental income decreased approximately 1% for the 2004 Fiscal Year as compared to the 2003 Fiscal Year, primarily due to increased vacancy and recurring concessions at one Local Partnership, a grant received in 2003 at a second Local Partnership which also converted to a Mark to Market program during 2003 and a decrease in tenants assistance payments in 2004 at a third Local Partnership. Subsidy income increased approximately $3,507,000 for the 2004 Fiscal Year as compared to the 2003 Fiscal Year, primarily due to a decrease in subsidy income being received at one Local Partnership in 2004. Total expenses, excluding insurance, remained fairly consistent with a decrease of approximately 1% for the 2004 Fiscal Year as compared to the 2003 Fiscal Year. Insurance increased approximately $173,000 for the 2004 Fiscal Year as compared to the 2003 Fiscal Year, primarily due to increases in insurance premiums at the Local Partnerships. 2003 vs. 2002 ------------- Rental income increased approximately 1%, for the 2003 Fiscal Year as compared to the 2002 Fiscal Year primarily due to rental rate increases. Total expenses, excluding operating, repairs and maintenance and depreciation and amortization, remained fairly consistent with a decrease of approximately 2% for the 2003 Fiscal Year as compared to the 2002 Fiscal Year. Operating increased approximately $366,00 for the 2003 Fiscal Year as compared to the 2002 Fiscal Year primarily due to an increase in gas and water expense at several Local Partnerships. Repairs and maintenance increased approximately $550,000, for the 2003 Fiscal Year as compared to the 2002 Fiscal Year primarily due to an increase in electrical and plumbing repairs, landscaping expense, security contracts, maintenance salaries and general repairs due to high tenant turnover at one Local Partnership, an increase in heating and air conditioning repairs, repair contracts and maintenance salaries at a second Local Partnership and increases in maintenance salaries and security contracts at a third Local Partnership. Depreciation and amortization increased approximately $1,078,000, for the 2003 Fiscal Year as compared to the 2002 Fiscal Year primarily due to the resumption of depreciation expense at one Local Partnership that was classified as an asset held for sale in 2002, and therefore not depreciated in 2002. Results of Operations of Certain Local Partnerships --------------------------------------------------- Redwood Villa Associates, L.P. ------------------------------ Redwood Villa Associates, L.P. ("Redwood") has sustained operating losses since its inception. For the 2004 Fiscal Year, Redwood experienced a loss of $199,278, including $216,628 of depreciation and $4,554 of amortization, and at December 31, 2004 had a partners' deficit of $1,944,248. In addition, Redwood has been able to defer ground lease payments that are due to a related party in the cumulative amount of $388,647 and $363,147 as of December 31, 2004 and 2003, respectively. These conditions raise substantial doubt about Redwood's ability to continue as a going concern. Redwood's continuation as a going concern is dependent upon its ability to achieve continued profitable operations or obtain future capital contributions from the partners. The Local General Partner, whenever possible, plans to reduce operating costs to achieve profitable operations. The financial statements for the 2004, 2003 and 2002 Fiscal Years for Redwood have been prepared assuming that Redwood will continue as a going concern. The Partnership's investment in Redwood at March 15, 2005 and 2004 was reduced to zero by prior years' losses and the minority interest balance was approximately $393,000 and $397,000, respectively. Redwood's net loss after minority interest amounted to approximately $195,000, $200,000 and $157,000 for the 2004, 2003 and 2002 Fiscal Years, respectively. On February 17, 2005, the Partnership's Limited Partnership interest in Redwood was sold. 12 Other ----- The Local Partnerships are impacted by inflation in several ways. Inflation allows for increases in rental rates generally to reflect the impact of higher operating and replacement costs. Furthermore, inflation generally does not impact the fixed long-term financing under which real property investments were purchased. Inflation also affects the Local Partnerships adversely by increasing operating costs, such as fuel, utilities, and labor. For a discussion of Mortgage Notes payable, see Note 7 to the Financial Statements. Item 7A. Quantitative and Qualitative Disclosure about Market Risk The Partnership has mortgage notes that are payable in aggregate monthly installments including principal and interest at rates varying from 1% to 12% per annum. The Partnership does not believe there is a material risk associated with the various interest rates associated with the mortgage notes as the majority of the Local Partnership mortgage notes have fixed rates. The Partnership currently discloses in Item 8, Note 3 of the Notes to Consolidated Financial Statements, the fair value of the mortgage notes payable. The Partnership does not have any other market risk sensitive instruments. 13 Item 8. Financial Statements and Supplementary Data

~~Year~~Sequential ~~Ended~~Page ~~March 15,~~ ----------~~----------------------------------~~ ~~2003 2002 2001 ------------ ------------ ------------ Net~~ (~~decrease~~a) ~~increase~~1. inConsolidated ~~cash~~Financial ~~and~~Statements ~~cash~~Report ~~equivalents~~of ~~(312,393)~~Independent ~~(280,220)~~Registered ~~719,565~~Public ~~Cash~~Accounting ~~and~~Firm ~~cash~~15 ~~equivalents,~~Consolidated ~~beginning~~Balance ofSheets ~~year~~at ~~6,379,655~~March 615,~~659,875~~ ~~5,940,310~~2005 ~~------------ ------------ ------------ Cash~~ and ~~cash~~2004 ~~equivalents,~~82 ~~end~~Consolidated ofStatements ~~year $ 6,067,262 $ 6,379,655 $ 6,659,875 ============ ============ ============ Supplemental disclosure~~ of ~~cash~~Operations ~~flows~~for ~~information: Cash paid during~~ the ~~year~~Years ~~for~~Ended ~~interest~~March ~~$ 9~~15,~~309,001~~ ~~$ 10~~2005,~~509,548~~ $2004 ~~12,698,874~~and ~~============~~2003 ~~============~~83 ~~============~~Consolidated ~~Supplemental~~Statements ~~disclosures~~ of ~~noncash~~Changes ~~investing and financing activities: Increase~~ in ~~accounts~~Partners' ~~payable~~Deficit ~~and other liabilities~~ for ~~property~~the ~~and~~Years ~~equipment~~Ended ~~additions~~March $15, ~~0 $ 438~~2005,~~546~~ $2004 0and ~~Increase~~2003 in84 ~~due~~Consolidated toStatements ~~local~~of ~~general~~Cash ~~partners~~Flows ~~and affiliates~~ for ~~accounts~~the ~~payable~~Years ~~and~~Ended ~~other~~March ~~liabilities 0 31~~15,~~128~~ 272005,~~603~~ ~~Decrease~~2004 ~~in accounts payable~~ and ~~other~~2003 ~~liabilities~~85 ~~for~~Notes ~~deferred~~to ~~loss~~Consolidated onFinancial ~~sale~~Statements ~~of properties 63,084 0 0~~87

14 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners of Liberty Tax Credit Plus L.P. and Subsidiaries (A Delaware Limited Partnership) We have audited the consolidated balance sheets of Liberty Tax Credit Plus L.P. (A Delaware Limited Partnership) and Subsidiaries as of March 15, 2005 and 2004, and the related consolidated statements of operations, changes in partners' deficit, and cash flows for the years ended March 15, 2005, 2004 and 2003 (the 2004, 2003 and 2002 Fiscal Years, respectively). These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements for 26 (Fiscal Year 2004), 29 (Fiscal Year 2003) and 30 (Fiscal Year 2002) subsidiary partnerships whose income (losses) aggregated $141,075 (2004 Fiscal Year), $(4,961,601) (2003 Fiscal Year), and $(700,428) (2002 Fiscal Year) and whose assets constituted 94% and 93% of the Partnership's assets at March 15, 2005 and 2004, presented in the accompanying consolidated financial statements. The financial statements for these subsidiary partnerships were audited by other auditors whose reports thereon have been furnished to us and our opinion expressed herein, insofar as it relates to the amounts included for these subsidiary partnerships, is based solely upon the reports of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based upon our audits, and the reports of the other auditors referred to above, the accompanying consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Liberty Tax Credit Plus L.P. and Subsidiaries at March 15, 2005 and 2004 and the results of their operations and their cash flows for the years ended March 15, 2005, 2004 and 2003, in conformity with U.S. generally accepted accounting principles. TRIEN ROSENBERG ROSENBERG WEINBERG CIULLO & FAZZARI LLP New York, New York June 7, 2005 15 [ASHER & COMPANY LETTERHEAD] Independent Auditor's Report The Partners B & C Housing Associates T/A St. Thomas Square/Worthington Apartments Marlton, New Jersey We have audited the accompanying balance sheets of B & C Housing Associates T/A St. Thomas Square/Worthington Apartments (A Limited Partnership), HUD Project No. 118-94008, as of December 31, 2004 and 2003 and the related statements of loss, Partners' capital and cash flows for the year ended December 31, 2004. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of B & C Housing Associates T/A St. Thomas Square/Worthington Apartments (A Limited Partnership), HUD Project No. 118-94008, as of December 31, 2004 and 2003, and the results of its operations, changes in its Partners' capital and its cash flows for the year ended December 31, 2004 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 accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with GOVERNMENT AUDITING STANDARDS we have also issued reports dated January 11, 2005 on our consideration of B & C Housing Associates' T/A St. Thomas Square/Worthington Apartments (A Limited Partnership), HUD Project No. 118-94008, internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of those reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania January 11, 2005 16 [ASHER & COMPANY LETTERHEAD] Independent Auditor's Report The Partners B & C Housing Associates T/A St. Thomas Square/Worthington Apartments Marlton, New Jersey We have audited the accompanying balance sheets of B & C Housing Associates T/A St. Thomas Square/Worthington Apartments (A Limited Partnership), HUD Project No. 118-94008, as of December 31, 2003 and 2002 and the related statements of loss, Partners' capital and cash flows for the year ended December 31, 2003. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of B & C Housing Associates T/A St. Thomas Square/Worthington Apartments (A Limited Partnership), HUD Project No. 118-94008, as of December 31, 2003 and 2002, and the results of its operations, changes in its Partners' capital and its cash flows for the year ended December 31, 2003 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 accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with GOVERNMENT AUDITING STANDARDS we have also issued reports dated January 15, 2004 on our consideration of B & C Housing Associates' T/A St. Thomas Square/Worthington Apartments (A Limited Partnership), HUD Project No. 118-94008, internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania January 15, 2004 17 [FISHBEIN & COMPANY, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners State Street 86 Associates Limited Partnership We have audited the accompanying balance sheets of STATE STREET 86 ASSOCIATES LIMITED PARTNERSHIP (A Limited Partnership) as of December 31, 2004 and 2003, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. 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 State Street 86 Associates Limited Partnership as of December 31, 2004 and 2003, 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/ Fishbein & Company, P.C. Horsham, Pennsylvania January 18, 2005 18 [FISHBEIN & COMPANY, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners State Street 86 Associates Limited Partnership We have audited the accompanying balance sheets of STATE STREET 86 ASSOCIATES LIMITED PARTNERSHIP (A Limited Partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of State Street 86 Associates Limited Partnership as of December 31, 2003 and 2002, 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/ Fishbein & Company, P.C. Elkins Park, Pennsylvania January 21, 2004 19 [Fishbein & Company, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners Foxglenn Investors We have audited the accompanying balance sheets of FOXGLENN INVESTORS (A Limited Partnership) as of December 31, 2004 and 2003, and the related statements of operations, partners' equity deficiency 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 Foxglenn Investors as of December 31, 2004 and 2003, 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/ Fishbein & Company, P.C. Horsham, Pennsylvania January 15, 2005 20 [Fishbein & Company, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners Foxglenn Investors We have audited the accompanying balance sheets of FOXGLENN INVESTORS (A Limited Partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' equity deficiency 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 Foxglenn Investors as of December 31, 2003 and 2002, 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/ Fishbein & Company, P.C. Elkins Park, Pennsylvania January 15, 2004 21 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of SHILOH GROVE LIMITED PARTNERSHIP, FHA PROJECT #043-35442 as of December 31, 2004, and the related Statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of SHILOH GROVE LIMITED 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 SHILOH GROVE LIMITED PARTNERSHIP as of December 31, 2004, and the results of its operations, changes in partners' equity, and its 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, we have also issued a report dated February 15, 2005 on our consideration of SHILOH GROVE LIMITED PARTNERSHIP's internal control and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 included in the report (shown on pages 12 to 16) and the Financial Data Template is presented for purposes of additional analysis and is not a required part of the basic financial statements of SHILOH GROVE LIMITED PARTNERSHIP. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI February 15, 2005 22 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners Shiloh Grove Limited Partnership Beachwood, Ohio We have audited the accompanying balance sheet of SHILOH GROVE LIMITED PARTNERSHIP, FHA PROJECT #043-35442 as of December 31, 2003, and the related Statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of SHILOH GROVE LIMITED PARTNERSHIP'S management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of SHILOH GROVE LIMITED PARTNERSHIP as of December 31, 2002, were audited by other auditors whose report, dated February 21, 2003 expressed an unqualified opinion on those statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SHILOH GROVE LIMITED PARTNERSHIP as of December 31, 2003, and the results of its operations, changes in partners' equity, and its 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, we have also issued a report dated March 5, 2004 on our consideration of SHILOH GROVE LIMITED PARTNERSHIP's internal control and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 12 to 16) and the Financial Data Template is presented for purposes of additional analysis and is not a required part of the basic financial statements of SHILOH GROVE LIMITED PARTNERSHIP. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI March 5, 2004 23 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of SHILOH GROVE LIMITED PARTNERSHIP, FHA PROJECT #043-35445 as of December 31, 2004, and the related Statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of SHILOH GROVE LIMITED 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 SHILOH GROVE LIMITED PARTNERSHIP as of December 31, 2004, and the results of its operations, changes in partners' equity, and its 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, we have also issued a report dated February 15, 2005 on our consideration of SHILOH GROVE LIMITED PARTNERSHIP's internal control and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 included in the report (shown on pages 12 to 17) and the Financial Data Template (shown on page 25 to 38) are presented for purposes of additional analysis and is not a required part of the basic financial statements of SHILOH GROVE LIMITED PARTNERSHIP. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI February 15, 2005 24 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners Shiloh Grove Limited Partnership Beachwood, Ohio We have audited the accompanying balance sheet of SHILOH GROVE LIMITED PARTNERSHIP, FHA PROJECT #043-35445 as of December 31, 2003, and the related Statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of SHILOH GROVE LIMITED PARTNERSHIP'S management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of SHILOH GROVE LIMITED PARTNERSHIP as of December 31, 2002, were audited by other auditors whose report, dated February 21, 2003 expressed an unqualified opinion on those statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SHILOH GROVE LIMITED PARTNERSHIP as of December 31, 2003, and the results of its operations, changes in partners' equity, and its 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, we have also issued a report dated March 5, 2004 on our consideration of SHILOH GROVE LIMITED PARTNERSHIP's internal control and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 12 to 17) and the Financial Data Template is presented for purposes of additional analysis and is not a required part of the basic financial statements of SHILOH GROVE LIMITED PARTNERSHIP. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI March 5, 2004 25 [Baumgarten & Company LLP Letterhead] Independent Auditor's Report To the Partners Shiloh Grove Limited Partnership Beachwood, Ohio We have audited the accompanying balance sheets of Shiloh Grove Limited Partnership, (an Ohio Limited Partnership) as of December 31, 2002 and 2001, and the related statements of income, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Project's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Shiloh Grove Limited Partnership as of December 31, 2002 and 2001, and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information included in these financial statements is presented for the purposes of additional analysis and is not a required part of the basic financial statements of Shiloh Grove Limited Partnership. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Baumgarten & Company LLP Certified Public Accountants Cleveland, Ohio February 21, 2003 26 [FRIEDMAN ALPREN & GREEN LLP Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners of Silver Blue Lake Apartments, Ltd. We have audited the accompanying statements of income, changes in partners' capital and cash flows of SILVER BLUE LAKE APARTMENTS, LTD. (a limited partnership), FHA Project No. FL29-K005-009-124, for the period January 1, 2003 to June 18, 2003 (date of dissolution). 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 results of operations and cash flows of SILVER BLUE LAKE APARTMENTS, LTD. for the period January 1, 2003 to June 18, 2003 (date of dissolution), in conformity with accounting principles generally accepted in the United States of America. /s/ Friedman Alpren & Green LLP New York, New York September 18, 2003 27 [FRIEDMAN ALPREN & GREEN LLP Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners of Silver Blue Lake Apartments, Ltd. We have audited the accompanying balance sheet of SILVER BLUE LAKE APARTMENTS, LTD. (a limited partnership), FHA Project No. FL29-K005-009-124, as of December 31, 2002, and the related statements of operations, changes in partners' capital deficiency 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 SILVER BLUE LAKE APARTMENTS, 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. /s/ Friedman Alpren & Green LLP New York, New York February 4, 2003 28 [Saltz, Shamis & Goldfarb, Inc. Letterhead] Independent Auditor's Report To the General and Limited Partners Lancaster Towers Associates, L.P. We have audited the accompanying balance sheets of Lancaster Towers Associates, L.P. (A Delaware Limited Partnership), FHA Project No. 014-44031-LDC-R as of December 31, 2004 and 2003, and the related statements of income, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lancaster Towers Associates, L.P. as of December 31, 2004 and 2003, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated January 13, 20054 on our consideration of Lancaster Towers Associates, L.P.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and over compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or over compliance. That report is an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report in considering the results of our audit. The accompanying supplemental information (commencing on Page 22) is presented for purposes of additional analysis and is not a required part of the basic financial statements of Lancaster Towers Associates, L.P. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as whole. /s/ Saltz, Shamis & Goldfarb, Inc. CERTIFIED PUBLIC ACCOUNTANTS Cleveland, Ohio January 13, 2005 29 [Bick-Fredman & Co Letterhead] Independent Auditor's Report To the General and Limited Partners Lancaster Towers Associates, L.P. We have audited the accompanying balance sheets of Lancaster Towers Associates, L.P. (A Delaware Limited Partnership), FHA Project No. 014-44031-LDC-R as of December 31, 2002 and 2001, and the related statements of income, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lancaster Towers Associates, L.P. as of December 31, 2002 and 2001, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, we have also issued a report dated January 10, 2003 on our consideration of Lancaster Towers Associates, L.P.'s internal control and reports dated January 10, 2003 on its compliance with specific requirements applicable to major HUD programs and specific requirements applicable to Fair Housing and Non-Discrimination, and specific requirements applicable to nonmajor HUD program transactions. 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/ Bick-Fredman & Co. Cleveland, Ohio January 10, 2003 30 [Asher & Company, Ltd. Letterhead] Independent Auditors' Report The Partners West Kinney Associates, L.P. T/A Willie T. Wright Plaza Marlton, New Jersey We have audited the accompanying balance sheets of West Kinney Associates, L.P. T/A Willie T. Wright Plaza (A Limited Partnership) Project No. NJHMFA 607, as of December 31, 2004 and 2003, 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 and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of West Kinney Associates, L.P. T/A Willie T. Wright Plaza (A Limited Partnership) Project No. NJHMFA 607, as of December 31, 2004 and 2003, and the results of its operations, changes in its Partners' capital 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 issued reports dated January 12, 2005 on our consideration of West Kinney Associates, L.P.'s T/A Willie T. Wright Plaza (A Limited Partnership) Project No. NJHMFA 607, internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of those reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania January 12, 2005 31 [Asher & Company, Ltd. Letterhead] Independent Auditors' Report The Partners West Kinney Associates, L.P. T/A Willie T. Wright Plaza Marlton, New Jersey We have audited the accompanying balance sheets of West Kinney Associates, L.P. T/A Willie T. Wright Plaza (A Limited Partnership) Project No. NJHMFA 607, as of December 31, 2003 and 2002, 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 and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of West Kinney Associates, L.P. T/A Willie T. Wright Plaza (A Limited Partnership) Project No. NJHMFA 607, as of December 31, 2003 and 2002, and the results of its operations, changes in its Partners' capital 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 issued reports dated January 19, 2004 on our consideration of West Kinney Associates, L.P.'s T/A Willie T. Wright Plaza (A Limited Partnership) Project No. NJHMFA 607, internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania January 19, 2004 32 [MERINA & COMPANY, LLP Letterhead] INDEPENDENT AUDITOR'S REPORT To: The Partners Autumn Park Associates Limited Partnership We have audited the accompanying statement of profit and loss, changes in partners' equity, and cash flows of Autumn Park Associates Limited Partnership, for the period ended September 24, 2004 (date of dissolution). 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 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 the partnership and the results of its operations and its cash flows for the period ended September 24, 2004 (date of dissolution), in conformity with accounting principles generally accepted in the United States of America. /s/ Merina & Company, LLP West Linn, Oregon January 7, 2005 33 [MERINA & COMPANY, LLP Letterhead] INDEPENDENT AUDITOR'S REPORT To the Partners Autumn Park Associates Limited Partnership We have audited the accompanying balance sheets of Autumn Park Associates Limited Partnership as of December 31, 2003 and 2002, and the related statements of profit and loss, changes of partner' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our 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 the partnership as of December 31, 2003 and 2002, 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/ Merina & Company, LLP West Linn, Oregon February 26, 2004 34 [REZNICK GROUP, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Regent Street Associates We have audited the accompanying balance sheets of Regent Street Associates as of December 31, 2004 and 2003, and the 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 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. As described in Note A to the financial statements, the Partnership's financial statements have been prepared on the basis of accounting and reporting practices prescribed by the Pennsylvania Housing Finance Agency (PHFA). These prescribed practices are a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Regent Street Associates as of December 31, 2004 and 2003, and the results of its operations, the changes in partners' equity (deficit) and its cash flows for the years then ended, on the basis of accounting described in Note A. As discussed in Note K to the financial statements, the Partnership has executed a purchase agreement for the sale of the property. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our report dated February 11, 2005, on our consideration of Regent Street Associates' internal control over financial reporting and on our tests of its compliance with laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be considered in assessing the results of our audit. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The 2004 supplemental information on pages 25 through 28 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. This report is intended solely for the information and use of management and the Pennsylvania Housing Finance Agency and is not intended to be and should not be sued by anyone other than these specified parties. /s/ Reznick Group, P.C. Baltimore, Maryland February 11, 2005 35 [REZNICK FEDDER & SILVERMAN Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Regent Street Associates We have audited the accompanying balance sheets of Regent Street Associates as of December 31, 2003 and 2002, and the 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 and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Regent Street Associates as of December 31, 2003 and 2002, 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 and the "Consolidated Audit Guide for Audits of HUD Programs," we have also issued reports for the year ended December 31, 2003, dated February 13, 2004, on our consideration of Regent Street Associates' internal control and on its compliance with specific requirements applicable to major HUD programs and specific requirements applicable to 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 audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information on pages 27 through 40 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 Taxpayer Identification Number; 52-1088612 Baltimore, Maryland February 13, 2004 Lead Auditor: Michael A. Cumming 36 [Asher & Company, Ltd. Letterhead] Independent Auditors' Report The Partners Magnolia Arms Associates, Ltd. T/A Palm Terrace Apartments Marlton, New Jersey We have audited the accompanying balance sheets of Magnolia Arms Associates, Ltd. T/A Palm Terrace Apartments (A Limited Partnership) as of December 31, 2004 and 2003 and the related statements of loss, Partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Magnolia Arms Associates, Ltd. T/A Palm Terrace Apartments (A Limited Partnership) as of December 31, 2004 and 2003, and the results of its operations, changes in its Partners' capital and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania February 23, 2005 37 [Asher & Company, Ltd. Letterhead] Independent Auditors' Report The Partners Magnolia Arms Associates, Ltd. T/A Palm Terrace Apartments Marlton, New Jersey We have audited the accompanying balance sheets of Magnolia Arms Associates, Ltd. T/A Palm Terrace Apartments (A Limited Partnership) as of December 31, 2003 and 2002 and the related statements of loss, Partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Magnolia Arms Associates, Ltd. T/A Palm Terrace Apartments (A Limited Partnership) as of December 31, 2003 and 2002, and the results of its operations, changes in its Partners' capital and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania January 31, 2004 38 [Asher & Company, Ltd. Letterhead] Independent Auditors' Report The Partners Greenleaf Associates, L.P. Marlton, New Jersey We have audited the accompanying balance sheets of Greenleaf Associates, L.P. (A Limited Partnership), HUD Project No. 084-35341, as of December 31, 2004 and 2003, and the related statements of loss, Partners' capital and cash flows for the year ended December 31, 2004. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Greenleaf Associates, L.P. (A Limited Partnership), HUD Project No. 084-35341, as of December 31, 2004 and 2003, and the results of its operations, changes in its Partners' capital and its cash flows for the year ended December 31, 2004 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 accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued reports dated February 8, 2005 on our consideration of Greenleaf Associates, L.P.'s (A Limited Partnership), HUD Project No. 084-35341, internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of those reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania February 8, 2005 39 [Asher & Company, Ltd. Letterhead] Independent Auditors' Report The Partners Greenleaf Associates, L.P. Marlton, New Jersey We have audited the accompanying balance sheets of Greenleaf Associates, L.P. (A Limited Partnership), HUD Project No. 084-94009, as of December 31, 2003 and 2002, and the related statements of loss, Partners' capital and cash flows for the year ended December 31, 2003. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Greenleaf Associates, L.P. (A Limited Partnership), HUD Project No. 084-94009, as of December 31, 2003 and 2002, and the results of its operations, changes in its Partners' capital and its cash flows for the year ended December 31, 2003 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 accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued reports dated January 23, 2004 on our consideration of Greenleaf Associates, L.P.'s (A Limited Partnership), HUD Project No. 084-94009, internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania January 23, 2004 40 [JOSE E. ROSARIO & CO. Letterhead] INDEPENDENT AUDITOR'S REPORT To the Partners of Puerto Rico Housing Finance Corporation Alameda Towers Associates, L.P. San Juan, Puerto Rico Rio Piedras, Puerto Rico I have audited the accompanying balance sheets of Alameda Towers Associates, L.P., HUD Project No. RQ-46-K-006-003, as of December 31, 2004 and 2003, and the related statements of loss, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with auditing standards generally accepted in the United States of America and Puerto Rico 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 I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alameda Towers Associates, L.P. as of December 31, 2004 and 2003 and the results of its operations, changes in partners' capital, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America and Puerto Rico. In accordance with GOVERNMENT AUDITING STANDARDS, I have also issued a report dated February 3, 2005 on my consideration of Alameda Towers Associates, L.P.'s internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, grants, agreements and other matters. The purpose of those reports are to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. 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 my audits. My audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 13 to 18 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Alameda Towers Associates, LP. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in my opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Jose E. Rosario & Co. License No. 961 Expires December 1, 2007 Stamp No. 2029007 of the Puerto Rico College of CPA was affixed to the original. February 3, 2005 San Juan, Puerto Rico 41 [JOSE E. ROSARIO & CO. Letterhead] INDEPENDENT AUDITOR'S REPORT To the Partners of Puerto Rico Housing Finance Corporation Alameda Towers Associates, L.P. San Juan, Puerto Rico Rio Piedras, PR I have audited the accompanying balance sheets of Alameda Towers Associates, L.P. HUD Project No. RQ-46-K-006-003, as of December 31, 2003 and 2002, and the related statements of loss, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with auditing standards generally accepted in the United States of America and Puerto Rico 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 I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alameda Towers Associates, L.P. as of December 31, 2003 and 2002 and the results of its operations, changes in partners' capital, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America and Puerto Rico. In accordance with GOVERNMENT AUDITING STANDARDS, I have also issued a report dated January 28, 2004 on my consideration of Alameda Towers Associates, L.P.'s internal control and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 my audits. My audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 13 to 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Alameda Towers Associates, LP. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in my opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Jose E. Rosario & Co. License No. 961 Expires December 1, 2004 Stamp No. 1931870 of the Puerto Rico College of CPA was affixed to the original. January 28, 2004 San Juan, Puerto Rico 42 [Friedman, Alpren & Green, LLP Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Dixie Apartment Associates, Ltd. We have audited the accompanying statements of income, changes in partners' capital and cash flows of DIXIE APARTMENT ASSOCIATES, LTD. (a limited partnership), for the period January 1, 2003 to June 18, 2003 (date of dissolution). 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 results of operations, changes in partners' capital and cash flows of DIXIE APARTMENT ASSOCIATES, LTD. for the period January 1, 2003 to June 18, 2003 (date of dissolution), in conformity with accounting principles generally accepted in the United States of America. /s/ Friedman, Alpren & Green LLP New York, New York June 18, 2003 43 [Friedman, Alpren & Green, LLP Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Dixie Apartment Associates, Ltd. We have audited the accompanying balance sheet of Dixie Apartment Associates, Ltd. (a limited partnership), as of December 31, 2002, and the related statements of operations, changes in partners' capital deficiency 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 Dixie Apartment 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. /s/ Friedman, Alpren & Green LLP New York, New York February 6, 2003 44 [Friedman, Alpren & Green LLP Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Ludlam Gardens Apartments, Ltd. We have audited the accompanying statements of income, changes in partners' capital and cash flows of LUDLAM GARDENS APARTMENTS, LTD. (a limited partnership) for the period January 1, 2003 to June 18, 2003 (date of dissolution). 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 results of operations, changes in partners' capital and cash flows of LUDLAM GARDENS APARTMENTS, LTD. for the period January 1, 2003 to June 18, 2003 (date of dissolution), in conformity with accounting principles generally accepted in the United States of America. /s/ Friedman, Alpren & Green LLP New York, New York June 18, 2003 45 [Friedman, Alpren & Green LLP Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Ludlam Gardens Apartments, Ltd. We have audited the accompanying balance sheet of Ludlam Gardens Apartments, Ltd., (a limited partnership) as of December 31, 2002, and the related statements of operations, changes in partners' capital deficiency 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 Ludlam Gardens Apartments, 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. /s/ Friedman, Alpren & Green LLP New York, New York February 4, 2003 46 [REZNICK GROUP, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT To the Partners GROVE PARC ASSOCIATES LIMITED PARTNERSHIP We have audited the accompanying balance sheet of GROVE PARC ASSOCIATES LIMITED PARTNERSHIP, FHA Project No. 071-11091 (An Illinois Limited Partnership) as of December 31, 2004, and the related statement of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements as of December 31, 2003, were audited by Friduss, Lukee, Schiff & Co., P.C., who merged with Reznick Group, P.C. as of January 1, 2005, and whose report dated March 18, 2004, expressed an unqualified opinion on those statements. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 GROVE PARC ASSOCIATES LIMITED PARTNERSHIP as of December 31, 2004, and the results of its operations, changes in its partners' deficit and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued reports, dated March 3, 2005 on our consideration of GROVE PARC ASSOCIATES LIMITED PARTNERSHIP'S internal control, and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report in considering the results of our audits. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information for the year ended December 31, 2004, 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 Group, P.C. Certified Public Accountants Chicago, Illinois March 3, 2005 47 [FRIDUSS, LUKEE, SCHIFF & CO., P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT To the Partners GROVE PARC ASSOCIATES LIMITED PARTNERSHIP We have audited the accompanying balance sheet of GROVE PARC ASSOCIATES LIMITED PARTNERSHIP, FHA Project No. 071-11091 (An Illinois Limited Partnership) as of December 31, 2003, and the related statement of operations, partners' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of GROVE PARC ASSOCIATES LIMITED PARTNERSHIP as of December 31, 2002 were audited by other auditors, whose report dated, January 30, 2003, expressed an unqualified opinion on those statements. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 GROVE PARC ASSOCIATES LIMITED PARTNERSHIP as of December 31, 2003, and the results of its operations, changes in its partners' deficit and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports, dated March 18, 2004 on our consideration of GROVE PARC ASSOCIATES LIMITED PARTNERSHIP'S internal control, and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audits. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information for the year ended December 31, 2003 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/ Friduss, Lukee, Schiff & Co., P.C. Chicago, Illinois March 18, 2004 48 [PHILIP ROOTBERG & COMPANY, LLP Letterhead] INDEPENDENT AUDITOR'S REPORT To the Partners Grove Parc Associates Limited Partnership We have audited the accompanying balance sheet of Grove Parc Associates Limited Partnership (a limited partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Grove Parc Associates Limited Partnership as of December 31, 2002 and 2001, and the results of its operations, changes in its partners' deficit and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules listed on the preceding contents page are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the 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/ Philip Rootberg & Company, LLP Chicago, Illinois January 30, 2003 49 [Michael Sczekan & Co., P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT ---------------------------- To the General Partners Apple Creek Housing Associates, Ltd. Arvada, Colorado We have audited the accompanying Balance Sheet of Apple Creek Housing Associates, Ltd. FHA Project Number 101-35515, as of May 31, 2002, and the related statements of profit and loss, changes in project equity and cash flows for the period January 1 through May 31, 2002. These financial statements are the responsibility of the Project's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Apple Creek Housing Associates, Ltd., as of May 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with GOVERNMENT AUDITING STANDARDS and the CONSOLIDATED AUDIT GUIDE FOR AUDITS OF HUD PROGRAMS we have also issued a report dated August 12, 2002, on our consideration of Apple Creek Housing Associates, Ltd.'s internal control structure and reports dated August 12, 2002, on its compliance with laws and regulations and compliance with specific requirements applicable to major HUD programs and specific requirements applicable to Fair Housing and Non-Discrimination. Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The supporting data included in the report on pages 13 through 18 is presented for the purposes of additional analysis and are not a required part of the financial statements of Apple Creek Housing Associates, Ltd. Such information has been subjected to the same auditing procedures applied in the examination of the basic financial statements and, in our opinion, are presented fairly in all material respects in relation to the financial statements taken as a whole. Respectfully submitted, /s/ Michael Sczekan & Co., P.C. Certified Public Accountants Englewood, Colorado August 12, 2002 50 [LEAF & COLE, LLP Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Redwood Villa Associates (A California Limited Partnership) c/o San Diego Interfaith Housing Foundation 2130 Fourth Avenue San Diego, California 92101 We have audited the balance sheet of Redwood Villa Associates (A California Limited Partnership) as of December 31, 2004, and the related statements of operations, partners' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Redwood Villa Associates as of December 31, 2003 were audited by other auditors whose report dated January 27, 2004, expressed an unqualified opinion on those statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Redwood Villa Associates as of December 31, 2004, and the results of its operations and its cash flows for the period 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 10 to the financial statements, the Partnership has sustained operating losses since inception. For the year ended December 31, 2004, the Partnership experienced a loss of $199,278 (including $216,628 of depreciation and $4,554 of amortization expense) and as of that date, had a partners' (deficit) of $1,944,248. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. Management's plans regarding these matters are described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In accordance with Government Auditing Standards, we have also issued our report dated January 26, 2005, on our consideration of Redwood Villa Associates' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results audit. 51 To the Partners Page 2 Redwood Villa Associates (A California Limited Partnership) Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying information in Schedules I and II are presented for purposes of additional analysis and is not a required part of the basic financial statements. The information in Schedule I 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 basic financial statements taken as a whole. The financial statements of Redwood Villas Associates for the year ended December 2003, were audited by other auditors whose report dated January 27, 2004, expressed an unqualified opinion on those financial statements. Their report, as of the same date stated that in their opinion, the supplementary information in Schedule I was fairly stated in all material respects in relation to the basic financial statements for the year ended December 31, 2003, taken as a whole. The information in Schedule II, a portion of which is of a nonaccounting nature, has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and we express no opinion on it. /s/ Leaf & Cole, LLP San Diego, California January 26, 2005 52 [BRODSHATZER, WALLACE, SPOON & YIP Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners of Redwood Villa Associates (A Limited Partnership) We have audited the balance sheets of Redwood Villa Associates (A Limited Partnership) ("Partnership") as of December 31, 2003 and 2002, and the related statements of operations, changes in partners' (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our 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 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 Redwood Villa Associates (A Limited Partnership) as of December 31, 2003 and 2002, 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 2 to the financial statements, the Partnership has sustained operating losses since inception. For the year ended December 31, 2003, the Partnership experienced a loss of $201,871 (including $212,076 of depreciation and $4,553 of amortization expense) and as of that date, had a working capital deficiency of $754,531 and a partners' (deficit) of $1,729,970. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. Management's plans regarding these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our report dated January 27, 2004 on our consideration of Redwood Villa Associates' (A Limited Partnership) internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Brodshatzer, Wallace, Spoon & Yip San Diego, California January 27, 2004 53 [Asher & Company, Ltd. Letterhead] Independent Auditors' Report ---------------------------- The Partners Charles Drew Court Associates, L.P. Marlton, New Jersey We have audited the accompanying balance sheets of Charles Drew Court Associates, L.P. (A Limited Partnership) as of December 31, 2003 and 2002 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 Charles Drew Court Associates, L.P. (A Limited Partnership) as of December 31, 2003 and 2002 and the results of its operations, changes in its Partners' capital and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. 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/ Asher & Company, Ltd. Philadelphia, Pennsylvania February 6, 2004 54 [Koch Group & Company, LLP Letterhead] INDEPENDENT AUDITORS' REPORT To The Partners Walnut Park Plaza Associates, L.P. We have audited the accompanying statement of financial position of Walnut Park Plaza Associates, L.P. (A Pennsylvania Limited Partnership), as of March 31, 2004 and the related statements of operations, changes in partner's equity, and cash flows for the three months then ended. These financial statements are the responsibility of the Walnut Park Plaza Associates, L.P.'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 Walnut Park Plaza Associates, L.P. (A Pennsylvania Limited Partnership), as of March 31, 2004 and the changes in its net assets and its cash flows for the three months then ended in conformity with generally accepted accounting principles. /s/ Koch Group & Company, LLP Certified Public Accountants New York, New York December 17, 2004 55 [Koch Group & Company, LLP Letterhead] INDEPENDENT AUDITORS' REPORT To The Partners Walnut Park Plaza Associates, L.P. We have audited the accompanying statement of financial position of Walnut Park Plaza Associates, L.P. (A Pennsylvania Limited Partnership) as of December 31, 2003, and the related statements of operations, changes in partner's equity (deficiency), cash flows for the year then ended. These financial statements are the responsibility of the Walnut Park Plaza Associates, L.P.'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 Walnut Park Plaza Associates, L.P. (A Pennsylvania Limited Partnership), as of December 31, 2003, and the results of its operations, changes in its partner's equity (deficiency), and its cash flows for the year then ended in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern. As discussed in Note 3 to the financial statements, the Partnership has suffered recurring losses from operations and is in default of certain obligation under the terms of the mortgage loan. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern at December 31, 2003. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Koch Group & Company, LLP New York, New York March 31, 2004, except for notes 8 and 11, as to which the date is June 2, 2004 56 [Matthews, Carter and Boyce, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT To The Partners Walnut Park Plaza Associates Philadelphia, Pennsylvania We have audited the accompanying balance sheets of Walnut Park Plaza Associates (a Pennsylvania Limited Partnership) as of December 31, 2002 and 2001, and the related statements of operations, changes in 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 audit. We conducted our audits in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States. Those standards require that we plan and perform the 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 amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 Walnut Park Plaza Associates 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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated January 31, 2003, on our consideration of Walnut Park Plaza Associates internal control and a report dated January 31, 2003 on its compliance with laws, regulations, contracts and grants applicable to Walnut Park Plaza Associates. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 10 to the financial statements, the Partnership has suffered recurring losses from operations and does not have sufficient cash flow from operations to pay current liabilities, which raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Matthews, Carter and Boyce, P.C. Fairfax, Virginia January 31, 2003 57 [Favors & Associates, CPA's, P.S. Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Bayridge Associates Limited Partnership We have audited the accompanying balance sheet of Bayridge Associates Limited Partnership as of December 31, 2004 and the related statements of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the entity'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 Bayridge Associates Limited Partnership as of December 31, 2004 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Favors & Associates, CPA's, P.S. Fircrest, Washington February 16, 2005 58 [Richey May & Co. Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Bayridge Associates Limited Partnership Denver, Colorado We have audited the accompanying balance sheet of Bayridge Associates Limited Partnership as of December 31, 2003 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Bayridge Associates Limited Partnership as of December 31, 2002 were audited by other auditors whose report dated January 31, 2003 expressed an unqualified opinion on those 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 Bayridge Associates Limited Partnership, as of December 31, 2003 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 supplemental information on pages 11 and 12 is presented for the 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 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/ Richey May & Co. Englewood, Colorado January 16, 2004 59 [Reznick Fedder & Silverman Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Bayridge Associates Limited Partnership We have audited the accompanying balance sheets of Bayridge Associates Limited Partnership as of December 31, 2002 and 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 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 Bayridge Associates 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/ Reznick Fedder & Silverman Atlanta, Georgia January 31, 2003 60 [Habif, Arogeti & Wynne, LLP. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of United-Pennsylvanian Limited Partnership We have audited the accompanying balance sheets of UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP [FHA Project No. R-251-8E] as of December 31, 2004 and 2003, and the related statements of profit and loss, changes in partners' deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP as of December 31, 2004 and 2003, and the results of its operations, its changes in partners' 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, issued by the Comptroller General of the United States and the CONSOLIDATED AUDIT GUIDE FOR AUDITS OF HUD PROGRAMS, issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, we have also issued our reports dated January 27, 2005, on our consideration of UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP's internal control and on our tests of its compliance with certain provisions of laws regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audits. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information included in the report [shown on pages 14 through 21] is presented for the purpose of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. /s/ Habif, Arogeti & Wynne, LLP Atlanta, Georgia January 27, 2005 61 [Habif, Arogeti & Wynne, LLP. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of United-Pennsylvanian Limited Partnership We have audited the accompanying balance sheets of UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP [FHA Project No. R-251-8E] as of December 31, 2003 and 2002, and the related statements of profit and loss, changes in partners' deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP as of December 31, 2003 and 2002, and the results of its operations, its changes in partners' 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, issued by the Comptroller General of the United States and the CONSOLIDATED AUDIT GUIDE FOR AUDITS OF HUD PROGRAMS, issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, we have also issued our reports dated January 28, 2004, on our consideration of UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP's internal control and on our tests of its compliance with certain provisions of laws regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audits. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information included in the report [shown on pages 14 through 21] is presented for the purpose of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. /s/ Habif, Arogeti & Wynne, LLP Atlanta, Georgia January 28, 2004 62 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners 2051 Grand Concourse Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of 2051 Grand Concourse Housing Associates (a limited partnership) as of December 31, 2004 and 2003, and the related statements of operations, partners' capital (deficiency), 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 2051 Grand Concourse Housing Associates as of December 31, 2004 and 2003, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C White Plains, New York January 21, 2005 63 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners 2051 Grand Concourse Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of 2051 Grand Concourse Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 2051 Grand Concourse Housing Associates as of December 31, 2003 and 2002, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C White Plains, New York January 23, 2004 64 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Concourse Artists Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Concourse Artists Housing Associates (a limited partnership) as of December 31, 2004 and 2003, and the related statements of operations, partners' capital (deficiency), 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 Concourse Artists Housing Associates as of December 31, 2004 and 2003, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 21, 2005 65 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Concourse Artists Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Concourse Artists Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 Concourse Artists Housing Associates as of December 31, 2003 and 2002, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 23, 2004 66 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Willoughby-Wyckoff Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing Associates (a limited partnership) as of December 31, 2004 and 2003, and the related statements of operations, partners' capital (deficiency), 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 Willoughby-Wyckoff Housing Associates as of December 31, 2004 and 2003, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 21, 2005 67 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Willoughby-Wyckoff Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 Willoughby-Wyckoff Housing Associates as of December 31, 2003 and 2002, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 23, 2004 68 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Robin Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Robin Housing Associates (a limited partnership) as of December 31, 2004 and 2003, and the related statements of operations, partners' capital (deficiency), 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 Robin Housing Associates as of December 31, 2004 and 2003, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 21, 2005 69 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Robin Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Robin Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 Robin Housing Associates as of December 31, 2003 and 2002, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 23, 2004 70 [CARTER & COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, LLC Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Lund Hill Associates We have audited the accompanying balance sheet of Lund Hill Associates, (a limited partnership), WHEDA Project No. 021, as of December 31, 2004, and the related statements of profit and loss, 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. 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 my 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 Lund Hill Associates as of December 31, 2004, 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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our reports dated January 31, 2005 on our consideration of Lund Hill Associates internal control over financial reporting and on our tests of its compliance with certain provision of laws, regulations, contracts, and grant agreements and other matters. The purpose of those reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. 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 shown on pages 14-23 is presented for the purpose 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 financial statements taken as a whole. /s/ Carter & Company Destin, Florida January 31, 2005 71 [CARTER & COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, LLC Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Lund Hill Associates We have audited the accompanying balance sheet of Lund Hill Associates, (a limited partnership), WHEDA Project No. 021, as of December 31, 2003, 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. 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 my 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 Lund Hill Associates as of December 31, 2003, 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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our reports dated January 16, 2004 on our consideration of Lund Hill Associates internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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. The accompanying supplemental information (shown on pages 14-23) is presented for purposes of additional analysis and is not a required part of the basic financial statements of Lund Hill Associates. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Carter & Company Atlanta, Georgia January 16, 2004 72 [KENNETH W. BRYANT, CERTIFIED PUBLIC ACCOUNTANT Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Lund Hill Associates I have audited the accompanying balance sheet of Lund Hill Associates, (a limited partnership), WHEDA Project No. 021, as of December 31, 2002, and the related statements of profit and loss, changes in partners' equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my 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 I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lund Hill Associates 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. In accordance with Government Auditing Standards, I have also issued my reports dated February 7, 2003 on my consideration of Lund Hill Associates internal control and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 my audit. The accompanying supplemental information (shown on pages 14-23) is presented for purposes of additional analysis and is not a required part of the basic financial statements of Lund Hill Associates. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Kenneth W. Bryant Atlanta, Georgia February 7, 2003 73 [RICK J. TANNEBERGER, CERTIFIED PUBLIC ACCOUNTANT Letterhead] Independent Auditor's Report ---------------------------- The Partners Tanglewood Apartments, A Limited Partnership We have audited the accompanying balance sheets of Tanglewood Apartments, A Limited Partnership, as of July 30, 2004 and December 31, 2003, and the related statements of income, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. These 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 Tanglewood Apartments, A Limited Partnership as of July 30, 2004 and December 31, 2003, and the results of its operations and its cash flows for the period and year then ended in conformity with accounting principles 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 supplementary information presented on page 11 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Rick J. Tanneberger, CPA, P.A. January 31, 2005 Fayetteville, Arkansas 74 [RICK J. TANNEBERGER, CERTIFIED PUBLIC ACCOUNTANT Letterhead] Independent Auditor's Report ---------------------------- The Partners Tanglewood Apartments, A Limited Partnership We have audited the accompanying balance sheets of Tanglewood Apartments, A Limited Partnership, as of December 31, 2003 and 2002, and the related statements of income, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. These 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 Tanglewood Apartments, A Limited Partnership as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles 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 supplementary information presented on page 12 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/ Rick J. Tanneberger, CPA, P.A. Fayetteville, Arkansas February 9, 2004 75 [RBG & CO. Letterhead] Independent Auditors' Report Partners Quality Hill Historic District - Phase II-A, L.P. St. Louis, Missouri We have audited the accompanying balance sheet of Quality Hill Historic District-Phase II-A, L.P., a limited partnership, as of December 31, 2004 and 2003, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Quality Hill Historic District-Phase II-A, L.P. as of December 31, 2004 and 2003, 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/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri February 1, 2005 76 [RBG & CO. Letterhead] Independent Auditors' Report Partners Quality Hill Historic District - Phase II-A, L.P. St. Louis, Missouri We have audited the accompanying balance sheet of Quality Hill Historic District-Phase II-A, L.P., a limited partnership, as of December 31, 2003 and 2002, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Quality Hill Historic District-Phase II-A, L.P. as of December 31, 2003 and 2002, 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/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri February 3, 2004 77 [HAMILTON & MUSSER, P.C. LETTERHEAD] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Penn Alto Associates, Limited Partnership Altoona, Pennsylvania 16601 We have audited the accompanying balance sheets of Penn Alto Associates, Limited Partnership as of December 31, 2004 and 2003 and the related statements of income, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. 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 the opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Penn Alto Associates, Limited Partnership, as of December 31, 2004 and 2003, 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. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 9 and 10 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Hamilton & Musser, P.C. Certified Public Accountants Mechanicsburg, Pennsylvania February 11, 2005 78 [HAMILTON & MUSSER, P.C. LETTERHEAD] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Penn Alto Associates, Limited Partnership Altoona, Pennsylvania 16601 We have audited the accompanying balance sheets of Penn Alto Associates, Limited Partnership as of December 31, 2003 and 2002 and the related statements of income, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. 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 the opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Penn Alto Associates, Limited Partnership, as of December 31, 2003 and 2002, 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. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 9 and 10 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Hamilton & Musser, P.C. Certified Public Accountants Mechanicsburg, Pennsylvania February 19, 2004 79 [REZNICK GROUP, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Sartain School Venture We have audited the accompanying balance sheets of Sartain School Venture as of December 31, 2004 and 2003, 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 of Sartain School Venture at December 31, 2004 and 2003, 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, 2004, dated February 4, 2005, on our consideration of Sartain School Venture's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report in considering the results of our audit. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The 2004 supplemental information on pages 24 through 27 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Reznick Group, P.C. Baltimore, Maryland February 4, 2005 80 [REZNICK FEDDER & SILVERMAN Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Sartain School Venture We have audited the accompanying balance sheets of Sartain School Venture as of December 31, 2003 and 2002, and the related statements of profit and loss, changes in partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sartain School Venture at December 31, 2003 and 2002, and the results of its operations, the changes in partners' 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, 2003, dated February 6, 2004, on our consideration of Sartain School 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 audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 24 through 27 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Reznick Fedder & Silverman Baltimore, Maryland February 6, 2004 81 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS

~~Year Ended~~ March 15, ------------------------------ 2005 2004* ------------ ------------ ~~2003~~Operating ~~2002~~Assets ~~2001~~Property and equipment, at cost, less accumulated depreciation (Notes 2, 4, 7 and 10) $ 86,316,389 $113,980,774 Cash and cash equivalents (Notes 2, 3 and 11) 4,335,171 5,089,076 Cash held in escrow (Notes 3 and 5) 10,529,679 15,182,044 Accounts receivable - tenants 761,215 920,395 Deferred costs, less accumulated amortization (Notes 2 and 6) 1,922,580 2,289,632 Other assets 1,230,423 1,373,958 ------------ ------------ Total operating assets 105,095,457 138,835,879 ------------ ~~Summarized~~------------ ~~below~~Discontinued ~~are~~Assets ~~the~~(Note ~~components~~12) ofProperty ~~the~~and ~~gain~~equipment onheld for sale, net of ~~properties:~~accumulated ~~Decrease~~depreciation in(Note ~~property~~4) ~~and~~11,193,351 ~~equipment~~6,508,982 ~~net~~Net ofassets ~~accumulated~~held ~~depreciation~~for sale 4,452,896 841,444 ------------ ------------ Total discontinued assets 15,646,247 7,350,426 ------------ ------------ Total assets $120,741,704 5$146,~~903~~186,~~905~~305 ============ ============ LIABILITIES AND PARTNERS' DEFICIT Operating Liabilities Mortgage notes payable (Notes 3 and 7) $ 097,203,309 $129,470,161 0Accounts ~~Decrease~~payable in2,436,882 ~~cash~~3,710,915 ~~held~~Accrued ininterest ~~escrow~~payable ~~355~~7,~~027~~885,329 07,625,566 0Security ~~Decrease~~deposits inpayable ~~prepaid~~624,852 ~~expenses~~876,745 Due to local general partners and ~~other~~affiliates ~~assets~~(Note 188) 21,~~876~~080,176 019,979,284 0Due ~~Decrease~~to ingeneral ~~accounts~~partners ~~receivable~~and 3affiliates (Note 8) 8,~~990~~261,783 08,539,996 0Due ~~Decrease~~to inselling ~~deferred~~partners ~~costs~~1,412,272 ~~188~~1,~~591~~292,934 0------------ 0------------ ~~Decrease~~Total inliabilities ~~mortgage~~138,904,603 171,495,601 ------------ ------------ Discontinued liabilities (Note 12) Mortgage notes payable of assets held for sale (13Note 7) 12,~~019~~032,~~896)~~637 07,330,000 0Net ~~Increase~~liabilities inheld ~~accounts~~for ~~payable~~sale (including minority interest) 2,076,114 ~~accrued~~3,379,218 ~~expenses~~------------ ~~and~~------------ ~~other~~Total discontinued liabilities 2414,~~362~~108,751 010,709,218 0------------ ~~Decrease~~------------ inMinority ~~due~~interests to(Note ~~general~~2) (321,605) 662,078 ------------ ------------ Commitments and contingencies (Notes 7, 8 and 11) Partners' deficit Limited partners (15,987.5 BACs issued and ~~affiliates~~outstanding) (37Note 1) (30,~~980~~908,125) 0(35,583,942) 0General partners (1,041,920) (1,096,650) ------------ ------------ Total partners' deficit (31,950,045) (36,680,592) ------------ ------------ Total liabilities and partners' deficit $120,741,704 $146,186,305 ============ ============

* Reclassified for comparative purposes. See accompanying notes to consolidated financial statements. 82 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended March 15, ----------------------------------------- 2005 2004* 2003* ~~March~~----------- 15----------- ----------- Operations: Revenues Rental income $25,208,167 ~~2002~~$25,571,702 $25,359,397 Subsidy income (Note 1) 4,007,686 501,511 479,595 Other (Notes 1 and 11) 628,375 615,831 690,816 ----------- ----------- ----------- Total revenues 29,844,228 26,689,044 26,529,808 ----------- ----------- ----------- ~~Carrying~~Expenses ~~Carrying~~General ~~Amount~~and ~~Fair~~administrative ~~Value~~4,939,204 ~~Amount~~5,137,476 ~~Fair~~4,561,511 ~~Value~~General and administrative-related parties (Note 8) 2,089,729 1,950,681 2,218,245 Repairs and maintenance 6,019,542 5,692,790 5,142,706 Operating 3,598,017 3,509,360 3,143,335 Taxes 1,164,459 1,062,854 1,096,978 Insurance 1,580,225 1,407,674 1,345,126 Interest 7,421,193 8,021,051 8,695,826 Depreciation and amortization 6,498,326 6,757,547 5,679,284 ----------- ----------- ----------- 33,310,695 33,539,433 31,883,011 ----------- ~~Mortgage~~----------- ~~notes~~----------- ~~payable~~Loss ~~for~~from ~~which~~operations itbefore isminority interest (3,466,467) (6,850,389) (5,353,203) Minority interest in loss of subsidiaries from operations 22,634 10,736 377,948 ----------- ----------- ----------- Loss from operations (3,443,833) (6,839,653) (4,975,255) Discontinued Operations: ~~Practicable~~Income to(loss) ~~estimate~~from ~~fair~~discontinued ~~value~~operations (including gain (loss) on sale of properties) (Note 12) 8,196,269 (284,137) 4,375,326 ----------- ----------- ----------- Net income (loss) $68 4,~~157~~752,~~031~~436 (7,123,790) (599,929) =========== =========== =========== Number of BACs outstanding 15,987.5 15,987.5 15,987.5 =========== =========== =========== Loss from operations - limited partners $68(3,~~157~~409,~~031~~395) $72(6,~~186~~771,~~348~~256) $72(4,~~186~~925,~~348~~503) ~~Not~~Income ~~practicable~~(loss) ~~$79~~from discontinued operations (including gain (loss) on sale of properties) - limited partners 8,~~637~~114,~~580~~306 (*281,296) 4,331,573 ----------- ----------- ----------- Net income (loss) - limited partners $89 4,~~310~~704,~~240~~911 $(*7,052,552) $ (593,930) =========== =========== =========== Loss from operations per BAC $ (213.25) $ (423.53) $ (308.08) Income (loss) from discontinued operations per BAC 507.54 (17.60) 270.93 ----------- ----------- ----------- Net income (loss) per BAC $ 294.29 $ (441.13) $ (37.15) =========== =========== ===========

* Reclassified for comparative purposes. See accompanying notes to consolidated financial statements. 83 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT

~~March~~Limited ~~15,~~General ~~Estimated~~Total Partners Partner ------------ ------------ ------------ ~~Useful~~Partners' ~~Lives~~deficit ~~2003~~- March 16, 2002 $(~~Years~~28,956,873) $(27,937,460) $ (1,019,413) Net loss, year ended March 15, 2003 (599,929) (593,930) (5,999) ------------- ------------- ------------ ~~Land~~Partners' $deficit 11- March 15,~~179,181~~ $2003 11(29,~~804~~556,~~469~~802) ~~-- Buildings and improvements 234~~(28,~~742~~531,~~544~~390) ~~243~~(1,~~590~~025,~~454~~412) 15Net toloss, 40year ~~Other~~ended 6March 15,~~573~~ 2004 (7,~~947~~123,790) 6(7,~~472~~052,~~329~~552) 3(71,238) ~~to 20~~ ------------ ------------ ------------ Partners' deficit - ~~252~~March 15,~~495~~ 2004 (36,~~672~~680,592) ~~261~~(35,~~867~~583,~~252~~942) ~~Less:~~(1,096,650) ~~Accumulated~~Net ~~depreciation~~income, year ended March 15, 2005 4,752,436 4,704,912 47,524 Noncash distribution to related party (~~118~~29,~~952~~389) (29,~~648~~095) (~~117~~294) Noncash contribution due to write-off of related party debt 7,~~564~~500 0 7,~~191)~~500 ------------ ------------ ------------ Partners' deficit - March 15, 2005 $(31,950,045) ~~133~~$(30,~~543~~908,~~024~~125) $ ~~144~~(1,~~303~~041,~~061~~920) ============= ============ ============

See accompanying notes to consolidated financial statements. 84 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Years Ended March 15, ---------------------------------------------- 2005 2004* 2003* ~~2002~~------------ ------------ ------------ ~~Real~~Cash ~~estate~~flows ~~taxes~~from operating activities: Net income (loss) $ 4,752,436 ~~insurance~~$ (7,123,790) $ (599,929) ------------ ------------ ------------ Adjustments to reconcile net income (loss) to net cash provided by operating activities: (Income) loss from discontinued operations (8,196,269) 284,137 (4,375,326) Write-off of deferred costs 0 0 287,019 Cancellation of indebtedness income (68,571) (68,571) (68,571) Accrued interest added to principal of mortgage note payable 228,613 215,618 197,846 Depreciation and amortization 6,498,326 6,757,547 5,679,284 (Increase) decrease in assets: Cash held in escrow (40,801) 1,208,085 (399,440) Accounts receivable - tenants 144,638 170,244 (151,192) Other assets (180,779) 229,739 (683,797) Increase (decrease) in liabilities: Accounts payable and other $liabilities 792,812 472,254 214,646 Due to general partners and affiliates 481,132 1,467,396 997,205 Minority interest in loss of subsidiaries (22,634) (10,736) (377,948) ------------ ------------ ------------ Total adjustments (363,533) 10,725,713 1,319,726 ------------ ------------ ------------ Net cash provided by operating activities 4,388,903 3,601,923 719,797 ------------ ------------ ------------ Cash flows from investing activities: Improvements to property and equipment (2,~~551~~187,~~193~~824) $(2,050,294) (2,~~217~~866,~~225~~782) ~~Reserve~~Decrease ~~for~~(increase) ~~replacements~~in 9cash held in escrow 665,~~853~~769 (3,~~944~~558,039) 112,~~560~~007,~~958~~618 ~~Other~~------------ ------------ ------------ Net cash used in investing activities (1,522,055) (5,608,333) (859,164) ------------ ------------ ------------ Cash flows from financing activities: Increase in deferred costs (18) (130,827) (459,668) Increase in due to local general partners and affiliates 2,017,717 4,658,134 731,440 Decrease in due to local general partners and affiliates (249,391) (125,125) (390,190) Increase (decrease) in due to selling partners 119,338 (10,746) 40,020 Proceeds from mortgage notes 0 14,396,048 15,209,376 Repayment of mortgage notes (5,923,~~267~~190) ~~929~~(18,~~745~~149,630) (15,403,198) Decrease in capitalization of consolidated subsidiaries attributable to minority interest 414,791 390,370 99,194 ------------ ------------ ------------ Net cash (used in) provided by financing activities (3,620,753) 1,028,224 (173,026) ------------ ------------ ------------ Net decrease in cash and cash equivalents (753,905) (978,186) (312,393) Cash and cash equivalents, beginning of year 5,089,076 6,067,262 6,379,655 ------------ ------------ ------------ Cash and cash equivalents, end of year $13 4,~~328~~335,~~404~~171 $14 5,~~707~~089,~~928~~076 $ 6,067,262 ============ ============ ============ Supplemental disclosure of cash flows information: Cash paid during the year for interest $ 6,222,487 $ 7,988,167 $ 9,309,001 ============ ============ ============

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

Years Ended March 15, ---------------------------------------------- ~~Period~~2005 2004* 2003* ~~2002 (Months)~~ ------------ ------------ ------------ ~~Operating~~Supplemental ~~guarantee~~disclosures ~~fee~~of noncash investing and financing activities: Distribution from sale to related party $ ~~510~~(29,~~443~~389) $ ~~510,443~~0 60$ ~~Financing~~0 ~~expenses~~Contribution ~~5,328,418~~from ~~5,310,905~~write-off *of ~~Supervisory~~related ~~salaries~~party ~~783,020~~debt ~~783~~7,~~020~~500 600 ~~Other~~0 ~~48,518~~Increase ~~48,518~~in ~~Various~~accounts ~~-----------~~payable ~~-----------~~and ~~6,670,399~~other 6liabilities for deferred loss on sale of properties 0 0 63,~~652,886~~084 ~~Less~~Summarized below are the components of the forgiveness of indebtedness income: ~~Accumulated~~Decrease ~~amortization~~in ~~(3,419,798)~~accounts (3payable,~~268,299)~~ ~~-----------~~accrued ~~-----------~~expenses and other liabilities $ ~~3,250,601~~0 $ 3(133,~~384,587~~565) ~~===========~~$ ~~===========~~0

* Reclassified for comparative purposes. See accompanying notes to consolidated financial statements. 86 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 NOTE 1 - General Liberty Tax Credit Plus L.P., a Delaware limited partnership (the "Partnership"), was organized on June 26, 1987, but had no activity until October 1, 1987 (which date is considered to be inception for financial accounting purposes). The Partnership had no operations until commencement of the public offering on November 20, 1987. The Partnership's business is to invest as a limited partner in other limited partnerships ("Local Partnerships," "subsidiaries" or "subsidiary partnerships") owning leveraged apartment complexes that are eligible for the low-income housing tax credit (the "Low-Income Housing Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning properties that are eligible for the historic rehabilitation tax credit. The Partnership had originally invested in 31 subsidiary partnerships. During the year ended March 15, 2005, the Partnership sold the properties and the related assets and liabilities of four Local Partnerships and the limited partnership interest in two Local Partnerships. Through the year ended March 15, 2005, the Partnership sold the properties and the related assets and liabilities of seven Local Partnerships and its limited partnership interest in three Local Partnerships. Subsequently on March 29, 2005, the property and the related assets and liabilities of Regent Street Associates, L.P. ("Regent Street") were sold. Also subsequently on April 25, 2005, the Partnership entered into a contract to sell the Limited Partnership interest in Fox Glenn Investors, L.P. ("Fox Glenn"). There can be no assurance as to whether or when the sale will actually occur. The general partners of the Partnership are Related Credit Properties L.P., a Delaware limited partnership (the "Related General Partner") and Liberty Associates III L.P., a Delaware limited partnership ("Liberty Associates", and together with the Related General Partner, the "General Partners"). The Related General Partner is also the special limited partner of the Partnership. The general partner of the Related General Partner is Credit Properties GP LLC ("Credit Properties"), a Delaware corporation. The general partner of Liberty Associates is the Related General Partner. On November 17, 2003, CharterMac acquired Related Capital Company, which is the indirect parent of RCC Manager L.L.C., the managing member of Credit Properties. Pursuant to the acquisition, CharterMac acquired controlling interests in the General Partners. This acquisition did not affect the Partnership or its day-to-day operations, as the majority of the General Partners' management team remained unchanged. The terms of the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") provide, among other things, that net profits or losses and distributions of cash flow are, in general, allocated 99% to the limited partners and BACs holders and 1% to the General Partners. NOTE 2 - Summary of Significant Accounting Policies a) Basis of Consolidation The consolidated financial statements for the years ended March 15, 2005, 2004 and 2003 include the accounts of the Partnership and 28, 30 and 31 subsidiary partnerships, respectively, in which the Partnership is a limited partner. Through the rights of the Partnership and/or a General Partner, which General Partner has a contractual obligation to act on behalf of the Partnership, to remove the general partner of the subsidiary partnerships and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation. For financial reporting purposes, the Partnership's fiscal year ends on March 15. All subsidiaries have fiscal years ending December 31. Accounts of subsidiaries have been adjusted for intercompany transactions from January 1 through March 15. The Partnership's fiscal year ends on March 15 in order to allow adequate time for the subsidiaries financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with U.S. generally accepted accounting principles ("GAAP"). Accounts of the subsidiary partnerships have been adjusted for intercompany transactions from January 1 through March 15. Increases (decreases) in the capitalization of consolidated subsidiary partnerships attributable to minority interest arise from cash contributions and cash distributions to the minority interest partners. The Partnership's investment in each subsidiary partnership is equal to the respective subsidiary partnership's partners' equity less minority interest capital, if any. Losses attributable to minority interests which exceed the minority interests' investment in subsidiary partnerships have been charged to the Partnership. Such losses aggregated approximately $0, $192,000 and $15,000 for the years ended March 15, 2005, 2004 and 2003, respectively. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital. b) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash in banks, and investments in short-term highly liquid instruments purchased with original maturities of three months or less. c) Property and Equipment Property and equipment to be held and used are carried at cost, which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and 87 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. In accordance with FASB 144, "Accounting for the Impairment of Disposal of Long-Lived Assets", the results of discontinued operations are reported as a separate component of income before extraordinary items on the Consolidated Statements of Operations. Discontinued operations include the results of operations and any gain or loss recognized for Local Partnerships that have been disposed of or are held for sale. A gain or loss recognized on the disposal is disclosed in the notes to the financials statements. Adjustments to amounts previously reported in operations that are directly related to the disposal of a Local Partnership are reclassified in the current period as discontinued operations for comparability purposes. Assets and liabilities of a Local Partnership that are classified as held for sale are presented separately in the asset and liability sections, respectively, of the Consolidated Balance Sheets. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time, property investments themselves are reduced to estimated fair value (generally using discounted cash flows). Through March 15, 2005, the Partnership has not recorded any loss on impairment of assets or reduction to estimated fair value. d) Revenue Recognition Rental income is earned primarily under standard residential operating leases and is typically due the first day of each month, but can vary by property due to the terms of the tenant leases. Rental income is recognized when earned and charged to tenants' accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which it is earned. Other revenues are recorded when earned and consist of the following items: Interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income and other rental related items. Other revenues from operations include the following amounts at both the Partnership and Local Partnership level:

~~Fiscal~~March ~~Year~~15, ~~Ending~~-------------------------------------- ~~Amount~~2005 2004 2003 ---------- -------- -- ---------- ~~2003~~Interest $ 8144,~~701,955~~236 ~~2004~~$ 7115,~~120,008~~745 ~~2005~~$ 8127,~~524,776~~427 ~~2006~~Other 4484,~~718,637~~139 ~~2007 13~~500,~~642,628~~086 ~~Thereafter 105~~563,~~086,607~~389 ---------- ---------- ---------- Total other revenue $~~147~~ 628,~~794~~375 $ 615,~~611~~831 $ 690,816 ========== ========== ==========

Other revenues from discontinued operations include the following amounts at both the Partnership and Local Partnership level:

~~Year Ended~~ March 15, -------------------------------------- ~~2003~~2005 ~~2002~~2004 ~~2001~~2003 ---------- ---------- ---------- ~~Partnership~~Interest ~~management fees (a)~~ $~~1,122,750~~ $160,~~138,000~~870 $~~1,138,000~~ ~~Expense reimbursement (b) 146~~80,~~661~~768 ~~131,492~~$ ~~151~~93,~~415~~398 ~~Property~~Other ~~management fees incurred to affiliates of the General Partners (c) 1~~282,~~188,870~~021 1412,~~075,401~~744 1447,~~018,809~~348 ~~Local administrative fee (d) 66,500 63,965 69,000~~ ---------- ---------- ---------- Total ~~general~~other ~~and~~revenue ~~administrative-~~$ ~~General Partners 2~~342,~~524,781~~891 ~~2,408,858~~$ 2493,~~377,224~~512 ---------- ---------- ---------- Property management fees incurred to affiliates of the Local General Partners (c) 111,324 115,221 105,120 ---------- ---------- ---------- Total general and administrative- related parties $~~2,636,105~~ $2540,~~524,079~~746 ~~$2,482,344~~ ========== ========== ==========

Interest income is earned on cash and cash equivalent balances and cash held in escrow balances. Other income includes income from forfeited security deposits, late charges, laundry and vending income and other rental related items. Subsidy income includes rent subsidy received from the Atlantic County Improvement Authority at one Local Partnership.

March 15, ------------------------- ~~2003 2002~~ ----------- -- 2005 2004 2003 --------- Accrued ground lease $ 358,147 $ 358,147 Operating deficit advances 123,055 123,055 Operating advances 2,008,329 1,392,193 Development fee payable 132,448 132,851 Residual loan payable 52,500 52,500 Interest 6,635,589 5,735,215 Long-~~term~~ ~~notes payable (g) 5,525,906 5,539,560 Management and other fees 1,958,356 2,273,712~~ ----------- ----------- Subsidy Income $164,~~794~~007,~~330~~686 $15 501,~~607~~511 $ 479,~~233~~595 =========== ========== ==========

March 15, ~~-------------------------~~2005 ~~2003~~March ~~2002~~15, 2004* ----------- ----------- Grove Parc Assoc. L.P. This note bears interest at 7.39% compounded annually on May 1 of each year. The note is secured by a mortgage subordinate in rights to mortgages securing the building loan. Both principal and interest on the loan are due and payable in full out of residual receipts on April 29, 2010, or are immediately due and payable upon refinancing or sale of the project. $ 5,040,000 $ 5,040,000 Dixie Apartment Assoc. LTD. ("Dixie") ---- --------------------------~~-------~~ ~~This~~Carrying ~~promissory~~Fair ~~note~~Carrying ~~bears~~Fair ~~interest~~Amount atValue ~~11%~~Amount ~~payable~~Value ~~on demand. Dixie was sold on January 16, 2003 (see Note 12). 105,187 105,187 Ludlam Gardens Apartments LTD. ("Ludlam")~~ ----------- ----------- -----------~~--------~~ ~~This promissory note bears interest at 11% payable on demand. Ludlam was sold on January 23, 2003 (see Note 12). 241,049 254,703 B & C Housing Associates~~ -----------~~-------------~~ ~~This~~Mortgage ~~promissory~~notes ~~note bears interest on the unpaid principal balance at prime plus 2% per annum~~ payable ~~along~~for ~~with~~which ~~principal~~it asis: ~~and~~Practicable ~~when~~to ~~permitted~~estimate byfair ~~the~~value ~~partnership~~$35,830,552 ~~agreement~~$35,830,552 ~~and payable only from surplus cash. 139~~$82,~~670~~559,517 ~~139~~$87,~~670~~599,429 ~~-----------~~Not ~~-----------~~practicable $ 561,~~525~~372,~~906~~757 $** 5$46,~~539~~910,~~560~~644 ~~=========== ===========~~**

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

~~Year~~March ~~Ended~~15, ~~December~~2005 31March 15, 2004* -------------------------- --------------- ~~2002 2001 2000~~ ------------ ~~------------~~Carrying Fair Carrying Fair Amount Value Amount Value ----------- ~~Financial statement Net loss $ (599,929) $(7,920,150) $(7,961,124) Difference between depreciation and amorti~~- zation expense recorded for financial reporting purposes and the accelerated cost recovery system utilized for income tax purposes (341,315) (56,153) 591,198 Difference resulting from parent company hav- ing a different fiscal year for income tax and financial reporting purposes (54,280) 71,677 (36,404) Difference between gain on sale of properties for financial reporting purposes and for income tax purposes (406,824) 0 0 Tax basis forgiveness of debt 0 0 (10,000) Differences resulting principally from rental income recognized for income tax purposes and deferred for financial reporting purposes and interest and other operating expenses deducted for financial reporting purposes not deducted for income tax purposes 80,359 (335,427) 63,699 ----------- ----------- ----------- ~~Net~~Mortgage ~~loss~~notes aspayable ~~shown~~for onwhich ~~the~~it ~~income~~is: ~~tax~~Practicable ~~return~~to ~~for~~estimate ~~the~~fair ~~calendar~~value ~~year~~$ ~~ended~~3,755,369 $(1 3,~~321~~755,~~989)~~369 $( 0 $ 0 Not practicable $ 8,~~240~~277,~~053)~~268 ** $( 7,~~352~~330,~~631)~~000 ~~=========== =========== ===========~~**

* Reclassified for comparative purposes. ** Management believes it is not practicable to estimate the fair value of the mortgage notes payable because mortgage programs with similar characteristics are not currently available to the Local Partnerships. The carrying amount of other financial instruments that require such disclosure approximates fair value. 89 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 NOTE 4 - Property and Equipment The components of property and equipment from operations are as follows:

~~Name~~March ~~and~~15, ~~Address~~Estimated ~~of Amount and Nature of Percentage Title of Class Beneficial Ownership Beneficial Ownership of Class~~ -------------- --------------- Useful Lives 2005 2004* (Years) ---- -------- ------------ ------------ ~~General~~Land ~~Partnership~~$ ~~Related~~6,885,598 ~~Credit~~ $1 9,~~000~~181,203 ~~capital~~-- ~~contribution~~Buildings ~~98%~~and ~~Interest~~improvements in171,519,862 ~~the~~215,705,799 ~~Properties~~15 ~~L.P.~~to -40 ~~directly~~Other ~~owned~~4,751,068 ~~Partnership 625 Madison Avenue New York~~5,924,632 NY3 ~~10022~~to ~~General~~20 ~~Partnership~~------------ ~~Liberty~~------------ ~~Associates~~183,156,528 ~~III L.P. $1~~230,~~000~~811,634 ~~capital~~Less: ~~contribution~~Accumulated 2%depreciation ~~Interest~~(96,840,139) in(116,830,860) ~~the~~------------ ~~625 Madison Avenue~~ ------------ ~~directly~~$ ~~owned~~86,316,389 ~~Partnership New York~~$113,980,774 NY============ ~~10022~~============

* Reclassified for comparative purposes. Included in property and equipment are $6,859,371 of acquisition fees paid to the General Partners and $809,661 of acquisition expenses. In addition, as of March 15, 2005, buildings and improvements include $2,870,719 of capitalized interest. In connection with the development or rehabilitation of the Properties, the subsidiary partnerships have incurred developer's fees of $23,360,275 to the local general partners and affiliates. Such fees have been included in the cost of property and equipment. Depreciation expense for the years ended March 15, 2005, 2004 and 2003 amounted to $6,376,651, $6,343,627 and $5,504,926, respectively. During the years ended March 15, 2005 and 2004, there were write-offs of accumulated depreciation in the amounts of $26,367,372 and $6,388,660, respectively, and $13,195,220 and $4,447,847 of these write-offs are related to the discontinued assets. The components of property and equipment held for sale from discontinued operations are as follows:

~~ASSETS~~ March 15, Estimated ------------------------- ~~2003 2002~~ ----~~-------~~ Useful Lives 2005 2004* (Years) ------------ ~~Cash and cash equivalents $ 3,637,764 $ 3,021,486 Investment in subsidiary partnerships 12,845,366 14,416,537 Other assets 165,466 87,053~~ ------------ ------------ ~~Total~~Land ~~assets~~ $16 396,~~648,596~~769 $17 454,~~525,076~~707 ~~===========~~-- ~~===========~~Buildings ~~LIABILITIES~~and ~~AND~~improvements ~~PARTNERS'~~22,802,756 ~~EQUITY~~10,163,785 ~~Due~~15 to ~~general~~40 ~~partner~~Other ~~and affiliates $ 7~~1,~~211~~189,~~781~~046 ~~$ 6~~338,~~235,410~~337 3 to 20 ------------ ------------ ~~Total liabilities 7~~24,~~211~~388,~~781~~571 610,~~235~~956,~~410~~829 ~~Partners'~~Less: ~~equity~~Accumulated 9depreciation (13,~~436~~195,~~815~~220) 11(4,~~289~~447,~~666~~847) ------------ ------------ ~~Total liabilities and partners' equity~~ $16 11,~~648~~193,~~596~~351 $17 6,~~525~~508,~~076~~982 ============ ============

Depreciation expense for the discontinued property and equipment for the years ended March 15, 2005, 2004 and 2003 amounted to $1,188,335, $2,067,173 and $2,400,391, respectively. NOTE 5 - Cash Held in Escrow Cash held in escrow consists of the following:

~~Year Ended~~ March 15, ---------------------------~~--------------~~ ~~2003~~2005 ~~2002~~2004* ~~2001~~ ----------- ----------- ~~-----------~~Real ~~Revenues~~estate ~~$ 12~~taxes,~~847~~ ~~$ 43~~insurance,~~008~~ ~~$ 95,431 ----------- ----------- ----------- Expenses Administrative~~ and ~~management~~other ~~142,844~~$ ~~207,206 297,192 Administrative and management-related parties~~ 1,~~269~~592,~~411~~143 ~~1,269,492~~$ 1,~~289~~928,~~415~~811 ~~-----------~~Reserve ~~-----------~~for ~~-----------~~replacements ~~Total expenses 1~~8,~~412~~303,~~255~~201 112,~~476~~402,~~698~~646 ~~1,586,607~~Other ~~----------- ----------- ----------- Loss from operations (1~~634,~~399,408)~~335 (1850,~~433,690)~~587 (1,491,176) Gain on sale on investment in subsidiary partnership 6,497,938 0 0 Equity in loss of subsidiary partnerships (*) (7,528,994) (872,379) (1,547,959) Distribution income from subsidiary partnerships 577,613 906,188 0 ----------- ----------- ~~----------- Net loss~~ $(110,~~852~~529,~~851)~~679 $(115,~~399~~182,~~881)~~044 ~~$(3,039,135)~~ =========== =========== ~~===========~~

* Reclassified for comparative purposes. 90 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 Cash held in escrow included in the discontinued assets consists of the following:

~~Year Ended~~ March 15, ---------------------------~~--------------~~ ~~2003~~2005 ~~2002~~2004* ~~2001~~ ----------- ----------- ~~-----------~~Real ~~Cash~~estate ~~flows~~taxes, ~~from~~insurance, ~~operating~~and ~~activities:~~other ~~Net loss~~ $~~(1,852,851)~~ ~~$(1~~301,~~399,881)~~972 $~~(3,039,135)~~ ~~----------- ----------- ----------- Adjustments to reconcile net loss to net cash used in operating activities: Gain on sale on investment of subsidiary partnership (6~~180,~~497,938)~~547 0Reserve 0for ~~Equity~~replacements ~~in loss of subsidiary partnerships 7~~3,~~528~~426,~~994~~996 ~~872~~149,~~379~~096 ~~1,547,959 Distribution income from subsidiary partnerships (577,613) (906,188) 0 (Increase) decrease in assets:~~ Other ~~assets (15~~122,~~344)~~610 6638,~~396~~316 ~~29,560 Increase (decrease) in liabilities: Due to general partners and affiliates 976,371 689,920 938,832~~ ----------- ----------- ----------- Total adjustments 1,414,470 722,507 2,516,351 ----------- ----------- ----------- Net cash used in operating activities (438,381) (677,374) (522,784) ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sale of investment in subsidiary 200,000 0 0 Distributions from subsidiaries 854,659 1,027,779 52,848 ----------- ----------- ----------- Net cash provided by investing activities 1,054,659 1,027,779 52,848 ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents 616,278 350,405 (469,936) Cash and cash equivalents, beginning of year 3,021,486 2,671,081 3,141,017 ----------- ----------- ----------- Cash and cash equivalents, end of year $ 3,~~637~~851,~~764~~578 $ 3367,~~021,486~~959 ~~$ 2,671,081~~ =========== =========== ~~===========~~

NOTE 6 - Deferred Costs The components of other deferred costs and their periods of amortization are as follows:

~~Initial~~March ~~Cost~~15, ~~to Partnership Cost Capitalized~~ ----------------------------- ~~Subsequent~~Period to2005 ~~Buildings~~2004* ~~and~~(Months) ~~Acquisition: Subsidiary Partnership's Residential Property Encumbrances Land Improvements Improvements~~ ------------~~---------------------------------~~ ------------ ------------ ~~-------------~~Operating ~~----------------~~guarantee Bfee ~~& C Housing Associates, L.P. Tulsa, OK~~ $ 6510,~~556,685~~343 $ 727,300 $ 5,420,791 $ 2,638,904 State Street 86 Associates, L.P. Camden, NJ 6,746,337 861,947 12,460,882 504,102 Fox Glenn Investors, L.P. Seat Pleasant, MD 5,539,500 491,209 6,548,849 522,815 Shiloh Grove L.P. (Mt Vernon) Columbus, OH 11,894,867 764,874 16,618,743 489,506 Silver Blue Lake Apartments Ltd. Miami, FL 2,500,000 537,204 4,755,176 201,386 Lancaster Towers Associates, Ltd. Lancaster, NY 1,888,473 147,000 3,673,921 816,625 West Kinney Associates, L.P. Newark, NJ 3,961,972 262,466 6,072,924 510,~~447~~443 ~~Autumn~~60 ~~Park~~Financing ~~Associates,~~expenses ~~L.P. Wilsonville, OR 3,798,770 369,932~~ 2,~~251~~242,~~887~~728 3,~~564~~160,~~042~~617 ~~Regent~~** ~~Street~~Supervisory ~~Associates,~~salaries ~~L.P. Philadelphia~~783,020 ~~PA 4~~783,~~312,225~~020 ~~40,000~~60 ~~7,387,283~~Other ~~275~~48,~~779~~518 ~~Magnolia Arms Associates~~48,518 ~~Ltd.~~Various Jacksonville, FL 6,314,137 125,000 8,165,738 778,781 Greenleaf Associates L.P. Kansas City, MO 4,286,223 695,000 5,125,103 311,941 Alameda Towers, Associates L.P. San Juan, PR 8,569,691 644,000 15,157,047 704,447 Dixie Apartment Associates, Ltd. (c) Miami, FL 864,763 194,480 1,354,562 75,205 Ludlam Gardens Apartments, Ltd. (c) Miami, FL 2,826,651 755,057 3,943,234 92,607 Grove Parc Associates, L.P. (Woodlawn) Chicago, IL 11,852,622 600,000 9,386,536 11,907,942 2108 Bolton Drive Associates, L.P. Atlanta, GA 7,356,449 835,000 6,599,896 6,214,133 Apple Creek Housing Associates, Ltd. (d) Arvada, CO 0 618,136 10,973,665 (11,591,801) Redwood Villa Associates San Diego, CA 3,844,036 0 5,931,183 98,327 Charles Drew Court Associates, L.P. Atlantic City, NJ 3,924,428 100 7,893,416 394,430 Walnut Park Plaza Associates, L.P. Philadelphia, PA 7,330,000 454,707 7,690,675 2,859,139 Bayridge Associates, L.P. Beaverton, OR 10,034,559 917,682 488,333 11,424,515 Gross Amount at which Carried At Close of Period ------------~~------------------------------------~~ ~~Buildings and Accumulated Subsidiary Partnership's Residential Property Land Improvements Total Depreciation~~ ------------~~---------------------------------~~ ------------ ------------- ------------ ------------ B & C Housing Associates, L.P. Tulsa, OK $ 729,685 $ 8,057,310 $ 8,786,995 $ 4,245,809 State Street 86 Associates, L.P. Camden, NJ 864,332 12,962,599 13,826,931 7,607,404 Fox Glenn Investors, L.P. Seat Pleasant, MD 493,594 7,069,279 7,562,873 3,~~852~~584,~~881~~609 ~~Shiloh Grove L.P. (Mt Vernon) Columbus, OH 767,259 17,105,864 17,873,123 8,672,844 Silver Blue Lake Apartments Ltd. Miami, FL 539,589~~ 4,~~954~~502,~~177~~598 ~~5,493,766~~Less: ~~2,597,481~~Accumulated ~~Lancaster~~amortization Towers Associates, Ltd. Lancaster, NY 149,385 4,488,161 4,637,546 2,384,529 West Kinney Associates, L.P. Newark, NJ 264,850 6,580,987 6,845,837 3,395,866 Autumn Park Associates, L.P. Wilsonville, OR 938,336 5,247,525 6,185,861 3,122,126 Regent Street Associates, L.P. Philadelphia, PA 42,384 7,660,678 7,703,062 4,027,251 Magnolia Arms Associates, Ltd. Jacksonville, FL 127,384 8,942,135 9,069,519 5,112,485 Greenleaf Associates L.P. Kansas City, MO 697,384 5,434,660 6,132,044 3,235,007 Alameda Towers, Associates L.P. San Juan, PR 646,384 15,859,110 16,505,494 5,422,597 Dixie Apartment Associates, Ltd. (~~c) Miami, FL 194,480~~ 1,~~429~~662,767 1,624,247 711,560 Ludlam Gardens Apartments, Ltd. (c) Miami, FL 755,057 4,035,841 4,790,898 2,031,808 Grove Parc Associates, L.P. (Woodlawn) Chicago, IL 602,384 21,292,094 21,894,478 9,302,384 2108 Bolton Drive Associates, L.P. Atlanta, GA 837,384 12,811,645 13,649,029 ~~7,166,260 Apple Creek Housing Associates, Ltd. (d~~) ~~Arvada, CO 0 0 0 0 Redwood Villa Associates San Diego, CA~~ (2,~~384 6~~212,027,126 6,029,510 3,084,943 Charles Drew Court Associates, L.P. Atlantic City, NJ 143,846 8,144,100 8,287,946 4,547,219 Walnut Park Plaza Associates, L.P. Philadelphia, PA 457,091 10,547,430 11,004,521 4,137,533 Bayridge Associates, L.P. Beaverton, OR 920,066 11,910,464 12,830,530 5,878,640 Life on which Depreciation in Year of Latest Income Construction/ Date Statement is Subsidiary Partnership's Residential Property Renovation Acquired Computed (a966)~~(b)~~ ------------~~---------------------------------~~ ------------- ~~-------------~~$ ~~--------------- B & C Housing Associates~~1, ~~L.P. Tulsa~~922,580 OK$ ~~1987 Dec. 1987 27.5 years State Street 86 Associates~~2, ~~L.P. Camden~~289,632 NJ============ 1987 Feb. 1988 27.5 years Fox Glenn Investors, L.P. Seat Pleasant, MD 1987 Mar. 1988 15 to 27.5 years Shiloh Grove L.P. (Mt Vernon) Columbus, OH 1987 Feb. 1988 27.5 years Silver Blue Lake Apartments Ltd. Miami, FL 1987 Feb. 1988 27.5 years Lancaster Towers Associates, Ltd. Lancaster, NY 1987 May 1988 27.5 years West Kinney Associates, L.P. Newark, NJ 1983 June 1988 27.5 years Autumn Park Associates, L.P. Wilsonville, OR 1988 June 1988 15 to 27.5 years Regent Street Associates, L.P. Philadelphia, PA 1987 June 1988 27.5 years Magnolia Arms Associates, Ltd. Jacksonville, FL 1987 July 1988 27.5 years Greenleaf Associates L.P. Kansas City, MO 1987 July 1988 27.5 years Alameda Towers, Associates L.P. San Juan, PR 1987 July 1988 40 years Dixie Apartment Associates, Ltd. (c) Miami, FL 1987 July 1988 27.5 years Ludlam Gardens Apartments, Ltd. (c) Miami, FL 1987 July 1988 27.5 years Grove Parc Associates, L.P. (Woodlawn) Chicago, IL 1988 July 1988 27.5 to 31.5 years 2108 Bolton Drive Associates, L.P. Atlanta, GA 1988 July 1988 15 to 27.5 years Apple Creek Housing Associates, Ltd. (d) Arvada, CO 1988 June 1988 28 years Redwood Villa Associates San Diego, CA 1988 Sept. 1988 27.5 years Charles Drew Court Associates, L.P. Atlantic City, NJ 1987 Sept. 1988 27.5 years Walnut Park Plaza Associates, L.P. Philadelphia, PA 1988 Sept. 1988 35 years Bayridge Associates, L.P. Beaverton, OR 1988 Dec. 1988 15 to 27.5 years============

* Reclassified for comparative purposes. ** Over the life of the respective mortgages. Amortization of deferred costs for the years ended March 15, 2005, 2004 and 2003 amounted to $121,675, $413,920 and $174,358, respectively. During the years ended March 15, 2005 and 2004, there were net decreases in deferred costs of $917,989 and $2,167,801 and net decreases in accumulated amortization of $672,612 and $1,620,753, respectively, due to write-offs and reclasses into discontinued operations as summarized in the table below. The discontinued assets components of other deferred costs and their periods of amortization are as follows:

** Over the life of the respective mortgages. Amortization of deferred costs in the discontinued assets for the years ended March 15, 2005, 2004 and 2003 amounted to $182,464, $357,648 and $147,092, respectively. NOTE 7 - Mortgage Notes Payable The mortgage notes are payable in aggregate monthly installments of approximately $567,000 including principal and interest at rates varying from 1% to 12% per annum, through 2036. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnership's rents and leases and is without further recourse. 91 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 Annual principal payment requirements as of March 15, 2005 for each of the next five fiscal years and thereafter are as follows:

~~Cost~~Fiscal ~~of Property and Equipment Accumulated Depreciation ---------------------------------------------- ----------------------------------------------~~ Year ~~Ended~~Ending ~~March~~Amount ~~15,~~ ------------------~~-----------------------------------------------------------------------------~~ ~~2003 2002 2001 2003 2002 2001~~ ------------- ~~-------------~~2005 ~~------------- ------------- ------------- ------------- Balance at beginning of period~~ $ ~~261~~5,~~867~~015,~~252~~281 $2006 ~~259~~2,~~617~~865,~~963~~736 $2007 ~~258~~2,~~579~~634,~~378~~376 $2008 ~~117~~11,~~564,191 $ 108,754,135 $ 99,818,~~713 ~~Additions during period: Improvements 3~~,~~112,269~~972 2009 2,~~249~~334,~~289~~536 ~~1,038,585~~Thereafter ~~Depreciation expense 7~~72,~~905~~639,~~317~~408 ~~8,810,056 8,935,422 Deduction during period: Dispositions (12,483,849) 0 0 (6,516,860) 0 0~~ ------------- ~~------------- ------------- ------------- ------------- ------------- Balance at end of period~~ $ ~~252~~97,~~495~~203,~~672~~309 ~~$ 261,867,252 $ 259,617,963 $ 118,952,648 $ 117,564,191 $ 108,754,135~~ ===========~~== ============= ============= ============= ============= =============~~

Accrued interest payable at March 15, 2005 and 2004 was approximately $7,885,000 and $7,626,000, respectively. Interest accrues on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. Annual principal payment requirements as of March 15, 2005 for each of the next five fiscal years and thereafter for the discontinuing liabilities are as follows:

Accrued interest payable for the discontinued liabilities at March 15, 2005 and 2004 was approximately $711,000 and $2,053,000, respectively. Interest accrues on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. In September 2004, Charles Drew Associates, L.P. ("Charles Drew") received funds from a pledge/security agreement with Bank of America (formerly Fleet Bank, N.A.), Charles Drew's mortgagor, under which the ACIA pledged certificates of deposit originally in the amount of $4,772,500. The funds, including interest earned thereon, provided a subsidy to the Partnership equal to the debt service on the mortgage. The funds were used to payoff the mortgage in September 2004. On October 21, 2003, Greenleaf Associates Limited Partnership's ("Greenleaf") mortgage note was refinanced under the Mark-to-Market program sponsored by HUD. The USGI, Inc. mortgage, in the amount of $4,257,383, was paid-off from proceeds from a new HUD insured first mortgage held by Heartland Bank at a rate of 6.25% in the amount of $796,200 and a second mortgage held by Secretary of Department of Housing and Urban Development, Washington, D.C. at a rate of 1% in the amount of $3,297,016. Also, a third mortgage provided by Secretary of Department of Housing and Urban Development, Washington, D.C. at a rate of 1% in the amount of $543,064 was obtained. The refinancing proceeds were committed to Greenleaf for the purpose of paying the related finance costs totaling $48,786, and increasing the amount of reserve for replacement by $276,218. On June 17, 2003, Shiloh-Grove LP ("Shiloh") entered into a mortgage restructuring agreement for the purpose of refinancing its existing mortgages and adjusting rents to market rates related to its Mount Vernon Plaza II project (FHA Project #043-35445). As part of the restructuring agreement, the partnership refinanced its outstanding mortgage of $3,436,620 by obtaining three new mortgages. One mortgage is held by Greystone Servicing Corporation, Inc. and two are held by the Secretary of Housing and Urban Development in the amounts of $564,000, $2,288,000 and $1,116,120, respectively. All three have maturity dates of July 1, 2033. Principal and interest payments of $3,117 are made monthly on the first mortgage and interest will accrue on the second and third mortgage at the rate of 1% per annum. Tax and insurance escrow payments and replacement reserve deposits are made monthly. On April 25, 2003, Shiloh entered into a mortgage restructuring agreement for the purpose of refinancing its existing mortgages and adjusting rents to market rates related to its Mount Vernon Plaza I project (FHA project #043-35442). As part of the restructuring agreement, the partnership refinanced its outstanding mortgage of $4,710,536 by obtaining three new mortgages. One mortgage is held by Greystone Servicing Corporation, Inc. and two are held by the Secretary of Housing and Urban Development in the amounts of $972,400, $3,530,000 and $1,288,848, respectively. All three have maturity dates of July 1, 2033. Principal and interest payments of $5,706 are made monthly on the first mortgage 92 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 and interest will accrue on the second and third mortgage at the rate of 1% per annum. Tax and insurance escrow payments and replacement reserve deposits are made monthly. See Note 10 and 11 for other subsidiary partnerships' financing activities. NOTE 8 - Related Party Transactions An affiliate of the General Partners has a 1% interest as a special limited partner, in each of the subsidiary partnerships. An affiliate of the General Partners also has a minority interest in certain subsidiary partnerships. The costs incurred to related parties for the years ended March 15, 2005, 2004 and 2003 were as follows: A) Related Party Fees

* Reclassified for comparative purposes. Related Party Fees - discontinued operations

(a) The General Partners are entitled to receive a partnership management fee, after payment of all Partnership expenses, which together with the local annual administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership Agreement) for administering the affairs of the Partnership. The partnership management fee, subject to the foregoing limitation, will be determined by the General Partners in their sole discretion based upon their review of the Partnership's investments. Partnership management fees owed to the General Partners amounting to approximately $7,811,000 and $7,911,000 were accrued and unpaid as of March 15, 2005 and 2004, respectively. (b) The Partnership reimburses the General Partners and their affiliates for actual Partnership operating expenses incurred by the General Partners and their affiliates on the Partnership's behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partners performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships' performance. Expense reimbursements and asset monitoring fees owed to Related Credit Properties L.P. amounting to approximately $35,000 and $90,000 were accrued and unpaid as of March 15, 2005 and 2004, respectively. The General Partners have allowed for the accrual without payment of the amounts set forth in (a) and (b) but are under no obligation to continue to do so. (c) Property management fees incurred by subsidiary partnerships in operations amounted to $1,689,474, $1,826,298 and $1,902,472 for the years ended March 15, 2005, 2004 and 2003, respectively. Of these fees $1,035,932, $962,962 and $1,188,870 was incurred to affiliates of the Local General Partners, which includes $178,578, $246,599 and $279,036 of fee relating to discontinued operations. 93 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 (d) Liberty Associates, the special limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $2,500 per year from each subsidiary partnership. (e) Liberty Associates received cash distributions of approximately $7,000, $4,000 and $7,000 during the years ended March 15, 2005, 2004 and 2003, respectively. Liberty Associates was allocated Low-Income Housing Tax Credits of approximately $0, $10 and $200 for the taxable years ended March 15, 2005, 2004 and 2003, respectively. (f) Due to local general partners and affiliates at March 15, 2005 and 2004 consists of the following:

(f) Due to local general partners and affiliates at March 15, 2005 and 2004 included in the discontinued liabilities consists of the following:

(g) Long-term notes payable consist of the following:

94 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 The Partnership had negotiated Operating Deficit Guaranty Agreements with all Local Partnerships by which the general partners of the Local Partnerships had agreed to fund operating deficits for a specified period of time. The terms of the Operating Deficit Guaranty Agreements varied for each Local Partnership, with maximum dollar amounts to be funded for a specified period of time, generally three years, commencing on the break-even date. Amounts funded under the Operating Deficit Guaranty Agreements were treated as non-interest bearing loans, which will be paid only out of available cash flow or out of available net sale or refinancing proceeds. As of March 31, 2005, there was approximately $123,000 advanced under the Operating Deficit Guaranty Agreements. Any amounts funded under such agreements would be reflected under "Due to local general partner and affiliates" on our financial statements. As of March 31, 2005, all Operating Deficit Guaranty Agreements have expired. NOTE 9 - Taxable Net Income A reconciliation of the financial statement net income (loss) to the taxable net income (loss) for the Partnership and its consolidated subsidiaries is as follows:

NOTE 10 - Sale of Properties As of March 15, 2005, the Partnership sold the properties and the related assets and liabilities of seven Local Partnerships and its Limited Partnership interest in three Local Partnerships. Subsequently on March 29, 2005, the property and the related assets and liabilities of Regent Street were sold. Also subsequently on April 25, 2005, the Partnership entered into a contract to sell the Limited Partnership interest in Fox Glenn. There can be no assurance as to whether or when the sale will actually occur. On February 17, 2005, the partnership's limited Partnership Interest in Redwood Villa Associates ("Redwood") was sold to an unaffiliated third party purchaser for $60,000, resulting in a gain of approximately $1,700,000 which will be recognized in the Partnership's Form 10-Q for the quarter ended June 15, 2005. On January 5, 2005, the property and the related assets and liabilities of Lund Hill Associates, L.P. ("Lund Hill") were sold to an unaffiliated thirty party purchaser for $6,500,000, resulting in a gain of approximately $1,100,000 which will be recognized in the Partnership's Form 10-Q for the quarter ended June 15, 2005. On December 29, 2004, the Partnership entered into an agreement for the sale of its Limited Partnership Interest in Lancaster Towers Associates, LTD ("Lancaster") to an affiliate of the Local General Partner for a purchase price of $449,750. The sales documents have been executed and the funds are being held in escrow waiting for approval of the sale from the Department of Housing and Urban Development ("HUD"). No assurances can be given that HUD will approve the sale. Lancaster is being held as an Asset held for sale as of March 15, 2005. On September 24, 2004, the property and the related assets and liabilities of Autumn Park Associates, L.P. ("Autumn Park") were sold to an unaffiliated third party for approximately $4,800,000. The proceeds were used to settle the associated mortgage which had an outstanding balance of approximately $3,600,000, and the balance was distributed to the partners. This amount consisted of $900,000 paid in cash at the closing and $150,000 pursuant to one promissory note. The note compounds interest at 10% and is due on October 30, 2005. The sale resulted in a gain of approximately $2,100,000. 95 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 On August 27, 2004, the property and the related assets and liabilities of 2108 Bolton Drive Associated, L.P. ("Bolton") were sold to an unaffiliated third party for $8,891,000, resulting in a gain of approximately $1,700,000. On July 30, 2004, the property and the related assets and liabilities of Tanglewood Apartments, L.P. ("Tanglewood") were sold to an unaffiliated third party for $3,425,000, resulting in a gain of approximately $1,100,000. The sale resulted in the liquidation of Tanglewood. On March 31, 2004, the Partnership's limited Partnership Interest in Walnut Park Plaza ("Walnut") was sold to the local general partner for a purchase price of $1 plus the assumption of all the related debt which totaled approximately $7,700,000 resulting in a general partner contribution of approximately $2,600,000. The sale resulted in the liquidation of Walnut. On March 2, 2004, the Partnership signed a "Letter of Intent" with an unaffiliated third party to purchase the Partnership's limited partnership interest in Bayridge Associates, L.P. ("Bayridge") for a purchase price of $1,100,000 plus the assumption of the existing debt. The closing is expected to occur in 2006. No assurances can be given that the sale will actually occur. On May 19, 2003, the property and the related assets and liabilities of Silver Blue were sold to an unaffiliated third party for a purchase price of $3,500,000 resulting in a gain of approximately $400,000. Accrued interest on a note related to the Local Partnership was forgiven resulting in forgiveness of indebtedness income of approximately $114,000. The sale resulted in the liquidation of Silver Blue. On March 16, 2003, the Partnership recorded the transfer of the deed in lieu of foreclosure to Bryden Road, one of the properties owned by Shiloh to an unaffiliated third party. The outstanding mortgage balance paid by the third party on the day of transfer was $189,871 resulting in a gain of $104,000, which is included in gain on sale of properties. On January 23, 2003, the property and the related assets and liabilities of Ludlam Gardens Apartments, LTD. ("Ludlam") were sold to an unaffiliated third party for a purchase price of $3,900,000 resulting in a gain of approximately $1,000,000. The sale resulted in the liquidation of Ludlam. On January 16, 2003, the property and the related assets and liabilities of Dixie Apartment Associates, LTD. ("Dixie") were sold to an unaffiliated third party for a purchase price of $1,300,000 resulting in a gain of approximately $300,000. The sale resulted in the liquidation of Dixie. On December 18, 2002, the Partnership entered into an agreement with the local general partner to sell its remaining limited partnership interest in Shiloh for a purchase price of $175,000. No assurance can be given that the closing will actually occur. On May 31, 2002, the Partnership's Limited Partnership interest in Apple Creek Housing Associates, LTD. ("Apple Creek") was sold to an unaffiliated third party purchaser for $200,000 resulting in a gain of approximately $6,800,000, NOTE 11 - Commitments and Contingencies a) Subsidiary Partnership - Going Concern One subsidiary partnership, Redwood Villa Associates has significant contingencies and uncertainties regarding its continuing operations which raise substantial doubt about its ability to continue as a going concern. The financial statements of this subsidiary partnership were prepared assuming that it will continue as a going concern. Redwood Villa Associates, L.P. ------------------------------ Redwood Villa Associates, L.P. ("Redwood") has sustained operating losses since its inception. For the 2004 Fiscal Year, Redwood experienced a loss of $199,278, including $216,628 of depreciation and $4,554 of amortization, and at December 31, 2004 had a partners' deficit of $1,944,248. In addition, Redwood has been able to defer ground lease payments that are due to a related party in the cumulative amount of $388,647 and $363,147 as of December 31, 2004 and 2003, respectively. These conditions raise substantial doubt about Redwood's ability to continue as a going concern. Redwood's continuation as a going concern is dependent upon its ability to achieve continued profitable operations or obtain future capital contributions from the partners. The Local General Partner, whenever possible, plans to reduce operating costs to achieve profitable operations. The financial statements for the 2004, 2003 and 2002 Fiscal Years for Redwood have been prepared assuming that Redwood will continue as a going concern. The Partnership's investment in Redwood at March 15, 2005 and 2004 was reduced to zero by prior years' losses and the minority interest balance was approximately $393,000 and $397,000, respectively. Redwood's net loss after minority interest amounted to approximately $195,000, $200,000 and $157,000 for the 2004, 2003 and 2002 Fiscal Years, respectively. On February 17, 2005, the Partnership's limited partnership interest in Redwood was sold. b) Lease Commitment Redwood entered into a forty-year ground lease with a related party for the land on which the building is built. As stipulated in the lease, the subsidiary partnership agrees to pay all real estate taxes, license and permit fees, among other charges that may be assessed upon the land or improvements. At December 31, 2003, Redwood was committed to minimum future rentals on the noncancellable lease in the amount of $60,000 a year through 2028. The lease payments are payable from available cash and at December 31, 2004 and 2003 the subsidiary partnership has accrued lease payments of $388,647 and $363,147, respectively. On February 17, 2005, the Partnership's limited partnership interest in Redwood was sold. 96 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 c) Uninsured Cash and Cash Equivalents The Partnership maintains its cash and cash equivalents in various banks. Accounts at each bank are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. As of March 15, 2005, uninsured cash and cash equivalents approximated $6,200,000. d) Cash Distributions Cash distributions from the Local Partnerships to the Partnership are restricted by the provisions of the respective Local Partnership agreements and or HUD. Such cash distributions are typically made from surplus cash flow. e) Tax Credits A portion of the Tax Credits could be subject to recapture in future years if (i) a Local Partnership ceases to meet qualification requirements, or (ii) if there is a decrease in the qualified basis of the Local Partnership property or (iii) if there is a reduction in the Local Partnership interest in the property at any time during the 15-year Compliance Period that began with the first tax year of the Credit Period. As of December 31, 2003, the Tax Credit Period for each Local Partnership had expired. f) Other The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally, however no more than 24% of the properties are located in any single state. There are also substantial risks associated with owning properties receiving government assistance, for example the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owners' equity contribution. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence, without HUD's approval. Furthermore, there may not be market demand for apartments at full market rents when the rental assistance contracts expire. Note 12 - Discontinued Operations The following table summarizes the financial position of the Local Partnerships that are classified as discontinued operations because the respective Local Partnerships were classified as assets held for sale. As of March 15, 2005, Lancaster, Lund Hill, Redwood and Regent Street were classified as discontinued operations in the Consolidated Financial Statements. As of March 15, 2004, Walnut was reclassified as a discontinued operation on the Consolidated Balance Sheets. Consolidated Balance Sheets:

The following table summarizes the results of operations of the Local Partnerships that are classified as discontinued operations. For the year ended March 15, 2005, Lancaster, Lund Hill, Redwood and Regent Street, which were classified as assets held for sale and Autumn Park, Bolton, Tanglewood and Walnut, which were sold during the year, were all classified as discontinued operations on the Consolidated Financial Statements. For the year ended March 15, 2004, Lancaster, Lund Hill, Redwood, Regent Street, Autumn Park, Bolton, and Tanglewood, in order to present comparable results to the year ended March 15, 2005, Walnut, which was classified as an asset held for sale, and Silver Blue and Bryden Road, which were sold during the year, were all classified as discontinued operations on the Consolidated Financial Statements. For the year 97 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 ended March 15, 2003, Lancaster, Lund Hill, Redwood, Regent Street, Autumn Park, Bolton, Tanglewood, Walnut, Silver Blue and Bryden Road, in order to present comparable results to the year ended March 15, 2005, and Dixie, Ludlam and Apple Creek, which were sold during the year, were classified as discontinued operations on the Consolidated Financial Statements. Consolidated Statements of Discontinued Operations:

NOTE 13 - New Accounting Pronouncements On December 16, 2004, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 153, Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29 ("SFAS No. 153"). The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal period beginning after June 15, 2005. The Company does not believe that the adoption of SFAS No. 153 on June 15, 2005 will have a material effect on the Company's consolidated financial statements. In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 was applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created before February 1, 2003, the provisions of FIN 46 are applicable no later than July 1, 2003. The Partnership has not created any variable interest entities after January 31, 2003. In December 2003 the FASB redeliberated certain proposed modifications and revised FIN 46 ("FIN 46 (R)"). The revised provisions were applicable no later than the first reporting period ending after March 15, 2004. The adoption of FIN 46 and FIN 46 (R) is not anticipated to have a material impact on the Partnership's financial reporting and disclosures. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150 requires disclosure regarding the terms of those instruments and settlement alternatives. The guidance in SFAS No. 150 generally was effective for all 98 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 financial instruments entered into or modified after May 31, 2003, and was otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it does not have an impact on the Partnership's financial reporting and disclosures. NOTE 14 - Selected Quarterly Financial Data (Unaudited) The following table summarizes the Partnership's quarterly results of operations for the years ended March 31, 2005 and 2004. The fluctuations between the quarters are primarily due to the sales of Local Partnerships (see Note 10).

* Reclassified for comparative purposes. 99 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2005 NOTE 15 - Subsequent Events On March 29, 2005, the property and the related assets and liabilities of Regent Street were sold to an unaffiliated third party purchaser for the assumption of the outstanding debt, resulting in a gain of $1,317,000, which will be recognized on the Partnership's Form 10-Q dated June 15, 2005. Regent Street is classified as an asset held for sale as of March 15, 2005. On April 15, 2005, a distribution from sales proceeds was made to the limited partners of approximately $1,919,000 and to the general partner of approximately $19,000. On April 25, 2005, the Partnership entered into a Redemption Agreement for the sale of its Limited Partnership interest in Fox Glenn Investors, L.P. ("Fox Glenn") to the Local General Partner. The sales documents have been executed and the funds are being held in escrow. No assurances can be given that the sale will actually occur. 100 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None Item 9A. Controls and Procedures (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P., the general partners of the Partnership, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") as of the end of the period covered by this report. Based on such evaluation, such officer has concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes in Partnership's internal control over financial reporting during the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART III Item 10. Directors and Executive Officers of the Registrant The Partnership has no directors or officers. The Partnership's affairs are managed and controlled by the General Partners. The Partnership has not adopted a separate code of ethics because the Partnership has no directors or executive officers. However, the parent company of Related Capital Company, which controls our General Partners, has adopted a code of ethics. See http://www.chartermac.com. On November 17, 2003, CharterMac acquired Related Capital Company, which is the indirect parent of RCC Manager L.L.C., the managing member of the general partner of the Related General Partners. Pursuant to the acquisition, CharterMac acquired controlling interests in the General Partners. Alan P. Hirmes replaced Stephen M. Ross as Director of the general partner of the Related General Partner effective April 1, 2004 as a result of this acquisition. This acquisition did not affect the Partnership or its day-to-day operations as the majority of the General Partner's management team remained unchanged. Certain information concerning the directors and executive officers of Credit Properties GP LLC, the general partner of the Related General Partner (which, in turn, is the general partner of Liberty Associates), who may be deemed directors or executive officers of the Partnership is set forth below. Credit Properties GP LLC ---------------------------- Name Position ---------------------------- ---------------------- Alan P. Hirmes Director and President Stuart J. Boesky Executive Vice President Glenn F. Hopps Treasurer Teresa Wicelinski Secretary ALAN P. HIRMES, 50, has been a Certified Public Accountant in New York since 1978. Prior to joining Related Capital Company ("Capital") in October 1983, Mr. Hirmes was employed by Weiner & Co., Certified Public Accountants. Mr. Hirmes is also a Vice President of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts degree. Mr. Hirmes also serves on the Board of Trustees of CharterMac and American Mortgage Acceptance Company ("AMAC"). STUART J. BOESKY, 49, practiced real estate and tax law in New York City with the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined Capital. From 1983 to 1984 Mr. Boesky practiced law with the Boston law firm of Kaye, Fialkow, Richard & Rothstein 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 CharterMac and AMAC. GLENN F. HOPPS, 42, joined Capital 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. TERESA WICELINSKI, 39, joined Capital 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 Partnership has no officers or directors. The Partnership does not pay or accrue any fees, salaries or other forms of compensation to directors or executive officers of the General Partners for their services. However, under the terms of the Amended and Restated Agreement of Limited Partnership of the 101 Partnership, the Partnership has entered into certain arrangements with the General Partners and their affiliates which provide for compensation to be paid to the General Partners and their affiliates. Such arrangements include (but are not limited to) agreements to pay nonrecurring Acquisition Fees, a nonaccountable Acquisition Expense allowance, a partnership management fee and an accountable expense reimbursement. The General Partners are entitled, in the aggregate, to 1% of all cash distributions and an additional 15% of distributions from net sale or refinancing proceeds after the BACs holders have received distributions of such proceeds equal to their original capital contributions plus a 10% return thereon (to the extent not previously paid out of cash flow). Certain directors and executive officers of the General Partners receive compensation from the General Partners and their affiliates for services performed for various affiliated entities which may include services performed for the Partnership. Such compensation may be based in part on the performance of the Partnership. See also Note 8 to the Financial Statements in Item 8, which is incorporated in this Item 11 by reference thereto. Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in this annual report. As noted above, the Partnership has no executive officers. The levels of compensation payable to the General 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 and Related Security Holder Matters The general partnership interests in the Partnership are owned as follows:

Liberty Associates III L.P. holds a 1% limited partnership interest in each Local Partnership. No person is known by the Partnership to be the beneficial owner of more than 5% percent of the Limited Partnership Interests and/or the BACs; and none of the General Partners nor any director or executive officer of any of the General Partners owns any Limited Partnership Interests or BACs. Item 13. Certain Relationships and Related Transactions The Partnership has and will continue to have certain relationships with the General Partners and their affiliates, as discussed in Item 11 and also Note 8 to the Financial Statements in Item 8 above, which is incorporated herein by reference thereto and as set forth above. However, there have been no direct financial transactions between the Partnership and the directors and executive officers of the General Partners. Item 14. Principal Accountant Fees and Services Audit Fees ---------- The aggregate fees billed by Trien Rosenberg Rosenberg Weinberg Ciullo and Fazzari LLP and their respective affiliates (collectively, "Trien") for professional services rendered for the audit of our annual financial statements for the years ended March 15, 2005 and 2004 and for the reviews of the financial statements included in the Partnership's Quarterly Reports on Form 10-Q for those years were $56,400 and $56,400, respectively. Audit Related Fees ------------------ None. Tax Fees -------- The aggregate fees billed by Weiser LLP (formerly, Rubin and Katz LLP) and their respective affiliates (collectively, "Weiser") for professional services rendered for the preparation of our annual tax returns for the years ended December 31, 2004 and 2003 were approximately $8,400 and $8,000, respectively. All Other Fees -------------- None. The Partnership is not required to have, and does not have, a stand-alone audit committee. 102 PART IV Item 15. Exhibits and Financial Statement Schedules

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

104 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. LIBERTY TAX CREDIT PLUS L.P. ---------------------------- (Registrant) By: RELATED CREDIT PROPERTIES L.P., a General Partner By: Credit Properties GP LLC, its General Partner Date: June 9, 2005 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes President and Chief Executive Officer (Principal Executive and Financial Officer) By: LIBERTY ASSOCIATES III, L.P., a General Partner By: Related Credit Properties L.P., its General Partner By: Related Credit Properties Inc., its General Partner Date: June 9, 2005 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes President and Chief Executive Officer (Principal Executive and Financial Officer) 105 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:

106 Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A) I, Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P. (the "General Partners"), each of which is a general partner of Liberty 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 15, 2005 of the Partnership; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary 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 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 report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, 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 report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the Partnership's internal control over financial reporting that occurred during the Partnership's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Partnership's auditors and to the boards of directors of the General Partners: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Partnership's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership's internal control over financial reporting. Date: June 9, 2005 ------------ By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Principal Executive Officer and Principal Financial Officer 107 Exhibit 32.1 CERTIFICATION PURSUANT TO RULE 13A-14(B) OR RULE 15D-14(B) AND SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350) In connection with the Annual Report of Liberty Tax Credit Plus L.P. (the "Partnership") on Form 10-K for the period ending March 15, 2005 as filed with the Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I, Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P., the general partners of the Partnership, certify, pursuant to 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. A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the SEC or its staff upon request. By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Principal Executive Officer and Principal Financial Officer June 9, 2005 108 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- To the Partners of Liberty Tax Credit Plus L.P. and Subsidiaries (A Delaware Limited Partnership) In connection with our audits of the consolidated financial statements of Liberty Tax Credit Plus L.P. and Subsidiaries included in the Form 10-K as presented in our opinion dated June 7, 2005 on page 15 and based on the reports of other auditors, we have also audited supporting Schedule I for the 2004, 2003 and 2002 Fiscal Years and Schedule III at March 15, 2005. In our opinion, and based on the reports of the other auditors, these consolidated schedules present fairly, when read in conjunction with the related consolidated financial statements, the financial data required to be set forth therein. TRIEN ROSENBERG ROSENBERG WEINBERG CIULLO & FAZZARI LLP New York, New York June 7, 2005 109 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT Summarized condensed financial information of registrant (not including consolidated subsidiary partnerships): LIBERTY TAX CREDIT PLUS L.P. CONDENSED BALANCE SHEETS ASSETS

Investments in subsidiary partnerships are recorded in accordance with the equity method of accounting, wherein the investments are not reduced below zero. Accordingly, partners' equity on the consolidated balance sheet will differ from partners' equity shown above. 110 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT LIBERTY TAX CREDIT PLUS L.P. CONDENSED STATEMENTS OF OPERATIONS

(*) Includes suspended prior year losses in excess of investment in accordance with equity method of accounting amounting to $7,694,855, $1,444,277 and $6,336,652 for the years ended March 15, 2005, 2004, and 2003, respectively. 111 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT LIBERTY TAX CREDIT PLUS L.P. CONDENSED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents

112 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 15, 2005

113 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 15, 2005 (continued)

(a) Since all properties were acquired as operating properties, depreciation is computed using primarily the straight line method over the estimated useful lives determined by the Partnership date of acquisition. (b) Furniture and fixtures, included in buildings and improvements, are depreciated primarily by the straight line method over their estimated useful lives ranging from 3 to 20 years. (c) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2003 and included as part of discontinued operations. See Note 10 in Item 8, Financial Statements and Supplementary Data. (d) The Partnership's Local Partnership Interests in this Local Partnership was sold during the fiscal year ended March 15, 2003. See Note 10 in Item 8, Financial Statements and Supplementary Data. (e) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2004 and included as part of discontinued operations. See Note 10 in Item 8, Financial Statements and Supplementary Data. (f) The Partnership recorded the transfer of the deed in lieu of foreclosure to Bryden Road, a property owned by Shiloh. See Note 10 in Item 8, Financial Statements and Supplementary Data. (g) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2005. See Note 10 in Item 8, Financial Statements and Supplementary Data. (h) The Partnership's Local Partnership Interests in these Local Partnerships were sold during the fiscal year ended March 15, 2005. See Note 10 in Item 8., Financial Statements and Supplementary Data. (i) These properties are included in discontinued operations for the year ended March 15, 2004. See Note 12 in item 8, Financial Statements and Supplementary Data. (j) These properties are included in discontinued operations for the year ended March 15, 2005. See Note 12 in item 8, Financial Statements and Supplementary Data.

* Reclassified for comparative purposes. At the time the local partnerships were acquired by Liberty Tax Credit Plus Limited Partnership, the entire purchase price paid by Liberty Tax Credit Plus Limited Partnership was pushed down to the local partnerships as property and equipment with an offsetting credit to capital. Since the projects were in the construction phase at the time of acquisition, the capital accounts were insignificant at the time of purchase. Therefore, there are no material differences between the original cost basis for tax and GAAP. 114

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