June 27, 1997


Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312


        Boston Financial Qualified Housing Tax Credits L.P. III
        Form 10-K Annual Report for Year Ended March 31, 1997
        File Number 01-18462


Gentlemen:

Pursuant to the requirements of Section 15(d) of the Securities  Exchange Act of
1934, there is filed herewith one copy of subject report.


Very truly yours,


/s/Veronica J. Curioso
Veronica J. Curioso
Assistant Controller

QH310K-K



<PAGE>



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

                                    FORM 10-K

                 Annual Report Pursuant to Section 13 or 15(d)
                   of the Securities Exchange Act of 1934

For the fiscal year ended                              Commission file number
March 31, 1997                                             01-18462

           BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
             (Exact name of registrant as specified in its charter)

      Delaware                                           04-3032106
(State of organization)                                 (I.R.S. Employer
                                                         Identification No.)
  101 Arch Street, 16th Floor
  Boston, Massachusetts                                  02110-1106
(Address of Principal executive office)                  (Zip Code)

Registrant's telephone number, including area code 617/439-3911

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

                                                      Name of each exchange on
          Title of each class                         which registered
                 None                                        None

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

                    UNITS OF LIMITED PARTNERSHIP INTEREST
                              (Title of Class)
                                   100,000

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 (Subsection  229.405 of this chapter) 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 ]

State the  aggregate  sales  price of partnership units held by nonaffiliates of
the registrant.
                             $99,610,000 as of March 31, 1997


<PAGE>


                                                       

DOCUMENTS INCORPORATED BY REFERENCE:  LIST THE FOLLOWING DOCUMENTS IF 
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE
DOCUMENT IS INCORPORATED:  (1) ANY ANNUAL REPORT TO SECURITY HOLDERS;
(2) ANY PROXY OR  INFORMATION STATEMENT; AND (3) ANY PROSPECTUS  FILED  PURSUANT
TO RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933.


                                                            Part of Report on
                                                            Form 10-K into
                                                            Which the Document
Documents incorporated by reference                         is Incorporated

Post-effective Amendment No. 1 to the Form S-11
  Registration Statement, File # 33-24175                   Part I, Item 1

Supplement No. 4 to the Prospectus, dated May 9, 1989       Part I, Item 1

Report on Form 8-K dated November 21, 1989                  Part I, Item 1

Acquisition Reports                                         Part I, Item 1

Prospectus - Sections Entitled:

  "Investment Objectives and Policies -
   Principal Investment Policies                            Part I, Item 1

  "Estimated Use of Proceeds"                               Part III, Item 13

  "Management Compensation and Fees"                        Part III, Item 13

  "Profits and Losses for Tax Purposes, Tax
   Credits and Cash Distributions"                          Part III, Item 13




<PAGE>


               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                               (a Limited Partnership)

             ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1997


                                                 TABLE OF CONTENTS


PART I                                                                Page No.

  Item 1     Business                                                  K-3
  Item 2     Properties                                                K-7
  Item 3     Legal Proceedings                                         K-19
  Item 4     Submission of Matters to a
             Vote of Security Holders                                  K-19


PART II

  Item 5     Market for the Registrant's Units
             and Related Security Holder Matters                       K-19
  Item 6     Selected Financial Data                                   K-20
  Item 7     Management's Discussion and Analysis of
             Financial Condition and Results of Operations             K-21
  Item 8     Financial Statements and Supplementary Data               K-25
  Item 9     Changes in and Disagreements with
             accountants on Accounting and Financial
             Disclosure                                                K-25


PART III

  Item 10    Directors and Executive Officers
             of the Registrant                                         K-25
  Item 11    Management Remuneration                                   K-25
  Item 12    Security Ownership of Certain Beneficial
             Owners and Management                                     K-27
  Item 13    Certain Relationships and Related
             Transactions                                              K-27


PART IV

  Item 14    Exhibits, Financial Statement Schedule
             and Reports on Form 8-K                                   K-30

SIGNATURES                                                             K-31


<PAGE>


                                  PART I

Item 1.  Business

Boston Financial Qualified Housing Tax Credits L.P. III (the "Partnership") is a
limited  partnership  formed  on  August  9,  1988  under  the  Uniform  Limited
Partnership  Act of the State of  Delaware.  The  Certificate  and  Agreement of
Limited  Partnership  ("Partnership  Agreement")  authorized  the  sale of up to
100,000  units of Limited  Partnership  Interest  ("Units")  at $1,000 per Unit,
adjusted for certain  discounts.  The  Partnership  raised  $99,610,000  ("Gross
Proceeds"),  net of discounts of  $390,000,  through the sale of 100,000  Units.
Such amounts exclude five unregistered  Units previously  acquired for $5,000 by
the Initial  Limited  Partner,  which is also one of the General  Partners.  The
offering  of Units  terminated  on May 30,  1989.  No  further  sale of Units is
expected.

As described more fully under Item 7 -  Management's  Discussion and Analysis of
Financial  Condition  and  Results of  Operations,  affiliates  of the  Managing
General  Partner  assumed the Local  General  Partner  interest in several Local
Limited Partnerships in which the Partnership has invested:  1) BF Harbour View,
Inc.  assumed the Local General Partner  interest in 241 Pine Street  Associates
L.P.  ("241 Pine  Street");  2) BF Willow Lake,  Inc.  assumed the Local General
Partner interest in Willow Lake Partners II, L.P.  ("Willow Lake");  3) BF Texas
Limited  Partnership  was admitted as an  additional  Local  General  Partner to
thirteen Local Limited Partnerships ("Texas Partnerships") and assumed the Local
General Partner  interest in the Temple Kyle,  L.P.,  Ltd. (the "Kyle");  and 4)
Boston  Financial  GP-I,  LLC.  assumed the Local  General  Partner  interest in
Breckenridge  Creste  Apartments,  L.P.  ("Breckenridge").   As  a  result,  the
Partnership  is deemed to have control over 241 Pine  Street,  Willow Lake,  the
Texas Partnerships, the Kyle and Breckenridge (the "Combined Entities"), and the
accompanying financial statements are presented in combined form to conform with
the  required   accounting   treatment  under  generally   accepted   accounting
principles.  As described  more fully in Item 7 -  Management's  Discussion  and
Analysis  of  Financial  Condition  and  Results  of  Operations,  BF Texas  has
relinquished control of one Texas Partnership,  and the Managing General Partner
has  transferred all of the assets of five Texas  Partnerships  subject to their
liabilities to unaffiliated  entities. As of March 31, 1997, the remaining seven
Texas Partnerships are presented in combined form.  However,  these changes only
affect the presentation of the Partnership's operating results, not the business
of the Partnership.  Accordingly,  a presentation of information  about industry
segments is not applicable and would not be material to an  understanding of the
Partnership's business taken as a whole.

The  Partnership  has invested as a limited  partner in fifty-two  other limited
partnerships  ("Local Limited  Partnerships")  which own and operate residential
apartment  complexes  ("Properties"),  some of which  benefit  from some form of
federal,  state or local  assistance  programs and all of which  qualify for the
low-income  housing tax credits ("Tax  Credits") that were added to the Internal
Revenue  Code by the  Tax  Reform  Act of  1986  (the  "Code").  The  investment
objectives of the Partnership include the following:  (i) to provide current tax
benefits in the form of Tax Credits which qualified  limited partners may use to
offset  their  federal  income tax  liability;  (ii) to preserve and protect the
Partnership's capital; (iii) to provide limited cash distributions from property
operations  which are not  expected  to  constitute  taxable  income  during the
expected  duration of the  Partnership's  operations;  and (iv) to provide  cash
distributions  from  sale  or  refinancing  transactions.  There  cannot  be any
assurance  that the  Partnership  will  attain  any or all of  these  investment
objectives.

A more detailed discussion of these investment objectives,  along with the risks
in  achieving  them,  is  contained  in the section of the  prospectus  entitled
"Investment  Objectives and Policies - Principal  Investment  Policies" which is
herein incorporate by this reference.

Table A on the  following  pages  lists the  Properties  owned by Local  Limited
Partnerships  in which  the  Partnership  has  invested.  Item 7 of this  Report
contains  other  significant  information  with  respect to such  Local  Limited
Partnerships.  As required by applicable  rules, the terms of the acquisition of
Local Limited  Partnership  interests  have been described in supplements to the
Prospectus  and collected in one  post-effective  amendment to the  Registration
Statement,  in another  supplement to the Prospectus and in a report on Form 8-K
listed in Part IV of this Report (collectively, the "Acquisition Reports"); such
descriptions are incorporated herein by this reference.


<PAGE>


                                  TABLE A

                             SELECTED LOCAL LIMITED
                                PARTNERSHIP DATA
                                   (Unaudited)
<TABLE>
<CAPTION>

Properties Owned by                                                                                         Date
Local Limited                                                                                             Interest
Partnerships*                                                Location                                      Acquired
<S>                                                       <C>                                              <C>   

West Dade                                                 Miami, FL                                        12/31/88
West Dade II                                              Miami, FL                                        12/31/88
Regency Square                                            Dayton, OH                                       03/13/89
Westwood Manor                                            Flint, MI                                        02/21/89
Rolling Hills                                             Dayton, OH                                       03/13/89
Boulevard Commons II                                      Chicago, IL                                      04/04/89
Boulevard Commons IIA                                     Chicago, IL                                      04/04/89
Fox Run Housing                                           Victoria, TX                                     04/07/89
Waterfront                                                Buffalo, NY                                      04/28/89
Shoreline                                                 Buffalo, NY                                      04/28/89
Colony Apartments*                                        Columbia, SC                                     05/19/89
Admiral Court                                             Philadelphia, PA                                 06/07/89
Crestwood**                                               Bridgeport, TX                                   06/05/89
Elmwood                                                   Aurora, CO                                       05/16/89
El Jardin                                                 Davie, FL                                        06/14/89
Ashley Place                                              Orlando, FL                                      06/23/89
Willowick**                                               Gainesville, TX                                  06/30/89
Kirkendall Heights                                        Ellsworth, KS                                    07/19/89
Bentley Hill                                              Syracuse, KS                                     06/30/89
Columbia Townhouses                                       Burlington, IA                                   07/28/89
Quartermill                                               Richmond, VA                                     08/02/89
Ponca Manor                                               Satanta, KS                                      07/28/89
Pearl Place                                               Rossville, KS                                    07/28/89
Crown Point**                                             Venus, TX                                        08/22/89
Godley Arms**                                             Godley, TX                                       08/25/89
Pilot Point**                                             Pilot Point, TX                                  08/22/89
Sherwood Arms**                                           Keene, TX                                        08/22/89
South Holyoke                                             Holyoke, MA                                      08/29/89
Walker Woods                                              Dover, DE                                        08/30/89
Lakeway Colony**                                          Lake Dallas, TX                                  08/30/89
One Main Place**                                          Little Elm, TX                                   08/22/89
Eaglewood                                                 Covington, TN                                    09/06/89
Harbour View*                                             Staten Island, NY                                09/29/89
Georgetown II                                             Georgetown, DE                                   09/28/89
Granite*                                                  Boston, MA                                       09/29/89
Garden Plain                                              Garden Plain, KS                                 08/09/89
Fulton                                                    Fulton, KY                                       10/05/89
Lone Oak**                                                Graham, TX                                       10/06/89
Hallet West**                                             Hallettsville, TX                                11/20/89
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


Properties Owned by                                                                                         Date
  Local Limited                                                                                         Interest
  Partnerships*                                      Location                                              Acquired
<S>                                               <C>                                                      <C>   

Glenbrook**                                       St. Jo, TX                                               10/06/89
Eagles Nest**                                     Decatur, TN                                              10/06/89
Billings Family                                   Billings, MO                                             08/09/89
Brownsville                                       Brownsville, TN                                          08/09/89
Sunnyhill Villa                                   Wayne, NE                                                08/09/89
Longview                                          Humboldt, KS                                             10/13/89
Horseshoe Bend                                    Horseshoe Bend, AR                                       08/09/89
Briarwood II                                      Lake Havasua, AZ                                         10/04/89
Quail Run**                                       Iowa Park, TX                                            10/06/89
Smithville                                        Smithville, MO                                           08/09/89
Aurora East                                       Denver, CO                                               11/06/89
Elver Park II                                     Madison, WI                                              11/09/89
Elver Park III                                    Madison, WI                                              11/09/89
Tucson Trails I                                   Madison, WI                                              11/22/89
Tucson Trails II                                  Madison, WI                                              11/23/89
Pleasant Plaza                                    Malden, MA                                               12/01/89
241 Pine Street                                   Manchester, NH                                           12/04/89
Heather Oaks                                      Oak Grove, MO                                            11/24/89
Riverfront                                        Sunbury, PA                                              12/26/89
Susquehanna View                                  Camp Hill, PA                                            12/26/89
Breckenridge*                                     Duluth, GA                                               12/19/89
Wood Creek                                        Calcium, NY                                              12/15/89
Willow Lake*                                      Kansas City, MO                                          12/20/89
Ashton Heights                                    Bolivar, MO                                              12/15/89
Fouche Valley                                     Perryville, AR                                           05/01/90
Altheimer                                         Altheimer, AR                                            04/18/90
Kyle Hotel                                        Temple, TX                                               06/12/90
Diversey Square                                   Chicago, IL                                              12/01/90
Poplar Village                                    Cumberland, KY                                           12/30/90
Lexington                                         Lexington, TN                                            12/29/90
</TABLE>

*     The  Partnership's  interest in profits  and losses of each Local  Limited
      Partnership  arising from normal  operations  is 99% with the exception of
      five Local Limited  Partnerships in which the  Partnership  acquired a 98%
      interest  (Willow  Lake),  98%  interest   (Breckenridge),   97%  interest
      (Granite), 49% interest (Colony Apartments) and a 48.96% interest (Harbour
      View).  Profits and losses arising from sale or  refinancing  transactions
      are allocated in accordance with the respective Local Limited  Partnership
      Agreements.

**    As of March 31, 1997, the Managing  General  Partner has  transferred  all
      of  the  assets  of  five  of  the Texas Partnerships   subject  to  their
      liabilities to unaffiliated entities.  The transfer of Crown Point, Godley
      Arms, Glenbrook Apartments, Quail Run Apartments and Sherwood Arms Housing
      were effective February 21, 1996, February 21, 1996, June 7, 1996, July 3,
      1996  and  November  26, 1996, respectively.    Negotiations  between  the
      Managing General Partner, the Lender and prospective buyers have continued
      through the past quarter resulting in a revised  disposition  plan for the
      remaining Texas  Partnerships.  The new plan will transfer  title  to  the
      eight   remaining  Texas   Partnerships   (Crestwood   Place,  Eagle  Nest
      Apartments, Hallet-West Apartments,  Lone Oak Apartments,  One Main Place,
      Pilot Point  Apartments,  Lakeway  Colony  and  Willowick  Apartments)  to
      unaffiliated  buyers.  If negotiations continue as expected, this transfer
      will  occur  during the  second or third quarter  of calendar 1997. In the
      meantime,  operating  deficits  continue  to  be funded  from  Partnership
      Reserves.



<PAGE>


Although the  Partnership's  investments in Local Limited  Partnerships  are not
subject to seasonal  fluctuations,  the Partnership's  equity in losses of Local
Limited  Partnerships and rental operating revenues and expenses,  to the extent
they reflect the operations of individual  Properties,  may vary from quarter to
quarter based upon changes in occupancy  and  operating  expenses as a result of
seasonal factors.

With the exception of the Combined Entities, each Local Limited Partnership has,
as its general partners ("Local General  Partners"),  one or more individuals or
entities  not  affiliated  with the  Partnership  or its  General  Partners.  In
accordance  with the  partnership  agreements  under  which  such  entities  are
organized ("Local Limited Partnership  Agreements"),  the Partnership depends on
the Local General Partners for the management of each Local Limited Partnership.
As of March 31, 1997,  the following  Local Limited  Partnerships  have a common
Local General Partner or affiliated group of Local General  Partners  accounting
for the  specified  percentage  of the  original  investment  in  Local  Limited
Partnerships:  (i) Regency Square and Rolling  Hills,  representing  7.6%,  have
Folkers  Associates  as Local General  Partner;  (ii)  Boulevard  Commons II and
Boulevard Commons IIA,  representing  2.24%, have Carroll  Properties,  Inc. and
Robert King as Local  General  Partners;  (iii)  Ellsworth,  Syracuse,  Satanta,
Rossville, Humbolt, Smithville,  Brownsville, Briarwood, Billings, Garden Plain,
Wayne, Horseshoe Bend, Bolivar, Oak Grove, Westgate and Altheimer,  representing
2.16%,  have The Lockwood  Group as Local General  Partner;  (iv) Elver Park II,
Elver Park III,  Tucson Trails I and Tucson Trails II,  representing  5.9%, have
Gorman  Associates as Local  General  Partner;  (v)  Riverfront  Apartments  and
Susquehanna View,  representing 5.51%, have NCHP as Local General Partner;  (vi)
West Dade and West Dade II,  representing  6.01%,  have Romat,  Inc.  and Arbor,
Inc., respectively, both of which have Aristedes Martinez as principal, as Local
General Partner;  (vii) Elmwood and Fox Run,  representing  3.57%,  have Delwood
Ventures,   Inc.  and  R.S.F.   Ventures,   Inc.  as  Local  General   Partners,
respectively,  both of which have Raymond Baker as principal;  (viii) Eaglewood,
Lexington and Fulton,  representing  .70%,  have Tommy  Harper,  Jerry Blurt and
Chris Turskey as Local General  Partners;  and (ix)  Waterfront  and  Shoreline,
representing  6.17%,  have M.B.  Associates as Local General Partner.  The Local
General  Partners of the remaining Local Limited  Partnerships are identified in
the Acquisition Reports, which are incorporated herein by reference.

The Properties owned by Local Limited  Partnerships in which the Partnership has
invested are and will  continue to be subject to  competition  from existing and
future  properties in the same areas.  The continued  success of the Partnership
will  depend  on many  factors,  most of which are  beyond  the  control  of the
Partnership  and which cannot be predicted  at this time.  Such factors  include
general economic and real estate market conditions, both on a national basis and
in those areas where the Properties are located,  the  availability  and cost of
borrowed  funds,  real estate tax rates,  operating  expenses,  energy costs and
government  regulations.  In  addition,  other  risks  inherent  in real  estate
investment may influence the ultimate success of the Partnership, including: (i)
possible  reduction  in rental  income  due to an  inability  to  maintain  high
occupancy  levels or adequate  rental levels;  (ii) possible  adverse changes in
general economic  conditions and adverse local  conditions,  such as competitive
overbuilding,  a decrease in employment  rates or adverse changes in real estate
laws,  including  building codes; and (iii) the possible future adoption of rent
control  legislation  which would not permit  increased costs to be passed on to
the tenants in the form of rent increases or which would suppress the ability of
the Local Limited Partnership to generate operating cash flow. Since most of the
Properties benefit from some form of government  assistance,  the Partnership is
subject  to the risks  inherent  in that  area  including  decreased  subsidies,
difficulties  in finding  suitable  tenants and  obtaining  permission  for rent
increases. In addition, any Tax Credits allocated to investors with respect to a
Property are subject to recapture to the extent that the Property or any portion
thereof  ceases to qualify for the Tax Credits.  Other future changes in Federal
and  state  income  tax  laws  affecting   real  estate   ownership  or  limited
partnerships  could have a material  and adverse  affect on the  business of the
Partnership.

The  Partnership  is managed by Arch  Street III,  Inc.,  the  Managing  General
Partner of the Partnership. The other General Partner of the Partnership is Arch
Street III Limited  Partnership.  To economize  on direct and  indirect  payroll
costs, the Partnership, which does not have any employees, reimburses The Boston
Financial Group Limited Partnership  ("Boston  Financial"),  an affiliate of the
General Partners, for certain expenses and overhead costs. A complete discussion
of the management of the Partnership is set forth in Item 10 of this Report.


<PAGE>



Item 2.  Properties

The Partnership owns limited  partnership  interests in sixty-nine Local Limited
Partnerships which own and operate  Properties,  some of which benefit from some
form of federal, state or local assistance programs and all of which qualify for
the  Tax  Credits  added  to the  Code  by the  Tax  Reform  Act  of  1986.  The
Partnership's  ownership interest in each Local Limited Partnership is generally
99%, except for Willow Lake, Granite,  Colony Apartments and Harbour View, where
the Partnership's ownership interest is 98%, 97%, 49% and 48.96%, respectively.

Each of the Local Limited Partnerships has received an allocation of Tax Credits
from its relevant state tax credit agency.  In general,  the Tax Credit runs for
ten years from the date the Property is placed in service.  The required holding
period (the  "Compliance  Period") of the  Properties is fifteen  years.  During
these fifteen  years,  the  Properties  must satisfy rent  restrictions,  tenant
income  limitations  and other  requirements,  as  promulgated  by the  Internal
Revenue Code, in order to maintain  eligibility  for the Tax Credit at all times
during  the  Compliance  Period.  Once a Local  Limited  Partnership  has become
eligible for the Tax Credits,  it may lose such  eligibility and suffer an event
of  recapture  if  its  Property   fails  to  remain  in  compliance   with  the
requirements.

In  addition,  some of the Local  Limited  Partnerships  have  obtained one or a
combination  of different  types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the property is located at favorable  terms; and iii) loans which have repayment
terms that are based on a percentage of cash flow.

The schedules on the  following  pages provide  certain key  information  on the
Local Limited Partnership interests acquired by the Partnership.


<PAGE>
<TABLE>
<CAPTION>





                                                             Capital Contributions
Local Limited Partnership                                 Total              Total         Mtge. Loans                   Occupancy
Property Name                         Number of      Committed at       Paid through       payable at          Type of     at March
Property Location                     Apt. Units     March 31, 1997     March 31, 1997     December 31, 1996   Subsidy*    31, 1997
---------------------------------   --------------   -----------------   ---------------    ----------------    --------- ----------
<S>                                         <C>         <C>                <C>               <C>               <C>              <C>

West Dade LTD, A Limited Partnership
West Dade
Miami, FL                                   122         $1,513,936         $1,513,936        $4,087,350        Section 8        95%

West Dade LTD II, A Limited Partnership
West Dade II
Miami, FL                                   209          3,039,442          3,039,442         8,367,742        Section 8        96%

Westwood Manor Limited Dividend
    Housing Association L.P.
Westwood Manor
Flint, MI                                   144          1,165,925          1,165,925         3,364,998        Section 8        98%

Rolling Hills Associates L.P.
Rolling Hills
Dayton, OH                                  150          2,883,000          2,883,000         3,107,682        Section 8        48%

Regency Square Limited Partnership
Regency Square
Dayton, OH                                  140          2,772,000          2,772,000         3,301,775        Section 8        20%

Shoreline Limited Partnership
Shoreline
Buffalo, NY                                 142          1,079,318          1,079,318         6,461,589        None             76%

Waterfront Limited Partnership
Waterfront
Buffalo, NY                                 472          3,597,307          3,597,307        23,125,955        None             74%

</TABLE>

<PAGE>
<TABLE>
<CAPTION>





                                                        Capital Contributions
Local Limited Partnership                             Total             Total           Mtge. Loans                      Occupancy
Property Name                        Number of     Committed at     Paid through         payable at           Type of    at March
Property Location                   Apt. Units     March 31, 1997   March 31, 1997      December 31, 1996     Subsidy*    31, 1997
--------------------------------  -----------   ------------------  ----------------   -------------------  ----------   -----------
<S>                                         <C>        <C>             <C>                 <C>                <C>               <C>

Fox Run Housing
Fox Run
Victoria, TX                                150        1,605,775       1,605,775           4,132,463          Section 8         95%

Boulevard Commons Limited
    Partnership II
Boulevard Commons II
Chicago, IL                                  61          517,175         517,175             717,387          Section 8        100%

The Colony Apartments, L.P.
    A Limited Partnership
Colony Apartments
Columbia, SC                                300        1,762,500       1,762,500           8,639,305          Section 8         95%

Boulevard Commons Limited
    Partnership IIA
Boulevard Commons IIA
Chicago, IL                                  42        1,179,812       1,179,812           1,559,802          Section 8         79%

Ashley Place, LTD
    A Florida Limited Partnership
Ashley Place
Orlando, FL                                  96        2,002,560       2,002,560           2,826,469          None              99%

Admiral Housing Limited Partnership
Admiral Court
Philadelphia, PA                             46        1,900,000       1,900,000           2,478,296          Section 8         86%

</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                                        Capital Contributions
Local Limited Partnership                                Total          Total             Mtge. Loans                   Occupancy
Property Name                        Number of      Committed at      Paid through         payable at          Type of   at March
Property Location                    Apt. Units     March 31, 1997    March 31, 1997     December 31, 1996     Subsidy*  31, 1997
----------------------------------   ------------   --------------   ----------------   --------------------   --------  ----------
<S>                                      <C>           <C>             <C>                   <C>                <C>            <C>

Prarieland Property of Syracuse, L.P.
Bentley Hill
Syracuse, KS                               8              52,150           52,150              241,402          FmHA           100%

El Jardin of Davie, Ltd.
El Jardin
Davie, FL                                236           2,022,100        2,022,100            6,859,190          Section 8       98%

EDM Housing Associates LTD
    A Limited Partnership
Elmwood Delmar
Aurora, CO                                95           1,102,025        1,102,025            3,144,082          Section 8       98%

Bridgeport Housing Associates, LTD**(A)
Crestwood
Bridgeport, TX                            24              95,367           95,367              365,986          FmHA            42%

Willowick Housing Associates, LTD**(A)
Willowick
Gainesville, FL                           60             311,761          311,761            1,150,688          FmHA            30%

Ellsworth Senior Housing, L.P.
Kirkendall Heights
Ellsworth, KS                             12              69,658           69,658              329,346          FmHA            92%

Prairieland Properties of Satanta, L.P.
Ponca Manor
Satanta, KS                                8              49,915           49,915              224,206          FmHA           100%
</TABLE>



<PAGE>
<TABLE>
<CAPTION>



                                                      Capital Contributions
Local Limited Partnership                              Total            Total           Mtge. Loans                     Occupancy
Property Name                        Number of      Committed at     Paid through       payable at           Type of     at March
Property Location                   Apt. Units      March 31, 1997   March 31, 1997     December 31, 1996    Subsidy*    31, 1997
--------------------------------   --------------  ---------------- ----------------    -----------------    ---------   ----------
<S>                                     <C>           <C>               <C>               <C>                 <C>             <C>

Rossville Senior Housing L.P.
Pearl Place
Rossville, KS                            10               58,855           58,855            279,995          FmHA             90%

Columbia Townhouse Associates, L.P.
Columbia Townhouses
Burlington, IA                           56              752,450          752,450          1,398,816          Section 8       100%

Quartermill Associates, L.P.
    A Virginia Limited Partnership
Quartermill
Richmond, VA                            266            7,705,500        7,705,500          7,185,259          None            100%

One Main Place Housing
    Associates, LTD**(A)
One Main Place
Little Elm, TX                           24               80,374           80,374            364,887          FmHA             38%

Pilot Point Housing Associates, LTD**(A)
Pilot Point
Pilot Point, TX                          40              113,980          113,980            545,266          FmHA             50%

Sherwood Arms Housing
    Associates, LTD (A)
Sherwood Arms
Keene, TX
</TABLE>




<PAGE>
<TABLE>
<CAPTION>



                                                            Capital Contributions
Local Limited Partnership                               Total             Total          Mtge. Loans                      Occupancy
Property Name                        Number of      Committed at      Paid through       payable at            Type of     at March
Property Location                   Apt. Units      March 31, 1997    March 31, 1997     December 31, 1996     Subsidy*    31, 1997
-------------------------------   --------------   ----------------- ----------------   -------------------    ---------  ----------
<S>                                      <C>          <C>               <C>                  <C>                 <C>          <C>
 
Crown Point Housing
    Associates, LTD (A)
A Texas Limited Partnership
Crown Point
Venus, TX

Godley Arms Housing
    Associates, LTD (A)
Godley Arms
Godley, TX

South Holyoke Limited Partnership
South Holyoke
Holyoke, MA                               48          1,119,330          1,119,330           2,760,370          None           88%

Harbour View
    A Limited Partnership
Harbour View
Staten Island, NY                        122          1,350,000          1,350,000           9,549,824          None           93%

Walker Woods Partners, L.P.
Walker Woods
Dover, DE                                 51          1,452,380          1,452,380           2,363,190          None           90%

Boston Financial Texas Properties
    Limited Partnership III**(A)
Lakeway Colony
Lake Dallas, TX                           40            179,358            179,358             503,235          FmHA           60%



</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                                         Capital Contributions
Local Limited Partnership                            Total            Total           Mtge. Loans                        Occupancy
Property Name                      Number of      Committed at     Paid through      payable at           Type of         at March
Property Location                 Apt. Units      March 31, 1997   March 31, 1997    December 31, 1996    Subsidy*        31, 1997
-----------------------------   --------------   --------------   ---------------   ------------------    --------     -------------
<S>                                    <C>           <C>              <C>                 <C>                <C>               <C>

Eaglewood VIII, L.P.
    A Limited Partnership
Eaglewood
Covington, TN                           40             255,000          255,000           1,117,119          FmHA              100%

Georgetown Associates II, L.P.
Georgetown II
Georgetown, DE                          50           1,200,000        1,200,000           1,744,693          None               98%

Blue Mountain Associates, L.P.
    A Massachusetts Limited Partnership
Granite V
Boston, MA                             217           5,774,113        5,774,113           9,912,154          Section 8          99%

Garden Plain Senior Apts., LTD
Garden Plain
Garden Plain, KS                        12              70,030           70,030             303,961          FmHA              100%

Fulton Associates I, L.P.
    A Limited Partnership
Fulton, KY                              24             180,000          180,000             801,697          FmHA               92%

Lone Oak Housing Associates, LTD (A)
Lone Oak                                64             160,795          160,795             618,418          FmHA               42%
Graham, TX
</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                        Capital Contributions
Local Limited Partnership                             Total            Total           Mtge. Loans                       Occupancy
Property Name                      Number of      Committed at      Paid through       payable at          Type of        at March
Property Location                  Apt. Units     March 31, 1997    March 31, 1997     December 31, 1996   Subsidy*       31, 1997
-------------------------------   --------------  ---------------  ----------------    ------------------  ---------  -------------
<S>                                     <C>            <C>               <C>                <C>              <C>               <C>

West Hallettsville Housing
    Associates, LTD**(A)
Hallet-West
Hallettsville, TX                        24             66,426            66,426            296,389          FmHA               29%

Glenbrook Housing Associates, LTD (A)
Glenbrook
St. Jo, TX

Eagles Nest Housing
    Associates, LTD**(A)
Eagles Nest
Decatur, TX                              90            234,376           234,376            963,496          FmHA               33%

Billings Family Housing, L.P.
Cedar Tree
Billings, MO                             12             58,855            58,855            284,005          FmHA              100%

Brownsville Associates, L.P.
Brownsville
Brownsville, TN                          28            161,665           161,665            788,041          FmHA              100%

Wayne Senior Housing, L.P.
Sunnyhill Villa
Wayne, NE                                15             81,205            81,205            430,080          FmHA              100%

Longview Apartments, L.P.
Longview
Humbolt, KS                              14             91,635            91,635            399,642          FmHA               86%

</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                        Capital Contributions
Local Limited Partnership                            Total            Total          Mtge. Loans                         Occupancy
Property Name                     Number of      Committed at      Paid through      payable at             Type of       at March
Property Location                 Apt. Units     March 31, 1997    March 31, 1997    December 31, 1996      Subsidy*      31, 1997
-------------------------------  --------------   -------------   ---------------   ------------------    ------------    ---------
<S>                                      <C>           <C>               <C>            <C>                <C>                 <C>

Horseshoe Bend Associates I, L.P.
Horseshoe Bend
Horseshoe Bend, AR                       24            143,785           143,785          651,347          FmHA                100%

Briarwood Associates II, L.P.
Briarwood II
Lake Havasua, AZ                         32            219,030           219,030        1,114,117          FmHA                100%

North Quail Run Housing
    Associates, LTD (A)
Quail Run
Iowa Park, TX

Smithville Rural Housing
    A Limited Partnership
Smithville
Smithville, MO                           24            108,025           108,025          547,689          FmHA                100%

Aurora Properties, LTD.
    A Limited Partnership
Aurora East Apartments
Denver, CO                              125            765,000           765,000        4,031,980          Section 8            97%

Elver Park Limited Partnership II
Elver Park II
Madison, WI                              56          1,246,385         1,246,385        1,702,679          None                 98%

</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                         Capital Contributions
Local Limited Partnership                           Total              Total          Mtge. Loans                       Occupancy
Property Name                      Number of      Committed at      Paid through      payable at           Type of       at March
Property Location                 Apt. Units      March 31, 1997    March 31, 1997    December 31, 1996    Subsidy*      31, 1997
------------------------------   --------------   --------------   --------------    -------------------  ---------   -------------
<S>                                    <C>           <C>               <C>                <C>                 <C>               <C>

Elver Park Limited Partnership III
Elver Park III
Madison, WI                            48            1,047,470         1,047,470           1,471,297          None              98%

Tuscon Trails Limited Partnership I
Tuscon Trails I
Madison, WI                            48            1,047,470         1,047,470           1,435,577          None              90%

Tuscon Trails Limited Partnership II
Tuscon Trails II
Madison, WI                            48            1,047,470         1,047,470           1,442,356          None              90%

Pleasant Plaza Housing L.P.
Pleasant Plaza
Malden, MA                            125            3,340,138         3,340,138          12,449,423          Section 8         99%

241 Pine Street Associates, L.P.**
241 Pine Street
Manchester, NH                         50            1,374,298         1,374,298                   0          None              95%

Missouri Rural Housing of
    Oak Grove, L.P.
Heather Oaks
Oak Grove, MO                          24              118,828           118,828             563,397          FmHA              96%

Wood Creek Associates
    A New York Limited Partnership
Wood Creek
Calcium, NY                           104            1,850,000         1,850,000           3,366,957          None              97%

</TABLE>



<PAGE>
<TABLE>
<CAPTION>



                                                     Capital Contributions
Local Limited Partnership                          Total               Total            Mtge. Loans                    Occupancy
Property Name                     Number of      Committed at      Paid through         payable at          Type of      at March
Property Location                Apt. Units      March 31, 1997    March 31, 1997    December 31, 1996      Subsidy*     31, 1997
------------------------------- ------------   ----------------   ---------------  --------------------    ----------   ------------
<S>                                   <C>           <C>                <C>              <C>                <C>               <C>

Breckenridge Creste Apartments, L.P.**
Breckenridge
Duluth, GA                            164           3,520,000          3,520,000        4,819,643          None               76%

Willow Lake Partners II, L.P.**
    A Limited Partnership
Willow Lake
Kansas City, MO                       132           2,130,700          2,130,700        2,744,825          None               95%

Bolivar Senior Housing, L.P.
Ashton Heights
Bolivar, MO                            20              95,360             95,360          468,254          FmHA              100%

Lexington Associates I L.P.
    A Limited Partnership
Lexington Civic
Lexington, TN                          24              95,000             95,000          819,752          FmHA               58%

Riverfront Apartments, L.P.
Riverfront
Sunbury, PA                           200           1,984,908          1,984,908        7,711,792          Section 8         100%

Susquehanna View L.P.
Susquehanna View
Camp Hill, PA                         201           2,194,314          2,194,314        9,140,239          Section 8          99%

Westgate Associates I, L.P.
Fouche Valley
Perryville, AR                         20             131,865            131,865          640,576          FmHA               90%
</TABLE>



<PAGE>
<TABLE>
<CAPTION>



                                                        Capital Contributions
Local Limited Partnership                             Total           Total           Mtge. Loans                       Occupancy
Property Name                      Number of      Committed at      Paid through      payable at           Type of      at March
Property Location                  Apt. Units     March 31, 1997    March 31, 1997    December 31, 1996    Subsidy*     31, 1997
-------------------------------   -----------   ----------------   ---------------    -----------------    ---------    ------------
<S>                                  <C>          <C>               <C>              <C>                    <C>               <C>

Altheimer Associates I, L.P.
Altheimer
Altheimer, AR                           20            130,375            130,375           599,724          FmHA               95%

The Temple-Kyle L.P.**
Kyle Hotel
Temple, TX                              64          1,624,100          1,624,100         1,423,253          Section 8          98%

Diversey Square Associates II
Diversey Square II
Chicago, IL                             48          1,031,825          1,031,825         2,581,872          Section 8         100%

Poplar Village, LTD
Poplar Village
Cumberland, KY                          36            283,945            283,945         1,205,175          None               91%
                                      ------       -------------     -----------     ---------------
                                     5,401         75,398,344         75,398,344       188,028,174
                                     ======
Less: **Combined Entities                           9,730,740          9,730,740        13,177,668
                                                   -------------    ------------     ---------------
                                                  $65,667,604        $65,667,604    $  174,850,506
                                                  ===========       ===========      ===============
</TABLE>

 *FmHA    This subsidy, which is authorized under Section 515 of the Housing Act
          of 1949, can be one or a combination of different types of  financing.
          For instance, FmHA may provide:  1) direct  below-market-rate mortgage
          loans for rural rental housing;  2) mortgage interest subsidies which
          effectively  lower the interest  rate  of the  loan to 1%; 3) a rental
          assistance  subsidy to tenants  which  allows them to pay no more than
          30% of  their monthly  income as rent  with  the balance  paid by the
          federal government; or 4) a combination of any of the above.

Section 8 This subsidy,  which is authorized  under Section 8 of Title II of the
Housing and Community  Development  Act of 1974,  allows  qualified  low- income
tenants to pay 30% of their monthly  income as rent with the balance paid by the
federal government.

 (A)       As of March 31, 1997, the Managing  General  Partner has  transferred
           all of the assets of five of the Texas Partnerships  subject to their
           liabilities.   The  eight  remaining  Texas   Partnerships   will  be
           transferred  after March 31, 1997.  The five Texas  Partnerships  had
           total capital  contributions and mortgage payable amounts of $418,435
           and $1,708,130, respectively, as of the transfer dates.



<PAGE>


One Local Limited Partnership,  Quarter Mill Associates L.P., invested in by the
Partnership  represents more than 10% of the total capital  contributions  to be
made  to  Local  Limited  Partnerships  by the  Partnership.  Quarter  Mill is a
266-unit construction apartment complex located in Richmond, Virginia.

Quarter Mill is financed by a  combination  of private and public  sources.  The
first mortgage is at 8.75% interest,  a 40-year term, and is insured by HUD. The
apartment  project is pledged as  collateral  for the note. In addition to this,
there is a subordinated  nonrecourse note payable that is payable each year only
to the extent of 15% of the  property's  net cash  flow,  as defined by the note
agreement.

Additional  information  required  under  this  item,  as  it  pertains  to  the
Partnership, is contained in Items 1, 7 and 8 of this report.

Item 3.  Legal Proceedings

Lone Oak Housing Associates, Ltd., as was previously reported, was the defendant
in a lawsuit in which the plaintiff had alleged  negligence and deceptive  Trade
Act violations.  This  litigation has been settled by the insurance  carrier and
the case dismissed.

Willow Lake  Partners  II, L.P.  ("Willow  Lake") is the  defendant in a lawsuit
relating  to  an  earlier  lawsuit   involving  Willow  Lake.  As  part  of  the
Partnership's  settlement with the former management agent, Willow Lake gave the
management  agent  two cash  flow  notes.  The  former  management  agent is now
claiming  that Willow Lake has cash flow (so  payments  should have been made on
the notes) and it is the  Partnership's  position that the property is running a
deficit.  This  litigation  is not  expected  to have a  material  impact on the
Partnership.

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

None.


                              PART II

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

There is no public  market for the Units,  and it is not expected  that a public
market will develop.  If a Limited Partner  desires to sell Units,  the buyer of
those Units will be required to comply with the minimum  purchase and  retention
requirements and investor suitability standards imposed by applicable federal or
state  securities  laws and the  minimum  purchase  and  retention  requirements
imposed by the  Partnership.  The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers,  will be subject
to negotiation by the Limited Partner seeking to sell his Units.  Units will not
be redeemed or repurchased by the Partnership.

The  Partnership  Agreement  does not impose on the  Partnership  or its General
Partners any  obligation to obtain  periodic  appraisals of assets or to provide
Limited Partners with any estimates of the current value of Units.

As of  March  31,  1997,  there  were  6,283  record  holders  of  Units  of the
Partnership.

Cash distributions, when made, are paid annually.  No cash distribution was paid
in the years ended March 31, 1997, 1996 and 1995.


<PAGE>


Item 6.  Selected Financial Data

The following  table sets forth  selected  financial  information  regarding the
Partnership's  financial position and operating results. This information should
be read in conjunction  with  Management's  Discussion and Analysis of Financial
Condition  and Results of  Operations  and the  Financial  Statements  and Notes
thereto, which are included in Items 7 and 8 of this Report.
<TABLE>
<CAPTION>

                                    March 31,        March 31,       March 31,         March 31,         March 31,
                                       1997            1996             1995             1994               1993
                                   -------------    ------------    -------------     ------------      -------------
<S>                                <C>             <C>               <C>              <C>               <C>   

Revenue (C)                        $2,119,597       $2,219,261        $1,926,504       $1,200,399          $383,610
Equity in losses of Local
  Limited Partnerships (C)          (3,624,984)    (4,670,063)       (5,818,976)      (5,887,566)       (6,729,079)
Extraordinary gain (loss) on
   forgiveness of indebtedness         (51,595)      1,279,618                 -                -                 -
Per Limited Partnership Unit              (.51)          12.67                 -                -                 -
Net loss                            (7,208,441)    (5,440,551)       (9,002,539)      (7,684,561)       (7,245,217)
Per Limited Partnership
  Unit                                  (71.36)        (53.86)           (89.13)          (76.08)           (71.73)
Partner distributions                         -             -                -                  -                -
Cash, cash equivalents and
  marketable securities                 710,933        427,007         2,356,402        3,532,293         4,075,605
Investment in Local Limited
  Partnerships, at original cost(D,E)82,971,102     82,971,102        82,943,526       82,943,526        82,925,507
Total Assets (A)                     43,791,590     44,371,622        52,653,124       61,386,839        58,154,344
Total Liabilities                    15,393,975      9,474,777        12,090,444       11,823,888         1,471,720
Other Data:
Passive loss (B)                   (10,918,014)   (11,654,006)      (12,660,771)     (12,568,468)      (10,159,103)
Per Limited Partnership
  Unit (B)                             (108.09)       (115.37)          (125.34)         (124.43)          (100.58)
Portfolio Income  (B)                   412,136        529,521           470,018          706,189           837,920
Per Limited Partnership
  Unit (B)                                 4.08           5.24              4.65             6.99              8.30
Low-Income Housing
  Tax Credits (B)                    13,857,452     14,056,981        14,088,559       14,056,340        13,949,374
Per Limited Partnership
  Unit (B)                               136.50         138.47            138.78           138.50            137.41
Recapture of Low-Income
  Housing Tax Credits (B)             (995,750)              -                 -                -                 -
Per Limited Partnership
  Unit (B)                               (9.86)              -                 -                -                 -
Local Limited Partnership interests
owned at end of period (E)                   64             69                69               69                69

</TABLE>

(A) Total assets include the net investment in Local Limited Partnerships.

(B)  Income  tax  information  is as  of  December  31,  the  year  end  of  the
     Partnership for income tax purposes.  The Low-Income Housing Tax Credit per
     Limited Partnership Unit for 1996, 1995, 1994, 1993 and 1992 represents the
     amount  allocated  to  individual   investors.   Corporate  investors  were
     allocated $142.65,  $144.62, $144.95, $144.67 and $143.57 per Unit in 1996,
     1995, 1994, 1993 and 1992, respectively.


<PAGE>


Item 6.  Selected Financial Data (continued)

(C)  Revenue for the years  ended  March 31,  1997,  1996,  1995,  1994 and 1993
     includes  $1,909,683,   $2,224,273,   $1,792,997,   $828,978  and  $51,030,
     respectively,  of rental and other revenues from the Combined Entities that
     is  included  in  the  combined  revenue  on  the  Combined   Statement  of
     Operations.  Equity in losses of Local  Limited  Partnerships  in the years
     ended  March  31,  1997,  1996,  1995,  1994  and  1993  does  not  include
     $(902,253), $608,681, ($857,248),  ($549,275) and ($46,575),  respectively,
     of income (losses) from the Combined  Entities that have been combined with
     the Partnership's loss on the Combined Statement of Operations.

(D)  Investment in Local Limited Partnerships  includes capital contributions to
     Local Limited  Partnerships that have been combined for financial reporting
     purposes,  as well as  capital  contributions  that have been made to Local
     Limited Partnerships that have subsequently been transferred.

 (E) At March 31, 1997, the Managing  General Partner has transferred all of the
     assets of five of the Texas  Partnerships  subject to their  liabilities to
     unaffiliated entities with an orginal cost amount of $418,435.


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

Liquidity and Capital Resources

The  Partnership  (including the Combined  Entities) had an increase in cash and
cash equivalents of $111,574 for the year ended March 31, 1997. This increase is
attributable to cash distributions  received from Local Limited Partnerships and
advances on a note payable from an affiliate. These are partially offset by cash
used for  operations,  purchases of marketable  securities  and advances made to
affiliates.

The Managing  General Partner  initially  designated 3% of the Gross Proceeds to
Reserves.  The Reserves were  established to be used for working  capital of the
Partnership  and  contingencies  related  to  the  ownership  of  Local  Limited
Partnership  interests.  The Managing  General  Partner may increase or decrease
such Reserves from time to time, as it deems appropriate.  During the year ended
March 31, 1993,  the Managing  General  Partner  decided to increase the Reserve
level to  3.75%.  Funds  approximating  $195,000  have been  withdrawn  from the
Reserves  to pay  legal  and  other  costs  related  to the Mod  Rehab  Issue as
previously  discussed.  Additionally,  professional  fees  relating  to  various
property issues totaling approximately  $1,494,000 have been paid from Reserves.
This amount includes  approximately  $1,220,000 for the Texas  Partnerships.  To
date, Reserve funds in the amount of approximately  $349,000 have also been used
to make additional capital contributions to two Local Limited Partnerships,  and
the Partnership has paid approximately  $1,348,000 (net of paydowns) to purchase
the mortgage of a Local Limited  Partnership.  To date, the Partnership has used
approximately  $1,067,000 of operating funds to replenish Reserves. At March 31,
1997, approximately $482,000 of cash, cash equivalents and marketable securities
have been  designated  as  Reserves.  Reserves  may be used to fund  Partnership
operating deficits,  if the Managing General Partner deems funding  appropriate.
If  Reserves  are not  adequate  to  cover  the  Partnership's  operations,  the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset  Management Fees paid to an affiliate of the Managing  General
Partner  or  working  with  Local   Limited   Partnerships   to  increase   cash
distributions.

In the  event a Local  Limited  Partnership  encounters  operating  difficulties
requiring  additional funds, the Partnership might deem it in its best interests
to provide such funds, voluntarily, in order to protect its investment. To date,
in addition to the $1,220,000  noted above,  the  Partnership  has also advanced
approximately $625,000 to the Texas Partnerships and $324,000 to two other Local
Limited Partnerships to fund operating deficits.

Since the  Partnership  invests as a limited  partner,  the  Partnership  has no
contractual  duty to  provide  additional  funds to Local  Limited  Partnerships
beyond its specified investment. Thus, at March 31, 1997, the Partnership had no
contractual or other obligation to any Local Limited  Partnership  which had not
been paid or provided for.



Cash Distributions

No cash  distributions  were made in the three years ended March 31, 1997. As of
March 31,  1997,  all  required  capital  contributions  have been made to Local
Limited Partnerships. Based on the results of 1996 operations, the Local Limited
Partnerships are not expected to distribute  significant  amounts of cash to the
Partnership  because  such  amounts  will be needed to fund  Property  operating
costs. In addition,  many of the Properties benefit from some type of federal or
state  subsidy  and,  as a  consequence,  are  subject to  restrictions  on cash
distributions. Therefore, it is expected that only a limited amount of cash will
be distributed to investors from this source in the future.

Results of Operations

1997 versus 1996

For the year ended March 31, 1997, Partnership operations resulted in a net loss
of $7,208,441  as compared to a net loss of $5,440,551  for the year ended 1996.
The  increase  in  net  loss  is  primarily   attributable   to  a  decrease  in
extraordinary  gain  on  forgiveness  of  indebtness  and the  recognition  of a
provision  for  valuation  of  real  estate  by the  Texas  Partnerships.  These
increases are partially offset by a decrease in equity in losses.

The decrease in equity in losses of Local Limited  Partnerships is a result of a
decrease  in rental  operations  and  interest  expenses  at the  Local  Limited
Partnerships.  In addition, one of the Local Limited Partnerships contributed to
a decrease in equity in losses due to a reallocation of the net loss between the
Local and General Partners in 1996.

1996 versus 1995

For the year ended March 31, 1996, Partnership operations resulted in a net loss
of $5,440,551  as compared to a net loss of $9,002,539  for the year ended 1995.
The  decrease in net loss is primarily  attributable  to a decrease in equity in
losses,   lower  general  and   administrative   expenses  and  cancellation  of
indebtedness  income. In addition,  for the year ended March 31, 1996, there was
no adjustment to the provision for valuation of investments.

The decrease in equity in losses of Local Limited Partnerships is a result of an
increase in unrecognized  losses relating to certain Local Limited  Partnerships
in  which   cumulative   equity  in  losses  and   distributions   exceeded  the
Partnership's  total investments in these Local Limited  Partnerships during the
comparable periods. In addition, three of the Combining Entities had forgiveness
of indebtedness income as a result of refinancing and restructuring.
The   Partnership   also   liquidated   its  interests  in  five  Local  Limited
Partnerships.

The decline in general and administrative  expenses is primarily attributable to
a  reclassification  of legal  expenses  paid out of  Reserves  on  behalf  of a
Combined Entity now deemed collectible.  In addition, overall expenses are lower
due to no provision for valuation of investments in Local Limited Partnerships.

Effect of recently issued Accounting Standard

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, which is effective for fiscal years
beginning  after  December 15, 1995.  This  standard  requires that the carrying
values of long-lived  assets be reviewed for  recoverability.  Impairment losses
are  recognized  when  events or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  The Partnership adopted the
new standard for its year ending March 31, 1997. The Texas  Partnerships  had an
impairment  loss during the year ended December 31, 1996 because of the adoption
of this new standard.



<PAGE>


Low-Income Housing Tax Credits

The 1996,  1995 and 1994 Tax  Credits  per Unit for  individuals  were  $136.50,
$138.47 and $138.78,  respectively. The 1996, 1995 and 1994 Tax Credits per Unit
for corporations were $142.65, $144.62 and $144.95,  respectively.  The credits,
which have  stabilized,  are expected to remain  stable for the next four years,
and then they are  expected to decrease as certain  properties  reach the end of
the ten-year credit period.  The transfer of ownership of the Texas Partnerships
will result in nominal  recapture  of tax credits  since the Texas  Partnerships
represent only 2% of the Partnership's tax credits.

The Tax Credits per Unit for corporate investors will be slightly higher for the
remaining years of the credit period than that for individual  investors because
certain of the  Properties  took  advantage  of 1990  federal  legislation  that
allowed the  acceleration  of future tax credits to  individuals in the tax year
ended  December 31, 1990.  For those  Properties  that elected to accelerate the
individual credit, the accelerated portion is being amortized over the remainder
of the credit period,  thereby causing a reduction of this and future year's tax
credits  passed  through by those  Properties.  In total,  both  individual  and
corporate investors will be allocated equal amounts of Tax Credits.

Property Discussions

Prior to the transfer of the Texas Partnerships,  Limited Partnership  interests
had been acquired in sixty-nine Local Limited Partnerships which own and operate
rental properties in twenty-four states.  Forty-two of the properties,  totaling
3,935 units,  were  rehabilitated,  and twenty-seven  properties,  consisting of
1,614  units,  were newly  constructed.  All of the  properties  have  completed
construction  or  rehabilitation  and initial  lease-up.  Many of the  remaining
sixty-four Local Limited Partnerships in which the Partnership has invested have
stable operations and are operating satisfactorily.

Several properties are experiencing  operating  difficulties and generating cash
flow  deficits  due to a variety of reasons.  In most cases,  the Local  General
Partners of these  properties are funding the deficits  through  project expense
loans and  subordinated  loans or payments from escrows.  In instances where the
Local General Partners'  obligations to fund deficits have expired or otherwise,
the  Managing  General  Partner is  working  with the Local  General  Partner to
increase  operating  income,  reduce  expenses  or  refinance  the debt at lower
interest rates.

Operations are improving at Pleasant Plaza, located in Malden, Massachusetts, as
a result of the 1995 SHARP  subsidy  restructuring.  However,  as we  previously
reported,  the Local  General  Partner is  seeking  bankruptcy  protection.  His
reorganization plan is expected to be approved in 1997. If approved, the plan is
not  likely to  materially  affect  property  operations  or the  local  General
Partner's interest in the Partnership.

As previously  reported,  Harbour View,  located in Staten Island, New York, had
defaulted on its HUD-insured loan. Subsequently, the lender assigned the loan to
HUD.  In  December  1996,  the  property's  mortgage  was sold at  auction to an
unaffiliated institutional buyer. The Managing General Partner and Local General
Partner  continue  to  participate  in  discussions  with  the new  lender.  The
Partnership's  ability to retain its interest in the property will depend on the
ability of the Local General  Partner or Partnership  affiliates to purchase the
mortgage or negotiate a satisfactory  workout agreement with the new lender. The
Partnership's carrying value of this investment for financial reporting purposes
is zero.

As previously  reported,  the Managing  General  Partner  transferred all of the
assets  of five of the  Texas  partnerships  subject  to  their  liabilities  to
unaffiliated  entities  in  1996.  Negotiations  between  the  Managing  General
Partner,  the Lender and  prospective  buyers  have  continued  through the past
quarter resulting in a revised  disposition plan for the remaining 8 properties.
The new plan will transfer  title to the remaining 8 properties to  unaffiliated
buyers.  If negotiations  continue as expected,  this transfer will occur during
the  second  or third  quarter  of 1997.  In the  meantime,  operating  deficits
continue to be funded from Partnership Reserves. For tax purposes,  these events
will result in both Section 1231 gain and  cancellation of indebtedness  income.
In  addition,  the  transfer of  ownership  will  result in a nominal  amount of
recapture of tax credits because the Texas Partnerships represent only 2% of the
Partnership's tax credits.


Property Discussions (continued)

New on-site  management and rent increases have resulted in a marked improvement
in  operations at Columbia.  At 92%,  occupancy is at its highest point in three
years.  The Local  General  Partner  continues  to work with the first  mortgage
lender and with HUD to renegotiate the property's  debt. As a result of improved
operations,  the  property  is now  covering  its debt  service  from funds from
operations.

South  Holyoke,  located in  Holyoke,  Massachusetts,  continues  to  experience
occupancy  problems  resulting  from  increased  market  competition  and  local
economic  conditions.  The  management  agent,  which is  currently  funding the
deficits,  is  addressing  these  problems  through a  combination  of increased
advertising  and  community  outreach  and tighter  expense  monitoring  and has
requested additional SHARP subsidy from the local housing authority.

Waterfront  and  Shoreline,  two  Buffalo,  New  York  properties,  continue  to
experience  operating  difficulties  due  to  a  soft  rental  market,  deferred
maintenance and security issues.  The Managing General Partner and Local General
Partner have  successfully  negotiated a grant from the New York  Mortgage  Loan
Corporation.  The grant should be funded during 1998 and will be used to upgrade
the curb appeal and overall  physical  condition of the properties and stabilize
operations. The viability of these properties depends upon deficits being funded
by the  management  agent  until  the  receipt  of the  grant.  Both  properties
currently carry cash flow mortgages with New York State.

As  previously  discussed,  Regency  and  Rolling  Hills in  Dayton,  Ohio  have
experienced ongoing operating difficulties as a result of low occupancy, capital
rehabilitation  needs and a depressed  local economy.  The Local General Partner
and Managing  General  Partner were involved in prolonged  workout  negotiations
with HUD, but ultimately the mortgages for these  properties were sold to a bank
in  HUD's  August  1996  non-performing  loan  auction.   Although  negotiations
continued with the bank in an attempt to prevent foreclosure,  a workout was not
achieved,  and the  titles  were  transferred  on May 2, 1997 to the bank.  This
transfer  will result in a recapture  tax in 1997 and the  allocation of taxable
income which will be reported on the investors' 1997 tax return (filed in 1998).
The  Partnership's  carrying value of this  investment  for financial  reporting
purposes is zero.

As  previously  reported,   Breckenridge  Creste,  located  in  Duluth,  Georgia
continues to operate below  breakeven as a result of high increased  vacancy,  a
weak rental market and deferred maintenance issues. The capital improvement plan
has been  implemented  and should  improve  the curb appeal of the  property.  A
special  reserve account has been set up at the property level to hold funds for
capital  improvements and operating deficits.  Expenditures from these funds are
carefully monitored by property management and the Managing General Partner.


Inflation and Other Economic Factors

Inflation  had no material  impact on the  Partnerships  operations or financial
condition for the years ended March 31, 1997, 1996 and 1995.

As some  Properties  benefit  from  some  form  of  government  assistance,  the
Partnership is subject to the risks  inherent in that area  including  decreased
subsidies, difficulties in finding suitable tenants and obtaining permission for
rent increases. In addition, the Tax Credits allocated to investors with respect
to a Property  are  subject to  recapture  to the extent  that a Property or any
portion thereof ceases to qualify for Tax Credits.

Some of the properties listed in this report are located in areas suffering from
poor economic  conditions.  Such conditions  could have an adverse effect on the
rent or occupancy levels at such Properties.  Nevertheless, the Managing General
Partner  believes that the  generally  high demand for below market rate housing
will tend to negate such  factors.  However,  no assurance  can be given in this
regard.


Item 8.  Financial Statements and Supplementary Data

Information  required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.


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

None.

                                PART III

Item 10.  Directors and Executive Officers of the Registrant

The Managing  General  Partner of the  Partnership  is Arch Street III,  Inc., a
Massachusetts  corporation (the "Managing  General Partner" or "Arch Street III,
Inc."), an affiliate of The Boston Financial Group Limited Partnership  ("Boston
Financial"), a Massachusetts limited partnership.  George Fantini, Jr. and Donna
C. Gibson,  Vice  Presidents of the Managing  General  Partner,  resigned  their
positions effective June 30, 1995 and September 13, 1996, respectively.

The  Managing  General  Partner  was  incorporated  in August  1988.  William E.
Haynsworth is the Chief  Operating  Officer of the Managing  General Partner and
had  the  primary  responsibility  for  evaluating,  selecting  and  negotiating
investments  for the  Partnership.  The  Investment  Committee  of the  Managing
General  Partner  approved  all  investments.  The  names and  positions  of the
principal  officers and the  directors of the Managing  General  Partner are set
forth below.

     Name                                Position

Georgia Murray                          Managing Director, Treasurer and
                                         Chief Financial Officer
Fred N. Pratt, Jr.                      Managing Director
William E. Haynsworth                   Managing Director, Vice President and
                                         Chief Operating Officer
Paul F. Coughlan                        Vice President
Peter G. Fallon, Jr.                    Vice President
Randolph G. Hawthorne                   Vice President
A. Harold Howell                        Vice President

The  other  General Partner  of  the Partnership  is  Arch  Street  III  Limited
Partnership,  a Massachusetts  Limited Partnership ("Arch Street III L.P.") that
was organized in August 1988.  The General Partners of Arch Street III L.P. are
Messrs. Howell, Haynsworth and Hawthorne.

The Managing General Partner provides day-to-day  management of the Partnership.
Compensation is discussed in Item 11 of this report. Such day-to-day  management
does not include the management of the Properties.

The business  experience of each of the persons listed above is described below
There is no family  relationship  between any of the persons listed in this
section.

Georgia  Murray,  age 46, is a graduate  of Newton  College of the Sacred  Heart
(B.A.,  1972).  She joined Boston  Financial  Management  Company in 1973 and is
currently a Senior Vice President of Boston Financial. Ms. Murray is a member of
the  Senior  Leadership  Team and Board of  Directors  and  leads  the  Property
Management division.  Previously, she led the company's Institutional Tax Credit
Team and managed Boston Financial's  Investment Real Estate and Asset Management
divisions.  Ms. Murray currently serves as a director of Atlantic Bank and Trust
Company,  President of the Institute for Multi-Family  Housing,  Director of the
Investment Program Association and member of the Direct Investment  Committee of
the  Securities  Industry  Association.  Previously,  she served as the Industry
Advisor to the Management Policy Review Committee of the  Massachusetts  Housing
Finance Agency and as a commissioner of the Boston Public Facilities Department.

Fred N. Pratt, Jr., age 52, graduated  from  Tufts University  and the Amos Tuck
School of Business  Administration at Dartmouth  College.  Mr. Pratt was one of
the original  employees  of Boston  Financial  when it was founded in late 1969.
He currently serves as Boston Financial's Chief Executive Officer  and  Chairman
of the Board of the General Partner of Boston Financial.

William E. Haynsworth,  age 57, graduated from Dartmouth College and Harvard Law
School.  Mr.  Haynsworth  was Acting  Executive  Director  of the  Massachusetts
Housing Finance  Agency,  where he was also General  Counsel,  prior to becoming
Vice President of Boston  Financial in 1977 and a Senior Vice President in 1986.
He has also  served as  Director of  Non-Residential  Development  of the Boston
Redevelopment Authority and as an associate of the law firm of Goodwin,  Procter
& Hoar in Boston.  Mr.  Haynsworth is a member of the firm's  Senior  Leadership
Team and  participates  in the  structuring of real estate  investments  and the
development of new business opportunities.

Paul F. Coughlan,  age 53, is a graduate of Brown  University  (A.B.,  1965) and
served in the United  States Navy before  entering  the  securities  business in
1969. He was employed as an Account  Executive by Bache & Company until 1972 and
then by Reynolds  Securities  Inc. He joined Boston  Financial in 1975 as a Vice
President in the Real Estate Investment Marketing area and is currently a Senior
Vice President on the Institutional Tax Credit Team.

Peter G.  Fallon,  Jr.,  age 58,  graduated  from the  College of the Holy Cross
(B.S.,1960) and Babson College  (M.B.A.,  1965).  He joined Boston  Financial in
1970, shortly after its formation,  and is currently a Senior Vice President and
a member of the  Investment  Real Estate  Division with  responsibility  for the
marketing of the firm's Institutional Tax Credit product.

Randolph G. Hawthorne,  age 47, is a graduate of the Massachusetts  Institute of
Technology (B.S., 1971) and Harvard Graduate School of Business (M.B.A.,  1973).
He joined  Boston  Financial in 1973 and has served as Treasurer and managed the
firm's Investment Real Estate division. He is a Senior Vice President serving on
the  Investment  Acquisitions  Team  with 22 years  of  experience  in  property
acquisitions.  Mr.  Hawthorne has primary  responsibility  for structuring  real
estate investments and developing new business opportunities.  He is a member of
the Investment Committee.  He is Chairman of the National Multi Housing Council,
a past  president  of the National  Housing and  Rehabilitation  Association,  a
member of the  Residential  Development  Council of the Urban Land  Institute as
well as a member  of the  Advisory  Board of the  Berkeley  Real  Estate  at the
University of California.  A speaker at industry conferences,  he is also on the
Editorial Advisory Board of the Tax Credit Advisor.

A. Harold  Howell,  age 56,  graduated  from  Harvard  College and the Amos Tuck
School of Business  Administration at Dartmouth College. He has been employed by
Boston  Financial  since 1970.  For most of this time, he has been active in the
overall  administration of Boston Financial and its affiliates but has also been
involved in other areas of its business. Mr. Howell has served as head of Boston
Financial's Property Management Division and also as its Chief Financial Officer
and Chief Executive  Officer.  He currently is a Senior Vice President and is in
charge of a program being developed for properties  managed by Boston  Financial
whereby  heads-of-households who want to further their education can enroll in a
program on-site which teaches economic self  sufficiency,  computer and internet
skills,  problem  solving  skills and  related  real-world  skills.  Mr.  Howell
recently  spent a two  year  sabbatical  from  Boston  Financial  as a  Visiting
Professor  at the  Instituto  de Estudios  Superiores  de la  Empresa,  a highly
regarded  International  M.B.A.  Program in Barcelona,  Spain.  While there,  he
taught courses in business strategy and real estate finance.


<PAGE>



Item 11.  Management Remuneration

Neither the directors or officers of Arch Street III, Inc., the partners of Arch
Street III L.P. nor any other  individual  with  significant  involvement in the
business of the Partnership  receives any current or proposed  remuneration from
the Partnership.



Item 12.  Security Ownership of Certain Beneficial Owners and Management

As of March 31, 1997, the following is the only entity known to the  Partnership
  to be the  beneficial  owner of more than 5% of the total number of Units
outstanding:

                                                  Amount
Title of           Name and Address of          Beneficially            Percent
 Class                Beneficial Owner            Owned                of Class

Limited            AMP, Incorporated            10,000 Units               10%
Partner            P.O. Box 3608
                   Harrisburg, PA


The equity  securities  registered by the Partnership under Section 12(g) of the
Act  consist of 100,000  Units,  all of which have been sold to the public as of
March 31, 1997.  Holders of Units are permitted to vote on matters affecting the
Partnership only in certain unusual  circumstances and do not generally have the
right to vote on the operation or management of the Partnership.

As of March 31, 1997,  Arch Street III L.P. owns five  (unregistered)  Units not
included in the 100,000 units sold to the public.

Except as described in the preceding  paragraph,  neither Arch Street III, Inc.,
Arch Street III L.P.,  Boston  Financial  nor any of their  executive  officers,
directors,  partners or affiliates is the beneficial owner of any Units. None of
the  foregoing  persons  possesses a right to acquire  beneficial  ownership  of
Units.


The Partnership does not know of any existing  arrangement that might at a later
date result in a change in control of the Partnership.


Item 13.  Certain Relationships and Related Transactions

Information  required  under this Item is  contained  in Note 5 to the  Combined
Financial Statements presented in Item 14.

The  Partnership  was  required to pay  certain  fees to and  reimburse  certain
expenses of the Managing  General  Partner or its affiliates  (including  Boston
Financial)  in  connection  with the  organization  of the  Partnership  and the
offering of Units.  The Partnership was also required to pay certain fees to and
reimburse  certain  expenses of the Managing  General  Partner or its affiliates
(including  Boston  Financial)  in  connection  with the  administration  of the
Partnership  and its acquisition and disposition of investments in Local Limited
Partnerships.  In  addition,  the  General  Partners  are  entitled  to  certain
Partnership distributions under the terms of the Partnership Agreement. Also, an
affiliate  of the General  Partners  will receive up to $10,000 from the sale or
refinancing proceeds of each Local Limited Partnership, if it is still a limited
partner at the time of such  transaction.  All such fees and  distributions  are
more fully  described  in the sections  entitled  "Estimated  Use of  Proceeds",
"Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax
Credits  and  Cash   Distributions"   of  the  Prospectus.   Such  sections  are
incorporated herein by reference.

The Partnership is permitted to enter into transactions  involving affiliates of
the Managing General Partner,  subject to certain limitations established in the
Partnership Agreement.

Information regarding the fees paid and expense reimbursements made in the three
years ending March 31, 1997 is presented below.

Organizational fees and expenses

In  accordance  with  the  Partnership  Agreement,  Boston  Financial  is  to be
reimbursed by the Partnership for organizational,  offering and selling expenses
advanced on behalf of the Partnership by Boston  Financial or its affiliates and
for salaries and direct  expenses of certain  employees of the Managing  General
Partner and its affiliates in connection with the  registration and organization
of  the  Partnership.   Such  expenses  include  printing  expenses  and  legal,
accounting,  escrow agent and depository  fees and expenses.  Such expenses also
include a non-accountable  expense allowance for marketing  expenses equal to 1%
of gross offering  proceeds.  $11,832,395 of organization  fees and expenses and
selling expenses  incurred on behalf of the Partnership were paid and reimbursed
to an affiliate of the Managing General Partner. Total organization and offering
expenses did not exceed 5.5% of the gross offering proceeds.


Acquisition fees and expenses

In accordance with the Partnership Agreement, the Partnership is required to pay
acquisition fees to and reimburse  acquisition  expenses of the Managing General
Partner or its affiliates for selecting,  evaluating,  structuring,  negotiating
and  closing  the  Partnership's  investments  in  Local  Limited  Partnerships.
Acquisition  fees  total  7.5%  of  the  gross  offering  proceeds.  Acquisition
expenses,  which include such  expenses as legal fees and  expenses,  travel and
communications expenses,  costs of appraisals,  accounting fees and expenses did
not  exceed  2% of  the  gross  offering  proceeds.  Acquisition  fees  totaling
$7,500,000  for the  closing  of the  Partnership's  Local  Limited  Partnership
Investments  have been paid to an  affiliate of the  Managing  General  Partner.
Acquisition  expenses totaling $1,587,834 were incurred and have been reimbursed
to an  affiliate  of the  Managing  General  Partner.  In  accordance  with  the
Partnership  Agreement,  15% of the acquisition  fees payable to an affiliate of
the Managing  General Partner is the "Deferred  Acquisition  Fees". The Deferred
Acquisition Fees have been deposited in an interest bearing account and are paid
annually, with interest, at the rate of 10% per year over 10 years. Installments
began on the second  anniversary  of the  Prospectus,  November 23, 1990.  As of
March 31, 1997 and 1996, deferred  acquisition fees payable amounted to $337,500
and $450,000, respectively.

Payments made and expenses reimbursed in each of the three years ended March 31,
1997 are as follows:

                                         1997            1996            1995
                                       ----------      ----------    ----------

     Acquisition fees and expenses   $        -      $        -      $        -
     Deferred acquisition fees       $ 112,500       $   112,500     $  112,500

Asset Management Fees

In  accordance  with the  Partnership  Agreement,  an  affiliate of the Managing
General  Partner  is paid an annual  fee for  services  in  connection  with the
administration  of the  affairs  of the  Partnership.  The  affiliate  currently
receives  $6,818 (as adjusted by the CPI factor) per Local  Limited  Partnership
annually as the Asset Management Fee.

Asset  Management  Fees incurred in each of the three years ended March 31, 1997
are as follows:

                                      1997             1996                1995
                                  -------------   --------------       --------

     Asset management fees       $  450,678        $  447,110        $   435,572

Property Management Fees

Boston  Financial  Property  Management  ("BFPM"),  an affiliate of the Managing
General  Partner,  currently  manages  Harbour  View,  a  property  in which the
Partnership  has  invested.  Included in  operating  expenses in the  summarized
income  statements  in Note 4 to the Combined  Financial  Statements is $51,956,
$46,915  and  $45,845  of fees  earned  by BFPM  during  1996,  1995  and  1994,
respectively.

On April 2, 1993, BFPM became the management  agent of Willow Lake. In August of
1993, BFPM became the management agent for the Texas Partnerships.  On September
29, 1995, BFPM became the management agent of The Kyle. On August 20, 1996, BFPM
became the management agent of  Breckenridge.  Fees charged in each of the three
years ended December 31, 1996 are as follows:


                                   1996               1995                1994
                                -----------         ----------          -------

     Property management fees   $  135,472          $   70,315        $ 177,185


Salaries and benefits expense reimbursements

An affiliate of the Managing  General  Partner is reimbursed for the cost of the
Partnership's  salaries and benefits expenses. The reimbursements are based upon
the size and complexity of the Partnership's operations.  Reimbursements made in
each of the three years ended March 31, 1997 are as follows:

                                      1997              1996                1995
                                   ----------          ----------       --------

     Salaries and benefits expense
      reimbursements              $  170,961          $  182,482      $  155,236

Cash distributions paid to the General Partners

In  accordance  with the  Partnership  Agreement,  the  General  Partners of the
Partnership,  Arch Street  III,  Inc.  and Arch Street III Limited  Partnership,
receive 1% of cash  distributions  made to partners.  No cash distributions were
made to the General Partners in any of the three years ended March 31, 1997.




<PAGE>

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) (1) and (a) (2) Documents filed as a part of this Report.

In  response  to this  portion of Item 14, the  combined  financial  statements,
financial  statement  schedule and the  auditors'  report  relating  thereto are
submitted  as a  separate  section  of this  Report.  See Index to the  Combined
Financial Statements and Schedules on page F-1 hereof.

The reports of auditors of the Local Limited Partnership  relating to the audits
of the financial statements of such Local Limited Partnerships appear in Exhibit
(28)(1) of this report.

Other  schedules  have been  omitted  as they are  either  not  required  or the
information  required to be  presented  therein is  available  elsewhere  in the
combined financial statements or the accompanying notes and schedules.

(a)(3)        See Exhibit Index contained herein.

(a)(3)(b)   None.

(a)(3)(c)   Exhibits


Number and Description in Accordance with
Item 601 of Regulation S-K

   27.   Financial Data Schedule

   28.   Additional Exhibits

         (a)  28.1 Reports of Other Independent Auditors

         (b)  Audited financial statements of
              Local Limited Partnerships

              1.  None


(a)(3)(d)         None




<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.

      BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III

      By:  Arch Street III, Inc.
           its Managing General Partner




     By:   /s/William E. Haynsworth                                Date:
           William E. Haynsworth,
           Managing Director, Vice President and
           Chief Operating Officer

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



     By:   /s/William E. Haynsworth                                Date:
           William E. Haynsworth,
           Managing Director, Vice President and
           Chief Operating Officer




     By:   /s/Fred N. Pratt, Jr.                                   Date:
           Fred N. Pratt, Jr.,
           A Managing Director


<PAGE>


Item 8.  Financial Statements and Supplementary Data

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

          Annual Report on Form 10-K for the Year Ended March 31, 1997
                                      Index


                                                                  Page No.
                                                               ------------

Report of Independent Accountants                                    F-2

Financial Statements

     Combined Balance Sheets - March 31, 1997 and 1996               F-3

     Combined Statements of Operations - For the Years Ended
       March 31, 1997, 1996 and 1995                                 F-4

     Combined Statements of Changes in Partners' Equity
       (Deficiency) - For the Years Ended March 31, 1997,
       1996 and 1995                                                 F-5

     Combined Statements of Cash Flows - For the Years Ended
       March 31, 1997, 1996 and 1995                                 F-6

     Notes to the Combined Financial Statements                      F-8

Financial Statement Schedule:

     Schedule III - Real Estate and Accumulated Depreciation         F-24



Other  schedules  have been  omitted  as they are  either  not  required  or the
information  required to be  presented  therein is  available  elsewhere  in the
financial statements and the accompanying notes and schedules.




<PAGE>



                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Partners of
Boston Financial Qualified Housing Tax Credits L.P. III
(A Limited Partnership)

         We have  audited  the  combined  balance  sheets  of  Boston  Financial
Qualified Housing Tax Credits L.P. III (A Limited Partnership) ("BFQHIII") as of
March 31,  1997 and 1996 and the  related  combined  statements  of  operations,
changes in partners' equity, and cash flows and the financial statement schedule
listed in Item 14(a) of this Report on Form 10-K for the each of the three years
in the period ended March 31, 1997.  These  financial  statements  and financial
statement  schedules  are  the  responsibility  of  BFQHIII's  management.   Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial statement schedules based on our audits. In 1997 and 1996, 67% and 72%
of total assets,  respectively,  and in 1997, 1996 and 1995, 54%, 88% and 52% of
net loss,  respectively,  reflected  in the  combined  financial  statements  of
BFQHIII,  relate to investments in Local Limited  Partnerships  for which we did
not audit the  financial  statements.  The  financial  statements of those Local
Limited  Partnerships  were audited by other  auditors  whose  reports have been
furnished to us, and our opinion,  insofar as it relates to those investments in
Local  Limited  Partnerships,  is based  solely  upon the  reports  of the other
auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the combined financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the combined 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 on our audits and the  reports  of other  auditors,  the
combined financial  statements referred to above present fairly, in all material
respects,  the financial position of BFQHIII at March 31, 1997 and 1996, and the
results of its  operations and its cash flows for each of the three years in the
period ended March 31, 1997 in conformity  with  generally  accepted  accounting
principles.  In  addition,  in our  opinion  the  financial  statement  schedule
referred to above,  when considered in relation to the basic combined  financial
statements  taken as a whole,  present  fairly,  in all material  respects,  the
information required to be included therein.





/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 25, 1997




<PAGE>


------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)
 
<TABLE>

                                                        
                  COMBINED BALANCE SHEETS - MARCH 31, 1997 AND 1996
<CAPTION>

                                                                        1997                    1996
                                                                   -------------            --------
<S>                                                                <C>                      <C>
Assets
Cash and cash equivalents                                          $     379,614            $    268,040
Marketable securities, at fair value (Note 3)                            331,319                 158,967
Accounts receivable, net                                                 175,669                  40,757
Interest receivable                                                       17,607                     740
Prepaid expenses                                                          40,019                  35,930
Tenant security deposits                                                  66,439                  67,011
Replacement reserves                                                     210,045                 168,335
Rental property at cost, net of accumulated
   depreciation and reserve for  valuation (Note 6)                   17,884,234              12,818,153
Investments in Local Limited Partnerships, net
   of reserve for valuation of $1,635,000
   in 1997 and 1996 (Note 4)                                          23,983,675              30,216,554
Deferred acquisition fees escrow (Note 5)                                337,500                 450,000
Deferred expenses, net of $111,038 and $31,836
   accumulated amortization in 1997 and 1996                             235,339                  93,479
Other assets                                                             130,130                  53,656
                                                                   -------------            ------------
Total Assets                                                       $  43,791,590             $44,371,622
                                                                   =============             ===========

Liabilities and Partners' Equity
Accounts payable to affiliates (Note 5)                            $   1,193,182            $    755,244
Accounts payable and accrued expenses                                    611,515                 471,328
Interest payable                                                         377,295                 186,550
Note payable - affiliate (Note 5)                                        514,968                  22,279
Security deposits payable                                                 82,054                  60,229
Due to affiliate (Note 8)                                                323,046                 323,046
Deferred acquisition fees payable (Note 5)                               337,500                 450,000
General partner advances (Note 9)                                        200,000                 200,000
Mortgage notes payable (Note 7)                                       11,754,415               7,006,101
                                                                   -------------            ------------
   Total Liabilities                                                  15,393,975               9,474,777
                                                                   -------------            ------------

Minority interest in Local Limited Partnerships                        1,053,122                 341,952
                                                                   -------------            ------------

General, Initial and Investor Limited Partners' Equity                27,346,440              34,554,881
Net unrealized gains (losses) on marketable securities                    (1,947)                     12
                                                                   -------------            ------------
     Total Partners' Equity                                           27,344,493              34,554,893
                                                                   -------------            ------------
     Total Liabilities and Partners' Equity                        $  43,791,590             $44,371,622
                                                                   =============             ===========
</TABLE>

               The  accompanying  notes are an integral part of these  combined
financial statements.

<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)
<TABLE>

                        COMBINED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<CAPTION>

                                                               1997              1996           1995
                                                            -----------     ------------     -------
<S>                                                        <C>              <C>              <C>
Revenue:
   Rental                                                  $  1,764,258     $  1,982,497     $ 1,727,982
   Investment                                                    82,660           85,858          56,496
   Other                                                        272,679          150,906         142,026
                                                           ------------     ------------     -----------
     Total Revenue                                            2,119,597        2,219,261       1,926,504
                                                           ------------     ------------     -----------

Expenses:
   Asset management fees, related party (Note 5)                450,678          447,110         435,572
   General and administrative (includes reimbursements
    to affiliates of $170,961, $182,482, and $155,236,
    respectively) (Note 5)                                      611,810          841,989       1,167,244
   Bad debt expense                                               8,665           54,351               -
   Property management fees (Note 5)                            150,304           84,715         177,185
   Rental operations, exclusive of depreciation               1,387,909        1,488,464       1,549,436
   Interest expense (Notes 7 and 9)                             532,518          593,447         431,389
   Provision for valuation of investments
    in Local Limited Partnerships (Note 4)                            -                -         675,000
   Provision for valuation of real estate                     1,748,708                -               -
   Depreciation                                                 605,671          573,735         490,410
   Amortization                                                 182,875          179,003         192,490
                                                           ------------     ------------     -----------
     Total Expenses                                           5,679,138        4,262,814       5,118,726
                                                           ------------     ------------     -----------

Loss before equity in losses of Local Limited
   Partnerships and extraordinary item                       (3,559,541)      (2,043,553)     (3,192,222)

Equity in losses of Local Limited
   Partnerships (Note 4)                                     (3,624,984)      (4,670,063)     (5,818,976)

Minority interest in (income) losses of
   Local Limited Partnerships                                    27,679           (6,553)          8,659
                                                           ------------     ------------    ------------

Net Loss before extraordinary item                           (7,156,846)      (6,720,169)     (9,002,539)

Extraordinary gain (loss) on forgiveness
   of indebtedness (Note 12)                                    (51,595)       1,279,618               -
                                                           ------------     ------------    ------------

Net Loss                                                   $ (7,208,441)     $(5,440,551)    $(9,002,539)
                                                           ============      ===========     ===========

Net Loss Allocated:
   To General Partners                                     $    (72,084)    $    (54,406)   $    (90,025)
   To Limited Partners                                       (7,136,357)      (5,386,145)     (8,912,514)
                                                           ------------     ------------    ------------
                                                           $ (7,208,441)     $(5,440,551)    $(9,002,539)
                                                           ============      ===========     ===========

Net Loss before extraordinary item
   per Limited Partnership Unit (100,000 Units)            $     (70.85)    $     (66.53)   $     (89.13)
                                                           ============     ============    ============

Extraordinary item per Limited
   Partnership Unit (100,000 Units)                        $       (.51)    $      12.67$   -
                                                           ============     =================

Net loss per Limited
   Partnership Unit (100,000 Units)                        $     (71.36)    $     (53.86)   $    (89.13)
                                                           ============     ============    ===========
</TABLE>

               The  accompanying  notes are an integral part of these  combined
financial statements.

<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)
<TABLE>

              COMBINED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                      FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<CAPTION>

                                                                                     Net
                                                       Initial       Investor    Unrealized
                                        General        Limited        Limited       Gains
                                       Partners       Partners       Partners     (Losses)        Total

<S>                                    <C>             <C>        <C>             <C>          <C>        
Balance at March 31, 1994              $(385,866)      $5,000     $49,378,837     $(46,080)    $48,951,891

Net change in unrealized losses
    on marketable securities
    available for sale                         -            -               -       10,935          10,935

Net Loss                                 (90,025)           -      (8,912,514)           -      (9,002,539)
                                      ----------      -------    ------------     --------    ------------

Balance at March 31, 1995               (475,891)       5,000      40,466,323      (35,145)     39,960,287

Net change in unrealized losses
    on marketable securities
    available for sale                         -            -               -       35,157          35,157

Net Loss                                 (54,406)           -      (5,386,145)           -      (5,440,551)
                                      ----------      -------    ------------     --------    ------------

Balance at March 31, 1996               (530,297)       5,000      35,080,178           12      34,554,893

Net change in unrealized losses
    on marketable securities
    available for sale                         -            -               -       (1,959)         (1,959)

Net Loss                                 (72,084)           -      (7,136,357)           -      (7,208,441)
                                      ----------      -------    ------------     --------    ------------

Balance at March 31, 1997             $ (602,381)     $ 5,000    $ 27,943,821     $ (1,947)   $ 27,344,493
                                      ==========      =======    ============     ========    ============
</TABLE>

               The  accompanying  notes are an integral part of these  combined
financial statements.

<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)
<TABLE>

                           COMBINED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<CAPTION>

                                                               1997              1996          1995
                                                           ------------     ------------    -------

<S>                                                        <C>               <C>             <C>         
Net loss                                                   $ (7,208,441)     $(5,440,551)    $(9,002,539)
Adjustments to reconcile net loss to net
  cash used for operating activities:
   Equity in losses of Local Limited Partnerships             3,624,984        4,670,063       5,818,976
   Bad debt expense                                               8,665           54,351               -
   Provision for valuation of investments
     in Local Limited Partnerships                                    -                -         675,000
   Provision for valuation of real estate                     1,748,708                -               -
   Cancellation of indebtedness (income) loss                    51,595       (1,279,618)              -
   Cash distribution included in net loss                       (32,610)         (13,456)         (8,577)
   Replacement reserves                                          10,637          (66,521)        (11,503)
   Amortization and depreciation                                788,546          752,738         682,900
   (Gain) loss on sale of marketable securities                   1,291           (4,555)         66,613
   Minority interest in income (loss) of Local
    Limited Partnerships                                        (27,679)           6,553          (8,659)
   Increase (decrease) in cash arising from changes
    in operating assets and liabilities:
     Other assets                                               (64,183)         104,653        (187,669)
     Accounts payable to affiliates                             428,633          408,603         407,029
     Accounts payable and accrued expenses                      241,354          376,480        (174,147)
                                                           ------------      -----------     -----------
Net cash used for operating activities                         (428,500)        (431,260)     (1,742,576)
                                                           ------------      -----------     -----------

Cash flows from investing activities:
   Advances to affiliates                                      (124,294)               -               -
   Purchases of marketable securities                          (273,754)      (1,700,979)     (2,799,575)
   Proceeds from sales and maturities of
     marketable securities                                       98,152        3,782,670       3,822,762
   Cash distributions received from Local
     Limited Partnerships                                       503,503          345,051         415,959
   Cash received upon assumption of General Partner
     interest in a Combined Entity                               18,364           43,646               -
   Adjustment to cash received
     upon assumption of General
     Partner interest in a Combined Entity                      (51,595)               -               -
   Decrease in deferred acquisition fee escrow                  112,500          112,506         112,500
   Payment of deferred acquisition fees                        (112,500)        (112,506)       (112,500)
   Additions to fixed assets                                    (70,940)        (245,961)       (161,889)
                                                           ------------      -----------     -----------
Net cash provided by investing activities                        99,436        2,224,427       1,277,257
                                                           ------------      -----------     -----------
</TABLE>

               The  accompanying  notes are an integral part of these  combined
financial statements.
<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)
<TABLE>

                  COMBINED STATEMENTS OF CASH FLOWS (continued)
                  FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<CAPTION>

                                                               1997              1996          1995
                                                           ------------     ------------    -------

<S>                                                             <C>               <C>              <C>
Cash flows from financing activities:
   Advances from developer                                            -                -           5,172
   Advances from general partner                                      -           50,397         216,039
   Payments to general partner                                        -         (173,500)              -
   Advances from mortgages payable                                    -                -         179,500
   Repayment of mortgage notes payable                          (87,574)        (158,404)        (32,418)
   Advances from affiliate                                       35,523                -               -
   Advances on notes payable, affiliate                         492,689           22,279               -
   Advances from developer                                            -           13,756               -
   Capital contributions received                                     -           14,522               -
   Repayment of Local Limited Partnership's mortgage                  -       (1,462,693)              -
   Repayment of notes receivable affiliate                            -           13,060               -
                                                           ------------      -----------     -----------
Net cash provided by (used for) financing activities            440,638       (1,680,583)        368,293
                                                           ------------      -----------     -----------

Net increase (decrease) in cash and
     cash equivalents                                           111,574          112,584         (97,026)

Cash and cash equivalents, beginning of year                    268,040          155,456         252,482
                                                           ------------      -----------     -----------

Cash and cash equivalents, end of year                     $    379,614      $   268,040     $   155,456
                                                           ============      ===========     ===========

Supplemental Disclosure:
   Cash paid for interest                                  $    360,491      $   646,380     $   463,131
                                                           ============      ===========     ===========
</TABLE>


Non-cash disclosure:

   See  Note 10 for  discussion  of the  change  in  control  of  certain  Texas
Partnerships.

   See Note 11 for discussion of cancellation of indebtedness income.

               The  accompanying  notes are an integral part of these  combined
financial statements.

<PAGE>

------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

                  Notes to the Combined Financial Statements

1.   Organization

Boston Financial  Qualified Housing Tax Credits L.P. III (the "Partnership") was
formed on August 9, 1988 under the laws of the State of Delaware for the primary
purpose  of  investing,  as a limited  partner,  in other  limited  partnerships
("Local  Limited  Partnerships"),  most  of  which  own  and  operate  apartment
complexes,  most of which  benefit  from  some form of  federal,  state or local
assistance program and each of which qualify for low-income housing tax credits.
The  Partnership's  objectives  are to: (i) provide  current tax benefits in the
form of tax credits  which  qualified  investors may use to offset their federal
income tax liability;  ii) preserve and protect the Partnership's  capital; iii)
provide limited cash distributions  which are not expected to constitute taxable
income during  Partnership  operations;  and iv) provide cash distributions from
sale or refinancing  transactions.  The General  Partners of the Partnership are
Arch Street III, Inc., which serves as the Managing  General  Partner,  and Arch
Street III L.P., which also serves as the Initial Limited  Partner.  Both of the
General   Partners  are  affiliates  of  The  Boston   Financial  Group  Limited
Partnership  ("Boston  Financial").  The fiscal year of the Partnership  ends on
March 31.

The Certificate and Agreement of Limited Partnership  ("Partnership  Agreement")
authorized  the sale of up to  100,000  units of  Limited  Partnership  Interest
("Units") at $1,000 per Unit,  adjusted for certain  discounts.  The Partnership
raised $99,610,000 ("Gross Proceeds"), net of discounts of $390,000, through the
sale of 100,000 Units. Such amounts exclude five  unregistered  Units previously
acquired  for $5,000 by the Initial  Limited  Partner,  which is also one of the
General  Partners.  The offering of Units terminated on May 30, 1989. No further
sale of Units is expected.

Generally,  profits,  losses,  tax  credits  and cash flow from  operations  are
allocated  99% to the  Limited  Partners  and 1% to the  General  Partners.  Net
proceeds  from a sale  or  refinancing  will  be  allocated  95% to the  Limited
Partners and 5% to the General Partners, after certain priority payments.

Under  the  terms  of  the  Partnership  Agreement,  the  Partnership  initially
designated  3% of the Gross  Proceeds  from the sale of Units as a  reserve  for
working  capital of the Partnership  and  contingencies  related to ownership of
Local Limited Partnership  interests.  During the year ended March 31, 1993, the
Managing  General  Partner  decided to increase the reserve  level to 3.75%.  At
March 31,  1997,  the  Managing  General  Partner has  designated  approximately
$482,000 of cash, cash equivalents and marketable securities as such Reserve.


2.   Significant Accounting Policies

Basis of Presentation and Combination

The Partnership accounts for its investments in Local Limited Partnerships, with
the exception of the Combined  Entities,  using the equity method of accounting,
because the Partnership  does not have a majority control of the major operating
and financial  policies of the Local Limited  Partnerships  in which it invests.
Under the equity  method,  the  investment is carried at cost,  adjusted for the
Partnership's  share  of  income  or loss  of the  Local  Limited  Partnerships,
additional   investments   and  cash   distributions   from  the  Local  Limited
Partnerships.  Equity in income or loss of the  Local  Limited  Partnerships  is
included  currently in the  Partnership's  operations.  The  Partnership  has no
obligation  to fund  liabilities  of the Local Limited  Partnerships  beyond its
investment,  therefore,  a Local Limited  Partnership's  investment  will not be
carried  below zero.  To the extent that equity losses are incurred when a Local
Limited  Partnership's  respective  investment balance has been reduced to zero,
the losses will be  suspended to be used against  future  income.  Distributions
received from Local Limited  Partnerships whose respective  investment value has
been reduced to zero are included in income. For the years ended March 31, 1997,
1996 and 1995,  the  Partnership  did not recognize  $5,206,584,  $5,122,569 and
$4,088,341,   respectively,   of  equity   losses   relating  to  Local  Limited
Partnerships whose cumulative equity in losses and distributions  exceeded their
total investments.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

                    Notes to the Combined Financial Statements (continued)

2.   Significant Accounting Policies (continued)

Excess investment costs over the underlying net assets acquired have arisen from
acquisition   fees  paid  and  expenses   reimbursed  to  an  affiliate  of  the
Partnership.   These  fees  and  expenses  are  included  in  the  Partnership's
Investment  in  Local  Limited   Partnerships  and  are  being  amortized  on  a
straight-line basis over 35 years.

The Partnership  recognizes a decline in the carrying value of its investment in
Local Limited Partnerships when there is evidence of a non-temporary  decline in
the  recoverable  amount of the investment.  There is the  possibility  that the
estimates relating to reserves for non-temporary  declines in the carrying value
of  investments  in Local Limited  Partnerships  may be subject to material near
term adjustments.

The  Partnership,  as a limited  partner in the Local Limited  Partnerships,  is
subject to risks  inherent in the  ownership  of  property  which are beyond its
control,  such as  fluctuations  in  occupancy  rates  and  operating  expenses,
variations in rental schedules,  proper  maintenance of facilities and continued
eligibility  of tax  credits.  If the cost of  operating a property  exceeds the
rental income earned  thereon,  the Partnership may deem it in its best interest
to voluntarily provide funds in order to protect its investment.

The Managing  General Partner has elected to report results of the Local Limited
Partnerships on a 90-day lag basis because the Local Limited Partnerships report
their results on a calendar year basis.  Accordingly,  the financial information
of the Local Limited Partnerships that is included in the accompanying  combined
financial statements is as of December 31, 1996, 1995 and 1994.

On August 26, 1992, an affiliate of the Partnership's  Managing General Partner,
BF Harbour  View,  Inc.,  became the Local  General  Partner of 241 Pine  Street
Associates,  L.P. ("241 Pine Street"),  a Local Limited Partnership in which the
Partnership has invested.  Since the Local General Partner of 241 Pine Street is
now an affiliate of the Partnership, these combined financial statements include
the detailed  financial activity of 241 Pine Street for the years ended December
31, 1994, 1995 and 1996. All significant  intercompany balances and transactions
have been eliminated.

On April 2, 1993, an affiliate of the Managing General Partner,  BF Willow Lake,
Inc., became the Local General Partner of Willow Lake Partners II, L.P. ("Willow
Lake"). BF Willow Lake, Inc. replaced the previous  management agent with Boston
Financial  Property  Management,  an affiliate of the Managing  General Partner.
Since the  Local  General  Partner  of Willow  Lake is now an  affiliate  of the
Partnership,  these combined financial statements include the financial activity
of  Willow  Lake for the years  ended  December  31,  1994,  1995 and 1996.  All
significant intercompany balances and transactions have been eliminated.

On October 6, 1993, an affiliate of the Partnership's  Managing General Partner,
BF Texas  Limited  Partnership,  became  an  additional  Local  General  Partner
responsible for all management  decisions in thirteen Local Limited Partnerships
(the "Texas  Partnerships")  in which the  Partnership  has invested.  Since the
Local  General  Partner  of  the  Texas  Partnerships  was an  affiliate  of the
Partnership,  these combined financial statements include the financial activity
of thirteen  Texas  Partnerships  for the year ended March 31, 1995.  During the
year ended  March 31,  1996,  control of six of these  Texas  Partnerships  were
transferred  to  unrelated  parties,  and  as  such,  as  of  that  date,  these
partnerships  were accounted for on the equity method (see Note 10).  During the
year ended March 31, 1997, the Managing  General Partner  transferred all of the
assets of five out of these six Texas Partnerships  subject to their liabilities
to unaffiliated entities. Therefore, as of March 31, 1997, one Texas Partnership
is accounted for on the equity method and these  combined  financial  statements
include  detailed  financial  activity of seven Texas  Partnerships for the year
ended December 31, 1996. All significant  intercompany balances and transactions
have been eliminated.

On September 29, 1995, an affiliate of the Managing  General  Partner,  BF Texas
Limited  Partnership,  became  the Local  General  Partner  responsible  for all
management  decisions in The  Temple-Kyle  L.P.  ("The  Kyle").  Since the Local
General  Partner  of The  Kyle is now an  affiliate  of the  Partnership,  these
combined  financial  statements  include the detailed  financial activity of The
Kyle for the period from October 1, 1995  through  December 31, 1995 and for the
year  ended  December  31,  1996.  All  significant  intercompany  balances  and
transactions have been eliminated.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

             Notes to the Combined Financial Statements (continued)

2.  Significant Accounting Policies (continued)

On August 20,  1996,  an  affiliate  of the  Managing  General  Partner,  Boston
Financial GP-1,  L.L.C.,  became the Local General  Partner  responsible for all
management  decisions in Breckenridge  Creste  Apartments,  L.P.  ("Breckenridge
Creste").  Since the Local  General  Partner  of  Breckenridge  Creste is now an
affiliate of the Partnership,  these combined  financial  statements include the
detailed financial activity of Breckenridge Creste for the period from September
1, 1996 through  December 31, 1996. All  significant  intercompany  balances and
transactions have been eliminated.

The  Partnership  has elected to report the results of 241 Pine  Street,  Willow
Lake, The Kyle, Breckenridge Creste and the seven combined Texas Partnerships on
a  90-day  lag  basis,   consistent  with  the  presentation  of  the  financial
information  of all Local Limited  Partnerships.  As used herein,  the "Combined
Entities" refers to 241 Pine Street, Willow Lake, The Kyle,  Breckenridge Creste
and the seven combined Texas Partnerships.

Cash Equivalents

Cash equivalents  consist of short-term money market instruments with maturities
when purchased of ninety days or less.

Marketable Securities

Marketable securities consist primarily of U.S. Treasury instruments and various
asset-backed  investment vehicles.  The Partnership's  marketable securities are
classified  as  "Available  for Sale"  securities  and reported at fair value as
reported by the brokerage  firm at which the securities are held. All marketable
securities  have fixed  maturities.  Realized gains and losses from the sales of
securities are based on the specific identification method. Unrealized gains and
losses are  excluded  from  earnings  and  reported as a separate  component  of
partners' equity.

Effect of recently issued Accounting Standard

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, which is effective for fiscal years
beginning  after  December 15, 1995.  This  standard  requires that the carrying
values of long-lived  assets be reviewed for  recoverability.  Impairment losses
are  recognized  when  events or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  The Partnership adopted the
new standard for its year ending March 31,  1997.  The  Partnership  recorded an
impairment  loss of  $1,748,708  during the year ended March 31, 1997 related to
the carrying values of the Texas Partnerships' properties (see Note 6).

Rental Property

Real estate and personal  property of the Combined  Entities are recorded at the
lower of depreciated  cost or net  realizable  value.  Valuation  allowances are
established  when the  carrying  value of such assets  exceeds  their  estimated
recoverable  amounts.  The  Combined  Entities  provide for  depreciation  using
primarily the straight-line  method over their estimated useful lives of 3 to 40
years.

Deferred Expenses

Willow Lake's deferred financing fees are amortized over 180 months, the term of
the related debt, using the straight-line method.

Breckenridge's permanent loan costs are amortized over 10 years, the term of the
related debt, using the straight-line method.

Breckenridge's  compliance  monitoring  fees are  amortized  over the  remaining
12-year term of the tax credit compliance period.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

              Notes to the Combined Financial Statements (continued)

2.  Significant Accounting Policies (continued)

Rental Income

Rental income,  principally  from  short-term  leases on the Combined  Entities'
apartment  units,  is recognized as income under the accrual method as the rents
become due.

Use of Estimates

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

Fair Value of Financial Instruments

Statements  of  Financial   Accounting  Standards  No.  107  ("SFAS  No.  107"),
Disclosures About Fair Value of Financial  Instruments,  requires disclosure for
the fair value of most on- and off-balance sheet financial instruments for which
it is  practicable  to estimate  that value.  The scope of SFAS No. 107 excludes
certain financial  instruments,  such as trade receivables and payables when the
carrying value  approximates the fair value and investments  accounted for under
the equity method, and all nonfinancial  assets,  such as real property.  Unless
otherwise described, the fair values of the Partnership's assets and liabilities
which  qualify as financial  instruments  under SFAS No. 107  approximate  their
carrying amounts in the accompanying balance sheets.

Income Taxes

No provision for income taxes has been made as the  liability  for such taxes is
the  obligation of the partners of the Partnership.

Reclassifications

Certain  reclassifications  have been made to prior year financial statements to
conform to the current year presentation.



<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

               Notes to the Combined Financial Statements (continued)


3.   Marketable Securities

A summary of marketable securities is as follows:
<TABLE>
<CAPTION>
                                                                 Gross             Gross
                                                              Unrealized        Unrealized      Fair
                                              Cost               Gains            Losses        Value
<S>                                       <C>                  <C>              <C>          <C>
Debt securities issued by
   the US Treasury                        $   288,740          $     22         $ (1,918)    $   286,844

Mortgage backed securities                     41,271                 -              (51)         41,220

Other debt securities                           3,255                 -                -           3,255
                                          -----------          --------         --------     -----------

Marketable Securities
   at March 31, 1997                      $   333,266          $     22         $ (1,969)    $   331,319
                                          ===========          ========         ========     ===========

Debt securities issued by
   the US Treasury                        $    39,392          $      -         $   (167)    $    39,225

Mortgage backed securities                     56,715               583                -          57,298

Other debt securities                          62,848                 -             (404)         62,444
                                          -----------          --------         --------     -----------

Marketable Securities
   at March 31, 1996                      $   158,955          $    583         $   (571)    $   158,967
                                          ===========          ========         ========     ===========
</TABLE>


The contractual maturities at March 31, 1997 are as follows:
<TABLE>
<CAPTION>
                                                                                                Fair
                                                                                 Cost           Value
<S>                                                                          <C>             <C>        
Due in less than one year                                                    $    49,922     $    49,879
Due in one to five years                                                         242,073         240,220
Mortgage backed securities                                                        41,271          41,220
                                                                             -----------     -----------
                                                                             $   333,266     $   331,319
                                                                             ===========     ===========
</TABLE>

Actual maturities may differ from contractual  maturities because some borrowers
have the  right to call or  prepay  obligations.  Proceeds  from the  sales  and
maturities were approximately  $98,000,  $3,783,000 and $3,823,000 for the years
ended March 31, 1997, 1996 and 1995, respectively. Included in investment income
are gross  gains of $64 and gross  losses of $1,355  which were  realized on the
sales  during the year ended  March 31,  1997,  gross gains of $24,504 and gross
losses of $19,949  which were  realized on the sales during the year ended March
31,  1996 and gross  gains of $3,167  and gross  losses of  $69,780  which  were
realized on the sales during the year ended March 31, 1995.


4.   Investments in Local Limited Partnerships

The  Partnership  uses the equity  method to  account  for its  limited  partner
interests  in  fifty-two  Local  Limited  Partnerships  (excluding  the Combined
Entities) which own and operate  multi-family  housing complexes,  most of which
are government-assisted.  The Partnership,  as Investor Limited Partner pursuant
to the various  Local  Limited  Partnership  Agreements  which  contain  certain
operating and distribution  restrictions,  has generally acquired a 99% interest
in the profits,  losses,  tax credits and cash flows from  operations of each of
the Local  Limited  Partnerships,  except for  Granite,  Colony  Apartments  and
Harbour View, where the Partnership's ownership interest is 97%, 49% and 48.96%,
respectively.  Upon dissolution,  proceeds will be distributed according to each
respective partnership agreement.



<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

               Notes to the Combined Financial Statements (continued)

4.   Investments in Local Limited Partnerships (continued)

The  following  is a  summary  of  Investments  in Local  Limited  Partnerships,
excluding the Combined Entities, in the years ended March 31:
<TABLE>
<CAPTION>
                                                                       1997               1996            1995
                                                                   -------------     ------------      -------
<S>                                                                <C>               <C>               <C>
Capital contributions to Local Limited Partnerships
   and purchase price paid to withdrawing partners
   of Local Limited Partnerships                                   $  65,667,604     $ 69,606,039      $ 70,650,910

Cumulative equity in loss of Local Limited  Partnerships  
(excluding  cumulative unrecognized losses of $22,111,810,
     $17,117,633, and $11,683,993 at March 31,
   1997, 1996 and 1995, respectively)                                (43,991,055)    (42,375,049)      (37,465,458)

Cumulative cash distributions received from
   Local Limited Partnerships                                         (1,831,974)      (1,328,471)         (974,843)
                                                                   -------------     ------------      ------------

Investments in Local Limited Partnerships before adjustment           19,844,575       25,902,519        32,210,609

Excess of investment cost over the underlying net assets acquired:

   Acquisition fees and expenses                                       7,143,344        7,154,323         7,154,323

   Accumulated amortization of acquisition fees and expenses          (1,369,244)      (1,205,288)       (1,035,575)
                                                                   -------------     ------------      ------------

Investments in Local Limited Partnerships                             25,618,675       31,851,554        38,329,357

Reserve for valuation of investments in
   Local Limited Partnerships                                         (1,635,000)      (1,635,000)       (1,635,000)
                                                                   -------------     ------------      ------------
                                                                   $  23,983,675     $ 30,216,554      $ 36,694,357
                                                                   =============     = ==========      ============
</TABLE>

Summarized  financial  information  from the  financial  statements of all Local
Limited Partnerships  accounted for on the equity method (excluding the Combined
Entities  beginning on the date of  combination)  in which the  Partnership  has
invested is as follows:

Summarized Balance Sheets - December 31,
<TABLE>
<CAPTION>

                                                     1996                  1995                1994
                                                --------------         -------------      ---------
<S>                                              <C>                    <C>               <C>
Assets:
   Investment property, net                      $ 179,058,410          $193,889,556      $  201,412,775
   Other assets, net                                13,158,108            14,776,669          14,739,376
   Current assets                                    5,977,538             6,462,299           6,424,091
                                                 -------------         -------------      --------------
     Total assets                                $ 198,194,056         $ 215,128,524      $222,576,242
                                                 =============         =============      ============

Liabilities and Partners' Equity:
   Mortgages payable, net of current portion     $ 172,051,946         $ 164,854,884      $  174,825,236
   Other liabilities                                13,276,728            14,753,253          16,879,186
   Current liabilities (includes current
    portion of mortgages payable)                   17,958,778            26,612,722          12,135,895
                                                 -------------         -------------      --------------
     Total liabilities                             203,287,452           206,220,859         203,840,317
                                                 -------------         -------------      --------------

Partners' Equity:
   Partnership's equity                             (4,360,195)            8,820,206          17,418,308
   Other partners' equity                             (733,201)               87,459           1,317,617
                                                 -------------         -------------      --------------
     Total partners' equity                         (5,093,396)            8,907,665          18,735,925
                                                 -------------         -------------      --------------
   Total liabilities and partners' equity        $ 198,194,056         $ 215,128,524      $222,576,242
                                                 =============         =============      ============
</TABLE>



<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

                 Notes to the Combined Financial Statements (continued)

4.   Investments in Local Limited Partnerships (continued)
<TABLE>

Summarized Income Statements - For
the year ended December 31,
<CAPTION>

<S>                                              <C>                   <C>                <C>           
Rental and other income                          $  29,724,298         $  32,565,287      $   31,203,382
                                                 -------------         -------------      --------------

Expenses:
   Operating expenses                               17,315,396            18,500,899          17,206,372
   Interest expense                                 14,652,969            16,243,002          15,805,646
   Depreciation and amortization                     8,365,838             8,593,392           8,707,622
                                                 -------------         -------------      --------------
     Total expenses                                 40,334,203            43,337,293          41,719,640
                                                 -------------         -------------      --------------

Net Loss                                         $ (10,609,905)        $ (10,772,006)     $(10,516,258)
                                                 =============         =============      ============

Partnership's share of net loss                  $  (8,798,958)        $  (9,778,580)     $   (9,898,740)
                                                 =============         =============      ==============
Other partners' share of net loss                $  (1,810,947)        $    (993,426)     $     (617,518)
                                                 =============         =============      ==============
</TABLE>

For the years ended  March 31,  1997,  1996 and 1995,  the  Partnership  has not
recognized  $5,206,584,  $5,122,569 and $4,088,341,  respectively,  of equity in
losses relating to certain Local Limited Partnerships in which cumulative equity
in losses  and  distributions  exceeded  its total  investments  in these  Local
Limited Partnerships.

The summarized  financial  information of the Local Limited  Partnerships  above
does not include  241 Pine  Street and Willow Lake for the years ended  December
31, 1996, 1995 and 1994. Thirteen of the Texas Partnerships are excluded for the
year ended December 31, 1994.  Seven of the Texas  Partnerships are excluded for
the years ended  December  31, 1995 and 1996.  The Kyle is excluded for the year
ended December 31, 1996 and for the period October 1, 1995 through  December 31,
1995.  Breckenridge  Creste is excluded for the period September 1, 1996 through
December 31, 1996.  The balance  sheets and  statements  of  operations of these
Local  Limited  Partnerships  are  combined  with  the  Partnership's  financial
statements  through the date that these  partnerships  were controlled (see Note
10). As a result,  this  summarized  information is not comparable  from year to
year.

The Partnership's  deficiency as reflected by the Local Limited  Partnerships of
$(4,545,274)  differs  from  the  Partnership's  Investments  in  Local  Limited
Partnerships  before  adjustment  of  $19,844,575   principally   because:   the
Partnership  has not recognized  $22,111,810 of equity losses  relating to Local
Limited  Partnerships  whose  cumulative  equity in losses  exceeded their total
investments;   purchase  prices  paid  to  original   Limited  Partners  by  the
Partnership  have not been  reflected  in the  balance  sheets of certain  Local
Limited Partnerships; and distributions received from Local Limited Partnerships
during the quarter ended March 31, 1997.


5.   Transactions with Affiliates

In  accordance  with the  Partnership  Agreement,  15% of the  acquisition  fees
payable  to an  affiliate  of the  Managing  General  Partner  is the  "Deferred
Acquisition  Fees".  The  Deferred  Acquisition  Fees have been  deposited in an
interest  bearing account and are paid annually,  with interest,  at the rate of
10% per year over 10 years.  Installments began on the second anniversary of the
Prospectus,  November  23,  1990.  As of  March  31,  1997  and  1996,  deferred
acquisition fees payable amounted to $337,500 and $450,000, respectively.

An affiliate of the  Managing  General  Partner  currently  receives  $6,818 (as
adjusted by the CPI factor) per Local Limited Partnership  annually as the Asset
Management Fee for administering the affairs of the Partnership. Included in the
Combined  Statements  of  Operations  are  Asset  Management  Fees of  $450,678,
$447,110  and  $435,572,  for the years  ended  March 31,  1997,  1996 and 1995,
respectively. Payables to affiliates of the Managing General Partner relating to
the aforementioned  fees and expenses equal $1,141,523 and $690,845 at March 31,
1997 and 1996, respectively.



<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

                  Notes to the Combined Financial Statements (continued)

5.  Transactions with Affiliates (continued)

An affiliate of the Managing  General  Partner is reimbursed for the actual cost
of the Partnership's operating expenses.  Included in general and administrative
expenses for the years ended March 31, 1997, 1996 and 1995 is $170,961, $182,482
and  $155,236,  respectively,  that  the  Partnership  has  paid or will  pay as
reimbursement for salaries and benefits.

Boston  Financial  Property  Management  ("BFPM"),  an affiliate of the Managing
General  Partner,  currently  manages  Harbour  View,  a  property  in which the
Partnership  has  invested.  Included in  operating  expenses in the  summarized
income  statements  in Note 4 to the Combined  Financial  Statements is $51,956,
$46,915  and  $45,845  of fees  earned  by BFPM  during  1996,  1995  and  1994,
respectively.

On April 2, 1993, BFPM became the management  agent of Willow Lake. In August of
1993, BFPM became the management agent for the Texas Partnerships.  On September
29, 1995, BFPM became the management agent of The Kyle. On August 20, 1996, BFPM
became the management agent of Breckenridge. Included in the Combined Statements
of  Operations  is $135,472,  $70,315 and $177,185 of property  management  fees
charged by BFPM during 1996, 1995 and 1994, respectively. Payables to affiliates
include $51,659 and $71,113 of property management fees at December 31, 1996 and
1995, respectively.

An affiliate of the Managing General Partner advanced the Partnership amounts to
cover operating deficits. A non-interest bearing note was executed.  As of March
31, 1997 and 1996,  $514,968  and  $22,279,  respectively,  was the  outstanding
balance due to an affiliate of the Managing General Partner.

The  affiliate of the Managing  General  Partner has made a commitment  to defer
collection of past or future asset management  fees,  reimbursement of operating
expenses and property  management  fees, and to defer collection of the $514,968
note described above, to the extent necessary to cover operating deficits of the
Partnership.

6.   Rental Property

Real  estate and  personal  property  belonging  to the  Combined  Entities  are
recorded at cost, the components of which are as follows at December 31:
<TABLE>
<CAPTION>

                                                                        1996                    1995
                                                                   -------------            --------

   <S>                                                             <C>                      <C>         
   Land and improvements                                           $   1,375,504            $    492,599
   Building and improvements, net of reserve for valuation            21,390,249              14,816,483
   Equipment                                                             544,916                 543,316
                                                                   -------------            ------------
                                                                      23,310,669              15,852,398

   Less accumulated depreciation                                       5,426,435               3,034,245
                                                                   -------------            ------------
     Total                                                         $  17,884,234             $12,818,153
                                                                   =============             ===========
</TABLE>

During the year ended  December 31, 1996, an impairment  loss of $1,748,708  was
recognized  on the real estate in the Texas  Partnerships,  which  decreased the
aggregate  carrying value to  $2,920,411.  For the year ended December 31, 1996,
the net operating  results of the Texas  Partnerships  increased the loss of the
Partnership (prior to the impairment loss) by $410,866.  See Note 10 for further
details on the liquidation of the interests in the Texas Partnerships.


7.   Mortgage Notes Payable

Willow Lake

The original  mortgage  note  payable  consists of a 9.25% per annum note due in
monthly principal and interest installments of $22,878,  maturing on February 1,
2005. The original loan is  collateralized by a first deed of trust covering all
real and  personal  property.  The loan is also  collateralized  by an operating
deficit escrow of $58,387 provided by the Local General Partners as security for
the lender in the event of certain defaults under the mortgage loan agreement.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

                 Notes to the Combined Financial Statements (continued)

7.       Mortgage Notes Payable (continued)

At December 31, 1993,  Willow Lake was in default of its  principal and interest
payments due under the mortgage agreement;  however,  the lender and Willow Lake
executed a workout  commitment  letter in June of 1993  designed  to address the
default.  On February 17, 1994, the parties closed the final workout  agreement.
The terms of the workout  agreement  which were effective June 1, 1993 include a
reduction  in the  interest  rates  payable to 7.25% for the period from June 1,
1993 through May 1, 1995 and a reduction in the interest  rates payable to 8.25%
plus 95% of all net cash  flows,  as defined by the workout  agreement,  for the
period from June 1, 1995 through May 1, 1996.  Willow Lake  resumed  payments at
the original contract rate of 9.25%.  Under the terms of the workout  agreement,
the difference in the interest  payments at the original  contract rate of 9.25%
and the reduced payment rates required over the term of the workout period shall
be  payable  beginning  with  the  expiration  of the  workout  period  over the
remaining term of the note.

All delinquent  amounts under the original  mortgage were paid by Willow Lake on
February 17, 1994 upon closing of the final workout agreement. The delinquencies
were paid out of funds released from an escrow  deposit of $244,000,  which have
been held by an escrow agent pursuant to an operating  reserve escrow  agreement
requiring  deposits  be made to fund  certain  of the  obligations  of the Local
General  Partners  under Willow  Lake's  partnership  agreement,  including  the
payment of operating deficits.

Principal payments required under the above mortgage note which has a balance at
December 31, 1996 and 1995 of $2,744,825 and $2,764,469,  respectively, for each
of the next five years are as follows:

         Years Ending
           December 31,

              1997                             $    21,540
              1998                                  23,619
              1999                                  25,899
              2000                                  28,399
              2001                                  31,119

The  terms of the  mortgage  note  and  other  contract  documents  require  the
establishment of restricted deposits and funded reserves to be held and invested
by the mortgagee. These financial instruments potentially subject Willow Lake to
a concentration of credit risk. Due to the  unavailability  of similar loans, it
is not practicable to determine the fair value of this note at March 31, 1997.

Texas Partnerships

The Texas  Partnerships  and RECD have entered into  Interest  Credit and Rental
Assistance Agreements that have stated interest rates ranging from 9.5% to 7.25%
and provide for an  effective  interest  rate on the notes  payable to FmHA of 1
percent, plus all rental income over basic rents as determined by the government
(overages)   with   maturities   ranging  from  2016  to  2030.  All  notes  are
collateralized by the respective properties. The principal balances of the Texas
Partnerships'  mortgages  at  December  31,  1996 and 1995  are  $4,189,947  and
$4,228,562,  respectively. Due to the unavailability of similar loans, it is not
practicable to determine the fair value of these notes at March 31, 1997.

The Kyle

The Kyle has a note  payable  to the  Partnership  which  is  eliminated  in the
accompanying  combined  financial  statements.   The  note  is  due  in  monthly
installments of $13,800,  including interest at 7.82%,  through June 1, 1997 and
$17,600,  including  interest  at prime plus 1%,  from July 1, 1997  through its
maturity  date on June 1, 2005.  The note is  collateralized  by the  respective
property.  $1,423,253  and $1,454,127 is outstanding as of December 31, 1996 and
1995, respectively. The current value of this note approximates its fair value.



<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

          Notes to the Combined Financial Statements (continued)

7.   Mortgage Notes Payable (continued)

Breckenridge

Breckenridge's  mortgage note payable  consists of a 9.60% per annum note due in
monthly principal and interest installments of $42,408,  maturing on November 1,
2006. The liability of the partnership under the mortgage note is limited to the
underlying value of the real estate collateral plus other amounts deposited with
the  lender.  Principal  payments  required  under the above  note,  which has a
balance at December 31, 1996 of $4,811,607,  for each of the next five years and
thereafter are as follows:

                Years Ending
                 December 31,

                     1997                     $   49,105
                     1998                         54,032
                     1999                         59,454
                     2000                         65,419
                     2001                         71,983

Breckenridge's  second note  payable  bears no interest and is payable in annual
installments of $2,679 until April 15, 1999. The outstanding balance at December
31, 1996 is $8,036.

Due to the  unavailability  of similar loans, it is not practicable to determine
the fair value of this note at March 31, 1997.


8.   Due to affiliate

Under the terms of 241 Pine Street's development agreement, the Developer agreed
to  advance  to the  property  such  funds  as may be  required  to pay  certain
operating  expenses.  Any funds so advanced  are to be repaid by 241 Pine Street
upon sale or  refinancing  of the  property.  The  amount  due to  affiliate  at
December 31, 1996 and 1995 represents the net amount advanced to 241 Pine Street
under this  agreement.  In  connection  with these events the  Original  General
Partner was replaced by an affiliated entity of the Partnership . Therefore, the
amount previously reported as due to developer has been reclassified as a due to
affiliate.  Due to the unavailability of similar loans, it is not practicable to
determine the fair value of this note at March 31, 1997.

9.   General partner advances

Prior to 1995,  Willow  Lake  incurred  debt of  $662,306  payable to the former
general partners and their affiliates for developer fees,  Partnership  advances
and management  fees. As a result of the settlement  litigation in 1995,  Willow
Lake agreed to pay  $173,500  and issued two  promissory  notes in the amount of
$100,000 each.  Both notes have an annual interest rate of 6% and are payable in
full,  both as to accrued  interest and principal on January 1, 2005.  Principal
and  interest on these notes are due and payable out of cash flow which began in
June,  1996. If, in the event Willow Lake is unable to make a cash flow payment,
the  Partnership has guaranteed one note. The guarantee of the Partnership is an
interest  payment of $500 per month.  The  Partnership  paid $5,000 for interest
during  the year  ended  March 31,  1997.  The  remaining  debt  ($288,806)  was
forgiven.





<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

              Notes to the Combined Financial Statements (continued)

10.    Liquidation of Interests in Local Limited Partnerships

As previously  reported,  the Managing  General  Partner  transferred all of the
assets  of five of the  Texas  Partnerships  subject  to  their  liabilities  to
unaffiliated entities. Crown Point, Godley Arms, Glenbrook Apartments, Quail Run
Apartments  and Sherwood Arm Housing were  transferred  prior to March 31, 1997.
Negotiations  between the Managing General  Partner,  the Lender and prospective
buyers  have  continued   through  the  past  quarter  resulting  in  a  revised
disposition plan for the remaining eight properties.  The new plan will transfer
title to the remaining eight properties to unaffiliated  buyers. If negotiations
continue  as  expected,  this  transfer  will  occur  during the second or third
quarter of calendar  1997. In the meantime,  operating  deficits  continue to be
funded from Partnership Reserves.

For tax  purposes,  these  events  will  result  in both  Section  1231 Gain and
Cancellation of Indebtedness income. In addition, the transfer of ownership will
result in nominal  recapture  of tax  credits,  because  the Texas  Partnerships
represent only 2% of the Partnership's tax credits.

11.    Litigation

Lone Oak Housing Associates, Ltd., as was previously reported, was the defendant
in a lawsuit in which the plaintiff had alleged  negligence and deceptive  Trade
Act violations.  This  litigation has been settled by the insurance  carrier and
the case dismissed.

Willow Lake  Partners  II, L.P.  ("Willow  Lake") is the  defendant in a lawsuit
relating  to  an  earlier  lawsuit   involving  Willow  Lake.  As  part  of  the
Partnership's  settlement with the former management agent, Willow Lake gave the
management  agent  two cash  flow  notes.  The  former  management  agent is now
claiming  that Willow Lake has cash flow (so  payments  should have been made on
the notes) and it is the  Partnership's  position that the property is running a
deficit.  This  litigation  is not  expected  to have a  material  impact on the
Partnership.

12.  Extraordinary Item

For the year ended March 31, 1996,  the  Partnership  recognized  $1,297,618  of
cancellation of indebtedness  income attributable to three combined entities who
had restructured  their debt. For the year ended March 31, 1997, the Partnership
recognized  $51,595  of loss  which was an  adjustment  to the  cancellation  of
indebtedness income in the previous year.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)
             Notes to the Combined Financial Statements (continued)


13.  Federal Income Taxes

A reconciliation  of the loss reported in the Combined  Statements of Operations
for the years  ended  March 31,  1997,  1996 and 1995 to the loss  reported  for
federal income tax purposes for the year ended December 31, 1996,  1995 and 1994
is as follows:
<TABLE>
<CAPTION>

                                                            1997              1996               1995
                                                       --------------    -------------      ---------

<S>                                                    <C>               <C>                <C>           
Net loss per Combined Statement of Operations          $   (7,208,441)   $  (5,440,551)     $  (9,002,539)
   Provision for valuation of Investments in
     Local Limited Partnerships not taxable or
     deductible for tax purposes                                    -                -            675,000
   Operating expenses not deductible in
     current year for tax purposes                            483,083          452,028            132,652
   Other loss recognized for tax purposes but
     not recognized for book purposes                               -         (106,755)                 -
   Operating expenses paid in current year but
     expensed for financial reporting purposes
     in prior year                                                  -                -           (105,319)
   Amortization of acquisition fees and expenses
     not deductible for tax purposes                          167,201          168,519            182,006
   Adjustment to reflect March 31 fiscal year-
     end to December 31 tax year-end                         (120,542)          27,286            263,928
   Adjustment for equity in loss of Local Limited
     Partnerships for financial reporting purposes
     under equity in loss for tax purposes                  1,423,554       (1,091,105)          (242,083)
   Adjustment for equity in loss of Local
     Limited Partnerships not recognized for
     financial reporting purposes                          (5,206,584)      (5,122,569)        (4,088,341)
   Cash distribution included in loss for financial
     reporting purposes                                       (13,687)         (11,338)            (6,057)
   Other                                                      (30,462)               -                  -
                                                       --------------    -------------      -------------
Net loss for federal income tax purposes               $  (10,505,878)   $ (11,124,485)     $ (12,190,753)
                                                       ==============    =============      =============
</TABLE>


The  differences in the assets and  liabilities of the Partnership for financial
reporting  purposes and tax reporting purposes for the year ended March 31, 1997
are as follows:
<TABLE>
<CAPTION>

                                                         Financial              Tax
                                                         Reporting           Reporting
                                                         Purposes            Purposes          Differences

   <S>                                                 <C>                 <C>                  <C>        
   Investments in Local Limited Partnerships           $ 23,983,675        $  6,130,762         $17,852,913
                                                       ============        ============        ============
   Other assets                                        $ 19,807,915        $ 15,029,786        $  4,778,129
                                                       ============        ============        ============
   Liabilities                                         $ 15,393,975        $    837,199        $ 14,556,776
                                                       ============        ============        ============
</TABLE>


The  differences in the assets and  liabilities of the Partnership for financial
reporting  purposes are primarily  attributable  to: i) for financial  reporting
purposes,  the  Partnership  combines the  financial  statements of eleven Local
Limited  Partnerships  with its financial  statements;  for tax purposes,  these
entities are carried on the equity  method;  ii) the  cumulative  equity in loss
from Local  Limited  Partnerships,  including  the  Combined  Entities,  for tax
reporting  purposes is  approximately  $25,330,000  greater  than for  financial
reporting   purposes,   including   approximately   $22,112,000  of  losses  the
Partnership has not recognized relating to twenty-six Local Limited Partnerships
whose  cumulative  equity in losses exceeded their total  investments;  iii) the
Partnership  has provided a provision for valuation of $1,635,000  against three
of its  investments  in  Local  Limited  Partnerships  for  financial  reporting
purposes; and iv) organizational and offering costs of approximately $11,832,000
that have been  capitalized  for tax  reporting  purposes are charged to Limited
Partners' equity for financial reporting purposes.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

             Notes to the Combined Financial Statements (continued)

14.  Supplemental Combining Schedules
<TABLE>

                                                  Balance Sheets
<CAPTION>

                                   Boston Financial
                                   Qualified Housing
                                      Tax Credits          Combined        Eliminations       Combined
                                     L.P. III (A)        Entities (B)           (A)              (A)
<S>                                     <C>             <C>               <C>               <C>
Assets
Cash and cash equivalents               $    213,008    $     166,606     $          -      $    379,614
Accounts receivable, net                     781,206          104,803         (710,340)          175,669
Interest receivable                           63,679                -          (46,072)           17,607
Notes receivable                           1,423,253                -       (1,423,253)                -
Prepaid expenses                               8,493           31,526                -            40,019
Tenant security deposits                           -           66,439                -            66,439
Investments in Local Limited
   Partnerships, net of reserve
     for valuation                        26,350,137                -       (2,366,462)       23,983,675
Marketable securities, at fair value         331,319                -                -           331,319
Replacement reserves                               -          210,045                -           210,045
Rental property at cost, net of
   accumulated depreciation                        -       17,884,234                -        17,884,234
Deferred acquisition fees escrow             337,500                -                -           337,500
Deferred expenses, net                             -          235,339                -           235,339
Other assets                                       -          130,130                -           130,130
                                        ------------    -------------     ------------      ------------
     Total assets                       $ 29,508,595    $  18,829,122     $ (4,546,127)     $ 43,791,590
                                        ============    =============     ============      ============

Liabilities and Partners' Equity
Accounts payable to affiliates          $  1,141,523    $     761,999     $   (710,340)     $  1,193,182
Accounts payable and accrued
   expenses                                  170,111          441,404                -           611,515
Interest payable                                   -          423,367          (46,072)          377,295
Notes payable, affiliate                     514,968                -                -           514,968
Security deposits payable                          -           82,054                -            82,054
Due to affiliate                                   -          323,046                -           323,046
Deferred acquisition fees payable            337,500                -                -           337,500
General partner advances                           -          200,000                -           200,000
Mortgage notes payable                             -       13,177,668       (1,423,253)       11,754,415
                                        ------------    -------------     ------------      ------------
     Total liabilities                     2,164,102       15,409,538       (2,179,665)       15,393,975
                                        ------------    -------------     ------------      ------------

Minority interest in Local
   Limited Partnerships                            -                -        1,053,122         1,053,122
                                        ------------    -------------     ------------      ------------

General, Initial and Investor Limited
   Partners' Equity                       27,346,440        3,419,584       (3,419,584)       27,346,440
Net unrealized losses on marketable
   securities                                 (1,947)               -                -            (1,947)
                                        ------------    -------------     ------------      ------------
     Total Partners' Equity               27,344,493        3,419,584       (3,419,584)       27,344,493
                                        ------------    -------------    -------------      ------------
     Total Liabilities and
        Partners' Equity                $ 29,508,595    $  18,829,122    $  (4,546,127)     $ 43,791,590
                                        ============    =============    =============      ============
</TABLE>

(A) As of March 31, 1997. 
(B) As of December 31, 1996 - see Note 2.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

             Notes to the Combined Financial Statements (continued)

14.  Supplemental Combining Schedules (continued)
<TABLE>

                                             Statements of Operations
<CAPTION>

                                   Boston Financial
                                   Qualified Housing
                                      Tax Credits          Combined        Eliminations       Combined
                                     L.P. III (A)        Entities (B)           (A)              (A)

<S>                                     <C>                <C>               <C>            <C>
Revenue:
   Rental                               $          -       $ 1,764,258       $        -     $  1,764,258
   Investment                                 75,919             6,741                -           82,660
   Other                                     217,453           138,684          (83,458)         272,679
                                        ------------      ------------      -----------     ------------
     Total Revenue                           293,372         1,909,683          (83,458)       2,119,597
                                        ------------      ------------      -----------     ------------

Expenses:
   Asset management fees,                    450,678                 -                -          450,678
     related party
   General and administrative                611,810                 -                -          611,810
   Bad debt expense                            8,665                 -                -            8,665
   Property management fees                        -           150,304                -          150,304
   Rental operations, exclusive
     of depreciation                               -         1,387,909                -        1,387,909
   Interest                                    5,000           610,976          (83,458)         532,518
   Provision for valuation of real estate          -         1,748,708                -        1,748,708
   Depreciation                                    -           605,671                -          605,671
   Amortization                              167,201            15,674                -          182,875
                                        ------------      ------------      -----------     ------------
     Total Expenses                        1,243,354         4,519,242          (83,458)       5,679,138
                                        ------------      ------------      -----------     ------------

Loss before equity in losses of Local
   Limited Partnerships and
   extraordinary item                       (949,982)       (2,609,559)               -       (3,559,541)

Equity in losses of Local Limited
   Partnerships                           (6,258,459)                -        2,633,475       (3,624,984)

Minority interest in losses of Local
   Limited Partnerships                            -                 -           27,679           27,679
                                        ------------      ------------      -----------     ------------

Net loss before extraordinary item        (7,208,441)       (2,609,559)       2,661,154       (7,156,846)

Extraordinary loss on
   forgiveness of indebtedness                     -           (51,595)               -          (51,595)
                                        ------------      ------------      -----------     ------------

Net Income (Loss)                       $ (7,208,441)     $ (2,661,154)     $ 2,661,154     $ (7,208,441)
                                        ============      ============      ===========     ============
</TABLE>


(A) For the year ended March 31, 1997.  
(B) For the year ended December 31, 1996
- see Note 2.


<PAGE>
------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)

               Notes to the Combined Financial Statements (continued)

14.      Supplemental Combining Schedules (continued)
<TABLE>

                                               Statements of Cash Flows
<CAPTION>

                                         Boston Financial
                                         Qualified Housing
                                            Tax Credits          Combined         Eliminations          Combined
                                           L.P. III (A)        Entities (B)                 (A)                 (A)

<S>                                       <C>                 <C>                 <C>                <C>           
Net loss                                  $   (7,208,441)     $  (2,661,154)      $  2,661,154       $  (7,208,441)
Adjustments to reconcile net
  loss to net cash used for
  operating activities:
   Equity in losses of Local
     Limited Partnerships                      6,258,459                  -         (2,633,475)          3,624,984
   Bad debt expense                                8,665                  -                  -               8,665
   Provision for valuation of real estate              -          1,748,708                  -           1,748,708
   Cancellation of indebtedness loss                   -             51,595                  -              51,595
   Cash distribution included in
     net loss                                    (32,610)                 -                  -             (32,610)
   Replacement reserves                                -             10,637                  -              10,637
   Amortization and depreciation                 167,201            621,345                  -             788,546
   Loss on sale of marketable securities           1,291                  -                  -               1,291
   Minority interest in loss
     of Local Limited Partnerships                     -                  -            (27,679)            (27,679)
   Increase (decrease) in cash
     arising from changes in operating
     assets and liabilities:
     Other assets                                (57,277)            (6,906)                 -             (64,183)
     Accounts payable to affiliates              429,821             (1,188)                 -             428,633
     Accounts payable and accrued
     expenses                                     21,251            220,103                  -             241,354
                                          --------------      -------------       ------------       -------------

Net cash used for
   operating activities                         (411,640)           (16,860)                 -            (428,500)
                                          --------------      -------------       ------------       -------------

Cash flows from investing activities:
   Advances to affiliates                       (308,388)                 -            184,094            (124,294)
   Purchases of marketable securities           (273,754)                 -                  -            (273,754)
   Proceeds from sales and maturities
     of marketable securities                     98,152                  -                  -              98,152
   Cash distributions received from
     Local Limited Partnerships                  503,503                  -                  -             503,503
   Cash received upon assumption
     of General Partner interest
     in a Combined Entity                              -             18,364                  -              18,364
   Adjustment to cash received upon
     assumption of General Partner
     interest in a Combined Entity                     -            (51,595)                  -            (51,595)
   Decrease in deferred acquisition fee
     escrow                                      112,500                  -                  -             112,500
   Payment of deferred acquisition fee          (112,500)                 -                  -            (112,500)
   Additions to fixed assets                           -            (70,940)                 -             (70,940)
                                          --------------      -------------       ------------       -------------
Net cash provided by (used for)
   investing activities                           19,513           (104,171)           184,094              99,436
                                          --------------      -------------       ------------       -------------
</TABLE>

<PAGE>

------------------------------------------------------------------------------
               BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
------------------------------------------------------------------------------
                             (A Limited Partnership)
             Notes to the Combined Financial Statements (continued)

14.  Supplemental Combining Schedules (continued)
<TABLE>

                                         Statements of Cash Flows (continued)
<CAPTION>

                                         Boston Financial
                                         Qualified Housing
                                            Tax Credits          Combined         Eliminations      Combined
                                           L.P. III (A)        Entities (B)                 (A)                 (A)

<S>                                              <C>               <C>                 <C>                 <C>   
Cash flows from financing activities:
   Repayment of mortgage notes
      payable                                          -           (105,388)            17,814             (87,574)
   Advances from affiliate                             -            219,617            184,094              35,523
   Advances on notes payable,
     affiliate                                   492,689                  -                  -             492,689
   Repayment of notes
     receivable, affiliate                        17,814                  -            (17,814)                  -
                                          --------------      -------------       ------------       -------------
Net cash provided by
   financing activities                          510,503            114,229           (184,094)            440,638
                                          --------------      -------------       ------------       -------------

Net increase (decrease) in
   cash and cash equivalents                     118,376             (6,802)                 -             111,574

Cash and cash equivalents,
   beginning                                      94,632            173,408                   -            268,040
                                          --------------      -------------       -------------     --------------

Cash and cash equivalents,
   ending                                 $      213,008      $     166,606       $           -     $      379,614
                                          ==============      =============       =============     ==============

</TABLE>

(A) For the year ended March 31, 1997.  
(B) For the year ended December 31, 1996
- see Note 2.



<TABLE>
<CAPTION>



                                                            COST OF INTEREST          NET IMPROVEMENTS
                             NUMBER         TOTAL          AT ACQUISTION DATE           CAPTIALIZED
                                                       ----------------------------
                               OF          ENCUM-                  BUILDINGS AND       SUBSEQUENT TO
       DESCRIPTION            UNITS       BRANCES *      LAND      IMPROVEMENTS          ACQUISITON
----------------------------------------------------------------------------------------------------------

Multi-family residential property:

<S>                            <C>           <C>        <C>            <C>                       <C>     
Harbour View                   122           9,549,824  $406,704       $11,193,508               $530,801
 Staten Island, NY
Willow Lake Apts**             132           2,744,825   100,000         5,143,801               (55,918)
 Kansas City, MO
West Dade I                    122           4,087,350   626,698         4,572,095                597,462
 Miami, FL
West Dade II                   209           8,367,742 1,213,707         8,416,939              2,527,205
 Miami, FL
Westwood Manor                 144           3,364,998   191,987         4,091,974                 90,504
 Flint, MI
Rolling Hills                  150           3,107,682    10,000         6,791,690                 26,155
 Dayton, OH
Regency Square                 140           3,301,775   150,000         6,777,207                 31,232
 Dayton, OH
Buffalo Shoreline              142           6,461,589   153,588         5,106,986                758,263
 Buffalo, NY
Buffalo Waterfront             472          23,125,955   202,452        17,775,357              2,324,251
 Buffalo, NY
Fox Run                        150           4,132,463   452,610         5,039,028                 96,162
 Victoria, TX
Boulevard II                   19              717,387         0           965,670                384,682
 Chicago, IL
The Colony                     300           8,639,305 1,298,638         8,814,688                186,010
 Columbia, SC
Boulevard IIA                  42            1,559,802    11,786         2,467,433                621,660
 Chicago, IL
Ashley Place                   96            2,826,469        10         3,951,009                862,321
 Orlando, FL
Admiral Court                  46            2,478,296    60,637         4,751,321                314,692
 Philadelphia, PA
Syracuse Apartments             8              241,402    17,669           289,821                  3,301
 Syracuse, KS
El Jardin                      236           6,859,190   742,000         8,480,839                200,862
 Davie, FL
Elmwood Delmar                 95            3,144,082    67,097         4,111,291                 50,856
 Aurora, CO
Crestwood Place**              24              365,986     5,000           458,287              (181,525)
 Bridgeport, TX
Willowick Apts**               60            1,150,688    10,956         1,455,934              (316,883)
 Gainesville, TX
Ellsworth Apartments           12              329,346    18,000           390,835                  1,647
 Ellsworth, KS
Satanta Apartments              8              224,206    23,593           264,336                      0
 Satanta, KS
Rossville Apartments           10              279,995    23,950           259,486                 68,583
 Rossville, KS
Columbia Town House            56            1,398,816   167,000           885,042              1,078,618
 Burlington, IA
Quarter Mill                   266           7,185,259 1,139,508         2,530,458             12,625,086
 Richmond, VA
One Main Place**               24              364,887    19,458           414,803              (114,334)
 Little Elm, TX
Pilot Point**                  40              545,266    24,805           575,107              (138,080)
 Pilot Point, TX
Sherwood Arms (A)               0                    0    32,439           658,300              (690,739)
 Keene, TX

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                                                        COST OF INTEREST          NET IMPROVEMENTS
                        NUMBER        TOTAL            AT ACQUISTION DATE            CAPTIALIZED
                                                  ------------------------------
                          OF          ENCUM-                   BUILDINGS AND        SUBSEQUENT TO
     DESCRIPTION         UNITS      BRANCES *         LAND       IMPROVEMENTS        ACQUISITON
------------------------------------------------------------------------------------------------------

Multi-family residential property:

<S>                        <C>                  <C>   <C>               <C>                 <C>      
Crown Point (A)            0                    0     13,642            371,717             (385,359)
 Venus, TX
Godley Arms (A)            0                    0     26,156            250,345             (276,501)
 Godley, TX
South Holyoke             48            2,760,370    105,250          4,095,471             (157,457)
 South Holyoke, MA
Walker Woods              51            2,363,190    159,104          2,954,196             1,016,207
 Dover, DE
Shady Shores**            40              503,235     30,778            723,316              (91,390)
 Lake Dallas, TX
Eagle Wood Apts.          40            1,117,119          0          1,382,855                52,491
 Covington, TN
Georgetown II             50            1,744,693          0          1,079,160             1,726,090
 Georgetown, DE
Blue Mountain Apts.       217           9,912,154    618,994         14,308,698               154,034
 Boston, MA
Garden Plain              12              303,961     15,849            362,584                    54
 Garden Plain, KS
Fulton Apartments         24              801,697          0            985,000                35,000
 Fulton, KY
Lone Oak                  64              618,418     34,437            803,419                16,535
 Graham, TX
Hallett-West Apts.**      24              296,389     18,500            322,596                46,340
 Hallettsville, TX
Glenbrook (A)              0                    0     13,636            310,294             (323,930)
 St. Jo, TX
Eagles Nest**             90              963,496     49,340          1,153,573             (424,511)
 Decatur, TX
Billings Family           12              284,005     14,032            327,478                 2,855
 Billings, MO
Brownsville               28              788,041     31,000            980,353                 7,480
 Brownsville, TN
Wayne Senior              15              430,080     30,949            494,381                 1,215
 Wayne, NE
Longview                  14              399,642     29,710            461,233                 2,634
 Humboldt, KS
Horseshoe Bend            24              651,347     21,780            816,289                     0
 Horseshoe Bend, AR
Briarwood II              32            1,114,117    105,000          1,331,661                 8,587
 Lake Havasua, AZ
Quail Run (A)              0                    0      8,158            458,464             (466,622)
 Iowa Park, TX
Smithville                24              547,689     28,840            585,285                 1,057
 Smithville, MO
Aurora East               125           4,031,980    308,324          4,402,417               160,304
 Denver, CO
Elver Park II             56            1,702,679    348,138          2,509,630                15,617
 Madison, WI
Elver Park III            48            1,471,297    135,465            582,652             1,804,381
 Madison, WI
Tucson Trails             48            1,435,577    138,240            588,915             1,795,470
 Madison, WI
Tucson Trails II          48            1,442,356    138,240            281,704             2,104,333
 Madison, WI

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                                                            COST OF INTEREST          NET IMPROVEMENTS
                              NUMBER        TOTAL          AT ACQUISTION DATE            CAPTIALIZED
                                                       ----------------------------
                                OF          ENCUM-                  BUILDINGS AND       SUBSEQUENT TO
        DESCRIPTION            UNITS      BRANCES *         LAND      IMPROVEMENTS       ACQUISITON
-----------------------------------------------------------------------------------------------------------

Multi-family residential property:

<S>                             <C>         <C>             <C>         <C>                         <C>   
Pleasant Plaza                  125         12,449,423      303,775     15,691,150                  70,074
 Malden, MA
241 Pine Street**               50                   0      130,900      2,564,381             (1,451,679)
 Manchester, NH
Oak Grove                       24             563,397       35,000        169,708                 508,463
 Oak Grove, MO
Wood Creek                      104          3,366,957      475,000      4,203,585               1,398,056
 Calcium, NY
Breckenridge Creste**           164          4,819,643      845,000        811,111               7,479,926
 Duluth, GA
Bolivar Apartments              20             468,254       30,000        190,970                 360,983
 Boliver, MO
Lexington Civic                 24             819,752       15,000        650,260                 307,303
 Lexington, TN
Riverfront Apartments           200          7,711,792      140,333      9,845,838                 604,187
 Sunbury, PA
Susquehanna View                201          9,140,239      373,702     10,743,951                 597,386
 Camp Hill, PA
Westgate Associated             20             640,576       45,500        750,700                   1,478
 Perryville, AR
Altheimer Associates            20             599,724       10,000        725,429                   2,346
 Altheirmer, AR
The Temple-Kyle **              64           1,423,253       93,564        931,860               2,675,652
 Temple, TX
Diversey Square                 48           2,581,872       50,000      3,253,496                  77,249
 Chicago, IL
Poplar Village                  36           1,205,175       60,000      1,427,725                       0
 Cumberland, KY

                                        -------------------------------------------------------------------
                                           188,028,174   12,201,628    211,517,095              41,339,213

Less:  Combined Entities **               (13,177,668)  (1,328,301)   (14,554,769)             (7,427,598)

                                        ===================================================================
                                           174,850,506  $10,873,327   $196,962,326             $33,911,615
                                        ===================================================================

</TABLE>

<PAGE>


<TABLE>
<CAPTION>

                                                                                            LIFE ON
                                                                                              WHICH
                          GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, 1996                   DEPRECTIATION
                     --------------------------------------------------------------
                       LAND AND    BUIILDING AND                    ACCUMULATED      DATE   IS           DATE
                                                                                            COMPUTED
    DESCRIPTION      IMPROVEMENTS  IMPROVEMENTS       TOTAL         DEPRECIATON     BUILT    (YEARS)   ACQUIRED
-----------------------------------------------------------------------------------------------------------------
Multi-family residential
property:
                                                                        
<S>                       <C>          <C>           <C>                 <C>           <C>    <C>      <C>   
Harbour View              406,704      11,724,309    $12,131,013         2,457,463     1990   5-40     09/29/89
 Staten Island, NY
Willow Lake Apts**        126,035       5,061,848      5,187,883         1,473,381     1989   5-40     12/20/89
 Kansas City, MO
West Dade I               626,698       5,169,557      5,796,255         1,549,000  Various   5-40     12/31/88
 Miami, FL
West Dade II            1,118,822      11,039,029     12,157,851         3,136,402  Various   5-40     12/31/88
 Miami, FL
Westwood Manor            191,987       4,182,478      4,374,465         1,438,879  Various   5-40     02/21/89
 Flint, MI
Rolling Hills              57,315       6,770,530      6,827,845         2,052,334     1969   5-40     03/13/89
 Dayton, OH
Regency Square            185,201       6,773,238      6,958,439         1,993,017     1963   5-40     03/13/89
 Dayton, OH
Buffalo Shoreline         153,588       5,865,249      6,018,837         1,882,066  Various   5-40     04/28/89
 Buffalo, NY
Buffalo Waterfront        202,452      20,099,608     20,302,060         6,461,172  Various   5-40     04/28/89
 Buffalo, NY
Fox Run                   484,554       5,103,246      5,587,800         1,372,844     1975   5-40     04/07/89
 Victoria, TX
Boulevard II               15,600       1,334,752      1,350,352           335,002     1920   5-40     04/04/89
 Chicago, IL
The Colony              1,323,009       8,976,327     10,299,336         3,674,667     1950   5-40     05/19/89
 Columbia, SC
Boulevard IIA              34,400       3,066,479      3,100,879           722,727  Various   5-40     04/04/89
 Chicago, IL
Ashley Place                   10       4,813,330      4,813,340         1,300,158     1989   5-40     06/23/89
 Orlando, FL
Admiral Court              60,637       5,066,013      5,126,650           891,810     1920   5-40     06/07/89
 Philadelphia, PA
Syracuse Apartments        17,669         293,122        310,791            91,143     1989   5-40     06/30/89
 Syracuse, KS
El Jardin                 742,000       8,681,701      9,423,701         2,326,736     1973   5-40     06/14/89
 Davie, FL
Elmwood Delmar             74,221       4,155,023      4,229,244         1,102,788     1957   5-40     05/16/89
 Aurora, CO
Crestwood Place**           5,000         276,762        281,762            95,762     1975   5-40     06/05/89
 Bridgeport, TX
Willowick Apts**           60,813       1,089,194      1,150,007           321,507     1975   5-40     06/30/89
 Gainesville, TX
Ellsworth Apartments       18,000         392,482        410,482           110,157     1975   5-40     07/19/89
 Ellsworth, KS
Satanta Apartments          7,500         280,429        287,929            80,908     1989   5-40     07/28/89
 Satanta, KS
Rossville Apartments       23,950         328,069        352,019            88,389     1990   5-40     07/28/89
 Rossville, KS
Columbia Town House       168,303       1,962,357      2,130,660           555,543     1990   5-40     07/28/89
 Burlington, IA
Quarter Mill            5,551,917      10,743,135     16,295,052         3,607,780     1990   5-40     08/02/89
 Richmond, VA
One Main Place**           20,424         299,503        319,927            93,227     1989   5-40     08/22/89
 Little Elm, TX
Pilot Point**              24,805         437,027        461,832           151,662     1989   5-40     08/22/89
 Pilot Point, TX
Sherwood Arms (A)               0               0              0                 0     1989    N/A     08/22/89
 Keene, TX
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                                                         LIFE ON
                                                                                           WHICH
                       GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, 1996                    DEPRECTIATION
                     --------------------------------------------------------
                       LAND AND    BUIILDING AND                ACCUMULATED     DATE    IS COMPUTED    DATE
    DESCRIPTION      IMPROVEMENTS  IMPROVEMENTS       TOTAL     DEPRECIATON    BUILT      (YEARS)    ACQUIRED
----------------------------------------------------------------------------------------------------------------

Multi-family residential
property:

<S>                             <C>             <C>           <C>          <C>     <C>      <C>      <C>
Crown Point (A)                 0               0             0            0       1989     N/A      08/22/89
 Venus, TX
Godley Arms (A)                 0               0             0            0       1989     N/A      08/25/89
 Godley, TX
South Holyoke             105,250       3,938,014     4,043,264      836,577       1988    5-40      08/29/89
 South Holyoke, MA
Walker Woods              159,104       3,970,403     4,129,507      669,908       1990    5-40      08/30/89
 Dover, DE
Shady Shores**             61,487         601,217       662,704      155,663       1989    5-40      08/30/89
 Lake Dallas, TX
Eagle Wood Apts.           45,510       1,389,836     1,435,346      350,802       1990    5-40      09/06/89
 Covington, TN
Georgetown II                   0       2,805,250     2,805,250      522,451       1990    5-40      09/28/89
 Georgetown, DE
Blue Mountain Apts.       618,994      14,462,732    15,081,726    4,042,046    Various    5-40      09/29/89
 Boston, MA
Garden Plain               15,932         362,555       378,487      110,651       1990    5-40      08/09/89
 Garden Plain, KS
Fulton Apartments          28,000         992,000     1,020,000      246,458       1990    5-40      10/05/89
 Fulton, KY
Lone Oak                   34,437         819,954       854,391      131,356       1990    5-40      10/06/89
 Graham, TX
Hallett-West Apts.**       18,500         368,936       387,436       72,436       1989    5-40      11/20/89
 Hallettsville, TX
Glenbrook (A)                   0               0             0            0       1989     N/A      10/06/89
 St. Jo, TX
Eagles Nest**              49,340         729,062       778,402      231,402       1989    5-40      10/06/89
 Decatur, TX
Billings Family            14,070         330,295       344,365       96,815       1989    5-40      08/09/89
 Billings, MO
Brownsville                31,000         987,833     1,018,833      345,880       1989    5-40      08/09/89
 Brownsville, TN
Wayne Senior               30,949         495,596       526,545      110,746       1988    5-40      08/09/89
 Wayne, NE
Longview                   29,796         463,781       493,577      138,667       1988    5-40      10/13/89
 Humboldt, KS
Horseshoe Bend             21,780         816,289       838,069      288,436       1988    5-40      08/09/89
 Horseshoe Bend, AR
Briarwood II              105,000       1,340,248     1,445,248      443,708       1989    5-40      10/04/89
 Lake Havasua, AZ
Quail Run (A)                   0               0             0            0       1989     N/A      10/06/89
 Iowa Park, TX
Smithville                 29,253         585,929       615,182      166,709       1987    5-40      08/09/89
 Smithville, MO
Aurora East               308,324       4,562,721     4,871,045    1,985,059       1972    5-40      11/06/89
 Denver, CO
Elver Park II             348,138       2,525,247     2,873,385      616,198       1989    5-40      11/09/89
 Madison, WI
Elver Park III            217,507       2,304,991     2,522,498      480,654       1990    5-40      11/09/89
 Madison, WI
Tucson Trails             193,866       2,328,759     2,522,625      482,759       1990    5-40      11/22/89
 Madison, WI
Tucson Trails II          194,388       2,329,889     2,524,277      470,521       1990    5-40      11/23/89

</TABLE>

<PAGE>


<TABLE>
<CAPTION>



                                                                                        LIFE ON
                                                                                         WHICH
                       GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, 1996                  DEPRECTIATION
                     --------------------------------------------------------
                       LAND AND    BUIILDING AND                ACCUMULATED    DATE   IS COMPUTED     DATE
    DESCRIPTION      IMPROVEMENTS  IMPROVEMENTS       TOTAL     DEPRECIATON   BUILT     (YEARS)     ACQUIRED
---------------------------------------------------------------------------------------------------------------

Multi-family residential
property:

<S>                       <C>          <C>           <C>           <C>           <C>      <C>       <C>   
Pleasant Plaza            303,775      15,761,224    16,064,999    4,403,222     1989     5-40      12/01/89
 Malden, MA
241 Pine Street**         130,900       1,112,702     1,243,602      470,011     1988     5-40      12/04/89
 Manchester, NH
Oak Grove                  35,000         678,171       713,171      159,286     1991     5-40      11/24/89
 Oak Grove, MO
Wood Creek                842,496       5,234,145     6,076,641    1,573,085     1990     5-40      12/15/89
 Calcium, NY
Breckenridge              790,200       8,345,837     9,136,037    1,886,435     1990     5-40      12/19/89
Creste**
 Duluth, GA
Bolivar Apartments         30,000         551,953       581,953      140,368     1990     5-40      12/15/90
 Boliver, MO
Lexington Civic            15,000         957,563       972,563      180,520     1990     5-40      12/29/90
 Lexington, TN
Riverfront                140,333      10,450,025    10,590,358    2,003,411     1990     5-40      12/26/89
Apartments
 Sunbury, PA
Susquehanna View          373,702      11,341,337    11,715,039    2,247,259     1988     5-40      12/26/89
 Camp Hill, PA
Westgate Associated        20,000         777,678       797,678      193,612     1990     5-40      05/01/90
 Perryville, AR
Altheimer Associates       10,000         727,775       737,775      181,438     1990     5-40      04/18/90
 Altheirmer, AR
The Temple-Kyle **         88,000       3,613,076     3,701,076      474,948     1991     5-40      06/12/90
 Temple, TX
Diversey Square            50,000       3,330,745     3,380,745      849,812     1990     5-40      12/01/90
 Chicago, IL
Poplar Village             60,000       1,427,725     1,487,725      266,424     1991     5-40      12/30/90
 Cumberland, KY

                     --------------------------------------------------------
                       17,251,645     247,806,291   265,057,936   67,392,257

Less:  Combined       (1,375,504)    (21,935,164)  (23,310,668)  (5,426,434)
Entities **

                     ========================================================
                      $15,876,141    $225,871,127  $241,747,268  $61,965,823
                     ========================================================
</TABLE>

The   aggregate   cost  for  Federal   Income  Tax  purposes  is   approximately
$270,527,000.

                 * Mortgage  notes  payable  generally  represent   non-recourse
                   financing of low-income  housing  projects payable with terms
                   of up to 40 years with interest payable at rates ranging from
                   9.75% to 12%. The Partnership has not guaranteed any of these
                   mortgage notes payable.

(A) During the year ended March 31, 1997, the Partnership has  transferrred  all
of the assets of five of the Texas Partnerships  subject to their liabilities to
unaffiliated
entities.

(B) Balances at December  31, 1995 are  restated to reflect that the  properties
previously  stated as having been transferred at March 31, 1996 were transferred
during the year ended March 31, 1997 and were accounted for on the equity method
of accounting at March 31, 1996.


<PAGE>
<TABLE>


Summary of property owned and accumulated depreciation:
<CAPTION>

<S>                                                              <C>                                              
Property Owned  December 31, 1996                                Accumulated Depreciation  December 31,
                                                                 1996
---------------------------------------------------------------  -------------------------------------------
Balance at beginning of period                    $252,533,482   Balance at beginning of        $55,943,640
                                                                 period
  Additions during period:                                         Additions during period:
     Acquisitions through                 $0                          Eliminations - 1995         3,034,245
foreclosure
     Other                           226,465                          Eliminations - 1996       (5,426,434)
acquisitions
     Improvements                    623,525                          Properties disposed of      (421,819)
etc.                                                             (A)
                                -------------
                                                       849,990                                    8,836,191
                                                                 Depreciation
                                                                                               -------------
  Deductions during period:                                      Balance at close of period     $61,965,823
                                                                                               =============
     Cost of real estate and        (33,471)
fixed assets sold
     Eliminations - 1995          15,852,398
Combined entities
     Eliminations - 1996        (23,310,668)
Combined Entities
     Provision for valuation     (1,748,708)
of real estate
     Properties disposed of (A)  (2,395,755)
                                -------------
                                                  (11,636,204)
                                             ------------------
Balance at close of period                        $241,747,268
                                             ==================

Property Owned  December 31, 1995                                Accumulated Depreciation  December 31,
                                                                 1995
---------------------------------------------------------------  -------------------------------------------
Balance at beginning of period                    $248,571,597   Balance at beginning of        $47,158,822
                                                                 period
  Additions during period:                                         Additions during period:
     Acquisitions through                 $0                          Eliminations - 1994         2,653,279
foreclosure
     Other                            77,498                          Eliminations - 1995       (3,034,245)
acquisitions
     Improvements                  4,576,477                          Properties disposed of
etc.                                                             (B)                                      -
                                -------------
                                                     4,653,975                                    9,165,784
                                                                 Depreciation
                                                                                               -------------
  Deductions during period:                                      Balance at close of period     $55,943,640
                                                                                               =============
     Cost of real estate and         (1,408)
fixed assets sold
     Eliminations - 1994          15,161,716
Combined entities
     Eliminations - Combined    (15,852,398)
Entities
     Fixed assets of                       0
properties disposed of (B)
                                -------------
                                                     (692,090)
                                             ------------------
Balance at close of period                        $252,533,482
                                             ==================
Property Owned  December 31, 1994                                Accumulated Depreciation  December 31,
                                                                 1994
---------------------------------------------------------------  -------------------------------------------
Balance at beginning of period                    $248,131,413   Balance at beginning of        $38,641,221
                                                                 period
  Additions during period:                                         Additions during period:
     Acquisitions through                 $0                          Eliminations - 1993         2,163,088
foreclosure                                                      Combined entities
     Other                           139,171                          Eliminations - Combined   (2,653,279)
acquisitions                                                     Entities
     Improvements                    544,589                                                      9,007,792
etc.                                                             Depreciation
                                -------------                                                  -------------
                                                       683,760   Balance at close of period     $47,158,822
                                                                                               =============
  Deductions during period:
     Cost of real estate and        (81,907)
fixed assets sold
     Eliminations - 1993          15,000,047
Combined entities
     Eliminations - Combined    (15,161,716)
Entities
     Reclassification to                   0
intangible assets
                                -------------
                                                     (243,576)
                                             ------------------
Balance at close of period                        $248,571,597
                                             ==================
</TABLE>
<PAGE>
<PAGE>



                  BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                           (A Limited Partnership)

                          Annual Report on form 10-K
                      For The Year Ended March 31, 1996
                       Reports of Independent Auditors

<PAGE>
[Letterhead]

FRIDUSS, LUKEE, SCHIFF & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
4747 WEST PETERSON AVENUE
CHICAGO, ILLINIOS 60646
(773) 777-4445
FAX (773) 777-6557

INDEPENDENT AUDITOR'S REPORT

To the Partners of                                   HUD Field Office Director
DIVERSEY SQUARE ASSOCIATES II                         Chicago, Illinois
Chicago, Illinois

We have audited the accompanying balance sheets of DIVERSEY SQUARE ASSOCIATES II
(An Illinois Limited  Partnership),  Project No.  071-35573,  as of December 31,
1996 and 1995, and the related  statements of profit and loss,  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 generally accepted auditing standards
and generally accepted Government Auditing Standards,  issued by the Comptroller
General of the 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 the financial statements referred to above present fairly, in all
material respects, the financial position of DIVERSEY SQUARE ASSOCIATES II as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.



The  supporting  data  included in this  report  shown on pages 19 through 24 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 same
auditing procedures applied in the audit of the basic financial statements,  and
in our opinion, are presented fairly in all material respects in relation to the
basic financial statements taken as a whole.

/s/FRIDUSS, LUKEE, SCHIFF & CO., P.C.

FRIDUSS, LUKEE, SCHIFF & CO., P.C.                                 36-3087225
Certified Public Accountants                             Mr. Bruce C. Schiff
                                                         (773) 777-4445
Chicago, Illinois
January 30, 1997
<PAGE>
[Letterhead]

FRIDUSS, LUKEE, SCHIFF & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
4747 WEST PETERSON AVENUE
CHICAGO, ILLINIOS 60646
(312) 777-4445
FAX (312) 777-6557

INDEPENDENT AUDITOR'S REPORT

To the Partners of                                   HUD Field Office Director
DIVERSEY SQUARE ASSOCIATES II                         Chicago, Illinois
Chicago, Illinois

We have audited the accompanying balance sheets of DIVERSEY SQUARE ASSOCIATES II
(An Illinois Limited  Partnership),  Project No.  071-35573,  as of December 31,
1995 and 1994 and the related  statements of profit and loss,  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 audit in accordance with generally  accepted auditing standards
and generally accepted Government Auditing, issued by the Comptroller General of
the 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  misstatements.  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 provided 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 DIVERSEY SQUARE ASSOCIATES II as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.


In accordance with Government Auditing  Standards,  we have also issued a report
dated February 1, 1996 on our  consideration of DIVERSEY SQUARE  ASSOCIATES II's
internal control structure and a report dated February 1, 1996 on its compliance
with laws and regulations.

The supporting data in this report shown on pages 19 through 24 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 same auditing
procedures  applied in the audit of the basic financial  statements,  and in our
opinion,  are presented fairly in all material respects in relation to the basic
financial statements taken as a whole.

/s/FRIDUSS, LUKEE, SCHIFF & CO., P.C.

FRIDUSS, LUKEE, SCHIFF & CO., P.C.                                 36-3087225
Certified Public Accountants                             Mr. Bruce C. Schiff
                                                         (312) 777-4445
Chicago, Illinois
February 1, 1996

<PAGE>
[Letterhead]
[LOGO]
Habif, Arogeti & Wynne, P.C.
Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

To the Partners
Breckenridge Creste Apartments, L.P.

We  have  audited  the  accompanying   balance  sheet  of  Breckenridge   Creste
Apartments, L.P., (a Georgia Limited Partnership),  as of December 31, 1996, and
the related  statements  of changes in partners'  equity,  operations,  and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

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

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

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a  whole.  The  accompanying  supplemental  information  is
presented for the purpose of  additional  analysis and is not a required part of
the basic financial  statements.  Such information has not been subjected to the
auditing procedures applied in the audit of the basic financial statements.

/s/Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia

January 24, 1997
<PAGE>
[Letterhead]
[LOGO]
Habif, Arogeti & Wynne, P.C.
Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Breckenridge Creste Apartments, L.P.

We  have  audited  the  accompanying   balance  sheet  of  Breckenridge   Creste
Apartments,  L.P., (a Georgia Limited Partnership),  as of December 31, 1995 and
the related  statements  of changes in partners'  equity,  operations,  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 audit in accordance with generally accepted auditing standards.
These standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 provided 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 Breckenridge  Creste Apartments,
L.P. as of December 31,  1995,  and the results of its  operations  and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a  whole.  The  accompanying  supplemental  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 same
auditing procedures applied in the audit of the basic financial statements.

/s/Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia

January 31, 1996
<PAGE>
[Letterhead]
[LOGO]
Habif, Arogeti & Wynne, P.C.
Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Breckenridge Creste Apartments, L.P.

We  have  audited  the  accompanying   balance  sheet  of  Breckenridge   Creste
Apartments,  L.P., (a Georgia Limited Partnership),  as of December 31, 1994 and
the related  statements  of changes in partners'  equity,  operations,  and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Breckenridge  Creste Apartments,
L.P. as of December 31,  1994,  and the results of its  operations  and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a  whole.  The  accompanying  supplemental  information  is
presented for purpose of  additional  analysis and is not a required part of the
basic  financial  statements.  Such  information  has been subjected to the same
auditing procedures applied in the audit of the basic financial statements.

/s/Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia

January 31, 1995


<PAGE>
[Letterhead]
[LOGO]
STARK TINTER & ASSOCIATES, LLC

INDEPENDENT AUDITOR'S REPORT

To the Partners of
EDM Housing Associates, Ltd.
Englewood, Colorado

We have audited the accompanying  balance sheet of EDM Housing Associates,  Ltd.
(a limited partnership),  HUD Project No. 101-94007, as of December 31, 1996 and
the  related  statements  of  profit  and  loss,  changes  in  partners'  equity
(deficiency) and cash flows for the year then ended. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion the financial statements referred to above present fairly, in all
material respects,  the financial position of EDM Housing Associates,  Ltd., HUD
Project  No.  101-94007,  as of  December  31,  1996,  and  the  results  of its
operations  and the changes in its partners'  equity  (deficiency)  and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

/s/STARK TINTER & ASSOCIATES
Certified Public Accountants
Financial Consultants

January 30, 1997

<PAGE>
[Letterhead]
[LOGO]
STARK TINTER & ASSOCIATES, LLC

INDEPENDENT AUDITOR'S REPORT

To the Partners of
EDM Housing Associates, Ltd.
Englewood, Colorado

We have audited the accompanying  balance sheet of EDM Housing Associates,  Ltd.
(a limited partnership),  HUD Project No. 101-94007, as of December 31, 1995 and
the  related  statements  of  profit  and  loss,  changes  in  partners'  equity
(deficiency) and cash flows for the year then ended. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  These  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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  provided 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 EDM Housing Associates,  Ltd., HUD
Project  No.  101-94007,  as of  December  31,  1995,  and  the  results  of its
operations and the changes in partners'  equity  (deficiency) and its cash flows
for the year then  ended,  in  conformity  with  generally  accepted  accounting
principles.

/s/STARK TINTER & ASSOCIATES
Certified Public Accountants
Financial Consultants

January 30, 1996

<PAGE>
[Letterhead]
[LOGO]
STARK TINTER & ASSOCIATES, LLC

INDEPENDENT AUDITOR'S REPORT

To the Partners of
EDM Housing Associates, Ltd.
Englewood, Colorado

We have audited the accompanying  balance sheet of EDM Housing Associates,  Ltd.
(a limited partnership),  HUD Project No. 101-94007, as of December 31, 1994 and
the related  statements of profit and loss, changes in partners' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
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  misstatements.  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 EDM Housing Associates,  Ltd., HUD
Project  No.  101-94007,  as of  December  31,  1994,  and  the  results  of its
operations  and the changes in partners'  equity and its cash flows for the year
then ended, in conformity with generally accepted accounting principles.

/s/STARK TINTER & ASSOCIATES
February 5, 1995
Certified Public Accountants
Financial Consultants

<PAGE>
[Letterhead]
[LOGO]
STARK TINTER & ASSOCIATES, LLC

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Fox Run Housing Associates, Ltd.
Englewood, Colorado

We have audited the  accompanying  balance sheet of Fox Run Housing  Associates,
Ltd. (a limited  partnership),  HUD Project No.  115-94018,  as of December  31,
1996, and the related statements of profit and loss, changes in partners' equity
(deficiency) and cash flows for the year then ended. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion the financial statements referred to above present fairly, in all
material respects,  the financial position of Fox Run Housing Associates,  Ltd.,
HUD  Project No.  115-94018,  as of December  31,  1996,  and the results of its
operations  and the changes in its partners'  equity  (deficiency)  and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

/s/STARK TINTER & ASSOCIATES
Certified Public Accountants
Financial Consultants
January 30, 1997
<PAGE>
[Letterhead]
[LOGO]
STARK TINTER & ASSOCIATES, LLC

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Fox Run Housing Associates, Ltd.
Englewood, Colorado

We have audited the  accompanying  balance sheet of Fox Run Housing  Associates,
Ltd. (a limited partnership), HUD Project No. 115-94018, as of December 31, 1995
and the  related  statements  of profit and loss,  changes in  partners'  equity
(deficiency) and cash flows for the year then ended. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  These  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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  provided 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 Fox Run Housing Associates,  Ltd.,
HUD  Project No.  115-94018,  as of December  31,  1995,  and the results of its
operations and the changes in partners'  equity  (deficiency) and its cash flows
for the year then  ended,  in  conformity  with  generally  accepted  accounting
principles.

/s/STARK TINTER & ASSOCIATES
Certified Public Accountants
Financial Consultants
January 30, 1996
<PAGE>
[Letterhead]
[LOGO]
STARK TINTER & ASSOCIATES, LLC

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Fox Run Housing Associates, Ltd.
Englewood, Colorado

We have audited the  accompanying  balance sheet of Fox Run Housing  Associates,
Ltd. (a limited  partnership),  HUD Project No.  115-94018,  as of December  31,
1994, and the related statements of profit and loss, changes in partners' equity
and cash  flows for the year then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
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  misstatements.  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 Fox Run Housing Associates,  Ltd.,
HUD  Project No.  115-94018,  as of December  31,  1994,  and the results of its
operations  and the changes in partners'  equity and its cash flows for the year
then ended, in conformity with generally accepted accounting principles.

/s/STARK TINTER & ASSOCIATES
Certified Public Accountants
Financial Consultants
February 5, 1995

<PAGE>
[Letterhead]
[LOGO]
Dauby O'Conner & Zaleski
A Limited Liability Company
Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Partners
241 Pine Street Associates, L.P.
Manchester, New Hampshire

We have audited the  accompanying  balance sheet of 241 Pine Street  Associates,
L.P., (a New  Hampshire  Limited  Partnership),  as of December 31, 1996 and the
related  statement of income  (loss),  partners'  capital and cash flows for the
year then  ended.  These  financial  statements  are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 provided 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 241 Pine Street Associates, L.P. as
of December 31, 1996, and the results of its' operations for the year then ended
in conformity with generally accepted accounting principles.

                                               /s/Dauby O'Conner & Zaleski

January 4, 1996                                   Dauby O'Conner & Zaleski
Indianapolis, Indiana                             Certified Public Accountants

<PAGE>
[Letterhead]
[LOGO]
Dauby O'Conner & Zaleski
A Limited Liability Company
Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Partners
241 Pine Street Associates, L.P.
Manchester, New Hampshire

We have audited the  accompanying  balance sheet of 241 Pine Street  Associates,
L.P., (a New  Hampshire  Limited  Partnership),  as of December 31, 1995 and the
related  statements of income (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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 provided 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 241 Pine Street Associates, L.P. as
of December 31, 1995, and the results of its' operations for the year then ended
in conformity with generally accepted accounting principles.

                                               /s/Dauby O'Conner & Zaleski

January 4, 1996                                   Dauby O'Conner & Zaleski
Indianapolis, Indiana                             Certified Public Accountants

<PAGE>
[Letterhead]
[LOGO]
BRAYMAN, TEEL & COMPANY
Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Partners
241 Pine Street Associates, L.P.
Manchester, New Hampshire

We have audited the  accompanying  balance  sheet of 241 Pine Street  Associates
Limited Partnership,  (a New Hampshire Limited Partnership),  as of December 31,
1994 and the related statements of (loss), partners' capital, and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 241 Pine Street  Associates
Limited  Partnership as of December 31, 1994 and the results of its'  operations
for the year  then  ended  in  conformity  with  generally  accepted  accounting
principles.

                                                  /s/Brayman, Teel & Company

February 10, 1995


<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


INDEPENDENT  AUDITORS'REPORT

To the Partners
Brownsville Associates, L.P.
Brownsville, Tennessee

We have audited the accompanying balance sheets of Brownsville Associates,  L.P.
(a Missouri limited partnership),  Rural Development Case No.:  48-038-431399553
as of December 31, 1996 and 1995, and the related statements of loss,  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 generally accepted auditing standards
and with 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 Brownsville Associates, L.P. as
of December  31, 1996 and 1995 and the  results of its  operations  and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 21, 1997 on our  consideration of Brownsville  Associates,  L.P.'s
internal control structure and a report dated January 21, 1997 on its compliance
with laws and regulations.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard
TOPEKA, KANSAS
JANUARY 21, 1997

<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Brownsville Associates, L.P.
Brownsville, Tennessee

We have audited the accompanying balance sheets of Brownsville Associates, L.P.,
(a  Missouri  limited  partnership),  RECD  Case  No.:  48-038-431399553,  as of
December 31, 1995 and 1994 and the related statements of loss,  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 generally accepted auditing standards
and with 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  misstatements.  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  provided 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 Brownsville Associates,  L.P. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard
TOPEKA, KANSAS
February 2, 1996


<PAGE>
 [Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


INDEPENDENT AUDTORS' REPORT

To the Partners
Briarwood Associates II, L.P.

We have audited the accompanying balance sheets of Briarwood Associates II, L.P.
(a Missouri limited Partnership),  Rural Development Case No.:  02-027-431303694
as of December 31, 1996 and 1995, and the related statements of loss,  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 generally accepted auditing standards
and with 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 Briarwood  Associates II, L.P.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated February 10, 1997 on our consideration of Briarwood  Associates II, L.P.'s
internal  control  structure  and a  report  dated  February  10,  1997  on  its
compliance with laws and regulations.

<PAGE>

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental information on pages 8-9
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 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.


/s/Braunsdorf, Carlson and Clinkinbeard, C.P.A.'s, P.A.
Braunsdorf, Carlson and Clinkinbeard, C.P.A.'s,P.A.
TOPEKA, KANSAS
February 10, 1997

<PAGE>
 [Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Briarwood Associates II, L.P.

We have audited the  accompanying  balance  sheets of Briarwood  Associates  II,
L.P., (a Missouri limited Partnership),  RECD Case No.: 02-027-431303694,  as of
December 31, 1995 and 1994 and the related statements of loss,  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 audit in accordance with generally  accepted auditing standards
and with 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  misstatements.  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  provided 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 Briarwood Associates II, L.P. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  on pages 8-9 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 same 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/Braunsdorf, Carlson and Clinkinbeard
Braunsdorf, Carlson and Clinkinbeard
TOPEKA, KANSAS
February 13, 1996

<PAGE>
 [Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Altheimer Associates I, L.P.
Altheimer, Arkansas

We have audited the accompanying balance sheets of Altheimer Associates I, L.P.,
(a  Missouri  limited  Partnership),  FmHA  Case  No.:  03-035-431479737,  as of
December 31, 1995 and the related statements of loss,  partners' equity and cash
flows for the year ended December 31, 1995.  These financial  statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 provided 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 Altheimer Associates I, L.P. as of
December 31, 1995,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard
Braunsdorf, Carlson and Clinkinbeard
TOPEKA, KANSAS
February 3, 1996

<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Altheimer Associates I, L.P.
Altheimer, Arkansas

We have audited the accompanying  balance sheet of Altheimer Associates I, L.P.,
(a  Missouri  limited  partnership),  as of  December  31,  1993 and the related
statements  of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Altheimer Associates I, L.P. as of
December 31, 1993,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard
Braunsdorf, Carlson and Clinkinbeard
TOPEKA, KANSAS
January 29, 1994



<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Bolivar Senior Housing, L.P.
Wayne, Nebraska

We have audited the accompanying balance sheet of Bolivar Senior Housing,  L.P.,
(a  Missouri  limited  Partnership),  RECD  Case  No.:  29-084-481063570,  as of
December 31, 1995 and the related statements of loss,  partners' equity and cash
flows for the year ended December 31, 1995.  These financial  statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 provided 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 Bolivar Senior Housing, L.P. as of
December 31, 1995,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard
Braunsdorf, Carlson and Clinkinbeard
TOPEKA, KANSAS
January 31, 1996

<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Bolivar Senior Housing, L.P.

We have audited the accompanying balance sheet of Bolivar Senior Housing,  L.P.,
(a  Missouri  limited  partnership),  as of  December  31,  1993 and the related
statements  of 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  generally   accepted   auditing
standards.Those  standards  require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 Bolivar Senior Housing, L.P. as of
December 31, 1993 and the results of its  operations  and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard
Braunsdorf, Carlson and Clinkinbeard
TOPEKA, KANSAS
February 2, 1994


<PAGE>
[Letterhead]
[LOGO]
CRAIN
& COMPANY
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Partners
Fulton Associates I LP
(A Limited Partnership)

We have audited the  accompanying  balance  sheets of Fulton  Associates I LP (A
Limited Partnership),  a FmHA Project, as of December 31, 1996 and 1995, and the
related  statements of operations,  changes in 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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Fulton  Associates I LP (A
Limited  Partnership)  as of December 31, 1996 and 1995,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

Our audits  were for the  purpose  of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  information  as listed in the
table of contents 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 same  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/Crain & Company
CRAIN & COMPANY
Certified Public Accountants

Jackson, Tennessee
February 10, 1997

<PAGE>
[Letterhead]
[LOGO]
CRAIN
& COMPANY
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Partners
Fulton Associates I LP
(A Limited Partnership)

We have audited the  accompanying  balance  sheets of Fulton  Associates I LP (A
Limited  Partnership),  a FmHA Project, as of December 31, 1995 and 1994 and the
related  statements of operations,  changes in 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  generally   accepted  auditing
standards.  These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 Fulton Associates I LP (A Limited
Partnership) as of December 31, 1995 and 1994, and the results of its operations
and its cash  flows  for the  years  then  ended in  conformity  with  generally
accepted accounting principles.

Our audits  were for the  purpose  of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  information  as listed in the
table of contents 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 same  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/Crain & Company
CRAIN & COMPANY
Certified Public Accountants

Jackson, Tennessee
February 3, 1996


<PAGE>
[Letterhead]
[LOGO]
CRAIN
& COMPANY
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Partners
Eaglewood VIII LP
(A Limited Partnership)

We have audited the accompanying  balance sheets of Eaglewood VIII LP (A Limited
Partnership),  a FmHA Project, as of December 31, 1996 and 1995, and the related
statements of  operations,  changes in 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 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 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  Eaglewood  VIII LP (A Limited
Partnership) as of December 31, 1996 and 1995, and the results of its operations
and its cash  flows  for the  years  then  ended in  conformity  with  generally
accepted accounting principles.

Our audits  were for the  purpose  of forming an opinion on the basic  financial
statements taken as a whole.  The  supplementary  information,  as listed in the
table of contents, 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 same  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.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  11,  1997 on our  consideration  of the  limited  partnership's
itnernal control structure and a report dated February 9, 1996 on its compliance
with laws and regulations

/s/Crain & Company
CRAIN & COMPANY
Certified Public Accountants

Jackson, Tennessee
February 11, 1997

<PAGE>
[Letterhead]
[LOGO]
CRAIN
& COMPANY
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Partners
Eaglewood VIII LP
(A Limited Partnership)

We have audited the accompanying  balance sheets of Eaglewood VIII LP (A Limited
Partnership),  a FmHA Project,  as of December 31, 1995 and 1994 and the related
statements of  operations,  changes in 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 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  misstatements.  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  Eaglewood  VIII LP (A Limited
Partnership) as of December 31, 1995 and 1994, and the results of its operations
and its cash  flows  for the  years  then  ended in  conformity  with  generally
accepted accounting principles.

Our audits  were for the  purpose  of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  information  as listed in the
table of contents 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 same  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.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  9,  1996  on our  consideration  of the  limited  partnership's
itnernal control structure and a report dated February 9, 1996 on its compliance
with laws and regulations

/s/Crain & Company
CRAIN & COMPANY
Certified Public Accountants

Jackson, Tennessee
February 9, 1996


<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Elver Park Limited Partnership III
Madison, Wisconsin

We  have  audited  the  accompanying   balance  sheets  of  Elver  Park  Limited
Partnership III as of December 31, 1996 and 1995, and the related  statements of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements referred above present fairly, in all
material respects,  the financial position of Elver Park Limited Partnership III
as of December 31, 1996 and 1995, and the results of its operations,  changes in
partners'  equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 15, 1997
<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Elver Park Limited Partnership III
Madison, Wisconsin

We  have  audited  the  accompanying   balance  sheets  of  Elver  Park  Limited
Partnership III, as of December 31, 1995 and 1994 and the related  statements of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 above present fairly, in all
material respects,  the financial position of Elver Park Limited Partnership III
as of December 31, 1995 and 1994, and the results of its operations,  changes in
partners' equity, and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 15, 1996

<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Elver Park Limited Partnership II
Madison, Wisconsin

We  have  audited  the  accompanying   balance  sheets  of  Elver  Park  Limited
Partnership II as of December 31, 1996 and 1995,  and the related  statements of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements referred above present fairly, in all
material respects,  the financial position of Elver Park Limited  Partnership II
as of December 31, 1996 and 1995, and the results of its operations,  changes in
partners'  equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 14, 1997

<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Elver Park Limited Partnership II
Madison, Wisconsin

We  have  audited  the  accompanying   balance  sheets  of  Elver  Park  Limited
Partnership  II, as of December 31, 1995 and 1994 and the related  statements of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 above present fairly, in all
material respects,  the financial position of Elver Park Limited  Partnership II
as of December 31, 1995 and 1994, and the results of its operations,  changes in
partners' equity, and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 15, 1996

<PAGE>
[Letterhead]
[LOGO]
Robert Ercolini & Company L.L.P.
Certified Public Accountants
Fifty-Five Summer Street
Boston, Massachusetts 02110-1007
Telephone (617) 482-5511
Telecoper (617) 426-5252

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Blue Mountain Associates Limited Partnership               HUD Area Office
Boston, Massachusetts                                    Boston, Massachusetts
We have  audited the  accompanying  balance  sheet of Blue  Mountain  Associates
Limited  Partnership  (a  Massachusetts  Limited  Partnership),  HUD Project No.
023-36609 as of December 31, 1996, and the related statements of profit and loss
(on HUD Form No. 92410),  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  audit.  

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Blue  Mountain  Associates
Limited  Partnership as of December 31, 1996, and the results of its operations,
changes  in  partners'  capital,  and its cash  flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 23, 1997 on our consideration of Blue Mountain  Associates Limited
Partnership's internal control structure, a report dated January 23, 1997 on its
compliance with laws and regulations,  and reports dated January 23, 1997 on its
compliance with specific requirements applicable to HUD Programs.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The additional  information included in this report
(shown on pages 14  through  19) is  presented  for the  purpose  of  additional
analysis  and is not a required  part of the basic  financial  statements.  Such
information  has been subjected to the same auditing  procedures  applied in the
audit of the basic financial  statements and, in our opinion,  its fairly stated
in all material respects in relation to the basic financial  statements taken as
a whole.


/s/Robert Ercolini & Company L.L.P.
Robert Ercolini & Company L.L.P.
January 23, 1997
<PAGE>
[Letterhead]
[LOGO]
Robert Ercolini & Company
Certified Public Accountants
Fifty-Five Summer Street
Boston, Massachusetts 02110-1007
Telephone (617) 482-5511
Telecoper (617) 426-5252

INDEPENDENT AUDITOR'S REPORT

To the Partners of
Blue Mountain Associates Limited Partnership               HUD Area Office
Boston, Massachusetts                                    Boston, Massachusetts

We have  audited the  accompanying  balance  sheet of Blue  Mountain  Associates
Limited Partnership.,  (A Massachusetts  Limited  Partnership),  HUD Project No.
023-36609,  as of December  31, 1995 and the  related  statements  of profit and
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 audit.

We conducted our audit in accordance with generally  accepted auditing standards
and generally accepted  Government  Auditing Standards issued by the Comptroller
General of the United States.  These standards  require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of  material  misstatements.  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 Blue Mountain  Associates Limited
Partnership as of December 31, 1995,  and its results of operations,  changes in
partners' capital, and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 26, 1996 on our consideration of Blue Mountain  Associates Limited
Partnership's  internal control  structure,  a reports dated January 26, 1996 on
its compliance with laws and regulations,  and reports dated January 26, 1996 on
its compliance with specific requirements applicable to HUD Programs.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The additional  information included in this report
(shown on pages 14 through 18) 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 same auditing  procedures  applied in the audit of the
basic  financial  statements  and, in our opinion,  are presented  fairly in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

/s/Robert Ercolini & Company
Robert Ercolini & Company
January 26, 1996

<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

To the Partners                        HUD Field Office Director
Boulevard Commons Limited Partnership                Chicago, Illinois
Chicago, Illinois

We have audited the  accompanying  balance  sheet of Boulevard  Commons  Limited
Partnership,  Project No.  071-35592,  as of December 31, 1996,  and the related
statements of profit and loss, changes in partners' equity and statement of cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  These  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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  BOULEVARD  COMMONS  LIMITED
PARTNERSHIP  as of  December  31,  1996,  and its  profit  or loss,  changes  in
partners' equity,  and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  17,  1997 on our  consideration  of  Boulevard  Commons  Limited
Partnership's  internal control  structure and reports dated January 17, 1997 on
its compliance with specific  requirements  applicable to Major HUD Programs and
specific requirements applicable to Affirmative Fair Housing.

The  accompanying  supplementary  information  (shown  on  pages  15 to  19)  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  statement  and, in our
opinion,  is fairly stated in all material respects in relation to the financial
statements taken as whole.

/s/Haran & Associates LTD
HARAN & ASSOCIATES LTD.
Certified Public Accountants
Wimette, Illinois
Illinois Certificate No. 060-002892

January 17, 1997
<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

To the Partners
Boulevard Commons Limited Partnership IIA
Chicago, Illinois

We have audited the accompanying statement of assets, liabilities, and partners'
equity-income  tax basis of  Boulevard  Commons  Limited  Partnership  IIA.,  (a
Limited  Partnership)  as of December  31, 1995 and the  related  statements  of
operations-income  tax basis,  changes in partners'  equity-income tax basis and
statement  of cash  flows-income  tax  basis  for the  year  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  generally  accepted   Government   Auditing  Standards  for  financial  and
compliance audits issued by the Comptroller General of the United States.  These
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 provided a reasonable basis for our opinion.


As described in the notes to the financial statements,  the Partnership's policy
is to prepare  its  financial  statements  on the basis of  accounting  used for
income tax purposes and are not  intended to be  presented  in  conformity  with
generally accepted accountants principles.

In our opinion the financial statements referred to above present fairly, in all
material  respects,  the assets,  liabilities and partners'  equity of BOULEVARD
COMMONS  LIMITED  Partnership  IIA at December  31,  1995,  and its  operations,
changes in partners'  equity,  and its cash flows for the year then ended on the
basis of accounting described in the notes to the financial statements.

/s/Haran & Associates LTD
HARAN & ASSOCIATES LTD.
Certified Public Accountants
Wimette, Illinois
Illinois Certificate No. 060-002892

January 17, 1996

<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

To the Partners
BOULEVARD COMMONS LIMITED PARTNERSHIP IIA
Chicago, Illinois

We have audited the accompanying statement of assets, liabilities, and partners'
equity-income  tax basis of  BOULEVARD  COMMONS  LIMITED  PARTNERSHIP  IIA.,  (a
Limited  Partnership)  as of December  31, 1994 and the  related  statements  of
operations-income  tax basis,  changes in partners'  equity-income tax basis and
statement  of cash  flows-income  tax  basis  for the  year  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  generally  accepted   Government   Auditing  Standards  for  financial  and
compliance audits issued by the Comptroller General of the United States.  These
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 provided a reasonable basis for our opinion.

As described in the notes to the financial statements,  the Partnership's policy
is to prepare  its  financial  statements  on the basis of  accounting  used for
income tax purposes and are not  intended to be  presented  in  conformity  with
generally accepted accountants principles.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the assets, liabilities and partners' equity of BOULEVARD
COMMONS  LIMITED  PARTNERSHIP  IIA at December  31,  1994,  and its  operations,
changes in partners'  equity,  and its cash flows for the year then ended on the
basis of accounting described in the notes to the financial statements.

/s/Haran & Associates LTD
HARAN & ASSOCIATES LTD.
Certified Public Accountants
Wimette, Illinois
Illinois Certificate No. 060-002892

January 25, 1995



<PAGE>
[Letterhead]
[LOGO]
BDO Seidman, LLP
Accountants and Consultants


INDEPENDENT AUDITORS' REPORT

To the Partners of
El Jardin of Davie, Ltd.
  (A Limited Partnership)
Miami, Florida

We have audited the accompanying  balance sheet of El Jardin of Davie, Ltd. (FHA
Project No.  066-10539-REF) as of December 31, 1996, and the related  statements
of profit and loss (HUD Form 92410),  changes in partners' capital accounts, and
cash  flows  for  the  year  then  ended.  These  financial  statements  are the
responsibility  of the management of the partnership.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion the financial  statements  referred above present fairly,  in all
material  respects,  the  financial  position of El Jardin of Davie,  Ltd.  (FHA
Project  No.  066-10539-REF)  at  December  31,  1996,  and the  results  of its
operations  and its cash  flows  for the year then  ended,  in  conformity  with
generally accepted accounting principles.

In accordance  with Government  Auditing  Standards and the  Consolidated  Audit
Guide for Audits of HUD  Programs  issued by the US  Department  of Housing  and
Urban Development ("HUD"), we have also issued a report dated February 24, 1997,
on our consideration of El Jardin of Davie,  Ltd.'s internal control  structure,
and  reports  dated  February  24,  1997,  on  its   compliance   with  specific
requirements   applicable  to  major  HUD  programs  and  specific  requirements
applicable to Affirmative Fair Housing.

<PAGE>

Our audit was made for the  purpose  of  forming  an  opinion  on the  financial
statements taken as a whole. The accompanying supplementary information shown on
pages 16 to 21 are presented for the purpose of additional  analysis and are not
a required part of the basic  financial  statements of El Jardin of Davie,  Ltd.
(FHA Project No.  066-10539-REF).  Such  information  has been  subjected to the
auditing procedures applied in the audit of the basic financial  statements and,
in our opinion,  is presented fairly 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 24, 1997

<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand


INDEPENDENT AUDITOR'S REPORT

To the Partners of
El Jardin of Davie, Ltd.

We have audited the accompanying statement of assets, liabilities, and partners'
capital of El Jardin of Davie, Ltd. (the "Partnership"), as of December 31, 1995
and the  related  statements  of revenues  and  expenses,  changes in  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 audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  Government  Auditing  Standards  issued by the  Comptroller  General of the
United  States.  These  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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 above present fairly,  in all
material  respects,  the  financial  position  of El Jardin of Davie,  Ltd.as of
December 31, 1995,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial  statements taken as a whole. The supporting  information  included in
this  report  (shown  on pages 11  through  18) 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 same auditing procedures
applied in the audit of the basic financial  statements and, in our opinion, are
presented  fairly in all  material  respects in relation to the basic  financial
statements taken as a whole.

/s/Coopers & Lybrand L.L.P

Miami, Florida
February 23, 1996

<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand


INDEPENDENT AUDITOR'S REPORT

To the Partners of
El Jardin of Davie, Ltd.

We have audited the accompanying statement of assets, liabilities, and partners'
capital of El Jardin of Davie,  Ltd.  (the  "Partnership"),  as of December  31,
1994, and the related statements of revenues and expenses,  changes in 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 audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  Government  Auditing  Standards  issued by the  Comptroller  General of the
United  States.  These  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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 above present fairly,  in all
material  respects,  the  financial  position  of El Jardin of Davie,  Ltd.as of
December 31, 1994,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial  statements taken as a whole. The supporting  information  included in
this  report  (shown  on pages 11  through  18) 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 same auditing procedures
applied in the audit of the basic financial  statements and, in our opinion, are
presented  fairly in all  material  respects in relation to the basic  financial
statements taken as a whole.

/s/Coopers & Lybrand L.L.P.

Miami, Florida
February 21, 1995


<PAGE>
[Letterhead]
[LOGO]
Deloitte &                                Certified Public Accountants
Touche LLP                              Suite 1800
                                                  200 South Orange Avenue
                                                  Orlando, Florida  32801
                                                  Telephone: (407) 246-8200
                                                   Fascimile: (407) 422-0936

INDEPENDENT AUDITOR'S REPORT

To the General Partner and Limited Partners of
Ashley Place, Ltd.:

We have audited the accompanying  balance sheet of Ashley Place, Ltd. (a Florida
Limited  Partnership),  as of  December  31,  1995  and the  related  statements
operations,  partners'  equity  and cash  flows for the year then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance  with generally  accepted  auditing . Those
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 above present fairly,  in all
material  respects,  the  financial  position of Ashley  Place,  Ltd. (a Florida
Limited  Partnership) as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.


/s/Deloite & Touche LLP

February 2, 1996

<PAGE>
[Letterhead]
[LOGO]
Deloitte &                                Certified Public Accountants
Touche LLP                              Suite 1800
                                                  200 South Orange Avenue
                                                  Orlando, Florida  32801
                                                  Telephone: (407) 246-8200
                                                   Fascimile: (407) 422-0936

INDEPENDENT AUDITOR'S REPORT

To the General Partner and Limited Partners of
Ashley Place, Ltd.:

We have audited the accompanying  balance sheet of Ashley Place, Ltd. (a Florida
Limited  Partnership),  as of  December  31,  1994  and the  related  statements
operations,  partners'  equity  and cash  flows for the year then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance  with generally  accepted  auditing . Those
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 above present fairly, in all
material  respects,  the  financial  position of Ashley  Place,  Ltd. (a Florida
Limited  Partnership) as of December 31, 1994, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.


/s/Deloite & Touche LLP

February 10, 1995

<PAGE>
[Letterhead]
[LOGO]
Deloitte &                                Certified Public Accountants
Touche LLP                              Suite 1800
                                                  200 South Orange Avenue
                                                  Orlando, Florida  32801
                                                  Telephone: (407) 246-8200
                                                   Fascimile: (407) 422-0936

INDEPENDENT AUDITOR'S REPORT

To the General Partner and Limited Partners of
Ashley Place, Ltd.:

We have audited the accompanying  balance sheet of Ashley Place, Ltd. (a Florida
Limited  Partnership),  as of  December  31,  1993  and the  related  statements
operations,  partners'  equity  and cash  flows for the year then  ended.  These
financial statements are the responsibility of the partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance  with generally  accepted  auditing . Those
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 above present fairly, in all
material  respects,  the  financial  position of Ashley  Place,  Ltd. (a Florida
Limited  Partnership) as of December 31, 1993, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.


/s/Deloite & Touche

February 24, 1994


<PAGE>
[Letterhead]
[LOGO]
Purkey, Carter, Compton, Swann & Carter, P.L.L.C.
Certified Public Accountants
2335 W. Andrew Johnson Highway
P.O. Box 727
Morriston, Tennessee 37815
Telephone (423) 586-4850
Fax (423) 581-8873

INDEPENDENT AUDITOR'S REPORT

General Partners                          Mr. Choice Edward, State Coordinator
Partners                                    U.S. Department of Housing and
The Colony Apartments, L.P.                 Urban Development
1504 Riverview Tower                        Strom Thurmond Federal Building
900 S. Gay Street                           1835-45 Assembly Street. 11th Floor
Knoxville, Tennessee                        Columbia, South Carolina 29201

We have audited the accompanying  balance sheet of The Colony Apartments,  L.P.,
FHA Project No.  054-94002-OMC (a limited  partnership) as of December 31, 1996,
and the related  statements  income,  changes in partners' equity and cash flows
for the year then ended.  These financial  statements are the  responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing  Standards,  issued by the Comptroller General of the United
States and the July 1993  Consolidated  Audit  Guide for Audits of HUD  Programs
(the "Guide"),  issued by the U.S.  Department of Housing and Urban Development,
Office  of the  Inspector  General.  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 The Colony Apartments,  L.P as
of  December  31,  1996,  and the results of its  operations  and the changes in
partners'  equity  and cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.

<PAGE>
General Partners
The Colony Apartments, L.P.                                          Page 2

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 January 21, 1997, on our
consideration of The Colony  Apartments,  L.P.'s internal control  structure and
reports  dated January 21, 1997, on its  compliance  with specific  requirements
applicable  to major  HUD  Programs  and  specific  requirements  applicable  to
Affirmative Fair Housing.

Our audit was  conducted  for the purpose of forming an opinion on the financial
statements  taken as a whole.  The  supplementary  information  included in this
report  (shown on pages 26 to 35) is  presented  for the  purpose of  additional
analysis and is not a required  part of the  financial  statements of The Colony
Apartments,  L.P.  Such  information  has been  subjected  to the same  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.

We attest that our firm, Purkey, Carter, Compton, Swann & Carter, P.L.L.C. meets
any legal requirements concerning registration by the State of South Carolina.

/s/Purkey, Carter, Compton, Swann & Carter, P.L.L.C.
Purkey, Carter, Compton, Swann & Carter, P.L.L.C.
January 21, 1997
<PAGE>
[Letterhead]
[LOGO]
Purkey, Carter, Compton, Swann & Carter
Certified Public Accountants
2335 W. Andrew Johnson Highway
P.O. Box 727
Morriston, Tennessee 37815
Telephone (423) 586-4850
Fax (423) 581-8873

INDEPENDENT AUDITOR'S REPORT

General Partners                          Mr. Choice Edward, State Coordinator
Partners                                    U.S. Department of Housing and
The Colony Apartments, L.P.                 Urban Development
1504 Riverview Tower                        Strom Thurmond Federal Building
900 S. Gay Street                           1835-45 Assembly Street. 11th Floor
Knoxville, Tennessee                        Columbia, South Carolina 29201

We have audited the accompanying  balance sheet of The Colony Apartments,  L.P.,
FHA Project No. 054-94002-OMC (a limited  partnership),  as of December 31, 1995
and the related  statements  income,  changes in partners' equity and cash flows
for the year then ended.  These financial  statements are the  responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
Government  Auditing  Standards issued by the Comptroller  General of the United
States and the July 1993  Consolidated  Audit  Guide for Audits of HUD  Programs
(the "Guide"),  issued by the U.S.  Department of Housing and Urban Development,
Office  of the  Inspector  General.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatements. 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 above present fairly,  in all
material respects,  the financial  position of The Colony Apartments,  L.P as of
December  31,  1995,  and the  results  of its  operations  and the  changes  in
partners'  equity  and cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.

<PAGE>
General Partners
The Colony Apartments, L.P.                                          Page 2

In accordance  with Government  Auditing  Standards and the  Consolidated  Audit
Guide for Audits of HUD Programs (the "Guide"), issued by the U.S. Department of
Housing and Urban  Development,  we have also issued a report dated  January 22,
1996 on our  consideration  of The Colony  Apartments,  L.P.'s internal  control
structure  and reports dated  January 22, 1996 on its  compliance  with specific
requirements   applicable  to  major  HUD  Programs  and  specific  requirements
applicable to Affirmative Fair Housing.

Our audit was  conducted  for the purpose of forming an opinion on the financial
statements  taken as a whole.  The  supplementary  information  included in this
report  (shown  on pages  26 to 35) is  presented  for  purposes  of  additional
analysis and is not a required  part of the  financial  statements of The Colony
Apartments,  L.P.  Such  information  has been  subjected  to the same  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.

We attest that our firm, Purkey, Carter, Compton, Swann & Carter meets any legal
requirements concerning registration by the State of South Carolina.

/s/Purkey, Carter, Compton, Swann & Carter
Purkey, Carter, Compton, Swann & Carter
January 22, 1996

<PAGE>
[Letterhead]
[LOGO]
Purkey, Carter, Compton, Swann & Carter
Certified Public Accountants
2335 W. Andrew Johnson Highway
P.O. Box 727
Morriston, Tennessee 37815
Telephone (423) 586-4850
Fax (423) 581-8873

INDEPENDENT AUDITOR'S REPORT

General Partners                         Mr. Choice Edward, State Coordinator
Partners                                   U.S. Department of Housing and
The Colony Apartments, L.P.                 Urban Development
1504 Riverview Tower                       Strom Thurmond Federal Building
900 S. Gay Street                          1835-45 Assembly Street. 11th Floor
Knoxville, Tennessee                        Columbia, South Carolina 29201

We have audited the accompanying  balance sheet of The Colony Apartments,  L.P.,
FHA Project No. 054-94002-OMC (a limited  partnership),  as of December 31, 1994
and the related  statements  income,  changes in partners' equity and cash flows
for the year then ended.  These financial  statements are the  responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
Government  Auditing  Standards issued by the Comptroller  General of the United
States and the July 1993  Consolidated  Audit  Guide for Audits of HUD  Programs
(the "Guide"),  issued by the U.S.  Department of Housing and Urban Development,
Office  of the  Inspector  General.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatements. 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 above present fairly,  in all
material respects,  the financial  position of The Colony Apartments,  L.P as of
December  31,  1993,  and the  results  of its  operations  and the  changes  in
partners'  equity  and cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.

<PAGE>
General Partners
The Colony Apartments, L.P.                                          Page 2

Our audit was  conducted  for the purpose of forming an opinion on the financial
statements  taken as a whole.  The  supplementary  information  included in this
report  (shown  on pages  26 to 34) is  presented  for  purposes  of  additional
analysis and is not a required  part of the  financial  statements of The Colony
Apartments,  L.P.  Such  information  has been  subjected  to the same  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.

We attest that our firm, Purkey, Carter, Compton, Swann & Carter meets any legal
requirements concerning registration by the State of South Carolina.

/s/Purkey, Carter, Compton, Swann & Carter
Purkey, Carter, Compton, Swann & Carter
January 21, 1995

<PAGE>
[Letterhead]
[LOGO]
LARRY O'DONNELL, CPA, P.C.
Office 745-4545

Partners
Aurora Properties, Ltd.
d/b/a Aurora East Apartments
Aurora, Colorado

INDEPENDENT AUDITOR'S REPORT


I have audited the accompanying  balance sheets of Aurora  Properties Ltd. d/b/a
Aurora East  Apartments,  Project No.  101-10522 (a Limited  Partnership)  as of
December  31,  1996 and 1995,  and the  related  statements  of profit and loss,
partners'  equity  and cash  flows for the years  then  ended.  These  financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally  accepted  auditing  standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States and the  Consolidated  Audit  Guide for  Audits of HUD  Programs,
issued  by the U.S.  Department  of  Housing  and Urban  Development,  Office of
Inspector General in July, 1993. Those standards require that I plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement presentation.  I believe that my audit provides a reasonable basis for
opinion.

In my opinion,  the financial statements referred to above present fairly in all
material  respects,  the financial  position of Aurora  Properties  Ltd.,  d/b/a
Aurora East  Apartments as of December 31, 1996 and 1995, and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

In accordance with Government  Auditing  Standards,  I have also issued a report
dated February 3, 1997 on my  consideration  of Aurora  Properties  Ltd.,  d/b/a
Aurora East Apartments, internal control structure and reports dated February 3,
1997 on its  compliance  with  laws  and  regulations  applicable  to the  basic
financial statements and the major HUD program.

/s/Larry O'Donnell, CPA, PC
Larry O'Donnell, CPA, PC
February 3, 1997
Federal Identification Number 84-1075467

<PAGE>
[Letterhead]
[LOGO]
LARRY O'DONNELL, CPA, P.C.
Office 745-4545

Partners
Aurora Properties, Ltd.
d/b/a Aurora East Apartments
Aurora, Colorado

INDEPENDENT AUDITOR'S REPORT


I have audited the accompanying balance sheets of Aurora Properties, Ltd., d/b/a
Aurora East  Apartments,  Project No. 101-10522 (a Limited  Partnership),  as of
December 31, 1995 and 1994 and the related  statements  of profit and loss,  net
worth, and cash flows for the years then ended.  These financial  statements are
the responsibility of the Company's management.  My responsibility is to express
an opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally  accepted auditing  standards,
Government Auditing  Standards,  issued by the Comptroller General of the United
States and the  Consolidated  Audit Guide for Audits of HUD Programs,  issued by
the U.S.  Department of Housing and Urban  Development,  Office of the Inspector
General in July 1993. Those standards  require that I plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of  material  misstatements.  An  audit  includes  examining,  on a test  basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement presentation.  I believe that my audit provides a reasonable basis for
opinion.

In my opinion the financial  statements referred to above present fairly, in all
material  respects,  the financial  position of Aurora  Properties,  Ltd., d/b/a
Aurora East  Apartments as of December 31, 1995 and 1994, and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

In accordance with Government  Auditing  Standards,  I have also issued a report
dated February 7, 1996 on my  consideration  of Aurora  Properties,  Ltd., d/b/a
Aurora East Apartments, internal control structure and reports dated February 7,
1996 on its  compliance  with  laws  and  regulations  applicable  to the  basic
financial statements and the major HUD program.

/s/Larry O'Donnell, CPA, PC
Larry O'Donnell, CPA, PC
February 7, 1996
Federal Identification Number 84-1075467


<PAGE>
[Letterhead]
[LOGO]
VMCHC&S Vroman, McGowen, Hurst, Clark & Smith, P.C.
Certified Public Accountants and Business Advisors


INDEPENDENT AUDITOR'S REPORT

To the Partners
Columbia Townhouse Associates Limited Partnership
Des Moines, Iowa

We have audited the accompanying balance sheets of Columbia Townhouse Associates
Limited  Partnership,  HUD Project No.  074-35189,  as of December  31, 1996 and
1995, and the related statements of profit and loss, 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 audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our 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 Columbia Townhouse  Associates
Limited Partnership as of December 31, 1996 and
1995, and the results of its operations,  changes in partners' capital (deficit)
and cash flows for the years then ended in conformity  with  generally  accepted
accounting principles.

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 January 31, 1997, on our
consideration of the Partnership's internal control structure and reports, dated
January 31, 1997, on its  compliance  with specific  requirements  applicable to
major HUD Programs and specific  requirements  applicable  to  Affirmative  Fair
Housing.

As discussed in Note A, the accompanying financial statements have been prepared
assuming that the Partnership will continue as a going concern.  As shown in the
financial  statements,  the Partnership has incurred  substantial  losses before
depreciation for each of the passed two years.  The financial  statements do not
include any adjustments  relating to the  recoverability  and  classification of
recorded assets, or the amounts of  classifications of liabilities that might be
necessary in the event the Partnership cannot continue in existence.

<PAGE>
Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The accompanying supplemental information
(shown in Section II) is presented for the purpose of additional analysis and is
not a required  part of the basic  financial  statements  of Columbia  Townhouse
Associates Limited Partnership.  Such information has been subjected to the same
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are presented fairly in all material respects in relation to the
basic financial statements taken as a whole.

/s/Vroman, McGowen, Hurst, Clark & Smith, P.C.
Des Moines, Iowa
January 31, 1997

Other auditor information:
Lead Auditor - Michael W. McNichols
Federal ID Number- 42-1104473

<PAGE>
[Letterhead]
[LOGO]
VMCHC&S Vroman, McGowen, Hurst, Clark & Smith, P.C.
Certified Public Accountants and Business Advisors


INDEPENDENT AUDITOR'S REPORT

To the Partners
Columbia Townhouse Associates Limited Partnership
Des Moines, Iowa

We have audited the accompanying balance sheets of Columbia Townhouse Associates
Limited Partnership, HUD Project No. 074-35189, as of December 31, 1995 and 1994
and the related  statements of profit and loss,  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 audit in accordance with generally  accepted auditing standards
and Government  Auditing 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
misstatements. 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 in the first  paragraph
present fairly,  in all material  respects,  the financial  position of Columbia
Townhouse  Associates Limited  Partnership as of December 31, 1995 and 1994, and
the results of its operations,  changes in partners' capital (deficit), and cash
flows for the years then ended in conformity with generally accepted
accounting principles.

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  January 31, 1996 on our
consideration  of  Partnership's  internal  control  structure and reports dated
January 31, 1996 on its  compliance  with  specific  requirements  applicable to
major HUD Programs and specific  requirements  applicable  to  Affirmative  Fair
Housing.

As discussed in Note A, the accompanying financial statements have been prepared
assuming that the Partnership will continue as a going concern.  As shown in the
financial  statements,  the Partnership has incurred  substantial  losses before
depreciation for each of the passed two years.  The financial  statements do not
include any adjustments  relating to the  recoverability  and  classification of
recorded assets, or the amounts of  classifications of liabilities that might be
necessary in the event the Partnership cannot continue in existence.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The accompanying supplemental information
(shown in Section II) is presented for the purpose of additional analysis and is
not a required  part of the basic  financial  statements  of Columbia  Townhouse
Associates Limited Partnership.  Such information has been subjected to the same
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are presented fairly in all material respects in relation to the
basic financial statements taken as a whole.

/s/Vroman, McGowen, Hurst, Clark & Smith, P.C.
Des Moines, Iowa
January 31, 1996

Other auditor information:
Lead Auditor - Michael W. McNichols
Federal ID Number- 42-1104473


<PAGE>
[Letterhead]
[LOGO]
Fishbein & Company
Certified Public Accountants                              January 31, 1997

INDEPENDENT AUDITOR'S REPORT

Partners
Admiral Housing Limited Partnership

We have  audited the  accompanying  balance  sheets of ADMIRAL  HOUSING  LIMITED
PARTNERSHIP,  as of  December  31, 1996 and the  related  statement  operations,
partners'  equity  and cash  flows  for the year  then  ended.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the 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 the financial statements referred to above present fairly, in all
material respects, the financial position of Admiral Housing Limited Partnership
as of December 31, 1996,  and the results of its  operations  and its cash flows
for the year  then  ended  in  conformity  with  generally  accepted  accounting
principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplemental  information  included  in this
report (shown on pages 9and 10) is presented for purposes of additional analysis
and is not a required part of the basic financial statements of the Partnership.
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 financial statements taken as a whole.


/s/Fishbein & Company P.C.


<PAGE>
[Letterhead]
[LOGO]
FEGLEY & ASSOCIATES A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 2250
Hickory Road, Suite 20 Plymouth Meeting, PA 19462 Phone (610) 825-7400 Fax (610)
825-1297

INDEPENDENT AUDITOR'S REPORT

To the Partners
Admiral Housing Limited Partnership

We have  audited the  accompanying  balance  sheets of Admiral  Housing  Limited
Partnership,  as of  December  31,  1994  and 1993  and the  related  statements
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 audit.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our 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 Admiral Housing Limited Partnership
as of December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
company  will  continueas  a  going  concern.  As  discussed  in  Note 12 to the
financial statements,  existing  circumstances raise substantial doubt as to the
ability of Admiral Housing  Limited  Partnership to continue as a going concern.
The accompanying  financial statements do not include any adjustments that might
result from this uncertainty.


/s/Fegley & Associates
February 27, 1995


<PAGE>
[Letterhead]
[LOGO]
HALBERT, KATZ & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

To the Partners
Georgetown Associates II, L.P.
Wimington, Delaware

We have audited the  accompanying  balance  sheets of Georgetown  Associates II,
L.P., as of December 31, 1996 and December 31, 1995, and the related  statements
of loss,  partners'  capital  (capital  deficiency) and cash flows for the years
then ended.  These financial  statements are the responsibility of the project's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the 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 Georgetown Associates II, L.P.,
as of December 31, 1996 and December 31, 1995, and the results of its operations
and its cash  flows for the years  then  ended,  in  conformity  with  generally
accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole. The supporting  information  included in
the  report  (shown on pages 12  through  14) is  presented  for the  purpose of
additional analysis and is not a required part of the basic financial
statements of Georgetown Associates II, L.P. Such information has been subjected
to the same  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 financial statements taken as a whole.

/s/Halbert, Katz & Co., P.C.
January 30, 1997

<PAGE>
[Letterhead]
[LOGO]
HALBERT, KATZ & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

To the Partners
Georgetown Associates II, L.P.
Wimington, Delaware

We have audited the  accompanying  balance  sheets of Georgetown  Associates II,
L.P. as of December 31, 1995 and December 31, 1994 and the related statements of
loss,  partners' capital (capital  deficiency) and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  project's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing, issued by the Comptroller General of the 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  also  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 Georgetown  Associates II, L.P. as
of December 31, 1995 and December  31, 1994,  and the results of its  operations
and its cash  flows  for the  years  then  ended in  conformity  with  generally
accepted accounting principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 30, 1996 on our consideration of Georgetown Associates II, L.P.'s,
internal control structure.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole. The supporting  information  included in
the report  (shown on pages 14 through  16) is  presented  for the  purposes  of
additional  analysis  and  is  not  a  required  part  of  the  basic  financial
statements.  Such information has been subjected to the same 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 financial  statements
taken as a whole.

/s/Halbert, Katz & Co., P.C.
January 30, 1996


<PAGE>
[Letterhead]
[LOGO]
CRAIN
& COMPANY
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Partners
Lexington Associates, I LP
(A Limited Partnership)

We have audited the accompanying balance sheets of Lexington Associates, I LP (A
Limited Partnership),  a FmHA Project, as of December 31, 1996 and 1995, and the
related  statements of operations,  changes in 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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of  Lexington  Associates  I LP (A
Limited  Partnership)  as of December 31, 1996 and 1995,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

Our audits  were for the  purpose  of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  information  as listed in the
table of contents 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 same  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.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  12,  1997 on our  consideration  of the  limited  partnership's
internal  control  structure  and a  report  dated  February  12,  1997  on  its
compliance with laws and regulations

/s/Crain & Company
CRAIN & COMPANY
Certified Public Accountants

Jackson, Tennessee
February 12, 1997
<PAGE>
[Letterhead]
[LOGO]
CRAIN
& COMPANY
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Partners
Lexington Associates, I LP
(A Limited Partnership)

We have audited the accompanying balance sheets of Lexington Associates, I LP (A
Limited  Partnership),  a FmHA Project, as of December 31, 1995 and 1994 and the
related  statements of operations,  changes in 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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 Lexington  Associates,  I LP (A
Limited  Partnership)  as of December 31, 1995 and 1994,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

Our audits  were for the  purpose  of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  information  as listed in the
table of contents 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 same  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.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  3,  1996  on our  consideration  of the  limited  partnership's
internal control structure and a report dated February 3, 1996 on its compliance
with laws and regulations

/s/Crain & Company
CRAIN & COMPANY
Certified Public Accountants

Jackson, Tennessee
February 3, 1996

<PAGE>
[Letterhead]
[LOGO]
CRAIN
& COMPANY
CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

To the Partners
Lexington Associates, I LP
(A Limited Partnership)

We have audited the accompanying balance sheets of Lexington Associates, I LP (A
Limited  Partnership),  a FmHA Project, as of December 31, 1994 and 1993 and the
related  statements of operations,  changes in 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 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  misstatements.  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 Lexington  Associates,  I LP (A
Limited  Partnership)  as of December 31, 1994 and 1993,  and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

Our audits  were for the  purpose  of forming an opinion on the basic  financial
statements  taken as a whole.  The  supplementary  information on pages 11-16 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 same
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/Crain & Company
CRAIN & COMPANY
Certified Public Accountants

Jackson, Tennessee
February 15, 1995


<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Longview Apartments, L.P.
Humboldt, Kansas

We have audited the accompanying balance sheet of Longview  Apartments,  L.P. (a
Kansas limited partnership), RECD Case No.: 18-001-431454412, as of December 31,
1995 and the related statements of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Longview  Apartments,  L.P. as of
December 31, 1995,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
January 31, 1996

<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Longview Apartments, L.P.
Humboldt, Kansas

We have audited the accompanying balance sheet of Longview  Apartments,  L.P. (a
Kansas limited  partnership) as of December 31, 1993 and the related  statements
of  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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Longview  Apartments,  L.P. as of
December 31, 1993,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
January 29, 1994


<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Missouri Rural Housing of Oak Grove, L.P.
Oak Grove, Missouri

We have audited the accompanying  balance sheet of Missouri Rural Housing of Oak
Grove,  L.P. (a Missouri limited  partnership),  as of December 31, 1995 and the
related  statements of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Missouri  Rural  Housing of Oak
Grove,  L.P. as of December 31, 1995,  and the results of its operations and its
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
February 9, 1996

<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Missouri Rural Housing of Oak Grove, L.P.
Oak Grove, Missouri

We have audited the accompanying  balance sheet of Missouri Rural Housing of Oak
Grove,  L.P. (a Missouri limited  partnership),  as of December 31, 1993 and the
related  statements of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Missouri Rural Housing of Oak
Grove,  L.P. as of December 31, 1993,  and the results of its operations and its
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
February 11, 1994


<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Smithville Rural Housing, A Limited Partnership
Wayne, Nebraska

We have audited the accompanying  balance sheet of Smithville  Rural Housing,  A
Limited   Partnership   (a  Missouri   limited   partnership),   RECD  Case  No:
29-024-480975973  as of December  31, 1995 and the related  statements  of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Smithville Rural Housing, A Limited
Partnership  as of December 31, 1995,  and the results of its operations and its
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
February 7, 1996

<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Smithville Rural Housing, A Limited Partnership
Wayne, Nebraska

We have audited the accompanying  balance sheet of Smithville  Rural Housing,  A
Limited Partnership (a Missouri limited  partnership),  as of December 31, 1993,
and the related statements of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Smithville Rural Housing, A Limited
Partnership  as of December 31, 1993,  and the results of its operations and its
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
February 12, 1994


<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Westgate Associates I, L.P.
Perryville, Arkansas

We have audited the accompanying balance sheet of Westgate Associates I, L.P. (a
Missouri limited partnership), FmHA Case No: 03-053-431477863 as of December 31,
1995 and the related statements of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Westgate  Associates I, L.P. as of
December 31, 1995,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
February 6, 1996

<PAGE>
[Letterhead]
[LOGO]
BCC
Braunsdorf, Carlson and Clinkinbeard
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Westgate Associates I, L.P.
Perryville, Arkansas

We have audited the accompanying balance sheet of Westgate Associates I, L.P. (a
Missouri  limited  partnership),  as  of  December  31,  1993  and  the  related
statements  of 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 Westgate  Associates I, L.P. as of
December 31, 1993,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Braunsdorf, Carlson and Clinkinbeard,  CPA's, P.A.
TOPEKA, KANSAS
January 29, 1994


<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Tucson Trails Limited Partnership I
Madison, Wisconsin

We have  audited  the  accompanying  balance  sheets  of Tucson  Trails  Limited
Partnership  I as of December 31, 1996 and 1995,  and the related  statements of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements referred above present fairly, in all
material respects, the financial position of Tucson Trails Limited Partnership I
as of December 31, 1996 and 1995, and the results of its operations,  changes in
partners'  equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 17, 1997


<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Tucson Trails Limited Partnership I
Madison, Wisconsin

We have  audited  the  accompanying  balance  sheets  of Tucson  Trails  Limited
Partnership  I, as of December 31, 1995 and 1994 and the related  statements  of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 above present fairly, in all
material respects, the financial position of Tucson Trails Limited Partnership I
as of December 31, 1995 and 1994, and the results of its operations,  changes in
partners' equity, and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 15, 1996


<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Tucson Trails Limited Partnership II
Madison, Wisconsin

We have  audited  the  accompanying  balance  sheets  of Tucson  Trails  Limited
Partnership II as of December 31, 1996 and 1995,  and the related  statements of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements referred above present fairly, in all
material respects,  the financial position of Tucson Trails Limited  Partnership
II as of December 31, 1996 and 1995, and the results of its operations,  changes
in  partners'  equity and its cash flows for the years then ended in  conformity
with generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 17, 1997

<PAGE>
[Letterhead]
[LOGO]
Suby, Von Haden
& Associates, S.C.
CERTIFIED PUBLIC ACCOUNTANTS
Business and Management Consultants

INDEPENDENT AUDITOR'S REPORT

To the Partners
Tucson Trails Limited Partnership II
Madison, Wisconsin

We have  audited  the  accompanying  balance  sheets  of Tucson  Trails  Limited
Partnership  II, as of December 31, 1995 and 1994 and the related  statements of
loss,  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 above present fairly, in all
material respects,  the financial position of Tucson Trails Limited  Partnership
II as of December 31, 1995 and 1994, and the results of its operations,  changes
in partners'  equity,  and its cash flows for the years then ended in conformity
with generally accepted accounting principles.

/s/Suby, Von Haden & Associates, S.C.

January 15, 1996


<PAGE>
[Letterhead]
[LOGO]
PATTERSON & KELLY
PROFESSIONAL ASSOCIATION
CERTIFIED PUBLIC ACCOUNTANTS


To the Partners of
Walker Woods Partners, L.P.
Dover, Delware 19901

INDEPENDENT AUDITORS' REPORT


We have audited the accompanying  balance sheets of Walker Woods Partners,  L.P.
as of December 31, 1996 and 1995, and the  statements of income,  cash flows and
owners' equity and for the years then ended. These financial  statements are the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion,  the financial  statements referred above present fairly, in all
material respects,  the financial position of Walker Woods Partners,  L.P. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
and  owners'  equity  for the years  then  ended in  conformity  with  generally
accepted accounting principles.

/s/Patterson & Kelly, P.A.
Patterson & Kelly, P.A.


Dover, Delaware
February 15, 1997

<PAGE>
[Letterhead]
[LOGO]
PATTERSON & WINNINGTON
PROFESSIONAL ASSOCIATION
CERTIFIED PUBLIC ACCOUNTANTS


To the Partners of
Walker Woods Partners, L.P.
Dover, Delware 19901

INDEPENDENT AUDITOR'S REPORT


We have audited the accompanying  balance sheets of Walker Woods Partners,  L.P.
as of December 31, 1995 and 1994 and the  statements  of income,  cash flows and
owners' equity and for the years then ended. These financial  statements are the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 above present fairly, in all
material respects,  the financial position of Walker Woods Partners,  L.P. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
and  owners'  equity  for the years  then  ended in  conformity  with  generally
accepted accounting principles.

/s/Patterson & Winnington, P.A.
Patterson & Winnington, P.A.


Dover, Delaware
February 15, 1996

<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand


REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Waterfront Limited Partnership:

We have audited the accompanying  balance sheet (on DHCR Form No.:  HAA-77.2) of
Waterfront Limited Partnership, DHCR No.: UDC-13 as of December 31, 1996 and the
related  statements  of  income  and  expenses  (on DHCR  Form  No.  HAA-77-3a),
partners'  (deficiency)  and cash flows as of December 31, 1996. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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 1996 financial statements referred to above present fairly,
in  all  material  respects,   the  financial  position  of  Waterfront  Limited
Partnership,  DHCR No.: UDC-13,  as of December 31, 1996, and the results of its
operations,  the changes in partners'  (deficiency)  and cash flows for the year
then ended, in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 8 to the
financial statements, the Partnership has experienced recurring operating losses
and working capital  deficiencies that raise substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters are
also  described  in  Note  8.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

In accordance with Government Auditing  Standards,  we have also issued a report
dated February 10, 1997 on our consideration of Waterfront Limited Partnership's
internal  control  structure  and a  report  dated  February  10,  1997  on  its
compliance with laws and regulations.

/s/Coopers & Lybrand L.L.P

Boston, Massachusetts
February 10, 1997
<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand


REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Waterfront Limited Partnership:

We have audited the accompanying  balance sheet (on DHCR Form No.:  HAA-77.2) of
Waterfront Limited Partnership, DHCR No.: UDC-13 as of December 31, 1995 and the
related  statements  of  income  and  expenses  (on DHCR  Form  No.  HAA-77-3a),
partners'  (deficiency)  and cash flows as of December 31, 1995. 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. The financial statements of Waterfront Limited Partnership, DHCR No.:
UDC-13 as of  December  31, 1994 were  audited by other  auditors  whose  report
thereon  dated  January  31,  1995  expressed  an  unqualified  opinion on those
financial statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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  provide a  reasonable  basis for our
opinion.

In our opinion,  the 1995 financial statements referred to above present fairly,
in  all  material  respects,   the  financial  position  of  Waterfront  Limited
Partnership,  DHCR No.: UDC-13,  as of December 31, 1995, and the results of its
operations,  changes in partners'  (deficiency) and cash flows for the year then
ended in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 7 to the
financial statements, the Partnership has experienced recurring operating losses
and working capital  deficiencies that raise substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters are
also  described  in  Note  7.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

In accordance with Government Auditing  Standards,  we have also issued a report
dated February 6, 1996 on our consideration of Waterfront Limited  Partnership's
internal control structure and a report dated February 6, 1996 on its compliance
with laws and regulations.

/s/Coopers & Lybrand L.L.P

Boston, Massachusetts
February 6, 1996

<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants



INDEPENDENT AUDITORS' REPORT

To the Partners of
Waterfront Limited Partnership:

We have audited the accompanying  balance sheets (on DHCR Form No.: HAA-77.2) of
Waterfront Limited Partnership, as of December 31, 1994 and 1993 and the related
statements of income and expenses (on DHCR Form No. HAA-77-3), partners' deficit
and cash flows for the year ended December 31, 1994. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
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  misstatements.  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 Waterfront Limited Partnership,
as of December 31, 1994 and 1993, and the results of its operations,  changes in
partners'  deficit  and cash  flows for the year ended  December  31,  1994,  in
conformity with generally accepted accounting principles.

Our 1994  audit was made for the  purpose  of  forming  an  opinion on the basic
financial statements taken as a whole. The supplementary information on pages 19
through  42 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 same  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

Boston, Massachusetts                  Federal Employer
February 6, 1996                               Identification Number:
                                           52-1088612

Audit Principal:  Richard H. Chamberlain

<PAGE>
[Letterhead]
[LOGO]
BDO Seidman, LLP
Accountants and Consultants

Independent Auditors' Report

To the Partners of
West Dade, Ltd.
(A Limited Partnership)
Miami, Florida

We have audited the  accompanying  balance sheet of West Dade, Ltd. (FHA Project
No. 066-94021) as of December 31, 1996, and the related statements of profit and
loss (HUD Form 92410), changes in partners' capital accounts, and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
management of the partnership.  Our  responsibility  is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States.  Those  standards  require that we plan and perform the 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,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position West Dade, Ltd. (FHA Project No.
066-94021) at December 31, 1996,  and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

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  ("HUD"), we have also issued a report dated January 31, 1997,
on our  consideration  of West Dade,  Ltd.'s  internal  control  structure,  and
reports  dated January 31, 1997, on its  compliance  with specific  requirements
applicable  to major  HUD  programs  and  specific  requirements  applicable  to
Affirmative  Fair Housing. 
<PAGE>

/s/BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
January 31, 1997
<PAGE>
[Letterhead]
[LOGO]
BDO Seidman, LLP
Accountants and Consultants

Independent Auditors' Report

West Dade, Ltd.
(A Limited Partnership)
Miami, Florida

We have audited the  accompanying  balance  sheet of West Dade,  Ltd. (A Limited
Partnership)  (FHA  Project No.  066-94021)  as of December  31,  1995,  and the
related  statements  of profit and loss (HUD Form  92410),  changes in partners'
capital  accounts,  and cash  flows for the year  then  ended.  These  financial
statements  are the  responsibility  of the management of the  partnership.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States.  Those  standards  require that we plan and perform the audits to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 West Dade, Ltd. (FHA Project No.
066-94021) as of December 31, 1995,  and the results of its  operations  and its
cash  flows for the year then  ended,  in  conformity  with  generally  accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The supporting schedules and data shown on pages 15
through 29 are presented  for the purposes of  additional  analysis and is not a
required part of the basic financial  statements of West Dade, Ltd. (FHA Project
No. 066-94021).  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 financial  statements
taken as a whole.

/s/BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
January 26, 1996

<PAGE>
[Letterhead]
[LOGO]
BDO Seidman, LLP
Accountants and Consultants

Independent Auditors' Report


West Dade, Ltd.
(A Limited Partnership)
Miami, Florida

We have audited the  accompanying  balance  sheet of West Dade,  Ltd. (A Limited
Partnership)  (FHA  Project No.  066-94021)  as of December  31,  1994,  and the
related  statements  of profit and loss (HUD Form  92410),  changes in partners'
capital  accounts,  and cash  flows for the year  then  ended.  These  financial
statements  are the  responsibility  of the management of the  partnership.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States.  Those  standards  require that we plan and perform the audits to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 West Dade, Ltd. (FHA Project No.
066-94021) as of December 31, 1994,  and the results of its  operations  and its
cash  flows for the year then  ended,  in  conformity  with  generally  accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The supporting schedules and data shown on pages 15
through 28 are  presented  for the purpose of  additional  analysis and is not a
required part of the basic financial  statements of West Dade, Ltd. (FHA Project
No. 066-94021).  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 financial  statements
taken as a whole.

/s/BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
February 13, 1995

<PAGE>
[Letterhead]
[LOGO]
BDO Seidman, LLP
Accountants and Consultants

Independent Auditors' Report

To the Partners of
West Dade, Ltd. II
(A Limited Partnership)
Miami, Florida

We have  audited  the  accompanying  balance  sheet of West Dade,  Ltd.  II (FHA
Project No.  066-94022) as of December 31, 1996,  and the related  statements of
profit and loss (HUD Form 92410), changes in partners'
capital  accounts,  and cash  flows for the year  then  ended.  These  financial
statements  are the  responsibility  of the management of the  partnership.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States.  Those  standards  require that we plan and perform the 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 the financial statements referred to above present fairly, in all
material  respects,  the financial  position West Dade, Ltd. II (FHA Project No.
066-94022) at December 31, 1996,  and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

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 ("HUD") we have also issued a report dated January 31, 1997 on
our  consideration  of West Dade,  Ltd. II's  internal  control  structure,  and
reports  dated January 31, 1997, on its  compliance  with specific  requirements
applicable  to major  HUD  programs  and  specific  requirements  applicable  to
Affirmative  Fair Housing.  
<PAGE> 

/s/BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
January 31, 1997

<PAGE>
[Letterhead]
[LOGO]
BDO Seidman, LLP
Accountants and Consultants

Independent Auditors' Report

West Dade, Ltd. II
(A Limited Partnership)
Miami, Florida

We have audited the accompanying  balance sheet of West Dade, Ltd. II (A Limited
Partnership)  (FHA  Project No.  066-94022)  as of December  31,  1995,  and the
related  statements  of profit and loss (HUD Form  92410),  changes in partners'
capital  accounts,  and cash  flows for the year  then  ended.  These  financial
statements  are the  responsibility  of the management of the  partnership.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States.  Those  standards  require that we plan and perform the audits to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 West Dade, Ltd. II (FHA Project No.
066-94022) as of December 31, 1995,  and the results of its  operations  and its
cash  flows for the year then  ended,  in  conformity  with  generally  accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The supporting schedules and data shown on pages 16
through 30 are presented  for the purposes of  additional  analysis and is not a
required  part of the basic  financial  statements  of West Dade,  Ltd.  II (FHA
Project No.  066-94022).  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 financial
statements taken as a whole.

/s/BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
January 26, 1996

<PAGE>
[Letterhead]
[LOGO]
BDO Seidman, LLP
Accountants and Consultants

Independent Auditors' Report

West Dade, Ltd. II
(A Limited Partnership)
Miami, Florida

We have audited the accompanying  balance sheet of West Dade, Ltd. II (A Limited
Partnership)  (FHA  Project No.  066-94022)  as of December  31,  1994,  and the
related  statements  of profit and loss (HUD Form  92410),  changes in partners'
capital  accounts,  and cash  flows for the year  then  ended.  These  financial
statements  are the  responsibility  of the management of the  partnership.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States.  Those  standards  require that we plan and perform the audits to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 West Dade, Ltd. II (FHA Project No.
066-94022) as of December 31, 1994,  and the results of its  operations  and its
cash  flows for the year then  ended,  in  conformity  with  generally  accepted
accounting principles.

Our audit was made for the  purpose  of  forming  an  opinion  on the  financial
statements taken as a whole. The supporting schedules and data shown on pages 16
to 29 are  presented  for  the  purpose  of  additional  analysis  and are not a
required  part of the basic  financial  statements  of West Dade,  Ltd.  II (FHA
Project No.  066-94022).  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 financial
statements taken as a whole.

/s/BDO Seidman, LLP
Certified Public Accountants
Miami, Florida
February 13, 1995

<PAGE>
[Letterhead]
[LOGO]
CHAPMAN, COLLINS, AGOSTINELLI & SHAW, P.C.  A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS


INDEPENDENT AUDITORS' REPORT

To the Partners of
Wood Creek Associates

We have audited the balance sheets of Wood Creek  Associates (A New York Limited
Partnership)  as of December 31, 1996 and 1995,  and the related  statements  of
operations,  changes  in  partners'  capital,  and cash flows for the years then
ended.  These  financial   statements  are  the  responsibility  of  Wood  Creek
Associates'  management.  Our  responsibility  is to express an opinion on these
financial statements based on our audits.

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

In our opinion the financial statements referred to above present fairly, in all
material  respects,  the financial position Wood Creek Associates as of December
31, 1996 and 1995,  and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental 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 financial
statements taken as a whole.

/s/CHAPMAN, COLLINS, AGOSTINELLI & SHAW, P.C.

January 31, 1997
<PAGE>
[Letterhead]
[LOGO]
CHAPMAN, COLLINS, AGOSTINELLI & SHAW, P.C.  A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS


INDEPENDENT AUDITORS' REPORT

To the Partners of
Wood Creek Associates

We have audited the balance sheets of Wood Creek  Associates (A New York Limited
Partnership)  as of December 31, 1995 and 1994,  and the related  statements  of
operations,  changes  in  partners'  capital,  and cash flows for the years then
ended.  These  financial   statements  are  the  responsibility  of  Wood  Creek
Associates'  management.  Our  responsibility  is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit  also  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 Wood Creek Associates as of December
31, 1995 and 1994,  and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental information is presented
for the 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 financial
statements taken as a whole.

/s/CHAPMAN, COLLINS, AGOSTINELLI & SHAW, P.C.

January 11, 1996

<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants, Business Consultants
A Professional Corporation

INDEPENDENT AUDITORS' REPORT

To the Partners
Westwood Manor Limited Dividend Housing
       Association Limited Partnership

We have  audited  the  accompanying  balance  sheet of  Westwood  Manor  Limited
Dividend Housing  Association  Limited  Partnership as of December 31, 1996, and
the related  statements  of profit and loss (on HUD Form No.  92410),  partners'
equity and cash flows for the year then ended.  These  financial  statements are
the  responsibility of the partnership's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
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 Westwood Manor Limited  Dividend
Housing Association Limited Partnership as of December 31, 1996, and the results
of its operations,  the changes in partners'  equity and cash flows for the year
then ended, in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The supplemental  information on pages 20 though 25
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
financial statements taken as a whole.
<PAGE>
In accordance with Government  Auditing  Standards and the " Consolidated  Audit
Guide for Audits of HUD Programs, we have also issued reports dated February 14,
1997 on our consideration of Westwood Manor Limited Dividend Housing Association
Limited  Partnership's  internal  control  structure and on its compliance  with
specific  requirements  applicable  to  major  HUD  Programs,  affirmative  fair
housing, and laws and regulations applicable to the financial statements.

/s/Reznick Fedder & Silverman

Bethesda, Maryland                              Federal Employer
February 14, 1997                                       Indentification Number:
                                                                 52-1088612

Audit Principal:   Renee G. Scruggs
<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants, Business Consultants
A Professional Corporation

INDEPENDENT AUDITORS' REPORT

To the Partners
Westwood Manor Limited Dividend Housing
       Association Limited Partnership

We have  audited  the  accompanying  balance  sheet of  Westwood  Manor  Limited
Dividend Housing  Association  Limited  Partnership as of December 31, 1995, and
the related  statements  of profit and loss (on HUD Form No.  92410),  partners'
equity and cash flows for the year then ended.  These  financial  statements are
the  responsibility of the partnership's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
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  also  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  Westwood  Manor  Limited  Dividend
Housing Association Limited Partnership as of December 31, 1995, and the results
of its  operations,  the changes in partners'  equity and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The supplemental  information on pages 19 though 24
is presented for the 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
financial statements taken as a whole.

In accordance with Government  Auditing  Standards,  we have also issued reports
dated February 2, 1996 on our  consideration  of Westwood Manor Limited Dividend
Housing Association Limited Partnership's  internal control structure and on its
compliance  with  specific  requirements   applicable  to  major  HUD  Programs,
affirmative fair housing,  and laws and regulations  applicable to the financial
statements.

/s/Reznick Fedder & Silverman

Bethesda, Maryland                              Federal Employer
February 2, 1996                                       Indentification Number:
                                                                 52-1088612

Audit Principal:   Renee G. Scruggs


<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants, Business Consultants
A Professional Corporation

INDEPENDENT AUDITORS' REPORT

To the Partners
Westwood Manor Limited Dividend Housing
       Association Limited Partnership

We have  audited  the  accompanying  balance  sheet of  Westwood  Manor  Limited
Dividend Housing  Association  Limited  Partnership as of December 31, 1994, and
the related  statements  of profit and loss (on HUD Form No.  92410),  partners'
equity and cash flows for the year then ended.  These  financial  statements are
the responsibility of partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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  Westwood  Manor  Limited  Dividend
Housing Association Limited Partnership as of December 31, 1994, and the results
of its operations,  the changes in partners'  equity and cash flows for the year
then ended, in conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The supplemental  information on pages 18 though 23
is presented for the 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
financial statements taken as a whole.

/s/Reznick Fedder & Silverman

Bethesda, Maryland                              Federal Employer
February 13, 1995                                       Indentification Number:
                                                                 52-1088612

Audit Principal:   Renee G. Scruggs

<PAGE>
[Letterhead]
[LOGO]
Pannell Kerr Forster PC
Certified Public Accountants


Independent Auditors' Report

To the Partners
Pleasant Plaza Housing Limited Partnership

We have audited the accompanying balance sheet of Pleasant Plaza Housing Limited
Partnership,  MHFA Project No:  85-004,  as of December 31, 1996 and the related
statements of loss, changes in partners' equity  (deficiency) and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  These  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our 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 Pleasant Plaza Housing Limited
Partnership  at December 31, 1996 and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated February 9, 1997, on our  consideration  of Pleasant Plaza Housing Limited
Partnership's internal control structure, and a report dated February 9, 1997 on
its compliance with laws and regulations.

/s/Pannell Kerr Forster PC

February 9, 1997
<PAGE>
[Letterhead]
[LOGO]
Pannell Kerr Forster PC
Certified Public Accountants


Independent Auditors' Report

To the Partners
Pleasant Plaza Housing Limited Partnership

We have audited the accompanying balance sheet of Pleasant Plaza Housing Limited
Partnership, MHFA Project No: 85-004-5, as of December 31, 1995, and the related
statements of loss, changes in partners' equity  (deficiency) and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with 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  also  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  Pleasant  Plaza  Housing  Limited
Partnership at December 31, 1995, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

In accordance with Government  Auditing  Standards,  we have also issued reports
dated February 9, 1996 on our  consideration  of Pleasant Plaza Housing  Limited
Partnership's internal control structure, and a report dated February 9, 1996 on
its compliance with laws and regulations.

/s/Pannell Kerr Forster PC

February 9, 1996


<PAGE>
[Letterhead]
[LOGO]
Pannell Kerr Forster PC
Certified Public Accountants


Independent Auditors' Report

To the Partners
Pleasant Plaza Housing Limited Partnership

We have audited the accompanying balance sheet of Pleasant Plaza Housing Limited
Partnership, MHFA Project No: 85-004-5, as of December 31, 1994, and the related
statements of loss, changes in partners' equity  (deficiency) and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with 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  also  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  Pleasant  Plaza  Housing  Limited
Partnership at December 31, 1994, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

/s/Pannell Kerr Forster PC

February 10, 1995



<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand


REPORT OF INDEPENDENT ACCOUNANTS

To the Partners of Shoreline Limited Partnership:

We have audited the accompanying  balance sheet (on DHCR Form No.:  HAA-77.2) of
Shoreline  Limited  Partnership,  DHCR No.: UDC-03, as of December 31, 1996, and
the related  statements  of income and  expenses  (on DHCR Form No.  HAA-77-3a),
partners'  capital  deficit and cash flows for the year then ended  December 31,
1996. These financial  statements are the  responsibility  of the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 1996 financial statements referred to above present fairly,
in  all  material   respects,   the  financial  position  of  Shoreline  Limited
Partnership,  DHCR No.:  UDC-03 as of December 31, 1996,  and the results of its
operations,  changes in partners'  capital  deficit,  and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 8 to the
financial statements, the Partnership has experienced recurring operating losses
and working capital  deficiencies that raise substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters are
also  described  in  Note  8.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

In accordance with Government Auditing  Standards,  we have also issued a report
dated February 10, 1997 on our consideration of Shoreline Limited  Partnership's
internal  control  structure  and a  report  dated  February  10,  1997  on  its
compliance with laws and regulations.

/s/Coopers & Lybrand L.L.P

Boston, Massachusetts
February 10, 1997
<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand


REPORT OF INDEPENDENT ACCOUNANTS

To the Partners of Shoreline Limited Partnership:

We have audited the accompanying  balance sheet (on DHCR Form No.:  HAA-77.2) of
Shoreline Limited Partnership,  DHCR No.: UDC-03 as of December 31, 1995 and the
related  statements  of  income  and  expenses  (on DHCR  Form  No.  HAA-77-3a),
partners'  capital  deficit and cash flows for the year then ended  December 31,
1995. 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.  The financial  statements of Shoreline  Limited
Partnership,  DHCR No.:  UDC-03 as of December  31,  1994 were  audited by other
auditors  whose report  thereon dated January 28, 1995  expressed an unqualified
opinion on those financial statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 1995 financial statements referred to above present fairly,
in  all  material   respects,   the  financial  position  of  Shoreline  Limited
Partnership,  DHCR No.: UDC-03,  as of December 31, 1995, 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.

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 7 to the
financial statements, the Partnership has experienced recurring operating losses
and working capital  deficiencies that raise substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters are
also  described  in  Note  7.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

In accordance with Government Auditing  Standards,  we have also issued a report
dated February 6, 1996 on our consideration of Shoreline  Limited  Partnership's
internal control structure and a report dated February 6, 1996 on its compliance
with laws and regulations.

/s/Coopers & Lybrand L.L.P

Boston, Massachusetts
February 6, 1996


[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants



INDEPENDENT AUDITORS' REPORT

To the Partners of
Shoreline Limited Partnership:

We have audited the accompanying  balance sheets (on DHCR Form No.: HAA-77.2) of
Shoreline Limited Partnership,  as of December 31, 1994 and 1993 and the related
statements of income and expenses (on DHCR Form No. HAA-77-3), partners' deficit
and cash flows for the year ended December 31, 1994. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
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  misstatements.  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 Shoreline Limited Partnership,
as of December 31, 1994 and 1993, and the results of its operations,  changes in
partners'  deficit,  and its cash flows for the year ended December 31, 1994, in
conformity with generally accepted accounting principles.

Our 1994  audit was made for the  purpose  of  forming  an  opinion on the basic
financial statements taken as a whole. The supplemental  information on pages 18
through  41 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 same  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

Boston, Massachusetts                  Federal Employer
January 31, 1995                               Identification Number:
                                           52-1088612

Audit Principal:  Richard H. Chamberlain


<PAGE>
[Letterhead]
[LOGO]
MILLER, MAYER, SULLIVAN & STEVENS LLP
CERTIFIED PUBLIC ACCOUNTANTS


INDEPENDENT AUDITORS' REPORT

To the Partners                                      Rural Development
Poplar Village, Ltd.                                  London, Kentucky

We have audited the  accompanying  balance  sheets of Poplar  Village,  Ltd., (a
limited partnership) Case No. 20-048-611170806, as of December 31, 1996 and 1995
and the related statements of operations, changes in partners' equity (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 audits.

We conducted our audit in accordance with generally  accepted auditing standards
and  the  standards  for  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  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 Poplar  Village,  Ltd. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.

In accordance with Government  Auditing  Standards,  we have also issued reports
dated January 31, 1997 on our consideration of Poplar Village,  Ltd. 's internal
control structure and compliance with laws and regulations.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial  statements taken as a whole.  The supplemental  data included in this
report 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 presented fairly, in all material respects,  in relation
to the financial statements taken as a whole.

/s/Miller, Mayer, Sullivan, & Stevens


Lexington, Kentucky
January 31, 1997
<PAGE>
[Letterhead]
[LOGO]
MILLER, MAYER, SULLIVAN & STEVENS LLP
CERTIFIED PUBLIC ACCOUNTANTS


INDEPENDENT AUDITORS' REPORT

To the Partners                                      Farmers Home Administration
Poplar Village, Ltd.                                  London, Kentucky

We have audited the  accompanying  balance  sheets of Poplar  Village  Ltd.,  (a
limited partnership) Case No. 20-048-611170806, as of December 31, 1995 and 1994
and the related statements of operations, changes in partners' equity (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 audits.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States.  Those  standards  require that we plan and perform the audits to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 Poplar  Village Ltd. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 31, 1996 on our  consideration  of Poplar Village Ltd. 's internal
control structure and compliance with laws and regulations.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole.  The supplemental  data included in this
report 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 financial statements taken as a whole.

/s/Miller, Mayer, Sullivan, & Stevens


Lexington, Kentucky
January 31, 1996


<PAGE>
[Letterhead]
[LOGO]
JOSEPH B. COHAN
& ASSOCIATES, P.C.
CERTIFIED PUBLIC ACCOUNTANTS


INDEPENDENT AUDITORS' REPORT

To the Partners of
South Holyoke Housing Limited Partnership

We have audited the accompanying  balance sheet of South Holyoke Housing Limited
Partnership  as of  December  31,  1995 and the  related  statements  of income,
changes  in  partners'  equity  (deficiency),  and cash  flows for the year then
ended.  These financial  statements are the  responsibility of the partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with 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  also  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 South Holyoke Housing Limited
Partnership as of December 31, 1995, and the results of its operations,  changes
in  partners  equity and its cash  flows for the years then ended in  conformity
with generally accepted accounting principles.

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 7, 1996 on our
consideration of South Holyoke Housing Limited  Partnership's  internal control,
and reports dated February 7, 1996 on its compliance  with laws and  regulations
and specific requirements applicable to nonmajor HUD program transactions.

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 11 to 21 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 financial statements taken as a whole.

/s/Joseph B. Cohan & Assoc PC


Worcester, Massachusetts
February 7, 1996


<PAGE>
[Letterhead]
[LOGO]
JOSEPH B. COHAN
& ASSOCIATES, P.C.
CERTIFIED PUBLIC ACCOUNTANTS


INDEPENDENT AUDITORS' REPORT

To the Partners of
South Holyoke Housing Limited Partnership

We have audited the accompanying  balance sheet of South Holyoke Housing Limited
Partnership  as of  December  31,  1994 and the  related  statements  of income,
changes in partners' equity (deficiency), and cash flows for the year then ended
(presented in a format required by the  Massachusetts  Housing Finance  Agency).
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 South Holyoke Housing Limited
Partnership as of December 31, 1994, and the results of its operations,  changes
in partners  equity  (deficiency)  and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements have been prepared  assuming that South
Holyoke  Housing  Limited  Partnership  will  continue  as a going  concern.  As
discussed  in  Note 4 to the  financial  statements,  the  Partnership  has  had
recurrent  operating  losses and has  significant  unmet  liabilities.  There is
substantial  doubt  about  the  Partnership's  ability  to  continue  as a going
concern.  The  financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.

/s/Joseph B. Cohan & Assoc PC


Worcester, Massachusetts
February 7, 1995

<PAGE>
[Letterhead]
[LOGO]
JOSEPH B. COHAN
& ASSOCIATES, P.C.
CERTIFIED PUBLIC ACCOUNTANTS


INDEPENDENT AUDITORS' REPORT

To the Partners of
South Holyoke Housing Limited Partnership

We have audited the accompanying  balance sheet of South Holyoke Housing Limited
Partnership  as of  December  31,  1993 and the  related  statements  of income,
changes in partners' equity (deficiency), and cash flows for the year then ended
(presented in a format required by the  Massachusetts  Housing Finance  Agency).
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 South Holyoke Housing Limited
Partnership as of December 31, 1993, and the results of its operations,  changes
in partners  equity  (deficiency)  and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements have been prepared  assuming that South
Holyoke  Housing  Limited  Partnership  will  continue  as a going  concern.  As
discussed  in  Note 4 to the  financial  statements,  the  Partnership  has  had
recurrent  operating  losses and has  significant  unmet  liabilities.  There is
substantial  doubt  about  the  Partnership's  ability  to  continue  as a going
concern.  The  financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.

/s/Joseph B. Cohan & Assoc PC


Worcester, Massachusetts
January 20, 1994




<PAGE>
[Letterhead]
[LOGO]
SPAETH & BATTERBERRY, Ltd.  CPAs and Advisors


Report of Independent Certified Public Accountants

To the Partners
Rolling Hills Associates Limited Partnership

We have  audited the  accompanying  balance  sheet of Rolling  Hills  Associates
Limited  Partnership,  as of  December  31,  1996  and  1995,  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 audit.

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

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership will continue as a going concern.  However, the following conditions
raise  substantial  doubt about its ability to continue as a going  concern.  As
reflected  in  the  accompanying  financial  statements,   the  Partnership  has
experienced net losses and negative cash flow from operations.  In addition,  as
discussed in Note 1 to the financial  statements,  the Partnership  defaulted on
its HUD  mortgage in 1992.  In 1996,  HUD sold the  mortgage to Beal Bank.  Also
during  1996,  the  apartment   project  owned  by  the  Partnership  went  into
receivership  which required that certain  deposit  accounts be transferred to a
third-party  management  company.  Since  substantially all of the Partnership's
assets are  pledged as  collateral  for the  mortgage  note,  the  Partnership's
ability to continue as a going  concern and to realize its  investment in assets
through future operations has been seriously impaired.

As discussed in Note 2 to the financial statements,  the Partnership is carrying
property and equipment at cost less accumulated depreciation. In accordance with
Statement  of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment of Long-Lived  Assets and For  Long-Lived  Assets to Be Disposed Of,"
these  assets  should be revalued at fair market  value and an  impairment  loss
recognized for the difference  between fair market value and the carrying value.
The effects on the financial  statements are not reasonably  determinable  since
management has not attempted to calculate fair market value.  Because we believe
that the adjustment  would be material our present opinion on the 1995 financial
statements, as presented herein, is different from that expressedin our previous
report.

<PAGE>

In our opinion, because of the effects of the matter discussed in the preceeding
paragraph,  the financial  statements  referred to in the first paragraph do not
present fairly, in conformity with generally accepted accounting principles, the
financial  position  of  Rolling  Hills  Associates  Limited  Partnership  as of
December 31, 1996 and 1995,  or the results of its  operations or its cash flows
for the years then ended.

/s/Spaeth & Batterberry, Ltd.
Certified Public Accountants

January 24, 1997


<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP

Independent Auditors' Report

To the Partners of
Rolling Hills Associates Limited Partnership

We  have  audited  the  accompanying   financial  statements  of  Rolling  Hills
Associates   Limited   Partnership,   (HUD  Project  No.   046-94006-MNA)   (the
"Partnership"),  listed in the accompanying Table of Contents, as of and for the
year ended December 31, 1994. These financial  statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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.

As described in Note 2 to the financial statements,  management has not obtained
a current appraisal to support the recorded amount of property and equipment. In
our opinion,  generally  accepted  accounting  principals  require management to
maintain  support for the recorded  amount of the  property and  equipment or to
recognize a loss on impairment  of  long-lived  assets if the fair value is less
than the recorded amount. The information needed to quantify the effects of this
item on the financial  position and the results of operations of the Partnership
is not reasonably determinable from the information provided by management.

In our  opinion,  except  for the  effect  on the  financial  statements  of the
determination of any impairment of the recorded amount of property and equipment
as discussed in the preceeding paragraph,  such financial statements referred to
above  present  fairly,  in all material  respects,  the  financial  position of
Rolling Hills Associates Limited Partnership (HUD Project No.  046-94006-MNA) as
of December 31, 1994, and the results of its  operations,  its partners'  equity
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.


The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 1 to the
financial  statements,  the Partnership's  recurring losses and mortgage default
raises  substantial  doubt about its  ability to  continue  as a going  concern.
Management's  plans  regarding  those  matters also are described in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.
 <PAGE>
Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial statements taken as a whole. The supplemental  schedules listed in the
Table of Contents, which are the responsibility of the Partnership's management,
are presented for purposes of additional analysis and are not a required part of
the basic financial  statements of Rolling Hills Associates Limited  Partnership
(HUD Project No.  046-94006-MNA).  Such  information  has been  subjected to the
auditing procedures applied in the audit of the basic financial  statements and,
in our  opinion,  except for the  effects  on such  schedules  of not  obtaining
support for the  recorded  value of property  and  equipment as discussed in the
third  preceding  paragraph,  are  fairly  stated in all  material  respects  in
relation to the financial statements taken as a whole.


/s/Deloitte & Touche LLP

January 13, 1995


<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand

Report of Independent Accountants

To the Partners of Quarter Mill Associates L.P.:

We have audited the accompanying balance sheet of Quarter Mill Associates, L.P.,
a Virginia Limited Partnership (the  "Partnership"),  FHA Project No. 051-35404,
as of December  31,  1996,  and the related  statements  of changes in partners'
capital accounts, profit and loss, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Quarter Mill Associates,  L.P.
as of December 31, 1996,  and the results of its  operations  and its cash flows
for the year then  ended,  in  conformity  with  generally  accepted  accounting
principles.

/s/Coopers & Lybrand L.L.P

Richmond, Virginia
January 27, 1997

<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand

Report of Independent Accountants

To the Partners of Quarter Mill Associates L.P.:

We have audited the accompanying  balance sheet of Quarter Mill Associates L.P.,
a Virginia Limited Partnership (the  "Partnership"),  FHA Project No. 051-35404,
as of  December  31,  1995 and the related  statements  of changes in  partners'
capital accounts, profit and loss, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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 Quarter Mill Associates L.P. as
of December 31, 1995,  and the results of its  operations and its cash flows for
the  year  then  ended,  in  conformity  with  generally   accepted   accounting
principles.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial statements taken as a whole. The supplementary information included in
this report is  presented  for the purpose of  additional  analysis and is not a
required part of the basic financial  statements of Quarter Mill Associates L.P.
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 financial statements taken as a whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January 30, 1996,  on our  consideration  of the  Partnership's  internal
control  structure,  a report  dated  January  30, 1996 on its  compliance  with
specific  requirements  applicable  to its major  Housing and Urban  Development
program  and a  report  dated  January  30,  1996 on  compliance  with  specific
requirements applicable to affirmative fair housing.

/s/Coopers & Lybrand L.L.P

Richmond, Virginia
January 30, 1996

<PAGE>
[Letterhead]
[LOGO]
Coopers
& Lybrand

Report of Independent Accountants

To the Partners of Quarter Mill Associates L.P.:

We have audited the accompanying  balance sheet of Quarter Mill Associates L.P.,
a Virginia Limited Partnership (the  "Partnership"),  FHA Project No. 051-35404,
as of December  31,  1994,  and the related  statements  of changes in partners'
capital accounts, profit and loss, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatements.  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 Quarter Mill Associates L.P. as
of December 31, 1994,  and the results of its  operations and its cash flows for
the  year  then  ended,  in  conformity  with  generally   accepted   accounting
principles.


/s/Coopers & Lybrand L.L.P

Richmond, Virginia
January 30, 1995



<PAGE>
[Letterhead]
[LOGO]
MUELLER & WALLA, P.C.
Certified Public Accountants

INDEPENDENTS AUDITORS' REPORT

The Partners
Horseshoe Bend Associates I, L.P.
St. Louis, Missouri

We have audited the  accompanying  balance sheet of Horseshoe Bend Associates I,
L.P. (a limited partnership) as of December 31, 1996, 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 generally accepted auditing standards.
 Those standards require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the 1996 financial statements referred to above present fairly,
in all material respects, the financial position of Horseshoe Bend Associates I,
L.P. as of December  31,  1996,  and the results of its  operations,  changes in
partners'  capital  and cash  flows for the year then ended in  conformity  with
generally accepted accounting principles.

The 1995 financial statements were compiled by us and our report thereon,  dated
February  6,  1996,  stated  that we did not  audit or  review  those  financial
statements and, accordingly, expressed no opinion or other form of assuarance on
them.

 /s/Mueller, Walla & Albertson, P.C.
Mueller, Walla & Albertson, P.C.
Certified Public Accountants
February 10, 1997


<PAGE>
[Letterhead]
[LOGO]
MUELLER & WALLA, P.C.
Certified Public Accountants

ACCOUNTANTS' COMPILATION REPORT

The Partners
Horseshoe Bend Associates I, L.P.
St. Louis, Missouri

We have compiled the accompanying  balance sheet of Horseshoe Bend Associates I,
L.P. (a limited partnership) as of December 31, 1995, and the related statements
of operations,  partners'  capital,  and cash flows for the year then ended,  in
accordance  with  Statements on Standards  for  Accounting  and Review  Services
issued by the American Institute of Certified Public Accountants.

A  compilation  is limited to  presenting  in the form of  financial  statements
information  that is the  representation  of management.  We have not audited or
reviewed the accompanying financial statements, and, accordingly, do not express
an opinion or any other form of assurance on them.

The financial  statements for the year ended December 31, 1994,  were audited by
us, and we expressed an unqualified opinion on them in our report dated February
6, 1995, but we have not performed any auditing procedures since that date.

/s/Mueller & Walla, P.C.
Mueller & Walla, P.C.
Certified Public Accountants
February 6, 1996


<PAGE>
[Letterhead]
[LOGO]
MUELLER & WALLA, P.C.
Certified Public Accountants

ACCOUNTANTS' COMPILATION REPORT

The Partners
Horseshoe Bend Associates I, L.P.
St. Louis, Missouri

We have compiled the accompanying  balance sheet of Horseshoe Bend Associates I,
L.P. (a limited partnership) as of December 31, 1994, and the related statements
of operations,  partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility if the partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. 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 1994 financial statements referred to above present fairly,
in all material respects, the financial position of Horseshoe Bend Associates I,
L.P. as of December  31,  1994,  and the results of its  operations,  changes in
partnerss capital and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

The 1993 financial statements were compiled by us and our report thereon,  dated
January  19,  1994,  stated  that we did not  audit or  review  those  financial
statements and, accordingly,  expressed no opinion or other form of assurance on
them

/s/Mueller & Walla, P.C.
Mueller & Walla, P.C.
Certified Public Accountants
February 6, 1995


<PAGE>
[Letterhead]
[LOGO]
MUELLER & WALLA, P.C.
Certified Public Accountants

ACCOUNTANTS' COMPILATION REPORT

The Partners
Horseshoe Bend Associates I, L.P.
St. Louis, Missouri

We have compiled the accompanying  balance sheet of Horseshoe Bend Associates I,
L.P. (a limited partnership) as of December 31, 1993, and the related statements
of operations,  partners'  capital,  and cash flows for the year then ended,  in
accordance  with  Statements on Standards  for  Accounting  and Review  Services
issued by the American Institute of Certified Public Accountants.

A  compilation  is limited to  presenting  in the form of  financial  statements
information  that is the  representation  of management.  We have not audited or
reviewed the accompanying financial statements, and, accordingly, do not express
an opinion or any other form of assurance on them.

The financial  statements for the year ended December 31, 1992,  were audited by
other  accounants,  and they  expressed  an  unqualified  opinion on them in our
report  dated  January  21,  1993,  but they  have not  performed  any  auditing
procedures since that date.

/s/Mueller & Walla, P.C.
Mueller & Walla, P.C.
Certified Public Accountants
January 19, 1994

<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditor's Report
BOULEVARD COMMONS LIMITED PARTNERSHIP II
Chicago, Illinois

We have audited the accompanying statement of assets, liabilities, and partners'
equity-income tax basis of BOULEVARD  COMMONS LIMITED  PARTNERSHIP II (a Limited
Partnership),   as  of  December  31,  1995,  and  the  related   statements  of
operations-income  tax basis,  changes in partners'  equity-income tax basis and
cash flows-income tax basis for the year then ended. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  generally  accepted   Government   Auditing  Standards  for  financial  and
compliance audits issued by the Comptroller General of the United States.  These
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit  also  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.

As described in the notes to the financial statements,  the Partnership's policy
is to prepare  its  financial  statements  on the basis of  accounting  used for
income tax purposes and are not  intended to be  presented  in  conformity  with
generally accepted accounting principles.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  assets,  liabilities,  and  partners'  equity  of
BOULEVARD  COMMONS LIMITED  PARTNERSHIP II at December 31, 1995, and its results
of its operations,  changes in partners'  equity and its cash flows for the year
then ended,  on the basis of accounting  described in the notes to the financial
statements.

/s/Haran & Associates Ltd
HARAN & ASSOCIATES LTD
Certified Public Accountants
Wilmette, Illinois
Illinois Certificate No. 060-002892

January 17, 1996

<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditor's Report
BOULEVARD COMMONS LIMITED PARTNERSHIP II
Chicago, Illinois

We have audited the accompanying statement of assets, liabilities, and partners'
equity-income tax basis of BOULEVARD  COMMONS LIMITED  PARTNERSHIP II (a Limited
Partnership),   as  of  December  31,  1994,  and  the  related   statements  of
operations-income  tax basis,  changes in partners'  equity-income tax basis and
cash flows-income tax basis for the year then ended. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  generally  accepted   Government   Auditing  Standards  for  financial  and
compliance audits issued by the Comptroller General of the United States.  These
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit  also  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  provided a  reasonable  basis for our
opinion.

As described in the notes to the financial statements,  the Partnership's policy
is to prepare  its  financial  statements  on the basis of  accounting  used for
income tax purposes and are not  intended to be  presented  in  conformity  with
generally accepted accounting principles.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  assets,  liabilities,  and  partners'  equity  of
BOULEVARD  COMMONS  LIMITED  PARTNERSHIP  II  at  December  31,  1994,  and  its
operations,  changes  in  partners'  equity and its cash flows for the year then
ended,  on the  basis of  accounting  described  in the  notes to the  financial
statements.

/s/Haran & Associates Ltd
HARAN & ASSOCIATES LTD
Certified Public Accountants
Wilmette, Illinois
Illinois Certificate No. 060-002892

January 23, 1995



<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditor's Report
BOULEVARD COMMONS LIMITED PARTNERSHIP II
Chicago, Illinois

We have audited the accompanying statement of assets, liabilities, and partners'
equity-income tax basis of BOULEVARD  COMMONS LIMITED  PARTNERSHIP II (a Limited
Partnership),   as  of  December  31,  1993,  and  the  related   statements  of
operations-income  tax basis,  changes in partners'  equity-income tax basis and
cash flows-income tax basis for the year then ended. These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  generally  accepted   Government   Auditing  Standards  for  financial  and
compliance audits issued by the Comptroller General of the United States.  These
standards  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit  also  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  provided a  reasonable  basis for our
opinion.

As described in the notes to the financial statements,  the Partnership's policy
is to prepare  its  financial  statements  on the basis of  accounting  used for
income tax purposes and are not  intended to be  presented  in  conformity  with
generally accepted accounting principles.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  assets,  liabilities,  and  partners'  equity  of
BOULEVARD  COMMONS  LIMITED  PARTNERSHIP  II  at  December  31,  1993,  and  its
operations,  changes  in  partners'  equity and its cash flows for the year then
ended,  on the  basis of  accounting  described  in the  notes to the  financial
statements.

/s/Haran & Associates Ltd
HARAN & ASSOCIATES LTD
Certified Public Accountants
Wilmette, Illinois
Illinois Certificate No. 060-002892

January 25, 1994

<PAGE>
[Letterhead]
[LOGO]
SPAETH & BATTERBERRY, Ltd.  CPAs and Advisors


Report of Independent Certified Public Accountants

To the Partners
Regency Square Limited Partnership


      We have audited the  accompanying  balance sheet of Regency Square Limited
Partnership,  as of December 31, 1996 and 1995,  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 audit.

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

       The accompanying  financial  statements have been prepared  assuming that
the  Partnership  will  continue  as a going  concern.  However,  the  following
conditions  raise  substantial  doubt  about its  ability to continue as a going
concern. As reflected in the accompanying financial statements,  the Partnership
has experienced net losses and negative cash flow from operations.  In addition,
as discussed in Note 1 to the financial statements, the Partnership defaulted on
its HUD  mortgage in 1992.  In 1996,  HUD sold the  mortgage to Beal Bank.  Also
during  1996,  the  apartment   project  owned  by  the  Partnership  went  into
receivership  which required that certain deposits  accounts be transferred to a
third-party  management  company.  Since  substantially all of the Partnership's
assets are  pledged as  collateral  for the  mortgage  note,  the  Partnership's
ability to continue as a going  concern and to realize its  investment in assets
through future operations has been seriously impaired.

    As discussed  in Note 2 to the  financial  statements,  the  Partnership  is
carrying  property  and  equipment  at cost less  accumulated  depreciation.  In
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and For Long-Lived Assets to Be Disposed
Of," these assets should be revalued at fair market value and an impairment loss
recognized for the difference  between fair market value and the carrying value.
The effects on the financial  statements are not reasonably  determinable  since
management has not attempted to calculate fair market value.  Because we believe
that the adjustment would be material, our present opinion on the 1995 financial
statements,  as  presented  herein,  is  different  from that  expressed  in our
previous report.

<PAGE>

    In our  opinion,  because  of the  effects of the  matter  discussed  in the
preceding paragraph, the financial statements referred to in the first paragraph
do  not  present  fairly,  in  conformity  with  generally  accepted  accounting
principles,  the financial position of Regency Square Limited  Partnership as of
December 31, 1996 and 1995,  or the results of its  operations or its cash flows
for the years then ended.

/s/Spaeth & Batterberry, Ltd.
Certified Public Accountants

January 24, 1997

<PAGE>
[Letterhead]
[LOGO]
SPAETH & BATTERBERRY, Ltd.  CPAs and Advisors


Report of Independent Certified Public Accountants

To the Partners of
Regency Square Limited Partnership
(A Limited Partnership)

     We have audited the  accompanying  balance sheet of Regency  Square Limited
Partnership  (A Limited  Partnership),  HUD  Project  No.  046-94005-MNA,  as of
December 31, 1995 and the related  statements of operations,  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 and Government Auditing Standards issued by the Comptroller General of
the United States,  and the Consolidated Audit Guide for Audits of HUD Programs,
issued  by the U.S.  Department  of  Housing  and Urban  Development,  Office of
Inspector  General  in July,  1993.  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 also 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.

As  described  in  Note  2 to  the  financial  statements,  management  has  not
calculated  a fair market  value to support the  carrying  value of property and
equipment.  In our opinion,  generally  accepted  accounting  principals require
management  to  maintain  support for the  carrying  value of the  property  and
equipment or to recognize a loss on impairment of long-lived  assets if the fair
value is less than the carrying value. Because of the lack of the calculation of
fair market value by management, we were unable to form an opinion regarding the
carrying  value of  property  and  equipment  at December  31,  1995  (stated at
$5,221,135). 
<PAGE> 
In our  opinion,  except  for the  effect  on the  financial  statements  of the
determination  of any impairment of the carrying value of property and equipment
as discussed in the preceding  paragraph,  such financial statements referred to
above present fairly in all material  respects,  the financial  position Regency
Square Limited Partnership (A Limited Partnership), as of December 31, 1995, and
the  results  of its  operations  and its cash  flows for the year then ended in
conformity with generally accepted accounting principles.

/s/Spaeth & Batterberry, Ltd.
Certified Public Accountants

January 26, 1996

<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP


INDEPENDENT AUDITORS' REPORT

To the Partners of
Regency Square Limited Partnership:

We have audited the accompanying  financial statements of Regency Square Limited
Partnership, (HUD Project No. 046-94005-MNA) (the "Partnership"),  listed in the
Table of  Contents,  as of and for the  year  ended  December  31,  1994.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and  Government  Auditing  Standards  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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.

As described in Note 2 to the financial statements,  management has not obtained
a current appraisal to support the recorded amount of property and equipment. In
our opinion,  generally  accepted  accounting  principals  require management to
maintain  support for the recorded  amount of the  property and  equipment or to
recognize a loss on impairment  of  long-lived  assets if the fair value is less
than the recorded  amounts.  The  information  needed to quantify the effects of
this item on the financial position and results of operations of the Partnership
is not reasonably determinable from the information provided by management.

In our  opinion,  except  for the  effect  on the  financial  statements  of the
determination of any impairment of the recorded amount of property and equipment
as discussed in the preceding  paragraph,  such financial statements referred to
above present fairly in all material  respects,  the financial  position Regency
Square Limited  Partnership(HUD  Project No. 046-94005-MNA),  as of December 31,
1994,  and the  results of its  operations  and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 1 to the
financial  statements,  the  Partnership's  recurring  losses and default on the
mortgage  raise  substantial  doubt  about its  ability to  continue  as a going
concern.  Management's plans concerning these matters also are described in Note
1. The  financial  statements do not include any  adjustments  that might result
from the outcome of this uncertainty.

<PAGE>

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial statements taken as a whole. The supplementary schedules listed in the
Table  of  Contents,  which  are also the  responsibility  of the  Partnership's
management,  are presented  for the purpose of additional  analysis and is not a
required  part of the basic  financial  statements  of  Regency  Square  Limited
Partnership(HUD Project No. 046-94005-MNA).  Such information has been subjected
to  the  auditing  procedures  applied  in the  audit  of  the  basic  financial
statements and, in our opinion,  except for the effects on such schedules of not
obtaining  support for the recorded value of property and equipment as discussed
in the third preceding  paragaph,  are fairly stated in all material respects in
relation to the financial statements taken as a whole.

/s/Deloitte & Touche LLP


January 13, 1995

<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants, Business Consultants
A Professional Corporation

INDEPENDENT AUDITORS' REPORT

To the Partners
Harbour View Associates

We have audited the accompanying balance sheets of Harbour View Associates as of
December 31, 1996 and 1995,and the related  statements of operations,  partners'
deficit and cash flows for the years then ended. These financial  statements are
the  responsibility of the Partnership's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

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

As more fully described in Note C to the financial  statements,  the Partnership
has not  recorded  certain  accrued  interest  on the  mortgage  payable  in the
accompanying  financial  statements which, in our opinion,  should be accrued in
order to conform with generally accepted accounting principles. If this interest
were  recorded,  accrued  interest  payable  would be increase  by $122,803  and
partners' deficit would be increased by $122,803 as of December 31, 1996.

In our  opinion,  except for the  effects of not  accruing
certain  interest on the mortgage as discussed in the preceding  paragraph,  the
financial statements referred to above present fairly, in all material respects,
the financial position Harbour View Associates as of December 31, 1996 and 1995,
and the results of its operations, the changes in partners' deficit and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.
<PAGE>
The  accompanying   financial   statements  have  been  prepared   assuming  the
Partnership  will  continue as a going  concern.  As  discussed in Note B to the
financial  statements,  the  Partnership  is in default of its  mortgage  due to
substantial  losses from operations and the unauthorized  withdrawal of funds by
the  former  managing  general  partner  and the  former  managing  agent of the
Partnership's   property.   These  events  raise  substantial  doubt  about  the
Partnership's  ability to  continue as a going  concern.  The  Management'  plan
regarding this matter is also  described in Note B. The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


/s/Reznick Fedder & Silverman

Boston, Massachusetts                              Federal Employer
January 23, 1997                                       Identification Number:
                                                                 52-1088612

Audit Principal:   Phillip A. Weitzel

<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants, Business Consultants
A Professional Corporation

INDEPENDENT AUDITORS' REPORT

To the Partners
Harbour View Associates (a Limited Partnership)

We have audited the  accompanying  balance  sheet of Harbour View  Associates (a
Limited Partnership),  HUD Project No.:  012-36601-PM,  as of December 31, 1995,
and the related statements of profit and loss (on HUD Form No. 92410), partners'
equity  (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.  The  financial  statements  of Harbour  View  Associates  (a Limited
Partnership) HUD project No.: 101-36601-PM as of and for the year ended December
31, 1994 were audited by other  auditors  whose report thereon dated February 8,
1995 expressed a qualified opinion on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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.

As more fully described in Note C to the financial  statements,  the Partnership
has not  recorded  certain  accrued  interest  on the  mortgage  payable  in the
accompanying  balance  sheets,  statements  of  profit  and loss  and  partners'
deficit,  that,  in our  opinion,  should be accrued  in order to  conform  with
generally  accepted  accounting  principles.  If this  interest  were  recorded,
accrued  interest  payable would be increased by $122,803 and partners'  deficit
would be  increased by $122,803,  as of December  31,  1995.  Additionally,  the
Partnership's  net loss for the year ended  December 31, 1995 would be increased
by  $122,803. 
<PAGE>
In our opinion,  except for the effects of not accruing  certain interest on the
mortgage as discussed  in the  preceding  paragraph,  the  financial  statements
referred to above  present  fairly,  in all  material  respects,  the  financial
position  Harbour View  Associates  (a Limited  Partnership)  as of December 31,
1995, and the results of its operations, partners' equity (deficit) and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

The  accompanying   financial   statements  have  been  prepared   assuming  the
Partnership  will  continue as a going  concern.  As  discussed in Note B to the
financial  statements,  the  Partnership  is in default of its  mortgage  due to
substantial  losses from operations and the unauthorized  withdrawal of funds by
the  former  managing  general  partner  and the  former  managing  agent of the
Partnership's   property.   These  events  raise  substantial  doubt  about  the
Partnership's ability to continue as a going concern. The General Partners' plan
regarding this matter is also  described in Note B. The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements for 1995 taken as a whole. The  supplemental  information on pages 22
though 28 is  presented  for the  purposes of  additional  analysis and is not a
required part of the basic financial  statements.  Such information for 1995 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  financial  statements  taken  as a  whole.  The
supplemental  information  for 1994 was audited by other  auditors  whose report
thereon dated February 8, 1995 express a qualified opinion.

In accordance with Government  Auditing  Standards,  we have also issued reports
dated  January 30, 1996 on our  consideration  of Harbour  View  Associates'  (a
Limited  Partnership)  internal  control  structure and on its  compliance  with
specific  requirements  applicable  to  major  HUD  Programs,  affirmative  fair
housing, and laws and regulations applicable to the financial statements.

/s/Reznick Fedder & Silverman

Boston, Massachusetts                              Federal Employer
January 30, 1996                                       Identification Number:
                                                                 52-1088612

Audit Principal:   Phillip A. Weitzel


<PAGE>
[Letterhead]
[LOGO]
Coopers
 & Lybrand
a professional services firm

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners
Harbour View Associates (a Limited Partnership)

We have audited the accompanying  balance sheets of Harbour View Associates (the
"Partnership"), HUD Project No.: 012-36601-PM, as of December 31, 1994 and 1993,
and the related statements of profit and loss, partners' equity (deficiency) 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 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  also  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.

As more fully described in Note 2 to the financial  statements,  the Partnership
has not recorded  certain  accrued  interest on the mortgage note payable in the
accompanying balance sheets,  statements of profit and loss and partners' equity
(deficiency),  that, in our opinion,  should be accrued in order to conform with
generally  accepted  accounting  principles.  If this  interest  were  recorded,
accrued  interest  payable would be increased by $166,857 and  partners'  equity
would be  decreased by $166,857,  as of December  31,  1994.  Additionally,  the
Partnership's  net loss for the year ended  December 31, 1994 would be increased
by $166,857.

In our opinion,  except for the effects of not accruing  certain interest on the
mortgage note as discussed in the preceding paragraph,  the financial statements
referred to above  present  fairly,  in all  material  respects,  the  financial
position  Harbour  View  Associates  (a Limited  Partnership),  HUD Project No.:
012-36601-PM,  as of  December  31,  1994  and  1993,  and  the  results  of its
operations  and its cash  flows for the years then  ended,  in  conformity  with
generally accepted accounting principles.

The  accompanying   financial   statements  have  been  prepared   assuming  the
Partnership  will  continue as a going  concern.  As  discussed in Note 1 to the
financial  statements,  the  Partnership  is in default of its  mortgage  due to
substantial  losses from operations and the unauthorized  withdrawal of funds by
the  former  managing  general  partner  and the  former  managing  agent of the
Partnership's   property.   These  events  raise  substantial  doubt  about  the
Partnership's ability to continue as a going concern. The General Partners' plan
regarding this matter is also  described in Note 1. The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

/s/Coppers & Lybrand L.L.P.

Boston, Massachusetts
February 8, 1995



<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Bridgeport Housing Associates, Ltd.
          (d/b/a Crestewood Place Apartments)

We have audited the accompanying balance sheet of Bridgeport Housing Associates,
Ltd. (a Texas Limited  partnership)  (d/b/a Crestwood Place  Apartments),  as of
December 31, 1993, and the related statements operations, 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.  The  financial
statements  of  Bridgeport  Housing  Associates,  Ltd.  (d/b/a  Crestwood  Place
Apartments) as of December 31, 1992, were audited by other auditors whose report
dated January 29, 1993, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects,  the financial position Bridgeport Housing Associates,
Ltd.  (d/b/a  Crestwood  Place  Apartments),  as of December 31,  1993,  and the
results of its operations,  changes in partners'  equity  (deficit) and its cash
flows for the year then ended, in conformity with generally accepted  accounting
principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 12, 1994

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Bridgeport Housing Associates, Ltd.
          (d/b/a Crestewood Place Apartments)

We have  audited  the  accompanying  balance  sheet of The Temple  Kyle  Limited
Partnership,  LTD. ( a Texas limited  partnership),  as of December 31, 1996 and
1995, and the related statements  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 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 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,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of The Temple  Kyle  Limited
Partnership, LTD.
  as of December 31, 1996 and 1995, and the results of its  operations,  changes
in partners'  equity  (deficit) and its cash flows for the years then ended,  in
conformity with generally accepted accounting principles.

/s/Plante & Moran

February 12, 1997

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Crown Point Housing Associates, Ltd.

We  have  audited  the  accompanying   balance  sheet  of  Crown  Point  Housing
Associates, Ltd. (a Texas Limited partnership), as of December 31, 1993, and the
related  statements  operations,  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. The financial statements of Crown Point
Housing Associates, Ltd. as of December 31, 1992, were audited by other auditors
whose report dated January 29, 1993,  expressed an unqualified  opinion on those
statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects, the financial position Crown Point Housing Associates,
Ltd.  at  December  31,  1993,  and the  results of its  operations,  changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 18, 1994

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Glenbrook Housing Associates, Ltd.

We have audited the accompanying  balance sheet of Glenbrook Housing Associates,
Ltd. (a Texas  Limited  partnership),  as of December 31, 1993,  and the related
statements  operations,  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.  The financial  statements of Glenbrook  Housing
Associates,  Ltd. as of December 31, 1992,  were audited by other auditors whose
report  dated  January  29,  1993,  expressed  an  unqualified  opinion on those
statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects,  the financial position Glenbrook Housing  Associates,
Ltd.  at  December  31,  1993,  and the  results of its  operations,  changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

February 4, 1994


<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Godley Arms Housing Associates, Ltd.

We  have  audited  the  accompanying   balance  sheet  of  Godley  Arms  Housing
Associates, Ltd. (a Texas Limited partnership), as of December 31, 1993, and the
related  statements  operations,  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. The financial statements of Godley Arms
Housing Associates, Ltd. as of December 31, 1992, were audited by other auditors
whose report dated January 29, 1993,  expressed an unqualified  opinion on those
statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects, the financial position Godley Arms Housing Associates,
Ltd.  at  December  31,  1993,  and the  results of its  operations,  changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 14, 1994


<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
North Quail Run Housing Associates, Ltd.

We have  audited  the  accompanying  balance  sheet of North  Quail Run  Housing
Associates, Ltd. (a Texas limited partnership), as of December 31, 1993, and the
related  statements  operations,  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. The financial statements of North Quail
Run Housing  Associates,  Ltd. as of December  31,  1992,  were audited by other
auditors whose report dated January 29, 1993,  expressed an unqualified  opinion
on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all  material  respects,  the  financial  position  North  Quail Run  Housing
Associates,  Ltd.  at December  31,  1993,  and the  results of its  operations,
changes  in  partners'  equity and its cash  flows for the year then  ended,  in
conformity with generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 21, 1994



<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Lake Dallas Housing Associates, Ltd.
(d/b/a Shady Shores Apartments)

We  have  audited  the  accompanying   balance  sheet  of  Lake  Dallas  Housing
Associates,  Ltd. (a Texas limited partnership) (d/b/a Shady Shores Apartments),
as of December 31, 1993, and the related statements operations, 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.  The  financial
statements  of  Lake  Dallas  Housing  Associates,   Ltd.  (d/b/a  Shady  Shores
Apartments) as of December 31, 1992, were audited by other auditors whose report
dated January 29, 1993, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects, the financial position Lake Dallas Housing Associates,
Ltd.  (d/b/a Shady Shores  Apartments)  at December 31, 1993, and the results of
its operations, changes in partners' equity and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 20, 1994

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Eagles Nest Housing Associates, Ltd.

We  have  audited  the  accompanying   balance  sheet  of  Eagles  Nest  Housing
Associates,   Ltd.   (a   Texas   limited   partnership),   RECD   Project   No.
51-049-0752266596,   as  of  December  31,  1995,  and  the  related  statements
operations,  partners' equity (deficit), and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 Eagles Nest Housing  Associates,
Ltd. as of December  31,  1995,  and the results of its  operations,  changes in
partners'  equity  (deficit)  and its cash  flows  for the year then  ended,  in
conformity with generally accepted accounting principles.

As discussed in Note 4 to the financial statements,  the Partnership has entered
into an option with a prospective  purchaser for the sale of assets and transfer
of certain  liabilities  of the  Partnership.  It is presently not  determinable
whether the amounts realizable from the disposition of the assets or the amounts
that RECD agrees to accept in settlement of the  obligations  due it will differ
materially from the amounts shown in the accompanying financial statements.

As  described  in Note 3 to the  financial  statements,  the  Partnership  is in
noncompliance with RECD loan covenants and RECD regulations.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  26,  1996 on our  consideration  of the  Partnership's  internal
control  structure  and a report dated January 26, 1996 on its  compliance  with
laws and regulations.

/s/Plante & Moran LLP

January 26, 1996

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Eagles Nest Housing Associates, Ltd.

We  have  audited  the  accompanying   balance  sheet  of  Eagles  Nest  Housing
Associates, Ltd. (a Texas limited partnership), as of December 31, 1993, and the
related  statements  operations,  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. The financial statements of Eagles Nest
Housing Associates, Ltd. as of December 31, 1992, were audited by other auditors
whose report dated January 29, 1993,  expressed an unqualified  opinion on those
statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects, the financial position Eagles Nest Housing Associates,
Ltd.  at  December  31,  1993,  and the  results of its  operations,  changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 25, 1994

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN, LLP

Independent Auditor's Report

To the Partners
Loan Oak Housing Associates, Ltd.

We have audited the accompanying  balance sheet of Loan Oak Housing  Associates,
Ltd. (a Texas Limited  partnership),  RECD Project No.  51-052-752266417,  as of
December 31,  1995,  and the related  statements  operations,  partners'  equity
(deficit),  and cash flows for the year then ended.  These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 Loan Oak Housing Associates,  Ltd.
at December 31, 1995,  and the results of its  operations,  changes in partners'
equity (deficit), and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

Subsequent  to  December  31,  1995,  as  discussed  in Note 4 to the  financial
statements,  the  Partnership  has  entered  into an option  with a  prospective
purchaser  for the sale of assets and  transfer  of certain  liabilities  of the
Partnership.  It is presently not  determinable  whether the amounts  realizable
from the  disposition of the assets or the amounts that RECD agrees to accept in
settlement of the  obligations  due it will differ  materially  from the amounts
shown in the accompanying financial statements.

As  described  in Note 3 to the  financial  statements,  the  Partnership  is in
noncompliance with RECD loan covenants and RECD regulations.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  30,  1996 on our  consideration  of the  Partnership's  internal
control  structure  and a report dated January 30, 1996 on its  compliance  with
laws and regulations.

/s/Plante & Moran LLP

January 30, 1996

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Lone Oak Housing Associates, Ltd.

We have audited the accompanying  balance sheet of Lone Oak Housing  Associates,
Ltd. (a Texas  limited  partnership),  as of December 31, 1993,  and the related
statements  operations,  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.  The  financial  statements  of Lone Oak Housing
Associates,  Ltd. as of December 31, 1992,  were audited by other auditors whose
report  dated  January  29,  1993,  expressed  an  unqualified  opinion on those
statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects,  the financial  position Lone Oak Housing  Associates,
Ltd.  at  December  31,  1993,  and the  results of its  operations,  changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 26, 1994



<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN, LLP

Independent Auditor's Report

To the Partners
Sherwood Arms Housing Associates, Ltd.

We have  audited  the  accompanying  balance  sheet  of  Sherwood  Arms  Housing
Associates,   Ltd.   (a   Texas   Limited   partnership),   RECD   Project   No.
50-026-752266412,   as  of  December  31,  1995,  and  the  related   statements
operations,  partners' equity (deficit), and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 Sherwood Arms Housing Associates,
Ltd.  at  December  31,  1995,  and the  results of its  operations,  changes in
partners'  equity  (deficit),  and its cash  flows for the year then  ended,  in
conformity with generally accepted accounting principles.

Subsequent  to  December  31,  1995,  as  discussed  in Note 4 to the  financial
statements,  the  Partnership  has  entered  into an option  with a  prospective
purchaser  for the sale of assets and  transfer  of certain  liabilities  of the
Partnership.  It is presently not  determinable  whether the amounts  realizable
from the  disposition of the assets or the amounts that RECD agrees to accept in
settlement of the  obligations  due it will differ  materially  from the amounts
shown in the accompanying financial statements.

As  described  in Note 3 to the  financial  statements,  the  Partnership  is in
noncompliance with RECD loan covenants and RECD regulations.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  6,  1996 on our  consideration  of the  Partnership's  internal
control  structure and a report dated  February 6, 1996 on its  compliance  with
laws and regulations.

/s/Plante & Moran LLP

February 6, 1996

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN, LLP

Independent Auditor's Report

To the Partners
Pilot Point Housing Associates, Ltd.

We  have  audited  the  accompanying   balance  sheet  of  Pilot  Point  Housing
Associates, Ltd. (a Texas Limited partnership), as of December 31, 1995, and the
related statements  operations,  partners' equity (deficit),  and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 Pilot Point Housing  Associates,
Ltd.  at  December  31,  1995,  and the  results of its  operations,  changes in
partners'  equity  (deficit),  and its cash  flows for the year then  ended,  in
conformity with generally accepted accounting principles.

As discussed in Note 4 to the financial statements,  the Partnership has entered
into an option with a prospective  purchaser for the sale of assets and transfer
of certain  liabilities  of the  Partnership.  It is presently not  determinable
whether the amounts realizable from the disposition of the assets or the amounts
that RECD agrees to accept in settlement of the  obligations  due it will differ
materially from the amounts shown in the accompanying financial statements.

As  described  in Note 3 to the  financial  statements,  the  Partnership  is in
noncompliance with RECD loan covenants and RECD regulations.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  30,  1996 on our  consideration  of the  Partnership's  internal
control  structure  and a report dated January 30, 1996 on its  compliance  with
laws and regulations.

/s/Plante & Moran LLP

January 30, 1996

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Pilot Point Housing Associates, Ltd.

We  have  audited  the  accompanying   balance  sheet  of  Pilot  Point  Housing
Associates, Ltd. (a Texas limited partnership), as of December 31, 1993, and the
related  statements  operations,  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. The financial statements of Pilot Point
Housing Associates, Ltd. as of December 31, 1992, were audited by other auditors
whose report dated January 29, 1993,  expressed an unqualified  opinion on those
statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects, the financial position Pilot Point Housing Associates,
Ltd.  at  December  31,  1993,  and the  results of its  operations,  changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 18, 1994


<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN, LLP

Independent Auditor's Report

To the Partners
Willowick Housing Associates, Ltd.

We have audited the accompanying  balance sheet of Willowick Housing Associates,
Ltd. (a Texas  Limited  partnership),  RECD Project No.  49-049-75227086,  as of
December 31,  1995,  and the related  statements  operations,  partners'  equity
(deficit),  and cash flows for the year then ended.  These financial  statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 Willowick Housing Associates, Ltd.
at December 31, 1995,  and the results of its  operations,  changes in partners'
equity (deficit), and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As discussed in Note 5 to the financial statements,  the Partnership has entered
into an option with a prospective  purchaser for the sale of assets and transfer
of certain  liabilities  of the  Partnership.  It is presently not  determinable
whether the amounts realizable from the disposition of the assets or the amounts
that RECD agrees to accept in settlement of the  obligations  due it will differ
materially from the amounts shown in the accompanying financial statements.

As  described  in Note 4 to the  financial  statements,  the  Partnership  is in
noncompliance with RECD loan covenants and RECD regulations.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  8,  1996 on our  consideration  of the  Partnership's  internal
control  structure and a report dated  February 8, 1996 on its  compliance  with
laws and regulations.

/s/Plante & Moran LLP

February 8, 1996

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Willowick Housing Associates, Ltd.

We have audited the accompanying  balance sheet of Willowick Housing Associates,
Ltd. (a Texas  limited  partnership),  as of December 31, 1993,  and the related
statements  operations,  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.  The financial  statements of Willowick  Housing
Associates,  Ltd. as of December 31, 1992,  were audited by other auditors whose
report  dated  January  29,  1993,  expressed  an  unqualified  opinion on those
statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material respects,  the financial position Willowick Housing  Associates,
Ltd.  at  December  31,  1993,  and the  results of its  operations,  changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 13, 1994


<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
West Hallettsville Housing Associates, Ltd.

We have audited the  accompanying  balance sheet of West  Hallettsville  Housing
Associates, Ltd. (a Texas limited partnership), as of December 31, 1993, and the
related  statements  operations,  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.  The  financial  statements  of West
Hallettsville Housing Associates,  Ltd. as of December 31, 1992, were audited by
other  auditors  whose report dated January 29, 1993,  expressed an  unqualified
opinion on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all material  respects,  the financial  position West  Hallettsville  Housing
Associates,  Ltd.  at December  31,  1993,  and the  results of its  operations,
changes  in  partners'  equity and its cash  flows for the year then  ended,  in
conformity with generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 28, 1994

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN, LLP

Independent Auditor's Report

To the Partners
One Main Place Housing Associates, Ltd.

We have  audited  the  accompanying  balance  sheet  of One Main  Place  Housing
Associates, Ltd. (a Texas limited partnership), as of December 31, 1993, and the
related  statements  operations,  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.  The financial  statements of One Main
Place Housing  Associates,  Ltd. as of December 31, 1992,  were audited by other
auditors whose report dated January 29, 1993,  expressed an unqualified  opinion
on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in all  material  respects,  the  financial  position  One  Main  Place  Housing
Associates,  Ltd.  at December  31,  1993,  and the  results of its  operations,
changes  in  partners'  equity and its cash  flows for the year then  ended,  in
conformity with generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 13, 1994

<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN

Independent Auditor's Report

To the Partners
Sherwood Arms Housing Associates, Ltd.

We have  audited  the  accompanying  balance  sheet  of  Sherwood  Arms  Housing
Associates, Ltd. (a Texas limited partnership), as of December 31, 1993, and the
related  statements  operations,  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.  The financial  statements of Sherwood
Arms Housing  Associates,  Ltd. as of December  31, 1992,  were audited by other
auditors whose report dated January 29, 1993,  expressed an unqualified  opinion
on those statements.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 1993 financial statements referred to above present fairly,
in  all  material  respects,   the  financial  position  Sherwood  Arms  Housing
Associates,  Ltd.  at December  31,  1993,  and the  results of its  operations,
changes  in  partners'  equity and its cash  flows for the year then  ended,  in
conformity with generally accepted accounting principles.

As  described  in Note 6 to the  financial  statements,  the  Partnership  is in
noncompliance with FmHA loan covenants and FmHA regulations.

/s/Plante & Moran

January 15, 1994


<PAGE>
[Letterhead]
[LOGO]
PLANTE & MORAN, LLP

Independent Auditor's Report

To the Partners
Division of Boston Financial
Texas Properties Limited Partnership III
(d/b/a Lakeway Colony)

We have audited the  accompanying  balance sheet of Division of Boston Financial
Texas Properties Limited Partnership III (a Massachusetts  limited  Partnership)
(d/b/a Lakeway Colony), RECD Project No.  49-061-0043253081,  as of December 31,
1995, and the related  statements  operations,  partners' equity (deficit),  and
cash  flows  for  the  year  then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit  also  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 Division of Boston Financial Texas
Properties Limited Partnership III (a Massachusetts  limited Partnership) (d/b/a
Lakeway Colony) at December 31, 1995, and the results of its operations, changes
in partners' equity,  and cash flows for the year then ended, in conformity with
generally accepted accounting principles.

As discussed in Note 5 to the financial statements,  the Partnership has entered
into an option with a prospective  purchaser for the sale of assets and transfer
of certain  liabilities  of the  Partnership.  It is presently not  determinable
whether the amounts realizable from the disposition of the assets or the amounts
that RECD agrees to accept in settlement of the  obligations  due it will differ
materially from the amounts shown in the accompanying financial statements.

In accordance with Government Auditing  Standards,  we have also issued a report
dated March 14, 1996 on our consideration of the Partnership's  internal control
structure  and a report  dated  March 14, 1996 on its  compliance  with laws and
regulations.

/s/Plante & Moran LLP

March 14, 1996

<PAGE>
[Letterhead]
[LOGO]
Braunsdorf, Carlson and Clinkinbeard
Certified Public Accountants
A Professional Association

 INDEPENDENT AUDITORS" REPORT

To the Partners
Wayne Senior Housing, A Limited Partnership
Wayne, Nebraska

We have  audited the  accompanying  balance  sheet of Wayne  Senior  Housing,  A
Limited  Partnership (a Kansas limited  Partnership)  Rural Development Case No.
32-090-481008237  as of December 31, 1996,  and the related  statements of loss,
partners'  equity and cash flows for the year ended  December  31,  1996.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position Wayne Senior Housing, A Limited
Partnership as of December 31, 1996, and the results of its operations,  and its
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles.


/s/Braunsdorf, Carlson, and Clinkinbeard, CPA's, P.A.

Braunsdorf, Carlson, and Clinkinbeard, CPA's, P.A.

Topeka, Kansas
January 21, 1997

<PAGE>
[Letterhead]
[LOGO]
Braunsdorf, Carlson and Clinkinbeard
Certified Public Accountants
A Professional Association

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
Wayne Senior Housing, A Limited Partnership
Wayne, Nebraska

We have  audited the  accompanying  balance  sheet of Wayne  Senior  Housing,  A
Limited   Partnership   (a   Kansas   limited   Partnership)   FmHA   Case   No.
32-090-481008237,  as of December 31, 1994, and the related  statements of loss,
partners'  equity and cash flows for the year ended  December  31,  1994.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit  also  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 Wayne Senior Housing, A Limited
Partnership as of December 31, 1994, and the results of its operations,  changes
in partners' equity,  and cash flows for the year then ended, in conformity with
generally accepted accounting principles.


/s/Braunsdorf, Carlson, and Clinkinbeard

Braunsdorf, Carlson, and Clinkinbeard, CPA's, P.A.

Topeka, Kansas
February 13, 1995

PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
Certified Public Accountants Business Consultants

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners
Willow Lake Partners II, L.P.

We have audited the accompanying balance sheet of Willow Lake Partners II, L.P.,
 as of December 31, 1996, and the related statements of
operations,  partners'  equity  and cash  flows for the year then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position Willow Lake Partners II, L.P.
 as of December  31,  1996,  and the results of its  operations,  the changes in
partners'  equity and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.


/s/Reznick Fedder & Silverman

Boston, Massachusetts
January 16, 1997

<PAGE>
[Letterhead]
[LOGO]
Coopers & Lybrand

Certified Public Accountants

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Willow Lake Partners II, L.P.
(a Limited Partnershhip)

We have audited the accompanying  balance sheet of Willow Lake Partners II, L.P.
(a Limited Partnershhip), as of December 31, 1993, 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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit  also  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 Willow Lake Partners II, L.P. (a
Limited Partnershhip) as of December 31, 1993, and the results of its operations
and its cash  flows  for the year  then  ended,  in  conformity  with  generally
accepted accounting principles.


/s/Coopers & Lybrand

Boston, Massachusetts
February 17, 1994

<PAGE>
 [Letterhead]
[LOGO]
Deloitte & Touche LLP


INDEPENDENT AUDITORS' REPORT

To the Partners of                         Pennsylvania Housing Finance Agency
River Front Apartments Limited             2101 North Front Street
Partnership                                P.O. Box 8029
Washington, D.C.                           Harrisburg, PA

We have audited the accompanying statements of financial position of River Front
Apartments Limited Partnership, A Limited Partnership,  PHFA Project No. R458-8E
as of December 31, 1996 and 1995, and the related  statements of profit and loss
(on HUD Form No.  92410),  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 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  also  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,  such  financial  statements  present  fairly,  in all material
respects,  the financial position of River Front Apartments Limited  Partnership
at December 31, 1996 and 1995,  and the results of its  operations  and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The additional  information,  as referred
to in the Table of Contents,  is presented for purposes of  additional  analysis
and is not a required part of the basic  financial  statements.  This additional
information  is  the  responsibility  of  the  Partnership's  managements.  Such
information has been subjected to the auditing  procedures applied in the audits
of  the  basic  financial   statements  and,  in  our  opinion,  the  additional
information is fairly stated, in all material respect , in relation to the basic
financial statements taken as a whole.

<PAGE>
Riverfront Apartments Limited Partnerships

Page 2

In accordance with Government Auditing Standards,  we have issued a report dated
January 22, 1997 on our  consideration  of the  Partnership's  internal  control
structure  and a report dated January 22, 1997 on its  compliance  with laws and
regulations.

/s/Deloitte & Touche LLP


January 22, 1997
<PAGE>
 [Letterhead]
[LOGO]
Deloitte & Touche LLP


INDEPENDENT AUDITORS' REPORT

To the Partners of                         Pennsylvania Housing Finance Agency
River Front Apartments Limited             2101 North Front Street
Partnership                                P.O. Box 8029
Washington, D.C.                           Harrisburg, PA

We have audited the accompanying statements of financial position of River Front
Apartments Limited Partnership, A Limited Partnership,  PHFA Project No. R458-8E
as of December 31, 1995 and 1994, and the related  statements of profit and loss
(on HUD Form No.  92410),  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit  also  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,  such  financial  statements  present  fairly,  in all material
respects,  the financial position of River Front Apartments Limited  Partnership
at December 31, 1995 and 1994,  and the results of its  operations  and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

/s/Deloitte & Touche LLP


January 31, 1996

<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP


INDEPENDENT AUDITORS' REPORT

To the Partners of                     Pennsylvania Housing Finance Agency
Susquehanna View Limited               2101 North Front Street
Partnership                            P.O. Box 8029
Washington, D.C.                       Harrisburg, PA

We have audited the accompanying statements of financial position of Susquehanna
View Limited Partnership, A Limited Partnership,  PHFA Project No. R451-8E as of
December 31, 1995 and 1994,  and the related  statements  of profit and loss (on
HUD Form No. 92410),  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit  also  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,  such  financial  statements  present  fairly  in all  material
respects, the financial position of Susquehanna View Limited Partnership,  as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The additional  information,  as referred
to in the Table of Contents,  is presented for purposes of  additional  analysis
and is not a required part of the basic  financial  statements.  This additional
information  is  the  responsibility  of  the  Partnership's  managements.  Such
information has been subjected to the auditing  procedures applied in the audits
of  the  basic  financial   statements  and,  in  our  opinion,  the  additional
information is fairly stated, in all material respect , in relation to the basic
financial statements taken as a whole.

Page 2

In accordance with Government Auditing Standards,  we have issued a report dated
January 16, 1997 on our  consideration  of the  Partnership's  internal  control
structure  and a report dated January 16, 1997 on its  compliance  with laws and
regulations.



/s/Deloitte & Touche LLP


January 17, 1996

<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP


INDEPENDENT AUDITORS' REPORT

To the Partners of                     Pennsylvania Housing Finance Agency
Susquehanna View Limited               2101 North Front Street
Partnership                            P.O. Box 8029
Washington, D.C.                       Harrisburg, PA

We have audited the accompanying statements of financial position of Susquehanna
View Limited Partnership, A Limited Partnership,  PHFA Project No. R451-8E as of
December 31, 1995 and 1994,  and the related  statements  of profit and loss (on
HUD Form No. 92410),  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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit  also  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,  such  financial  statements  present  fairly  in all  material
respects, the financial position of Susquehanna View Limited Partnership,  as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.


/s/Deloitte & Touche LLP


January 17, 1996


<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP


INDEPENDENT AUDITORS' REPORT

To the Partners of                          Pennsylvania Housing Finance Agency
Susquehanna View Limited                    2101 North Front Street
Partnership                                 P.O. Box 8029
Washington, D.C.                            Harrisburg, PA

We have audited the accompanying statements of financial position of Susquehanna
View Limited Partnership, A Limited Partnership,  PHFA Project No. R451-8E as of
December 31, 1994 and 1993,  and the related  statements  of profit and loss (on
HUD Form No. 92410),  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 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  also  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,  such  financial  statements  present  fairly  in all  material
respects, the financial Susquehanna View Limited Partnership, as of December 31,
1994 and 1993,  and the  results  of its  operations  and its cash flows for the
years then ended in conformity with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The additional  information,  as referred
to in the  Table of  Contents,  is  presented  for the  purposes  of  additional
analysis  and is not a required  part of the basic  financial  statements.  This
additional  information is the  responsibility of the Partnership's  management.
Such  information  has been  subjected  to the 
<PAGE>  
Susquehanna  View Limited
Partnership Page 2

auditing procedures applied in the audit of the basic financial  statements and,
in our opinion,  the  additional  information  is fairly  stated in all material
respects in relation to the financial statements taken as a whole.


/s/Deloitte & Touche LLP


January 16, 1995

<PAGE>
[Letterhead]
[LOGO]
Braunsdorf, Carlson and Clinkinbeard
Certified Public Accountants
A Professional Association

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT

We are enclosing the following  compiled  financial  statements for the attached
list of properties

1.  Balance sheet as of December 31, 1995.

2. Statement of income for the current  period ending  December 31, 1995 and the
twelve months ending December 31, 1995.

These  statements  have been  compiled by us in  accordance  with  Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. A compilation is limited to presenting in the form
of financial statements information that is the representation of management. We
have  not  audited  or  reviewed  the  accompanying  financial  statements  and,
accordingly do not express an opinion or any other form of assurance on them.

Management  has elected to omit  substantially  all of the  disclosures  and the
statement of cash flows required by generally accepted accounting principals. If
the omitted  disclosures were included in the financial  statements,  they might
influence the user's conclusions about the company's financial position, results
of operations,  and cash flows. Accordingly,  these financial statements are not
designed for those who are not informed of such matters.

Sincerely,

/s/Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.

Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Topeka, Kansas
February 28, 1996

<PAGE>

Billings Family Housing
Ellsworth Senior Housing
Garden Plain Senior Housing
Rossville Senior Housing
Prairieland of Satanta
Prairieland of Syracuse
Wayne Senior Housing

<PAGE>
[Letterhead]
[LOGO]
Braunsdorf, Carlson and Clinkinbeard
Certified Public Accountants
A Professional Association

INDEPENDENT ACCOUNTANTS' COMPILATION REPORT

We are enclosing the following  compiled  financial  statements for the attached
list of properties

1.  Balance sheet as of December 31, 1994.

2. Statement of income for the current  period ending  December 31, 1994 and the
twelve months ending December 31, 1994.

These  statements  have been  compiled by us in  accordance  with  Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. A compilation is limited to presenting in the form
of financial statements information that is the representation of management. We
have  not  audited  or  reviewed  the  accompanying  financial  statements  and,
accordingly do not express an opinion or any other form of assurance on them.

Management  has elected to omit  substantially  all of the  disclosures  and the
statement of cash flows required by generally accepted accounting principals. If
the omitted  disclosures were included in the financial  statements,  they might
influence the user's conclusions about the company's financial position, results
of operations,  and cash flows. Accordingly,  these financial statements are not
designed for those who are not informed of such matters.

Sincerely,

/s/Braunsdorf, Carlson and Clinkinbeard

Braunsdorf, Carlson and Clinkinbeard, CPA's, P.A.
Topeka, Kansas
February 28, 1995

<PAGE>

Altheimer Associates I, L.P
Billings Family Housing
Blair Senior Housing
Bolivar Senior Housing, L.P.
Ellsworth Senior
Garden Plain Senior
La Center Associates, L.P.
Lamar Associates, L.P.
Longview Apartments, L.P.
Missouri Rural Housing of Oak Grove, L.P.
Mulburry Associates I, L.P.
Prairieland of Satanta
Prairieland of Syracuse
Rossville Senior
Smithsville Senior
Strafford II Rural
Westgate Associates I, L.P. Winona Associates I, L.P.




<PAGE>