MECCA APARTMENTS II
                        A California Limited Partnership
                         (RHCP Project No. 92-RHCP-127)







                               ANNUAL EXAMINATION


                                -----------------
                                December 31, 2003
                                -----------------



















<PAGE>


                                    CONTENTS






                                                                            Page
                                                                            ----

INDEPENDENT AUDITOR'S REPORT                                                 1-2
FINANCIAL STATEMENTS:
      Balance Sheets                                                         3-4
      Statements of Operations and Changes in Partners' Equity                 5
      Statements of Cash Flows                                               6-7
      Notes to Financial Statements                                         8-11
SUPPLEMENTARY INFORMATION:
      Supplemental Information Required by HCD                             12-14
      Supplemental Schedule of Expenses                                       15
      RHCP Form 180, 181 and 182                                           16-18
INDEPENDENT AUDITOR'S REPORT ON INTERNAL
      CONTROLS                                                             19-20
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
      WITH LAWS AND REGULATIONS                                               21




















<PAGE>


1730 Havens Point Place
Carlsbad, California 92008-3611
                                                                      Jack Gilk
Telephone: 760.434.8845
Facsimile: 760.434.8865
Email: jack@gilkcpa.com
                                                     Certified Public Accountant

Partners
Mecca Apartments II
Irvine, California



                          INDEPENDENT AUDITOR'S REPORT


     I have audited the  accompanying  balance sheet of Mecca  Apartments  II, a
California Limited Partnership (RHCP Project No. 92-RHCP-127) as of December 31,
2003, and the related  statements of operations and changes in partners' equity,
and cash  flows for the year then  ended.  These  financial  statements  are the
responsibility of the partnership's  management. My responsibility is to express
an  opinion  on these  financial  statements  based on my audit.  The  financial
statements  of Mecca  Apartments  II as of December  31,  2002,  were audited by
another  auditor whose report dated  February 3, 2003,  expressed an unqualified
opinion on those statements.

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

     In my opinion,  the financial  statements referred to above present fairly,
in all material  respects,  the  financial  position of Mecca  Apartments  II, a
California Limited Partnership (RHCP Project No. 92-RHCP-127) 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.

     My audit was  conducted  for the  purpose  of  forming  an  opinion  on the
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  shown on pages 12 to 18 is presented  for the purpose of additional
analysis and is not a required part of the basic  financial  statements of Mecca
Apartments  II  (RHCP  Project  No.  92-RHCP-127).  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.


<PAGE>


Mecca Apartments II
RHCP Project No. 92-RHCP-127
Independent Auditor's Report, December 31, 2003
Page 2
--------------------------------------------------------------------------------



     In accordance  with  Government  Auditing  Standards,  I have also issued a
report  dated  January  19,  2004 on my  consideration  of Mecca  Apartments  II
internal control structure and a report dated January 19, 2004 on its compliance
with laws and regulations.




                                                            /s/Jack Gilk

                                                              33-0724657
January 19, 2004







               See the accompanying notes to financial statements.
--------------------------------------------------------------------------------
                                       2

<PAGE>




<TABLE>
<CAPTION>

                               MECCA APARTMENTS II
                          RHCP Project No. 92-RHCP-127
                                    (A California Limited Partnership)
-------------------------------------------------------------------------------------------------------------
                   BALANCE SHEETS, DECEMBER 31, 2002 AND 2003
-------------------------------------------------------------------------------------------------------------


                                     ASSETS



                                                                          2003                       2002
                                                                      ---------------         ---------------
<S>                                                                   <C>                     <C>
Current Assets:
    Operating cash and equivalents                                    $      16,760           $    143,977
    Security deposit cash                                                    23,672                 23,635
    Tenant accounts receivable                                                  923                    343
    Prepaid expenses                                                          9,750                  7,787
    Tax and insurance impound funds                                          53,590                  4,352
                                                                      ---------------         ---------------
             Total current assets                                           104,695                180,094
                                                                      ---------------         ---------------

Property, Building, and Equipment, At Cost:
    Land                                                                    259,698                259,698
    Buildings and improvements                                            3,961,851              3,961,851
    Equipment                                                               139,749                139,749
                                                                      ---------------         ---------------
                                                                          4,361,298              4,361,298

    Accumulated depreciation                                             (1,003,164)              (901,661)
                                                                      ---------------         ---------------
             Property, building, and equipment - net                      3,358,134              3,459,637
                                                                      ---------------         ---------------

Other Assets:
     Replacement reserve
                                                                             51,900                 49,328
     Operating reserve                                                      110,852                105,370
     Unamortized deferred costs                                             134,864                148,969
                                                                      ---------------         ---------------
             Total other assets                                             297,616                303,667
                                                                      ---------------         ---------------

                                                                      $   3,760,445           $  3,943,398
                                                                      ===============         ===============










               See the accompanying notes to financial statements.
-------------------------------------------------------------------------------------------------------------
</TABLE>
                                      3
<PAGE>
<TABLE>
<CAPTION>
Mecca Apartments II
RHCP Project No. 92-RHCP-127
Balance Sheets, December 31, 2002 and 2003
Page 2
-------------------------------------------------------------------------------------------------------------




                        LIABILITIES AND PARTNERS' EQUITY


                                                                          2003                       2002
                                                                      ---------------         ---------------
<S>                                                                   <C>                     <C>
Current Liabilities:
     Current portion of long-term debt                                $       8,993           $        8,201
     Accounts payable                                                         5,147                    6,510
     Security trust liability                                                23,327                   23,342
     Accrued interest                                                         5,196                    5,359
     Unearned income                                                          8,136                    2,030
                                                                      ---------------         ---------------
                Total current liabilities                                    50,799                   45,442
                                                                      ---------------         ---------------

Long-term Debt:
     Mortgages payable, less current portion
          included above                                                    665,048                  674,041
     Notes payable                                                        1,814,577                1,814,577
     Long-term portion of accrued interest                                  595,562                  523,625
     Long-term portion of unearned income                                     6,458                   12,658
                                                                      ---------------         ---------------

               Total long-term debt                                       3,081,645                3,024,901
                                                                      ---------------         ---------------

Partners' equity                                                            628,001                  873,055
                                                                      ---------------         ---------------

                                                                      $   3,760,445           $    3,943,398
                                                                      ===============         ===============










               See the accompanying notes to financial statements.
---------------------------------------------------------------------------------------------------------------
</TABLE>
                                       4
<PAGE>

<TABLE>
<CAPTION>

                               MECCA APARTMENTS II
                          RHCP Project No. 92-RHCP-127
                                   (A California Limited Partnership)
---------------------------------------------------------------------
                      STATEMENTS OF OPERATIONS AND CHANGES
       IN PARTNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2002 AND
                                      2003
---------------------------------------------------------------------------------------------------------------





                                                                          2003                       2002
                                                                      ---------------         -----------------
<S>                                                                   <C>                      <C>
Revenue:
     Gross potential rents                                            $     266,976            $     277,164
     Less vacancies                                                         (12,560)                  (5,179)
                                                                      ---------------         -----------------
     Net rental income                                                      254,416                  271,985
     Laundry and vending income                                              17,825                   14,180
     Tenant charges income                                                    1,268                    1,814
     Interest income                                                          1,223                    4,273
                                                                      ---------------         -----------------

                  Total revenues                                            274,732                  292,252
                                                                      ---------------         -----------------

Expenses:
     Administrative                                                          79,565                   56,451
     Utilities                                                               21,351                   20,720
     Operating and maintenance                                              105,308                  101,402
     Insurance and taxes                                                     63,415                   54,389
     Interest                                                               134,539                  135,365
     Depreciation and amortization                                          115,608                  130,354
                                                                      ---------------         -----------------
                  Total expenses                                            519,786                  498,681
                                                                      ---------------         -----------------

Net loss                                                                   (245,054)                (206,429)

Partners' equity - beginning                                                873,055                1,079,484
                                                                      ---------------         -----------------

Partners' equity - ending                                             $     628,001           $      873,055
                                                                      ===============         =================


















               See the accompanying notes to financial statements.
---------------------------------------------------------------------------------------------------------------
</TABLE>
                                       5

<PAGE>

<TABLE>
<CAPTION>

                               MECCA APARTMENTS II
                          RHCP Project No. 92-RHCP-127
                                    (A California Limited Partnership)
----------------------------------------------------------------------
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003
---------------------------------------------------------------------------------------------------------------


                                                                          2003                       2002
                                                                      ---------------         -----------------
<S>                                                                   <C>                     <C>
operating activities:
     Rental receipts                                                  $     248,348           $      267,532
     Operating interest receipts                                                516                    1,962
     Other operating receipts                                                19,351                   28,652
     Payments to suppliers and employees:
         Administrative                                                     (62,302)                 (37,098)
         Management fees                                                    (13,489)                 (14,156)
         Utilities                                                          (21,351)                 (20,720)
         Operating and maintenance                                         (105,308)                (101,402)
         Real estate taxes                                                  (32,589)                 (31,126)
         Property insurance                                                 (19,232)                 (15,253)
         Miscellaneous taxes and insurance                                  (13,558)                 (11,610)
         Interest on mortgage                                               (62,765)                 (63,487)
         Funding security deposits                                              (52)                     211
                                                                      ---------------         -----------------
              Net cash provided by (used in)
                  operating activities                                      (62,431)                   3,505
                                                                      ---------------         -----------------

Cash flows from investing activities:
     Mortgage escrow withdrawals (deposits) - net                           (54,509)                  (1,365)
     Cash to replacement reserve, including interest                        (14,526)                 (15,217)
     Replacement reserve draws                                               11,954                   51,646
     Interest from reserve investments                                          496                      901
                                                                      ---------------         -----------------
         Net cash used in investing activities                              (56,585)                  35,965

Cash flows from financing activity
     mortgage principal payments                                             (8,201)                  (7,479)
                                                                      ---------------         -----------------

Net increase (decrease) in cash                                            (127,217)                  31,991
Cash at beginning of year                                                   143,977                  111,986
                                                                      ---------------         -----------------

Cash at end of year                                                   $      16,760           $      143,977
                                                                      ===============         ================






               See the accompanying notes to financial statements.
----------------------------------------------------------------------------------------------------------------
</TABLE>
                                       6
<PAGE>
<TABLE>
<CAPTION>
Mecca Apartments II
RHCP Project No. 92-RHCP-127
Statements of Cash Flows, December 31, 2002 and 2003
Page 2
----------------------------------------------------------------------------------------------------------------


                           Reconciliation of Net Loss
             to Net Cash Provided By (Used in) Operating Activities



                                                                          2003                       2002
                                                                      ---------------         -----------------
<S>                                                                   <C>                     <C>
Net Loss                                                              $    (245,054)          $      (206,429)
Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
    Depreciation and amortization                                           115,608                   130,354
    Decrease (increase) in:
        Security deposit cash                                                   (37)                      364
        Receivables                                                            (580)                    1,405
        Prepaids                                                             (1,963)                   (3,600)
    Increase (decrease) in:
        Payables                                                             (1,363)                      (97)
        Security deposit liability                                              (15)                     (153)
        Accruals                                                             71,774                    71,878
    Unearned income                                                             (94)                   12,094
    Reserve interest earned                                                    (707)                   (2,311)
                                                                      ---------------         -----------------

Net cash provided by (used in) operating activities                   $     (62,431)          $         3,505
                                                                      ===============         =================





















               See the accompanying notes to financial statements.
-------------------------------------------------------------------------------------------------------------
</TABLE>
                                       7
<PAGE>


                               MECCA APARTMENTS II
                          RHCP Project No. 92-RHCP-127
                                    (A California Limited Partnership)
--------------------------------------------------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
--------------------------------------------------------------------------------


1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization:   The  partnership  was  organized  to  develop  and  operate
     low-income housing in the City of Mecca, California.  The property included
     in the  financial  statements  consists  of sixty  units of rental  housing
     placed in service in 1995.  The  partnership  has entered into an agreement
     with the State of  California  Tax Credit  Allowance  Committee;  under the
     terms of which the partnership will be allocated federal low-income housing
     credits  which  will be passed  through  to the  partners  for the ten year
     period following  initial  occupancy of the housing.  The credits are to be
     8.72% of the  eligible  basis up to a maximum  credit of $387,873 per year.
     Agreements  with the Tax Credit  Allocation  Committee and the lender place
     substantial restrictions on the use and operation of the housing, including
     restrictions on rents,  expenditures and withdrawals and requirements  that
     various restricted cash deposits be maintained.

     Capitalization   and   Depreciation:   Assets  are  recorded  at  cost  and
     depreciated  using a method  which  approximates  straight-line  over their
     estimated  useful  lives.  The  principal  estimated  useful  lives used in
     computing the depreciation provisions are as follows:

          Building and improvements                                     40 years
          Equipment                                                  5 - 7 years

     The policy of the project is to charge  amounts  expended for  maintenance,
     repairs, and minor replacements to expense, and to capitalize  expenditures
     for major replacements and betterments.

     Deferred Costs: Loan fees are amortized over 26.5 years.

     Cash and Cash  Equivalents:  For  purposes of  reporting  cash flows,  cash
     includes unrestricted cash in bank, cash on hand, savings accounts, and all
     certificates of deposit with original maturities of three months or less.

     The project maintains its cash in bank deposit accounts, which at times may
     exceed federally insured limits. The project has not experienced any losses
     in  such  accounts.  The  Partnership  believes  it is not  exposed  to any
     significant credit risk on cash and cash equivalents.








                                       8
--------------------------------------------------------------------------------
<PAGE>

Mecca Apartments II
RHCP Project No. 92-RHCP-127
Notes to Financial Statements, December 31, 2003
Page 2
--------------------------------------------------------------------------------


     Estimates:  The  preparation  of financial  statements in  conformity  with
     generally  accepted  accounting  principles  requires  management  to  make
     estimates and assumptions  that affect:  (1) the reported amounts of assets
     and  liabilities  and  disclosure  of  contingencies  at  the  date  of the
     financial statements, and (2) the reported amounts of revenues and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Rental Income and Unearned Rents: The Partnership  rents apartment units on
     a month to  month  basis  and  recognizes  revenues  when  earned.  Advance
     receipts of rents are classified as liabilities until earned.

     Income  Taxes:  No provision is made for income taxes since such taxes,  if
     any, are the liability of the individual partners.

2.   RESTRICTED FUNDS

     The  Partnership  is required  to make  monthly  impound  deposits to cover
     insurance   premiums,   property  taxes  and  to  maintain  a  reserve  for
     replacements.  These  restricted  funds are held by, and  expenditures  are
     subject to supervision and approval by Midland Mortgage Investment Corp.

3.   MORTGAGE PAYABLE

     Mortgage payable  consists of a 9.25% real estate mortgage,  collateralized
     by a deed of trust on the real  property.  The  obligation  is  payable  in
     aggregate  monthly  principal  and interest  installments  of $5,914 with a
     maturity date of January 1, 2026.                                   674,041

     Less current portion                                                (8,993)
                                                                        --------

                                                                        $665,048
                                                                        ========

     The amounts maturing for the next five years are:

                  2004                  $8,993
                  2005                   9,839
                  2006                  10,789
                  2007                  11,830
                  2008                  12,972








--------------------------------------------------------------------------------
                                       9
<PAGE>

<TABLE>
<CAPTION>
Mecca Apartments II
RHCP Project No. 92-RHCP-127
Notes to Financial Statements, December 31, 2003
Page 3
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>
4.   NOTES PAYABLE

     Notes payable at December 31, 2003 consist of the following:

     6.5% note payable  with a term of 15 years,  payable to County of Riverside
     Home Funds.  Payments of $8,469,  including interest made monthly beginning
     May 2010,  until  outstanding  principal  balance  of note and all  accrued
     interest paid in full. At December 31, 2003,  accrued  interest on note was
     $269,074.                                                                                            $ 500,000

     3% note payable from the  California  Department  of Housing and  Community
     Development Rental Housing Construction  Program.  Payments of interest and
     principal to be deferred,  unless the  operation of the property  generates
     surplus  cash in excess of  allowable  distributions.  At December 31, 2003
     accrued interest on note was $326,488.

                                                                                                          1,314,577
                                                                                                          ---------



                                                                                                         $1,814,577
                                                                                                         ==========
5. PROPERTY TAXES

     The managing general partner is Indio Housing Development  Corporation,  an
     organization  exempt from income  taxes  under the  provisions  of Internal
     Revenue  Cod(  Section  501(c)(3).  As a  provider  of  rental  housing  to
     qualifying  low income  families the  partnership  qualifies  for a welfare
     exemption  from a portion of the property  taxes  assessed by the County of
     Riverside.  The Riverside  County  Assessor is contesting  the grant of the
     welfare   exemption.   Discussions  are  being  held  with  the  assessor's
     representative.



------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       10
<PAGE>


Mecca Apartments II
RHCP Project No. 92-RHCP-127
Notes to Financial Statements, December 31, 2003
Page 4
--------------------------------------------------------------------------------


6    COMMITMENTS



     The  Partnership  operates  the  project in  accordance  with the rules and
     regulations set forth by the California Department of Housing and Community
     Development  (HCD).  The  Partnership  is  subject  to  restrictions  as to
     operating   policies,   rental   charges,    operating   expenditures   and
     distributions to partners under these guidelines.

     The Partnership  has also entered into a Regulatory  Agreement with the Tax
     Credit Allocation Committee (TCAC).  Under this Agreement,  the Partnership
     shall maintain the project as a Qualified  Low-income  Housing Project.  In
     exchange for this agreement,  TCAC has authorized an allocation relating to
     the  low-income  housing  credit under the  provisions of Section 42 of the
     Internal Revenue Code.

7.   CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

     The  Partnership's  operations are  concentrated  in the  multifamily  real
     estate market. In addition, the Partnership operates in a heavily regulated
     environment.   The   operations   of  the   project   are  subject  to  the
     administrative  directives,  rules and  regulations  of federal,  state and
     local  regulatory  agencies,  including,  but not  limited  to,  HCD.  Such
     administrative  directives,  rules and regulations are subject to change by
     an act of congress,  the State of  California or an  administrative  change
     mandated by HCD.  Such changes may occur with little  notice or  inadequate
     funding to pay for related costs,  including the additional  administrative
     burden, to comply with a change.
























--------------------------------------------------------------------------------
                                       11
<PAGE>




















                            SUPPLEMENTARY INFORMATION


































<PAGE>

<TABLE>
<CAPTION>

                               MECCA APARTMENTS II
                          RHCP Project No. 92-RHCP-127
                                    (A California Limited Partnership)
------------------------------------------------------------------------------------------------------------
                    SUPPLEMENTAL INFORMATION REQUIRED BY HCD
                      FOR THE YEAR ENDED DECEMBER 31, 2003
------------------------------------------------------------------------------------------------------------


UNRESTRICTED CASH

<S>                                                                      <C>
     Unrestricted cash consisted of the following accounts:
     Petty cash                                                          $      100
     U.S. Bank                    Operating account                           1,962
     Bank of America              Operating transit account                   4,365
     U.S. Bank                    Operating savings                          10,333
                                                                         -----------------

                                                                         $   16,760
                                                                         =================
</TABLE>
DELINQUENT TENANTS' ACCOUNTS RECEIVABLE

     Accounts  receivable  from tenants  consisted of $923 of December rent from
     seven tenants.

TENANTS' SECURITY DEPOSITS

     The tenants'  security  deposits are funded in separate accounts at Bank of
     America  and U.S.  Bank.  The  amount  on  deposit  was $345  more than the
     liability.

BUILDINGS AND IMPROVEMENTS
<TABLE>
<CAPTION>
                                                               Buildings &
                                                 Land          Improvements      Equipment        Total
                                              -------------  ---------------  -------------  -----------------

<S>                                              <C>             <C>              <C>            <C>
     Balance, January 1                          $259,698        $3,961,851       $139,749       $4,361,298

     Additions                                          -                 -              -                -
                                              -------------  ---------------  -------------  ------------------

     Balance, December 31                         259,698         3,961,851        139,749        4,361,298

     Less accumulated depreciation                      -          (863,415)      (139,749)      (1,003,164)
                                              -------------  ---------------  -------------  ------------------

     Net                                         $259,698        $3,098,436       $      -       $3,358,134
                                              -------------  ---------------  -------------  ------------------










-------------------------------------------------------------------------------------------------------------
</TABLE>
                                       12
<PAGE>

<TABLE>
<CAPTION>

Mecca Apartments II
RHCP Project No. 92-RHCP-127
Supplemental Information Required by HCD, December 31, 2003
Page 2
-------------------------------------------------------------------------------------------------------

<S>                                                                                           <C>
AUDIT

Auditing expense consisted of the following:

         Audit of 2002 financial statements for submission to
         Department of Housing and Community Development.                                     $ 6,500
                                                                                              =======
</TABLE>
TAXES

Real property taxes have been paid before the delinquency date.

INSURANCE

All insurance premiums were paid timely.

DEBT SERVICE

     Debt service payments have been timely.

REPLACEMENT RESERVE ACCOUNT
<TABLE>
<CAPTION>
     In accordance with the terms of the regulatory  agreement,  restricted cash
     is held by one of the  lenders.  It is to be used  for the  replacement  of
     property with the prior approval of the Department of Housing and Community
     Development.

<S>                                                                                         <C>
     The activity for 2003 was as follows:
           Balance, beginning of year                                                       $ 49,328
           Deposits: 12 @ $1,193                                                              14,316
           Authorized withdrawals                                                            (11,954)
           Interest                                                                              210
                                                                                          ------------

           Balance, end of year                                                             $ 51,900
                                                                                          ============

     The monthly  deposits to the account were in  accordance  with the terms of
     the regulatory agreement.






------------------------------------------------------------------------------------------------------
                                       13

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

Mecca Apartments II
RHCP Project No. 92-RHCP-127
Supplemental Information Required by HCD, December 31, 2003
Page 3
-------------------------------------------------------------------------------------------------------------


<S>                                                                                            <C>
OTHER RESERVES

     In accordance with the terms of the regulatory  agreement,  restricted cash
     is held by U.S.  Bank in an account  designated  as an  operating  reserve.
     Monthly  deposits of $554 are  required.  The  activity  during 2003 was as
     follows:

          Balance, beginning of year                                                           $105,370
          Monthly deposits                                                                        4,986
          Interest                                                                                  496
                                                                                                ---------

          Balance, end of year                                                                 $110,852
                                                                                               ==========






































-------------------------------------------------------------------------------------------------------------
</TABLE>
                                       14

<PAGE>

<TABLE>
<CAPTION>

                               MECCA APARTMENTS II
                          RHCP Project No. 92-RHCP-127
                                    (A California Limited Partnership)
                        SUPPLEMENTAL SCHEDULE OF EXPENSES
                      FOR THE YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
<S>                                                                      <C>
Site management payroll                                                  $ 16,257
Manager's rent-free apartment                                               5,136
Management fee                                                             13,489
Reporting fee                                                              30,000
Audit fee                                                                   6,500
Advertising                                                                    75
Telephone and answering service                                             1,387
Office supplies                                                             4,444
Other administration                                                        2,277
                                                                           -------
       Subtotal administrative expenses                                                        $ 79,565

Electricity                                                                 7,876
Water and sewer                                                            10,852
Fuel                                                                        2,623
                                                                           -------
       Subtotal utilities                                                                        21,351

Maintenance and repairs payroll                                            18,646
Maintenance and repairs supply                                              3,662
Maintenance and repairs contract                                           40,990
Garbage and trash removal                                                  13,073
Painting and decorating                                                    10,217
Grounds                                                                    16,084
Services                                                                    2,617
Other maintenance expenses                                                     19
                                                                           -------
       Subtotal maintenance expenses                                                            105,308

Property taxes                                                             32,589
Other taxes and licenses                                                    9,963
Property and liability insurance                                           17,268
Health insurance and other employee benefits                                3,595
                                                                           -------

       Subtotal tax and insurance                                                                63,415

Interest                                                                                        134,539
Depreciation and amortization                                                                   115,608
                                                                                              ----------
       Total expenses                                                                         $ 519,786
                                                                                              ---------





</TABLE>

--------------------------------------------------------------------------------
                                       15
<PAGE>



1730 Havens Point Place
Carlsbad, California 92008-3611
                                                                      Jack Gilk
Telephone: 760.434.8845
Facsimile: 760.434.8865
Email: jack@gilkcpa.com
                                                     Certified Public Accountant




Partners
Mecca Apartments II
Irvine, California


             INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROLS OVER
          FINANCIAL REPORTINGBASED ON AN AUDIT OF FINANCIAL STATEMENTS
            PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS

     I  have  audited  the  financial  statements  of  Mecca  Apartments  II,  a
California Limited  Partnership (RHCP Project No. 92-RHCP-127) as of and for the
year ended  December 31, 2003,  and have issued my report  thereon dated January
19, 2004. I conducted my audit in accordance with auditing  standards  generally
accepted in the United States and Government Auditing  Standards,  issued by the
Comptroller  General of the United States.  Those standards  require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.

     The  management  of  the  Project  is  responsible  for   establishing  and
maintaining an internal control  structure.  In fulfilling this  responsibility,
estimates  and  judgments  by  management  are  required to assess the  expected
benefits  and  related  costs  of  internal  control   structure   policies  and
procedures.  The  objectives  of an internal  control  structure  are to provide
management  with  reasonable,  but  not  absolute,  assurance  that  assets  are
safeguarded against loss from unauthorized use or disposition, that transactions
are executed in accordance with management  authorization  and recorded properly
to permit the preparation of financial  statements in accordance with accounting
principles  generally  accepted in the United  States,  and that  state-assisted
programs are managed in compliance with applicable laws and regulations  Because
of  inherent   limitations   in  any   internal   control   structure,   errors,
irregularities,  or instances of noncompliance may nevertheless occur and not be
detected.  Also, projection of any evaluation of the structure to future periods
is subject to the risk that procedures may become inadequate  because of changes
in conditions or that the  effectiveness of the design and operation of policies
and procedures may deteriorate.

     In planning and performing my audit for the year ended December 31, 2003, I
obtained an understanding of the design of relevant  internal control  structure
policies  and  procedures  and  determined  whether  they  had  been  placed  in
operation,  and I  assessed  control  risk in order  to  determine  my  auditing
procedures  for the purpose of  expressing  my opinions on the  Project's  basic
financial statements and on its compliance with specific requirements




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<PAGE>


Mecca Apartments II
RHCP Project No. 92-RHCP-127
Independent Auditor's Report on Internal Controls, December 31, 2003
Page 2
------



     applicable  to  its  major  state-assisted  programs  and  not  to  provide
     assurance on the internal control structure.

     I performed tests of controls to evaluate the  effectiveness  of the design
and  operation of internal  control  structure  policies and  procedures  that I
considered  relevant to  preventing  or detecting  material  noncompliance  with
specific requirements  applicable to the Project's  state-assisted  programs. My
procedures  were less in scope than would be  necessary  to render an opinion on
internal control structure policy and procedures.  Accordingly, I do not express
such an opinion.

     My consideration  of the internal  control  structure would not necessarily
disclose all matters in the internal  control  structure  that might be material
weaknesses  under standards  established by the American  Institute of Certified
Public Accountants.  A material weakness is a reportable  condition in which the
design or operation of one or more of the internal  control  structure  elements
does not reduce to a relatively low level the risk that errors or irregularities
in amounts that would be material in relation to the financial  statements being
audited or that  noncompliance  with laws and regulations that would be material
to a state-assisted program may occur and not be detected within a timely period
by employees in the normal  course of performing  their  assigned  functions.  I
noted no matters  involving the internal  control  structure and its  operations
that I consider to be material weaknesses as defined above.

     This  report  is  intended  solely  for the  information  of the  partners,
management  and their  staff,  and the  California  Department  of  Housing  and
Community Development and is not intended to be and should not be used by anyone
other than these specified parties.






                                                            /s/Jack Gilk

                                                              33-0724657
January 19, 2004








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                                       17

<PAGE>

1730 Havens Point Place
Carlsbad, California 92008-3611
                                                                      Jack Gilk
Telephone: 760.434.8845
Facsimile: 760.434.8865
Email: jack@gilkcpa.com
                                                     Certified Public Accountant

Partners
Mecca Apartments II
Irvine, California


              INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH LAWS
            AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
           PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

     I  have  audited  the  financial  statements  of  Mecca  Apartments  II,  a
California Limited  Partnership (RHCP Project No. 92-RHCP-127) as of and for the
year ended  December 31, 2003,  and have issued my report  thereon dated January
19, 2004. I conducted my audit in accordance with auditing  standards  generally
accepted in the United States and Government Auditing  Standards,  issued by the
Comptroller  General of the United States.  Those standards  require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.

     Compliance with laws,  regulations and contracts  applicable to the project
is  the  responsibility  of the  project's  management.  As  part  of  obtaining
reasonable assurance about whether the financial statements are free of material
misstatement,  I  performed  tests  of the  project's  compliance  with  certain
provisions of laws, regulations and contracts.  However, my objective was not to
provide an opinion on overall compliance with such provisions. Accordingly, I do
not express such an opinion.

     I also considered those compliance matters comprehended in the Department
 of Housing and Community Development letter dated August 14, 1995 regarding
 "Rental Housing Construction Program Audit Requirements".

     The results of my tests of compliance  indicate  that,  with respect to the
items  tested,  the  project  complied,  in  all  material  respects,  with  the
provisions  referred to in the two preceding  paragraphs.  With respect to items
not tested,  nothing  came to my  attention  that caused me to believe  that the
project had not complied, in all material respects, with those provisions.

     This  report  is  intended  solely  for the  information  of the  partners,
management,  others within the organization,  and the Department of Agriculture,
Rural  Development  and is not  intended  to be and should not be used by anyone
other than these specified parties.


                                                            /s/Jack Gilk

                                                              33-0724657
January 19, 2004

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