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, 2004

                                       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, 2003 was
$17,353,000, 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 November 17, 2003,  CharterMac  acquired RCC, which is the
indirect parent of RCC Manager LLC, the sole  shareholder of RIAI III.  Pursuant
to the acquisition,  CharterMac  acquired  controlling  interests in the General
Partner.  This  acquisition  did not affect the  Partnership  or its  day-to-day
operations,  as the majority of the General  Partner's  management team remained
unchanged.

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, 2004, the Partnership had acquired  interests in twenty
Local Partnerships.  As of March 31, 2004, 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 $326,000
remains to be contributed to the Local  Partnerships  for payment by them to the
original sellers of the Properties (including  approximately $132,000 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.

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.



                                       2
<PAGE>


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, 2004, 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
any encumbrances  affecting the properties,  may be found in Schedule III to the
financial statements which are included herein.



                                       3
<PAGE>



                           Local Partnership Schedule
                           --------------------------
<TABLE>
<CAPTION>

Name and Location                                         % of Units Occupied  at  May 1,
                                                       ------------------------------------
(Number of Units)                     Date Acquired    2004    2003    2002    2001    2000
-----------------                     -------------    ----    ----    ----    ----    ----
<S>                                   <C>              <C>     <C>     <C>     <C>     <C>
Edward Hotel Limited Partnership
  Los Angeles, CA (47)                November 1994     96%     91%     91%    100%    100%

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

Overtown Development Group, Ltd.
  Miami, FL (65)                      December 1994     72%     82%     91%     89%     79%

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

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

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

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

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

Lewis Street L.P.                     October 1995      84%    100%     91%     88%     91%
  Buffalo, NY (32)

Savannah Park Housing
  Limited Partnership                 October 1995      89%     75%     86%     84%     84%
  Washington, DC                                                                       (64)

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

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

Primm Place Partners, L.P.            December 1995     99%     96%     94%     98%    100%
  St. Louis, MI (128)

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

BK-10K Partners L.P.                  December 1995    100%     95%     90%     96%     91%
  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%     99%    100%    100%

</TABLE>


                                       4
<PAGE>

                           Local Partnership Schedule
                           --------------------------
                                  (continued)
<TABLE>
<CAPTION>

Name and Location                                         % of Units Occupied  at  May 1,
                                                       ------------------------------------
(Number of Units)                     Date Acquired    2004    2003    2002    2001    2000
-----------------                     -------------    ----    ----    ----    ----    ----
<S>                                   <C>              <C>     <C>     <C>     <C>     <C>
Universal Court Associates
  Philadelphia, PA (32)               April 1997        88%     97%    100%    100%     94%

New Zion Apartments
  Shreveport, LA (100)                November 1997     96%     95%     88%    100%     99%

Dreitzer House
  New York, NY (32)                   December 1997    100%    100%    100%     97%    100%

</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.

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
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, 2004,  2003 and
2002,  the  gross  amounts  of  the  Operating  Deficit   Guarantees   aggregate
approximately  $5,129,000, of which $3,273,000 has expired as of March 31, 2004.
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 have been required to undertake an
obligation  to  comply  with a Rent-Up  Guaranty  Agreement,  whereby  the Local
General Partner has agreed 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 has deemed it appropriate,  the obligations of a


                                       5
<PAGE>

Local General Partner under the Development  Deficit,  Operating  Deficit and/or
Rent-Up  Guarantees  have been  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, 2004, 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.

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, 2004, the Partnership has approximately  2,531 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, 2004. The Partnership
does not anticipate  providing cash distributions to its BACs holders other than
from net refinancing or sales proceeds.



                                       6
<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                                 2004            2003            2002            2001            2000
----------                             ------------    ------------    ------------    ------------    ------------
<S>                                    <C>             <C>             <C>             <C>             <C>
Revenues                               $  6,719,811    $  6,408,871    $  6,452,014    $  6,332,726    $  5,873,889


Operating expenses                      (10,014,054)     (9,886,082)    (10,465,208)     (9,597,628)     (9,357,207)
                                       ------------    ------------    ------------    ------------    ------------

Net loss before minority interest        (3,294,243)     (3,477,211)     (4,013,194)     (3,264,902)     (3,483,318)

Minority interest in loss of sub-
  sidiary partnerships                      281,138         293,278         670,493          21,134           9,131
                                       ------------    ------------    ------------    ------------    ------------

Net loss                               $ (3,013,105)   $ (3,183,933)   $ (3,342,701)   $ (3,243,768)   $ (3,474,187)
                                       ============    ============    ============    ============    ============

Net loss per weighted average
  BAC                                  $     (68.67)   $     (72.56)   $     (76.18)   $     (73.93)   $     (79.18)
                                       ============    ============    ============    ============    ============

<CAPTION>
                                                                         March 31,
                                       ----------------------------------------------------------------------------
FINANCIAL POSITION                         2004            2003            2002            2001            2000
------------------                     ------------    ------------    ------------    ------------    ------------
<S>                                             <C>             <C>             <C>             <C>             <C>
Total assets                           $ 73,610,412    $ 76,223,243    $ 78,982,075    $ 82,660,313    $ 86,067,310
                                       ============    ============    ============    ============    ============

Total liabilities                      $ 55,499,430    $ 54,524,974    $ 53,786,549    $ 54,434,413    $ 54,433,977
                                       ============    ============    ============    ============    ============


Minority interest                      $  2,568,235    $  3,142,417    $  3,455,741    $  3,143,414    $  3,307,079
                                       ============    ============    ============    ============    ============

Total partners' capital                $ 15,542,747    $ 18,555,852    $ 21,739,785    $ 25,082,486    $ 28,326,254
                                       ============    ============    ============    ============    ============
</TABLE>

During the year ended March 31, 2004, 2003,  2002, 2001 and 2000,  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,
2004.


                                       7
<PAGE>



                  Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
                                                Quarter Ended
                           --------------------------------------------------------
                             June 30,    September 30,   December 31,    March 31,
OPERATIONS                     2003          2003            2003           2004
----------                 ------------   -----------    -----------    -----------
<S>                        <C>            <C>            <C>            <C>
Revenues                   $ 1,657,817    $ 1,623,365    $ 1,642,216    $ 1,796,413

Operating expenses          (2,405,829)    (2,411,472)    (2,367,015)    (2,829,738)
                           -----------    -----------    -----------    -----------

Loss before minor-
  ity interest                (748,012)      (788,107)      (724,799)    (1,033,325)

Minority interest in
  loss of subsidiaries          48,958         70,047         67,374         94,759
                           -----------    -----------    -----------    -----------

Net loss                   $  (699,054)   $  (718,060)   $  (657,425)   $  (938,566)
                           ===========    ===========    ===========    ===========

Net loss per
  weighted average
  BAC                           (15.93)        (16.37)        (14.98)        (21.39)
                           ===========    ===========    ===========    ===========
<CAPTION>
                                                Quarter Ended
                           --------------------------------------------------------
                             June 30,    September 30,   December 31,    March 31,
OPERATIONS                     2003          2003            2003           2004
----------                 ------------   -----------    -----------    -----------
<S>                        <C>            <C>            <C>            <C>
Revenues                   $ 1,558,925    $ 1,603,146    $ 1,594,588    $ 1,652,212

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

Loss before minor-
  ity interest                (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)
                           ===========    ===========    ===========    ===========

</TABLE>

                                       8
<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, 2004, 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
$326,000 remains to be contributed to the Local Partnerships for payment by them
to the original sellers of the Properties (not including  approximately $132,000
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,  2004,  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,  2004,  cash and cash  equivalents  decreased
approximately  $30,000.  This  decrease is due to  acquisition  of property  and
equipment  ($423,000),  principal  payments of  mortgage  notes  ($466,000),  an
increase  in  deferred  costs  ($37,000)  and a decrease  in  capitalization  of
consolidated  subsidiaries  attributable to minority  interest  $(293,000) which
exceeded cash provided by operating activities ($909,000), a net increase in due
to local  general  partners and  affiliates  relating to investing and financing
activities ($24,000) and a decrease in cash held in escrow relating to investing
activities ($257,000).  Included in the adjustments to reconcile the net loss to
cash  provided by operating  activities  is  depreciation  and  amortization  of
approximately $2,740,000.

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, 2004, 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, 2004,
2003 and 2002, the gross amounts of the Operating Deficit  Guarantees  aggregate
approximately  $5,129,000, of which $3,273,000 has expired as of March 31, 2004.
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.

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  $2,205,000 and $1,892,000 were accrued and unpaid as of March 31,
2004 and 2003,  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



                                       9
<PAGE>

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 value to the property on the market.  However,  such value  declines each
year and is not included in the financial statement carrying amount.

Tabular Disclosure of Contractual Obligations
---------------------------------------------

The following  table  summarizes the  Partnership's  commitments as of March 31,
2004 to make future  payments under its debt  agreements  and other  contractual
obligations.
<TABLE>
<CAPTION>
                                      Less
                                      than          1 - 3         3 -5        More than
                        Total        1 Year         Years         Years        5 Years
                     -----------   -----------   -----------   -----------   -----------
<S>                  <C>           <C>           <C>           <C>           <C>
Mortgage notes
  payable (a)        $42,847,861   $   597,329   $ 1,124,864   $ 1,311,576   $39,814,092
Land lease obliga-
  tions (b)              930,942        38,358        42,504        42,504       807,576
                     -----------   -----------   -----------   -----------   -----------

  Total              $43,778,803   $   635,687   $ 1,167,368   $ 1,354,080   $40,621,668
                     ===========   ===========   ===========   ===========   ===========
</TABLE>
(a)  The mortgage and construction  notes,  which are collateralized by land and
     buildings,  are payable in aggregate monthly  installments of approximately
     $93,000  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.

(b)  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, with monthly rent payments of $1,449.

Off Balance Sheet Arrangements
------------------------------

The Partnership has no off-balance sheet arrangements.

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

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

                                       10
<PAGE>

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

Property and  equipment  to be held and used are carried at cost which  includes
the purchase price,  acquisition fees and expenses, and any other costs incurred
in acquiring the  properties.  The cost of property and equipment is depreciated
over their estimated useful lives using accelerated and  straight-line  methods.
Expenditures  for repairs and  maintenance  are charged to expense as  incurred;
major  renewals  and  betterments  are  capitalized.  At the time  property  and
equipment  are  retired  or  otherwise  disposed  of,  the cost and  accumulated
depreciation  are  eliminated  from  the  assets  and  accumulated  depreciation
accounts  and the profit or loss on such  disposition  is reflected in earnings.
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, 2004, 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,  2004,  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 December 15, 2003.
The Partnership has not created any variable interest entities after January 31,
2003. In December 2003 the FASB redeliberated certain proposed modifications and
revised FIN 46 ("FIN 46 (R)").  The revised  provisions  are applicable no later
than the first reporting period ending after March 15, 2004. The adoption of FIN
46 and  FIN  46  (R)  is not  anticipated  to  have  a  material  impact  on the
Partnership's financial reporting and disclosures.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
changes the accounting for certain  financial  instruments  that, under previous
guidance,  could be classified as equity or "mezzanine" equity, by now requiring
those  instruments  to  be  classified  as  liabilities  (  or  assets  in  some
circumstances)  in the  Consolidated  Balance  Sheets.  Further,  SFAS  No.  150
requires  disclosure  regarding the terms of those  instruments  and  settlement
alternatives.  The  guidance in SFAS No. 150  generally  was  effective  for all
financial  instruments  entered  into or modified  after May 31,  2003,  and was
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The  Partnership  evaluated  SFAS No. 150 and determined  that it
does  not  have  an  impact  on  the  Partnership's   financial   reporting  and
disclosures.

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

The following is a summary of the results of operations of the  Partnership  for
the years ended March 31,  2004,  2003 and 2002 (the 2003,  2002 and 2001 Fiscal
Years).

The net loss for the 2003,  2002 and 2001 Fiscal  Years  aggregated  $3,013,105,
$3,183,933 and $3,342,701, respectively.


                                       11
<PAGE>

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 $5,683,281,
$5,683,279  and $5,683,279  Housing Tax Credits during the 2003,  2002 and 2001,
tax years, respectively.


2003 vs. 2002
-------------

Rental income increased approximately 4% for 2003 Fiscal Year as compared to the
2002 Fiscal Year, primarily due to rental rate increases.

Other  income  increased  approximately  $94,000  for the  2003  Fiscal  Year as
compared to the 2002 Fiscal Year. This increase was primarily due to an increase
in investment  income at one Local  Partnership and a loss on disposal of assets
which  was  offset by other  income in the 2002  Fiscal  Year at  another  Local
Partnership.

Repairs and  Maintenance  increased  approximately  $205,000 for the 2003 Fiscal
Year as  compared  to the 2002  Fiscal  Year,  primarily  due to an  increase in
carpentry  and  building  repairs  at two Local  Partnerships,  an  increase  in
maintenance  payroll at another Local Partnership and an increase in painting at
two other Local Partnerships.

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
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.

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 cause of  action  1998-755  filed in Erie
County  Supreme  Court 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.  On October 3, 2003, the Appellate  Division ruled in favor of
Lewis Street.  Lewis Street has been advised by the  plaintiff  that it does not
intend to pursue any further litigation.  The Partnership's  investment in Lewis
Street at March  31,  2004 and 2003 was  approximately  $529,000  and  $590,000,
respectively,  and the minority  interest  balance was zero at each date.  Lewis
Street's net loss after minority  interest  amounted to  approximately  $74,000,
$111,000 and $101,000 for the 2003, 2002, and 2001 Fiscal Years, respectively.



                                       12
<PAGE>


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.

The Partnership does not have any market risk sensitive instruments.



                                       13
<PAGE>



Item 8.  Financial Statements and Supplementary Data.
                                                                      Sequential
                                                                         Page
                                                                      ----------

(a) 1.   Consolidated Financial Statements

         Report of Independent Registered Public Accounting Firm          15

         Consolidated Balance Sheets at March 31, 2004 and 2003           58

         Consolidated Statements of Operations for the Years Ended
         March 31, 2004, 2003 and 2002                                    59

         Consolidated  Statements of Changes in Partners'  Capital
         (Deficit) for the Years Ended March 31, 2004,  2003 and
         2002                                                             60

         Consolidated Statements of Cash Flows for the Years Ended
         March 31, 2004, 2003 and 2002                                    61

         Notes to Consolidated Financial Statements                       63



                                       14
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------

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, 2004
and 2003,  and the related  consolidated  statements of  operations,  changes in
partners' capital (deficit),  and cash flows for the years ended March 31, 2004,
2003 and 2002  (the  2003,  2002 and 2001  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 (2003 Fiscal
Year),  sixteen  (2002  Fiscal Year) and fifteen  (2001 Fiscal Year)  subsidiary
partnerships whose losses aggregated  $2,103,161,  $2,266,539 and $2,428,205 for
the years ended March 31, 2004,  2003 and 2002,  respectively,  and whose assets
constituted  67% of the  Partnership's  assets  at  March  31,  2004  and  2003,
presented in the accompanying  consolidated financial statements.  The financial
statements  for sixteen  (2003  Fiscal  Year),  sixteen  (2002  Fiscal Year) and
fifteen  (2001  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.

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

In our  opinion,  based upon our audits,  and the reports of the other  auditors
referred to above,  the  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, 2004 and
2003,  and the  results of their  operations  and their cash flows for the years
ended March 31, 2004, 2003 and 2002, in conformity with U.S.  generally accepted
accounting principles.

TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 14, 2004


                                       15
<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, 2003 and 2002,
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, 2003 and 2002, and the results of its operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

Our audits  were  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 30, 2004



                                       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, 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  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>


[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, 2003 and 2002, and the related statements of operations, changes in
partners'  deficit  and cash flows for the years  then  ended.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended,  in conformity with  accounting  principles  generally
accepted in the United States of America.

/s/ Reznick Fedder & Silverman
Atlanta, Georgia
January 22, 2004



                                       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>



[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, 2003 and 2002, 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, 2003 and 2002, and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Smith, Ortiz, Gomez and Buzzi, P.A.
Miami, Florida
February 4, 2004




                                       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>



[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, 2003, 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,  2003,  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 16, 2004



                                       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>


[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, 2003,  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, 2003, 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 20, 2004



                                       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>



[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




                                       28
<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. as of December 31, 2003 and 2002, 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,  2003 and 2002,  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 13, 2004



                                       29
<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




                                       30
<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



                                       31
<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, 2003 and 2002 and the  related  statements  of
operations,  partners'  equity and cash flows for the years  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America 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, 2003 and 2002 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  16,  2004 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 16, 2004



                                       32
<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



                                       33
<PAGE>



[REZNICK FEDDER & SILVERMAN LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Partners
Savannah Park Housing
Limited Partnership

We have audited the accompanying balance sheets of Savannah Park Housing Limited
Partnership  as of December  31, 2003 and 2002,  and the related  statements  of
operations,  partners'  capital and cash flows for the years then  ended.  These
financial statements are the responsibility of the partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Savannah Park Housing Limited
Partnership as of December 31, 2003 and 2002, and the results of its operations,
the changes in  partners'  capital  and cash flows for the years then ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 24, 2004



                                       34
<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



                                       35
<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, 2003, 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, 2003, and the results of its operations and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America

Our audit was made for the purpose of forming an opinion on the basic  financial
statements for the year ended December 31, 2003 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 19, 2004



                                       36
<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



                                       37
<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




                                       38
<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,  2003 and  2002,  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, 2003 and 2002,  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 6, 2004



                                       39
<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




                                       40
<PAGE>



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

Independent Auditors' Report

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

We have audited the  accompanying  balance sheet of Primm Place Partners,  L.P.,
Project No. MT95-650,  a limited  partnership,  as of December 31, 2003, and the
related  statements of profit and loss,  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 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 Primm Place Partners,  L.P., as
of December 31, 2003,  and the results of its  operations and its cash flows for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  (shown on pages 15 to 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  financial  statements  and,  in our  opinion,  is  fairly  stated in all
material respects in relation to the financial statements taken as a whole.

/s/ Rubin, Brown, Gornstein & Co.  LLP
St. Louis, Missouri
February 6, 2004



                                       41
<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




                                       42
<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, 2003 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,  2003,  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 10, 2004



                                       43
<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



                                       44
<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



                                       45
<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, 2003 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,  2003,  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 19, 2004


                                       46
<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



                                       47
<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



                                       48
<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, 2003 and 2002, 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, 2003 and 2002,  and the results of its  operations,  the changes in
partners'  equity  (deficit)  and its cash  flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 30, 2004



                                       49
<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



                                       50
<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, 2003 and 2002 and the related statements of loss, Partners' capital
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America 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, 2003 and 2002,  and the results of its  operations,  changes in its
Partners' capital and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  is  presented  for  purposes of  additional  analysis  and is not a
required part of the basic  financial  statements of West Mill Creek  Associates
III T/A Jameson Court (A Limited  Partnership),  PHFA Project No.  0-0476.  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 22, 2004 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 22, 2004



                                       51
<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



                                       52
<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



                                       53
<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, 2003, and the related
statements of income,  partners' capital and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted  our audit in  accordance  with 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, 2003 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, 2003 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, 2004 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, 2004



                                       54
<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



                                       55
<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



                                       56
<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




                                       57
<PAGE>



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



                                     ASSETS
<TABLE>
<CAPTION>
                                                                               March 31,
                                                                     ----------------------------
                                                                         2004            2003
                                                                     ------------    ------------
<S>                                                                  <C>             <C>
Property and equipment - at cost, less accumulated depreciation
  (Notes 2 and 4)                                                    $ 66,272,924    $ 68,534,177
Cash and cash equivalents (Notes 2 and 10)                                526,645         556,259
Cash held in escrow (Note 5)                                            5,374,346       5,693,717
Deferred costs, less accumulated amortization (Notes 2 and 6)             765,730         784,581
Other assets                                                              670,767         654,509
                                                                     ------------    ------------

Total assets                                                         $ 73,610,412    $ 76,223,243
                                                                     ============    ============

                   LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Liabilities:
  Mortgage notes payable (Note 7)                                    $ 42,847,861    $ 42,714,124
  Construction loan payable (Note 7)                                            0         600,000
  Accounts payable and other liabilities                                6,704,508       5,809,239
  Due to local general partners and affiliates (Note 8)                 1,960,552       1,931,043
  Due to general partner and affiliates (Note 8)                        3,986,509       3,470,568
                                                                     ------------    ------------

Total liabilities                                                      55,499,430      54,524,974
                                                                     ------------    ------------

Minority interest (Note 2)                                              2,568,235       3,142,417
                                                                     ------------    ------------

Commitments and contingencies (Notes 7, 8 and 10)

Partners' capital (deficit):
  Limited partners (43,440 BACs issued and outstanding) (Note 1)       15,773,447      18,756,421
  General Partner                                                        (230,700)       (200,569)
                                                                     ------------    ------------

Total partners' capital (deficit)                                      15,542,747      18,555,852
                                                                     ------------    ------------

Total liabilities and partners' capital (deficit)                    $ 73,610,412    $ 76,223,243
                                                                     ============    ============
</TABLE>


See accompanying notes to consolidated financial statements.



                                       58
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                   Year Ended March 31,
                                                       --------------------------------------------
                                                           2004            2003*           2002
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
Revenues
Rental income                                          $  6,373,374    $  6,156,602    $  5,942,415
Other income                                                346,437         252,269         509,599
                                                       ------------    ------------    ------------

                                                          6,719,811       6,408,871       6,452,014
                                                       ------------    ------------    ------------

Expenses
General and administrative                                1,792,262       1,876,434       2,220,868
General and administrative-related parties
  (Note 8)                                                  800,267         788,862         830,348
Repairs and maintenance                                   1,393,319       1,188,564       1,322,086
Operating and other                                         790,045         790,629         930,104
Real estate taxes                                           293,958         326,075         388,868
Insurance                                                   482,220         442,874         385,804
Financial, principally interest                           1,721,883       1,714,331       1,659,965
Depreciation and amortization                             2,740,100       2,758,313       2,727,165
                                                       ------------    ------------    ------------


Total expenses                                           10,014,054       9,886,082      10,465,208
                                                       ------------    ------------    ------------

Net loss before minority interest                        (3,294,243)     (3,477,211)     (4,013,194)

Minority interest in loss of subsidiary partnerships        281,138         293,278         670,493
                                                       ------------    ------------    ------------

Net loss                                               $ (3,013,105)   $ (3,183,933)   $ (3,342,701)
                                                       ============    ============    ============

Net loss - Limited Partners                            $ (2,982,974)   $ (3,152,094)   $ (3,309,274)
                                                       ============    ============    ============

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

Net loss per BAC                                       $     (68.67)   $     (72.56)   $     (76.18)
                                                       ============    ============    ============

</TABLE>
*  Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.



                                       59
<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, 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)

Net loss                                         (3,013,105)     (2,982,974)        (30,131)
                                               ------------    ------------    ------------

Partners' capital (deficit) - March 31, 2004   $ 15,542,747    $ 15,773,447    $   (230,700)
                                               ============    ============    ============

</TABLE>

See accompanying notes to consolidated financial statements.



                                       60
<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,
                                             -----------------------------------------
                                                2004           2003           2002
                                             -----------    -----------    -----------
<S>                                          <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                     $(3,013,105)   $(3,183,933)   $(3,342,701)
                                             -----------    -----------    -----------
Adjustments to reconcile net loss
  to net cash provided by (used in)
  operating activities:
Depreciation and amortization                  2,740,100      2,758,313      2,727,165
Minority interest in loss of subsidiary
  partnerships                                  (281,138)      (293,278)      (670,493)
Loss on disposal of property and equipment             0         47,532         82,315
Write-off of deferred costs                            0              0         13,928
(Increase) decrease in assets:
Cash held in escrow                               62,085        (28,552)      (774,638)
Other assets                                     (16,258)        (1,788)       (18,340)
Increase (decrease) in liabilities:
Accounts payable and other liabilities           895,269        889,084        403,087
Increase in due to local general partners
  and affiliates                                  11,445         50,629         10,224
Decrease in due to local general partners
  and affiliates                                  (5,818)       (76,702)      (105,347)
Due to general partners and affiliates           515,941        621,867        738,694
                                             -----------    -----------    -----------

Total adjustments                              3,921,626      3,967,105      2,406,595
                                             -----------    -----------    -----------

Net cash provided by (used in)
  operating activities                           908,521        783,172       (936,106)
                                             -----------    -----------    -----------

Cash flows from investing activities:
Acquisition of property and equipment           (422,598)       (41,219)       (42,332)
Proceeds from disposal of property and
  equipment                                            0        335,552              0
Decrease (increase) in cash held in escrow       257,286       (464,599)      (268,412)
Decrease in due to local general partners
  and affiliates                                 (44,967)      (325,647)    (1,053,521)
Increase in due to local general partners
  and affiliates                                       0          8,056        146,487
                                             -----------    -----------    -----------

Net cash used in investing activities           (210,279)      (487,857)    (1,217,778)
                                             -----------    -----------    -----------

</TABLE>

                                       61
<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,
                                                           -----------------------------------------
                                                              2004           2003           2002
                                                           -----------    -----------    -----------
<S>                                                        <C>            <C>            <C>
Cash flows from financing activities:
Proceeds from mortgage notes                                         0              0        278,584
Principal payments of mortgage notes                          (466,263)      (454,435)      (388,958)
Repayments of construction loans                                     0              0       (689,449)
Increase in due to local general partners and affiliates        68,849         25,573         12,335
Increase in deferred costs                                     (37,398)             0              0
(Decrease) increase in capitalization of
  consolidated subsidiaries attributable to
  minority interest                                           (293,044)       (20,046)       982,820
                                                           -----------    -----------    -----------

Net cash (used in) provided by financing
  activities                                                  (727,856)      (448,908)       195,332
                                                           -----------    -----------    -----------

Net decrease in cash and cash equivalents                      (29,614)      (153,593)    (1,958,552)

Cash and cash equivalents at beginning of year                 556,259        709,852      2,668,404
                                                           -----------    -----------    -----------

Cash and cash equivalents at end of year                   $   526,645    $   556,259    $   709,852
                                                           ===========    ===========    ===========

Supplemental disclosure of cash flows information:

Cash paid during the year for interest                     $   758,563    $   807,554    $   807,370
                                                           ===========    ===========    ===========

Supplemental disclosure of noncash investing
  and financing activities:

Mortgage notes payable converted from
  construction notes payable                               $   600,000    $         0    $         0

</TABLE>

See accompanying notes to consolidated financial statements.



                                       62
<PAGE>



                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004


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 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 November 17, 2003, CharterMac, acquired RCC,
which is the indirect  parent of RCC Manager LLC, the sole  shareholder  of RIAI
III. Pursuant to the acquisition,  CharterMac acquired controlling  interests in
the General  Partner.  This  acquisition  did not affect the  Partnership or its
day-to-day operations,  as the majority of the General Partner's management team
remained unchanged.

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,  2004,  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, 2004, 2003 and 2002, respectively, (the 2003, 2002
and 2001  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
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.



                                       63
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004


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, $18,000 and $20,000 for the years ended March
31, 2004,  2003 and 2002,  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, 2004, 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,  2004,  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).

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.



                                       64
<PAGE>



                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004



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 December 15, 2003.
The Partnership has not created any variable interest entities after January 31,
2003. In December 2003 the FASB redeliberated certain proposed modifications and
revised FIN 46 ("FIN 46 (R)").  The revised  provisions  are applicable no later
than the first reporting period ending after March 15, 2004. The adoption of FIN
46 and  FIN  46  (R)  is not  anticipated  to  have  a  material  impact  on the
Partnership's financial reporting and disclosures.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
changes the accounting for certain  financial  instruments  that, under previous
guidance,  could be classified as equity or "mezzanine" equity, by now requiring
those  instruments  to  be  classified  as  liabilities  (  or  assets  in  some
circumstances)  in the  Consolidated  Balance  Sheets.  Further,  SFAS  No.  150
requires  disclosure  regarding the terms of those  instruments  and  settlement
alternatives.  The  guidance in SFAS No. 150  generally  was  effective  for all
financial  instruments  entered  into or modified  after May 31,  2003,  and was
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003.


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.




                                       65
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004



The  estimated  fair  values of the  Partnership's  mortgage  notes  payable and
construction loans payable are as follows:
<TABLE>
<CAPTION>
                                           March 31, 2004              March 31, 2003
                                     -------------------------   -------------------------
                                      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   $10,386,051   $ 9,260,654   $13,386,179   $12,812,966
Not practicable                       32,461,810             *    29,327,945             *

Construction loans payable for
 which it is:

Practicable to estimate fair value   $         0   $         0   $         0   $         0
Not Practicable                                0             *       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>
                                                                      Estimated
                                                        March 31,   Useful Lives
                                         2004             2003         (Years)
                                    -------------    -------------  ------------
<S>                                  <C>             <C>                <C>
Land                                 $  1,166,783     $  1,166,783          -
Building and improvements              83,563,525       83,170,492      20-40
Furniture and fixtures                  1,244,550        1,214,985       5-12
                                     ------------     ------------
                                       85,974,858       85,552,260

Less: Accumulated depreciation        (19,701,934)     (17,018,083)
                                      ------------     ------------

                                     $ 66,272,924     $ 68,534,177
                                     ============     ============
</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, 2004 and
2003,  respectively.  In addition,  as of March 31, 2004 and 2003,  building and
improvements include $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,  2004 and  2003.  Such fees have been
included in the cost of property and equipment.



                                       66
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004



Depreciation  expense for the years ended March 31, 2004, 2003 and 2002 amounted
to $2,683,851, $2,700,555 and $2,664,316, 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,
                                                      --------------------------
                                                         2004            2003
                                                      ----------      ----------
<S>                                                   <C>             <C>
Purchase price payments*                              $  132,175      $  297,142
Construction                                                   0             436
Real estate taxes, insurance and other                 3,506,363       3,568,448
Reserve for replacements                               1,735,808       1,827,691
                                                      ----------      ----------

                                                      $5,374,346      $5,693,717
                                                      ==========      ==========
</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,
                                       -----------------------------------------
                                           2004           2003          Period
                                       -----------    -----------    -----------
<S>                                    <C>            <C>                      <C>
Financing costs                        $ 1,265,159    $ 1,227,761              *
Less: Accumulated amortization            (499,429)      (443,180)
                                       -----------    -----------

                                       $   765,730    $   784,581
                                       ===========    ===========
</TABLE>
*    Over the life of the related mortgages.

Amortization  expense for the years ended March 31, 2004, 2003 and 2002 amounted
to $56,249, $57,758 and $62,849, respectively.


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
$93,000  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.



                                       67
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004



Annual principal payment requirements, as of March 31, 2004 for each of the next
five fiscal years and thereafter, are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ending                     Amount
------------------                  -----------
<C>                                 <C>
2004                                $   597,329
2005                                    542,784
2006                                    582,080
2007                                    631,753
2008                                    679,823
Thereafter                           39,814,092
                                     ----------

                                    $42,847,861
                                    ===========
</TABLE>
The mortgage  agreements  require  monthly  deposits to replacement  reserves of
approximately  $17,000 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  with an outstanding  balance of
approximately $600,000. In March 2003, such construction loan was converted into
a permanent  loan with interest at 9.5% a year. The maturity date of the loan is
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, 2004, 2003 and
2002,  the  gross  amounts  of  the  Operating  Deficit   Guarantees   aggregate
approximately  $5,129,000, of which $3,273,000 has expired as of March 31, 2004.
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,



                                       68
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004



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,  2004,  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, 2004, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>
                                                        Year Ended March 31,
                                                   ------------------------------
                                                     2004       2003       2002
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Partnership management fees (a)                    $313,389   $331,132   $361,742
Expense reimbursement (b)                           144,110    149,036    120,820
Local administrative fees (d)                        62,750     65,500     61,500
                                                   --------   --------   --------

Total general and administrative-General Partner    520,249    545,668    544,062
                                                   --------   --------   --------

Property management fees incurred to
affiliates of the subsidiary partnerships'
general partners (c)                                280,018    243,194    286,286
                                                   --------   --------   --------

Total general and administrative-related parties   $800,267   $788,862   $830,348
                                                   ========   ========   ========
</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
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 $2,205,000 and $1,892,000 were
accrued  and unpaid as of March 31,  2004 and 2003,  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 is 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
$477,876,  $438,586 and  $458,450  for the years ended March 31, 2004,  2003 and
2002, respectively. Of these fees, $280,018, $243,194 and $286,286 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.




                                       69
<PAGE>

                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004




C) Due to Local General Partners and Affiliates

Due to local general partners and affiliates consists of the following:
<TABLE>
<CAPTION>
                                                              March 31,
                                                     ---------------------------
                                                        2004             2003
                                                     ----------       ----------
<S>                                                  <C>              <C>
Operating advances                                   $   39,518       $   39,654
Development fee payable                               1,500,701        1,545,668
Other capitalized costs                                  16,335           16,335
Construction costs payable                              154,543          154,543
General Partner loan payable                            218,069          149,220
Management and other operating fees                      31,386           25,623
                                                     ----------       ----------

                                                     $1,960,552       $1,931,043
                                                     ==========       ==========
</TABLE>
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,
                                                        -----------------------------------------
                                                           2003           2002           2001
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>
Financial statement net loss                            $(3,013,105)   $(3,183,933)   $(3,342,701)

Differences between  depreciation and amortization
expense records for financial  reporting  purposes
and the accelerated  costs recovery system utilized
for income tax purposes                                    (414,282)      (302,859)      (451,799)

Differences  resulting from parent  company  having
a different  fiscal year for income tax and financial
reporting purposes                                          (22,792)       (27,154)        26,399

Tax exempt interest income                                        0              0        (23,591)

Other, including accruals for financial reporting
not deductible for tax purposes until paid
                                                            (96,387)       147,826       (690,941)
                                                        -----------    -----------    -----------

Net loss as shown on the income tax return for the
calendar year ended                                     $(3,546,566)   $(3,366,120)   $(4,482,633)
                                                        ===========    ===========    ===========
</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 cause of  action  1998-755  filed in Erie
County  Supreme  Court for the alleged  value of work and  services  provided by
Phase Three Paul for interference with contractual  relations and for fraud that



                                       70
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004



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.  On October 3, 2003, the Appellate  Division ruled in favor of
Lewis Street.  Lewis Street has been advised by the  plaintiff  that it does not
intend to pursue any further litigation.  The Partnership's  investment in Lewis
Street at March  31,  2004 and 2003 was  approximately  $529,000  and  $590,000,
respectively,  and the minority  interest  balance was zero at each date.  Lewis
Street's net loss after minority  interest  amounted to  approximately  $74,000,
$111,000 and $101,000 for the 2003, 2002, and 2001 Fiscal Years, respectively.

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, with
monthly rent payments of $1,449. Estimated future minimum payments due under the
terms of the lease are as follows:
<TABLE>
<CAPTION>

<S>                               <C>
2004                              $   38,358
2005                                  21,252
2006                                  21,252
2007                                  21,252
2008                                  21,252
Thereafter                           807,576
                                   ---------
                                  $  930,942
                                  ==========
</TABLE>
As of December 31, 2003, the subsidiary  partnership was in default on the lease
agreement. For the year ended December 31, 2003, $19,481 has been paid under the
terms of the lease and $15,880 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
$129,000 at March 31, 2004.

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
$5,683,281, $5,683,279 and $5,683,279 Tax Credits during the 2003, 2002 and 2001
tax years, respectively.



                                       71
<PAGE>



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

None

Item 9A. Controls and Procedures

(a) EVALUATION OF DISCLOSURE  CONTROLS AND PROCEDURES.  The Principal  Executive
Officer and Principal Financial Officer of Related  Independence  Associates III
L.P., the general partner of the Partnership,  and its general partner,  Related
Independence  Associates  III  Inc.,  has  evaluated  the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as such term is defined in
Rules  13a-15(e) and  15d-15(e)  under the  Securities  Exchange Act of 1934, as
amended  ("Exchange  Act") as of the end of the period  covered by this  report.
Based on such evaluation, such officer has concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.

(b) INTERNAL CONTROL OVER FINANCIAL  REPORTING.  There have not been any changes
in  Partnership's  internal  control over financial  reporting during the fiscal
year to  which  this  report  relates  that  have  materially  affected,  or are
reasonably likely to materially affect, the Partnership's  internal control over
financial reporting.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

The Partnership has no directors or executive  officers.  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").  The  Partnership's
affairs are managed and controlled by the General  Partner.  The Partnership has
not adopted a separate code of ethics because the  Partnership  has no directors
or executive  officers.  However,  the parent company of RCC, which controls our
General Partner, has adopted a code of ethics. See http://www.chartermac.com.

On November 17, 2003, CharterMac,  acquired RCC, which is the indirect parent of
RCC Manager LLC, the sole  shareholder of Related  Independence  Associates III,
Inc. ("RIAI III"), the sole general partner of the General Partner.  Pursuant to
the  acquisition,  CharterMac  acquired  controlling  interests  in the  General
Partner.  This  acquisition  did not affect the  Partnership  or its  day-to-day
operations,  as the majority of the General  Partner's  management team remained
unchanged.  Alan P.  Hirmes  replaced  Stephen M. Ross as  Director  of RIAI III
effective April 1, 2004 as a result of this acquisition.

Certain information  concerning the directors and executive officers of RIAI III
is set forth below.

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

Alan P. Hirmes                      Director and President

Stuart J. Boesky                    Senior Vice President

Marc D. Schnitzer                   Vice President

Denise L. Kiley                     Vice President

Glenn F. Hopps                      Treasurer

Teresa Wicelinski                   Secretary

ALAN P. HIRMES,  49, 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
degree.  Mr.  Hirmes  also serves on the Board of  Trustees  of  CharterMac  and
American Mortgage Acceptance Company ("AMAC").



                                       72
<PAGE>

STUART J. BOESKY,  48,  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 CharterMac and AMAC.

MARC D. SCHNITZER,  43, 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.  Mr.  Schnitzer
serves on the Board of Trustees of CharterMac.

DENISE L. KILEY,  44, 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. Ms. Kiley serves on the Board of Trustees of CharterMac.

GLENN F. HOPPS,  41, 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,  38, 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
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.



                                       73
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management.

                    Name and Address of    Amount and Nature of       Percentage
Title of Class      Beneficial Ownership   Beneficial Ownership        of Class
--------------      --------------------   --------------------       ----------
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

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, 2004,  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.
<TABLE>
<CAPTION>
                                      Amount and Nature of
Name of Beneficial Owner (1)          Beneficial Ownership      Percent of Class
------------------------              --------------------      ----------------
<S>                                   <C>      <C> <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



                                       74
<PAGE>

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.

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. Principal Accountant Fees and Services.

Audit Fees
----------
The  aggregate  fees billed by Trien  Rosenberg  Rosenberg  Weinberg  Ciullo and
Fazzari  LLP  and  their  respective  affiliates  (collectively,   "Trien")  for
professional  services rendered for the audit of our annual financial statements
for the years ended March 31, 2004 and 2003 and for the reviews of the financial
statements  included  in the  Partnership's  Quarterly  Reports on Form 10-Q for
those years were $51,200 and $51,200, respectively.

Audit Related Fees
------------------
None.

Tax Fees
--------
The aggregate fees billed by Weiser LLP (formerly, Rubin and Katz LLP) and their
respective  affiliates   (collectively,   "Weiser")  for  professional  services
rendered  for the  preparation  of our annual tax  returns  for the years  ended
December 31, 2003 and 2002 were $8,300 and $8,000, respectively.

All Other Fees
--------------
None.

The  Partnership is not required to have, and does not have, a stand alone audit
committee.



                                       75
<PAGE>



                                     PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

                                                                      Sequential
                                                                         Page
                                                                      ----------

(a) 1.   Financial Statements


         Report of Independent Registered Public Accounting Firm          15

         Consolidated Balance Sheets at March 31, 2004 and 2003           58

         Consolidated Statements of Operations for the Years Ended
         March 31, 2004, 2003 and 2002                                    59

         Consolidated  Statements of Changes in Partners'  Capital
         (Deficit) for the Years Ended March 31, 2004,  2003 and
         2002                                                             60

         Consolidated Statements of Cash Flows for the Years Ended
         March 31, 2004, 2003 and 2002                                    61

         Notes to Consolidated Financial Statements                       63

(a) 2.   Consolidated Financial Statement Schedules

         Report of Independent Registered Public Accounting Firm          82

         Schedule I - Condensed Financial Information of Registrant       83

         Schedule III - Real Estate and Accumulated Depreciation          86

         All other  schedules  have been  omitted  because they are
         not  required or because the  required  information  is
         contained in the financial statements 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  Partne-
         rship 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 Partn-
         ership's acquisition of Local Partnership Interests*

(10D)    Form of Amended and Restated Agreement of Limited Partnership
         of Local Partnerships*

(21)     Subsidiaries of the Registrant                                   77

(31.1)   Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a).      80



                                       76
<PAGE>


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

                                                                      Sequential
                                                                         Page
                                                                      ----------

(32.1)   Certification  Pursuant to Rule  13a-14(b) or Rule  15d-14(b)
         and Section  1350 of Title 18 of the United  States Code (18
         U.S.C. 1350).                                                    81

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

(b)      Reports on Form 8-K

         No reports on Form 8-K were filed during the quarter.

                                                                   Jurisdiction
(c)      Subsidiaries of the Registrant (Exhibit 21)             of Organization
         ------------------------------                          ---------------

         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



                                       77
<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 16, 2004            By:  /s/ Alan P. Hirmes
                                    ------------------
                                    Alan P. Hirmes
                                    President
                                    (principal executive and financial officer)



<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 and Director
                             (principal executive and
/s/ Alan P. Hirmes           financial officer) of Related
------------------
Alan P. Hirmes               Independence Associates III Inc.    June 16, 2004




                             Treasurer (principal
/s/ Glenn F. Hopps           accounting officer) of Related
------------------
Glenn F. Hopps               Independence Associates III Inc.    June 16, 2004




<PAGE>


                                                                    Exhibit 31.1


                         CERTIFICATION PURSUANT TO RULE
                           13a-14(a) OR RULE 15d-14(a)


I, Alan P. Hirmes,  Principal  Executive Officer and Principal Financial Officer
of Related  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, 2004 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, 2004 (the "Evaluation  Date");
          and

          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 16, 2004


<PAGE>


                                                                    Exhibit 32.1


                             CERTIFICATION PURSUANT
                       TO RULE 13a-14(b) OR RULE 15d-14(b)
                          AND SECTION 1350 OF TITLE 18
                   OF THE UNITED STATES CODE (18 U.S.C. 1350)


In connection  with the Annual Report of  Independence  Tax Credit Plus L.P. III
(the "Partnership") on Form 10-K for the year ended March 31, 2004 as filed with
the  Securities  and  Exchange  Commission  ("SEC")  on  the  date  hereof  (the
"Report"),  I,  Alan  P.  Hirmes,  Principal  Executive  Officer  and  Principal
Financial Officer of Related 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.

A signed  original of this  written  statement  required by Section 906 has been
provided  to the  Partnership  and  will  be  retained  by the  Partnership  and
furnished to the SEC or its staff upon request.



By:  /s/ Alan P. Hirmes
     Alan P. Hirmes
     Principal Executive Officer and Principal Financial Officer
     June 16, 2004


<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------



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 June
14,  2004 on page 15, and based on the reports of other  auditors,  we have also
audited  supporting  Schedule  I for the 2003,  2002 and 2001  Fiscal  Years and
Schedule III as of March 31, 2004.  In our opinion,  and based on the reports of
the other auditors,  these consolidated  schedules present fairly,  when read in
conjunction with the related consolidated  financial  statements,  the financial
data required to be set forth therein.


TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP

New York, New York
June 14, 2004


                                       82
<PAGE>



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



                            CONDENSED BALANCE SHEETS



                                     ASSETS


<TABLE>
<CAPTION>
                                                               March 31,
                                                       -------------------------
                                                           2004         2003
                                                       -----------   -----------
<S>                                                    <C>           <C>
Cash and cash equivalents                              $    33,301   $    35,268
Investment in subsidiary partnerships                   19,933,240    21,998,761
Cash held in escrow                                        132,175       297,142
                                                       -----------   -----------

Total assets                                           $20,098,716   $22,331,171
                                                       ===========   ===========



                        LIABILITIES AND PARTNERS' CAPITAL



Due to general partner and affiliates                  $ 3,313,127   $ 2,820,240
Other liabilities                                           14,278         9,556
                                                       -----------   -----------

Total liabilities                                        3,327,405     2,829,796

Partners' capital                                       16,771,311    19,501,375
                                                       -----------   -----------

Total liabilities and partners' capital                $20,098,716   $22,331,171
                                                       ===========   ===========
</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.



                                       83
<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,
                                            -----------------------------------------
                                                2004           2003           2002
                                            -----------    -----------    -----------
<S>                                         <C>            <C>            <C>
Revenues

Interest income                             $         0    $         0    $    13,583
Other                                               550            350          4,873
                                            -----------    -----------    -----------

Total revenues                                      550            350         18,456
                                            -----------    -----------    -----------

Expenses

Administrative and management                    84,466        119,553        202,027
Administrative and management-
  related parties                               457,499        480,168        482,562
                                            -----------    -----------    -----------

Total expenses                                  541,965        599,721        684,589
                                            -----------    -----------    -----------

Loss from operations                           (541,415)      (599,371)      (666,133)

Equity in loss of subsidiary partnerships    (2,188,649)    (2,307,951)    (2,674,427)
                                            -----------    -----------    -----------

Net loss                                    $(2,730,064)   $(2,907,322)   $(3,340,560)
                                            ===========    ===========    ===========

</TABLE>

                                       84
<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,
                                                ------------------------------------------
                                                   2004           2003            2002
                                                -----------    -----------    ------------
<S>                                             <C>            <C>            <C>
Cash flows from operating activities:

Net loss                                        $(2,730,064)   $(2,907,322)   $(3,340,560)
                                                -----------    -----------    -----------

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

Equity in loss of subsidiary partnerships         2,188,649      2,307,951      2,674,427
Increase (decrease) in liabilities:
Due to general partners and affiliates              492,887        573,577        595,684
Other liabilities                                     4,722          4,781           (833)
                                                -----------    -----------    -----------

Total adjustments                                 2,686,258      2,886,309      3,269,278
                                                -----------    -----------    -----------

Net cash used in operating
  activities                                        (43,806)       (21,013)       (71,282)
                                                -----------    -----------    -----------

Cash flows from investing activities:

Investment in subsidiary partnerships              (170,020)             0     (1,466,822)
Distributions from subsidiary partnerships           46,892         27,986         27,710
Decrease in cash held in escrow                     164,967              0        100,000
                                                -----------    -----------    -----------

Net cash provided by (used in) investing
  activities                                         41,839         27,986     (1,339,112)
                                                -----------    -----------    -----------

Net (decrease) increase in cash and
  cash equivalents                                   (1,967)         6,973     (1,410,394)

Cash and cash equivalents, beginning of year         35,268         28,295      1,438,689
                                                -----------    -----------    -----------

Cash and cash equivalents, end of year          $    33,301    $    35,268    $    28,295
                                                ===========    ===========    ===========
</TABLE>


                                       85
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2004
<TABLE>
<CAPTION>

                                                            Initial Cost to Partnership   Cost Capitalized
                                                           -----------------------------    Subsequent to
                                                                           Buildings and    Acquisition
Description                                Encumbrances       Land          Improvements    Improvements
-----------                                ------------    -----------     -------------   -------------
<S>                                        <C>             <C>             <C>             <C>
Edward Hotel Limited Partnership           $ 2,399,459     $   275,000     $   591,240     $ 2,580,054
  Los Angeles, CA
Pacific East, L.P.                           2,056,638           1,950       3,125,584         183,697
  Brooklyn, NY
Overtown Development Group, Ltd.             1,197,552          52,284       2,627,099         162,091
  Miami, FL
Sumpter Commons Associates, L.P.             1,213,870             500       1,862,916          50,963
Park Housing Limited Partnership               833,536           5,000       2,343,351          64,880
Livingston Manor Urban Renewal               3,080,000         119,988       7,047,532         632,130
  Associates, L.P.
Jefferis Square Housing                      1,900,000          55,158               0       4,612,613
  Partnership, L.P.
2301 First Avenue Limited Partnership        5,109,664          64,350       5,818,269         159,285
Lewis Street Limited Partnership             1,600,000           7,000               0       2,773,181
Savannah Park Housing Limited                  779,530               0       2,049,888       2,068,576
  Partnership
Brannon Group, L.C                           4,477,471         380,000       2,598,402       5,476,348
Independence Tax Credit Fund L.P.            2,510,527           1,732         339,661       6,275,119
  (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)
Primm Place Partners, L.P.                   3,860,000         168,258               0       6,721,429
BK-9-A Partners L.P.                           934,495               0       1,517,313          56,847
BK-10K Partners L.P.                         1,087,163          11,000       1,637,762          50,286
Westmill Creek Associates III L.P.           2,887,146          37,031       6,922,563          29,651
Universal Court Associates                   1,650,000          31,024         279,220       4,663,433
New Zion Apartments                            995,810          20,000       2,688,770          12,362
Dreitzer House                               4,275,000               5               0       6,722,063
                                           -----------     -----------     -----------     -----------

                                           $42,847,861     $ 1,230,280     $41,449,570     $43,295,008
                                           ===========     ===========     ===========     ===========

<CAPTION>

                                           Gross Amount at which Carried at Close of Period
                                           ------------------------------------------------
                                                          Buildings and
Description                                   Land        Improvements        Total
-----------                                -----------    -------------    -----------
<S>                                        <C>            <C>              <C>
Edward Hotel Limited Partnership           $   281,123     $ 3,165,171     $ 3,446,294
  Los Angeles, CA
Pacific East, L.P.                               8,075       3,303,156       3,311,231
  Brooklyn, NY
Overtown Development Group, Ltd.                58,408       2,783,066       2,841,474
  Miami, FL
Sumpter Commons Associates, L.P.                 3,673       1,910,706       1,914,379
Park Housing Limited Partnership                 8,173       2,405,058       2,413,231
Livingston Manor Urban Renewal                 123,161       7,676,489       7,799,650
  Associates, L.P.
Jefferis Square Housing                         39,347       4,628,424       4,667,771
  Partnership, L.P.
2301 First Avenue Limited Partnership           67,523       5,974,381       6,041,904
Lewis Street Limited Partnership                10,173       2,770,008       2,780,181
Savannah Park Housing Limited                    3,173       4,115,291       4,118,464
  Partnership
Brannon Group, L.C                             383,173       8,071,577       8,454,750
Independence Tax Credit Fund L.P.                5,123       6,611,389       6,616,512
  (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)
Primm Place Partners, L.P.                      67,777       6,821,910       6,889,687
BK-9-A Partners L.P.                             3,173       1,570,987       1,574,160
BK-10K Partners L.P.                            14,176       1,684,872       1,699,048
Westmill Creek Associates III L.P.              37,649       6,951,596       6,989,245
Universal Court Associates                      31,642       4,942,035       4,973,677
New Zion Apartments                             20,618       2,700,514       2,721,132
Dreitzer House                                     623       6,721,445       6,722,068
                                           -----------     -----------     -----------

                                           $ 1,166,783     $84,808,075     $85,974,858
                                           ===========     ===========     ===========
<CAPTION>
                                                                                            Life on which
                                                                                           Depreciation in
                                                             Year of                        Latest Income
                                           Accumulated    Construction/       Date         Statements are
Description                                Depreciation    Renovation       Acquired       Computed (a)(b)
-----------                                ------------   ------------     ----------      ---------------
<S>                                        <C>            <C>              <C>             <C>
Edward Hotel Limited Partnership           $   933,350     1994-95         Nov. 1994       27.5 years
  Los Angeles, CA
Pacific East, L.P.                           1,188,234     1994-95         Dec. 1994       27.5 years
  Brooklyn, NY
Overtown Development Group, Ltd.               678,068     1994-95         Dec. 1994       40 years
  Miami, FL
Sumpter Commons Associates, L.P.               578,799     1995-96         Apr. 1995       27.5 years
Park Housing Limited Partnership               685,004     1995-96         May 1995        27.5 years
Livingston Manor Urban Renewal               1,586,845     1995-96         June 1995       15-40 years
  Associates, L.P.
Jefferis Square Housing                        942,804     1995-96         June 1995       20 - 40 years
  Partnership, L.P.
2301 First Avenue Limited Partnership        2,013,456     1995-96         Aug. 1995       27.5 years
Lewis Street Limited Partnership               828,633     1995-96         Oct. 1995       27.5 years
Savannah Park Housing Limited                  959,824     1995-96         Oct. 1995       27.5 years
  Partnership
Brannon Group, L.C                           1,312,944     1995-96         Dec. 1995       40 years
Independence Tax Credit Fund L.P.            1,198,371     1995-96         Dec. 1995       20 - 40 years
  (Mansion Court Phase II Venture and
  Aspen Olive Associates Consolidated)
Primm Place Partners, L.P.                   1,237,670     1995-96         Dec. 1995       10 - 40 years
BK-9-A Partners L.P.                           344,290     1995-96         Dec. 1995       40 years
BK-10K Partners L.P.                           377,544     1995-96         Dec. 1995       40 years
Westmill Creek Associates III L.P.           2,185,424     1997-98         Dec. 1996       27.5 years
Universal Court Associates                     703,688     1997-98         Apr. 1997       20-40 years
New Zion Apartments                            708,707     1997-98         Nov. 1997       15 - 27.5 years
Dreitzer House                               1,238,279     1997-99         Dec. 1997       27.5 years
                                           -----------     -----------     -----------     ---------------

                                           $19,701,934
                                           ===========
</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.


                                       86
<PAGE>


                      INDEPENDENCE TAX CREDIT PLUS L.P. III
                                AND SUBSIDIARIES
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                   Partnership Property Pledged as Collateral
                                 MARCH 31, 2004
                                   (continued)
<TABLE>
<CAPTION>

                                       Cost of Property and Equipment                     Accumulated Depreciation
                                 -------------------------------------------    -------------------------------------------
                                                                   Year Ended March 31,
                                 ------------------------------------------------------------------------------------------
                                     2004           2003            2002            2004           2003            2002
                                 ------------   ------------    ------------    ------------   ------------    ------------
<S>                              <C>            <C>             <C>             <C>            <C>             <C>
Balance at beginning of period   $ 85,552,260   $ 85,943,904    $ 85,983,887    $ 17,018,083   $ 14,367,307    $ 11,702,991
Additions during period:
  Improvements                        422,598         41,219          42,332
  Depreciation expense                                                             2,683,851      2,700,555       2,664,316
Reductions during period:
  Dispositions                              0       (432,863)        (82,315)              0        (49,779)              0
                                 ------------   ------------    ------------    ------------   ------------    ------------

Balance at close of period       $ 85,974,858   $ 85,552,260    $ 85,943,904    $ 19,701,934   $ 17,018,083    $ 14,367,307
                                 ============   ============    ============    ============   ============    ============
</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.


                                       87