UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)

   X     ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF  THE  SECURITIES
-------  EXCHANGE  ACT  OF  1934


For the fiscal year ended March 31, 2003

                                       OR

         TRANSITION  REPORT  PURSUANT TO SECTION  13 OR 15(d)  OF THE SECURITIES
-------  EXCHANGE ACT OF 1934

                         Commission File Number 0-24650

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                      -------------------------------------
             (Exact name of registrant as specified in its charter)

                  Delaware                                        13-3746339
-------------------------------                              -------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

625 Madison Avenue, New York, New York                              10022
----------------------------------------                     -------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code (212) 421-5333

Securities registered pursuant to Section 12(b) of the Act:

     None

Securities registered pursuant to Section 12(g) of the Act:

     Limited Partnership Interests and Beneficial Assignment Certificates

     (Title of Class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No
                                             -----  -----

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes     No  X
                                      -----  -----

     The  approximate  aggregate book value of the voting and non-voting  common
equity held by  non-affiliates  of the  Registrant  as of September 30, 2002 was
$20,392,000, based on Limited Partner equity as of such date.

                       DOCUMENTS INCORPORATED BY REFERENCE

     None


<PAGE>

                                     PART I

Item 1.  Business.

General
-------

Independence  Tax  Credit  Plus  L.P.  III  (the  "Partnership")  is  a  limited
partnership which was formed under the laws of the State of Delaware on December
23,  1993.  The  general  partner of the  Partnership  is  Related  Independence
Associates III L.P., a Delaware limited partnership (the "General Partner"). The
general  partner of the General Partner is Related  Independence  Associates III
Inc., a Delaware corporation ("RIAI III") and is an affiliate of Related Capital
Company ("RCC").

On June 7, 1994, the Partnership commenced a public offering (the "Offering") of
Beneficial Assignment Certificates ("BACs") representing  assignments of limited
partnership  interests in the  Partnership  ("Limited  Partnership  Interests"),
managed by Related Equities  Corporation (the "Dealer  Manager"),  pursuant to a
prospectus dated June 7, 1994 (the "Prospectus").

As of the  termination  of the  offering  on May 9, 1995,  the  Partnership  had
received  $43,440,000 of gross  proceeds of the Offering (the "Gross  Proceeds")
from 2,810 investors ("BACs  holders").  (See Item 8, "Financial  Statements and
Supplementary Data," Note 1).

The Partnership's  business is primarily to invest as a limited partner in other
partnerships  ("Local  Partnerships")  owning  apartment  complexes  ("Apartment
Complexes" or  "Properties")  that are eligible for the  low-income  housing tax
credit  ("Housing  Tax Credit")  enacted in the Tax Reform Act of 1986,  some of
which may also be eligible for the historic rehabilitation tax credit ("Historic
Tax  Credit";   together  with  Housing  Tax  Credits,   "Tax   Credits").   The
Partnership's  investment in each Local  Partnership  represents  from 98.99% to
99.98% other than one Local Partnership in which the Partnership's investment is
41.86%.  As of March 31, 2003, the Partnership had acquired  interests in twenty
Local Partnerships.  As of March 31, 2003, approximately  $35,051,000 (including
approximately  $3,142,000  classified as a loan repayable from  sale/refinancing
proceeds  in  accordance  with  the   contribution   agreement  with  one  Local
Partnership and including  acquisition fees of approximately  $2,510,000) of net
proceeds has been invested in Local Partnerships of which approximately $491,000
remains to be contributed to the Local  Partnerships  for payment by them to the
original sellers of the Properties (including  approximately $297,000 being held
in escrow),  as certain  benchmarks  such as  occupancy  levels must be attained
prior to the release of such funds.  The Partnership  does not intend to acquire
interests in additional Local Partnerships.

Investment Objectives/General Incentives
----------------------------------------

The Partnership has been formed to invest in low-income Apartment Complexes that
are eligible  for the Housing Tax Credit  enacted in the Tax Reform Act of 1986.
Some Apartment  Complexes may also be eligible for Historic  Rehabilitation  Tax
Credits ("Historic Complexes"). The investment objectives of the Partnership are
described below.

1.  Entitle  qualified  BACs  holders  to Tax  Credits  over the  period  of the
Partnership's entitlement to claim Tax Credits (for each Property, generally ten
years from the date of investment or, if later,  the date the Property is leased
to qualified tenants; referred to herein as the "Credit Period") with respect to
each Apartment Complex.

2. Preserve and protect the Partnership's capital.

                                       2
<PAGE>

3.  Participate in any capital  appreciation  in the value of the Properties and
provide  distributions  of Sale or Refinancing  Proceeds upon the disposition of
the Properties.

4. Allocate  passive losses to individual  BACs holders to offset passive income
that they may realize  from rental real  estate  investments  and other  passive
activities,  and allocate  passive  losses to  corporate  BACs holders to offset
business income.

One of the Partnership's  objectives is to entitle qualified BACs holders to Tax
Credits  over the Credit  Period.  Each of the Local  Partnerships  in which the
Partnership  has acquired an interest has been  allocated by the relevant  state
credit  agencies the authority to recognize Tax Credits during the Credit Period
provided  that the Local  Partnership  satisfies the rent  restriction,  minimum
set-aside and other requirements for recognition of the Tax Credits at all times
during such period.  Once a Local  Partnership  has become eligible to recognize
Tax Credits,  it may lose such eligibility and suffer an event of "recapture" if
its Property  fails to remain in  compliance  with the Tax Credit  requirements.
None of the Local Partnerships in which the Partnership has acquired an interest
has suffered an event of recapture.

There can be no  assurance  that the  Partnership  will  achieve its  investment
objectives as described above.

Segments
--------
The Partnership operates in one segment, which is the investment in multi-family
residential property.

Competition
-----------

The real estate  business is highly  competitive  and  substantially  all of the
properties  acquired by the Partnership are expected to have active  competition
from similar  properties in their respective  vicinities.  In addition,  various
other limited  partnerships have, in the past, and may, in the future, be formed
by the General  Partner and/or its affiliates to engage in businesses  which may
be competitive with the Partnership.

Employees
---------

The Partnership does not have any direct  employees.  All services are performed
for the  Partnership  by the  General  Partner and its  affiliates.  The General
Partner receives compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partner and
certain  of  its  affiliates  for  expenses  incurred  in  connection  with  the
performance  by their  employees of services for the  Partnership  in accordance
with the  Partnership's  Amended and Restated  Agreement of Limited  Partnership
(the "Partnership Agreement").

Item 2.  Properties.

As of March 31, 2003, the  Partnership  had acquired an interest in twenty Local
Partnerships,  all of which  have been  consolidated  for  accounting  purposes.
Except  for  the  interest  in New  Zion  Apartments,  L.P.  ("New  Zion"),  the
Partnership's  investment in each Local Partnership  represents 98.99% or 99.89%
of  the  partnership  interests  in the  Local  Partnership.  The  Partnership's
investment  in New Zion  represents  42.39% of the  partnership  interest in the
Local  Partnership  (the other 58.12% limited  partnership  interest is owned by
affiliates of the Partnership,  with the same management).  Set forth below is a
schedule of the Local  Partnerships  including  certain  information  concerning
their respective Apartment Complexes (the "Local Partnership Schedule"). Further
information concerning these Local Partnerships and their properties,  including

                                       3
<PAGE>

any encumbrances  affecting the properties,  may be found in Schedule III to the
financial statements which are included herein.
<TABLE>
<CAPTION>

                           Local Partnership Schedule
                           --------------------------

                                                      % of Units Occupied at May 1,
Name and Location                                    -------------------------------
(Number of Units)                   Date Acquired    2003   2002   2001  2000   1999
-----------------                   -------------    ----   ----   ----  ----   ----
<S>                                 <C>              <C>    <C>    <C>   <C>    <C>
Edward Hotel Limited Partnership

  Los Angeles, CA (47)              November 1994     91%    91%   100%  100%   100%

Pacific-East L.P.
  Brooklyn, NY (39)                 December 1994     98%   100%   100%   97%   100%

Overtown Development Group, Ltd.
  Miami, FL (65)                    December 1994     82%    91%    89%   79%    83%

Sumpter Commons Associates, L.P.    April 1995       100%   100%   100%  100%    95%
  Brooklyn, NY (21)

Park Housing Limited Partnership    May 1995          93%   100%    97%   97%   100%
  Hartford, CT  (30)

Livingston Manor Urban Renewal
  Associates, L.P.                  June 1995         98%   100%    98%   98%    98%
  New Brunswick, NJ (50)

Jefferis Square Housing
  Partnership L.P.                  June 1995        100%    97%   100%  100%    97%
  Chester, PA (36)

2301 First Avenue Limited
  Partnership                       August 1995       99%   100%    98%  100%    99%
  New York, NY (92)

Lewis Street L.P.                   October 1995     100%    91%    88%   91%    94%
  Buffalo, NY (32)

Savannah Park Housing
  Limited Partnership               October 1995      75%    86%    84%   84%    95%
  Washington, DC  (64)

Brannon Group, L.C.                 December 1995     96%    98%    88%  (a)     76%
  Leisure City, FL (80)

Mansion Court Phase II Venture      December 1995     95%   100%    95%   90%    95%
  Philadelphia, PA (19)

Primm Place Partners, L.P.          December 1995     96%    94%    98%  100%    97%
  St. Louis, MI (128)

BK-9-A Partners L.P.                December 1995     96%    91%   100%  100%   100%
  Brooklyn, NY (23)
</TABLE>

                                       4
<PAGE>
<TABLE>
<CAPTION>

                           Local Partnership Schedule
                           --------------------------
                                  (continued)

                                                      % of Units Occupied at May 1,
Name and Location                                    -------------------------------
(Number of Units)                   Date Acquired    2003   2002   2001  2000   1999
-----------------                   -------------    ----   ----   ----  ----   ----
<S>                                 <C>              <C>    <C>    <C>   <C>    <C>
BK-10K Partners L.P.                December 1995     95%    90%    96%   91%    95%
  Brooklyn, NY (21)

Aspen-Olive Associates
  Philadelphia, PA (22)             October 1996     100%   100%   100%  100%   100%

West Mill Creek Associates III L.P.
  Philadelphia, PA (72)             January 1997      99%    99%   100%  100%    99%

Universal Court Associates
  Philadelphia, PA (32)             April 1997        97%   100%   100%   94%   100%

New Zion Apartments
  Shreveport, LA (100)              November 1997     95%    88%   100%   99%    98%

Dreitzer House
  New York, NY (32)                 December 1997    100%   100%    97%  100%     0%*
</TABLE>

(a) As a result of prior  litigation  related  to the Local  General  Partner of
    Brannon  Group,  LC  occupancy  rate was not  provided  for this year by the
    management agent.

*   Properties in construction phase.

All leases are  generally  for periods not greater  than one to two years and no
tenant occupies more than 10% of the rentable square footage.

Commercial  tenants (to which average  rental per square foot applies)  comprise
less than 5% of the rental  revenues of the  Partnership.  Maximum rents for the
residential units are determined annually by HUD and reflect increases/decreases
in  consumer  price  indices in various  geographic  areas.  Market  conditions,
however, determine the amount of rent actually charged.

Management  continuously  reviews  the  physical  state  of the  properties  and
suggests to the respective  general partners of the Local  Partnerships  ("Local
General Partners") budget improvements which are generally funded from cash flow
from  operations  or  release  of  replacement  reserve  escrows  to the  extent
available.

Management  continuously  reviews the insurance  coverage of the  properties and
believes such coverage is adequate.

See Item 1, Business,  above for the general competitive conditions to which the
properties described above are subject.

Real estate taxes are calculated using rates and assessed valuations  determined
by the  township  or city in which the  property  is  located.  Such  taxes have
approximated 1% of the aggregate cost of the properties as shown in Schedule III
to the financial statements included herein.

In connection with investments in  development-stage  Apartment  Complexes,  the
General  Partner  generally  required  that the Local General  Partners  provide
completion guarantees and/or undertake to repurchase the Partnership's  interest
in the Local  Partnership if  construction or  rehabilitation  was not completed

                                       5
<PAGE>

substantially  on time or on  budget  ("Development  Deficit  Guarantees").  The
Development Deficit Guarantees generally also required the Local General Partner
to provide  any funds  necessary  to cover net  operating  deficits of the Local
Partnership  until such time as the  Apartment  Complex has achieved  break-even
operations.  The  General  Partner  generally  required  that the Local  General
Partners  undertake  an  obligation  to fund  operating  deficits  of the  Local
Partnership  (up to a stated  maximum  amount)  during a limited  period of time
(typically  three  to  five  years)  following  the  achievement  of  break-even
operations  ("Operating  Deficit  Guarantees").  As of March 31, 2003,  2002 and
2001,  the  gross  amounts  of  the  Operating  Deficit   Guarantees   aggregate
approximately  $5,129,000, of which $2,935,000 has expired as of March 31, 2003.
Management  does  not  expect  that  expiration  to have a  material  impact  on
liquidity,  based on prior years' fundings. Amounts funded under such agreements
are treated as noninterest  bearing loans, which will be paid only out of 50% of
available  cash flow or out of available net sale or  refinancing  proceeds.  In
some  instances,  the Local  General  Partners  are  required  to  undertake  an
obligation  to  comply  with a Rent-Up  Guaranty  Agreement,  whereby  the Local
General  Partner agrees to pay  liquidated  damages if  predetermined  occupancy
rates are not achieved.  These payments are made without right of repayment.  In
cases where the General Partner deems it appropriate, the obligations of a Local
General Partner under the Development Deficit,  Operating Deficit and/or Rent-Up
Guarantees are secured by letters of credit and/or cash escrow deposits.

Tax  Credits  with  respect to a given  Apartment  Complex are  available  for a
ten-year period that commences when the property is leased to qualified tenants.
However,  the annual Tax Credits  available  in the year in which the  Apartment
Complex is leased, must be prorated based upon the number of months remaining in
the year.  The amount of the annual Tax Credit not  available  in the first year
will be  available in the  eleventh  year.  In certain  cases,  the  Partnership
acquired its interest in a Local  Partnership  after the Local  Partnership  had
placed its Apartment Complex in service.  In these cases, the Partnership may be
allocated Tax Credits only  beginning in the month  following the month in which
it acquired its  interest and Tax Credits  allocated in any prior period are not
available to the Partnership.

Item 3. Legal Proceedings.

This  information is incorporated by reference to the discussion of Lewis Street
L.P. in the Results of  Operations of Certain  Local  Partnerships  contained in
Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

                                     PART II

Item 5. Market for the  Registrant's  Common Equity and Related  Security Holder
Matters.

As of March 31, 2003, the Partnership had issued and outstanding  43,440 Limited
Partnership  Interests,  each representing a $1,000 capital  contribution to the
Partnership,  or an aggregate  capital  contribution of $43,440,000.  All of the
issued  and  outstanding  Limited  Partnership  Interests  have  been  issued to
Independence  Assignor Inc. (the "Assignor Limited Partner"),  which has in turn
issued 43,440 BACs to the purchasers  thereof for an aggregate purchase price of
$43,440,000.  Each BAC  represents  all of the economic and virtually all of the
ownership  rights  attributable  to a Limited  Partnership  Interest held by the
Assignor  Limited  Partner.  BACs  may be  converted  into  Limited  Partnership
Interests at no cost to the holder (other than the payment of transfer costs not
to  exceed  $100),  but  Limited  Partnership  Interests  so  acquired  are  not
thereafter convertible into BACs.

                                       6
<PAGE>

Neither  the  BACs nor the  Limited  Partnership  Interests  are  traded  on any
established  trading market. The Partnership does not intend to include the BACs
for  quotation  on NASDAQ or for  listing  on any  national  or  regional  stock
exchange or any other  established  securities  market.  The Revenue Act of 1987
contained  provisions  which have an adverse  impact on  investors  in "publicly
traded  partnerships."  Accordingly,  the General  Partner  has imposed  limited
restrictions  on the  transferability  of the BACs and the  Limited  Partnership
Interests in secondary market  transactions.  Implementation of the restrictions
should prevent a public trading market from developing and may adversely  affect
the ability of an investor to liquidate  his or her  investment  quickly.  It is
expected that these  procedures  will remain in effect until such time, if ever,
as further  revision of the Revenue  Act of 1987 may permit the  Partnership  to
lessen the scope of the restrictions.

As of May 13, 2003, the Partnership has approximately  2,519 registered  holders
of an aggregate of 43,440 BACs.

All  of  the  Partnership's  general  partnership  interests,   representing  an
aggregate capital contribution of $1,000, are held by the General Partner.

There are no material legal  restrictions  in the  Partnership  Agreement on the
ability of the Partnership to make distributions.  However,  the Partnership has
made no  distributions to the BACs holders as of March 31, 2003. The Partnership
does not anticipate  providing cash distributions to its BACs holders other than
from net refinancing or sales proceeds.

                                       7
<PAGE>

Item 6. Selected Financial Data.

The  information  set  forth  below  presents  selected  financial  data  of the
Partnership.  Additional  financial  information  is set  forth  in the  audited
financial statements in Item 8 hereof.
<TABLE>
<CAPTION>

                                                          Year Ended March 31,
                              ----------------------------------------------------------------------------
OPERATIONS                        2003            2002            2001            2000            1999
----------                    ------------    ------------    ------------    ------------    ------------
<S>                           <C>             <C>             <C>             <C>             <C>
Revenues                      $  6,408,871    $  6,452,014    $  6,332,726    $  5,873,889    $  5,457,954

Operating expenses              (9,886,082)    (10,465,208)     (9,597,628)     (9,357,207)     (8,521,362)
                              ------------    ------------    ------------    ------------    ------------

Net loss before minority        (3,477,211)     (4,013,194)     (3,264,902)     (3,483,318)     (3,063,408)
  interest

Minority interest in loss
  (income) of subsidiary
  partnerships                     293,278         670,493          21,134           9,131         (23,590)
                              ------------    ------------    ------------    ------------    ------------

Net loss                      $ (3,183,933)   $ (3,342,701)   $ (3,243,768)   $ (3,474,187)   $ (3,086,998)
                              ============    ============    ============    ============    ============


Net loss per weighted aver-
  age BAC                     $     (72.56)   $     (76.18)   $     (73.93)   $     (79.18)   $     (70.35)
                              ============    ============    ============    ============    ============

<CAPTION>

                                                                March 31,
                              ----------------------------------------------------------------------------
FINANCIAL POSITION                2003            2002            2001            2000            1999
------------------            ------------    ------------    ------------    ------------    ------------
<S>                           <C>             <C>             <C>             <C>             <C>

Total assets                  $ 76,223,243    $ 78,982,075    $ 82,660,313    $ 86,067,310    $ 90,312,704
                              ============    ============    ============    ============    ============

Total liabilities             $ 54,524,974    $ 53,786,549    $ 54,434,413    $ 54,433,977    $ 55,319,950
                              ============    ============    ============    ============    ============

Minority interest             $  3,142,417    $  3,455,741    $  3,143,414    $  3,307,079    $  3,192,313
                              ============    ============    ============    ============    ============

Total partners' capital       $ 18,555,852    $ 21,739,785    $ 25,082,486    $ 28,326,254    $ 31,800,441
                              ============    ============    ============    ============    ============
</TABLE>

During the year ended March 31, 2003, 2002,  2001, 2000 and 1999,  respectively,
total assets decreased  primarily due to depreciation and a decrease in cash and
cash equivalents.

Cash Distributions
------------------

The  Partnership has made no  distributions  to the BACs holders as of March 31,
2003.

                                       8
<PAGE>
<TABLE>
<CAPTION>

                  Selected Quarterly Financial Data (Unaudited)

                                           Quarter Ended
                     --------------------------------------------------------
OPERATIONS             June 30,    September 30,   December 31,    March 31,
                         2002          2002           2002           2003
----------           -----------   -------------   -----------    -----------
<S>                  <C>            <C>            <C>            <C>
Revenues             $ 1,558,925    $ 1,603,146    $ 1,594,588    $ 1,652,212

Operating ex-
  penses              (2,366,578)    (2,352,230)    (2,306,097)    (2,861,177)
                     -----------    -----------    -----------    -----------

Loss before
  minority inter-
  est                   (807,653)      (749,084)      (711,509)    (1,208,965)

Minority interest
  in loss (income)
  of subsidiaries          7,664         17,075         (2,770)       271,309
                     -----------    -----------    -----------    -----------


Net loss             $  (799,989)   $  (732,009)   $  (714,279)   $  (937,656)
                     ===========    ===========    ===========    ===========

Net loss per
  weighted
  average BAC        $    (18.23)   $    (16.68)   $    (16.28)   $    (21.37)
                     ===========    ===========    ===========    ===========

<CAPTION>

                                           Quarter Ended
                     --------------------------------------------------------
OPERATIONS             June 30,    September 30,   December 31,    March 31,
                         2001          2001           2001           2002
----------           -----------   -------------   -----------    -----------
<S>                  <C>            <C>            <C>            <C>
Revenues             $ 1,660,714    $ 1,521,861    $ 1,554,151    $ 1,715,288

Operating ex-
  penses              (2,442,329)    (2,318,288)    (2,321,697)    (3,382,894)
                     -----------    -----------    -----------    -----------

Loss before
  minority inter-
  est                   (781,615)      (796,427)      (767,546)    (1,667,606)

Minority interest
  in loss of sub-
  sidiaries                8,984          8,803          5,568        647,138
                     -----------    -----------    -----------    -----------

Net loss             $  (772,631)   $  (787,624)   $  (761,978)   $(1,020,468)
                     ===========    ===========    ===========    ===========

Net loss per
  weighted
  average BAC        $    (17.61)   $    (17.95)   $    (17.36)   $    (23.26)
                     ===========    ===========    ===========    ===========
</TABLE>

                                       9
<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Liquidity and Capital Resources
-------------------------------

General
-------

The  Partnership's  primary source of funds is rental revenues,  which are fully
utilized at the property level.

The Partnership had received  $43,440,000 in gross proceeds for BACs pursuant to
a  public  offering  resulting  in net  proceeds  available  for  investment  of
approximately $35,000,000 after volume discounts,  payment of sales commissions,
acquisition  fees  and  expenses,   organization   and  offering   expenses  and
establishment of a working capital reserve.

As of March 31, 2003, the  Partnership  has invested  approximately  $35,051,000
(including   approximately   $3,142,000   classified  as  loans  repayable  from
sale/refinancing proceeds in accordance with the contribution agreement with one
Local   Partnership  and  not  including   acquisition   fees  of  approximately
$2,510,000) of net proceeds in twenty Local Partnerships of which  approximately
$491,000 remains to be contributed to the Local Partnerships for payment by them
to the original sellers of the Properties (not including  approximately $297,000
being held in escrow) as certain  benchmarks,  such as occupancy level,  must be
attained prior to the release of the funds.  The Partnership  does not intend to
acquire  additional  properties.  During  the year  ended  March 31,  2003,  the
Partnership  did not  make any  payments  to Local  Partnerships.  Although  the
Partnership will not be acquiring additional properties,  the Partnership may be
required  to fund  potential  purchase  price  adjustments  based on tax  credit
adjustor clauses.

During  the year  ended  March 31,  2003,  cash and cash  equivalents  decreased
approximately  $154,000.  This  decrease is due to  acquisition  of property and
equipment  ($41,000),  a net  decrease  in due to  local  general  partners  and
affiliates  relating  to  investing  and  financing  activities  ($292,000),  an
increase in cash held in escrow  relating to  investing  activities  ($465,000),
principal   payments  of   mortgage   notes   ($454,000)   and  an  increase  in
capitalization  of consolidated  subsidiaries  attributable to minority interest
$(20,000)  which exceeded cash provided by operating  activities  ($783,000) and
proceeds  from disposal of property and  equipment  ($336,000).  Included in the
adjustments  to reconcile the net loss to cash provided by operating  activities
is depreciation and amortization of approximately $2,758,000.

A working capital reserve had previously been established from the Partnership's
funds available for investment, which includes amounts which may be required for
potential  purchase price adjustments  based on tax credit adjustor clauses.  At
March 31, 2003, all funds were used.

The Partnership has negotiated  Operating  Deficit Guaranty  Agreements with all
Local Partnerships by which the Local General Partners of the Local Partnerships
have agreed to fund operating deficits for a specified period of time. The terms
of the Operating  Deficit Guaranty  Agreements vary for each Local  Partnership,
with  maximum  dollar  amounts  to be  funded  for a  specified  period of time,
generally three years,  commencing on the break-even date. As of March 31, 2003,
2002 and 2001, the gross amounts of the Operating Deficit  Guarantees  aggregate
approximately  $5,129,000, of which $2,935,000 has expired as of March 31, 2003.
Management  does  not  expect  that  expiration  to have a  material  impact  on
liquidity,  based on prior years' fundings. Amounts funded under such agreements
are treated as noninterest  bearing loans, which will be paid only out of 50% of
available cash flow or out of available net sale or refinancing proceeds.

                                       10
<PAGE>

The  Operating  Deficit  Guaranty  Agreements  were  negotiated  to protect  the
Partnership's interest in the Local Partnerships and to provide incentive to the
Local General Partners to generate positive cash flow.

Partnership   management  fees  owed  to  the  General   Partner   amounting  to
approximately  $1,892,000 and $1,561,000 were accrued and unpaid as of March 31,
2003 and 2002,  respectively.  Without the General  Partner's  continued accrual
without payment of certain fees and expense reimbursements, the Partnership will
not be in a position to meet its obligations.  The General Partner has continued
allowing the accrual without payment of these amounts but is under no obligation
to continue to do so.

For discussion of contingencies affecting certain subsidiary  partnerships,  see
Results of Operations of Certain Local  Partnerships,  below.  Since the maximum
loss the Partnership would be liable for is its net investment in the respective
subsidiary  partnerships,  the resolution of the existing  contingencies  is not
anticipated  to impact  future  results of  operations,  liquidity  or financial
condition in a material way. However,  the Partnership's  loss of its investment
in a Local Partnership will eliminate the ability to generate future Tax Credits
from such Local  Partnership  and may also result in recapture of tax credits if
the investment is lost before the expiration of the Credit Period.

Except as  described  above,  management  is not aware of any  trends or events,
commitments or uncertainties,  which have not otherwise been disclosed that will
or are likely to impact  liquidity in a material  way.  Management  believes the
only impact would be for laws that have not yet been  adopted.  The portfolio is
diversified by the location of the  properties  around the United States so that
if one  area of the  country  is  experiencing  downturns  in the  economy,  the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic  diversification  of the portfolio may not protect  against a general
downturn in the national  economy.  The Partnership has invested the proceeds of
its  offering in twenty  Local  Partnerships,  all of which fully have their Tax
Credits in place.  The Tax Credits are  attached to the property for a period of
ten years,  and are  transferable  with the property during the remainder of the
ten-year  period.  If trends in the real estate  market  warranted the sale of a
property,  the remaining Tax Credits  would  transfer to the new owner;  thereby
adding  significant  value to the  property  on the  market,  which value is not
included in the financial statement carrying amount.

Critical Accounting Policies
----------------------------

In  preparing  the  consolidated  financial  statements,   management  has  made
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting periods.  Actual results could differ
from those  estimates.  Set forth below is a summary of the accounting  policies
that  management  believes are critical to the  preparation of the  consolidated
financial  statements.  The summary should be read in conjunction  with the more
complete discussion of the Partnership's  accounting policies included in Note 2
to the consolidated financial statements in this annual report on Form 10-K.

Property and Equipment
----------------------

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price,  acquisition fees and expenses, and any other costs incurred
in acquiring the  properties.  The cost of property and equipment is depreciated
over their estimated useful lives using accelerated and  straight-line  methods.
Expenditures  for repairs and  maintenance  are charged to expense as  incurred;
major  renewals  and  betterments  are  capitalized.  At the time  property  and
equipment  are  retired  or  otherwise  disposed  of,  the cost and  accumulated

                                       11
<PAGE>

depreciation  are  eliminated  from  the  assets  and  accumulated  depreciation
accounts  and the profit or loss on such  disposition  is reflected in earnings.
The Partnership complies with Statement of Financial Accounting Standards (SFAS)
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". A loss
on  impairment  of  assets  is  recorded  when  management   estimates   amounts
recoverable   through  future   operations  and  sale  of  the  property  on  an
undiscounted basis are below depreciated cost. At that time property investments
themselves are reduced to estimated fair value  (generally using discounted cash
flows).

Through March 31, 2003, the  Partnership has not recorded any loss on impairment
of assets or reduction to estimated fair value.

At the time management  commits to a plan to dispose of assets,  said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets  are  classified  as  property  and  equipment-held  for sale and are not
depreciated.  Through  March 31,  2003,  the  Partnership  has not  recorded  or
classified any property and equipment as held for sale.

Income Taxes
------------

The  Partnership  is not  required to provide  for, or pay,  any federal  income
taxes.  Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The  Partnership may be subject
to state and local taxes in jurisdictions  in which it operates.  For income tax
purposes, the Partnership has a fiscal year ending December 31.

New Accounting Pronouncements
-----------------------------

In  January  2003,  the  Financial   Accounting   Standards  Board  issued  FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable  immediately for variable  interest  entities created after
January 31, 2003. For variable  interest  entities  created  before  February 1,
2003,  the  provisions of FIN 46 are  applicable no later than July 1, 2003. The
Partnership has not identified any variable  interest entities that were created
after January 31, 2003 and is currently  evaluating the impact of the provisions
of FIN 46 on its consolidated financial statements.


Results of Operations
---------------------

The following is a summary of the results of operations of the  Partnership  for
the years ended March 31,  2003,  2002 and 2001 (the 2002,  2001 and 2000 Fiscal
Years).

The net loss for the 2002,  2001 and 2000 Fiscal  Years  aggregated  $3,183,933,
$3,342,701 and $3,243,768, respectively.

The Partnership and BACs holders began recognizing Tax Credits with respect to a
Property when the Credit Period for such Property commenced. Because of the time
required for the acquisition,  completion and rent-up of Properties,  the amount
of Tax Credits  per BAC  gradually  increased  over the first three years of the
Partnership.  Tax  Credits  not  recognized  in the first  three  years  will be
recognized in the 11th through 13th years. The Partnership generated $5,683,279,
$5,683,279  and $5,682,911  Housing Tax Credits during the 2002,  2001 and 2000,
tax years, respectively.

2002 vs. 2001
-------------

Rental income increased approximately 4% for the 2002 Fiscal Year as compared to
the 2001 Fiscal Year.

Other  income  decreased  approximately  $257,000  for the 2002  Fiscal  Year as
compared to 2001 Fiscal Year.  This  decrease was primarily due to a decrease in

                                       12
<PAGE>

interest income earned in 2002 at the Partnership  level and Local  Partnerships
due to a decrease in interest  rates,  as well as lower cash and cash equivalent
balances earning interest.

General and administrative  decreased approximately $457,000 for the 2002 Fiscal
Year as compared to 2001 Fiscal Year.  This  decrease was  primarily  due to the
settlement  of  legal  action  in 2001 at one  Local  Partnership  as well as an
overaccrual of general and administrative  expenses in the 2001 Fiscal Year at a
second Local Partnership.

Repairs and  maintenance  decreased  approximately  $134,000 for the 2002 Fiscal
Year as compared to 2001 Fiscal  Year.  This  decrease was  primarily  due to an
overaccrual  of repairs  and  maintenance  in the 2001  Fiscal Year at one Local
Partnership.

Insurance  expense increased  approximately  $57,000 for the 2002 Fiscal Year as
compared to 2001 Fiscal Year.  This increase was primarily due to an increase in
insurance premiums at the Local Partnerships.

2001 vs. 2000
-------------

Rental income increased approximately 1% for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year.

Other  income  increased  approximately  $64,000  for the  2001  Fiscal  Year as
compared to the 2000 Fiscal Year. This increase was primarily due to higher cash
and cash equivalent balances earning interest in 2001 at one Local Partnership.

Total expenses,  excluding general and administrative,  repairs and maintenance,
taxes and insurance, remained fairly consistent with a decrease of approximately
1% for the 2001 Fiscal Year as compared to the 2000 Fiscal year.

General and administrative  increased approximately $516,000 for the 2001 Fiscal
Year as compared  with the 2000 Fiscal Year.  This increase was primarily due to
an increase in legal costs at one Local  Partnership as well as small  increases
at three other Local Partnerships.

Repairs and  maintenance  increased  approximately  $339,000 for the 2001 Fiscal
Year as compared  with the 2000 Fiscal Year.  This increase was primarily due to
carpet  replacement  at one Local  Partnership,  repairs  due to a water  heater
explosion at a second Local Partnership, painting and miscellaneous repairs at a
third  Local  Partnership  and repairs to the  building  common area at a fourth
Local Partnership.

Taxes  increased  approximately  $40,000 for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year. This increase was primarily due to an underaccrual in 2000
at two Local Partnerships.

Insurance increased  approximately  $62,000 for the 2001 Fiscal Year as compared
to the 2000 Fiscal Year.  This  increase was  primarily  due to an  underaccrual
during 2000 at one Local Partnership.

Results of Operations of Certain Local Partnerships
---------------------------------------------------

Lewis Street L.P.
-----------------
In January of 1998,  Lewis  Street  Limited  Partnership  ("Lewis  Street")  was
informed  that it was a defendant in a cause of action for the alleged  value of
work  and  services   provided  by  Phase  Three  Paul,  for  interference  with
contractual  relations and for fraud that was brought by the project's  original
developer.  The  complaint  seeks  damages  for the  alleged  value  of work and
services  provided in the amount of $296,940  and damages to  reputation  in the

                                       13
<PAGE>

amount of at least $1,000,000 plus unspecified punitive damages. This litigation
will continue to be vigorously contested by the Local Partnership. Legal counsel
for the Local  Partnership  has indicated that the ultimate  liability,  if any,
with respect to this possible  action  cannot be  determined  at this time.  The
Partnership's  investment  in  Lewis  Street  at  March  31,  2003  and 2002 was
approximately  $590,000 and $700,000,  respectively,  and the minority  interest
balance was zero at each date.  Lewis Street's net loss after minority  interest
amounted to  approximately  $111,000,  $101,000 and $100,000 for the 2002, 2001,
and 2000 Fiscal Years, respectively.

Other
-----

The Partnership's  investment as a limited partner in the Local  Partnerships is
subject to the risks of potential  losses arising from  management and ownership
of improved real estate.  The Partnership's  investments also could be adversely
affected by poor economic  conditions  generally,  which could increase  vacancy
levels and rental payment defaults and increase operating  expenses,  any or all
of which could  threaten  the  financing  viability  of one or more of the Local
Partnerships.

There also are  substantial  risks  associated  with the  operation of Apartment
Complexes   receiving   government   assistance.   These  include   governmental
regulations  concerning tenant eligibility,  which may make it more difficult to
rent apartments in the complexes;  difficulties in obtaining government approval
for rent  increases;  limitations  on the  percentage  of  income  which low and
moderate-income  tenants may pay as rent; the possibility  that Congress may not
appropriate  funds to enable HUD to make the rental  assistance  payments it has
contracted to make; and that when the rental  assistance  contracts expire there
may not be  market  demand  for  apartments  at  full  market  rents  in a Local
Partnership's Apartment Complex.

The Local  Partnerships  are impacted by inflation  in several  ways.  Inflation
allows for  increases in rental rates  generally to reflect the impact of higher
operating and replacement  costs.  Inflation also affects the Local Partnerships
adversely by increasing  operating costs,  for example,  for such items as fuel,
utilities and labor.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

                                       14
<PAGE>

Item 8.  Financial Statements and Supplementary Data.
<TABLE>
<CAPTION>
                                                                                Sequential
                                                                                   Page
                                                                                ----------
<S>                                                                                 <C>
(a) 1.   Consolidated Financial Statements

         Independent Auditors' Report                                               16

         Consolidated Balance Sheets at March 31, 2003 and 2002                     64

         Consolidated Statements of Operations for the Years Ended March 31,
         2003, 2002 and 2001                                                        65

         Consolidated Statements of Changes in Partners' Capital (Deficit) for
         the Years Ended March  31, 2003, 2002 and 2001                             66

         Consolidated Statements of Cash Flows for the Years Ended March 31,
         2003, 2002 and 2001                                                        67

         Notes to Consolidated Financial Statements                                 69
</TABLE>

                                       15
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Partners of
Independence Tax Credit Plus L.P. III and Subsidiaries
(A Delaware Limited Partnership)

We have audited the consolidated  balance sheets of Independence Tax Credit Plus
L.P. III and Subsidiaries (A Delaware Limited  Partnership) as of March 31, 2003
and 2002,  and the related  consolidated  statements of  operations,  changes in
partners' capital (deficit),  and cash flows for the years ended March 31, 2003,
2002 and 2001  (the  2002,  2001 and 2000  Fiscal  Years,  respectively).  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We did not audit the financial  statements for sixteen (2002 Fiscal
Year),  fifteen  (2001 Fiscal  Year) and twenty  (2000  Fiscal Year)  subsidiary
partnerships whose losses aggregated  $2,266,539,  $2,428,205 and $2,566,254 for
the years ended March 31, 2003,  2002 and 2001,  respectively,  and whose assets
constituted 67% and 68% of the Partnership's  assets at March 31, 2003 and 2002,
respectively,  presented in the accompanying  consolidated financial statements.
The financial  statements  for sixteen (2002 Fiscal Year),  fifteen (2001 Fiscal
Year) and nineteen (2000 Fiscal Year)  subsidiary  partnerships  were audited by
other auditors  whose reports  thereon have been furnished to us and our opinion
expressed  herein,  insofar  as it  relates to the  amounts  included  for these
subsidiary partnerships, is based solely upon the reports of the other auditors.
The financial  statements for one (2000 Fiscal Year) subsidiary  partnership was
not audited.

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

In our  opinion,  based upon our audits,  and the reports of the other  auditors
referred to above,  the  consolidated  financial  statements  referred to in the
first paragraph present fairly, in all material respects, the financial position
of Independence  Tax Credit Plus L.P. III and Subsidiaries at March 31, 2003 and
2002,  and the  results of their  operations  and their cash flows for the years
ended March 31, 2003, 2002 and 2001, in conformity with U.S.  generally accepted
accounting principles.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
May 30, 2003



                                       16
<PAGE>


[HOLTHOUSE CARLIN & VAN TRIGT LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of the
Edward Hotel Limited Partnership:

We have  audited  the  accompanying  balance  sheets  of  Edward  Hotel  Limited
Partnership (a California limited partnership) as of December 31, 2002 and 2001,
and the related statements of operations, changes in partners' capital (deficit)
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial  position  of  Edward  Hotel  Limited
Partnership as of December 31, 20021 and 2001, and the results of its operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial  statements  taken  as  a  whole.  The  information  included  in  the
accompanying  Schedule I is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.

/s/ Holthouse Carlin & Van Trigt LLP
Santa Monica, California
January 31, 2003

                                       17
<PAGE>

[HOLTHOUSE CARLIN & VAN TRIGT LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of the
Edward Hotel Limited Partnership:

We have  audited  the  accompanying  balance  sheets  of  Edward  Hotel  Limited
Partnership (a California limited partnership) as of December 31, 2001 and 2000,
and the related statements of operations, changes in partners' capital (deficit)
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial  position  of  Edward  Hotel  Limited
Partnership  as of December 31, 2001 and 2000, and the results of its operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial  statements  taken  as  a  whole.  The  information  included  in  the
accompanying  Schedule I is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.

/s/ Holthouse Carlin & Van Trigt LLP
Los Angeles, California
February 21, 2002

                                       18
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Pacific-East L.P.

We have  audited the  accompanying  balance  sheets of  Pacific-East  L.P. as of
December 31, 2002 and 2001, and the related statements of operations, changes in
partners'  deficit  and cash flows for the years  then  ended.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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  Pacific-East  L.P. as of
December 31, 2002 and 2001, and the results of its operations and its cash flows
for the years then ended,  in conformity with  accounting  principles  generally
accepted in the United States of America.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
February 3, 2003

                                       19
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Pacific-East L.P.

We have  audited  the  accompanying  balance  sheet of  Pacific-East  L.P. as of
December  31,  2000,  and the  related  statements  of  operations,  changes  in
partners'  deficit  and cash  flows for the year  then  ended.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  Pacific-East  L.P. as of
December 31, 2000, and the results of its  operations,  the changes in partners'
deficit and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
January 16, 2001

                                       20
<PAGE>

[SMITH, ORTIZ, GOMEZ AND BUZZI, P.A.  LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

The Partners
Overtown Development Group, Ltd.
(A Limited Partnership):

We have audited the accompanying  balance sheets of Overtown  Development Group,
Ltd. (A Limited  Partnership)  as of December 31, 2002 and 2001, and the related
statement of operations,  changes in partners'  capital,  and cash flows for the
years then ended. These financial  statements are the responsibility of Overtown
Development Group, Ltd. management.  Our responsibility is to express an opinion
on these financial statements based on our audits.

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

In our opinion,  based on our audits, the financial statements referred to above
present fairly,  in all material  respects,  the financial  position of Overtown
Development Group, Ltd. as of December 31, 2002 and 2001, and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Smith, Ortiz, Gomez and Buzzi, P.A.
Miami, Florida
February 4, 2003

                                       21
<PAGE>

[SMITH, ORTIZ, GOMEZ AND BUZZI, P.A.  LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

The Partners
Overtown Development Group, Ltd.
(A Limited Partnership):

We have audited the accompanying  balance sheets of Overtown  Development Group,
Ltd. (A Limited  Partnership)  as of December 31, 2001 and 2000, and the related
statement of operations,  changes in partners'  capital,  and cash flows for the
years then ended. These financial  statements are the responsibility of Overtown
Development Group, Ltd. management.  Our responsibility is to express an opinion
on these financial statements based on our audits.

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

In our opinion,  based on our audits, the financial statements referred to above
present fairly,  in all material  respects,  the financial  position of Overtown
Development Group, Ltd. as of December 31, 2001 and 2000, and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

/s/ Smith, Ortiz, Gomez and Buzzi, P.A.
Miami, Florida
January 29, 2002

                                       22
<PAGE>

[LAWLOR, O'BRIEN & CHERVENAK, LLC LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Sumpter Commons Associates, L.P.

We have audited the  accompanying  balance sheet of Sumpter Commons  Associates,
L.P. as of December 31, 2002, and the related statements of operations,  changes
in partners' (deficit),  and cash flows for the year then ended. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Sumpter Commons  Associates,
L.P. as of December  31,  2002,  and the results of its  operations,  changes in
partners'  (deficit),  and cash flows for the year then ended in conformity with
generally accepted accounting principles in the United States of America.

/s/ Lawlor, O'Brien & Chervenak, LLC
Totowa, New Jersey
February 15, 2003

                                       23
<PAGE>

[LAWLOR, O'BRIEN & CHERVENAK, LLC LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Sumpter Commons Associates, L.P.

We have audited the  accompanying  balance sheet of Sumpter Commons  Associates,
L.P. as of December 31, 2001, and the related statements of operations,  changes
in partners' capital  (deficit),  and cash flows for the year then ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Sumpter Commons  Associates,
L.P. as of December  31,  2001,  and the results of its  operations,  changes in
partners'  capital  (deficit),  and  cash  flows  for the  year  then  ended  in
conformity with generally accepted accounting principles in the United States of
America.

/s/ Lawlor, O'Brien & Chervenak, LLC
Totowa, New Jersey
February 25, 2002

                                       24
<PAGE>

[LAWLOR, O'BRIEN & CHERVENAK, LLC LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Sumpter Commons Associates, L.P.

We have audited the  accompanying  balance sheet of Sumpter Commons  Associates,
L.P. as of December 31, 2000, and the related statements of operations,  changes
in partners' capital  (deficit),  and cash flows for the year then ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Sumpter Commons  Associates,
L.P. as of December  31,  2000,  and the results of its  operations,  changes in
partners'  capital  (deficit),  and  cash  flows  for the  year  then  ended  in
conformity with generally accepted accounting principles.

/s/ Lawlor, O'Brien & Chervenak, LLC
Totowa, New Jersey
February 14, 2001

                                       25
<PAGE>

[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]

To The Partners
Park Housing Limited Partnership

INDEPENDENT AUDITORS' REPORT
----------------------------

We  have  audited  the  accompanying  balance  sheet  of  Park  Housing  Limited
Partnership  as of December 31, 2002,  and the related  statements of operations
and changes in partners' capital,  and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial  position  of  Park  Housing  Limited
Partnership  as of December 31, 2002, and the results of its operations and cash
flows  for the  year  then  ended,  in  accordance  with  accounting  principles
generally accepted in the United States of America.

/s/ Kostin, Ruffkess & Company, LLC
Farmington, Connecticut
January 24, 2003

                                       26
<PAGE>

[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]

To The Partners
Park Housing Limited Partnership

INDEPENDENT AUDITORS' REPORT

We  have  audited  the  accompanying  balance  sheet  of  Park  Housing  Limited
Partnership  as of December 31, 2001,  and the related  statements of operations
and changes in partners' capital,  and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial  position  of  Park  Housing  Limited
Partnership  as of December 31, 2001, and the results of its operations and cash
flows  for the  year  then  ended,  in  accordance  with  accounting  principles
generally accepted in the United States of America.

/s/ Kostin, Ruffkess & Company, LLC
Farmington, Connecticut
January 24, 2002

                                       27
<PAGE>

[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]

To The Partners
Park Housing Limited Partnership

INDEPENDENT AUDITORS' REPORT

We  have  audited  the  accompanying  balance  sheet  of  Park  Housing  Limited
Partnership  as of December 31, 2000,  and the related  statements of operations
and partners'  capital,  and cash flows for the year then ended. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial  position  of  Park  Housing  Limited
Partnership  as of December 31, 2000, and the results of its operations and cash
flows for the year then ended, in accordance with generally accepted  accounting
principles.

/s/ Kostin, Ruffkess & Company, LLC
West Hartford, Connecticut
February 6, 2001

                                       28
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Livingston Manor Urban Renewal Associates, L.P.

We have  audited  the  accompanying  balance  sheets of  Livingston  Manor Urban
Renewal  Associates,  L.P.  as of December  31,  2002 and 2001,  and the related
statements of operations,  changes in partners'  equity (deficit) and cash flows
for the years then ended.  These financial  statements are the responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Livingston Manor Urban Renewal
Associates,  L.P.  as of  December  31,  2002 and 2001,  and the  results of its
operations, the changes in partners' equity (deficit) and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 17, 2003

                                       29
<PAGE>

[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Livingston Manor Urban Renewal Associates, L.P.

We have  audited  the  accompanying  balance  sheets of  Livingston  Manor Urban
Renewal  Associates,  L.P.  as of December  31,  2000 and 1999,  and the related
statements  of  operations,  changes in partners'  equity and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
Partnership's   general   partner   and   contracted   management   agent.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Livingston Manor Urban Renewal
Associates,  L.P.  at  December  31,  2000  and  1999,  and the  results  of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan LLP
Boston, Massachusetts
January 16, 2001

                                       30
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Jefferis Square Housing Partnership, L.P.

We have  audited the  accompanying  balance  sheets of Jefferis  Square  Housing
Partnership,  L.P. (a Pennsylvania  limited partnership) as of December 31, 2002
and 2001, and the related statements of operations,  changes in partners' equity
(deficit) and cash flows for the years then ended.  These  financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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 Jefferis  Square  Housing
Partnership,  L.P.  as of  December  31,  2002 and 2001,  and the results of its
operations,  changes in partners'  equity  (deficit)  and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 7, 2003

                                       31
<PAGE>

[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Jefferis Square Housing Partnership, L.P.

We have  audited the  accompanying  balance  sheets of Jefferis  Square  Housing
Partnership,  L.P. (a Pennsylvania  limited partnership) as of December 31, 2000
and 1999, and the related statements of operations,  changes in partners' equity
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Partnership's  general partners and contracted  management
agent. Our responsibility is to express an opinion on these financial statements
based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles used and significant  estimates made by the
Partnership's  general  partners and  contracted  management  agent,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits 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 Jefferis  Square  Housing
Partnership,  L.P.  at  December  31,  2000 and  1999,  and the  results  of its
operations,  changes in  partners'  equity and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan, LLP
Boston, Massachusetts
January 15, 2001

                                       32
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
2301 First Avenue Limited Partnership

We have audited the  accompanying  balance  sheets of 2301 First Avenue  Limited
Partnership,  as of December 31, 2002 and 2001,  and the related  statements  of
operations,  changes in partners' equity (deficit), and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by the 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 2301 First  Avenue  Limited
Partnership, as of December 31, 2002 and 2001, and the results of its operations
and its cash flows for the years  then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole. The supplemental  information on page 17
is presented for purposes of  additional  analysis and is not a required part of
the basic  financial  statements.  Such  information  has been  subjected to the
auditing procedures applied in the audit of the basic financial  statements and,
in our opinion,  is fairly  stated in all  material  respects in relation to the
basic financial statements taken as a whole.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
February 8, 2003

                                       33
<PAGE>

[FRIEDMAN ALPREN & GREEN LLP LETTERHEAD]

Independent Auditors' Report

To the Partners of
2301 First Avenue Limited Partnership:

We have audited the  accompanying  balance  sheet of 2301 First  Avenue  Limited
Partnership as of December 31, 2000,  and the related  statements of operations,
changes in partners' capital  deficiency and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of 2301 First  Avenue  Limited
Partnership  as of December 31, 2000,  and the results of its operations and its
cash  flows for the year then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.

/s/ Friedman Alpren & Green LLP
New York, NY
February 8, 2001

                                       34
<PAGE>

[TOSKI, SCHAEFER & CO., P.C.  LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lewis Street Limited Partnership:

We have  audited  the  accompanying  balance  sheets  of  Lewis  Street  Limited
Partnership  as of  December  31, 2002 and 2001 and the  related  statements  of
operations,  partners'  equity and cash flows for the years  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial  position  of  Lewis  Street  Limited
Partnership as of December 31, 2002 and 2001 and the results of its  operations,
changes  in  partners'  equity  and cash  flows for the  years  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  23,  2003 on our  consideration  of the  Partnership's  internal
control  and on its  compliance  with  laws and  regulations  applicable  to the
financial  statements.  That report is an integral part of an audit performed in
accordance with Government  Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

/s/ Toski, Schaefer & Co., P.C.
Williamsville, New York
January 23, 2003

                                       35
<PAGE>

[TOSKI, SCHAEFER & CO., P.C.  LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

The Partners
Lewis Street Limited Partnership:

We have  audited  the  accompanying  balance  sheets  of  Lewis  Street  Limited
Partnership  as of  December  31, 2001 and 2000 and the  related  statements  of
operations,  partners'  equity and cash flows for the years  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial  position  of  Lewis  Street  Limited
Partnership as of December 31, 2001 and 2000 and the results of its  operations,
changes  in  partners'  equity  and cash  flows for the  years  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  25,  2002 on our  consideration  of the  Partnership's  internal
control  and on its  compliance  with  laws and  regulations  applicable  to the
financial  statements.  That report is an integral part of an audit performed in
accordance with Government  Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

/s/ Toski, Schaefer & Co., P.C.
Williamsville, New York
January 25, 2002

                                       36
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Savannah Park Housing
Limited Partnership

We have audited the accompanying  balance sheet of Savannah Park Housing Limited
Partnership as of December 31, 2002,  and the related  statements of operations,
partners'  capital  and cash  flows for the year  then  ended.  These  financial
statements  are  the  responsibility  of  the  partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Savannah Park Housing Limited
Partnership  as of December 31,  2002,  and the results of its  operations,  the
changes  in  partners'  capital  and cash  flows  for the year  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
April 8, 2003

                                       37
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Savannah Park Housing
Limited Partnership

We have audited the accompanying  balance sheet of Savannah Park Housing Limited
Partnership as of December 31, 2001,  and the related  statements of operations,
partners'  capital  and cash  flows for the year  then  ended.  These  financial
statements  are  the  responsibility  of  the  partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Savannah Park Housing Limited
Partnership  as of December 31,  2001,  and the results of its  operations,  the
changes  in  partners'  capital  and cash  flows  for the year  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
March 11, 2002

                                       38
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Savannah Park Housing
 Limited Partnership

We have audited the accompanying  balance sheet of Savannah Park Housing Limited
Partnership as of December 31, 2000,  and the related  statements of operations,
changes  in  partners'  capital  and cash flows for the year then  ended.  These
financial statements are the responsibility of the partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Savannah Park Housing Limited
Partnership  as of December 31,  2000,  and the results of its  operations,  the
changes  in  partners'  capital  and cash  flows  for the year  then  ended,  in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
partnership  will  continue as a going  concern.  As  discussed in note B to the
financial statements,  the partnership's declining cash flow and defaults on its
land lease and a note payable raise  substantial  doubt about the  partnership's
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also  described in note B. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
March 2, 2001

                                       39
<PAGE>

[BDO Seidman, LLP LETTERHEAD]

Independent Auditors' Report

Brannon Group, L.C.
(A Limited Liability Company)
Coral Gables, Florida

We have audited the accompanying balance sheet of Brannon Group, L.C. (A Limited
Liability Company) as of December 31, 2002, and the related statements of profit
and loss,  changes in members' capital,  and cash flows for the year then ended.
These  financial  statements  are the  responsibility  of the  management of the
Company.  Our  responsibility  is to  express  an  opinion  on  these  financial
statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Brannon Group, L.C. at December
31, 2002, and the results of its operations and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America

Our audit was made for the purpose of forming an opinion on the basic  financial
statements for the year ended December 31, 2002 taken as whole. The supplemental
information  presented on pages 16 to 17 is presented for purposes of additional
analysis  and is not a required  part of the basic  financial  statements.  This
information has been subjected to the auditing  procedures  applied in our audit
of the basic financial  statements and, in our opinion,  is fairly stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

/s/ BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
February 22, 2003, except for Note 9,
which is as of March 7, 2003

                                       40
<PAGE>

[BDO Seidman, LLP LETTERHEAD]

Independent Auditors' Report

Brannon Group, L.C.
(A Limited Liability Company)
Coral Gables, Florida

We have  audited  the  accompanying  balance  sheets of Brannon  Group,  L.C. (A
Limited Liability  Company) as of December 31, 2001, and the related  statements
of profit and loss, changes in members' capital accounts, and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
management of the company.  Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Brannon Group, L.C. at December
31,  2001,  and the results of its  operations  and its cash flows for the years
then ended in conformity with generally  accepted  accounting  principles in the
United States of America

Our audit was made for the  purpose of forming an opinion on the basic  combined
financial  statements for the year ended  December 31, 2001 taken as whole.  The
supplemental  material  presented on pages 15 to 18 is presented for purposes of
additional  analysis  and  is  not  a  required  part  of  the  basic  financial
statements.  This  information  has been  subjected to the  auditing  procedures
applied in our audit of the basic  combined  financial  statements  and,  in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.

/s/ BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
February 22, 2002

                                       41
<PAGE>

[BDO Seidman, LLP LETTERHEAD]

Independent Auditors' Report

Brannon Group, L.C.
(A Limited Liability Company)
Coral Gables, Florida

We have  audited  the  accompanying  balance  sheets of Brannon  Group,  L.C. (A
Limited  Liability  Company) as of December  31, 2000 and 1999,  and the related
statements of profit and loss,  changes in members' capital  accounts,  and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility  of the  management  of the  company.  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
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Brannon Group, L.C. at December
31, 2000 and 1999,  and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting  principles in
the United States of America

/s/ BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
July 12, 2001

                                       42
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Mansion Court Phase II Venture
Philadelphia, Pennsylvania

We have  audited  the  accompanying  balance  sheets of Mansion  Court  Phase II
Venture  as of  December  31,  2002 and  2001,  and the  related  statements  of
operations,  changes in partners'  equity (deficit) and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  the  Partnership's   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 Mansion Court Phase II Venture
at December  31, 2002 and 2001,  and the results of its  operations,  changes in
partners'  equity  (deficit)  and its cash  flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 24, 2003

                                       43
<PAGE>

[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Mansion Court Phase II Venture
Philadelphia, Pennsylvania

We have  audited  the  accompanying  balance  sheets of Mansion  Court  Phase II
Venture (a  Pennsylvania  limited  partnership) as of December 31, 2000 and 1999
and the related  statements of operations,  changes in partners' equity and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the Partnership's  general partners and contracted  management
agent. Our responsibility is to express an opinion on these financial statements
based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
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 Mansion Court Phase II Venture
at December  31, 2000 and 1999,  and the results of its  operations,  changes in
partners'  equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan LLP
Boston, Massachusetts
January 28, 2001

                                       44
<PAGE>

[RUBIN BROWN GORNSTEIN & CO. LLP]
[RBG & CO.  LETTERHEAD]

Independent Auditors' Report

Partners
Primm Place Partners, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Primm Place Partners,  L.P., a
Missouri limited partnership,  as of December 31, 2002 and 2001, and the related
statements of income,  partners' equity and cash flows for the years then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Primm Place Partners,  L.P., as
of December 31, 2002 and 2001,  and the results of its  operations  and its cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.

/s/ Rubin, Brown, Gornstein & Co.  LLP
St. Louis, Missouri
January 17, 2003

                                       45
<PAGE>

[ZINER, KENNEDY & LEHAN LLP]
[RBG & CO.  LETTERHEAD]

Independent Auditors' Report

Partners
Primm Place Partners, L.P.
St. Louis, Missouri

We have audited the accompanying balance sheet of Primm Place Partners,  L.P., a
Missouri limited partnership, as of December 31, 2000 and the related statements
of  income,  partners'  equity  and cash  flows for the year then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Primm Place Partners,  L.P., as
of December 31, 2000,  and the results of its  operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ Rubin, Brown, Gornstein & Co.  LLP
St. Louis, Missouri
January 19, 2001

                                       46
<PAGE>

[RAINES AND FISCHER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of BK-9-A Partners, L.P.:

We have audited the accompanying  balance sheet of BK-9-A Partners,  L.P. (A New
York Limited  Partnership) as of December 31, 2002 and the related statements of
operations,  changes in partners' capital (deficit), and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of BK-9-A Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2002,  and the results of its
operations,  changes in its  partners'  capital  and its cash flows for the year
then ended in conformity with accounting  principles  generally  accepted in the
United States of America.

/s/ Raines & Fischer
New York, New York
February 7, 2003

                                       47
<PAGE>

[RAINES AND FISCHER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of BK-9-A Partners, L.P.:

We have audited the accompanying  balance sheet of BK-9-A Partners,  L.P. (A New
York Limited  Partnership) as of December 31, 2001 and the related statements of
operations,  changes  in  partners'  capital,  and cash  flows for the year then
ended.  These financial  statements are the  responsibility of the Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of BK-9-A Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2001,  and the results of its
operations,  changes in its  partners'  capital  and its cash flows for the year
then ended in conformity with accounting  principles  generally  accepted in the
United States of America.

/s/ Raines & Fischer
New York, New York
February 11, 2002

                                       48
<PAGE>

[RAINES AND FISCHER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of BK-9-A Partners, L.P.:

We have audited the accompanying  balance sheet of BK-9-A Partners,  L.P. (A New
York Limited  Partnership) as of December 31, 2000 and the related statements of
operations,  changes  in  partners'  capital,  and cash  flows for the year then
ended.  These financial  statements are the  responsibility of the Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of BK-9-A Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2000,  and the results of its
operations,  changes in its  partners'  capital  and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

/s/ Raines & Fischer
New York, New York
January 24, 2001

                                       49
<PAGE>

[RAINES AND FISCHER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Partners of BK-10K Partners, L.P.:

We have audited the accompanying  balance sheet of BK-10K Partners,  L.P. (A New
York Limited  Partnership) as of December 31, 2002 and the related statements of
operations,  changes in partners' capital (deficit), and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of BK-10K Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2002,  and the results of its
operations,  changes in its  partners'  capital  and its cash flows for the year
then ended in conformity with accounting  principles  generally  accepted in the
United States of America.

/s/ Raines & Fischer
New York, New York
February 5, 2003

                                       50
<PAGE>

[RAINES AND FISCHER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of BK-10K Partners, L.P.:

We have audited the accompanying  balance sheet of BK-10K Partners,  L.P. (A New
York Limited  Partnership) as of December 31, 2001 and the related statements of
operations,  changes in partners' capital (deficit), and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of BK-10K Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2001,  and the results of its
operations,  changes in its  partners'  capital  and its cash flows for the year
then ended in conformity with accounting  principles  generally  accepted in the
United States of America.

/s/ Raines & Fischer
New York, New York
February 9, 2002

                                       51
<PAGE>

[RAINES AND FISCHER LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of BK-10K Partners, L.P.:

We have audited the accompanying  balance sheet of BK-10K Partners,  L.P. (A New
York Limited  Partnership) as of December 31, 2000 and the related statements of
operations,  changes in partners' capital (deficit), and cash flows for the year
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with 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 audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of BK-10K Partners,  L.P. (A New
York  Limited  Partnership)  as of  December  31,  2000,  and the results of its
operations,  changes in its  partners'  capital  and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

/s/ Raines & Fischer
New York, New York
February 6, 2001

                                       52
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Aspen-Olive Associates

We have audited the accompanying balance sheets of Aspen-Olive  Associates as of
December 31, 2002 and 2001, and the related statements of operations, changes in
partners'  equity  (deficit)  and cash  flows for the years  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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 the 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 Aspen-Olive  Associates as of
December 31, 2002 and 2001,  and the results of its  operations,  the changes in
partners'  equity  (deficit)  and its cash  flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 17, 2003

                                       53
<PAGE>

[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Aspen-Olive Associates
Philadelphia, Pennsylvania

We have audited the  accompanying  balance sheets of  Aspen-Olive  Associates (a
Pennsylvania  limited  partnership)  as of  December  31,  2000 and 1999 and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended.  These financial  statements are the responsibility of the
Partnership's   general   partners  and   contracted   management   agent.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles used and significant  estimates made by the
Partnership's  general  partners and  contracted  management  agent,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits 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  Aspen-Olive  Associates at
December  31,  2000 and 1999  and the  results  of its  operations,  changes  in
partners'  equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan LLP
Boston, Massachusetts
January 13, 2001

                                       54
<PAGE>

[ASHER & COMPANY, LTD. LETTERHEAD]

Independent Auditors' Report

The Partners
West Mill Creek Associates III
T/A Jameson Court
Marlton, New Jersey

We have audited the  accompanying  balance sheets of West Mill Creek  Associates
III T/A Jameson Court (A Limited  Partnership),  PHFA Project No. 0-0476,  as of
December 31, 2002 and 2001 and the related statements of loss, Partners' capital
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of West Mill Creek Associates III
T/A  Jameson  Court (A Limited  Partnership),  PHFA  Project No.  0-0476,  as of
December 31, 2002 and 2001,  and the results of its  operations,  changes in its
Partners' capital and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  is  presented  for  purposes of  additional  analysis  and is not a
required  part of the basic  financial  statements.  Such  information  has been
subjected  to the  auditing  procedures  applied  in  the  audits  of the  basic
financial  statements  and, in our  opinion,  is fairly  stated in all  material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 15, 2003 on our  consideration of West Mill Creek Associates III's
T/A Jameson Court (A Limited  Partnership),  PHFA Project No.  0-0476,  internal
control over financial  reporting and our tests of its  compliance  with certain
provisions  of laws,  regulations,  contracts  and  grants.  That  report  is an
integral  part of an audit  performed in  accordance  with  Government  Auditing
Standards and should be read in conjunction  with this report in considering the
results of our audit.

/s/ ASHER & COMPANY, Ltd.
Philadelphia, Pennsylvania
January 15, 2003

                                       55
<PAGE>

[ASHER & COMPANY, LTD. LETTERHEAD]

Independent Auditors' Report

The Partners
West Mill Creek Associates III
T/A Jameson Court
Marlton, New Jersey

We have audited the  accompanying  balance sheets of West Mill Creek  Associates
III T/A Jameson Court (A Limited  Partnership),  PHFA Project No. 0-0476,  as of
December 31, 2001 and 2000 and the related statements of loss, Partners' capital
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of West Mill Creek Associates III
T/A  Jameson  Court (A Limited  Partnership),  PHFA  Project No.  0-0476,  as of
December 31, 2001 and 2000,  and the results of its  operations,  changes in its
Partners' capital and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  is  presented  for  purposes of  additional  analysis  and is not a
required  part of the basic  financial  statements.  Such  information  has been
subjected  to the  auditing  procedures  applied  in  the  audits  of the  basic
financial  statements  and, in our  opinion,  is fairly  stated in all  material
respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 23, 2002 on our  consideration of West Mill Creek Associates III's
T/A Jameson Court (A Limited  Partnership),  PHFA Project No.  0-0476,  internal
control over financial  reporting and our tests of its  compliance  with certain
provisions  of laws,  regulations,  contracts  and  grants.  That  report  is an
integral  part of an audit  performed in  accordance  with  Government  Auditing
Standards and should be read in conjunction  with this report in considering the
results of our audit.

/s/ ASHER & COMPANY, Ltd.
Philadelphia, Pennsylvania
January 23, 2002

                                       56
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Universal Court Associates

We have audited the accompanying  balance sheets of Universal Court  Associates,
as of December  31, 2002 and 2001,  and the related  statements  of  operations,
changes in partners'  equity  (deficit) and cash flows for the years then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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 the 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 Universal Court Associates.  as
of December 31, 2002 and 2001, and the results of its operations, the changes in
partners'  equity  (deficit)  and its cash  flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 7, 2003

                                       57
<PAGE>

[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners of
Universal Court Associates

We have audited the accompanying balance sheets of Universal Court Associates (a
Pennsylvania  limited  partnership)  as of  December  31,  2000 and 1999 and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended.  These financial  statements are the responsibility of the
Partnership's  general partners and contracted  agent. Our  responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audit 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 the
Partnership's  general  partners and  contracted  management  agent,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Universal Court Associates at
December 31, 2000 and 1999,  and the results of its  operations,  changes in its
partners'  equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Ziner, Kennedy & Lehan LLP
Boston, Massachusetts
January 17, 2001

                                       58
<PAGE>

[COLE, EVANS & PETERSON LETTERHEAD]

INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL
STATEMENTS AND SUPPLEMENTAL INFORMATION

To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana

We have audited the  accompanying  balance sheet of New Zion Apartments  Limited
Partnership,  HUD Project No. LA48E000011, at December 31, 2002, and the related
statements of income,  partners' capital and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the  financial  statements  referred to in the first  paragraph
above present fairly, in all material  respects,  the financial  position of New
Zion Apartments Limited  Partnership,  HUD Project No. LA48E000011,  at December
31, 2002 and the results of its operations,  changes in capital,  and cash flows
for the year then ended in conformity with U.S.  generally  accepted  accounting
principles.

Our audit was made  primarily for the purpose of forming an opinion on the basic
financial  statements for the year ended December 31, 2002 taken as a whole. The
supplementary  Schedules 1, 2 and 3 are  presented  for  purposes of  additional
analysis and are not a required  part of the basic  financial  statements.  Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and, in our opinion,  is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government  Auditing  Standards,  we have also issued reports
dated  February 10, 2003 on our  consideration  of New Zion  Apartments  Limited
Partnership's  internal control, and on our tests on its compliance with certain
provisions of laws,  regulations,  contracts,  and grants.  Those reports are an
integral  part of an audit  performed in  accordance  with  Government  Auditing
Standards and should be read in conjunction  with this report in considering the
results of our audit.

/s/ Cole, Evans & Peterson
Lead Auditor: Steven W. Hedgepeth
Shreveport, Louisiana
Federal ID No. 72-0506596
February 10, 2003

                                       59
<PAGE>

[COLE, EVANS & PETERSON LETTERHEAD]

INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL
STATEMENTS AND SUPPLEMENTAL INFORMATION

To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana

We have audited the  accompanying  balance sheet of New Zion Apartments  Limited
Partnership,  HUD Project No. LA48E000011, at December 31, 2001, and the related
statements of income,  partners' capital and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the  financial  statements  referred to in the first  paragraph
above present fairly, in all material  respects,  the financial  position of New
Zion Apartments Limited  Partnership,  HUD Project No. LA48E000011,  at December
31, 2001 and the results of its operations,  changes in capital,  and cash flows
for the year then ended in conformity with U.S.  generally  accepted  accounting
principles.

Our audit was made  primarily for the purpose of forming an opinion on the basic
financial  statements for the year ended December 31, 2001 taken as a whole. The
supplementary  Schedules 1, 2 and 3 are  presented  for  purposes of  additional
analysis and are not a required  part of the basic  financial  statements.  Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and, in our opinion,  is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance  with Government  Auditing  Standards and the  Consolidated  Audit
Guide for Audits of HUD Programs  issued by the U.S.  Department  of Housing and
Urban  Development,  we have also issued a report dated  February 8, 2002 on our
consideration of New Zion Apartments Limited Partnership's internal control, and
reports dated  February 8, 2002, on its  compliance  with laws and  regulations,
compliance   with   specific   requirements   applicable  to  Fair  Housing  and
Non-Discrimination,  and  compliance  with specific  requirements  applicable to
major  HUD-assisted  programs.  Those  reports are an integral  part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

/s/ Cole, Evans & Peterson
Lead Auditor: Steven W.  Hedgepeth
Shreveport, Louisiana
Federal ID No. 72-0506596
February 8, 2002

                                       60
<PAGE>

[COLE, EVANS & PETERSON LETTERHEAD]

INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL
STATEMENTS AND SUPPLEMENTAL INFORMATION

To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana

We have audited the  accompanying  balance sheet of New Zion Apartments  Limited
Partnership,  HUD Project No. LA48E000011, at December 31, 2000, and the related
statements of income,  partners' capital and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the  financial  statements  referred to in the first  paragraph
above present fairly, in all material  respects,  the financial  position of New
Zion Apartments Limited  Partnership,  HUD Project No. LA48E000011,  at December
31, 2000 and the results of its operations,  changes in capital,  and cash flows
for the year  then  ended  in  conformity  with  generally  accepted  accounting
principles.

Our audit was made  primarily for the purpose of forming an opinion on the basic
financial  statements for the year ended December 31, 2000 taken as a whole. The
supplementary  Schedules 1, 2 and 3 are  presented  for  purposes of  additional
analysis and are not a required  part of the basic  financial  statements.  Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and, in our opinion,  is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance  with Government  Auditing  Standards and the  Consolidated  Audit
Guide for Audits of HUD Programs  issued by the U.S.  Department  of Housing and
Urban  Development,  we have also issued a report dated February 16, 2001 on our
consideration of New Zion Apartments Limited Partnership's internal control, and
reports dated  February 16, 2001, on its compliance  with laws and  regulations,
compliance   with   specific   requirements   applicable  to  Fair  Housing  and
Non-Discrimination,  and  compliance  with specific  requirements  applicable to
major  HUD-assisted  programs.  Those  reports are an integral  part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.

/s/ Cole, Evans & Peterson
Lead Auditor: Steven W.  Hedgepeth
Shreveport, Louisiana
Federal ID No. 72-0506596
February 16, 2001

                                       61
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Dreitzer Limited Partnership

We have audited the accompanying  balance sheets of Dreitzer Limited Partnership
as of December  31, 2002 and 2001,  and the related  statements  of  operations,
changes in partners' equity (deficit),  and cash flows for the years then ended.
These  financial   statements  are  the   responsibility  of  the  partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Dreitzer Limited Partnership as
of December 31, 2002 and 2001, and the results of its operations, and cash flows
for the years then ended,  in conformity with  accounting  principles  generally
accepted in the United States of America.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
February 8, 2003

                                       62
<PAGE>

[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Dreitzer Limited Partnership

We have audited the accompanying  balance sheets of Dreitzer Limited Partnership
as of December  31, 2001 and 2000,  and the related  statements  of  operations,
partners'  deficit  and cash flows for the years  then  ended.  These  financial
statements  are  the  responsibility  of  the  partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Dreitzer Limited Partnership as
of December  31, 2001 and 2000,  and the results of its  operations,  changes in
partners'  equity and cash flows for the years then ended,  in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
February 7, 2002

                                       63
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS

                                                                            March 31,
                                                                  ----------------------------
                                                                      2003            2002
                                                                  ------------    ------------
<S>                                                               <C>             <C>
Property and equipment - at cost, less accumulated depreciation
  (Notes 2 and 4)                                                 $ 68,534,177    $ 71,576,597
Cash and cash equivalents (Notes 2 and 10)                             556,259         709,852
Cash held in escrow (Note 5)                                         5,693,717       5,200,566
Deferred costs, less accumulated amortization (Notes 2 and 6)          784,581         842,339
Other assets                                                           654,509         652,721
                                                                  ------------    ------------

Total assets                                                      $ 76,223,243    $ 78,982,075
                                                                  ============    ============

                   LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Liabilities:
  Mortgage notes payable (Note 7)                                 $ 42,714,124    $ 43,168,559
  Construction loan payable (Note 7)                                   600,000         600,000
  Accounts payable and other liabilities                             5,809,239       4,920,155
  Due to local general partners and affiliates (Note 8)              1,931,043       2,249,134
  Due to general partner and affiliates (Note 8)                     3,470,568       2,848,701
                                                                  ------------    ------------

Total liabilities                                                   54,524,974      53,786,549
                                                                  ------------    ------------

Minority interest (Note 2)                                           3,142,417       3,455,741
                                                                  ------------    ------------

Commitments and contingencies (Notes 7, 8 and 10)

Partners' capital (deficit):
  Limited partners (43,440 BACs issued and outstanding)(Note 1)     18,756,421      21,908,515
  General Partner                                                     (200,569)       (168,730)
                                                                  ------------    ------------

Total partners' capital (deficit)                                   18,555,852      21,739,785
                                                                  ------------    ------------

Total liabilities and partners' capital (deficit)                 $ 76,223,243    $ 78,982,075
                                                                  ============    ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                       64
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   Year Ended March 31,
                                                       --------------------------------------------
                                                           2003            2002            2001
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
Revenues
Rental income                                          $  6,156,602    $  5,942,415    $  5,886,882
Other income                                                252,269         509,599         445,844
                                                       ------------    ------------    ------------

                                                          6,408,871       6,452,014       6,332,726
                                                       ------------    ------------    ------------

Expenses
General and administrative                                1,764,159       2,220,868       1,704,534
General and administrative-related parties
  (Note 8)                                                  788,862         830,348         810,324
Repairs and maintenance                                   1,188,564       1,322,086         982,688
Operating and other                                         870,006         930,104         865,683
Real estate taxes                                           358,973         388,868         348,716
Insurance                                                   442,874         385,804         323,471
Financial, principally interest                           1,714,331       1,659,965       1,752,292
Depreciation and amortization                             2,758,313       2,727,165       2,809,920
                                                       ------------    ------------    ------------


Total expenses                                            9,886,082      10,465,208       9,597,628
                                                       ------------    ------------    ------------

Net loss before minority interest                        (3,477,211)     (4,013,194)     (3,264,902)

Minority interest in loss of subsidiary partnerships        293,278         670,493          21,134
                                                       ------------    ------------    ------------

Net loss                                               $ (3,183,933)   $ (3,342,701)   $ (3,243,768)
                                                       ============    ============    ============

Net loss - Limited Partners                            $ (3,152,094)   $ (3,309,274)   $ (3,211,330)
                                                       ============    ============    ============

Number of BACs outstanding                                   43,440          43,440          43,440
                                                       ============    ============    ============

Net loss per BAC                                       $     (72.56)   $     (76.18)   $     (73.93)
                                                       ============    ============    ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                       65
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>

                                                                  Limited          General
                                                   Total          Partners         Partner
                                                ------------    ------------    ------------
<S>                                             <C>             <C>             <C>
Partners' capital (deficit) - April 1, 2000     $ 28,326,254    $ 28,429,119    $   (102,865)

Net loss                                          (3,243,768)     (3,211,330)        (32,438)
                                                ------------    ------------    ------------

Partners' capital (deficit) - March 31, 2001      25,082,486      25,217,789        (135,303)

Net loss                                          (3,342,701)     (3,309,274)        (33,427)
                                                ------------    ------------    ------------

Partners' capital (deficit) - March 31, 2002      21,739,785      21,908,515        (168,730)

Net loss                                          (3,183,933)     (3,152,094)        (31,839)
                                                ------------    ------------    ------------

Partners' capital (deficit) - March 31, 2003    $ 18,555,852    $ 18,756,421    $   (200,569)
                                                ============    ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       66
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>

                                                                Year Ended March 31,
                                                     -----------------------------------------
                                                        2003            2002           2001
                                                     -----------    -----------    -----------
<S>                                                  <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                             $(3,183,933)   $(3,342,701)   $(3,243,768)
                                                     -----------    -----------    -----------
Adjustments to reconcile net loss
  to net cash provided by (used in)
  operating activities:
Depreciation and amortization                          2,758,313      2,727,165      2,809,920
Minority interest in loss of subsidiary
  partnerships                                          (293,278)      (670,493)       (21,134)
Loss on disposal of property and equipment                47,532         82,315              0
Write-off of deferred costs                                    0         13,928              0
(Increase) decrease in assets:
Cash held in escrow                                      (28,552)      (774,638)    (1,158,629)
Other assets                                              (1,788)       (18,340)       (26,050)
Increase (decrease) in liabilities:
Accounts payable and other liabilities                   889,084        403,087        488,562
Due to local general partners
  and affiliates                                          50,629         10,224         45,524
Due to local general partners
  and affiliates                                         (76,702)      (105,347)       (36,997)
Due to general partners and affiliates                   621,867        738,694        561,691
                                                     -----------    -----------    -----------

Total adjustments                                      3,967,105      2,406,595      2,662,887
                                                     -----------    -----------    -----------

Net cash provided by (used in)
  operating activities                                   783,172       (936,106)      (580,881)
                                                     -----------    -----------    -----------

Cash flows from investing activities:
Acquisition of property and equipment                    (41,219)       (42,332)      (155,939)
Proceeds from disposal of property and
  equipment                                              335,552              0              0
Proceeds from investments available for sale                   0              0      1,300,000
(Increase) decrease in cash held in escrow              (464,599)      (268,412)        95,980
Decrease in accounts payable and
  other liabilities                                            0              0        (36,611)
Decrease in due to local general partners
  and affiliates                                        (325,647)    (1,053,521)    (1,014,008)
Increase in due to local general partners
  and affiliates                                           8,056        146,487              0
                                                     -----------    -----------    -----------

Net cash (used in) provided by investing
  activities                                            (487,857)    (1,217,778)       189,422
                                                     -----------    -----------    -----------
</TABLE>

                                       67
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                   (continued)
<TABLE>
<CAPTION>

                                                                Year Ended March 31,
                                                     -----------------------------------------
                                                        2003            2002           2001
                                                     -----------    -----------    -----------
<S>                                                  <C>            <C>            <C>
Cash flows from financing activities:
Proceeds from mortgage notes                                   0        278,584        365,303
Principal payments of mortgage notes                    (454,435)      (388,958)      (357,788)
Repayments of construction loans                               0       (689,449)             0
Increase (decrease) in due to local general
  partners and affiliates                                 25,573         12,335        (15,240)
Increase in deferred costs                                     0              0       (117,615)
(Decrease) increase in capitalization of
  consolidated subsidiaries attributable to
  minority interest                                      (20,046)       982,820       (142,531)
                                                     -----------    -----------    -----------

Net cash (used in) provided by financing
  activities                                            (448,908)       195,332       (267,871)
                                                     -----------    -----------    -----------

Net decrease in cash and cash equivalents               (153,593)    (1,958,552)      (659,330)

Cash and cash equivalents at beginning of year           709,852      2,668,404      3,327,734
                                                     -----------    -----------    -----------

Cash and cash equivalents at end of year             $   556,259    $   709,852    $ 2,668,404
                                                     ===========    ===========    ===========

Supplemental disclosure of cash flows information:

Cash paid during the year for interest               $   807,554    $   807,370    $   859,352
                                                     ===========    ===========    ===========

Supplemental disclosure of noncash investing
  and financing activities:

Mortgage notes payable converted from
  construction notes payable                         $         0    $         0    $ 6,745,630
</TABLE>

See accompanying notes to consolidated financial statements.


                                       68
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

NOTE 1 - General

Independence  Tax Credit Plus L.P.  III (a Delaware  limited  partnership)  (the
"Partnership")  was  organized  on December  23, 1993 and  commenced  the public
offering on June 7, 1994.  The  general  partner of the  Partnership  is Related
Independence  Associates III L.P., a Delaware limited  partnership (the "General
Partner").

The  Partnership's  business  is  to  invest  as  a  limited  partner  in  other
partnerships ("Local Partnerships," "subsidiaries" or "subsidiary partnerships")
owning  apartment  complexes  that are eligible for the  low-income  housing tax
credit  ("Housing  Tax Credit")  enacted in the Tax Reform Act of 1986,  some of
which complexes may also be eligible for the historic  rehabilitation tax credit
("Historic Tax Credit"; together with Housing Tax Credits, "Tax Credits").

As of March 31,  2003,  the  Partnership  had  acquired  a  limited  partnership
interest in twenty subsidiary partnerships.

The  Partnership  was  authorized  to  issue a total of  100,000  ($100,000,000)
Beneficial  Assignment  Certificates  ("BACs")  which were  registered  with the
Securities and Exchange  Commission for sale to the public.  Each BAC represents
all of the economic and virtually all of the ownership rights  attributable to a
limited  partnership  interest in the Partnership.  As of the termination of the
offering on May 9, 1995,  the  Partnership  had  received  $43,440,000  of gross
proceeds of the Offering  (the "Gross  Proceeds")  from 2,810  investors  ("BACs
holders").

The  terms of the  Partnership's  Amended  and  Restated  Agreement  of  Limited
Partnership (the "Partnership  Agreement") provide, among other things, that net
profits or losses and distributions of cash flow are, in general,  allocated 99%
to the limited partners and BACs holders and 1% to the general partner.


NOTE 2 - Summary of Significant Accounting Policies

a) Basis of Accounting

For financial reporting purposes the Partnership's fiscal year ends on March 31.
All  subsidiaries  have  fiscal  years  ending  December  31.  Accounts  of  the
subsidiaries  have been adjusted for  intercompany  transactions  from January 1
through March 31. The Partnership's  fiscal year ends March 31 in order to allow
adequate  time for the  subsidiaries'  financial  statements  to be prepared and
consolidated.  The books and records of the  Partnership  are  maintained on the
accrual  basis  of  accounting,  in  accordance  with  U.S.  generally  accepted
accounting principles ("GAAP").

b) Basis of Consolidation

The consolidated  financial  statements  include the accounts of the Partnership
and twenty subsidiary partnerships in which the Partnership is a limited partner
for the years ended March 31, 2003, 2002 and 2001, respectively, (the 2002, 2001
and 2000  Fiscal  Years).  Through  the  rights  of the  Partnership  and/or  an
affiliate of the General Partner,  which affiliate has a contractual  obligation
to act on behalf  of the  Partnership,  to remove  the  general  partner  of the

                                       69
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

subsidiary  local  partnerships  and to  approve  certain  major  operating  and
financial decisions, the Partnership has a controlling financial interest in the
subsidiary  partnerships.  All intercompany  accounts and transactions  with the
subsidiary partnerships have been eliminated in consolidation.

Increases  (decreases)  in  the  capitalization  of  consolidated   subsidiaries
attributable  to  minority  interest  arise  from  cash  contributions  and cash
distributions to the minority interest partners.

Losses  attributable to minority  interest which exceed the minority  interests'
investment  in a subsidiary  have been charged to the  Partnership.  Such losses
aggregated  approximately $18,000, $20,000 and $22,000 for the years ended March
31, 2003,  2002 and 2001,  respectively.  The  Partnership's  investment in each
subsidiary  is  equal  to the  respective  subsidiary's  partners'  equity  less
minority interest capital, if any. In consolidation,  all subsidiary partnership
losses are  included  in the  Partnership's  capital  account  except for losses
allocated to minority interest capital.

c) Cash and Cash Equivalents

Cash and cash  equivalents  include cash on hand, cash in banks, and investments
in short-term highly liquid  investments  purchased with original  maturities of
three months or less.

d) Property and Equipment

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price, acquisition fees and expenses,  construction period interest
and any other costs incurred in acquiring the  properties.  The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods.  Expenditures for repairs and maintenance are charged
to expense as incurred;  major renewals and betterments are capitalized.  At the
time property and  equipment are retired or otherwise  disposed of, the cost and
accumulated   depreciation  are  eliminated  from  the  assets  and  accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings.  A loss on impairment of assets is recorded when management  estimates
amounts  recoverable  through  future  operations and sale of the property on an
undiscounted   basis  are  below  depreciated  cost.  At  that  time,   property
investments  themselves  are reduced to estimated  fair value  (generally  using
discounted cash flows).

Through March 31, 2003, the  Partnership has not recorded any loss on impairment
of assets or reduction to estimated fair value.

At the time management  commits to a plan to dispose of assets,  said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets  are  classified  as  property  and  equipment-held  for sale and are not
depreciated.  Through  March 31,  2003,  the  Partnership  has not  recorded  or
classified any property and equipment as held for sale.

e) Income Taxes

The  Partnership  is not  required to provide  for, or pay,  any federal  income
taxes.  Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The  Partnership may be subject
to state and local taxes in jurisdictions  in which it operates.  For income tax
purposes, the Partnership has a fiscal year ending December 31 (Note 9).

                                       70
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

f) Offering Costs

Costs incurred to sell BACs, including brokerage and the nonaccountable  expense
allowance, are considered selling and offering expenses. These costs are charged
directly to limited partners' capital.

g) Loss Contingencies

The  Partnership   records  loss  contingencies  as  a  charge  to  income  when
information  becomes available which indicates that it is probable that an asset
has  been  impaired  or a  liability  has  been  incurred  as of the date of the
financial statements and the amount of loss can be reasonably estimated.

h) Use of Estimates

The  preparation  of financial  statements  in  conformity  with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect certain  reported amounts and disclosures.  Accordingly,
actual results could differ from those estimates.

i) New Accounting Pronouncements

In  January  2003,  the  Financial   Accounting   Standards  Board  issued  FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable  immediately for variable  interest  entities created after
January 31, 2003. For variable  interest  entities  created  before  February 1,
2003,  the  provisions of FIN 46 are  applicable no later than July 1, 2003. The
Partnership has not identified any variable  interest entities that were created
after January 31, 2003 and is currently  evaluating the impact of the provisions
of FIN 46 on its consolidated financial statements.


NOTE 3 - Fair Value of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each  class  of  financial  instruments  (all of which  are held for  nontrading
purposes) for which it is practicable to estimate that value:

Cash and  Cash  Equivalents,  Investments  Available-for-Sale  and Cash  Held in
--------------------------------------------------------------------------------
Escrow
------
The carrying amount approximates fair value.

Mortgage Notes Payable
----------------------
The fair value of mortgage  notes  payable  and  construction  loans  payable is
estimated,  where practicable,  based on the borrowing rate currently  available
for similar loans.

                                       71
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

The  estimated  fair  values of the  Partnership's  mortgage  notes  payable and
construction loans payable are as follows:
<TABLE>
<CAPTION>
                                                    March 31, 2003              March 31, 2002
                                              -------------------------   -------------------------
                                               Carrying                    Carrying
                                                Amount      Fair Value      Amount      Fair Value
                                              -----------   -----------   -----------   -----------
<S>                                           <C>           <C>           <C>           <C>
Mortgage notes payable for
which it is:

Practicable to estimate fair value            $13,386,179   $12,812,966   $16,004,664   $13,210,492
Not practicable                                29,327,945             *    27,163,895             *

Construction loans payable for
which it is:

Practicable to estimate fair value            $         0   $         0   $         0   $         0
Not Practicable                                   600,000             *       600,000             *
</TABLE>

*Management  believes  it is not  practical  to  estimate  the fair value of the
mortgage notes payable because  mortgage  programs with similar  characteristics
are not currently available to the Local Partnerships.

Management  believes it is not  practical  to estimate  the fair value of due to
local and general  partners and affiliates  because  market  information on such
unique loans are not currently available to the Local Partnerships.

The carrying amount of other financial  instruments that require such disclosure
approximates fair value.


NOTE 4 - Property and Equipment

The components of property and equipment and their estimated useful lives are as
follows:
<TABLE>
<CAPTION>
                                           March 31,               Estimated
                                 ----------------------------    Usefule Lives
                                     2003            2002           (Years)
                                 ------------    ------------    -------------
<S>                              <C>             <C>                <C>
Land                             $  1,166,783    $  1,166,783         -
Building and improvements          83,170,492      83,586,188       20-40
Furniture and fixtures              1,214,985       1,190,933        5-12
                                 ------------    ------------
                                   85,552,260     85,943,904

Less: Accumulated depreciation    (17,018,083)    (14,367,307)
                                 ------------    ------------

                                 $ 68,534,177    $ 71,576,597
                                 ============    ============
</TABLE>

Included in property and equipment is $2,509,717 of acquisition fees paid to the
General Partner and $1,178,468 of acquisition  expenses as of March 31, 2003 and

                                       72
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

2002,  respectively.  In addition,  as of March 31, 2003 and 2002,  building and
improvements  and  construction in progress  includes  $1,106,837 of capitalized
interest.

In  connection  with  the  rehabilitation  of  the  properties,  the  subsidiary
partnerships  have incurred  developer's fees of $8,980,181 to the local general
partners  and  affiliates  as of March 31,  2003 and  2002.  Such fees have been
included in the cost of property and equipment.

Depreciation  expense for the years ended March 31, 2003, 2002 and 2001 amounted
to $2,700,555, $2,664,316 and $2,763,153, respectively.

During the year ended March 31, 2003,  $49,779 of accumulated  depreciation  was
written off.


NOTE 5 - Cash Held in Escrow

Cash held in escrow consists of the following:
<TABLE>
<CAPTION>

                                                               March 31,
                                                      --------------------------
                                                         2003            2002
                                                      ----------      ----------
<S>                                                   <C>             <C>
Purchase price payments*                              $  297,142      $  297,142
Construction                                                 436             436
Real estate taxes, insurance and other                 3,568,448       3,539,896
Reserve for replacements                               1,827,691       1,363,092
                                                      ----------      ----------

                                                      $5,693,717      $5,200,566
                                                      ==========      ==========
</TABLE>

*Represents  amounts to be paid to seller upon  completion of  properties  under
construction and upon meeting specified rental achievement criteria.


NOTE 6 - Deferred Costs

The  components  of  deferred  costs and their  periods of  amortization  are as
follows:
<TABLE>
<CAPTION>

                                                March 31,
                                       --------------------------
                                           2003           2002        Period
                                       -----------    -----------    -----------
<S>                                    <C>            <C>                <C>
Financing costs                        $ 1,227,761    $ 1,227,761        *
Less: Accumulated amortization            (443,180)      (385,422)
                                       -----------    -----------

                                       $   784,581    $   842,339
                                       ===========    ===========
</TABLE>

*Over the life of the related mortgages.

Amortization  expense for the years ended March 31, 2003, 2002 and 2001 amounted
to $57,758, $62,849 and $46,767, respectively.

                                       73
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

NOTE 7 - Mortgage and Construction Notes Payable

The  mortgage  and  construction  notes,  which are  collateralized  by land and
buildings,  are  payable in  aggregate  monthly  installments  of  approximately
$81,000  including  principal  and interest at rates  varying from 0% to 10% per
annum,  through  the year 2046.  Each  subsidiary  partnership's  mortgage  note
payable is collateralized by the land and buildings of the respective subsidiary
partnership,  the  assignment  of  certain  subsidiary  partnership's  rents and
leases, and is without further recourse.

Annual principal payment requirements, as of March 31, 2003 for each of the next
five fiscal years and thereafter, are as follows:
<TABLE>
<CAPTION>

Fiscal Year Ending                     Amount
------------------                  -----------
<C>                                 <C>
2003                                $   560,625
2004                                    501,986
2005                                    541,628
2006                                    507,419
2007                                    552,695
Thereafter                           40,049,771
                                    -----------

                                    $42,714,124
                                    ===========
</TABLE>

The mortgage  agreements  require  monthly  deposits to replacement  reserves of
approximately  $21,000 and monthly  deposits to escrow  accounts for real estate
taxes, hazard and mortgage insurance and other (Note 5).

As of December 31, 2002, one  subsidiary  partnership  had a  construction  loan
commitment totaling approximately $1,300,000. As of December 31, 2002, such loan
had an  outstanding  balance of  approximately  $600,000.  On March 7, 2003, the
subsidiary  partnership executed a commitment letter with its existing lender to
extend the maturity date of the loan to January 1, 2011.


NOTE 8 - Related Party Transactions

An affiliate  of the General  Partner has a .01%  interest as a special  limited
partner, in each of the Local Partnerships.

Pursuant to the Partnership Agreement and the Local Partnership Agreements,  the
General Partner and affiliate  receive their pro rata shares of profits,  losses
and tax credits.

A) Guarantees

The Partnership has negotiated  Operating  Deficit Guaranty  Agreements with all
Local  Partnerships by which the general partners of the Local Partnerships have
agreed to fund operating  deficits for a specified  period of time. The terms of
the Operating Deficit Guaranty Agreements vary for each Local Partnership,  with
maximum  dollar amounts to be funded for a specified  period of time,  generally
three years,  commencing on the break-even  date. As of March 31, 2003, 2002 and
2001,  the  gross  amounts  of  the  Operating  Deficit   Guarantees   aggregate

                                       74
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003


approximately  $5,129,000, of which $3,073,000 has expired as of March 31, 2003.
Amounts funded under such  agreements are treated as noninterest  bearing loans,
which will be paid only out of 50% of  available  cash flow or out of  available
net sale or refinancing  proceeds.  Management does not expect the expiration of
such  guarantees to have a material  impact on liquidity,  based on prior years'
fundings.

The  Operating  Deficit  Guaranty  Agreements  were  negotiated  to protect  the
Partnership's interest in the Local Partnerships and to provide incentive to the
Local General Partners to generate positive cash flow.

In November  2002,  FASB  Interpretation  No. 45,  "Guarantor's  Accounting  and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness  of  Others"  ("FASB  Interpretation  No.  45"),  was  issued.  The
accounting  recognition  provisions of FASB  Interpretation No. 45 are effective
January 1, 2003 on a prospective basis. They require that a guarantor recognize,
at the  inception  of a  guarantee,  a  liability  for  the  fair  value  of the
obligation  undertaken in issuing or modifying any guarantee  after December 31,
2002.  Under  prior  accounting  principles,  a  guarantee  would  not have been
recognized as a liability until a loss was probable and reasonably estimated. At
March 31,  2003,  the  Partnership  has not  issued  or  modified  any  existing
guarantees  and has not  determined  the impact,  if any,  that  adoption of the
accounting recognition provision of FASB Interpretation No. 45 would have on the
Partnership's future financial position or results of operations.

B) Other Related Party Expenses

The General Partner and its affiliates perform services for the Partnership. The
costs  incurred to the General  Partner and other related  parties for the years
ended March 31, 2003, 2002 and 2001 were as follows:
<TABLE>
<CAPTION>
                                                         Year Ended March 31,
                                                   ------------------------------
                                                     2003       2002       2001
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Partnership management fees (a)                    $331,132   $361,742   $341,497
Expense reimbursement (b)                           149,036    120,820    178,621
Local administrative fees (d)                        65,500     61,500     55,000
                                                   --------   --------   --------

Total general and administrative-General Partner    545,668    544,062    575,118
                                                   --------   --------   --------

Property management fees incurred to
affiliates of the subsidiary partnerships'
general partners (c)                                243,194    286,286    235,206
                                                   --------   --------   --------

Total general and administrative-related parties   $788,862   $830,348   $810,324
                                                   ========   ========   ========
</TABLE>

(a) The General  Partner is entitled to receive a  partnership  management  fee,
after payment of all Partnership expenses,  which together with the annual local
administrative  fees  will not  exceed a maximum  of 0.5% per annum of  invested
assets (as defined in the Partnership Agreement),  for administering the affairs
of  the  Partnership.  Subject  to the  foregoing  limitation,  the  partnership
management fee will be determined by the General  Partner in its sole discretion
based  upon its  review of the  Partnership's  investments.  Unpaid  partnership

                                       75
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

management  fees for any  year  will be  accrued  without  interest  and will be
payable only to the extent of  available  funds after the  Partnership  has made
distributions to the limited  partners of sale or refinancing  proceeds equal to
their original capital  contributions plus a 10% priority return thereon (to the
extent not theretofore paid out of cash flow).  Partnership management fees owed
to the General Partner amounting to approximately $1,892,000 and $1,561,000 were
accrued  and unpaid as of March 31,  2003 and 2002,  respectively.  Without  the
General Partner's  continued accrual without payment the Partnership will not be
in a  position  to meet its  obligations.  The  General  Partner  has  continued
allowing  the  accrual  without  payment  of  these  amounts  but are  under  no
obligation to continue to do so.

(b) The Partnership reimburses the General Partner and its affiliates for actual
Partnership   operating  expenses  incurred  by  the  General  Partner  and  its
affiliates on the  Partnership's  behalf.  The amount of reimbursement  from the
Partnership is limited by the provisions of the Partnership  Agreement.  Another
affiliate of the General Partner  performs asset monitoring for the Partnership.
These   services   include  site  visits  and   evaluations  of  the  subsidiary
partnerships' performance.

(c)  Property  management  fees  incurred  by  Local  Partnerships  amounted  to
$438,586,  $458,450 and  $384,918  for the years ended March 31, 2003,  2002 and
2001, respectively. Of these fees, $243,194, $286,286 and $235,206 were incurred
to affiliates of the subsidiary partnerships' general partners.

(d) Independence SLP III L.P., a limited partner of the subsidiary partnerships,
is entitled to receive a local  administrative fee of up to $5,000 per year from
each subsidiary partnership.

C) Due to Local General Partners and Affiliates

Due to local general partners and affiliates consists of the following:
<TABLE>
<CAPTION>
                                                              March 31,
                                                    ----------------------------
                                                       2003              2002
                                                    ----------        ----------
<S>                                                 <C>               <C>
Operating advances                                  $   39,654        $   79,396
Development fee payable                              1,545,668         1,871,315
Other capitalized costs                                 16,335            16,335
Construction costs payable                             154,543           146,487
General Partner loan payable                           149,220           123,647
Management and other operating fees                     25,623            11,954
                                                    ----------        ----------

                                                    $1,931,043        $2,249,134
                                                    ==========        ==========
</TABLE>

                                       76
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

NOTE 9 - Income Taxes

A reconciliation of the financial  statement net loss to the income tax loss for
the Partnership and its consolidated subsidiaries follows:
<TABLE>
<CAPTION>
                                                         For the Year Ended December 31,
                                                    -----------------------------------------
                                                       2002            2001           2000
                                                    -----------    -----------    -----------
<S>                                                 <C>            <C>            <C>
Financial statement net loss                        $(3,183,933)   $(3,342,701)   $(3,243,768)

Differences between depreciation and amortiza-
tion expense records for financial reporting
purposes and the accelerated costs recovery
system utilized for income tax purposes                (302,859)      (451,799)      (415,735)

Differences resulting from parent company
having a different fiscal year for income tax and
financial reporting purposes                            (27,154)        26,399         26,092

Tax exempt interest income                                    0        (23,591)       (69,856)

Other, including accruals for financial reporting
not deductible for tax purposes until paid              147,826       (690,941)       428,469
                                                    -----------    -----------    -----------

Net loss as shown on the income tax return for
the calendar year ended                             $(3,366,120)   $(4,482,633)   $(3,274,798)
                                                    ===========    ===========    ===========
</TABLE>

NOTE 10 - Commitments and Contingencies

a) Legal Proceedings

Lewis Street L.P.
-----------------
In January of 1998,  Lewis  Street  Limited  Partnership  ("Lewis  Street")  was
informed  that it was a defendant in a cause of action for the alleged  value of
work and services provided by Phase Three Paul for interference with contractual
relations  and for fraud that was brought by the project's  original  developer.
The complaint seeks damages for the alleged value of work and services  provided
in the amount of $296,940  and damages to  reputation  in the amount of at least
$1,000,000 plus unspecified  punitive damages.  This litigation will continue to
be vigorously  contested by the Local  Partnership.  Legal counsel for the Local
Partnership has indicated that the ultimate  liability,  if any, with respect to
this  possible  action  cannot be  determined  at this time.  The  Partnership's
investment in Lewis Street at March 31, 2003 and 2002 was approximately $590,000
and $700,000,  respectively,  and the minority interest balance was zero at each
date. Lewis Street's net loss after minority  interest amounted to approximately
$111,000,  $101,000  and  $100,000 for the 2002,  2001,  and 2000 Fiscal  Years,
respectively.

                                       77
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003

b) Leases

One of the  subsidiary  partnerships  is leasing the land on which its apartment
complex is located,  for a term of 50 years, which commenced in August 1996, and
monthly rent payments of $1,449. Estimated future minimum payments due under the
terms of the lease are as follows:
<TABLE>
<CAPTION>

<S>                         <C>
2003                        $   36,587
2004                            21,252
2005                            21,252
2006                            21,252
2007                            21,252
Thereafter                     828,828
                            ----------
                            $  950,423
                            ==========
</TABLE>

As of December 31, 2002, the subsidiary  partnership was in default on the lease
agreement. For the year ended December 31, 2002, $12,823 has been paid under the
terms of the lease and $15,335 remains payable.

c) Uninsured Cash and Cash Equivalents

The Partnership  maintains its cash and cash  equivalents in various banks.  The
accounts  at  each  bank  are  guaranteed  by  the  Federal  Deposit   Insurance
Corporation  up to $100,000.  Uninsured cash and cash  equivalents  approximated
$77,000 at March 31, 2003.

d) Other

The  Partnership and BACs holders began to recognize Tax Credits with respect to
a Property when the Credit Period for such  Property  commenced.  Because of the
time required for the  acquisition,  completion and rent-up of  Properties,  the
amount of Tax  Credits  per BAC have  gradually  increased  over the first three
years of the  Partnership.  Tax Credits not  recognized in the first three years
will be recognized  in the 11th through 13th years.  The  Partnership  generated
$5,683,279, $5,683,279 and $5,682,911 Tax Credits during the 2002, 2001 and 2000
tax years, respectively.

                                       78
<PAGE>

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

None

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

The  Partnership  has no  directors  or executive  officers.  The  Partnership's
affairs are managed and controlled by the General Partner.

In December 2002, Charter Mortgage Acceptance Company  ("CharterMac"),  which is
also managed by an affiliate of Related  Capital  Company,  announced a proposed
acquisition of Related  Capital  Company,  an affiliate of the General  Partner.
Pursuant  to the  proposed  acquisition,  CharterMac  will  acquire  controlling
interests in the general partner of the General Partner. This acquisition is not
anticipated to affect the Partnership or its day-to-day operations as management
of the General Partner will not change.

Certain information concerning the directors and executive officers of RIAI III,
the sole general partner of the General Partner, is set forth below.

Name                                Position
----                                --------

Stephen M. Ross                     Director

Alan P. Hirmes                      President

Stuart J. Boesky                    Senior Vice President

Marc D. Schnitzer                   Vice President

Denise L. Kiley                     Vice President

Glenn F. Hopps                      Treasurer

Teresa Wicelinski                   Secretary

STEPHEN M. ROSS, 63, the President,  a Director and a shareholder of The Related
Realty Group, Inc., the General Partner of The Related Companies, L.P ("TRCLP").
He graduated from the University of Michigan  School of Business  Administration
with a Bachelor of Science degree and from Wayne State University  School of Law
with a Juris Doctor  degree.  Mr. Ross then  received a Master of Laws degree in
taxation from New York  University  School of Law. He joined the accounting firm
of Coopers & Lybrand in Detroit as a tax specialist and later moved to New York,
where he worked for two large Wall Street investment banking firms in their real
estate and corporate  finance  departments.  Mr. Ross formed the  predecessor of
TRCLP  in  1972  to  develop,   manage,   finance  and  acquire  subsidized  and
conventional  apartment  developments.  Mr.  Ross  also  serves  on the Board of
Trustees of Charter Municipal Mortgage Acceptance Company.

ALAN P. HIRMES,  48, has been a Certified  Public  Accountant  in New York since
1978.  Prior to joining  Related in October  1983,  Mr.  Hirmes was  employed by
Weiner & Co., Certified Public Accountants.  Mr. Hirmes is also a Vice President
of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts

                                       79
<PAGE>

degree.  Mr.  Hirmes also  serves on the Board of Trustees of Charter  Municipal
Mortgage Acceptance Company and American Mortgage Acceptance Company.

STUART J. BOESKY,  47,  practiced  real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984, Mr. Boesky practiced law with the Boston law firm of
Kaye Fialkow Richard & Rothstein (which subsequently merged with Strook & Strook
& Lavan LLP) and from 1978 to 1980 was a consultant  specializing in real estate
at the  accounting  firm of  Laventhol  & Horwath.  Mr.  Boesky  graduated  from
Michigan  State  University  with a Bachelor of Arts degree and from Wayne State
School of Law with a Juris  Doctor  degree.  He then  received  a Master of Laws
degree in Taxation from Boston  University School of Law. Mr. Boesky also serves
on the Board of Trustees of Charter Municipal  Mortgage  Acceptance  Company and
American Mortgage Acceptance Company.

MARC D. SCHNITZER,  42, is responsible both for financial  restructuring of real
estate properties and directing Related's  acquisitions of properties generating
Housing Tax Credits. Mr. Schnitzer received a Masters of Business Administration
from The Wharton  School of the  University  of  Pennsylvania  in December  1987
before  joining  Related in January  1988.  From 1983 to January  1986, he was a
financial  analyst for the First Boston  Corporation in New York. Mr.  Schnitzer
graduated summa cum laude with a Bachelor of Science in Business  Administration
from the School of Management at Boston University in May 1983.

DENISE L. KILEY,  43, is responsible  for overseeing the due diligence and asset
management of all multifamily  residential  properties invested in RCC sponsored
corporate, public and private equity and debt funds. Prior to joining Related in
1990,  Ms.  Kiley  had  experience  acquiring,   financing  and  asset  managing
multifamily  residential  properties.  From 1981 through 1985 she was an auditor
with Price Waterhouse.  Ms. Kiley holds a Bachelor of Science in Accounting from
Boston College.

GLENN F. HOPPS,  40, joined Related in December 1990, and prior to that date was
employed  by Marks  Shron &  Company  and  Weissbarth,  Altman  and  Michaelson,
certified public accountants. Mr. Hopps graduated from New York State University
at Albany with a Bachelor of Science Degree in Accounting.

TERESA  WICELINSKI,  37, joined Related in June 1992, and prior to that date was
employed  by  Friedman,  Alpren  &  Green,  certified  public  accountants.  Ms.
Wicelinski  graduated  from Pace  University  with a Bachelor  of Arts Degree in
Accounting.

Item 11. Executive Compensation.

The  Partnership has no officers or directors.  The Partnership  does not pay or
accrue  any fees,  salaries  or other  forms of  compensation  to  directors  or
officers of the General Partner for their services.  However, under the terms of
the Partnership Agreement, the Partnership has entered into certain arrangements
with the General Partner and its affiliates,  which provide for  compensation to
be paid to the General Partner and its  affiliates.  Such  arrangements  include
(but are not limited to)  agreements  to pay  nonrecurring  Acquisition  Fees, a
nonaccountable   Acquisition   Expense   allowance,   an   accountable   expense
reimbursement  and  Subordinated  Disposition Fees to the General Partner and/or
its affiliates.  In addition,  the General Partner is entitled to a subordinated
interest in Cash from Sales or Financings  and a 1% interest in Net Income,  Net
Loss,  Distributions  of Adjusted  Cash from  Operations  and Cash from Sales or
Financings.  Certain  directors  and  officers  of the General  Partner  receive
compensation from the General Partner and its affiliates for services  performed
for various  affiliated  entities which may include  services  performed for the
Partnership.  The maximum annual partnership  management fee paid to the General

                                       80
<PAGE>

Partner is 0.5% of invested  assets.  See Note 8 to the Financial  Statements in
Item 8 above, which is incorporated herein by reference.

Tabular information concerning salaries, bonuses and other types of compensation
payable to executive  officers has not been included in this annual  report.  As
noted  above,  the  Partnership  has  no  executive  officers.   The  levels  of
compensation  payable to the General Partner and/or its affiliates is limited by
the terms of the Partnership  Agreement and may not be increased  therefrom on a
discretionary basis.

Item 12. Security  Ownership of Certain  Beneficial Owners
and Management.
<TABLE>
<CAPTION>

                      Name and Address of     Amount and Nature of           Percentage
Title of Class        Beneficial Ownership    Beneficial Ownership            of Class
--------------        --------------------    --------------------           ----------
<S>                   <C>                     <C>                              <C>
General Partnership   Related Independence    $1,000 capital contribution      100%
Interest in the       Associates III L.P.     -directly owned
Partnership           625 Madison Avenue
                      New York, NY 10022
</TABLE>

Independence  SLP III L.P., a limited  partnership  whose general partner is the
general  partner of the General Partner of the Partnership and which acts as the
special  limited  partner  of  each  Local  Partnership,  holds  a .01%  limited
partnership  interest  in each Local  Partnership.  See Note 8 to the  Financial
Statements  in  Item 8  above,  which  information  is  incorporated  herein  by
reference   thereto.   The  following  table  sets  forth  the  number  of  BACs
beneficially  owned,  as of June 2, 2003,  by (i) each BACs holder  known to the
Partnership  to be a  beneficial  owner of more than 5% of the  BACs,  (ii) each
director and executive officer of the general partner of the General Partner and
(iii) the directors and executive officers of the general partner of the General
Partner as a group.  Unless  otherwise  noted,  all BACs are owned directly with
sole voting and dispositive powers.

Except as set forth  below,  no  person  is known by the  Partnership  to be the
beneficial owner of more than five percent of the Limited Partnership  Interests
and/or BACs; and neither the General  Partner nor any director or officer of the
General Partner beneficially owns any Limited Partnership Interests or BACs.

                                       81
<PAGE>
<TABLE>
<CAPTION>
                                         Amount and Nature of
Name of Beneficial Owner (1)             Beneficial Ownership         Percent of Class
------------------------                 --------------------         ----------------
<S>                                      <C>                                 <C>
Lehigh Tax Credit Partners, Inc.         3,242.94 (2) (3)                    7.5%

J. Michael Fried                         3,242.94 (2) (3)                    7.5%

Alan P. Hirmes                           3,242.94 (2) (3)                    7.5%

Stuart J. Boesky                         3,242.94 (2) (3)                    7.5%

Stephen M. Ross                          3,242.94 (2) (3)                    7.5%

Marc D. Schnitzer                        3,242.94 (2) (3)                    7.5%

Denise L. Kiley                          3,242.94 (2) (3)                    7.5%

Glenn F. Hopps                           -                                     -

Teresa Wicelinski                        -                                     -

All directors and executive officers     3,242.94 (2) (3)                    7.5%
of the general partner of the
Related General Partner as a group
(nine persons)
</TABLE>

(1) The address for each of the persons in the table is 625 Madison Avenue,  New
York, New York 10022.

(2) As set forth in Schedule 13D filed by Lehigh Tax Credit  Partners III L.L.C.
("Lehigh III") and Lehigh Tax Credit Partners,  Inc., (the "Managing Member") on
January 25, 1999 with the Securities and Exchange  Commission (the "Commission")
and pursuant to a letter  agreement dated October 6, 1998 among the Partnership,
Lehigh III and the General  Partner  (the  "Standstill  Agreement"),  Lehigh III
agreed that, prior to October 6, 2008 (the  "Standstill  Expiration  Date"),  it
will not and it will  cause  certain  affiliates  not to (i) seek to  propose to
enter  into,  directly  or  indirectly,  any  merger,  consolidation,   business
combination,  sale or acquisition of assets,  liquidation,  dissolution or other
similar  transaction  involving the  Partnership,  (ii) form,  join or otherwise
participate  in a "group"  (within  the meaning of Section 13 (d)(3) of the Act)
with  respect to any voting  securities  of the  Partnership,  except that those
affiliates bound by the Standstill Agreement will not be deemed to have violated
it and  formed a "group"  solely by acting  in  accordance  with the  Standstill
Agreement,  (iii)  disclose  in writing to any third  party  intention,  plan or
arrangement  inconsistent  with the terms of the Standstill  Agreement,  or (iv)
loan money to,  advise,  assist or encourage any person in  connection  with any
action inconsistent with the terms of the Standstill Agreement,  Lehigh III also
agreed to vote its BACs in the same  manner as a  majority  of all  voting  BACs
holders; provided, however, Lehigh is entitled to vote its BACs as it determines
with  regard to any  proposal  (i) to remove  the  General  Partner as a general
partner  of the  Partnership  or (ii)  concerning  the  reduction  of any  fees,
profits,  distributions or allocations for the benefit of the General Partner or
its  affiliates.  The addresses of each of the  Partnership,  Lehigh III and the
General Partner is 625 Madison Avenue, New York, New York 10022.

(3) Each such party serves as a director and  executive  officer of the Managing
Member and owns an equity interest therein except J. Michael Fried who owns only
an economic interest.

                                       82
<PAGE>

Item 13. Certain Relationships and Related Transactions.

The  Partnership  has and will continue to have certain  relationships  with the
General Partner and its  affiliates,  as discussed in Item 11 and also Note 8 to
the  Financial  Statements  in Item 8 above,  which are  incorporated  herein by
reference  thereto.  However,  there have been no direct financial  transactions
between the Partnership and the directors and officers of the General Partner.

Item 14.  Controls and Procedures

The  Principal  Executive  Officer and  Principal  Financial  Officer of Related
Independence  Associates III Inc., the general  partner of Related  Independence
Associates  III L.P.,  which is the  general  partner  of the  Partnership,  has
evaluated the Partnership's  disclosure  controls and procedures relating to the
Partnership's annual report on Form 10-K for the period ending March 31, 2003 as
filed with the Securities  and Exchange  Commission and has judged such controls
and procedures to be effective as of March 31, 2003 (the "Evaluation Date").

There have been no  significant  changes in the  internal  controls  or in other
factors  that could  significantly  affect  internal  controls  relating  to the
Partnership since the Evaluation Date.

                                       83
<PAGE>

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
<TABLE>
<CAPTION>
                                                                                Sequential
                                                                                   Page
                                                                                ----------
<S>                                                                                 <C>
(a) 1.   Consolidated Financial Statements

         Independent Auditors' Report                                               16

         Consolidated Balance Sheets at March 31, 2003 and 2002                     64

         Consolidated Statements of Operations for the Years Ended March 31,
         2003, 2002 and 2001                                                        65

         Consolidated Statements of Changes in Partners' Capital (Deficit) for
         the Years Ended March  31, 2003, 2002 and 2001                             66

         Consolidated Statements of Cash Flows for the Years Ended March 31,
         2003, 2002 and 2001                                                        67

         Notes to Consolidated Financial Statements                                 69

(a) 2.   Consolidated Financial Statement Schedules
         ------------------------------------------
         Independent Auditors' Report                                               92

         Schedule I - Condensed Financial Information of Registrant                 93

         Schedule III - Real Estate and Accumulated Depreciation                    96

         All other schedules have been omitted because they are not required
         or because the required information is contained in the financial state-
         ments or notes thereto.

(a) 3.   Exhibits
         --------

(3A)     Agreement of Limited Partnership of Independence Tax Credit Plus
         L.P. III as adopted on December 23, 1993*

(3B)     Form of Amended and Restated Agreement of Limited Partnership of
         Independence Tax Credit Plus L.P. III, attached to the Prospectus as
         Exhibit A**

(3C)     Certificate of Limited Partnership of Independence Tax Credit Plus
         L.P. III as filed on December 23, 1993*

(10A)    Form of Subscription Agreement attached to the Prospectus as Exhibit
         B**

(10B)    Escrow Agreement between Independence Tax Credit Plus L.P. III and
         Bankers Trust Company*

(10C)    Form of Purchase and Sales Agreement pertaining to the Partnership's
         acquisition of Local Partnership Interests*
</TABLE>

                                       84
<PAGE>
Item 15. Exhibits,  Financial  Statement  Schedules,  and  Reports  on Form 8-K
         (continued)
<TABLE>
<CAPTION>
                                                                                Sequential
                                                                                   Page
                                                                                ----------
<S>                                                                                 <C>
(10D)    Form of Amended and Restated
         Agreement of Limited Partnership  of
         Local Partnerships*

(21)     Subsidiaries of the Registrant                                             86

         *Incorporated herein as an exhibit by reference to exhibits filed with
         Post-Effective Amendment No. 4 to the Registration Statement on
         Form S-11 {Registration No. 33-37704}

         **Incorporated herein as an exhibit by reference to exhibits filed with
         Post-Effective Amendment No.8 to the Registration Statement on
         Form S-11 {Registration No. 33-37704}

99.1     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002.                          91

(b)      Reports on Form 8-K
         -------------------

         No reports on Form 8-K were filed during the quarter.
</TABLE>

                                       85
<PAGE>
Item 15. Exhibits,  Financial  Statement  Schedules,  and  Reports  on Form 8-K
         (continued)
<TABLE>
<CAPTION>
                                                                   Jurisdiction
(c)      Subsidiaries of the Registrant (Exhibit 21)             of Organization
         ------------------------------                          ---------------
         <S>                                                            <C>
         Edward Hotel Limited Partnership                               CA
         Pacific-East L.P.                                              NY
         Overtown Development Group, Ltd.                               FL
         Sumpter Commons Associates, L.P.                               NY
         Park Housing Limited Partnership                               CT
         Livingston Manor Urban Renewal Associates, L.P.                NJ
         Jefferis Square Housing Partnership, L.P.                      PA
         2301 First Avenue Limited Partnership                          NY
         Lewis Street Limited Partnership                               NY
         Savannah Park Housing Limited Partnership                      DC
         Brannon Group, L.C.                                            FL
         Mansion Court Phase II Venture                                 PA
         Primm Place Partners, L.P.                                     MI
         BK-9-A Partners L.P.                                           NY
         BK-10K Partners L.P.                                           NY
         Aspen-Olive Associates                                         PA
         West Mill Creek Associates, III L.P.                           PA
         Universal Court Associates                                     PA
         New Zion Apartments                                            LA
         Dreitzer House                                                 NY

(d) Not applicable
</TABLE>


                                       86
<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.


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                      -------------------------------------
                                  (Registrant)



                             By:  RELATED INDEPENDENCE ASSOCIATES III L.P.,
                                  General Partner


                                  By: RELATED INDEPENDENCE ASSOCIATES III INC.,
                                      General Partner



Date: June 25, 2003          By:  /s/ Alan P. Hirmes
                                  ------------------
                                  Alan P. Hirmes
                                  President
                                  (principal executive and financial officer)

                                       87
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated:


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


                        President
/s/ Alan P. Hirmes      (principal executive and
------------------      financial officer) of Related
Alan P. Hirmes          Independence  Associates  III Inc.      June 25, 2003






/s/ Glenn F. Hopps      Treasurer (principal
------------------      accounting officer) of Related
Glenn F. Hopps          Independence Associates III Inc.        June 25, 2003





/s/ Stephen M. Ross
-------------------     Director of Related
Stephen M. Ross         Independence  Associates  III Inc.      June 25, 2003

                                       88
<PAGE>

                                  CERTIFICATION


I, Alan P. Hirmes,  Principal  Executive Officer and Principal Financial Officer
of Related  Independence  Associates III Inc.  ("RIAI"),  the general partner of
Related Independence  Associates III L.P. (the "General Partner"),  which is the
general  partner of Independence  Tax Credit Plus L.P. III (the  "Partnership"),
hereby certify that:

     1.  I have  reviewed  this  annual  report on Form 10-K for the year  ended
         March 31, 2003 of the Partnership;

     2.  Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         in order to make the  statements  made,  in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this annual report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the Partnership as of, and for, the periods  presented in
         this annual report;

     4.  I am responsible for establishing and maintaining  disclosure  controls
         and  procedures  (as defined in Exchange  Act Rules 13a-14 and 15-d-14)
         for the Partnership and I have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
         material  information  relating  to  the  Partnership,   including  its
         consolidated subsidiaries,  is made known to me, by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the Partnership's disclosure controls
         and procedures as of March 31, 2003 (the "Evaluation Date"); and

                                       89
<PAGE>

         c)  presented  in  this  annual   report  my   conclusions   about  the
         effectiveness  of the disclosure  controls and  procedures  based on my
         evaluation as of the Evaluation Date;

     5.  I  have  disclosed,   based  on  my  most  recent  evaluation,  to  the
         Partnership's auditors and to the board of directors of RIAI:

         a) all significant  deficiencies in the design or operation of internal
         controls  which could  adversely  affect the  Partnership's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified for the  Partnership's  auditors any material  weaknesses in
         internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in the  Partnership's
         internal controls; and

     6.  I have  indicated  in this  annual  report  whether  or not there  were
         significant changes in internal controls or in other factors that could
         significantly  affect internal  controls  subsequent to the date of our
         most recent evaluation, including any corrective actions with regard to
         significant deficiencies and material weaknesses.



                           By: /s/ Alan P. Hirmes
                               ------------------
                               Alan P. Hirmes
                               Principal Executive Officer and
                               Principal Financial Officer
                               June 25, 2003

                                       90
<PAGE>

                                                                    Exhibit 99.1


                            CERTIFICATION PURSUANT TO
                             18.U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection  with the Annual Report of  Independence  Tax Credit Plus L.P. III
(the "Partnership") on Form 10-K for the year ended March 31, 2003 as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Alan P. Hirmes,  Principal  Executive Officer and Principal Financial Officer of
Related   Independence   Associates  III  Inc.  a  general  partner  of  Related
Independence  Associates  III L.P.,  the  general  partner  of the  Partnership,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:


       (1) The Report fully complies with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and


       (2) The  information  contained  in the Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Partnership.



By:  /s/ Alan P. Hirmes
     ------------------
     Alan P. Hirmes
     Principal Executive Officer and Principal Financial Officer
     June 25, 2003

                                       91
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


To the Partners of
Independence Tax Credit Plus L.P. III and Subsidiaries
(A Delaware Limited Partnership)



In  connection  with our  audits of the  consolidated  financial  statements  of
Independence  Tax Credit Plus L.P.  III and  Subsidiaries  (A  Delaware  Limited
Partnership) included in the Form 10-K as presented in our opinion dated May 30,
2003 on page 16,  and  based on the  reports  of other  auditors,  we have  also
audited  supporting  Schedule  I for the 2002,  2001 and 2000  Fiscal  Years and
Schedule III as of March 31, 2003.  In our opinion,  and based on the reports of
the other auditors,  these consolidated  schedules present fairly,  when read in
conjunction with the related consolidated  financial  statements,  the financial
data required to be set forth therein.


TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
May 30, 2003

                                       92
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              (Not Including Consolidated Subsidiary Partnerships)
<TABLE>
<CAPTION>
                            CONDENSED BALANCE SHEETS


                                     ASSETS

                                                      March 31,
                                              -------------------------
                                                  2003          2002
                                              -----------   -----------
<S>                                           <C>           <C>
Cash and cash equivalents                     $    35,268   $    28,295
Investment in subsidiary partnerships          21,998,761    24,334,698
Cash held in escrow                               297,142       297,142
                                              -----------   -----------

Total assets                                  $22,331,171   $24,660,135
                                              ===========   ===========


                        LIABILITIES AND PARTNERS' CAPITAL


Due to general partner and affiliates         $ 2,820,240   $ 2,246,663
Other liabilities                                   9,556         4,775
                                              -----------   -----------

Total liabilities                               2,829,796     2,251,438

Partners' capital                              19,501,375    22,408,697
                                              -----------   -----------

Total liabilities and partners' capital       $22,331,171   $24,660,135
                                              ===========   ===========
</TABLE>

Investment in subsidiary partnerships are recorded in accordance with the equity
method of  accounting,  wherein  the  investments  are not  reduced  below zero.
Accordingly,  partners'  capital on the consolidated  balance sheets will differ
from partners' capital shown above.

                                       93
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              (Not Including Consolidated Subsidiary Partnerships)


                       CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                       Year Ended March 31,
                                            -----------------------------------------
                                                2003           2002           2001
                                            -----------    -----------    -----------
<S>                                         <C>            <C>            <C>
Revenues

Interest income                             $         0    $    13,583    $    65,441
Other                                               350          4,873         42,315
                                            -----------    -----------    -----------

Total revenues                                      350         18,456        107,756
                                            -----------    -----------    -----------

Expenses

Administrative and management                   119,553        202,027        208,900
Administrative and management-
  related parties                               480,168        482,562        520,118
                                            -----------    -----------    -----------

Total expenses                                  599,721        684,589        729,018
                                            -----------    -----------    -----------

Loss from operations                           (599,371)      (666,133)      (621,262)

Equity in loss of subsidiary partnerships    (2,307,951)    (2,674,427)    (2,188,646)
                                            -----------    -----------    -----------

Net loss                                    $(2,907,322)   $(3,340,560)   $(2,809,908)
                                            ===========    ===========    ===========
</TABLE>

                                       94
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                           Year Ended March 31,
                                                -----------------------------------------
                                                    2003           2002           2001
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
Cash flows from operating activities:

Net loss                                        $(2,907,322)   $(3,340,560)   $(2,809,908)
                                                -----------    -----------    -----------

Adjustments to reconcile net loss to net cash
used in operating activities:

Equity in loss of subsidiary partnerships         2,307,951      2,674,427      2,188,646
(Increase) decrease in assets:
Other assets                                              0              0         23,518

Increase (decrease) in liabilities:
Due to general partners and affiliates              573,577        595,684        522,317
Other liabilities                                     4,781           (833)          (759)
                                                -----------    -----------    -----------

Total adjustments                                 2,886,309      3,269,278      2,733,722
                                                -----------    -----------    -----------

Net cash used in operating
  activities                                        (21,013)       (71,282)       (76,186)
                                                -----------    -----------    -----------

Cash flows from investing activities:

Decrease in investments available-for-sale                0              0      1,300,000
Investment in subsidiary partnerships                     0     (1,466,822)    (1,322,065)
Distributions from subsidiary partnerships           27,986         27,710         40,312
Decrease in cash held in escrow                           0        100,000        290,536
                                                -----------    -----------    -----------

Net cash provided by (used in) investing
  activities                                         27,986     (1,339,112)       308,783
                                                -----------    -----------    -----------

Net increase (decrease) in cash and
  cash equivalents                                    6,973     (1,410,394)       232,597

Cash and cash equivalents, beginning of year         28,295      1,438,689      1,206,092
                                                -----------    -----------    -----------

Cash and cash equivalents, end of year          $    35,268    $    28,295    $ 1,438,689
                                                ===========    ===========    ===========
</TABLE>

                                       95
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2003
<TABLE>
<CAPTION>
                                                            Initial Cost to Partnership    Cost Capitalized
                                                           ----------------------------     Subsequent to
                                                                          Buildings and      Acquisition:
    Description                            Encumbrances       Land        Improvements      Improvements
-------------------                        ------------    -----------    -------------    ----------------
<S>                                        <C>             <C>            <C>                <C>
Apartment Complexes

Edward Hotel Limited Partnership           $  2,399,459    $   275,000    $     591,240      $  2,574,454
  Los Angeles, CA
Pacific East, L.P.                            2,077,798          1,950        3,125,584           163,444
  Brooklyn, NY
Overtown Development Group, Ltd.              1,249,808         52,284        2,627,099           162,091
  Miami, FL
Sumpter Commons Associates, L.P.              1,220,380            500        1,862,916            46,663
Park Housing Limited Partnership                837,407          5,000        2,343,351            64,880
Livingston Manor Urban Renewal                3,080,000        119,988        7,047,532           610,173
  Associates, L.P.
Jefferis Square Housing                       1,900,000         55,158                0         4,606,784
  Partnership, L.P.
2301 First Avenue Limited Partnership         5,240,161         64,350        5,818,269           159,285
Lewis Street Limited Partnership              1,600,000          7,000                0         2,766,263
Savannah Park Housing Limited                   802,554              0        2,049,888         2,059,271
  Partnership
Brannon Group, L.C.                           4,496,557        380,000        2,598,402         5,468,040
Independence Tax Credit Fund L.P.             2,510,527          1,732          339,661         6,274,319
  (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)
Primm Place Partners, L.P.                    3,965,000        168,258                0         6,397,283
BK-9-A Partners L.P.                            964,326              0        1,517,313            56,847
BK-10K Partners L.P.                          1,114,042         11,000        1,637,762            50,286
Westmill Creek Associates III L.P.            2,896,252         37,031        6,922,563            17,364
Universal Court Associates                    1,650,000         31,024          279,220         4,660,538
New Zion Apartments                           1,034,853         20,000        2,688,770            12,362
Dreitzer House                                4,275,000              5                0         6,722,063
                                           ------------    -----------    -------------      ------------

                                           $ 43,314,124    $ 1,230,280    $  41,449,570      $ 42,872,410
                                           ============    ===========    =============      ============

<CAPTION>
                                      Gross Amount at which Carried At Close of Period
                                      ------------------------------------------------
                                                     Buildings and                    Accumulated
    Description                          Land        Improvements        Total        Depreciation
-------------------                   -----------    -------------    ------------    ------------
<S>                                   <C>            <C>              <C>             <C>
Apartment Complexes

Edward Hotel Limited Partnership      $   281,123    $   3,159,571    $  3,440,694    $    828,692
  Los Angeles, CA
Pacific East, L.P.                          8,075        3,282,903       3,290,978       1,075,379
  Brooklyn, NY
Overtown Development Group, Ltd.           58,408        2,783,066       2,841,474         602,900
  Miami, FL
Sumpter Commons Associates, L.P.            3,673        1,906,406       1,910,079         509,466
Park Housing Limited Partnership            8,173        2,405,058       2,413,231         603,823
Livingston Manor Urban Renewal            123,161        7,654,532       7,777,693       1,389,239
  Associates, L.P.
Jefferis Square Housing                    39,347        4,622,595       4,661,942         816,200
  Partnership, L.P.
2301 First Avenue Limited Partnership      67,523        5,974,381       6,041,904       1,780,389
Lewis Street Limited Partnership           10,173        2,763,090       2,773,263         725,948
Savannah Park Housing Limited               3,173        4,105,986       4,109,159         854,118
  Partnership
Brannon Group, L.C.                       383,173        8,063,269       8,446,442       1,098,748
Independence Tax Credit Fund L.P.           5,123        6,610,589       6,615,712       1,019,601
  (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)
Primm Place Partners, L.P.                 67,777        6,497,764       6,565,541       1,045,260
BK-9-A Partners L.P.                        3,173        1,570,987       1,574,160         303,346
BK-10K Partners L.P.                       14,176        1,684,872       1,699,048         334,225
Westmill Creek Associates III L.P.         37,649        6,939,309       6,976,958       1,887,768
Universal Court Associates                 31,642        4,939,140       4,970,782         572,174
New Zion Apartments                        20,618        2,700,514       2,721,132         599,738
Dreitzer House                                623        6,721,445       6,722,068         971,069
                                      -----------    -------------    ------------    ------------

                                      $ 1,166,783    $  84,385,477    $ 85,552,260    $ 17,018,083
                                      ===========    =============    ============    ============

<CAPTION>
                                                                     Life on which
                                                                    Depreciation in
                                         Year of                     Latest Income
                                      Construction/      Date        Statements are
    Description                        Renovation      Acquired     Computed (a)(b)
-------------------                   -------------    ---------    ---------------
<S>                                     <C>            <C>             <C>
Apartment Complexes

Edward Hotel Limited Partnership        1994-95        Nov. 1994       27.5 years
  Los Angeles, CA
Pacific East, L.P.                      1994-95        Dec. 1994       27.5 years
  Brooklyn, NY
Overtown Development Group, Ltd.        1994-95        Dec. 1994       40 years
  Miami, FL
Sumpter Commons Associates, L.P.        1995-96        Apr. 1995       27.5 years
Park Housing Limited Partnership        1995-96        May 1995        27.5 years
Livingston Manor Urban Renewal          1995-96        June 1995       15-40 years
  Associates, L.P.
Jefferis Square Housing                 1995-96        June 1995       20 - 40 years
  Partnership, L.P.
2301 First Avenue Limited Partnership   1995-96        Aug. 1995       27.5 years
Lewis Street Limited Partnership        1995-96        Oct. 1995       27.5 years
Savannah Park Housing Limited           1995-96        Oct. 1995       27.5 years
  Partnership
Brannon Group, L.C.                     1995-96        Dec. 1995       40 years
Independence Tax Credit Fund L.P.       1995-96        Dec. 1995       20 - 40 years
  (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)
Primm Place Partners, L.P.              1995-96        Dec. 1995       10 - 40 years
BK-9-A Partners L.P.                    1995-96        Dec. 1995       40 years
BK-10K Partners L.P.                    1995-96        Dec. 1995       40 years
Westmill Creek Associates III L.P.      1997-98        Dec. 1996       27.5 years
Universal Court Associates              1997-98        Apr. 1997       20-40 years
New Zion Apartments                     1997-98        Nov. 1997       15 - 27.5 years
Dreitzer House                          1997-99        Dec. 1997       27.5 years

</TABLE>

(a)  Depreciation is computed using primarily the straight-line  method over the
     estimated useful lives determined by the Partnership date of acquisition.

(b)  Personal property is depreciated primarily by the straight-line method over
     the estimated useful lives of 5 - 12 years.

                                       96
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2003
                                   (continued)
<TABLE>
<CAPTION>
                                        Cost of Property and Equipment                    Accumulated Depreciation
                                 --------------------------------------------   -------------------------------------------
                                                                     Year Ended March 31,
                                 ------------------------------------------------------------------------------------------
                                     2003            2002            2001           2003            2002           2001
                                 ------------    ------------    ------------   ------------    ------------   ------------
<S>                              <C>             <C>             <C>            <C>             <C>            <C>
Balance at beginning of period   $ 85,943,904    $ 85,983,887    $ 85,827,948   $ 14,367,307    $ 11,702,991   $  8,939,838
Additions during period:
  Improvements                         41,219          42,332         155,939
  Depreciation expense                                                             2,700,555       2,664,316      2,763,153
Reductions during period:
  Dispositions                       (432,863)        (82,315)              0        (49,779)              0              0
                                 ------------    ------------    ------------   ------------    ------------   ------------

Balance at close of period       $ 85,552,260    $ 85,943,904    $ 85,983,887   $ 17,018,083    $ 14,367,307   $ 11,702,991
                                 ============    ============    ============   ============    ============   ============
</TABLE>

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

                                       97