FINANCIAL STATEMENTS AND
                                         INDEPENDENT AUDITORS' REPORT

                                           CITYSIDE APARTMENTS, L.P.

                                       DECEMBER 31, 1996, 1995 AND 1994





<PAGE>
<TABLE>
<CAPTION>
                            Cityside Apartments, L.P.

                                TABLE OF CONTENTS



                                                                                     PAGE
<S>                                                                              <C>
INDEPENDENT AUDITORS' REPORT                                                          3

FINANCIAL STATEMENTS

    BALANCE SHEETS                                                                    4

    STATEMENTS OF OPERATIONS                                                          5

    STATEMENTS OF PARTNERS' EQUITY                                                    6

    STATEMENTS OF CASH FLOWS                                                          7

    NOTES TO FINANCIAL STATEMENTS                                                     8


</TABLE>






<PAGE>

                                         INDEPENDENT AUDITOR'S REPORT


To the Partners
Cityside Apartments, L.P.

        We have audited the accompanying  balance sheets of Cityside Apartments,
L.P. as of December 31, 1996 and 1995, and the related statements of operations,
partners'  equity and cash flows for the years ended December 31, 1996, 1995 and
1994. These financial  statements are the  responsibility  of the  partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

        In our  opinion,  the  financial  statements  referred to above  present
fairly, in all material respects, the financial position of Cityside Apartments,
L.P. as of December 31, 1996 and 1995,  and the results of its  operations,  the
changes in  partners'  equity and cash flows for the years  ended  December  31,
1996,  1995  and  1994,  in  conformity  with  generally   accepted   accounting
principles.





/s/ Reznick Fedder & Silverman

Bethesda, Maryland
January 24, 1997




<PAGE>
<TABLE>
<CAPTION>


                                     CITYSIDE APARTMENTS, L.P.

                                           BALANCE SHEETS

                                            DECEMBER 31,


                                                           ASSETS
                                                              1996          1995
                                                            ------------  --------

            <S>                                                  <C>            <C>
         CURRENT ASSETS
          Petty Cash                                         $   400 $          400
          Cash in bank - operations                           86,291        207,947
          Cash in bank - development                           1,437          1,700
          Tenant accounts receivable                          17,821         23,622
          Accounts receivable - subsidy                       21,318         12,643
          Prepaid taxes and insurance                         39,371         42,618
          Due from affiliate                                  10,499           -
                                                           --------------------------

                   Total current assets                      177,137        288,930
                                                            ---------      ---------
         DEPOSITS HELD IN TRUST - FUNDED
           Tenant security deposit                            17,551         17,814
                                                            ---------      ---------
         RESTRICTED DEPOSITS AND FUNDED RESERVES
           Mortgage escrow deposits                           59,469         65,963
           Reserve for replacement                           180,166        153,212
           Reserve for painting                               29,117         21,060
           Rehabilitation escrow                             117,686        113,582
           Roofing and siding reserves                        64,684            -
                                                            ---------      ---------

                                                             451,122        353,817
         RENTAL PROPERTY                                    ---------      ---------
           Land                                               99,797         99,797
           Buildings and improvements                     13,802,871     13,802,871
           Building equipment - portable                      14,723         14,723
                                                          ----------     -----------
                                                          13,917,391     13,917,391
           Less accumulated depreciation                   3,675,441      3,171,904
                                                          -----------    -----------
                                                          10,241,950     10,745,487
                                                          -----------    -----------
      OTHER ASSETS
           Deposits                                            3,060          3,060
           Mortgage costs, less accumulated amortization
                      of $91,267 and $80,428                244,2230        255,062
                                                            ----------     ----------
                                                             247,283        258,122
                                                            ----------     ----------
                                                        $11, 135,043     $11,664,170
                                                        =============     ============


</TABLE>
See notes to financial statements







<PAGE>
<TABLE>
<CAPTION>

                                     CITYSIDE APARTMENTS, L.P.

                                           BALANCE SHEETS

                                            DECEMBER 31,

                                                              <S><C>            <C>
  LIABILITIES AND PARTNERS' EQUITY
                                                                   1996          1995
                                                               ------------     --------
      CURRENT LIABILITIES
         Accounts payable                                    $      8,490    $     3,029
         Accrued interest payable                                  48,380         48,876
         Accrued management fee                                     5,652          6,690
         Accrued P.I.L.O.T                                         22,814         29,157
         Due to general partners and affiliates                    79,177         79,177
         Rent deferred credits                                      1,317            642
         Current maturities of mortgages payable                   62,859         56,619
                                                                 ----------     --------
           Total current liabilities                              228,689        224,190
                                                                 ----------     --------
        DEPOSITS LIABILITY
         Tenant security deposits (contra)                         17,551         17,814
                                                                 ----------     --------

        LONG-TERM DEBT
         Mortgages payable, less current maturities             7,802,632      7,865,492
         Accrued interest payable                                 431,965        358,956
                                                                -----------     ---------
                                                                8,234,597      8,224,448
                                                                -----------     ---------
        CONTINGENCY                                                     -             -

        PARTNERS' EQUITY                                        2,654,206      3,197,718
                                                                -----------     ---------
                                                              $11,135,043    $11,664,170
                                                               ============   ===========


</TABLE>
See notes to financial statements






<PAGE>
<TABLE>
<CAPTION>

                                     CITYSIDE APARTMENTS, L.P.

                                      STATEMENTS OF OPERATIONS

                                      Year ended December 31,


                                                 1996          1995          1994
                                                 ----          ----          ----
<S>                                              <C>           <C>            <C>
Revenue
  Rental                                     $ 1,281,775   $ 1,285,427   $ 1,257,143
  Interest and other                              20,117        29,947        79,278
                                             -----------   -----------   -----------

                                              1,301,892     1,315,374      1,336,421
                                              ---------     ---------      ---------
Expenses
  Administrative                                167,757       163,402        166,358
  Utilities                                      78,170        71,139         76,345
  Operating and maintenance                     207,532       153,174        160,426
  Taxes and insurance                        191,263          182,006        175,340
  Interest                                      681,306       662,020        667,127
  Depreciation and amortization                 514,376       515,275        515,866
                                             ----------    ----------     ----------

                                              1,840,404     1,747,016      1,761,462
                                              ---------     ---------      ---------

    NET LOSS                                 $ (538,512)   $ (431,642)   $ (425,041)
                                              ==========    ==========    ==========



</TABLE>
See notes to financial statements






<PAGE>
<TABLE>
<CAPTION>

                                     CITYSIDE APARTMENTS, L.P.

                                   STATEMENTS OF PARTNERS' EQUITY

                            Years ended December 31, 1996, 1995 and 1994


                                                             General       Limited
                                                Total        partners      partners
<S>                                              <C>           <C>            <C>
Partners' equity, December 31, 1993          $ 4,056,901   $    90,426   $ 3,966,475

Partner distribution                            (2,500)        -             (2,500)

Net profit (loss) - 1994                       (425,041)         49,211    (474,252)
                                             -----------   ------------  -----------

Partners' equity, December 31, 1994           3,629,360    139,637         3,489,723

Net profit (loss) - 1995                       (431,642)         7,298     (438,940)
                                             -----------   -----------   -----------

Partners' equity, December 31, 1995           3,197,718       146,935      3,050,783

Partner distribution                            (5,000)        -             (5,000)

Net loss - 1996                                (538,512)      (5,385)      (533,127)
                                             -----------    ---------    -----------

Partners' equity, December 31, 1996          $ 2,654,206    $ 141,550    $ 2,512,656
                                              ==========     ========     ==========



</TABLE>
See notes to financial statements






<PAGE>
<TABLE>
<CAPTION>

                                     CITYSIDE APARTMENTS, L.P.

                                      STATEMENTS OF CASH FLOWS

                                      Year ended December 31,

                                                               1996          1995           1994
                                                               ----          ----           ----
<S>                                                            <C>            <C>           <C>
Cash flows from operating activities
  Net loss                                                 $   (538,512) $  (431,642)  $  (425,041)
  Adjustments to reconcile net loss to net cash provided
    by
    operating activities
  Depreciation                                                503,537        504,436       504,153
  Amortization                                                 10,839         10,839        11,713
  Mortgagor income                                                429          -             -
  Decrease (increase) in tenant  accounts receivable            5,801            182       (7,977)
  Decrease (increase) in accounts receivable - subsidy        (8,675)          3,279      (11,452)
  Decrease (increase) in accounts receivable - insurance        -             15,118      (15,118)
    claims
  Decrease (increase) in prepaid expenses                       3,247        (3,369)        1,448
  Decrease in tenant security deposits - net                    1,230          -             -
  Decrease (increase) in mortgage escrow deposits               6,494        (8,184)      (12,937)
  Increase (decrease) in accounts payable                       3,802          (968)       (4,213)
  Increase (decrease) in accrued management fee                (1,038)       (1,046)        1,032
  Increase in accrued interest payable                         72,513        72,563        72,608
  Increase (decrease) in accrued P.I.L.O.T.                    (6,343)        3,219        (7,343)
  Increase (decrease) in accounts payable - fire loss           -           (48,257)       48,257
  Increase (decrease) in rent deferred credits                     67           300           (28)
                                                           ---------------------------- --------------
    Net cash provided by operating activities                  53,999       116,470       155,102
                                                           ------------- -----------    -----------

Cash flows from investing activities
  Increase in reserve for replacements                       (26,954)       (26,880)      (22,791)
  Increase in rehabilitation escrow                           (4,104)        (4,233)       (2,243)
  Increase in painting escrow                                 (8,057)          (633)         (427)
  Advances on behalf of affiliate                            (10,499)          -             -
  Investment in rental property                                 -              -           (5,633)
  Decrease in GNMA deposit                                      -              -           58,346
  Increase in roofing and siding reserve                      (64,684)              -        -
                                                           ------------  ----------------------------
    Net cash provided by (used in) investing activities      (114,298)       (31,746)          27,252
                                                           -----------   ------------   -------------

Cash flows from financing activities
  Principal payments on mortgages                            (56,620)        (50,999)     (46,026)
  Distribution to limited partner                             (5,000)          -           (2,500)
  Repayment of due to general partners and affiliates             -         (376,330)               -
                                                           --------------------------   -------------
    Net cash used in financing activities                    (61,620)       (427,329)     (48,526)
                                                           ------------  ------------   ------------

    NET INCREASE (DECREASE) IN CASH                         (121,919)       (342,605)      133,828

Cash, beginning                                              210,047         552,652       418,824
                                                           -----------   -----------    -----------

Cash, end                                                  $  88,128     $   210,047   $   552,652
                                                            ============  ===========    ===========

Supplemental disclosure of cash flow information
  Cash paid for interest during the year                  $  583,837  $      589,457   $   594,519
                                                            ===========   ===========    ===========

</TABLE>
See notes to financial statements





<PAGE>
                            CITYSIDE APARTMENTS, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1996, 1995 and 1994


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cityside  Apartments,  L.P.  was  organized  under  the laws of the State of New
Jersey  on April  1,  1988  for the  purpose  of  acquiring,  constructing,  and
operating a low-income  residential  housing project under Section  221(d)(4) of
the National  Housing Act. The project consists of 126 units located in Trenton,
New Jersey and is  currently  operating  under the name of Cityside  Apartments.
Cash distributions are limited by agreement between the partnership and the City
of Trenton  to  $81,884  annually,  however,  in no event can the  distributions
exceed surplus cash as defined by HUD. The project  qualifies for the low-income
credit established by the Tax Reform Act of 1986.

Each building of the project has qualified and been allocated low-income housing
credits  pursuant to  Internal  Revenue  Code  Section 42  ("Section  42") which
regulates the use of the project as to occupant eligibility and unit gross rent,
among other requirements.  Each building of the project must meet the provisions
of these regulations during each of fifteen consecutive years in order to remain
qualified to receive the credits.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Rental Property

Land, buildings and improvements are recorded at cost.  Depreciation is provided
for in amounts sufficient to relate the cost of depreciable assets to operations
over their estimated  service lives using the  straight-line  method over a 27.5
year life.  Personal  property is recorded at cost and is  depreciated  over its
estimated service life of 5-7 years using accelerated methods.  Improvements are
capitalized,  while  expenditures  for  maintenance  and  repairs are charged to
expense as incurred.  Upon disposal of  depreciable  property,  the  appropriate
property accounts are reduced by the related costs and accumulated depreciation.
The resulting gains and losses are reflected in the statements of operations.

Amortization

Mortgage  costs are  amortized  over the term of the  respective  loan using the
effective interest method.

Provision for Doubtful Accounts

The  partnership   considers  accounts   receivable  to  be  fully  collectible;
accordingly,  no allowance for doubtful accounts is required.  If amounts become
uncollectible, they will be charged to operations upon such determination.

Rental Income

Rental income is recognized as rentals become due. Rental  payments  received in
advance are  deferred  until  earned.  All leases  between the  partnership  and
tenants of the property are operating leases.






<PAGE>
                            CITYSIDE APARTMENTS, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1996, 1995 and 1994


Income Taxes

No provision or benefit for income  taxes has been  included in these  financial
statements since taxable income or loss passes through to, and is reportable by,
the partners individually.

NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS

The partnership has four general partners which  collectively have a 1% interest
- Trenton  Investors,  Inc.,  Landex  Corporation,  The Richman Group,  Inc. and
Altman  Properties,  Ltd.  -  and  one  limited  partner,  American  Tax  Credit
Properties,  L.P.,  which has a 99%  interest.  Total  general  partner  capital
contributions  received  in prior  years  were $400.  The  limited  partner  was
obligated to make capital  contributions  of $6,098,988,  all of which have been
received.

NOTE C - LONG-TERM DEBT

Mortgage Payable - Greystone Servicing Corporation, Inc.

The partnership is obligated under the terms of a mortgage  payable to Greystone
Servicing  Corporation,  Inc.  (subservicer for the Government National Mortgage
Association).  The note is insured by the Federal Housing  Administration  (FHA)
and is  collateralized  by a first  mortgage  on the  property.  The note  bears
interest at the rate of 10.5%.

Principal and interest are payable by the partnership in monthly installments of
$53,371 through August 1, 2019.  Principal and accrued  interest due at December
31, 1996 and 1995 are  $5,529,191  and  $48,380,  and  $5,585,811  and  $48,876,
respectively.

Under  agreements  with the mortgage lender and FHA, the partnership is required
to make monthly escrow deposits for taxes,  insurance and replacement of project
assets, and is subject to restrictions as to operating policies, rental charges,
operating expenditures and distributions to partners.

The liability of the partnership under the mortgage is limited to the underlying
value of the real  estate  collateral  plus  other  amounts  deposited  with the
lender.

Aggregate  annual  maturities of the mortgage payable over each of the next five
years are as follows:

                     <TABLE>
                     <CAPTION>
                      <S>            <C>               <C>
                      December 31,   1997              $62,859
                                     1998                69,787
                                     1999                77,478
                                     2000                86,016
                                     2001                95,495
                     </TABLE>

Mortgage Payable - City of Trenton

The  partnership  is  obligated  under the terms of a mortgage  from the City of
Trenton,  State of New  Jersey.  The note bears  interest at the rate of 3.125%.
Annual  payments of principal and  interest,  limited to surplus cash as defined
and in accordance with the terms of the agreement, were scheduled to commence on
February 4, 1993.  No payments  were due in 1995 and 1996 under the terms of the
agreement. All unpaid principal and interest is due and payable on






<PAGE>
                            CITYSIDE APARTMENTS, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                         December 31, 1996, 1995 and 1994


February 4, 2006,  subject to extension to August 1, 2019 at the  discretion  of
the first mortgagee. Principal and accrued interest due at December 31, 1996 and
1995 are $2,336,300 and $431,965, and $2,336,300 and $358,956, respectively.

The loan is secured by a second  mortgage on the real estate.  The  liability of
the  partnership  under the mortgage is limited to the  underlying  value of the
real estate collateral.

NOTE D - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

Due to General Partners and Affiliates

As of December 31, 1996 and 1995, the partnership  owes the general partners and
certain  affiliates  $43,326 and $43,326,  respectively,  for development  fees,
construction management fees, and other construction items.
The amounts are noninterest bearing and due on demand.

Partnership Administration Fee

The partnership has entered into a Partnership Administrative Services agreement
with the general  partners  for their  services in managing  the business of the
partnership.  The  annual  fee is equal to 50% of net cash  flow  available  for
distribution as defined in the partnership  agreement with a maximum of $250,000
per year. No such fee was incurred  during 1996,  1995 and 1994.  The cumulative
amount payable as of December 31, 1996 and 1995 is $35,851.

Management Fee

The property is managed by an affiliate of certain of the general partners.  The
management fee is 6% of project  receipts.  The  management  agent also receives
fees for  accounting  services  provided  to the  partnership.  Management  fees
charged to  operations  during 1996,  1995 and 1994 were $76,712,  $77,346,  and
$74,352, respectively.  Accounting fees charged to operations were $6,804 during
each of the three years ended December 31. At December 31, 1996 and 1995, $5,652
and $6,690, respectively, in management and accounting fees are payable.

Insurance

The sole  shareholder  of an affiliate of one of the general  partners  provided
debt  service  financing  for the  capitalization  of  LaMere  Associates,  Inc.
(LaMere).  In connection with such debt financing,  the shareholder received 20%
of the  stock  of  LaMere.  LaMere  was paid  premiums  in  connection  with the
following insurance coverage provided to the project:  property, auto, workmen's
compensation,   liability  and  umbrella.  In  connection  with  such  insurance
coverage, the partnership incurred $56,725, $57,574, and $50,495 in premiums for
the years 1996, 1995 and 1994, respectively.

Shared Project Payroll Costs and Expenses

As approved by the State of New Jersey Department of Community Affairs, Division
of Housing  and  Community  Resources,  payroll  and all other  direct  costs of
employment for certain employees are shared between the partnership and Cityside
Apartments,  Phase II, L.P., a contiguous  project.  The projects share a common
management  office and  therefore  share  office  expenses.  Certain non project
specific  maintenance  expenses are shared  between the projects.  These payroll
costs and expenses are  allocated  based on the number of units in each project.
Also approved, the social service






<PAGE>
                            CITYSIDE APARTMENTS, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1996, 1995 and 1994


director/site  manager provided services to another project the management agent
manages. The partnership was reimbursed by the management agent for the services
provided based on the time spent on the other project.

Computer Services

In accordance  with HUD Handbook  4381.5 Rev-2,  Paragraph 6.38, the partnership
uses the  services of a computer  consultant  company to provide  the  following
services:  purchase and install personal computers and the related equipment and
software  for the  project's  rental  office,  provide  training  and  technical
support, and consult on software upgrades.  Dynamic Information  Services,  Inc.
(DIS), which is owned by a relative of an officer of the management  company, is
a licensed  representative  of Project Data  Systems,  Inc., a nationally  known
provider of computer system software for the subsidized  housing  industry.  DIS
derives 40% of its  consulting  service  revenues  from third party  clients not
affiliated with the management company. In 1996, DIS provided no services to the
partnership.  In 1995, the partnership  paid DIS $183 for technical  support and
training services based on billable hours.

NOTE E - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS

All profits and losses are  allocated 1% to the general  partners and 99% to the
limited partner.

Distributable   cash  flow,  as  defined  by  the  partnership   agreement,   is
distributable  1% to the  general  partners  and  99% to  the  limited  partner.
However, cash distributions are limited as described in note A.

Gain,  if any,  from a sale,  exchange  or other  disposition  is  allocable  as
follows:

        1. To all partners  having negative  balances in their capital  accounts
           prior to the  distribution  of any sale or refinancing  proceeds,  an
           amount of such gain to increase their negative balance to zero.

        2. 1% to the general  partners  and 99% to the  limited  partner  until 
           the limited  partner has received an amount equal to its gross 
           capital contribution.

        3. The  remainder  of such gain,  if any,  50% to the  limited  partner
           and 50% to the general partners.
           
Loss from a sale is allocable as follows:

        1. To the  partners  such that after such  allocation  their  respective
           capital accounts will be proportionate to their interests.

        2. To the partners until each partner's capital account equals their 
           capital contribution.

        3. To the partners to the extent of and in proportion to each partner's 
           capital account.

        4. Any remaining  loss is allocated to the partners in  accordance  with
           the manner in which they bear the economic risk of loss.






<PAGE>
                            CITYSIDE APARTMENTS, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                        December 31, 1996, 1995 and 1994


NOTE F - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENT

The Federal  Housing  Administration  (FHA) has contracted  with the partnership
under Section 8 of Title II of the Housing and Community Development Act of 1974
to make housing  assistance  payments to the  partnership on behalf of qualified
tenants.  The agreements are on a  unit-by-unit  basis,  have a 15-year term and
expire on various dates through May 2005.

NOTE G - CONTRACT WITH THE CITY OF TRENTON (IN LIEU OF TAXES)

The  partnership  has entered into an agreement with the City of Trenton whereby
the partnership pays a service charge in an amount equal to 6.28% of gross rents
as defined in the agreement.  During 1996, 1995 and 1994, $82,610,  $82,167, and
$80,873,  respectively,  was charged to  operations  and  $22,814  and  $29,157,
respectively, is owed at December 31, 1996 and 1995.

NOTE H - CONTINGENCY

The  partnership's  low-income  housing credits are contingent on its ability to
maintain  compliance with applicable sections of Section 42. Failure to maintain
compliance  with  occupant  eligibility,  and/or unit gross rent,  or to correct
noncompliance  within a  specified  time period  could  result in  recapture  of
previously  taken  tax  credits  plus  interest.  In  addition,  such  potential
noncompliance  may  require  an  adjustment  to the  contributed  capital by the
limited partner.