FINANCIAL STATEMENTS AND
                          INDEPENDENT AUDITORS' REPORT

                                BLUE HILL HOUSING
                               LIMITED PARTNERSHIP

                        DECEMBER 31, 1998, 1997 AND 1996


<PAGE>





                      Blue Hill Housing Limited Partnership

                                TABLE OF CONTENTS


INDEPENDENT AUDITORS' REPORT                                                  6


FINANCIAL STATEMENTS

         BALANCE SHEETS                                                       7


         STATEMENTS OF PROFIT AND LOSS                                        8


         STATEMENTS OF PARTNERS' EQUITY (DEFICIT)                             9


         STATEMENTS OF CASH FLOWS                                            10


         NOTES TO FINANCIAL STATEMENTS                                       11


<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Partners
Blue Hill Housing Limited Partnership

     We have  audited  the  accompanying  balance  sheets of Blue  Hill  Housing
Limited Partnership as of December 31, 1998 and 1997, and the related statements
of profit  and loss,  partners'  equity  (deficit)  and cash flows for the years
ended  December 31, 1998,  1997 and 1996.  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.  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 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 Blue Hill Housing Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations,
the changes in  partners'  equity  (deficit)  and cash flows for the years ended
December  31,  1998,  1997 and  1996,  in  conformity  with  generally  accepted
accounting principles.





Bethesda, Maryland
January 12, 1999

<PAGE>
                      Blue Hill Housing Limited Partnership
                                 BALANCE SHEETS
                                  December 31,
<TABLE>
<CAPTION>
<S>                                                    <C>                      <C>
                                                            1998                    1997
                                                         ----------              ----------
               ASSETS

CURRENT ASSETS

    Cash and cash equivalents - operations              $   272,243             $   369,166
    Cash and cash equivalents - entity                      135,092                     707
    Tenant accounts receivable                                1,409                   4,095
    Miscellaneous prepaid expenses                           27,030                  27,152
                                                        -----------             -----------

           Total current assets                             435,774                 401,120
                                                        -----------             -----------
DEPOSITS HELD IN TRUST - FUNDED
    Tenant deposits                                          37,356                  37,711
                                                        -----------             -----------

RESTRICTED DEPOSITS AND FUNDED RESERVES
    Escrow deposits                                         101,752                 183,477
    Reserve for replacements                                213,165                 241,862
                                                        -----------             -----------

                                                            314,917                 425,339
                                                        -----------             -----------
RENTAL PROPERTY
    Land                                                    111,325                 111,325
    Buildings                                            10,868,372              10,839,187
    Furnishings                                              62,003                  62,003
                                                        -----------             -----------

                                                         11,041,700              11,012,515
    Less accumulated depreciation                         3,687,040               3,416,271
                                                        -----------             -----------

                                                          7,354,660               7,596,244
                                                        -----------             -----------
OTHER ASSET
    Intangible assets, net of accumulated
        amortization of $175,098 and $105,987               345,984                 357,283
                                                        -----------             -----------

                                                        $ 8,488,691             $ 8,817,697
                                                        ===========             ===========


            LIABILITIES AND PARTNERS' EQUITY


CURRENT LIABILITIES
    Accounts payable                                    $     8,718             $   111,431
    Accrued interest payable - mortgage                      55,751                  55,751
    Management fees payable                                  10,830                  10,663
    Accounts payable - entity                                74,157                  92,061
    Prepaid revenue                                           8,662                   4,004
    Current maturities of mortgage payable                   31,362                  28,319
    Development fee payable                                  16,235                       -
                                                        -----------             -----------

           Total current liabilities                        205,715                 302,229
                                                        -----------             -----------

DEPOSITS LIABILITY
    Tenant deposits held in trust (contra)                   38,139                  36,710
                                                        -----------             -----------

LONG-TERM DEBT
    Mortgage payable, less current maturities             6,467,417               6,498,779
    Development fee payable                                       -                  98,377
                                                        -----------             -----------

                                                          6,467,417               6,597,156
                                                        -----------             -----------

CONTINGENCY                                                       -                       -
                                                        -----------             -----------

PARTNERS' EQUITY                                          1,777,420               1,881,602
                                                        -----------             -----------
                                                        $ 8,488,691             $ 8,817,697
                                                        ===========             ===========

                        See notes to financial statements
</TABLE>
<PAGE>

                     Blue Hill Housing Limited Partnership
                          STATEMENTS OF PROFIT AND LOSS
                             Year ended December 31,

<TABLE>
<CAPTION>
<S>                                            <C>                 <C>                  <C>
                                                   1998                1997                1996
                                               -----------         -----------          -----------
Revenue
  Rental                                       $ 2,151,805         $ 2,104,840          $ 1,914,452
  Interest and other                                34,475              37,566               30,997
                                               -----------         -----------          -----------

                                                 2,186,280           2,142,406            1,945,449
                                               -----------         -----------          -----------

Expenses
    Administrative                                 309,536             290,300              261,456
    Utilities                                      317,797             307,875              283,606
    Operating and maintenance                      462,009             344,999              382,255
    Taxes and insurance                            179,333             193,017              179,562
    Interest                                       667,709             670,054              672,924
    Depreciation and amortization                  282,068             407,921              404,875
    Other                                           72,010             117,129               69,184
                                               -----------         -----------          -----------
                                                 2,290,462           2,331,295            2,253,862
                                               -----------         -----------          -----------

        NET LOSS                               $  (104,182)        $  (188,889)         $  (308,413)
                                               ===========         ===========          ===========

                       See notes to financial statements
</TABLE>
<PAGE>

                     Blue Hill Housing Limited Partnership
                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
                  Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
<S>                                                         <C>                 <C>                 <C>
                                                                                  General              Limited
                                                                Total             partners             partner
                                                            -------------       ------------        ------------

Partners' equity (deficit), December 31, 1995               $   2,383,904       $   (67,609)        $  2,451,513

Net loss - 1996                                                  (308,413)            7,298             (315,711)
                                                            -------------       ------------        ------------
Partners' equity (deficit), December 31, 1996                   2,075,491           (60,311)           2,135,802

Distribution                                                       (5,000)                -               (5,000)

Net loss - 1997                                                  (188,889)              490             (189,379)
                                                            -------------       ------------        ------------
Partners' equity (deficit), December 31, 1997                   1,881,602           (59,821)           1,941,423

Net loss - 1998                                                  (104,182)            1,940             (106,122)
                                                            -------------       ------------        ------------
Partners' equity (deficit), December 31, 1998               $   1,777,420       $   (57,881)        $  1,835,301
                                                            =============       ===========         ============

                        See notes to financial statements
</TABLE>
<PAGE>
                      Blue Hill Housing Limited Partnership
                            STATEMENTS OF CASH FLOWS
                             Year ended December 31,
<TABLE>
<CAPTION>
<S>                                                          <C>                <C>             <C>
                                                                 1998              1997                1996
                                                             -----------        -----------        -----------
Cash flows from operating activities
  Net loss                                                   $  (104,182)       $  (188,889)       $  (308,413)
  Adjustments to reconcile net loss to net cash
   provided by operating activities
     Depreciation                                                270,769            396,622            393,576
     Amortization                                                 11,299             11,299             11,299
     Changes in asset and liability accounts
     (Increase) decrease in assets
       Tenant accounts receivable                                  2,686             (1,128)              (696)
       Miscellaneous prepaid expenses                                122                111              2,476
       Tenant security deposits - funded                             355             (1,002)             5,791
       Mortgage escrow deposits                                    1,686             (4,373)              (974)
     Increase (decrease) in liabilities
       Accounts payable                                         (102,713)             2,360            (40,474)
       Accrued interest payable                                        -               (402)               (14)
       Accrued liabilities                                           167              1,055             (1,404)
       Tenant security deposits held in trust                      1,429                  -                  -
       Prepaid revenue                                             4,658                 86              1,066
       Entity/construction liabilities payable                   (17,904)            13,072             51,823
                                                             -----------        -----------        -----------

          Net cash provided by operating activities               68,372            228,811            114,056
                                                             -----------        -----------        -----------
Cash flows from investing activities
  Net withdrawals from (deposits to) reserve for
   replacements                                                   28,697            (26,733)            (8,671)
  Net withdrawals from (deposits to) other escrows                80,039             80,669             72,416
  Entity/construction investing activities paid from
   partnership cash                                              (82,142)           (82,141)           (79,500)
  Net purchases of fixed assets                                  (29,185)           (56,454)                 -
                                                             -----------        -----------        -----------

          Net cash used in investing activities                   (2,591)           (84,659)           (15,755)
                                                             -----------        -----------        -----------

Cash flows from financing activities
  Mortgage principal payments                                    (28,319)           (25,571)           (23,091)
  Distributions paid                                                   -             (5,000)                 -
                                                             -----------        -----------        -----------

          Net cash used in financing activities                  (28,319)           (30,571)           (23,091)
                                                             -----------        -----------        -----------

          NET INCREASE IN CASH AND CASH EQUIVALENTS               37,462            113,581             75,210

Cash and cash equivalents, beginning                             369,873            256,292            181,082
                                                             -----------        -----------        -----------

Cash and cash equivalents, end                               $   407,335        $   369,873        $   256,292
                                                             ===========        ===========        ===========

Supplemental disclosure of cash flow information
  Cash paid for interest during the year                     $   667,709        $   670,456        $   672,938
                                                             ===========        ===========        ===========

                        See notes to financial statements
</TABLE>
<PAGE>

                      Blue Hill Housing Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE A - ORGANIZATION

Blue  Hill  Housing  Limited  Partnership  was  organized  under the laws of the
Commonwealth of Massachusetts on November 4, 1987, for the purpose of acquiring,
rehabilitating  and  operating a low-income  residential  housing  project under
Section 221(d)4 of the National  Housing Act. The project  consists of 144 units
located in Dorchester,  Massachusetts, and is currently operating under the name
of Blue Hill Housing.

Cash  distributions  are limited by agreements  between the  partnership and the
Department of Housing and Urban  Development (HUD) to the extent of surplus cash
as  defined by HUD.  If the  partnership  does not  distribute  at least  $2,500
annually to the limited partner,  the general partners are obligated to pay such
shortfall. The distribution is payable from partnership cash.

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 15  consecutive  years in order to remain
qualified to receive the credits.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

Property and Equipment

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 to
40-year life.  Personal property is recorded at cost and is depreciated over its
estimated  service life of five to seven years using  accelerated  methods or 12
years  using the  straight-line  method.  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 statement of profit and loss.

Amortization

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

Cash and Cash Equivalents

The  partnership  invests all cash balances in overnight  repurchase  agreements
with its bank which are invested in U.S.  Treasury Notes.  Management  considers
highly liquid  investments with original maturity dates of 90 days or less to be
cash equivalents.

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  when that  determination  is
made.

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.
<PAGE>

                     Blue Hill Housing Limited Partnership
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1998 and 1997


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

U.S. Treasury Note

U.S.  Treasury  notes  of $-0- and  $39,791  at  December  31,  1998  and  1997,
respectively,  are carried at amortized cost, which approximates fair value, and
are classified as held-to-maturity. The U.S. Treasury notes are reflected in the
escrow deposits account. The notes bore interest at 5.10% - 6.25% and matured on
February 28, 1998.

NOTE C - MORTGAGE PAYABLE

The mortgage note is co-insured by the Federal Housing  Administration (FHA) and
collateralized  by a deed of  trust  on the  rental  property.  The  note  bears
interest  at the rate of  10.25%.  Principal  and  interest  are  payable by the
partnership in monthly installments of $58,002 through October 2029.

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  note is limited to the
underlying value of the real estate collateral plus other amounts deposited with
the lender.

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


                           December 31, 1999           $  31,362
                                        2000              34,732
                                        2001              38,591
                                        2002              42,597
                                        2003              47,175


NOTE D - RELATED PARTY TRANSACTIONS

Development Fee Payable

The partnership  has accrued a development  fee payable to the general  partners
for services provided during the development and  rehabilitation of the project.
This fee was  capitalized as part of the rental  property  during the year ended
December  31, 1989 and is payable  from  capital  contributions,  the  operating
deficit escrow and interest  earned on the escrow.  During 1998,  1997 and 1996,
$82,142, $82,141 and $79,500, respectively, of this fee was paid. As of December
31, 1998 and 1997, $16,235 and $98,377, respectively, remains payable.

Management Fees

The property is managed by  affiliates  of the general  partners,  pursuant to a
management  agreement approved by HUD. The current management agreement provides
for a management  fee of 6% of monthly  rental  collections.  The fee charged to
operations  during 1998,  1997 and 1996 was  $129,936,  $127,538  and  $115,165,
respectively.  In  addition,  a  reporting  fee of $5.25  per unit per  month is
charged for  bookkeeping  and reporting  services.  The reporting fee charged to
operations  during  each of the three years  ended  December  31 was $9,072.  At
December 31, 1998 and 1997,  $10,830 and $10,663,  respectively,  in  management
fees are payable.

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 $500,000
per annum.  For the years ended December 31, 1998,  1997 and 1996, a partnership
administrative fee of $74,157, $92,061 and $78,989,  respectively, was incurred,
of which $74,157 and $92,061,  respectively, was payable as of December 31, 1998
and 1997.
<PAGE>
                     Blue Hill Housing Limited Partnership
                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1998 and 1997

NOTE E - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENT

FHA has  contracted  with the  partnership,  under  Section 8 of Title II of the
Housing and Community Development Act of 1974, to make annual housing assistance
payments  to the  partnership  on behalf of  qualified  tenants.  The  agreement
expires June 16, 2003.

NOTE F - OPERATING DEFICIT ESCROW

The  partnership  has  entered  into  an  agreement  with  the  Commonwealth  of
Massachusetts,  Executive Office of Communities and Development  (EOCD) in order
to receive its allocation of housing  credit dollar amounts  pursuant to Section
42 of the Internal Revenue Code. The agreement  requires the  establishment of a
reserve to fund  operating  deficits for a period of five years from the date of
final endorsement of the mortgage.  The partnership was required to deposit into
an escrow  account  $684,507,  reduced by an estimate of interest  which will be
earned on the account during the deficit  period.  The deposit was made prior to
final endorsement of the mortgage. As of December 31, 1998 and 1997, $26,372 and
$106,411,  respectively, are in escrow. Annually, the escrow will be released by
one-fifth  (reduced  by any  required  funding  of  operations  or to  make  any
replacement required by EOCD).

NOTE G - CONTINGENCY

The  project'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.

NOTE H - NEIGHBORHOOD NETWORK CENTER

During 1997,  pursuant to HUD's approval,  the partnership and Elm Hill Housing,
L.P., an affiliate,  established a Neighborhood Network Center. Cost incurred by
the  partnership  during  1998  and  1997  amounted  to  $29,185  and  $173,014,
respectively.  The  amount  of  these  costs  capitalized  during  1998 and 1997
amounted to $29,185 and $146,454, respectively. $26,560 was expensed in 1997.


<PAGE>

                                   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.


                                 AMERICAN TAX CREDIT PROPERTIES L.P.
                                 (a Delaware limited partnership)

                                 By:  Richman Tax Credit Properties L.P.,
                                      General Partner

                                 by:  Richman Tax Credit Properties Inc.,
                                      general partner

Dated:  June 29, 1999            /s/ Richard Paul Richman
        -------------            ------------------------
                                 by: Richard Paul Richman
                                     President

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 in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S>                                              <C>                                                   <C>


                 Signature                                     Title                                        Date
                 ---------                                     -----                                        ----

       /s/ Richard Paul Richman                  President, Chief Executive Officer                    June 29, 1999
       -------------------------                 and Director of the general partner
          (Richard Paul Richman)                 of the General Partner


       /s/ Neal Ludeke                           Vice President and Treasurer of the                   June 29, 1999
       ----------------------------------        general partner of the General                        -------------
       (Neal Ludeke)                             Partner (Principal Financial and
                                                 Accounting Officer of Registrant)


</TABLE>