-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DBC9iQD24PJagLwkzoQb11VEDsgb8+y4kVocn0VD/YHnpP7G9ZKJ1vbC5yaBPPiV 2vfu11jRUXZX5pu2pniq3w== 0000857115-97-000004.txt : 19970714 0000857115-97-000004.hdr.sgml : 19970714 ACCESSION NUMBER: 0000857115-97-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970711 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GATEWAY TAX CREDIT FUND II LTD CENTRAL INDEX KEY: 0000857115 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 650142704 STATE OF INCORPORATION: FL FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19022 FILM NUMBER: 97639706 BUSINESS ADDRESS: STREET 1: 880 CARILLON PARKWAY CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 8135733800 MAIL ADDRESS: STREET 1: 880 CARILLON PKWY CITY: ST PETERSBURG STATE: FL ZIP: 33716 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRES) For the fiscal year ended March 31, 1997 Commission File Number 0-19022 Gateway Tax Credit Fund II Ltd. (Exact name of Registrant as specified in its charter) Florida 65-0142704 (State or other jurisdiction of ( I.R.S. Employer No.) incorporation or organization) 880 Carillon Parkway, St. Petersburg, Florida 33716 (Address of principal executive offices) (Zip Code) Registrant's Telephone No., Including Area Code: (813)573-3800 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of Each Class: Beneficial Assignee Certificates 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 (Sec. 229.405 of this chapter) is not contained herein, and will be contained to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Park III of this Form 10-K or any amendment to this Form 10-K. X Number of Units Title of Each Class March 31, 1997 Beneficial Assignee Certificates 2,254 General Partner Interest 2 DOCUMENTS INCORPORATED BY REFERENCE Parts III and IV - Form S-11 Registration Statement and all amendments and supplements thereto. File No. 33-31821 PART I Item 1. Business Gateway Tax Credit Fund II Ltd. ("Gateway") is a Florida Limited Partnership. The general partners are Raymond James Tax Credit Funds, Inc., the Managing General Partner, and Raymond James Partners, Inc., both sponsors of Gateway Tax Credit Fund II Ltd. and wholly-owned subsidiaries of Raymond James Financial, Inc. Pursuant to the Securities Act of 1933, Gateway filed a Form S-11 Registration Statement with the Securities and Exchange Commission, effective September 12, 1989, which covered the offering (the "Public Offering") of Gateway's Beneficial Assignee Certificates ("BACs") representing assignments of units for the beneficial interest of the limited partnership interest of the Assignor Limited Partner. The Assignor Limited Partner was formed for the purpose of serving in that capacity for the Fund and will not engage in any other business. Gateway is engaged in only one industry segment, to acquire limited partnership interests in unaffiliated limited partnerships ("Project Partnerships"), each of which owns and operates one or more apartment complexes eligible for Low- Income Housing Tax Credits under Section 42 of the Internal Revenue Code ("Tax Credits"), received over a ten year period. Subject to certain limitations, Tax Credits may be used by Gateway's investors to reduce their income tax liability generated from other income sources. Gateway will terminate on December 31, 2040, or sooner, in accordance with the terms of its Limited Partnership Agreement. As of March 31, 1997, Gateway had received capital contributions of $1,000 from the General Partners and $37,228,000 from Assignees. Gateway offered BACs in five series. BACs in the amounts of $6,136,000, $5,456,000, $6,915,000, $8,616,000 and $10,105,000 for Series 2, 3, 4, 5, and 6, respectively had been issued as of March 31, 1997. Each series is treated as a separate partnership, investing in a separate and distinct pool of Project Partnerships. Net proceeds from each series were used to acquire Project Partnerships which are specifically allocated to such series. Income or loss and all tax items from the Project Partnerships acquired by each series are specifically allocated among the Assignees of such series. Operating profits and losses, cash distributions from operations and Tax Credits are allocated 99% to the Assignees and 1% to the General Partners. Profit or loss and cash distributions from sales of property will be allocated as described in the Limited Partnership Agreement. As of March 31, 1997, Gateway had invested in 22 Project Partnerships for Series 2, 23 Project Partnerships for Series 3, 29 Project Partnerships for Series 4, 36 Project Partnerships for Series 5 and 38 Project Partnerships for Series 6. Gateway acquired its interests in these properties by becoming a limited partner in the Project Partnerships that own the properties. As of March 31, 1997 each series was fully invested in Project Partnerships and management plans no new investments in the future. The primary source of funds from the inception of each series has been the capital contributions from Assignees. Gateway's operating costs are funded using the reserves, established for this purpose, the interest earned on these reserves and distributions received from Project Partnerships. All but two of the Project Partnerships are government subsidized with mortgage loans from the Farmers Home Administration (now called Rural Economic and Community Development) ("RECD") under Section 515 of the Housing Act of 1949. These mortgage loans are made at low interest rates for multi-family housing in rural and suburban areas, with the requirement that the interest savings be passed on to low income tenants in the form of lower rents. A significant portion of the project partnerships also receive rental assistance from RECD to subsidize certain qualifying tenants. The General Partners do not believe the Project Partnerships are subject to the risks generally associated with conventionally financed nonsubsidized apartment properties. Risks related to the operations of Gateway are described in detail on pages 23 through 34 of the Prospectus, as supplemented, under the Caption "Risk Factors" which is incorporated herein by reference. The investment objectives of Gateway are to: 1) Provide tax benefits to Assignees in the form of Tax Credits during the period in which each Project is eligible to claim tax credits; 2) Preserve and protect the capital contribution of Investors; 3) Participate in any capital appreciation in the value of the Projects; and 4) Provide passive losses to i) individual investors to offset passive income from other passive activities, and ii) corporate investors to offset business income. The investment objectives and policies of Gateway are described in detail on pages 34 through 40 of the Prospectus, as supplemented, under the caption "Investment Objectives and Policies" which is incorporated herein by reference. Gateway's goal was to invest in a diversified portfolio of Project Partnerships located in rural and suburban locations with a high demand for low income housing. As of March 31, 1997 the investor capital contributions were successfully invested in Project Partnerships which met the investment criteria. Management anticipates that competition for tenants will only be with other low income housing projects and not with conventionally financed housing. With significant number of rural American households living below the poverty level in substandard housing, management believes there will be a continuing demand for affordable low income housing for the foreseeable future. Gateway has no direct employees. Services are performed by the Managing General Partner and its affiliates and by agents retained by it. The Managing General Partner has full and exclusive discretion in management and control of Gateway. Item 2. Properties Gateway owns a majority interest in properties through its limited partnership investments in Project Partnerships. The largest single investment in a Project Partnership in Series 2 is 11.0% of the Series' total assets, Series 3 is 12.1%, Series 4 is 6.8%, Series 5 is 9.3% and Series 6 is 9.8%. The following table provides certain summary information regarding the Project Partnerships in which Gateway had an interest as of December 31, 1996: Item 2 - Properties (continued): SERIES 2 Location # of Date Partnership of Property Units Acquired - ----------- ----------- ----- --------- Claxton Elderly Claxton, GA 24 9/90 Deerfield II Douglas, GA 24 9/90 Hartwell Family Hartwell, GA 24 9/90 Cherrytree Apts. Albion, PA 33 9/90 Springwood Apts. Westfield, NY 32 9/90 Lakeshore Apts. Tuskegee, AL 34 9/90 Lewiston Lewiston, NY 25 10/90 Charleston Charleston, AR 32 9/90 Sallisaw II Sallisaw, OK 47 9/90 Pocola Pocola, OK 36 10/90 Inverness Club Inverness, FL 72 9/90 Pearson Elderly Pearson, GA 25 9/90 Richland Elderly Richland, GA 33 9/90 Lake Park Lake Park, GA 48 9/90 Woodland Terrace Waynesboro, GA 30 9/90 Mt. Vernon Elderly Mt. Vernon, GA 21 9/90 Lakeland Elderly Lakeland, GA 29 9/90 Prairie Apartments Eagle Butte, SD 21 10/90 Sylacauga Heritage Sylacauga, AL 44 12/90 Manchester Housing Manchester, GA 49 1/91 Durango C.W.W. Durango, CO 24 1/91 Columbus Seniors Columbus, KS 16 5/92 ------- Total Series 2 723 The aggregate average effective rental per unit is $3,214 per year ($267 per month). Inverness Club Ltd.'s fixed asset total is 12.4% of the Series 2 total Project Partnership fixed assets. Inverness Club was placed in service in October 1991, is located on Florida's West Coast and operates as a low-income 72 unit apartment facility for the elderly. It also offers an optional congregate services package to all tenants. The property competes for tenants with six other apartment properties in the area. The market study estimated a demand for 100 elderly units. Inverness Club's occupancy rate was 90% and its average effective annual rental per unit was $4,584 ($382 per month) on December 31, 1996. The land cost was $205,500 and the building cost was $3,291,324. The building is depreciated using the straight line method over 27.5 years. Management believes the property insurance coverage is adequate. For the year ended December 31, 1996 the real estate taxes were $58,296 with a rate of 26.5554 mills. Item 2 - Properties (continued): SERIES 3 Location # of Date Partnership of Property Units Acquired - ----------- ----------- ----- --------- Poteau II Poteau, OK 52 8/90 Sallisaw Sallisaw, OK 52 8/90 Nowata Properties Oolagah, OK 32 8/90 Waldron Properties Waldron, AR 24 9/90 Roland II Roland, OK 52 10/90 Stilwell Stilwell, OK 48 10/90 Birchwood Apts. Pierre, SD 24 9/90 Hornellsville Arkport, NY 24 9/90 Sunchase II Watertown, SD 41 9/90 CE McKinley II Rising Sun, MD 16 9/90 Weston Apartments Weston, AL 10 11/90 Countrywood Apts. Centreville, AL 40 11/90 Wildwood Apts. Pineville, LA 28 11/90 Hancock Hawesville, KY 12 12/90 Hopkins Madisonville, KY 24 12/90 Elkhart Apts. Elkhart, TX 54 1/91 Bryan Senior Bryan, OH 40 1/91 Brubaker Square New Carlisle, OH 38 1/91 Southwood Savannah, TN 44 1/91 Villa Allegra Celina, OH 32 1/91 Belmont Senior Cynthiana, KY 24 1/91 Heritage Villas Helena, GA 25 3/91 Logansport Seniors Logansport, LA 32 3/91 ------- Total Series 3 768 The average effective rental per unit is $2,953 per year ($246 per month). Item 2 - Properties (continued): SERIES 4 Location # of Date Partnership of Property Units Acquired - ----------- ----------- ----- --------- Alsace Soda Springs, ID 24 12/90 Seneca Apartments Seneca, MO 24 2/91 Eudora Senior Eudora, KS 36 3/91 Westville Westville, OK 36 3/91 Wellsville Senior Wellsville, KS 24 3/91 Stilwell II Stilwell, OK 52 3/91 Spring Hill Senior Spring Hill, KS 24 3/91 Smithfield Smithfield, UT 40 4/91 Tarpon Heights Galliano, LA 48 4/91 Oaks Apartments Oakdale, LA 32 4/91 Wynnwood Common Fairchance, PA 34 4/91 Chestnut Apartments Howard, SD 24 5/91 St. George St. George, SC 24 6/91 Williston Williston, SC 24 6/91 Brackettville Sr. Brackettville, TX 32 6/91 Sonora Seniors Sonora, TX 32 6/91 Ozona Seniors Ozona, TX 24 6/91 Fredericksburg Sr. Fredericksburg,TX 48 6/91 St. Joseph St. Joseph, IL 24 6/91 Courtyard Huron, SD 21 6/91 Rural Development Ashland, ME 25 6/91 Jasper Villas Jasper, AR 25 6/91 Edmonton Senior Edmonton, KY 24 6/91 Jonesville Manor Jonesville, VA 40 6/91 Norton Green Norton, VA 40 6/91 Owingsville Senior Owingsville, KY 22 8/91 Timpson Seniors Timpson, TX 28 8/91 Piedmont Barnesville, GA 36 8/91 S.F. Arkansas City Arkansas City, KS 12 8/91 ------- Total Series 4 879 The average effective rental per unit is $3,122 per year ($260 per month). Item 2 - Properties (continued): SERIES 5 Location # of Date Partnership of Property Units Acquired - ----------- ----------- ----- --------- Seymour Seymour, IN 37 8/91 Effingham Effingham, IL 24 8/91 S.F. Winfield Winfield, KS 12 8/91 S.F.Medicine Lodge Medicine Lodge,KS 16 8/91 S.F. Ottawa Ottawa, KS 24 8/91 S.F. Concordia Concordia, KS 20 8/91 Highland View Elgin, OR 24 9/91 Carrollton Club Carrollton, GA 78 9/91 Scarlett Oaks Lexington, SC 40 9/91 Brooks Hill Ellijay, GA 44 9/91 Greensboro Greensboro, GA 24 9/91 Greensboro II Greensboro, GA 33 9/91 Pine Terrace Wrightsville, GA 25 9/91 Shellman Shellman, GA 27 9/91 Blackshear Cordele, GA 46 9/91 Crisp Properties Cordele, GA 31 9/91 Crawford Crawford, GA 25 9/91 Yorkshire Wagoner, OK 60 9/91 Woodcrest South Boston, VA 40 9/91 Fox Ridge Russellville, AL 24 9/91 Redmont II Red Bay, AL 24 9/91 Clayton Clayton, OK 24 9/91 Alma Alma, AR 24 9/91 Pemberton Village Hiawatha, KS 24 9/91 Magic Circle Eureka, KS 24 9/91 Spring Hill Spring Hill, KS 36 9/91 Menard Retirement Menard, TX 24 9/91 Wallis Housing Wallis, TX 24 9/91 Zapata Housing Zapata, TX 40 9/91 Mill Creek Grove, OK 60 11/91 Portland II Portland, IN 20 11/91 Georgetown Georgetown, OH 24 11/91 Cloverdale Cloverdale, IN 24 1/92 So. Timber Ridge Chandler, TX 44 1/92 Pineville Pineville, MO 12 5/92 Ravenwood Americus, GA 24 1/94 ------- Total Series 5 1,106 The average effective rental per unit is $3,055 per year ($255 per month). Item 2 - Properties (continued): SERIES 6 Location # of Date Partnership of Property Units Acquired - ----------- ----------- ----- --------- Spruce Pierre, SD 24 11/91 Shannon O'Neill, NE 16 11/91 Carthage Carthage, MO 24 1/92 Mountain Crest Enterprise, OR 39 3/92 Coal City Coal City, IL 24 3/92 Blacksburg Terrace Blacksburg, SC 32 4/92 Frazer Place Smyrna, DE 30 4/92 Ehrhardt Ehrhardt, SC 16 4/92 Sinton Sinton, TX 32 4/92 Frankston Frankston, TX 24 4/92 Flagler Beach Flagler Beach, FL 43 5/92 Oak Ridge Williamsburg, KY 24 5/92 Monett Monett, MO 32 5/92 Arma Arma, KS 28 5/92 Southwest City So.West City, MO 12 5/92 Meadowcrest Luverne, AL 32 6/92 Parsons Parsons, KS 48 7/92 Newport Village Newport, TN 40 7/92 Goodwater Falls Jenkins, KY 36 7/92 Northfield Station Corbin, KY 24 7/92 Pleasant Hill Somerset, KY 24 7/92 Winter Park Mitchell, SD 24 7/92 Cornell Watertown, SD 24 7/92 Heritage Drive So. Jacksonville, TX 40 1/92 Brodhead Brodhead, KY 24 7/92 Mt. Village Mt. Vernon, KY 24 7/92 Hazlehurst Hazlehurst, MS 32 8/92 Sunrise Yankton, SD 33 8/92 Stony Creek Hooversville, PA 32 8/92 Logan Place Logan, OH 40 9/92 Haines Haines, AK 32 8/92 Maple Wood Barbourville, KY 24 8/92 Summerhill Gassville, AR 28 9/92 Dorchester St. George, SC 12 9/92 Lancaster Mountain View, AR 33 9/92 Autumn Village Harrison, AR 16 7/92 Hardy Hardy, AR 24 7/92 Dawson Dawson, GA 40 11/93 ------- Total Series 6 1,086 The average effective rental per unit is $3,288 per year ($274 per month). Item 2 - Properties (continued): SERIES 2 12/31/96 12/31/96 Property Occupancy Partnership Cost Rate - ----------- -------- --------- Claxton Elderly $ 799,538 100% Deerfield II 854,562 83% Hartwell Family 859,698 96% Cherrytree Apts. 1,439,636 94% Springwood Apts. 1,501,083 100% Lakeshore Apts. 1,267,543 94% Lewiston 1,233,935 100% Charleston 1,076,098 97% Sallisaw II 1,517,589 96% Pocola 1,245,870 89% Inverness Club 3,496,824 90% Pearson Elderly 781,460 92% Richland Elderly 1,057,871 91% Lake Park 1,798,725 96% Woodland Terrace 1,080,083 93% Mt. Vernon Elderly 700,935 95% Lakeland Elderly 955,815 100% Prairie Apartments 1,239,141 100% Sylacauga Heritage 1,733,310 98% Manchester Housing 1,779,793 90% Durango C.W.W. 1,271,996 100% Columbus Seniors 507,627 94% ---------- Total Series 2 $ 28,199,132 Item 2 - Properties (continued): SERIES 3 12/31/96 12/31/96 Property Occupancy Partnership Cost Rate - ----------- -------- --------- Poteau II $ 1,789,148 90% Sallisaw 1,744,103 100% Nowata Properties 1,148,484 80% Waldron Properties 860,273 88% Roland II 1,804,010 96% Stilwell 1,597,701 88% Birchwood Apts. 1,018,169 100% Hornellsville 1,095,517 100% Sunchase II 1,320,074 100% CE McKinley II 792,528 94% Weston Apartments 339,338 100% Countrywood Apts. 1,519,764 98% Wildwood Apts. 1,084,325 93% Hancock 440,425 100% Hopkins 927,256 100% Elkhart Apts. 1,526,724 87% Bryan Senior 1,184,257 93% Brubaker Square 1,452,506 100% Southwood 1,792,293 100% Villa Allegra 1,133,557 97% Belmont Senior 935,143 96% Heritage Villas 823,974 92% Logansport Seniors 1,086,394 91% ---------- Total Series 3 $ 27,415,963 Item 2 - Properties (continued): SERIES 4 12/31/96 12/31/96 Property Occupancy Partnership Cost Rate - ----------- -------- --------- Alsace $ 799,478 100% Seneca Apartments 718,675 96% Eudora Senior 1,257,482 100% Westville 1,101,686 92% Wellsville Senior 810,970 96% Stilwell II 1,657,974 87% Spring Hill Senior 1,036,369 96% Smithfield 1,837,620 95% Tarpon Heights 1,493,434 98% Oaks Apartments 1,032,509 91% Wynnwood Common 1,665,785 97% Chestnut Apartments 1,050,564 54% St. George 940,861 88% Williston 1,002,600 100% Brackettville Sr. 991,966 97% Sonora Seniors 1,013,315 97% Ozona Seniors 759,843 92% Fredericksburg Sr. 1,402,563 96% St. Joseph 976,046 96% Courtyard 841,808 100% Rural Development 1,422,482 100% Jasper Villas 1,099,717 100% Edmonton Senior 906,714 100% Jonesville Manor 1,686,195 100% Norton Green 1,693,066 100% Owingsville Senior 848,044 100% Timpson Seniors 815,916 96% Piedmont 1,289,047 96% S.F. Arkansas City 412,028 100% ---------- Total Series 4 $ 32,564,757 Item 2 - Properties (continued): SERIES 5 12/31/96 12/31/96 Property Occupancy Partnership Cost Rate - ----------- -------- --------- Seymour $ 1,517,995 97% Effingham 980,060 100% S.F. Winfield 400,920 92% S.F.Medicine Lodge 564,559 94% S.F. Ottawa 707,449 100% S.F. Concordia 686,962 100% Highland View 872,267 88% Carrollton Club 3,217,901 94% Scarlett Oaks 1,672,737 100% Brooks Hill 1,745,640 100% Greensboro 866,259 96% Greensboro II 1,093,149 100% Pine Terrace 885,185 92% Shellman 905,064 93% Blackshear 1,592,318 98% Crisp Properties 1,124,037 97% Crawford 907,712 100% Yorkshire 2,534,566 95% Woodcrest 1,574,776 98% Fox Ridge 889,941 100% Redmont II 840,596 100% Clayton 871,530 96% Alma 957,710 100% Pemberton Village 766,979 88% Magic Circle 776,127 92% Spring Hill 1,449,378 89% Menard Retirement 761,873 96% Wallis Housing 574,393 100% Zapata Housing 1,238,405 90% Mill Creek 1,741,669 100% Portland II 712,774 95% Georgetown 891,086 100% Cloverdale 933,166 100% So. Timber Ridge 1,280,424 100% Pineville 389,020 92% Ravenwood 887,896 100% ---------- Total Series 5 $ 39,812,523 Item 2 - Properties (continued): SERIES 6 12/31/96 12/31/96 Property Occupancy Partnership Cost Rate - ----------- -------- --------- Spruce $ 1,096,570 96% Shannon 646,473 100% Carthage 693,667 92% Mountain Crest 1,231,007 100% Coal City 1,185,662 100% Blacksburg Terrace 1,323,069 100% Frazer Place 1,673,104 97% Ehrhardt 685,776 100% Sinton 1,039,306 97% Frankston 674,981 100% Flagler Beach 1,653,116 100% Oak Ridge 1,037,966 96% Monett 956,746 97% Arma 858,813 100% Southwest City 385,909 100% Meadowcrest 1,203,738 100% Parsons 1,532,968 100% Newport Village 1,582,170 100% Goodwater Falls 1,393,363 97% Northfield Station 1,022,561 88% Pleasant Hill 954,810 92% Winter Park 1,238,516 100% Cornell 1,068,426 96% Heritage Drive So. 1,195,671 100% Brodhead 954,068 96% Mt. Village 939,596 100% Hazlehurst 1,181,404 94% Sunrise 1,360,019 100% Stony Creek 1,626,195 91% Logan Place 1,518,626 95% Haines 3,025,603 100% Maple Wood 1,007,744 92% Summerhill 840,256 100% Dorchester 562,272 100% Lancaster 1,380,668 100% Autumn Village 615,604 100% Hardy 931,560 96% Dawson 1,474,973 100% ---------- Total Series 6 $ 43,752,976 Item 2 - Properties (continued): A summary of the cost of the properties at December 31, 1996, 1995 and 1994 is as follows: 12/31/96 SERIES 2 SERIES 3 Land $ 1,012,180 $ 985,546 Land Improvements 110,157 370,083 Buildings 26,256,812 24,975,936 Furniture and Fixtures 819,983 1,084,398 Construction in Progress 0 0 ----------- ----------- Properties, at Cost 28,199,132 27,415,963 Less: Accumulated Depreciation 5,649,101 7,624,569 ----------- ----------- Properties, Net $22,550,031 $19,791,394 =========== =========== 12/31/95 SERIES 2 SERIES 3 Land $ 1,012,180 $ 985,546 Land Improvements 110,157 368,152 Buildings 26,169,333 24,933,711 Furniture and Fixtures 860,825 1,077,495 Construction in Progress 0 0 ----------- ----------- Properties, at Cost 28,152,495 27,364,904 Less: Accumulated Depreciation 4,712,310 6,707,453 ----------- ----------- Properties, Net $23,440,185 $20,657,451 =========== =========== 12/31/94 SERIES 2 SERIES 3 Land $ 1,012,180 $ 985,546 Land Improvements 108,406 263,354 Buildings 26,156,183 24,923,737 Furniture and Fixtures 835,134 1,068,432 Construction in Progress 0 0 ----------- ----------- Properties, at Cost 28,111,903 27,241,069 Less: Accumulated Depreciation 3,757,718 5,778,041 ----------- ----------- Properties, Net $24,354,185 $21,463,028 =========== =========== Item 2 - Properties (continued): 12/31/96 SERIES 4 SERIES 5 Land $ 1,188,112 $ 1,461,156 Land Improvements 120,607 71,068 Buildings 29,950,050 36,811,454 Furniture and Fixtures 1,305,988 1,468,845 Construction in Progress 0 0 ----------- ----------- Properties, at Cost 32,564,757 39,812,523 Less: Accumulated Depreciation 6,264,280 6,839,405 ----------- ----------- Properties, Net $26,300,477 $32,973,118 =========== =========== 12/31/95 SERIES 4 SERIES 5 Land $ 1,188,112 $ 1,460,628 Land Improvements 119,812 71,068 Buildings 29,938,890 36,787,328 Furniture and Fixtures 1,257,453 1,458,530 Construction in Progress 0 0 ----------- ----------- Properties, at Cost 32,504,267 39,777,554 Less: Accumulated Depreciation 5,226,315 5,473,574 ---------- ---------- Properties, Net $27,277,952 $34,303,980 =========== =========== 12/31/94 SERIES 4 SERIES 5 Land $ 1,188,112 $ 1,460,628 Land Improvements 119,812 71,068 Buildings 29,935,624 36,906,821 Furniture and Fixtures 1,243,389 1,316,683 Construction in Progress 0 0 ----------- ----------- Properties, at Cost 32,486,937 39,755,200 Less: Accumulated Depreciation 4,183,755 4,261,218 ----------- ----------- Properties, Net $28,303,182 $35,493,982 =========== =========== Item 2 - Properties (continued): 12/31/96 SERIES 6 TOTAL Land $ 1,779,755 $ 6,426,749 Land Improvements 449,010 1,120,925 Buildings 39,702,357 157,696,609 Furniture and Fixtures 1,821,854 6,501,068 Construction in Progress 0 0 ----------- ------------ Properties, at Cost 43,752,976 171,745,351 Less: Accumulated Depreciation 6,668,399 33,045,754 ----------- ------------ Properties, Net $37,084,577 $138,699,597 =========== ============ 12/31/95 SERIES 6 TOTAL Land $ 1,779,755 $ 6,426,221 Land Improvements 443,074 1,112,263 Buildings 39,683,190 157,512,452 Furniture and Fixtures 1,774,248 6,428,551 Construction in Progress 0 0 ----------- ------------ Properties, at Cost 43,680,267 171,479,487 Less: Accumulated Depreciation 5,205,351 27,325,003 ----------- ------------ Properties, Net $38,474,916 $144,154,484 =========== ============ 12/31/94 SERIES 6 TOTAL Land $ 1,779,755 $ 6,426,221 Land Improvements 442,459 1,005,099 Buildings 39,761,649 157,684,014 Furniture and Fixtures 1,688,445 6,152,083 Construction in Progress 0 0 ----------- ------------ Properties, at Cost 43,672,308 171,267,417 Less: Accumulated Depreciation 3,786,411 21,767,143 ----------- ------------ Properties, Net $39,885,897 $149,500,274 =========== ============ Item 3. Legal Proceedings Gateway is not a party to any material pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders As of March 31, 1997, no matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise. PART II Item 5. Market for the Registrant's Securities and Related Security Holder Matters (a) Gateway's Limited Partnership interests (BACs) are not publicly traded. There is no market for Gateway's Limited Partnership interests and it is unlikely that any will develop. No transfers of Limited Partnership Interest or BAC Units are permitted without the prior written consent of the Managing General Partner. There have been several transfers from inception to date with most being from individuals to their trusts or heirs. The Managing General Partner is not aware of the price at which the units are transferred. The conditions under which investors may transfer units is found under ARTICLE XII - "Issuance of BAC'S" on pages A-29 and A-30 of the Limited Partnership Agreement within the Prospectus, which is incorporated herein by reference. There have been no distributions to Assignees from inception to date. (b) Approximate Number of Equity Security Holders: Title of Class Number of Holders as of March 31, 1997 Beneficial Assignee Certificates 2,254 General Partner Interest 2 Item 6. Selected Financial Data FOR THE YEARS ENDED MARCH 31,: SERIES 2 1997 1996 1995 ----- ---- ---- Total Revenues $ 36,217 $ 36,532 $ 34,922 Net Loss (582,633) (591,355) (756,064) Equity in Losses of Project Partnerships (527,175) (537,111) (699,847) Total Assets 1,345,931 1,893,838 2,449,615 Investments in Project Partnerships 814,883 1,350,923 1,901,609 Per Bac: Tax Credits (A) 166.40 166.30 166.30 Portfolio Income (A) 12.10 11.20 9.70 Passive Loss (A) (141.90) (126.10) (131.30) Net Loss (94.00) (95.41) (121.99) SERIES 2 1994 1993 ---- ---- Total Revenues $ 34,150 $ 30,461 Net Loss (742,342) (866,867) Equity in Losses of Project Partnerships (683,315) (792,150) Total Assets 3,164,145 3,853,623 Investments in Project Partnerships 2,623,688 3,321,940 Per Bac: Tax Credits (A) 166.30 161.08 Portfolio Income (A) 8.40 8.19 Passive Loss (A) (144.50) (167.27) Net Loss (119.77) (139.86) FOR THE YEARS ENDED MARCH 31,: SERIES 3 1997 1996 1995 ---- ---- ---- Total Revenues $ 31,128 $ 31,179 $ 29,718 Net Loss (341,282) (470,880) (640,203) Equity in Losses of Project Partnerships (285,853) (421,996) (579,907) Total Assets 1,043,223 1,362,838 1,805,494 Investments in Project Partnerships 584,189 901,663 1,348,162 Per Bac: Tax Credits (A) 176.40 176.65 175.12 Portfolio Income (A) 13.90 14.00 12.00 Passive Loss (A) (146.40) (143.30) (135.00) Net Loss (61.93) (85.44) (116.17) SERIES 3 1994 1993 ---- ---- Total Revenues $ 29,691 $ 24,588 Net Loss (750,197) (809,156) Equity in Losses of Project Partnerships (687,550) (735,127) Total Assets 2,409,790 3,125,368 Investments in Project Partnerships 1,960,485 2,681,609 Per Bac: Tax Credits (A) 176.65 175.70 Portfolio Income (A) 10.80 10.64 Passive Loss (A) (139.60) (148.04) Net Loss (136.12) (146.82) FOR THE YEARS ENDED MARCH 31,: SERIES 4 1997 1996 1995 ---- ---- ---- Total Revenues $ 41,455 $ 42,246 $ 40,437 Net Loss (696,010) (705,639) (758,528) Equity in Losses of Project Partnerships (635,178) (644,865) (694,726) Total Assets 2,048,377 2,711,102 3,379,586 Investments in Project Partnerships 1,423,319 2,073,510 2,737,516 Per Bac: Tax Credits (A) 168.60 168.60 168.30 Portfolio Income (A) 13.20 12.90 10.30 Passive Loss (A) (149.30) (142.30) (134.60) Net Loss (99.65) (101.02) (108.60) SERIES 4 1994 1993 ---- ---- Total Revenues $ 39,361 $ 38,440 Net Loss (705,387) (759,739) Equity in Losses of Project Partnerships (637,858) (690,605) Total Assets 4,094,719 4,751,938 Investments in Project Partnerships 3,455,906 4,112,627 Per Bac: Tax Credits (A) 168.70 166.43 Portfolio Income (A) 8.80 9.57 Passive Loss (A) (136.20) (148.06) Net Loss (100.99) (108.77) FOR THE YEARS ENDED MARCH 31,: SERIES 5 1997 1996 1995 ---- ---- ---- Total Revenues $ 52,985 $ 54,273 $ 57,635 Net Loss (997,362) (781,436) (817,018) Equity in Losses of Project Partnerships (911,965) (700,127) (739,296) Total Assets 3,078,890 4,041,606 4,790,100 Investments in Project Partnerships 2,268,632 3,211,868 3,950,979 Per Bac: Tax Credits (A) 164.70 164.60 162.20 Portfolio Income (A) 13.10 12.50 10.90 Passive Loss (A) (137.80) (124.30) (108.20) Net Loss (114.60) (89.79) (93.88) SERIES 5 1994 1993 ---- ---- Total Revenues $ 55,260 $ 50,247 Net Loss (1,036,710) (994,280) Equity in Losses of Project Partnerships (953,919) (901,049) Total Assets 5,666,886 6,540,185 Investments in Project Partnerships 4,711,095 5,612,906 Per Bac: Tax Credits (A) 155.60 110.96 Portfolio Income (A) 8.60 9.65 Passive Loss (A) (145.10) (128.52) Net Loss (119.12) (114.25) FOR THE YEARS ENDED MARCH 31,: SERIES 6 1997 1996 1995 ---- ---- ---- Total Revenues $ 47,326 $ 48,446 $ 48,235 Net Loss (915,827) (821,024) (987,087) Equity in Losses of Project Partnerships (805,310) (710,986) (875,023) Total Assets 4,748,789 5,612,685 6,375,252 Investments in Project Partnerships 3,912,526 4,769,625 5,525,062 Per Bac: Tax Credits (A) 165.40 165.40 161.70 Portfolio Income (A) 11.30 10.70 7.70 Passive Loss (A) (122.10) (117.30) (119.80) Net Loss (89.72) (80.44) (96.71) SERIES 6 1994 1993 ---- ---- Total Revenues $ 52,737 $ 181,118 Net Loss (1,190,078) (622,257) Equity in Losses of Project Partnerships (1 080,864) (660,758) Total Assets 7,287,730 9,527,478 Investments in Project Partnerships 6,470,949 7,471,643 Per Bac: Tax Credits (A) 150.20 39.50 Portfolio Income (A) 8.50 22.81 Passive Loss (A) (137.20) (74.30) Net Loss (116.59) (22.32) (A) The per BAC tax information is as of December 31, the year end for tax purposes. The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this report. This statement is not covered by the auditor's opinion included elsewhere in this report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations, Liquidity and Capital Resources Operations commenced on September 14, 1990, with the first admission of Assignees in Series 2. The proceeds from Assignees' capital contributions available for investment were used to acquire interests in Project Partnerships. As disclosed on the statement of operations for each Series, except as described below, interest income is comparable for the years ended March 31, 1997, March 31, 1996 and March 31, 1995. The General and Administrative expenses - General Partner and General and Administrative expenses - Other for the year ended March 31, 1997 are comparable to March 31, 1996 and March 31, 1995. The capital resources of each Series are used to pay General and Administrative operating costs including personnel, supplies, data processing, travel and legal and accounting associated with the administration and monitoring of Gateway and the Project Partnerships. The capital resources are also used to pay the Asset Management Fee due the Managing General Partner, but only to the extent that Gateway's remaining resources are sufficient to fund Gateway's ongoing needs. (Payment of any Asset Management Fee unpaid at the time Gateway sells its interests in the Project Partnerships is subordinated to the return of the investors' original capital contributions). The sources of funds to pay the operating costs of each Series are short term investments and interest earned thereon, the maturity of U.S. Treasury Security Strips ("Zero Coupon Treasuries") which were purchased with funds set aside for this purpose, and cash distributed to the Series from the operations of the Project Partnerships. From inception, no Series has paid distributions and management does not anticipate distributions in the future. Series 2 - Gateway closed this series on September 14, 1990 after receiving $6,136,000 from 375 Assignees. As of March 31, 1997, the series had invested $4,524,678 in 22 Project Partnerships located in 10 states containing 723 apartment units. Average occupancy of the Project Partnerships was 95% at December 31, 1996. Equity in Losses of Project Partnerships decreased from $699,847 for the year ended March 31, 1995 to $537,111 for the year ended March 31, 1996. This decrease was partially due to suspended losses of $25,114 as these losses would reduce the investment in certain Project Partnerships below zero. The remaining portion of the decrease was due to increased rental income as a result of rental rate increases and average occupancy improved from 93% to 96%. Equity in Losses of Project Partnerships of $527,175 for the year ended March 31, 1997 were comparable to the year ended March 31, 1996. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. (These Project Partnerships reported depreciation and amortization of $970,876, $959,697 and $939,525 for the years ended December 31, 1994, 1995 and 1996, respectively.) As a result, management expects that this Series, as well as those described below, will report its equity in Project Partnerships as a loss for tax and financial reporting purposes. Overall, management believes the Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1997, the Series had $138,561 of short-term investments (Cash and Cash Equivalents). It also had $392,487 in Zero Coupon Treasuries with annual maturities providing $45,698 in fiscal year 1998 increasing to $66,285 in fiscal year 2007. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee. As disclosed on the statement of cash flows, the Series had a net loss of $582,633 for the year ending March 31, 1997. However, after adjusting for Equity in Losses of Project Partnerships of $527,175 and the changes in operating assets and liabilities, net cash used in operating activities was $36,752, of which $33,198 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $39,794, consisting of $6,497 in cash distributions from the Project Partnerships and $33,297 from matured Zero Coupon Treasuries. There were no unusual events or trends to describe. Series 3 - Gateway closed this series on December 13, 1990 after receiving $5,456,000 from 398 Assignees. As of March 31, 1997 the series had invested $3,888,713 in 23 Project Partnerships located in 12 states containing 768 apartment units. Average occupancy of the Project Partnerships was 94% as of December 31, 1996. Equity in Losses of Project Partnerships decreased from $579,907 for the year ended March 31, 1995 to $421,996 for the year ended March 31, 1996 and to $285,853 for the year ended March 31, 1997. These decreases were due to suspended losses of $190,864 and $343,378 for the years ended March 31, 1996 and 1997, respectively. These losses would reduce the investment in certain Project Partnerships below zero. (These Project Partnerships reported depreciation and amortization of $973,197, $940,084 and 925,984 for the years ended December 31, 1994, 1995 and 1996, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1997, the Series had $109,925 of short-term investments (Cash and Cash Equivalents). It also had $349,109 in Zero Coupon Treasuries with annual maturities providing $40,634 in fiscal year 1998 increasing to $58,940 in fiscal year 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee. As disclosed on the statement of cash flows, the Series had a net loss of $341,282 for the year ended March 31, 1997. However, after adjusting for Equity in Losses of Project Partnerships of $285,853 and the changes in operating assets and liabilities, net cash used in operating activities was $50,917, of which $40,569 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $62,854, consisting of $33,237 in cash distributions received from the Project Partnerships and $29,617 from matured Zero Coupon Treasuries. There were no unusual events or trends to describe. Series 4 - Gateway closed this series on May 31, 1991 after receiving $6,915,000 from 465 Assignees. As of March 31, 1997, the series had invested $4,952,519 in 29 Project Partnerships located in 16 states containing 879 apartment units. Average occupancy of the Project Partnerships was 95% at December 31, 1996. Equity in Losses of Project Partnerships decreased from $694,726 for the year ended March 31, 1995 to $644,865 for the year ended March 31, 1996 and to $635,178 for the year ended March 31, 1997. (These Project Partnerships reported depreciation and amortization of $1,063,204, $1,047,484 and $1,043,887 for the years ended December 31, 1994, 1995 and 1996, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1997, the Series had $182,773 of short-term investments (Cash and Cash Equivalents). It also had $442,285 in Zero Coupon Treasuries with annual maturities providing $51,500 in fiscal year 1998 increasing to $74,700 in fiscal year 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee. As disclosed on the statement of cash flows, the Series had a net loss of $696,010 for the year ended March 31, 1997. However, after adjusting for Equity in Losses of Project Partnerships of $635,178 and the changes in operating assets and liabilities, net cash used in operating activities was $50,223, of which $44,047 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $54,490, consisting of $16,968 in cash distributions from the Project Partnerships and $37,522 from matured Zero Coupon Treasuries. There were no unusual events or trends to describe. Series 5 - Gateway closed this series on October 11, 1991 after receiving $8,616,000 from 535 Assignees. As of March 31, 1997, the series had invested $6,164,472 in 36 Project Partnerships located in 13 states containing 1,106 apartment units. Average occupancy of the Project Partnerships was 97% as of December 31, 1996. Equity in Losses of Project Partnerships decreased from $739,296 for the year ended March 31, 1995 to $700,127 for the year ended March 31, 1996 and increased to $911,965 for the year ended March 31, 1997. (These Project Partnerships reported depreciation and amortization of $1,423,401, $1,219,766 and $1,380,487 for the years ended December 31, 1994, 1995 and 1996, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1997, the Series had $259,006 of short-term investments (Cash and Cash Equivalents). It also had $551,252 in Zero Coupon Treasuries with annual maturities providing $64,168 in fiscal year 1998 increasing $93,075 in fiscal year 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee. As disclosed on the statement of cash flows, the Series had a net loss of $997,362 for the year ended March 31, 1997. However, after adjusting for Equity in Losses of Project Partnerships of $911,965 and the changes in operating assets and liabilities, net cash used in operating activities was $65,573, of which $61,023 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $67,030 consisting of $20,264 in cash distributions from the Project Partnerships and $46,766 from matured Zero Coupon Treasuries. There were no unusual events or trends to describe. Series 6 - Gateway closed this series on March 11, 1992 after receiving $10,105,000 from 625 Assignees. As of March 31, 1997, the series had invested $7,462,215 in 38 Project Partnerships located in 19 states containing 1,086 apartment units. Average occupancy of the Project Partnerships was 98% as of December 31, 1996. Equity in Losses of Project Partnerships decreased from $875,023 for the year ended March 31, 1995 to $710,986 for the year ended March 31, 1996 and increased to $805,310 for the year ended March 31, 1997. (These Project Partnerships reported depreciation and amortization of $1,564,347, $1,437,632 and $1,477,003 for the years ended December 31, 1994, 1995 and 1996, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1997, the Series had $396,736 of short-term investments (Cash and Cash Equivalents). It also had $439,527 in Zero Coupon Treasuries with annual maturities providing $48,000 in fiscal year 1998 increasing to $83,000 in fiscal year 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee. As disclosed on the statement of cash flows, the Series had a net loss of $915,827 for the year ended March 31, 1997. However, after adjusting for Equity in Losses of Project Partnerships of $805,310 and the changes in operating assets and liabilities, net cash used in operating activities was $58,017, of which $54,247 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $65,762 of which $29,740 was received in cash distributions from the Project Partnerships and $36,022 from matured Zero Coupon Treasuries. There were no unusual events or trends to describe. Item 8. Financial Statements and Supplementary Data INDEPENDENT AUDITOR'S REPORT To the Partners of Gateway Tax Credit Fund II Ltd. We have audited the accompanying balance sheets of each of the five Series (Series 2 through 6) constituting Gateway Tax Credit Fund II Ltd. (a Florida Limited Partnership) as of March 31, 1997 and 1996 and the related statements of operations, partners' equity, and cash flows of each of the five Series for each of the three years in the period ended March 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain underlying Project Partnerships owned by Gateway Tax Credit Fund II Ltd. for each of the periods presented, the investments in which are recorded using the equity method of accounting. The investments in these partnerships represent the following percentages of the Partnership's assets and the total investment in Project Partnerships as of March 31, 1997 and 1996 and the equity in their losses for each of the three years in the period ended March 31, 1997 presented: Investments Assets March 31, March 31, 1997 1996 1997 1996 Series 2 70% 73% 42% 52% Series 3 63% 69% 35% 46% Series 4 73% 72% 51% 55% Series 5 60% 62% 44% 49% Series 6 51% 53% 42% 45% Partnership Loss Year Ended March 31, 1997 1996 1995 Series 2 78% 80% 81% Series 3 81% 76% 76% Series 4 69% 64% 58% Series 5 69% 71% 56% Series 6 65% 52% 66% Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for such underlying partnerships, is based solely on 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 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 and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of each of the five Series (Series 2 through 6) constituting Gateway Tax Credit Fund II Ltd. as of March 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1997 presented, 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 schedules listed under Item 14(a)(2) in the index are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, based on our audits and the reports of other auditors, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Spence, Marston, Bunch, Morris & Co. SPENCE, MARSTON, BUNCH, MORRIS & CO. Certified Public Accountants Clearwater, Florida June 20, 1997 PART I - Financial Information Item 1. Financial Statements GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1997 AND 1996 1997 1996 ----------- ----------- SERIES 2 ASSETS Current Assets: Cash and Cash Equivalents $ 138,561 $ 135,519 Investments in Securities 45,757 43,655 ---------- ---------- Total Current Assets 184,318 179,174 Investments in Securities 346,730 363,740 Investments in Project Partnerships, Net 814,883 1,350,923 ---------- ---------- Total Assets $1,345,931 $1,893,837 ========== ========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners $ 43,644 $ 44,607 Long-Term Liabilities: Payable to General Partners 261,410 225,720 Partners' Equity: Assignor Limited Partner Units of limited Partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1997 and 1996 have been issued to the assignees Assignees Units of beneficial interest of the limited partnership interest of the assignor limited partner, $1,000 stated value per BAC, 37,228 at March 31, 1997 and 1996, issued and outstanding 1,084,268 1,661,075 General Partners (43,391) (37,565) ---------- ---------- Total Partners' Equity 1,040,877 1,623,510 ---------- ---------- Total Liabilities and Partners Equity $1,345,931 $1,893,837 ========== ========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1997 AND 1996 1997 1996 ----------- ---------- SERIES 3 ASSETS Current Assets: Cash and Cash Equivalents $ 109,925 $ 97,988 Investments in Securities 40,699 38,831 ---------- ---------- Total Current Assets 150,624 136,819 Investments in Securities 308,410 323,539 Investments in Project Partnerships, Net 584,189 901,663 ---------- ---------- Total Assets $1,043,223 $1,362,021 ========== ========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners $ 48,117 $ 48,855 Long-Term Liabilities: Payable to General Partners 212,944 189,722 Partners' Equity: Assignor Limited Partner Units of limited Partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1997 and 1996 have been issued to the assignees Assignees Units of beneficial interest of the limited partnership interest of the assignor limited partner, $1,000 stated value per BAC, 37,228 at March 31, 1997 and 1996, issued and outstanding 822,156 1,160,025 General Partners (39,994) (36,581) ---------- ---------- Total Partners' Equity 782,162 1,123,444 ---------- ---------- Total Liabilities and Partners Equity $1,043,223 $1,362,021 ========== ========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1997 AND 1996 1997 1996 ----------- ---------- SERIES 4 ASSETS Current Assets: Cash and Cash Equivalents $ 182,773 $ 178,506 Investments in Securities 51,562 49,195 ---------- ---------- Total Current Assets 234,335 227,701 Investments in Securities 390,723 409,891 Investments in Project Partnerships, Net 1,423,319 2,073,510 ---------- ---------- Total Assets $2,048,377 $2,711,102 ========== ========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners $ 52,967 $ 53,905 Long-Term Liabilities: Payable to General Partners 246,861 212,638 Partners' Equity: Assignor Limited Partner Units of limited Partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1997 and 1996 have been issued to the assignees Assignees Units of beneficial interest of the limited partnership interest of the assignor limited partner, $1,000 stated value per BAC, 37,228 at March 31, 1997 and 1996, issued and outstanding 1,791,717 2,480,767 General Partners (43,168) (36,208) ---------- ---------- Total Partners' Equity 1,748,549 2,444,559 ---------- ---------- Total Liabilities and Partners Equity $2,048,377 $2,711,102 ========== ========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1997 AND 1996 1997 1996 ----------- ---------- SERIES 5 ASSETS Current Assets: Cash and Cash Equivalents $ 259,006 $ 257,549 Investments in Securities 64,266 61,314 ---------- ---------- Total Current Assets 323,272 318,863 Investments in Securities 486,986 510,876 Investments in Project Partnerships, Net 2,268,632 3,211,868 ---------- ---------- Total Assets $3,078,890 $4,041,607 ========== ========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners $ 70,909 $ 72,085 Long-Term Liabilities: Payable to General Partners 237,669 201,848 Partners' Equity: Assignor Limited Partner Units of limited Partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1997 and 1996 have been issued to the assignees Assignees Units of beneficial interest of the limited partnership interest of the assignor limited partner, $1,000 stated value per BAC, 37,228 at March 31, 1997 and 1996, issued and outstanding 2,818,232 3,805,620 General Partners (47,920) (37,946) ---------- ---------- Total Partners' Equity 2,770,312 3,767,674 ---------- ---------- Total Liabilities and Partners Equity $3,078,890 $4,041,607 ========== ========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1997 AND 1996 1997 1996 ----------- ---------- SERIES 6 ASSETS Current Assets: Cash and Cash Equivalents $ 396,736 $ 388,991 Investments in Securities 45,870 43,120 ---------- ---------- Total Current Assets 442,606 432,111 Investments in Securities 393,657 410,950 Investments in Project Partnerships, Net 3,912,526 4,769,625 ---------- ---------- Total Assets $4,748,789 $5,612,686 ========== ========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners $ 66,605 $ 67,831 Long-Term Liabilities: Payable to General Partners 293,418 240,262 Partners' Equity: Assignor Limited Partner Units of limited Partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1997 and 1996 have been issued to the assignees Assignees Units of beneficial interest of the limited partnership interest of the assignor limited partner, $1,000 stated value per BAC, 37,228 at March 31, 1997 and 1996, issued and outstanding 4,433,605 5,340,274 General Partners (44,839) (35,681) ---------- ---------- Total Partners' Equity 4,388,766 5,304,593 ---------- ---------- Total Liabilities and Partners Equity $4,748,789 $5,612,686 ========== ========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1997 AND 1996 1997 1996 ----------- ---------- TOTAL SERIES 2 - 6 ASSETS Current Assets: Cash and Cash Equivalents $ 1,087,001 $ 1,058,553 Investments in Securities 248,154 236,115 ----------- ----------- Total Current Assets 1,335,155 1,294,668 Investments in Securities 1,926,506 2,018,996 Investments in Project Partnerships, Net 9,003,549 12,307,589 ----------- ----------- Total Assets $12,265,210 $15,621,253 =========== =========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners $ 282,242 $ 287,283 Long-Term Liabilities: Payable to General Partners 1,252,302 1,070,190 Partners' Equity: Assignor Limited Partner Units of limited Partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1997 and 1996 have been issued to the assignees Assignees Units of beneficial interest of the limited partnership interest of the assignor limited partner, $1,000 stated value per BAC, 37,228 at March 31, 1997 and 1996, issued and outstanding 10,949,978 14,447,761 General Partners (219,312) (183,981) ----------- ----------- Total Partners' Equity 10,730,666 14,263,780 ----------- ----------- Total Liabilities and Partners Equity $12,265,210 $15,621,253 =========== =========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997 1996 1995 SERIES 2 ----------- ----------- ---------- Revenues: Interest Income $ 36,217 $ 36,532 $ 34,922 ----------- ----------- ---------- Expenses: Asset Management Fee- General Partner 68,889 68,998 69,024 General and Administrative- General Partner 6,792 6,812 8,330 General and Administrative- Other 13,625 10,154 8,497 Amortization 2,369 4,812 5,288 ----------- ----------- ---------- Total Expenses 91,675 90,776 91,139 ----------- ----------- ---------- Loss Before Equity in Losses of Project Partnerships (55,458) (54,244) (56,217) Equity in Losses of Project Partnerships (527,175) (537,111) (699,847) ----------- ----------- ----------- Net Loss $ (582,633) $ (591,355) $ (756,064) =========== =========== =========== Allocation of Net Loss: Assignees $ (576,807) $ (585,441) $ (748,503) General Partners (5,826) (5,914) (7,561) ----------- ----------- ----------- $ (582,633) $ (591,355) $ (756,064) =========== =========== =========== Net Loss Per Beneficial Assignee Certificate $ (94.00) $ (95.41) $ (121.99) Number of Beneficial Assignee Certificates Outstanding 6,136 6,136 6,136 See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997 1996 1995 SERIES 3 ----------- ----------- ---------- Revenues: Interest Income $ 31,128 $ 31,179 $ 29,718 ----------- ----------- ---------- Expenses: Asset Management Fee- General Partner 63,792 63,927 64,043 General and Administrative- General Partner 7,102 7,104 8,709 General and Administrative- Other 17,278 11,001 9,301 Amortization (1,615) (1,969) 7,961 ----------- ----------- ---------- Total Expenses 86,557 80,063 90,014 ----------- ----------- ---------- Loss Before Equity in Losses of Project Partnerships (55,429) (48,884) (60,296) Equity in Losses of Project Partnerships (285,853) (421,996) (579,907) ----------- ----------- ----------- Net Loss $ (341,282) $ (470,880) $ (640,203) =========== =========== =========== Allocation of Net Loss: Assignees $ (337,869) $ (466,171) $ (633,801) General Partners (3,413) (4,709) (6,402) ----------- ----------- ----------- $ (341,282) $ (470,880) $ (640,203) =========== =========== =========== Net Loss Per Beneficial Assignee Certificate $ (61.93) $ (85.44) $ (116.17) Number of Beneficial Assignee Certificates Outstanding 5,456 5,456 5,456 See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997 1996 1995 SERIES 4 ----------- ----------- ---------- Revenues: Interest Income $ 41,455 $ 42,246 $ 40,437 ----------- ----------- ---------- Expenses: Asset Management Fee- General Partner 78,270 78,384 78,571 General and Administrative- General Partner 8,953 8,978 10,456 General and Administrative- Other 17,019 12,268 11,050 Amortization (1,955) 3,390 4,162 ----------- ----------- ---------- Total Expenses 102,287 103,020 104,239 ----------- ----------- ---------- Loss Before Equity in Losses of Project Partnerships (60,832) (60,774) (63,802) Equity in Losses of Project Partnerships (635,178) (644,865) (694,726) ----------- ----------- ----------- Net Loss $ (696,010) $ (705,639) $ (758,528) =========== =========== =========== Allocation of Net Loss: Assignees $ (689,050) $ (698,583) $ (750,943) General Partners (6,960) (7,056) (7,585) ----------- ----------- ----------- $ (696,010) $ (705,639) $ (758,528) =========== =========== =========== Net Loss Per Beneficial Assignee Certificate $ (99.65) $ (101.02) $ (108.60) Number of Beneficial Assignee Certificates Outstanding 6,915 6,915 6,915 See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997 1996 1995 SERIES 5 ----------- ----------- ---------- Revenues: Interest Income $ 52,985 $ 54,273 $ 57,635 ----------- ----------- ---------- Expenses: Asset Management Fee- General Partner 96,844 97,010 97,163 General and Administrative- General Partner 11,114 11,144 13,682 General and Administrative- Other 19,418 14,676 13,108 Amortization 11,006 12,752 11,404 ----------- ----------- ---------- Total Expenses 138,382 135,582 135,357 ----------- ----------- ---------- Loss Before Equity in Losses of Project Partnerships (85,397) (81,309) (77,722) Equity in Losses of Project Partnerships (911,965) (700,127) (739,296) ----------- ----------- ----------- Net Loss $ (997,362) $ (781,436) $ (817,018) =========== =========== =========== Allocation of Net Loss: Assignees $ (987,388) $ (773,622) $ (808,848) General Partners (9,974) (7,814) (8,170) ----------- ----------- ----------- $ (997,362) $ (781,436) $ (817,018) =========== =========== =========== Net Loss Per Beneficial Assignee Certificate $ (114.60) $ (89.79) $ (93.88) Number of Beneficial Assignee Certificates Outstanding 8,616 8,616 8,616 See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997 1996 1995 SERIES 6 ----------- ----------- ---------- Revenues: Interest Income $ 47,326 $ 48,446 $ 48,235 ----------- ----------- ---------- Expenses: Asset Management Fee- General Partner 107,403 107,665 107,910 General and Administrative- General Partner 11,732 11,765 14,388 General and Administrative- Other 16,660 16,398 14,994 Amortization 22,048 22,656 23,007 ----------- ----------- ---------- Total Expenses 157,843 158,484 160,299 ----------- ----------- ---------- Loss Before Equity in Losses of Project Partnerships (110,517) (110,038) (112,064) Equity in Losses of Project Partnerships (805,310) (710,986) (875,023) ----------- ----------- ----------- Net Loss $ (915,827) $ (821,024) $ (987,087) =========== =========== =========== Allocation of Net Loss: Assignees $ (906,669) $ (812,814) $ (977,216) General Partners (9,158) (8,210) (9,871) ----------- ----------- ----------- $ (915,827) $ (821,024) $ (987,087) =========== =========== =========== Net Loss Per Beneficial Assignee Certificate $ (89.72) $ (80.44) $ (96.71) Number of Beneficial Assignee Certificates Outstanding 10,105 10,105 10,105 See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997 1996 1995 TOTAL SERIES 2-6 ------------ ------------ ----------- Revenues: Interest Income $ 209,111 $ 212,676 $ 210,947 ------------ ------------ ----------- Expenses: Asset Management Fee- General Partner 415,198 415,984 416,711 General and Administrative- General Partner 45,693 45,803 55,565 General and Administrative- Other 84,000 64,497 56,950 Amortization 31,853 41,641 51,822 ----------- ------------ ----------- Total Expenses 576,744 567,925 581,048 ----------- ------------ ----------- Loss Before Equity in Losses of Project Partnerships (367,633) (355,249) (370,101) Equity in Losses of Project Partnerships (3,165,481) (3,015,085) (3,588,799) ------------ ------------ ------------ Net Loss $(3,533,114) $(3,370,334) $(3,958,900) ============ ============ ============ Allocation of Net Loss: Assignees $(3,497,783) $(3,336,631) $(3,919,311) General Partners (35,331) (33,703) (39,589) ------------ ------------ ------------ $(3,533,114) $(3,370,334) $(3,958,900) ============ ============ ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: General Assignees Partners Total SERIES 2 ----------- ----------- ----------- Balance at March 31, 1994 $ 2,995,019 $ (24,090) $ 2,970,929 Net Loss (748,503) (7,561) (756,064) ------------ ---------- ------------ Balance at March 31, 1995 2,246,516 (31,651) 2,214,865 Net Loss (585,441) (5,914) (591,355) ------------ ---------- ------------ Balance at March 31, 1996 1,661,075 (37,565) 1,623,510 Net Loss (576,807) (5,826) (582,633) ------------ ---------- ------------ Balance at March 31, 1997 $ 1,084,268 $ (43,391) $ 1,040,877 ============ ========== ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: General Assignees Partners Total SERIES 3 ----------- ----------- ----------- Balance at March 31, 1994 $ 2,259,997 $ (25,470) $ 2,234,527 Net Loss (633,801) (6,402) (640,203) ------------ ---------- ------------ Balance at March 31, 1995 1,626,196 (31,872) 1,594,324 Net Loss (466,171) (4,709) (470,880) ------------ ---------- ------------ Balance at March 31, 1996 1,160,025 (36,581) 1,123,444 Net Loss (337,869) (3,413) (341,282) ------------ ---------- ------------ Balance at March 31, 1997 $ 822,156 $ (39,994) $ 782,162 ============ ========== ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: General Assignees Partners Total SERIES 4 ----------- ----------- ----------- Balance at March 31, 1994 $ 3,930,293 $ (21,567) $ 3,908,726 Net Loss (750,943) (7,585) (758,528) ------------ ---------- ------------ Balance at March 31, 1995 3,179,350 (29,152) 3,150,198 Net Loss (698,583) (7,056) (705,639) ------------ ---------- ------------ Balance at March 31, 1996 2,480,767 (36,208) 2,444,559 Net Loss (689,050) (6,960) (696,010) ------------ ---------- ------------ Balance at March 31, 1997 $ 1,791,717 $ (43,168) $ 1,748,549 ============ ========== ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: General Assignees Partners Total SERIES 5 ----------- ----------- ----------- Balance at March 31, 1994 $ 5,388,090 $ (21,962) $ 5,366,128 Net Loss (808,848) (8,170) (817,018) ------------ ---------- ------------ Balance at March 31, 1995 4,579,242 (30,132) 4,549,110 Net Loss (773,622) (7,814) (781,436) ------------ ---------- ------------ Balance at March 31, 1996 3,805,620 (37,946) 3,767,674 Net Loss (987,388) (9,974) (997,362) ------------ ---------- ------------ Balance at March 31, 1997 $ 2,818,232 $ (47,920) $ 2,770,312 ============ ========== ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: General Assignees Partners Total SERIES 6 ----------- ----------- ----------- Balance at March 31, 1994 $ 7,130,304 $ (17,600) $ 7,112,704 Net Loss (977,216) (9,871) (987,087) ------------ ---------- ------------ Balance at March 31, 1995 6,153,088 (27,471) 6,125,617 Net Loss (812,814) (8,210) (821,024) ------------ ---------- ------------ Balance at March 31, 1996 5,340,274 (35,681) 5,304,593 Net Loss (906,669) (9,158) (915,827) ------------ ---------- ------------ Balance at March 31, 1997 $ 4,433,605 $ (44,839) $ 4,388,766 ============ ========== ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: General Assignees Partners Total TOTAL SERIES 2-6 ----------- ----------- ----------- Balance at March 31, 1994 $21,703,703 $(110,689) $21,593,014 Net Loss (3,919,311) (39,589) (3,958,900) ------------ ---------- ------------ Balance at March 31, 1995 17,784,392 (150,278) 17,634,114 Net Loss (3,336,631) (33,703) (3,370,334) ------------ ---------- ------------ Balance at March 31, 1996 14,447,761 (183,981) 14,263,780 Net Loss (3,497,783) (35,331) (3,533,114) ------------ ---------- ------------ Balance at March 31, 1997 $10,949,978 $(219,312) $10,730,666 ============ ========== ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: 1997 1996 1995 SERIES 2 ----------- --------- --------- Cash Flows from Operating Activities: Net Loss $ (582,633) $ (591,355) $ (756,064) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 2,369 4,812 5,288 Accreted Interest Income on Investments in Securities (28,749) (29,127) (29,552) Equity in Losses of Project Partnerships 527,175 537,111 699,847 Interest Income from Redemption of Securities 10,358 7,238 4,425 Changes in Operating Assets and Liabilities: Decrease in Accounts Receivable 0 0 0 Increase in Payable to General Partners 34,728 35,578 41,534 ------------ ------------ ------------ Net Cash Used in Operating Activities (36,752) (35,743) (34,522) ------------ ------------ ------------ Cash Flows from Investing Activities: Investments in Project Partnerships 0 0 0 Acquisition Fees and Expenses 0 0 0 Distributions Received from Project Partnerships 6,497 8,762 16,944 Redemption of Investment in Securities 33,297 34,610 35,612 Decrease in Payable to: Project Partnerships - Capital Contributions 0 0 0 ------------ ------------ ------------ Net Cash Provided by (Used in) Investing Activities 39,794 43,372 52,556 ------------ ------------ ------------ Increase (Decrease) in Cash and Cash Equivalents 3,042 7,629 18,034 Cash and Cash Equivalents at Beginning of Year 135,519 127,890 109,856 ------------ ------------ ------------ Cash and Cash Equivalents at End of Year $ 138,561 $ 135,519 $ 127,890 ============ ============ ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: 1997 1996 1995 SERIES 3 ----------- --------- --------- Cash Flows from Operating Activities: Net Loss $ (341,282) $ (470,880) $ (640,203) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization (1,615) (1,969) 7,961 Accreted Interest Income on Investments in Securities (25,571) (25,908) (26,286) Equity in Losses of Project Partnerships 285,853 421,996 579,907 Interest Income from Redemption of Securities 9,212 6,437 3,917 Changes in Operating Assets and Liabilities: Decrease in Accounts Receivable 0 0 0 Increase in Payable to General Partners 22,486 27,408 35,907 ------------ ------------ ------------ Net Cash Used in Operating Activities (50,917) (42,916) (38,797) ------------ ------------ ------------ Cash Flows from Investing Activities: Investments in Project Partnerships 0 0 0 Acquisition Fees and Expenses 0 0 0 Distributions Received from Project Partnerships 33,237 26,471 24,455 Redemption of Investment in Securities 29,617 30,785 31,695 Decrease in Payable to: Project Partnerships - Capital Contributions 0 0 0 ------------ ------------ ------------ Net Cash Provided by (Used in) Investing Activities 62,854 57,256 56,150 ------------ ------------ ------------ Increase (Decrease) in Cash and Cash Equivalents 11,937 14,340 17,353 Cash and Cash Equivalents at Beginning of Year 97,988 83,648 66,295 ------------ ------------ ------------ Cash and Cash Equivalents at End of Year $ 109,925 $ 97,988 $ 83,648 ============ ============ ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: 1997 1996 1995 SERIES 4 ----------- --------- --------- Cash Flows from Operating Activities: Net Loss $ (696,010) $ (705,639) $ (758,528) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization (1,955) 3,390 4,162 Accreted Interest Income on Investments in Securities (32,396) (32,822) (33,301) Equity in Losses of Project Partnerships 635,178 644,865 694,726 Interest Income from Redemption of Securities 11,676 8,155 4,962 Changes in Operating Assets and Liabilities: Decrease in Accounts Receivable 0 0 0 Increase in Payable to General Partners 33,284 37,155 43,395 ------------ ------------ ------------ Net Cash Used in Operating Activities (50,223) (44,896) (44,584) ------------ ------------ ------------ Cash Flows from Investing Activities: Investments in Project Partnerships 0 0 0 Acquisition Fees and Expenses 0 0 0 Distributions Received from Project Partnerships 16,968 15,751 19,502 Redemption of Investment in Securities 37,522 39,000 40,155 Decrease in Payable to: Project Partnerships - Capital Contributions 0 0 0 ------------ ------------ ------------ Net Cash Provided by (Used in) Investing Activities 54,490 54,751 59,657 ------------ ------------ ------------ Increase (Decrease) in Cash and Cash Equivalents 4,267 9,855 15,073 Cash and Cash Equivalents at Beginning of Year 178,506 168,651 153,578 ------------ ------------ ------------ Cash and Cash Equivalents at End of Year $ 182,773 $ 178,506 $ 168,651 ============ ============ ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: 1997 1996 1995 SERIES 5 ----------- --------- --------- Cash Flows from Operating Activities: Net Loss $ (997,362) $ (781,436) $ (817,018) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 11,006 12,752 11,404 Accreted Interest Income on Investments in Securities (40,378) (40,909) (41,507) Equity in Losses of Project Partnerships 911,965 700,127 739,296 Interest Income from Redemption of Securities 14,552 10,166 6,186 Changes in Operating Assets and Liabilities: Decrease in Accounts Receivable 0 0 0 Increase in Payable to General Partners 34,644 32,942 49,740 ------------ ------------ ------------ Net Cash Used in Operating Activities (65,573) (66,358) (51,899) ------------ ------------ ------------ Cash Flows from Investing Activities: Investments in Project Partnerships 0 0 (3,179) Acquisition Fees and Expenses 0 0 (13,602) Distributions Received from Project Partnerships 20,264 26,233 26,197 Redemption of Investment in Securities 46,766 48,609 50,048 Decrease in Payable to: Project Partnerships - Capital Contributions 0 0 (109,508) ------------ ------------ ------------ Net Cash Provided by (Used in) Investing Activities 67,030 74,842 (50,044) ------------ ------------ ------------ Increase (Decrease) in Cash and Cash Equivalents 1,457 8,484 (101,943) Cash and Cash Equivalents at Beginning of Year 257,549 249,065 351,008 ------------ ------------ ------------ Cash and Cash Equivalents at End of Year $ 259,006 $ 257,549 $ 249,065 ============ ============ ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: 1997 1996 1995 SERIES 6 ----------- --------- --------- Cash Flows from Operating Activities: Net Loss $ (915,827) $ (821,024) $ (987,087) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 22,048 22,656 23,007 Accreted Interest Income on Investments in Securities (30,456) (30,458) (30,196) Equity in Losses of Project Partnerships 805,310 710,986 875,023 Interest Income from Redemption of Securities 8,978 5,963 3,455 Changes in Operating Assets and Liabilities: Decrease in Accounts Receivable 0 0 20,136 Increase in Payable to General Partners 51,930 58,457 74,609 ----------- ----------- ------------ Net Cash Used in Operating Activities (58,017) (53,420) (21,053) ----------- ---------- ------------ Cash Flows from Investing Activities: Investments in Project Partnerships 0 0 23,322 Acquisition Fees and Expenses 0 0 0 Distributions Received from Project Partnerships 29,740 21,796 24,535 Redemption of Investment in Securities 36,022 36,037 35,546 Decrease in Payable to: Project Partnerships - Capital Contributions 0 0 0 ----------- ----------- ------------ Net Cash Provided by (Used in) Investing Activities 65,762 57,833 83,403 ----------- ----------- ------------ Increase (Decrease) in Cash and Cash Equivalents 7,745 4,413 62,350 Cash and Cash Equivalents at Beginning of Year 388,991 384,578 322,228 ----------- ----------- ------------ Cash and Cash Equivalents at End of Year $ 396,736 $ 388,991 $ 384,578 =========== =========== ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995: 1997 1996 1995 TOTAL SERIES 2-6 ----------- --------- --------- Cash Flows from Operating Activities: Net Loss $(3,533,114) $(3,370,334) $(3,958,900) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 31,853 41,641 51,822 Accreted Interest Income on Investments in Securities (157,550) (159,224) (160,842) Equity in Losses of Project Partnerships 3,165,481 3,015,085 3,588,799 Interest Income from Redemption of Securities 54,776 37,959 22,945 Changes in Operating Assets and Liabilities: Decrease in Accounts Receivable 0 0 20,136 Increase in Payable to General Partners 177,072 191,540 245,185 ------------ ------------ ------------ Net Cash Used in Operating Activities (261,482) (243,333) (190,855) ------------ ------------ ------------ Cash Flows from Investing Activities: Investments in Project Partnerships 0 0 20,143 Acquisition Fees and Expenses 0 0 (13,602) Distributions Received from Project Partnerships 106,706 99,013 111,633 Redemption of Investment in Securities 183,224 189,041 193,056 Decrease in Payable to: Project Partnerships - Capital Contributions 0 0 (109,508) ------------ ------------ ------------ Net Cash Provided by (Used in) Investing Activities 289,930 288,054 201,722 ------------ ------------ ------------ Increase (Decrease) in Cash and Cash Equivalents 28,448 44,721 10,867 Cash and Cash Equivalents at Beginning of Year 1,058,553 1,013,832 1,002,965 ------------ ------------ ------------ Cash and Cash Equivalents at End of Year $ 1,087,001 $ 1,058,553 $ 1,013,832 ============ ============ ============ See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1997, 1996 AND 1995 NOTE 1 - ORGANIZATION: Gateway Tax Credit Fund II Ltd. ("Gateway"), a Florida Limited Partnership, was formed September 12, 1989, under the laws of Florida. Operations commenced on September 14, 1990 for Series 2, September 28, 1990 for Series 3, February 1, 1991 for Series 4, July 1, 1991 for Series 5 and January 1, 1992 for Series 6. Gateway has invested, as a limited partn- er, in other limited partnerships ("Project Partnerships") each of which owns and operates one or more apartment complexes expected to qualify for Low-Income Housing Tax Credits. Gateway will terminate on December 31, 2040, or sooner, in accordance with the terms of the Limited Partnership Agreement. As of March 31, 1997, Gateway had received capital contributions of $1,000 from the General Partners and $37,228,000 from Beneficial Assignee Certificate investors (the "Assignees"). The fiscal year of Gateway for reporting purposes ends on March 31. Pursuant to the Securities Act of 1933, Gateway filed a Form S-11 Registration Statement with the Securities and Exchange Commission, effective September 12, 1989, which covered the offering (the "Public Offering") of Gateway's Beneficial Assignee Certificates ("BACs") representing assignments of units for the beneficial interest of the limited partnership interest of the Assignor Limited Partner. The Assignor Limited Partner was formed for the purpose of serving in that capacity for the Fund and will not engage in any other business. Raymond James Partners, Inc. and Raymond James Tax Credit Funds, Inc., wholly-owned subsidiaries of Raymond James Financial, Inc., are the General Partner and the Managing General Partner, respectively. The Managing General Partner manages and controls the business of Gateway. Gateway offered BACs in five series. BACs in the amounts of $6,136,000, $5,456,000, $6,915,000, $8,616,000 and $10,105,000 for Series 2, 3, 4, 5 and 6, respectively had been issued as of March 31, 1997. Each Series is treated as a separate partnership, investing in a separate and distinct pool of Project Partnerships. Net proceeds from each Series are used to acquire Project Partnerships which are specifically allocated to such Series. Income or loss and all tax items from the Project Partnerships acquired by each Series are specifically allocated among the Assignees of such Series. Operating profits and losses, cash distributions from operations and tax credits are allocated 99% to the Assignees and 1% to the General Partners. Profit or loss and cash distributions from sales of properties will be allocated as formulated in the Limited Partnership Agreement. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting Gateway utilizes the accrual basis of accounting whereby revenues are recognized when earned and expenses are recognized when obligations are incurred. Gateway accounts for its investments as the sole limited partner in Project Partnerships ("Investments in Project Partnerships") using the equity method of accounting and reports the equity in losses of the Project Partnerships on a 3-month lag in the Statements of Operations. Under the equity method, the Investments in Project Partnerships initially include: 1) Gateway's capital contribution, 2) Acquisition fees paid to the General Partner for services rendered in selecting properties for acquisition, and 3) Acquisition expenses including legal fees, travel and other miscellaneous costs relating to acquiring properties. Quarterly the Investments in Project Partnerships are increased or decreased as follows: 1) Increased for equity in income or decreased for equity in losses of the Project Partnerships, 2) Decreased for cash distributions received from the Project Partnerships, 3) Decreased for the amortization of the acquisition fees and expenses, 4) In certain Project Partnerships, where Gateway's investment was greater than Gateway's pro-rata share of the book value of the underlying assets, decreased for the amortization of the difference; and 5) In certain Project Partnerships, where Gateway's investment was less than Gateway's pro-rata share of the book value of the underlying assets, increased for the accretion of the difference. Amortization and accretion are calculated on a straight-line basis over 35 years, as this is the average estimated useful life of the underlying assets. The net amortization and accretion are shown as amortization expense on the Statements of Operations. Pursuant to the limited partnership agreements for the Project Partnerships, cash losses generated by the Project Partnerships are allocated to the general partners of those partnerships. In subsequent years, cash profits, if any, are first allocated to the general partners to the extent of the allocation of prior years' cash losses. Since Gateway invests as a limited partner, and therefore is not obligated to fund losses or make additional capital contributions, it does not recognize losses from individual Project Partnerships to the extent that these losses would reduce the investment in those Project Partnerships below zero. The suspended losses will be used to offset future income from the individual Project Partnerships. Cash and Cash Equivalents It is Gateway's policy to include short-term investments with an original maturity of three months or less in Cash and Cash Equivalents. Short-term investments are comprised of money market mutual funds. Concentration of Credit Risk Financial instruments which potentially subject Gateway to concentrations of credit risk consist of cash investments in a money market mutual fund that is a wholly-owned subsidiary of Raymond James Financial, Inc. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates that affect certain reported amounts and disclosures. These estimates are based on management's knowledge and experience. Accordingly, actual results could differ from these estimates. Investment in Securities Effective April 1, 1995, Gateway adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities ("FAS 115"). Under FAS 115, Gateway is required to categorize its debt securities as held-to-maturity, available-for-sale or trading securities, dependent upon Gateway's intent in holding the securities. Gateway's intent is to hold all of its debt securities (U. S. Government Security Strips) until maturity and to use these reserves to fund Gateway's ongoing operations. Interest income is recognized ratably on the U. S. Government Strips using the effective yield to maturity. Offering and Commission Costs Offering and commission costs were charged against Assignees' Equity upon the admission of Limited Partners. Income Taxes No provision for income taxes has been made in these financial statements, as income taxes are a liability of the partners rather than of Gateway. Reclassifications For comparability, the 1996 and 1995 figures have been reclassified, where appropriate, to conform with the financial statement presentation used in 1997. NOTE 3 - INVESTMENT IN SECURITIES: The March 31, 1997 Balance Sheet includes Investment in Securities consisting of U.S. Government Security Strips which represents their cost, plus accreted interest income of $126,823 for Series 2, $112,807 for Series 3, $142,915 for Series 4, $178,125 for Series 5 and $114,459 for Series 6. For convenience, the Investment in Securities are commonly held in a brokerage account with Raymond James and Associates, Inc. A separate accounting is maintained for each series' share of the investments. Gross Cost Plus Unrealized Estimated Accreted Gains and Market Value Interest (Losses) Series 2 $ 405,394 $392,487 $ 12,907 Series 3 360,473 349,109 11,364 Series 4 456,863 442,285 14,578 Series 5 569,245 551,252 17,993 Series 6 443,040 439,527 3,513 As of March 31, 1997, the cost and accreted interest of debt securities by contractual maturities is as follows: Series 2 Series 3 Due within 1 year $ 45,757 $ 40,699 After 1 year through 5 years 168,808 150,150 After 5 years through 10 years 177,922 158,260 --------- --------- Total Amount Carried on Balance Sheet $ 392,487 $ 349,109 ========= ========= Series 4 Series 5 Due within 1 year $ 51,562 $ 64,266 After 1 year through 5 years 190,223 237,091 After 5 years through 10 years 200,500 249,895 --------- --------- Total Amount Carried on Balance Sheet $ 442,285 $ 551,252 ========= ========= Series 6 Total Due within 1 year $ 45,870 $ 248,154 After 1 year through 5 years 182,093 928,365 After 5 years through 10 years 211,564 998,141 --------- --------- Total Amount Carried on Balance Sheet $ 439,527 $2,174,660 ========= ========= NOTE 4 - RELATED PARTY TRANSACTIONS: The Payable to General Partners primarily represents the asset management fees owed to the General Partners at the end of the period. It is unsecured, due on demand and, in accordance with the limited partnership agreement, non- interest bearing. Within the next 12 months, the Managing General Partner does not intend to demand payment on the portion of Asset Management Fees payable classified as long- term on the Balance Sheet. The Payable to Project Partnerships represents unpaid capital contributions to the Project Partnerships and will be paid after certain performance criteria are met. Such contributions are in turn payable to the general partner of the Project Partnerships. For the years ended March 31, 1997, 1996 and 1995 the General Partners and affiliates are entitled to compensation and reimbursement for costs and expenses incurred by Gateway as follows: Acquisition Fees - Acquisition fees are paid for services rendered by the Managing General Partner in selecting properties for acquisition and providing other services in connection with the acquisition of interests in Project Partnerships. The acquisition fees paid or payable to the General Partners will not exceed the amount that is equal to 8% of the gross proceeds. The fees paid are included in Investments in Project Partnerships on the Balance Sheets. 1997 1996 1995 ---- ---- ---- Series 2 $ 0 $ 0 $ 0 Series 3 0 0 0 Series 4 0 0 0 Series 5 0 0 13,602 Series 6 0 0 0 ------- -------- -------- Total $ 0 $ 0 $ 13,602 ======= ======== ======== Asset Management Fee - The Managing General Partner is entitled to be paid an annual asset management fee equal to 0.25% of the aggregate cost of Gateway's interest in the projects owned by the Project Partnerships. The asset management fee will be paid only after all other expenses of Gateway have been paid. These fees are included in the Statements of Operations. Series 2 $ 68,889 $ 68,998 $ 69,024 Series 3 63,792 63,927 64,043 Series 4 78,270 78,384 78,571 Series 5 96,844 97,010 97,163 Series 6 107,403 107,665 107,910 -------- --------- --------- Total $415,198 $ 415,984 $ 416,711 ======== ========= ========= General and Administrative Expenses - The Managing General Partner is reimbursed for general and administrative expenses of Gateway on an accountable basis. This expense is included in the Statements of Operations. Series 2 $ 6,792 $ 6,812 $ 8,330 Series 3 7,102 7,104 8,709 Series 4 8,953 8,978 10,456 Series 5 11,114 11,144 13,682 Series 6 11,732 11,765 14,388 -------- --------- -------- Total $ 45,693 $ 45,803 $ 55,565 ======== ========= ======== NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS: As of March 31, 1997, the Partnership had acquired an interest in 22 Project Partnerships for the Series which own and operate government assisted multi-family housing complexes. The Partnership, as the Investor Limited Partner pursuant to the Project Partnership Agreements has generally acquired an ownership interest of 99% in these Project Partnerships. The following is a summary of Investments in Project Partnerships as of: MARCH 31, MARCH 31, 1997 1996 SERIES 2 ---------- ---------- Capital Contributions to Project Partnerships (purchase price paid for limited partner interests in Project Partnerships) $ 4,524,678 $ 4,524,678 Accumulated accretion/(amortization) of the difference in the book value of underlying assets of the Project Partnerships over/under purchase price (1) 39,734 33,815 Cumulative equity in losses of Project Partnerships (2) (4,022,371) (3,495,196) Cumulative distributions received from Project Partnerships (51,621) (45,124) Acquisition fees and expenses 390,838 390,838 Accumulated amortization of acquisition fees and expenses (66,375) (58,088) ------------ ------------ Investments in Project Partnerships $ 814,883 $ 1,350,923 ============ ============ (1) Includes amounts representing accumulated accretion or (amortization) of the difference between the book value of the underlying assets of the Project Partnerships over or under the purchase price. At March 31, 1997 and 1996 these excess costs were $205,718. (2) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $145,935 for the year ended March 31, 1997 and cumulative suspended losses of $25,114 for the year ended March 31, 1996 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): As of March 31, 1997, the Partnership had acquired an interest in 23 Project Partnerships for the Series which own and operate government assisted multi-family housing complexes. The Partnership, as the Investor Limited Partner pursuant to the Project Partnership Agreements has generally acquired an ownership interest of 99% in these Project Partnerships. The following is a summary of Investments in Project Partnerships as of: MARCH 31, MARCH 31, 1997 1996 SERIES 3 ---------- ---------- Capital Contributions to Project Partnerships (purchase price paid for limited partner interests in Project Partnerships) $ 3,888,713 $ 3,888,713 Accumulated accretion/(amortization) of the difference in the book value of underlying assets of the Project Partnerships over/under purchase price (1) 41,993 33,947 Cumulative equity in losses of Project Partnerships (2) (3,623,613) (3,337,760) Cumulative distributions received from Project Partnerships (143,977) (110,740) Acquisition fees and expenses 491,746 491,746 Accumulated amortization of acquisition fees and expenses (70,673) (64,243) ------------ ------------ Investments in Project Partnerships $ 584,189 $ 901,663 ============ ============ (1) Includes amounts representing accumulated accretion or (amortization) of the difference between the book value of the underlying assets of the Project Partnerships over or under the purchase price. At March 31, 1997 and 1996 these excess costs were $213,147. (2) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $569,390 for the year ended March 31, 1997 and cumulative suspended losses of $226,112 for the year ended March 31, 1996 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): As of March 31, 1997, the Partnership had acquired an interest in 29 Project Partnerships for the Series which own and operate government assisted multi-family housing complexes. The Partnership, as the Investor Limited Partner pursuant to the Project Partnership Agreements has generally acquired an ownership interest of 99% in these Project Partnerships. The following is a summary of Investments in Project Partnerships as of: MARCH 31, MARCH 31, 1997 1996 SERIES 4 ---------- ---------- Capital Contributions to Project Partnerships (purchase price paid for limited partner interests in Project Partnerships) $ 4,952,519 $ 4,952,519 Accumulated accretion/(amortization) of the difference in the book value of underlying assets of the Project Partnerships over/under purchase price (1) 74,647 60,437 Cumulative equity in losses of Project Partnerships (2) (4,003,381) (3,368,203) Cumulative distributions received from Project Partnerships (76,251) (59,283) Acquisition fees and expenses 562,967 562,967 Accumulated amortization of acquisition fees and expenses (87,182) (74,927) ------------ ------------ Investments in Project Partnerships $ 1,423,319 $ 2,073,510 ============ ============ (1) Includes amounts representing accumulated accretion or (amortization) of the difference between the book value of the underlying assets of the Project Partnerships over or under the purchase price. At March 31, 1997 these excess costs were $411,863 and at March 31, 1996 these excess costs were $430,637. (2) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $106,365 for the year ended March 31, 1997 and cumulative suspended losses of $11,440 for the year ended March 31, 1996 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): As of March 31, 1997, the Partnership had acquired an interest in 36 Project Partnerships for the Series which own and operate government assisted multi-family housing complexes. The Partnership, as the Investor Limited Partner pursuant to the Project Partnership Agreements has generally acquired an ownership interest of 99% in these Project Partnerships. The following is a summary of Investments in Project Partnerships as of: MARCH 31, MARCH 31, 1997 1996 SERIES 5 ---------- ---------- Capital Contributions to Project Partnerships (purchase price paid for limited partner interests in Project Partnerships) $ 6,164,472 $ 6,164,472 Accumulated accretion/(amortization) of the difference in the book value of underlying assets of the Project Partnerships over/under purchase price (1) 33,149 27,015 Cumulative equity in losses of Project Partnerships (2) (4,378,628) (3,466,663) Cumulative distributions received from Project Partnerships (105,135) (84,871) Acquisition fees and expenses 650,837 650,837 Accumulated amortization of acquisition fees and expenses (96,063) (78,922) ------------ ------------ Investments in Project Partnerships $ 2,268,632 $ 3,211,868 ============ ============ (1) Includes amounts representing accumulated accretion or (amortization) of the difference between the book value of the underlying assets of the Project Partnerships over or under the purchase price. At March 31, 1997 and 1996 these excess costs were $214,636. (2) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $25,401 for the year ended March 31, 1997 and cumulative suspended losses of $0 for the year ended March 31, 1996 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): As of March 31, 1997, the Partnership had acquired an interest in 38 Project Partnerships for the Series which own and operate government assisted multi-family housing complexes. The Partnership, as the Investor Limited Partner pursuant to the Project Partnership Agreements has generally acquired an ownership interest of 99% in these Project Partnerships. The following is a summary of Investments in Project Partnerships as of: MARCH 31, MARCH 31, 1997 1996 SERIES 6 ---------- ---------- Capital Contributions to Project Partnerships (purchase price paid for limited partner interests in Project Partnerships) $ 7,462,215 $ 7,462,215 Accumulated accretion/(amortization) of the difference in the book value of underlying assets of the Project Partnerships over/under purchase price (1) (2,849) (2,253) Cumulative equity in losses of Project Partnerships (2) (4,132,896) (3,327,586) Cumulative distributions received from Project Partnerships (93,172) (63,432) Acquisition fees and expenses 785,179 785,179 Accumulated amortization of acquisition fees and expenses (105,951) (84,498) ------------ ------------ Investments in Project Partnerships $ 3,912,526 $ 4,769,625 ============ ============ (1) Includes amounts representing accumulated accretion or (amortization) of the difference between the book value of the underlying assets of the Project Partnerships over or under the purchase price. At March 31, 1997 and 1996 these excess costs were ($20,841). (2) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $89,395 for the year ended March 31, 1997 and cumulative suspended losses of $11,517 for the year ended March 31, 1996 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): The following is a summary of Investments in Project Partnerships: MARCH 31, MARCH 31, 1997 1996 TOTAL SERIES 2 - 6 ---------- ---------- Capital Contributions to Project Partnerships (purchase price paid for limited partner interests in Project Partnerships) $ 26,992,597 $ 26,992,597 Accumulated accretion/(amortization) of the difference in the book value of underlying assets of the Project Partnerships over/under purchase price (1) 186,674 152,961 Cumulative equity in losses of Project Partnerships (20,160,889) (16,995,408) Cumulative distributions received from Project Partnerships (470,156) (363,450) Acquisition fees and expenses 2,881,567 2,881,567 Accumulated amortization of acquisition fees and expenses (426,244) (360,678) ------------- ------------- Investments in Project Partnerships $ 9,003,549 $ 12,307,589 ============= ============= NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized financial information for the Series' Project Partnerships as of December 31 of each year: 1996 1995 1994 SERIES 2 ----------- ---------- -------------- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 1,604,887 $ 1,422,846 $ 1,227,646 Investment properties, net 22,550,031 23,440,185 24,354,185 Other assets 770 2,731 5,582 ------------- ------------- ------------- Total assets $ 24,155,688 $ 24,865,762 $ 25,587,413 ============= ============= ============= Liabilities and Partners' Equity Current liabilities $ 475,053 $ 467,189 $ 553,699 Long-term debt 23,263,436 23,307,700 23,318,249 ------------- ------------- ------------- Total liabilities 23,738,489 23,774,889 23,871,948 Partners' Equity Limited Partner 340,514 997,378 1,525,449 General Partners 76,685 93,495 190,016 ------------- ------------- ------------ 417,199 1,090,873 1,715,465 Total liabilities and partners' equity $ 24,155,688 $ 24,865,762 $ 25,587,413 ============= ============= ============= SUMMARIZED STATEMENTS OF OPERATIONS: Rental and other income $ 3,877,838 $ 3,769,724 $ 3,697,671 Expenses: Operating expenses 1,505,411 1,360,644 1,347,826 Interest expense 2,087,442 2,069,305 2,085,887 Depreciation and amortization 939,525 959,697 970,876 ------------- ------------- ------------- Total expenses 4,532,378 4,389,646 4,404,589 Net loss $ (654,540) $ (619,922) $ (706,918) ============= ============= ============= Other partners' share of net loss $ (6,544) $ (57,697) $ (7,071) Partnership's share of net loss $ (647,996) $ (562,225) $ (699,847) Suspended loss 120,821 25,114 0 ------------- ------------- ------------- Equity in Loss of Project Partnerships $ (527,175) $ (537,111) $ (699,847) ============= ============= ============= As of December 31, 1996, the largest Project Partnership constituted 12.2% and 13.6%, and as of December 31, 1995 the largest Project Partnership constituted 12.3% and 13.7% of the combined total assets by series and combined total revenues by series, respectively. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized financial information for the Series' Project Partnerships as of December 31 of each year: 1996 1995 1994 SERIES 3 ----------- ---------- -------------- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 1,983,148 $ 1,836,034 $ 1,772,802 Investment properties, net 19,791,394 20,657,451 21,463,028 Other assets 225,290 231,762 242,374 ------------- ------------- ------------- Total assets $ 21,999,832 $ 22,725,247 $ 23,478,204 ============= ============= ============= Liabilities and Partners' Equity Current liabilities $ 496,156 $ 466,740 $ 551,949 Long-term debt 21,846,525 21,901,006 21,947,967 ------------- ------------- ------------- Total liabilities 22,342,681 22,367,746 22,499,916 Partners' Equity Limited Partner (680,352) (17,911) 610,805 General Partners 337,503 375,412 367,483 ------------- ------------- ------------ (342,849) 357,501 978,288 Total liabilities and partners' equity $ 21,999,832 $ 22,725,247 $ 23,478,204 ============= ============= ============= SUMMARIZED STATEMENTS OF OPERATIONS: Rental and other income $ 3,860,435 $ 3,785,907 $ 3,790,124 Expenses: Operating expenses 1,543,041 1,443,838 1,357,999 Interest expense 2,029,124 2,023,990 2,072,627 Depreciation and amortization 925,984 940,084 973,197 ------------- ------------- ------------- Total expenses 4,498,149 4,407,912 4,403,823 Net loss $ (637,714) $ (622,005) $ (613,699) ============= ============= ============= Other partners' share of net loss $ (8,583) $ (9,145) $ 1,456 Partnership's share of net loss $ (629,131) $ (612,860) $ (615,155) Suspended loss 343,278 190,864 35,248 ------------- ------------- ------------- Equity in Loss of Project Partnerships $ (285,853) $ (421,996) $ (579,907) ============= ============= ============= As of December 31, 1996, the largest Project Partnership constituted 7.5% and 6.5%, and as of December 31, 1995 the largest Project Partnership constituted 7.4% and 6.3% of the combined total assets by series and combined total revenues by series, respectively. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized financial information for the Series' Project Partnerships as of December 31 of each year: 1996 1995 1994 SERIES 4 ----------- ---------- -------------- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 1,953,151 $ 1,843,416 $ 1,712,216 Investment properties, net 26,300,477 27,277,952 28,303,182 Other assets 9,547 10,644 12,852 ------------- ------------- ------------- Total assets $ 28,263,175 $ 29,132,012 $ 30,028,250 ============= ============= ============= Liabilities and Partners' Equity Current liabilities $ 586,126 $ 623,562 $ 697,174 Long-term debt 26,621,848 26,667,967 26,743,281 ------------- ------------- ------------- Total liabilities 27,207,974 27,291,529 27,440,455 Partners' Equity Limited Partner 801,544 1,551,613 2,235,019 General Partners 253,657 288,870 352,776 ------------- ------------- ------------ 1,055,201 1,840,483 2,587,795 Total liabilities and partners' equity $ 28,263,175 $ 29,132,012 $ 30,028,250 ============= ============= ============= SUMMARIZED STATEMENTS OF OPERATIONS: Rental and other income $ 4,496,298 $ 4,453,375 $ 4,393,027 Expenses: Operating expenses 1,846,670 1,806,691 1,645,623 Interest expense 2,330,476 2,320,449 2,397,253 Depreciation and amortization 1,043,887 1,047,484 1,063,024 ------------- ------------- ------------- Total expenses 5,221,033 5,174,624 5,105,900 Net loss $ (724,735) $ (721,249) $ (712,873) ============= ============= ============= Other partners' share of net loss $ 5,368 $ (64,944) $ (18,147) Partnership's share of net loss $ (730,103) $ (656,305) $ (694,726) Suspended loss 94,925 11,440 0 ------------- ------------- ------------- Equity in Loss of Project Partnerships $ (635,178) $ (644,865) $ (694,726) ============= ============= ============= As of December 31, 1996, the largest Project Partnership constituted 5.9% and 5.7%, and as of December 31, 1995 the largest Project Partnership constituted 5.9% and 5.8% of the combined total assets by series and combined total revenues by series, respectively. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized financial information for the Series' Project Partnerships as of December 31 of each year: 1996 1995 1994 SERIES 5 ----------- ---------- -------------- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 2,490,991 $ 2,177,936 $ 1,983,020 Investment properties, net 32,973,118 34,303,980 35,493,982 Other assets 1,056 3,876 15,052 ------------- ------------- ------------- Total assets $ 35,465,165 $ 36,485,792 $ 37,492,054 ============= ============= ============= Liabilities and Partners' Equity Current liabilities $ 814,225 $ 776,819 $ 1,016,261 Long-term debt 32,902,094 32,969,419 33,030,862 ------------- ------------- ------------- Total liabilities 33,716,319 33,746,238 34,047,123 Partners' Equity Limited Partner 1,770,278 2,675,680 3,496,164 General Partners (21,432) 63,874 (51,233) ------------- ------------- ------------ 1,748,846 2,739,554 3,444,931 Total liabilities and partners' equity $ 35,466,165 $ 36,485,792 $ 37,492,054 ============= ============= ============= SUMMARIZED STATEMENTS OF OPERATIONS: Rental and other income $ 5,464,443 $ 5,378,749 $ 5,295,875 Expenses: Operating expenses 2,241,929 1,990,169 1,903,192 Interest expense 2,788,862 2,819,869 2,804,829 Depreciation and amortization 1,380,487 1,219,766 1,423,401 ------------- ------------- ------------- Total expenses 6,411,278 6,029,804 6,131,422 Net loss $ (946,835) $ (651,055) $ (835,547) ============= ============= ============= Other partners' share of net loss $ (9,469) $ 49,072 $ (96,251) Partnership's share of net loss $ (937,366) $ (700,127) $ (739,296) Suspended loss 25,401 0 0 ------------- ------------- ------------- Equity in Loss of Project Partnerships $ (911,965) $ (700,127) $ (739,296) ============= ============= ============= As of December 31, 1996, the largest Project Partnership constituted 8.1% and 7.9%, and as of December 31, 1995 the largest Project Partnership constituted 8.0% and 7.9% of the combined total assets by series and combined total revenues by series, respectively. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized financial information for the Series' Project Partnerships as of December 31 of each year: 1996 1995 1994 SERIES 6 ----------- ---------- -------------- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 2,723,043 $ 2,426,332 $ 2,038,027 Investment properties, net 37,084,577 38,474,916 39,885,897 Other assets 16,953 28,774 46,328 ------------- ------------- ------------- Total assets $ 39,824,573 $ 40,930,022 $ 41,970,252 ============= ============= ============= Liabilities and Partners' Equity Current liabilities $ 905,627 $ 976,499 $ 1,108,370 Long-term debt 35,857,657 35,963,608 36,062,397 ------------- ------------- ------------- Total liabilities 36,763,284 36,940,107 37,170,767 Partners' Equity Limited Partner 3,184,723 4,124,702 4,850,592 General Partners (123,434) (134,787) (51,107) ------------- ------------- ------------ 3,061,289 3,989,915 4,799,485 Total liabilities and partners' equity $ 39,824,573 $ 40,930,022 $ 41,970,252 ============= ============= ============= SUMMARIZED STATEMENTS OF OPERATIONS: Rental and other income $ 5,752,444 $ 5,656,081 $ 5,503,738 Expenses: Operating expenses 2,230,157 2,049,620 1,950,723 Interest expense 2,938,880 2,927,990 2,877,638 Depreciation and amortization 1,477,003 1,437,632 1,564,347 ------------- ------------- ------------- Total expenses 6,646,040 6,415,242 6,392,708 Net loss $ (893,596) $ (759,161) $ (888,970) ============= ============= ============= Other partners' share of net loss $ (10,408) $ (36,658) $ (13,947) Partnership's share of net loss $ (883,188) $ (722,503) $ (875,023) Suspended loss 77,878 11,517 0 ------------- ------------- ------------- Equity in Loss of Project Partnerships $ (805,310) $ (710,986) $ (875,023) ============= ============= ============= As of December 31, 1996, the largest Project Partnership constituted 7.0% and 6.7%, and as of December 31, 1995 the largest Project Partnership constituted 7.0% and 6.7% of the combined total assets by series and combined total revenues by series, respectively. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): In accordance with the Partnership's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized financial information for the Series' Project Partnerships as of December 31 of each year: 1997 1996 1994 TOTAL SERIES 2-6 ----------- ---------- -------------- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 10,755,220 $ 9,706,564 $ 8,733,711 Investment properties, net 138,699,597 144,154,484 149,500,274 Other assets 253,616 277,787 322,188 ------------- ------------- ------------- Total assets $149,708,433 $154,138,835 $158,556,173 ============= ============= ============= Liabilities and Partners' Equity Current liabilities $ 3,277,187 $ 3,310,809 $ 3,927,453 Long-term debt 140,491,560 140,809,700 141,102,756 ------------- ------------- ------------- Total liabilities 143,768,747 144,120,509 145,030,209 Partners' Equity Limited Partner 5,416,707 9,331,462 12,718,029 General Partners 522,979 686,864 807,935 ------------- ------------- ------------ 5,939,686 10,018,326 13,525,964 Total liabilities and partners' equity $149,708,433 $154,138,835 $158,556,173 ============= ============= ============= SUMMARIZED STATEMENTS OF OPERATIONS: Rental and other income $ 23,451,458 $ 23,043,836 $ 22,680,435 Expenses: Operating expenses 9,367,208 8,650,962 8,205,363 Interest expense 12,174,784 12,161,603 12,238,234 Depreciation and amortization 5,766,886 5,604,663 5,994,845 ------------- ------------- ------------- Total expenses 27,308,878 26,417,228 26,438,442 Net loss $ (3,857,420) $ (3,373,392) $ (3,758,007) ============= ============= ============= Other partners' share of net loss $ (29,636) $ (119,372) $ (133,960) Partnership's share of net loss $ (3,827,784) $ (3,254,020) $ (3,624,047) Suspended loss 662,303 238,935 35,248 ------------- ------------- ------------- Equity in Loss of Project Partnerships $ (3,165,481) $ (3,015,085) $ (3,588,799) ============= ============= ============= NOTE 6 - TAXABLE INCOME (LOSS): The following is a reconciliation between Net Income (Loss) as described in the financial statements and the Partnership income (loss) for tax purposes: 1997 1996 1995 SERIES 2 ----------- ---------- -------------- Net Loss per Financial Statements $ (582,633) $ (591,355) $ (756,064) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (260,440) (161,662) (42,854) Adjustments to convert March 31, fiscal year end to December 31, taxable year end (1,569) (1,153) (672) Items Expensed for Financial Statement purposes not expenses for Tax purposes: Asset Management Fee 35,831 35,373 40,700 Amortization Expense 4,458 6,347 5,298 ------------- ------------- ------------- Partnership loss for tax purposes as of December 31 $ (804,353) $ (712,450) $ (753,592) ============= ============= ============= Federal Low Income December 31, December 31, December 31, Housing Tax Credits 1996 1995 1994 ------------ ------------ ------------ $ 1,031,197 $ 1,030,475 $ 1,030,475 ============= ============= ============= NOTE 6 - TAXABLE INCOME (LOSS): The following is a reconciliation between Net Income (Loss) as described in the financial statements and the Partnership income (loss) for tax purposes: 1997 1996 1995 SERIES 3 ----------- ---------- -------------- Net Loss per Financial Statements $ (341,282) $ (470,880) $ (640,203) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (401,234) (259,712) (79,751) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 5,884 (9,853) (374) Items Expensed for Financial Statement purposes not expenses for Tax purposes: Asset Management Fee 23,595 27,250 34,835 Amortization Expense (6,985) 7,998 7,576 ------------- ------------- ------------- Partnership loss for tax purposes as of December 31 $ (720,022) $ (705,197) $ (677,917) ============= ============= ============= Federal Low Income December 31, December 31, December 31, Housing Tax Credits 1996 1995 1994 ------------ ------------ ------------ $ 972,146 $ 969,257 $ 967,994 ============= ============= ============= NOTE 6 - TAXABLE INCOME (LOSS): The following is a reconciliation between Net Income (Loss) as described in the financial statements and the Partnership income (loss) for tax purposes: 1997 1996 1995 SERIES 4 ----------- ---------- -------------- Net Loss per Financial Statements $ (696,010) $ (705,639) $ (758,528) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (289,799) (238,452) (154,906) Adjustments to convert March 31, fiscal year end to December 31, taxable year end (1,830) (1,631) (1,218) Items Expensed for Financial Statement purposes not expenses for Tax purposes: Asset Management Fee 34,607 37,087 42,017 Amortization Expense 2,340 5,283 4,597 ------------- ------------- ------------- Partnership loss for tax purposes as of December 31 $ (950,692) $ (903,352) $ (868,038) ============= ============= ============= Federal Low Income December 31, December 31, December 31, Housing Tax Credits 1996 1995 1994 ------------ ------------ ------------ $ 1,177,678 $ 1,177,678 $ 1,175,921 ============= ============= ============= NOTE 6 - TAXABLE INCOME (LOSS): The following is a reconciliation between Net Income (Loss) as described in the financial statements and the Partnership income (loss) for tax purposes: 1997 1996 1995 SERIES 5 ----------- ---------- -------------- Net Loss per Financial Statements $ (997,362) $ (781,436) $ (817,018) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (137,165) (238,351) (90,158) Adjustments to convert March 31, fiscal year end to December 31, taxable year end (330) 369 403 Items Expensed for Financial Statement purposes not expenses for Tax purposes: Asset Management Fee 36,383 34,228 46,030 Amortization Expense 12,854 11,505 14,372 ------------- ------------- ------------- Partnership loss for tax purposes as of December 31 $ (1,085,620) $ (973,685) $ (846,371) ============= ============= ============= Federal Low Income December 31, December 31, December 31, Housing Tax Credits 1996 1995 1994 ------------ ------------ ------------ $ 1,433,003 $ 1,432,379 $ 1,412,102 ============= ============= ============= NOTE 6 - TAXABLE INCOME (LOSS): The following is a reconciliation between Net Income (Loss) as described in the financial statements and the Partnership income (loss) for tax purposes: 1997 1996 1995 SERIES 6 ----------- ---------- -------------- Net Loss per Financial Statements $ (915,827) $ (821,024) $ (987,087) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (292,116) (349,531) (250,067) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 319 (1,658) (4,099) Items Expensed for Financial Statement purposes not expenses for Tax purposes: Asset Management Fee 53,770 60,312 72,030 Amortization Expense 22,377 23,661 24,781 ------------- ------------- ------------- Partnership loss for tax purposes as of December 31 $ (1,131,477) $ (1,088,240) $ (1,144,442) ============= ============= ============= Federal Low Income December 31, December 31, December 31, Housing Tax Credits 1996 1995 1994 ------------ ------------ ------------ $ 1,688,064 $ 1,687,904 $ 1,650,439 ============= ============= ============= NOTE 6 - TAXABLE INCOME (LOSS): The following is a reconciliation between Net Income (Loss) as described in the financial statements and the Partnership income (loss) for tax purposes: 1997 1996 1995 TOTAL SERIES 2-6 ----------- ---------- -------------- Net Loss per Financial Statements $ (3,533,114) $ (3,370,334) $ (3,958,900) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (1,380,754) (1,247 708) (617,736) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 2,474 (13,926) (5,960) Items Expensed for Financial Statement purposes not expenses for Tax purposes: Asset Management Fee 184,186 194,250 235,612 Amortization Expense 35,044 54,794 56,624 ------------- ------------- ------------- Partnership loss for tax purposes as of December 31 $ (4,692,164) $ (4,382,924) $ (4,290,360) ============= ============= ============= The difference in the total value of the Partnership's Investment in Project Partnerships is approximately $880,000 higher for Series 2, $715,000 higher for Series 3, $1,300,000 higher for Series 4, $740,000 higher for Series 5 and $990,000 higher for Series 6 for financial reporting purposes than for tax return purposes because (i) there were depreciation differences between financial reporting purposes and tax return purposes and (ii) certain expenses are not deductible for tax return purposes. Vincent & Voss 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Springwood Apartments Limited Partnership Westfield, New York We have audited the accompanying balance sheets of Springwood Apartments Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Springwood Apartments 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. In accordance with Government Auditing Standards, we have also issued reports dated January 31, 1997 on our consideration of Springwood Apartments Limited Partnership internal control structure and compliance with laws and regulations. /s/ Vincent & Voss Certified Public Accountants January 31, 1997 Vincent & Voss 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Cherrytree Apartments Limited Partnership Albion, PA We have audited the accompanying balance sheets of Cherrytree Apartments (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Cherrytree Apartments 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. In accordance with Government Auditing Standards, we have also issued reports dated January 30, 1997 on our consideration of Cherrytree Apartments Limited Partnership internal control structure and compliance with laws and regulations. /s/ Vincent & Voss Certified Public Accountants January 30, 1997 Vincent & Voss 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Wynnwood Common Associates Fairchance, PA We have audited the accompanying balance sheets of Wynnwood Common Associates, (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Wynnwood Common Associates 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 23, 1997 on our consideration of Wynnwood Commons Associates internal control structure and compliance with laws and regulations. /s/ Vincent & Voss January 23, 1997 Vincent & Voss 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Stony Creek Commons Limited Partnership Hooversville, Pennsylvania We have audited the accompanying balance sheets of Stony Creek Commons (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Stony Creek Commons 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. In accordance with Government Auditing Standards, we have also issued reports dated January 28, 1997 on our consideration of Stony Creek Commons Limited Partnership's internal control structure and compliance with laws and regulations. /s/ Vincent & Voss January 28, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Richland Elderly Housing, Ltd. Valdosta, Georgia We have audited the accompanying balance sheets of Richland Elderly Housing, Ltd. (A Limited Partnership), Federal ID No.: 58-1848044, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Richland Elderly Housing, 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 a report dated January 24, 1997 on our consideration of the Richland Elderly Housing, Ltd.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Pearson Elderly Housing, Ltd. Valdosta, Georgia We have audited the accompanying balance sheets of Pearson Elderly Housing, Ltd. (A Limited Partnership), Federal ID No.: 58-1848042, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Pearson Elderly Housing, 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 a report dated January 24, 1997 on our consideration of the Pearson Elderly Housing, Ltd.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Lake Park Apartments, Ltd. Valdosta, Georgia We have audited the accompanying balance sheets of Lake Park Apartments, Ltd. (A Limited Partnership), Federal ID No.: 58- 1844429, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Lake Park Apartments, 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 a report dated January 24, 1997 on our consideration of the Lake Park Apartments, Ltd.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Lakeland Elderly Housing, Ltd. Valdosta, Georgia We have audited the accompanying balance sheets of Lakeland Elderly Housing, Ltd. (A Limited Partnership), Federal ID No.: 58-1898054, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Lakeland Elderly Housing, 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 a report dated January 24, 1997 on our consideration of the Lakeland Elderly Housing, Ltd.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Woodland Terrace Apartments, Ltd. Valdosta, Georgia We have audited the accompanying balance sheets of Woodland Terrace Apartments, Ltd. (A Limited Partnership), Federal ID No.: 58- 1854412, as of December 31, 1996 and 1995, and the related statements of income, 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 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 Woodland Terrace Apartments, 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 a report dated January 24, 1997 on our consideration of Woodland Terrace Apartments, Ltd.'s internal control structure and its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Manchester Housing, Ltd. Valdosta, Georgia We have audited the accompanying balance sheets of Manchester Housing, Ltd. (A Limited Partnership), Federal ID No.: 58-1845215, as of December 31, 1996 and 1995, and the related statements of income, 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 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 Manchester Housing, 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 a report dated January 24, 1997 on our consideration of Manchester Housing, Ltd.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Heritage Villas, L.P. McRae, Georgia We have audited the accompanying balance sheets of Heritage Villas, L.P. (A Limited Partnership), Federal ID #: 58-1898056, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Heritage Villas, 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 reports dated February 7, 1997 on our consideration of Heritage Villas, L.P.'s internal control structure and its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants February 7, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Crisp Properties, L.P. Valdosta, Georgia We have audited the accompanying balance sheets of Crisp Properties, L.P. (A Limited Partnership), Federal ID No.: 58- 1910783, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Crisp Properties, 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 24, 1997 on our consideration of the Crisp Properties, L.P.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Blackshear Apartments, L.P., Phase II Valdosta, Georgia We have audited the accompanying balance sheets of Blackshear Apartments, L.P., Phase II (A Limited Partnership), Federal ID No.: 58-1925616, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Blackshear Apartments, L.P., Phase 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. In accordance with Government Auditing Standards, we have also issued a report dated January 24, 1997 on our consideration of the Blackshear Apartments, L.P.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Crawford Rental Housing, L.P. Valdosta, Georgia We have audited the accompanying balance sheets of Crawford Rental Housing, L.P. (A Limited Partnership), Federal ID No.: 58-1850761, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Crawford Rental Housing, 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 24, 1997 on our consideration of Crawford Rental Housing, L.P.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Shellman Housing, L.P. (A Limited Partnership) Valdosta, Georgia We have audited the accompanying balance sheets of Shellman Housing, L.P. (A Limited Partnership), Federal ID No.: 58-1917615, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Shellman Housing 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 24, 1997 on our consideration of the Shellman Housing L.P.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Greensboro Properties, L.P., Phase II Valdosta, Georgia We have audited the accompanying balance sheets of Greensboro Properties, L.P., Phase II (A Limited Partnership), Federal ID No.: 58-1915804, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Greensboro Properties, L.P., Phase 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. In accordance with Government Auditing Standards, we have also issued a report dated January 24, 1997 on our consideration of the Greensboro Properties, L.P., Phase II's internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Pine Terrace Apartments, L.P. Valdosta, Georgia We have audited the accompanying balance sheets of Pine Terrace Apartments, L.P. (A Limited Partnership), Federal ID No.: 58- 1918382, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Pine Terrace Apartments, 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 24, 1997 on our consideration of the Pine Terrace Apartments, L.P.'s internal control structure and a report dated January 24, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Dawson Elderly, L.P. Dawson, Georgia We have audited the accompanying balance sheet of Dawson Elderly, L.P. (A Limited Partnership), Federal ID No.: 58-1966658, as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Dawson Elderly, 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 24, 1997 on our consideration of Dawson Elderly, L.P.'s internal control structure and compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 24, 1997 Habif, Arogeti & Wynne, P.C. 1073 West Peachtree Street, N.E. Atlanta, GA 30367 PHONE: 404-892-9651 FAX: 404-876-4328 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Piedmont Development Company of Lamar County, Ltd., (L.P.) We have audited the accompanying balance sheets of PIEDMONT DEVELOPMENT COMPANY OF LAMAR COUNTY, LTD., L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture Farmers Home Administration's Audit Program. 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 accordance with Government Auditing Standards, we have also issued a report dated February 23, 1997 on our consideration of PIEDMONT DEVELOPMENT COMPANY OF LAMAR COUNTY, LTD., L.P.'s internal control structure and a report dated February 23, 1997 on its compliance with laws and regulations. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PIEDMONT DEVELOPMENT COMPANY OF LAMAR COUNTY, LTD., (L.P.) as of December 31, 1996 and 1995, and the results of its operations, its partners' equity, and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia February 23, 1997 Donald W. Causey, CPA, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 205-543-3707 FAX: 205-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Sylacauga Heritage Apartments Ltd. Sylacauga, AL I have audited the accompanying balance sheets of Sylacauga Heritage Apartments, Ltd., a limited partnership, RHS Project No.: 01-061-631025601 as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 our audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sylacauga Heritage Apartments, Ltd., RHS Project No.: 01-061- 631025601 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 audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 10 through 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA 1930- 8) Parts I through II for the year ended December 31, 1996 and 1995, is presented for purposes of complying with the requirements of the Rural Housing Services and is also 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 my 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, I have also issued a report dated February 20, 1997 on my consideration of Sylacauga Heritage Apartments, Ltd., internal control structure and a report dated February 20, 1997 on its compliance with laws and regulations. /s/ Donald W. Causey, CPA, P.C. February 20, 1997 Cole, Evans & Peterson Fifth Floor Travis Place - P.O. Drawer 1768 Shreveport, LA 71166-1768 PHONE: 318-222-8367 FAX: 318-425-4101 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Logansport Seniors Apartments, A Louisiana Partnership in Commendam Mansfield, Louisiana We have audited the accompanying balance sheets of Logansport Seniors Apartments, A Louisiana Partnership in Commendam at December 31, 1996 and December 31, 1995, and the related statements of income, 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 Logansport Seniors Apartments, A Louisiana Partnership in Commendam at 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. In accordance with Government Auditing Standards, we have also issued a report dated February 3, 1997 on our consideration of Logansport Seniors Apartments' internal control structure and a report dated February 3, 1997 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson Certified Public Accountants February 3, 1997 Cole, Evans & Peterson Fifth Floor Travis Place - P.O. Drawer 1768 Shreveport, LA 71166-1768 PHONE: 318-222-8367 FAX: 318-425-4101 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Tarpon Heights Apartments, A Louisiana Partnership in Commendam Mansfield, Louisiana We have audited the accompanying balance sheets of Tarpon Heights Apartments, A Louisiana Partnership in Commendam at December 31, 1996 and December 31, 1995, and the related statements of income, 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 Tarpon Heights Apartments, A Louisiana Partnership in Commendam at 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. In accordance with Government Auditing Standards, we have also issued a report dated February 3, 1997 on our consideration of Tarpon Height Apartments' internal control structure and a report dated February 3, 1997 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson February 3, 1997 Cole, Evans & Peterson Fifth Floor Travis Place - P.O. Drawer 1768 Shreveport, LA 71166-1768 PHONE: 318-222-8367 FAX: 318-425-4101 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners The Oaks Apartments, A Louisiana Partnership in Commendam Mansfield, Louisiana We have audited the accompanying balance sheets of The Oaks Apartments, A Louisiana Partnership in Commendam at December 31, 1996 and December 31, 1995, and the related statements of income, 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 The Oaks Apartments, A Louisiana Partnership in Commendam at 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. In accordance with Government Auditing Standards, we have also issued a report dated February 3, 1997 on our consideration of The Oaks Apartments, A Louisiana Partnership in Commendam's internal control structure and a report dated February 3, 1997 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson February 3, 1997 Cole, Evans & Peterson Fifth Floor Travis Place - P.O. Drawer 1768 Shreveport, LA 71166-1768 PHONE: 318-222-8367 FAX: 318-425-4101 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Sonora Seniors Apartments, Ltd. Mansfield, Louisiana We have audited the accompanying balance sheets of Sonora Seniors Apartments, Ltd. at December 31, 1996 and December 31, 1995, and the related statements of income, 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 Sonora Seniors Apartments, Ltd. at 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. In accordance with Government Auditing Standards, we have also issued a report dated February 4, 1997 on our consideration of Sonora Seniors Apartments, Ltd.'s internal control structure and a report dated February 4, 1997 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson February 4, 1997 Cole, Evans & Peterson Fifth Floor Travis Place - P.O. Drawer 1768 Shreveport, LA 71166-1768 PHONE: 318-222-8367 FAX: 318-425-4101 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Fredericksburg Seniors Apartments, Ltd. Mansfield, Louisiana We have audited the accompanying balance sheets of Fredericksburg Seniors Apartments, Ltd. at December 31, 1996 and December 31, 1995, and the related statements of income, 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 Fredericksburg Seniors Apartments, Ltd. at 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. In accordance with Government Auditing Standards, we have also issued a report dated February 3, 1997 on our consideration of Fredericksburg Seniors Apartment's internal control structure and a report dated February 3, 1997 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson February 3, 1997 Cole, Evans & Peterson Fifth Floor Travis Place - P.O. Drawer 1768 Shreveport, LA 71166-1768 PHONE: 318-222-8367 FAX: 318-425-4101 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Brackettville Seniors Apartments, Ltd. Mansfield, Louisiana We have audited the accompanying balance sheets of Brackettville Seniors Apartments, Ltd. at December 31, 1996 and December 31, 1995, and the related statements of income, 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 Brackettville Seniors Apartments, Ltd. at 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. In accordance with Government Auditing Standards, we have also issued a report dated January 30, 1997 on our consideration of Brackettville Seniors Apartments, LTD.'s internal control structure and a report dated January 30, 1997 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson January 30, 1997 Cole, Evans & Peterson Fifth Floor Travis Place - P.O. Drawer 1768 Shreveport, LA 71166-1768 PHONE: 318-222-8367 FAX: 318-425-4101 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Timpson Seniors Apartments, Ltd. Mansfield, Louisiana We have audited the accompanying balance sheets of Timpson Seniors Apartments, Ltd. at December 31, 1996 and December 31, 1995, and the related statements of income, 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 Timpson Seniors Apartments, Ltd. at 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. In accordance with Government Auditing Standards, we have also issued a report dated January 31, 1997 on our consideration of Timpson Seniors Apartments' internal control structure and a report dated January 31, 1997 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson January 31, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Charleston Properties, A Limited Partnership D/B/A Wingate Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of CHARLESTON PROPERTIES, A LIMITED PARTNERSHIP, D/B/A WINGATE APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 CHARLESTON PROPERTIES, A LIMITED PARTNERSHIP, D/B/A WINGATE 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, we have also issued a report dated February 21, 1997, on our consideration of the internal control structure of CHARLESTON PROPERTIES, A LIMITED PARTNERSHIP, D/B/A WINGATE APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 21, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Sallisaw Properties II, A Limited Partnership D/B/A Mayfair Place II Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of SALLISAW PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE II APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 SALLISAW PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE II 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, we have also issued our reports dated February 21, 1997, on our consideration of the internal control structure of SALLISAW PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE II APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA February 21, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Pocola Properties, A Limited Partnership D/B/A North Gate Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of POCOLA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A NORTH GATE APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 POCOLA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A NORTH GATE 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, we have also issued a report dated February 17, 1997, on our consideration of the internal control structure of POCOLA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A NORTH GATE APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 17, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Poteau Properties II, A Limited Partnership D/B/A North Pointe Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of POTEAU PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A NORTH POINTE APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 POTEAU PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A NORTH POINTE 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, we have also issued a report dated February 26, 1997, on our consideration of the internal control structure of POTEAU PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A NORTH POINTE APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 26, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Nowata Properties, A Limited Partnership D/B/A Cross Creek II Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of NOWATA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A CROSS CREEK II APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 NOWATA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A CROSS CREEK II 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, we have also issued our reports dated February 21, 1997, on our consideration of the internal control structure of NOWATA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A CROSS CREEK II APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 21, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Pocola Properties II, A Limited Partnership D/B/A Mayfair Place Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of SALLISAW PROPERTIES, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 SALLISAW PROPERTIES, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE 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, we have also issued a report dated February 21, 1997, on our consideration of the internal control structure of SALLISAW PROPERTIES, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 21, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Roland Properties II, A Limited Partnership D/B/A Woodland Hills II Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of ROLAND PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A WOODLAND HILLS II APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 ROLAND PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A WOODLAND HILLS II 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, we have also issued a report dated February 21, 1997, on our consideration of the internal control structure of ROLAND PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A WOODLAND HILLS II APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA February 21, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Sallisaw Properties, A Limited Partnership D/B/A Mayfair Place Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of SALLISAW PROPERTIES, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 SALLISAW PROPERTIES, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE 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, we have also issued a report dated February 21, 1997, on our consideration of the internal control structure of SALLISAW PROPERTIES, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 21, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Stilwell Properties, A Limited Partnership D/B/A Skywood Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of STILWELL PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SKYWOOD APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 STILWELL PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SKYWOOD 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, we have also issued a report dated February 26, 1997, on our consideration of the internal control structure of STILWELL PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SKYWOOD APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 26, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Stilwell Properties II, A Limited Partnership D/B/A Skywood II Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of STILWELL PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A SKYWOOD II APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 STILWELL PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A SKYWOOD II 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, we have also issued a report dated February 26, 1997, on our consideration of the internal control structure of STILWELL PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A SKYWOOD II APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA February 26, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Westville Properties, A Limited Partnership D/B/A Greystone Place Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of WESTVILLE PROPERTIES, A LIMITED PARTNERSHIP, D/B/A GREYSTONE PLACE APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 WESTVILLE PROPERTIES, A LIMITED PARTNERSHIP, D/B/A GREYSTONE PLACE 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, we have also issued a report dated February 26, 1997, on our consideration of the internal control structure of WESTVILLE PROPERTIES, A LIMITED PARTNERSHIP, D/B/A GREYSTONE PLACE APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA February 26, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Mill Creek Properties V, A Limited Partnership D/B/A Mill Creek Apartments V Fort Smith, Arkansas We have audited the accompanying balance sheets of MILL CREEK PROPERTIES V, A LIMITED PARTNERSHIP, D/B/A MILL CREEK APARTMENTS V as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 MILL CREEK PROPERTIES V, A LIMITED PARTNERSHIP, D/B/A MILL CREEK APARTMENTS V 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 26, 1997, on our consideration of the internal control structure of MILL CREEK PROPERTIES V, A LIMITED PARTNERSHIP, D/B/A MILL CREEK APARTMENTS V and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 26, 1997 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Parsons Properties, A Limited Partnership D/B/A Silver Stone Place Fort Smith, Arkansas We have audited the accompanying balance sheets of PARSONS PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SILVER STONE PLACE as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 PARSONS PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SILVER STONE PLACE 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 21, 1997, on our consideration of the internal control structure of PARSONS PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SILVER STONE PLACE and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 21, 1997 Goddard, Henderson, Godbee & Nichols, P.C. 3488 North Valdosta Road Valdosta, GA 31604 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Inverness Club, Ltd., L.P. (A Georgia Limited Partnership) Valdosta, Georgia We have audited the accompanying balance sheets of Inverness Club, Ltd., L.P. (A Georgia Limited Partnership), FmHA Project No.: 09- 009-581808620, as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Inverness Club, Ltd., 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 27, 1997 on our consideration of Inverness Club, Ltd., L.P.'s internal control structure and a report dated January 27, 1997 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 27, 1997 Reznick, Fedder & Silverman P.O. Box 501298 Atlanta, GA 31150-1298 PHONE: 770-844-0644 FAX: 770-844-7363 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Carrollton Club, Ltd., L.P. We have audited the accompanying balance sheets of Carrollton Club, Ltd., L.P., RHS Project No.: 10-22-58188314, as of December 31, 1996 and 1995, and the related statements of operations, 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 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 Carrollton Club, Ltd., L.P., RHS Project No.: 10-22-58188314, 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 supplemental information on pages 15 through 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 audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 22, 1997 on our consideration of Carrollton Club, Ltd., L.P.'s internal control structure and on its compliance with laws and regulations. /s/ Reznick, Fedder & Silverman Certified Public Accountants Atlanta, Georgia January 22, 1997 Grana & Teibel, CPAs, P.C. 300 Corporate Parkway, Suite 116 North Amherst, NY 14226 PHONE: 716-862-4270 FAX: 716-862-0007 INDEPENDENT AUDITORS' REPORT ---------------------------- To The Partners of Lewiston Limited Partnership Case No. 37-32-161349932 and RECD Housing Director 166 Washington Avenue Batavia, New York 14020 We have audited the accompanying balance sheets of Lewiston Limited Partnership as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Lewiston 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. In accordance with Government Auditing Standards, we have also issued a report dated January 22, 1997 on our consideration of Lewiston Limited Partnership's internal control structure and a report dated January 22, 1997 on its compliance with laws and regulations. /s/ Grana & Teibel, CPAs, P.C. Certified Public Accountants January 22, 1997 VanRheenen & Miller, Ltd. CPA 1309 E. Race Avenue Searcy, AR 72143 PHONE: 501-268-8356 FAX: 501-268-9362 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners Lancaster House, An Arkansas Limited Partnership D/B/A Pebble Creek Apartments 321 East 4th Street Mountain Home, AR 72653 We have audited the accompanying balance sheet of Lancaster House, An Arkansas Limited Partnership, D/B/A Pebble Creek Apartments, as of December 31, 1996 and 1995, and the related statements of income, changes in owners' equity, and cash flows for the years then ended. These financial statements and the supplemental financial information referred to above 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, and the provisions of Office of Management and Budget (OMB) Circular A-128, 'Audits of State and Local Governments'. Those standards and OMB Circular A- 128 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 Lancaster House, An Arkansas Limited Partnership, D/B/A Pebble Creek 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, we have also issued a report dated February 5, 1997 on our consideration of Lancaster House, An Arkansas Limited Partnership, D/B/A Pebble Creek Apartments' internal control structure and a report dated February 5, 1997 on its compliance with laws and regulations. Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying financial information listed as supplemental financial information in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements of Lancaster House, An Arkansas Limited Partnership, D/B/A Pebble Creek Apartments. Such information has been subjected to the auditing procedures applied in the audits of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. /s/ VanRheenen & Miller, Ltd. CPA Certified Public Accountants February 5, 1997 Leavitt, Christensen & Co. 960 Broadway Avenue, Suite 505 Boise, ID 83706 PHONE: 208-336-8666 FAX: 208-336-8741 INDEPENDENT AUDITORS' REPORT ---------------------------- Managing General Partner Haines Associates Limited Partnership Boise, Idaho We have audited the accompanying balance sheets of Haines Associates Limited Partnership, as of December 31, 1996 and 1995, and the related statements of operations, partners' capital (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and Government Auditing Standards issued by the Comptroller General of the United States and the Rural Development Audit Program issued in December 1989. 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 Haines Associates 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. In accordance with Government Auditing Standards, we have also issued reports dated January 25, 1997 on our consideration of Haines Associates Limited Partnership's internal control structure and on its compliance with laws and regulations. The Partnership has filed tax returns with the Internal Revenue Service which allow the partners to receive the benefit of a low income housing tax credit. Because the qualifying standards of the low income housing tax credit are different than the requirements of the loan agreement and the interest credit agreements, and due to the fact that the low income housing tax credit relates to income taxes which are the responsibility of the individual partners, the scope of these audits were not designed or intended to audit the compliance with the various low income housing tax credit laws. Therefore, these audits can not be relied on to give assurances with regard to compliance with any low income housing tax credit laws. /s/ Leavitt, Christensen & Co. Certified Public Accountants January 25, 1997 Oscar N. Harris Associates, P.A. 100 East Cumberland Street Dunn, NC 28334 PHONE: 910-892-1021 FAX: 910-892-6084 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Woodcrest Associates of South Boston, VA, LTD. Charlotte, North Carolina We have audited the accompanying balance sheets of Woodcrest Associates of South Boston, VA, LTD. as of December 31, 1996 and 1995, and the related statements of partners' capital, income, 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 Woodcrest Associates of South Boston, VA, 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 a report dated January 31, 1997 on our consideration of Woodcrest Associates of South Boston, VA, LTD's internal control structure and a report dated January 31, 1997 on its compliance with laws and regulations. /s/ Oscar N. Harris Associates, P.A. Certified Public Accountants January 31, 1997 Thomas C. Cunningham, CPA PC 23 Moore Street Bristol, VA 24201 PHONE: 540-669-5531 FAX: 540-669-5576 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Norton Green Limited Partnership I have audited the accompanying balance sheets of Norton Green Limited Partnership, D/B/A Norton Green Apartments, as of December 31, 1996 and 1995, and the related statements of operation, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my 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 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 audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Norton Green Limited Partnership, D/B/A Norton Green 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. My audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on page 12 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 my 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, I have also issued a report dated February 15, 1997 on my consideration of Norton Green Limited Partnership's internal control structure and a report dated February 15, 1997 on its compliance with laws and regulations applicable to the financial statements. /s/ Thomas C. Cunningham, CPA PC Bristol, Virginia February 15, 1997 Thomas C. Cunningham, CPA PC 23 Moore Street Bristol, VA 24201 PHONE: 540-669-5531 FAX: 540-669-5576 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Jonesville Manor Limited Partnership I have audited the accompanying balance sheets of Jonesville Manor Limited Partnership, D/B/A Jonesville Manor Apartments, as of December 31, 1996 and 1995, and the related statements of operation, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my 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 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 audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jonesville Manor Limited Partnership, D/B/A Jonesville Manor 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. My audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on page 12 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 my 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, I have also issued a report dated February 15, 1997 on my consideration of Jonesville Manor Limited Partnership's internal control structure and a report dated February 15, 1997 on its compliance with laws and regulations applicable to the financial statements. /s/ Thomas C. Cunningham, CPA PC Bristol, Virginia February 15, 1997 Thomas C. Cunningham, CPA PC 23 Moore Street Bristol, VA 24201 PHONE: 540-669-5531 FAX: 540-669-5576 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Blacksburg Terrace Limited Partnership I have audited the accompanying balance sheets of Blacksburg Terrace Limited Partnership, D/B/A Blacksburg Terrace Apartments, as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the 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 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 the audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Blacksburg Terrace Limited Partnership, D/B/A Blacksburg Terrace Apartments, of December 31, 1996 and 1995, and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles. My audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on page 12 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 audits of the basic financial statements and, in my 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, I have also issued a report dated February 15, 1997 on my consideration of Blacksburg Terrace Limited Partnership's internal control structure and a report dated February 15, 1997 on its compliance with laws and regulations applicable to the financial statements /s/ Thomas C. Cunningham, CPA PC Certified Public Accountants Bristol, Virginia February 15, 1997 Thomas C. Cunningham, CPA PC 23 Moore Street Bristol, VA 24201 PHONE: 540-669-5531 FAX: 540-669-5576 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Newport Village Limited Partnership I have audited the accompanying balance sheets of Newport Village Limited Partnership of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the 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 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 the audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Newport Village Limited Partnership of December 31, 1996 and 1995, and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with generally accepted accounting principles. My audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on page 12 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 audits of the basic financial statements and, in my 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, I have also issued a report dated February 15, 1997 on my consideration of Newport Village Limited Partnership's internal control structure and a report dated February 15, 1997 on its compliance with laws and regulations applicable to the financial statements /s/ Thomas C. Cunningham, CPA PC Certified Public Accountants Bristol, Virginia February 15, 1997 Lou Ann Montey & Associates 2404 Rutland, Suite 104 Austin, TX 78758 PHONE: 512-338-0044 FAX: 512-338-5395 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Zapata Housing, Ltd. (A Texas Limited Partnership) Buret, TX We have audited the accompanying balance sheets of Zapata Housing, Ltd. (A Texas Limited Partnership), as of December 31, 1996 and 1995, and the related statements of income (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 Government Auditing Standards as issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Zapata Housing, Ltd.- (A Texas 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. In accordance with Government Auditing Standards, we have also issued a report dated February 4, 1997 on our consideration of the internal control structure of Zapata Housing, Ltd.- (A Texas Limited Partnership) and a report dated February 4, 1997 on its compliance with laws and regulations. /s/ Lou Anne Montey & Associates Certified Public Accountants Austin, Texas February 4, 1997 Lou Anne Montey & Associates 2404 Rutland, Suite 104 Austin, TX 78758 PHONE: 512-338-0044 FAX: 512-338-5395 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Sinton Retirement, Ltd. (A Texas Limited Partnership) Burnet, TX We have audited the accompanying balance sheets of Sinton Retirement, Ltd. (A Texas Limited Partnership), as of December 31, 1996 and 1995, and the related statements of income (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 Government Auditing Standards as issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Sinton Retirement, Ltd.- (A Texas 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. In accordance with Government Auditing Standards, we have also issued a report dated February 5, 1997 on our consideration of the internal control structure of Sinton Retirement, Ltd.- (A Texas Limited Partnership) and a report dated February 5, 1997 on its compliance with laws and regulations. /s/ Lou Anne Montey & Associates Certified Public Accountants Austin, Texas February 5, 1997 Gubler and Carter, P.C. 7001 South 900 East, Suite 240 Midvale, UT 84047 PHONE: 801-566-5866 FAX: 801-561-8693 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Smithfield Greenbriar Limited Partnership We have audited the accompanying balance sheets of Smithfield Greenbriar Limited Partnership, as of December 31, 1996 and 1995, and the related statements of income, 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 and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Smithfield Greenbriar Limited Partnership as of December 31, 1996 and 1995, and the results of its operations, changes in partners' capital 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 our reports dated February 10, 1997 on our consideration of Smithfield Greenbriar Limited Partnership's internal control and on its compliance with laws and regulations. Our audits were conducted for the purposes of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information shown on pages 14 through 16 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Smithfield Greenbriar Limited Partnership. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Gubler and Carter, P.C. Certified Public Accountants Salt Lake City, Utah February 10, 1997 Simmons and Clubb 410 S. Orchard, Suite 156 Boise, ID 83705 PHONE: 208-336-6800 FAX: 208-343-2381 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Mountain Crest Limited Partnership Boise, Idaho We have audited the accompanying balance sheets of Mountain Crest Limited Partnership as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Mountain Crest 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. In accordance with Government Auditing Standards, we have also issued reports dated February 13, 1997 on our consideration of Mountain Crest Limited Partnership's internal control structure and its compliance with laws and regulations. The partnership's tax returns have been filed allowing the partners to claim a benefit of a low income housing tax credit. Because the compliance and qualification standards of the low income housing tax credit are not related to the interest credit agreement and loan agreement, and because the low income housing tax credit related to income taxes which are the responsibility of each individual partner, the scope of our audit was not designed or intended to audit the partnerships compliance with the low income housing tax credit laws. Accordingly, our audit cannot be relied upon to give assurance with regard to the partnerships compliance with any of the low income housing tax credit laws. /s/ Roger Clubb Simmons and Clubb Certified Public Accountants Boise, Idaho February 13, 1997 Berberich, Trahan and Co., P.A. 800 S.W. Jackson St., Suite 1300 Topeka, KS 66612 PHONE: 913-234-3427 FAX: 913-233-1768 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Eudora Senior Housing, L.P. We have audited the accompanying balance sheet of Pinecrest Apartments II, FmHA Project No. 18-023-481065040 (wholly-owned by Eudora Senior Housing, L.P., a limited Partnership) as of December 31, 1996, and the related statement of profit and loss, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Project's management. Our responsibility is to express an opinion on these statements based on our audit The financial statements of Pinecrest Apartments II as of December 31, 1995 were audited by other auditors whose report dated February 1, 1996, expressed an unqualified opinion on those statements. 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 Pinecrest Apartments II, FmHA Project No. 18-023-481065040, 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. In accordance with government Auditing Standards, we have also issued a report dated January 15, 1997 on our consideration of Pinecrest Apartments II's internal control structure and a report dated January 15, 1997 on its compliance with laws and regulations applicable to the financial statements. /s/ Berberich, Trahan and Co., P.A. Certified Public Accountants Topeka, Kansas January 15, 1997 Audit Principal: John T. Berberich IA Federal ID Number: 48-1066439 Ralph C. Johnson & Company Mark Twain Tower 106 W. 11th Street, Suite 1630 Kansas City, Missouri 64105-1817 PHONE: 816-472-8900 FAX: 816-472-4633 INDEPENDENT AUDITORS' REPORT ---------------------------- The Partners Eudora Senior Housing, L.P. We have audited the accompanying balance sheet of Pinecrest Apartments II, FmHA Project No. 18-023-481065040 (wholly-owned by Eudora Senior Housing, L.P., a limited Partnership) as of December 31, 1995 and 1994, and the related statement of profit and loss, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Project's management. Our responsibility is to express an opinion on these statements based on our audit. 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 Pinecrest Apartments II, FmHA Project No. 18-023-481065040, 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. 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 16 to 24 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information presented for the year ended December 31, 1995, is presented for purposes of complying with the requirements of the Farmers Home Administration and is also not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Ralph C. Johnson & Company Kansas City 1 February 96 Our 25th Year Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Spring Hill Housing, L.P. (A Limited Partnership) D/B/A Spring Hill Apartments Fort Smith, Arkansas We have audited the accompanying balance sheets of SPRING HILL HOUSING, L.P., A LIMITED PARTNERSHIP, D/B/A SPRING HILL APARTMENTS as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 the standards for financial audits contained in Government Auditing Standards issued by the U.S. General Accounting Office. 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 SPRING HILL HOUSING L.P., A LIMITED PARTNERSHIP, D/B/A SPRING HILL 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, we have also issued a report dated February 26, 1997, on our consideration of the internal control structure of SPRING HILL HOUSING L.P., A LIMITED PARTNERSHIP, D/B/A SPRING HILL APARTMENTS and on its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA February 26, 1997 Charles Bailly & Co. 100 North Phillips, Suite 800 Sioux Falls, SD 57102 PHONE: 605-339-1999 FAX: 605-339-1306 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Sunchase II, Ltd. Watertown, SD We have audited the accompanying balance sheets of Sunchase II, Ltd. (A 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 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 Sunchase II, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 12 and 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated February 7, 1997 on our consideration of Sunchase II, Ltd.s internal control structure and a report dated February 7, 1997 on its compliance with laws and regulations. /s/ Charles Bailly & Co. Certified Public Accountants Sioux Falls, South Dakota February 7, 1997 Charles Bailly & Co. 100 North Phillips, Suite 800 Sioux Falls, SD 57102 PHONE: 605-339-1999 FAX: 605-339-1306 INDEPENDENT AUDITORS' REPORT ---------------------------- The Partners Courtyard, Ltd. Huron, South Dakota We have audited the accompanying balance sheets of Courtyard, Ltd. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 Courtyard, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 15 and 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 auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated February 7, 1997 on our consideration of Courtyard, Ltd.'s internal control structure and a report dated February 7, 1997 on its compliance with laws and regulations. /s/ Charles Bailly & Co. Certified Public Accountants Sioux Falls, South Dakota February 7, 1997 Charles Bailly & Co. 100 North Phillips, Suite 800 Sioux Falls, SD 57102 PHONE: 605-339-1999 FAX: 605-339-1306 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Sunrise, Ltd. Yanton, South Dakota We have audited the accompanying balance sheets of Sunrise Ltd. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 Sunrise, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 12 and 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated February 7, 1997 on our consideration of Sunrise, Ltd.'s internal control structure and a report dated February 7, 1997 on its compliance with laws and regulations. /s/ Charles Bailly & Co. Sioux Falls, South Dakota February 7, 1997 Johnson, Hickey & Murchison, P.C. 651 East Fourth Street, Suite 200 Chattanooga, TN 37403 PHONE: 423-756-0052 FAX: 423-267-5945 INDEPENDENT AUDITORS' REPORT ---------------------------- To the General Partners of Southwood, L.P.: We have audited the accompanying balance sheets of Southwood, L.P. as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's 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 Southwood, L.P. 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. In accordance with Government Auditing Standards, we have also issued a report dated January 22, 1997 on our consideration of the Partnership's internal control structure and our report dated January 22, 1997, on its compliance with laws and regulations applicable to the basic financial statements. /s/ Johnson, Hickey & Murchison, P.C. Certified Public Accountants January 22, 1997 Donald W. Causey, CPA, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 205-543-3707 FAX: 205-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Hazlehurst Manor, L.P. Hazlehurst, Mississippi I have audited the accompanying balance sheets of Hazlehurst Manor L.P., a limited partnership, RHS Project No.: 28-015-64083081 as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the audits in accordance with generally accepted auditing Standards and Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 the audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hazlehurst Manor, L.P., RHS Project No.: 28-015-64083081 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 audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 9 through 12 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA 1930- 8) Parts I through II for the year ended December 31, 1996 and 1995, is presented for purposes of complying with the requirements of the Rural Housing Services and is also 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 my 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, I have also issued a report dated February 19, 1997 on my consideration of Hazlehurst Manor, L.P.'s internal control structure and a report dated February 19, 1997 on its compliance with laws and regulations. /s/ Donald W. Causey, CPA, P.C. February 19, 1997 Donald W. Causey, CPA, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 205-543-3707 FAX: 205-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Lakeshore Apartments Ltd. Tuskegee, AL I have audited the accompanying balance sheets of Lakeshore Apartments, Ltd., a limited partnership, RHS Project No.: 01-044- 631014228 as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the audits in accordance with generally accepted auditing Standards and Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lakeshore Apartments, Ltd., RHS Project No.: 01-044-631014228 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 audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 10 through 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA 1930- 8) Parts I through II for the year ended December 31, 1996 and 1995, is presented for purposes of complying with the requirements of the Rural Housing Services and is also 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 my 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, I have also issued a report dated February 23, 1997 on my consideration of Lakeshore Apartments, Ltd., internal control structure and a report dated February 23, 1997 on its compliance with laws and regulations. /s/ Donald W. Causey, CPA, P.C. February 23, 1997 Donald W. Causey, CPA, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 205-543-3707 FAX: 205-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Countrywood Apartments Ltd. Centerville, Alabama I have audited the accompanying balance sheets of Countrywood Apartments, Ltd., a limited partnership, RHS Project No.: 01-004- 630943678 as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the audits in accordance with generally accepted auditing Standards and Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 the audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Countrywood Apartments, Ltd., RHS Project No.: 01-004-630943678 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 audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 10 through 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA 1930- 8) Parts I through II for the year ended December 31, 1996 and 1995, is presented for purposes of complying with the requirements of the Rural Housing Services and is also 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 my 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, I have also issued a report dated February 22, 1997 on my consideration of Countrywood Apartments, Ltd., internal control structure and a report dated February 22, 1997 on its compliance with laws and regulations. /s/ Donald W. Causey, CPA, P.C. February 22, 1997 Donald W. Causey, CPA, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 205-543-3707 FAX: 205-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Wildwood Apartments Ltd. Pineville, Louisiana I have audited the accompanying balance sheets of Wildwood Apartments, Ltd., a limited partnership, RHS Project No.: 22-040- 630954515 as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the audits in accordance with generally accepted auditing Standards and Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 the audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wildwood Apartments, Ltd., RHS Project No.: 22-040-630954515 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 audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 10 through 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA 1930- 8) Parts I through II for the year ended December 31, 1996 and 1995, is presented for purposes of complying with the requirements of the Rural Housing Services and is also 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 my 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, I have also issued a report dated February 24, 1997 on my consideration of Wildwood Apartments, Ltd., internal control structure and a report dated February 24, 1997 on its compliance with laws and regulations. /s/ Donald W. Causey, CPA, P.C. February 24, 1997 Donald W. Causey, CPA, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 205-543-3707 FAX: 205-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Meadowcrest Apartments Ltd. Luverne, Alabama I have audited the accompanying balance sheets of Meadowcrest Apartments, Ltd., a limited partnership, RHS Project No.: 01-021- 631047203 as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted the audits in accordance with generally accepted auditing Standards and Government Auditing Standards issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 the audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Meadowcrest Apartments, Ltd., RHS Project No.: 01-021-631047203 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 audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 10 through 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplemental information presented in the Multiple Family Housing Borrower Balance Sheet (Form FmHA 1930- 8) Parts I through II for the year ended December 31, 1996 and 1995, is presented for purposes of complying with the requirements of the Rural Housing Services and is also 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 my 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, I have also issued a report dated February 23, 1997 on my consideration of Meadowcrest Apartments, Ltd., internal control structure and a report dated February 23, 1997 on its compliance with laws and regulations. /s/ Donald W. Causey, CPA, P.C. February 23, 1997 Turk & Giles, CPAs, P.C. 1823 East 20th - P.O. Box 3766 Joplin, MO 64803 PHONE: 417-623-8666 FAX: 417-623-4075 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Seneca Apartments, L.P. Joplin, Missouri We have audited the accompanying balance sheets of Seneca Apartments, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. 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 Seneca Apartments, L.P. (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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our reports dated February 7, 1997 on our consideration of Seneca Apartments, L.P.'s internal control structure and on its compliance with laws and regulations. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 7, 1997 Turk & Giles, CPAs, P.C. 1823 East 20th - P.O. Box 3766 Joplin, MO 64803 PHONE: 417-623-8666 FAX: 417-623-4075 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Carthage Seniors, L.P. Joplin, Missouri We have audited the accompanying balance sheets of Carthage Seniors, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. 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 Carthage Seniors, L.P. (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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated February 6, 1997 on our consideration of Carthage Seniors, L.P.'s internal control and on its compliance with laws and regulations. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 6, 1997 Turk & Giles, CPAs, P.C. 1823 East 20th - P.O. Box 3766 Joplin, MO 64803 PHONE: 417-623-8666 FAX: 417-623-4075 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Southwest City Apartments, L.P. Joplin, Missouri We have audited the accompanying balance sheets of Southwest City Apartments, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. 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 Southwest City Apartments, L.P. (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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated February 7, 1997 on our consideration of Southwest City Apartments, L.P.'s internal control and on its compliance with laws and regulations. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 7, 1997 Turk & Giles, CPAs, P.C. 1823 East 20th - P.O. Box 3766 Joplin, MO 64803 PHONE: 417-623-8666 FAX: 417-623-4075 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Pineville Apartments, L.P. Joplin, Missouri We have audited the accompanying balance sheets of Pineville Apartments, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. 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 Pineville Apartments, L.P. (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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated February 7, 1997 on our consideration of Pineville Apartments, L.P.'s internal control and on its compliance with laws and regulations. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 7, 1997 Turk & Giles, CPAs, P.C. 1823 East 20th - P.O. Box 3766 Joplin, MO 64803 PHONE: 417-623-8666 FAX: 417-623-4075 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Monett Seniors, L.P. Joplin, Missouri We have audited the accompanying balance sheets of Monett Seniors, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. 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 Monett Seniors, L.P. (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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated February 7, 1997 on our consideration of Monett Seniors, L.P.'s internal control and on its compliance with laws and regulations. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 7, 1997 Turk & Giles, CPAs, P.C. 1823 East 20th - P.O. Box 3766 Joplin, MO 64803 PHONE: 417-623-8666 FAX: 417-623-4075 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Columbus Seniors, L.P. Joplin, Missouri We have audited the accompanying balance sheets of Columbus Seniors, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Columbus Seniors, L.P. (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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated February 27, 1997 on our consideration of Columbus Seniors, L.P.'s internal control and on its compliance with laws and regulations. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 27,1997 Turk & Giles, CPAs, P.C. 1823 East 20th - P.O. Box 3766 Joplin, MO 64803 PHONE: 417-623-8666 FAX: 417-623-4075 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Arma Seniors, L.P. Joplin, Missouri We have audited the accompanying balance sheets of Arma Seniors, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. 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 Arma Seniors, L.P. (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. In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report dated February 6, 1997 on our consideration of Arma Seniors, L.P.'s internal control and on its compliance with laws and regulations. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 6, 1997 Suellen Doubet, CPA 226 East Cherokee Wagoner, OK 74467 PHONE: 918-485-8085 FAX: 918-485-3092 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Yorkshire Retirement Village: I have audited the accompanying balance sheet of Yorkshire Retirement Village, (An Oklahoma Limited Partnership) as of December 31, 1996, and the related statements of income, partners' equity, and cash flows for the year 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 audits. I conducted my 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 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 my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yorkshire Retirement Village 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. In accordance with Government Auditing Standards, I have also issued a report dated February 24, 1997 on my consideration of Yorkshire Retirement Village's internal control structure and a report dated February 24, 1997 on its compliance with laws and regulations. /s/ Suellen Doubet, CPA Wagoner, OK 74467 February 24, 1997 Suellen Doubet, CPA 226 East Cherokee Wagoner, OK 74467 PHONE: 918-485-8085 FAX: 918-485-3092 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Yorkshire Retirement Village: I have audited the accompanying balance sheet of Yorkshire Retirement Village, (An Oklahoma Limited Partnership) as of December 31, 1995 and 1994, and the related statements of income, partners' equity, and cash flows for the year 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 audits. I conducted my 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 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 my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yorkshire Retirement Village 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. My audit was 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. The supplementary information, The Schedule of Maintenance Expenses has been subjected to the audit procedures applied in the audit of the basic financial statements and, in my opinion, if fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, I have also issued a report dated February 24, 1997 on my consideration of Yorkshire Retirement Village's internal control structure and a report dated February 24, 1997 on its compliance with laws and regulations. /s/ Suellen Doubet, CPA Wagoner, OK 74467 February 29, 1996 Chester Kearney, CPA 12 Dyer Street Presque Isle, ME 04769-1550 PHONE: 207-764-3171 FAX: 207-764-6362 INDEPENDENT AUDITORS' REPORT ---------------------------- Rural Development Group (d/b/a Ashland Estates Caribou, Maine We have audited the accompanying balance sheets of Rural Development Group, d/b/a Ashland Estates, (a limited partnership) as of December 31, 1996 and 1995, and the related statements of operations, 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 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 the Rural Development Group, d/b/a Ashland Estates as of December 31, 1996 and 1995, and the results of its operations, partners' equity (deficit) 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 February 7, 1997 on our consideration of Rural Development Group, d/b/a Ashland Estates' internal control structure and compliance with laws and regulations. /s/ Chester Kearney, CPA Presque Isle, Maine February 7, 1997 Richard A. Strauss 1310 Lady Street, 9th Floor Columbia, SC 29201 PHONE: 803-779-7472 FAX: 803-252-6171 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Scarlett Oaks Limited Partnership Lexington, South Carolina I have audited the accompanying balance sheet of Scarlett Oaks Limited Partnership as of December 31, 1996 and 1995, and the related statements of income, Expense and partners' equity and cash flows for the years then ended. These financial statements are the responsibility of Scarlett Oaks Limited Partnership'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. 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 my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Scarlett Oaks Limited Partnership 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. In accordance with Government Auditing Standards, I have also issued a report dated February 5, 1997, on my consideration of Scarlett Oaks Limited Partnership's internal control and a report dated February 5, 1997 on its compliance with laws and regulations. This report is intended for the information of management and the Department of Agriculture, Rural Economic and Community Development. However, this report is a matter of public record and its distribution is not limited. Respectfully submitted, /s/ Richard A. Strauss, CPA Certified Public Accountants Columbia, South Carolina February 5, 1997 Reznick, Fedder & Silverman P.O. Box 501298 Atlanta, GA 31150-1298 PHONE: 770-844-0644 FAX: 770-844-7363 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Brookshill Apartments, L.P. We have audited the accompanying balance sheets of Brookshill Apartments L.P., RHS Project No.: 10-061-581953696, as of December 31, 1996 and 1995, and the related statements of operations, 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 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 Brookshill Apartments L.P., RHS Project No.: 10-061-581953696, 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 supplemental information on pages 16 through 17 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated February 1, 1997 on our consideration of Brookshill Apartments, L.P.'s internal control structure and on its compliance with laws and regulations. /s/ Reznick, Fedder & Silverman Certified Public Accountants Atlanta, Georgia February 1, 1997 K.B. Parrish & Company 151 North Delaware Street, Suite 1600 Indianapolis, IN 46204 PHONE: 317-269-2455 FAX: 317-269-2464 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Village Apartments of Seymour II, L.P. (A Limited Partnership) We have audited the accompanying balance sheets of Village Apartments of Seymour II, L.P. (A Limited Partnership), as of December 31, 1996 and 1995, and the related statements of operations, changes in partnership 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, Government Auditing Standards issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration Audit Program. 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 Village Apartments of Seymour II, L.P. at December 31, 1996 and 1995, and the results of its operations, changes in partnership capital, and 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 the partnership's internal control structure and a report dated January 21, 1997 on its compliance with laws and regulations. Respectfully submitted, /s/ K.B. Parrish & Company Certified Public Accountants January 21, 1997 Scheiner, Mister & Grandizio, P.A. 1301 York Road, Suite 705 Lutherville, MD 21093 PHONE: 410-494-0885 FAX: 410-321-9024 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Frazer Elderly Limited Partnership Reisterstown, Maryland We have audited the accompanying balance sheets of Frazer Elderly Limited Partnership as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 Frazer Elderly Limited Partnership as of December 31, 1996 and 1995, and the results of its operations, changes in partners' capital, and 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 14, 1997 on our consideration of the Partnership's internal control structure and a report dated January 14, 1997 on its compliance with laws and regulations. /s/ Scheiner, Mister & Grandizio, P.A. Certified Public Accountants January 14, 1997 Larry C. Stemen CPA & Associates 380 South Fifth Street, The Americana - Suite 1 Columbus, OH 43215 PHONE: 614-224-0955 FAX: 614-224-0971 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Bryan Senior Village Limited Partnership (A Limited Partnership) DBA Plaza Senior Village Apartments Mansfield, OH We have audited the accompanying balance sheets of Bryan Senior Village Limited Partnership (A Limited Partnership), DBA Plaza Senior Village Apartments, FmHA Case No. 41-086-341561720, as of December 31, 1996 and 1995, and the related income statements, changes in partners' equity (deficit) 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 Standards issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration 'Audit Program' issued in December 1989. Those standards and Audit Program 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 Bryan Senior Village Limited Partnership (A Limited Partnership), DBA Plaza Senior Village Apartments, FmHA Case No. 41-086-341561720, at December 31, 1996 and 1995, and the results of its operations, changes in partners' equity (deficit),and 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 financial statements taken as a whole. The supplemental data included in this report (shown on pages 14-18) are presented for the purpose of additional analysis and are not a required part of the financial statements of FmHA Case No. 41-086-341561720. Such information has been subjected to the same auditing procedures applied in the audits 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. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1997 on our consideration of Bryan Senior Village Limited Partnership's internal control structure and a report dated January 15, 1997 on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Larry C. Stemen CPA & Associates Certified Public Accountants Columbus, Ohio January 15, 1997 Larry C. Stemen CPA & Associates 380 South Fifth Street, The Americana - Suite 1 Columbus, OH 43215 PHONE: 614-224-0955 FAX: 614-224-0971 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Brubaker Square Limited Partnership (A Limited Partnership) DBA Brubaker Square Apartments Mansfield, OH We have audited the accompanying balance sheets of Brubaker Square Limited Partnership (A Limited Partnership), DBA Brubaker Square Apartments, FmHA Case No. 41-092-341561718, as of December 31, 1996 and 1995, and the related income statements, changes in partners' equity (deficit) 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 Standards issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration 'Audit Program' issued in December 1989. Those standards and Audit Program 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 Brubaker Square Limited Partnership (A Limited Partnership), DBA Brubaker Square Apartments, FmHA Case No. 41-092-341561718, at December 31, 1996 and 1995, and the results of its operations, changes in partners' equity (deficit),and 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 financial statements taken as a whole. The supplemental data included in this report (shown on pages 14-18) are presented for the purpose of additional analysis and are not a required part of the financial statements of FmHA Case No. 41-092-341561718. Such information has been subjected to the same auditing procedures applied in the audits 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. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1997 on our consideration of Brubaker Square Limited Partnership's internal control structure and a report dated January 15, 1997 on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Larry C. Stemen CPA & Associates Certified Public Accountants Columbus, Ohio January 15, 1997 Larry C. Stemen CPA & Associates 380 South Fifth Street, The Americana - Suite 1 Columbus, OH 43215 PHONE: 614-224-0955 FAX: 614-224-0971 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Villa Allegra Limited Partnership (A Limited Partnership) DBA Villa Allegra Apartments Mansfield, OH We have audited the accompanying balance sheets of Villa Allegra Limited Partnership (A Limited Partnership), DBA Villa Allegra Apartments, FmHA Case No. 41-054-341561716, as of December 31, 1996 and 1995, and the related income statements, changes in partners' equity (deficit) 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 Standards issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration 'Audit Program' issued in December 1989. Those standards and Audit Program 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 Villa Allegra Limited Partnership (A Limited Partnership), DBA Villa Allegra Apartments, FmHA Case No. 41-054-341561716, at December 31, 1996 and 1995, and the results of its operations, changes in partners' equity (deficit),and 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 financial statements taken as a whole. The supplemental data included in this report (shown on pages 14-18) are presented for the purpose of additional analysis and are not a required part of the financial statements of FmHA Case No. 41-054-341561716. Such information has been subjected to the same auditing procedures applied in the audits 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. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1997 on our consideration of Villa Allegra Limited Partnership's internal control structure and a report dated January 15, 1997 on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Larry C. Stemen CPA & Associates Certified Public Accountants Columbus, Ohio January 15, 1997 Larry C. Stemen CPA & Associates 380 South Fifth Street, The Americana - Suite 1 Columbus, OH 43215 PHONE: 614-224-0955 FAX: 614-224-0971 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Logan Place Limited Partnership (A Limited Partnership) DBA Logan Place Apartments Mansfield, Ohio We have audited the accompanying balance sheets of Logan Place Limited Partnership (A Limited Partnership), DBA Logan Place Apartments, FmHA Case No. 41-037-341643639, as of December 31, 1996 and 1995, and the related income statements, changes in partners' equity (deficit) and cash flows for the years ended December 31, 1996 and 1995. 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 Standards issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration 'Audit Program' issued in December 1989. Those standards and Audit Program 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 Logan Place Limited Partnership (A Limited Partnership), DBA Logan Place Apartments, FmHA Case No. 41-037-341643639, at December 31, 1996 and 1995, and the results of its operations, changes in partners' equity (deficit),and cash flows for the years ended December 31, 1996 and 1995, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental data included in this report (shown on pages 14-18) are presented for the purpose of additional analysis and are not a required part of the financial statements of FmHA Case No. 41-037-341643639. Such information has been subjected to the same auditing procedures applied in the audits 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. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1997 on our consideration of Logan Place Limited Partnership's internal control structure and a report dated January 15, 1997 on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Larry C. Stemen CPA & Associates Certified Public Accountants Columbus, Ohio January 15, 1997 Duggan, Joiner, Birkenmeyer, Stafford & Furman, PA 334 N.W. Third Avenue Ocala, FL 34475 PHONE: 352-732-0171 FAX: 352-867-1370 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Flagler Beach Villas RRH, Ltd. We have audited the accompanying basic financial statements of Flagler Beach Villas RRH, Ltd. as of and for the years ended December 31, 1996 and 1995, as listed in the table of contents. These basic 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 basic financial statements referred to above present fairly, in all material respects, the financial position of Flagler Beach Villas RRH, 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information presented on pages 9 to 15 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The information on pages 9 to 14 has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The information on page 15, which is of a nonaccounting nature, has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and we express no opinion on it. In accordance with Government Auditing Standards, we have also issued a report dated February 3, 1997 on our consideration of Flagler Beach Villas R.R.H., Ltd.'s internal control structure and a report dated February 3, 1997 on its compliance with laws and regulations. /s/ Duggan, Joiner, Birkenmeyer, Stafford & Furman, PA Certified Public Accountants February 3, 1997 Smith, Lambright & Assoc. P.O. Box 912 - 505 E. Tyler Athens, TX 75751 PHONE: 903-675-5674 FAX: 903-675-5676 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Elkhart Apartments Limited 700 South Palestine Athens, Texas 75751 We have audited the Balance Sheet and Statements of Income and Expenses, Changes in Partners' Equity (Deficit), and Cash Flows of Elkhart Apartments Limited as of December 31, 1996 and 1995, and for the years then ended. These financial statements are the responsibility of Elkhart Apartments Limited'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, Government Auditing Standards issued by the Comptroller General of the United States, and 'U.S. Department of Agriculture, Farmers Home Administration-Audit Program.' 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 Elkhart Apartments Limited 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 conducted for the purpose of forming an opinion on the financial statements taken as a whole. The schedules and supplemental letter listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements of Elkhart Apartments Limited. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented 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 February 19, 1997 on our consideration of Elkhart Apartments Limited's internal control structure and a report dated February 19, 1997 on its compliance with laws and regulations. /s/ Smith, Lambright & Assoc. Certified Public Accountants February 19, 1997 Smith, Lambright & Assoc. P.O. Box 912 - 505 E. Tyler Athens, TX 75751 PHONE: 903-675-5674 FAX: 903-675-5676 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners South Timber Ridge Apartments, Ltd. 700 South Palestine Athens, TX We have audited the Balance Sheet and Statements of Income and Expenses, Changes in Partners' Equity (Deficit), and Cash Flows of South Timber Ridge Apartments, Ltd. as of December 31, 1996 and 1995, and for the years then ended. These financial statements are the responsibility of South Timber Ridge Apartments, Ltd.'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, and the 'U.S. Department of Agriculture, Farmers Home Administration- Audit Program.' 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 al material respects, the financial position of South Timber Ridge Apartments, 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. Our audits were conducted for the purpose of forming an opinion`on the financial statements taken as a whole. The schedules and supplemental letter listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements of South Timber Ridge Apartments, Ltd. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented 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 February 7, 1997 on our consideration of South Timber Ridge Apartments, Ltd.'s internal control structure and a report dated February 7, 1997 on its compliance with laws and regulations. /s/ Smith, Lambright & Assoc. Certified Public Accountants February 7, 1997 Smith, Lambright & Assoc. P.O. Box 912 - 505 E. Tyler Athens, TX 75751 PHONE: 903-675-5674 FAX: 903-675-5676 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Heritage Drive South, Limited 700 South Palestine Athens, TX We have audited the Balance Sheet and Statements of Income and Expenses, Changes in Partners' Equity (Deficit), and Cash Flows of Heritage Drive South, Limited as of December 31, 1996 and 1995, and for the years then ended. These financial statements are the responsibility of Heritage Drive South, Limited'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, and the 'U.S. Department of Agriculture, Farmers Home Administration- Audit Program.' 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 Heritage Drive South, Limited 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 conducted for the purpose of forming an opinion`on the financial statements taken as a whole. The schedules and supplemental letter listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements of Heritage Drive South, Limited. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented 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 February 13, 1997 on our consideration of Heritage Drive South, Limited's internal control structure and a report dated February 13, 1997 on its compliance with laws and regulations. /s/ Smith, Lambright & Assoc. Certified Public Accountants February 13, 1997 Miller, Mayer, Sullivan & Stevens 2365 Harrodsburg Rd. Lexington, KY 40504-3399 PHONE: 606-223-3095 FAX: 606-223-2143 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Goodwater Falls, Ltd. We have audited the accompanying balance sheets of Goodwater Falls, Ltd. (A Limited Partnership) Case No. 20-067-621424606 as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 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 Goodwater Falls, 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 27, 1997 on our consideration of Goodwater Falls, 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 basic financial statements taken as a whole. /s/ Miller, Mayer, Sullivan & Stevens Certified Public Accountants Lexington, Kentucky January 27, 1997 Item 9. Disagreements on Accounting and Financial Disclosures None. PART III Item 10. Directors and Executive Officers of Gateway Gateway has no directors or executive officers. Gateway's affairs are managed and controlled by the Managing General Partner. Certain information concerning the directors and officers of the Managing General Partner are set forth below. Raymond James Tax Credit Funds, Inc. - Managing General Partner Raymond James Tax Credit Funds, Inc. is the Managing General Partner and is responsible for decisions pertaining to the acquisition and sale of Gateway's interests in the Project Partnerships and other matters related to the business operations of Gateway. The officers and directors of the Managing General Partner are as follows: Ronald M. Diner, age 53, is President and a Director. He is a Senior Vice President of Raymond James & Associates, Inc., with whom he has been employed since June 1983. Mr. Diner received an MBA degree from Columbia University (1968) and a BS degree from Trinity College (1966). Prior to joining Raymond James & Associates, Inc., he managed the broker-dealer activities of Pittway Real Estate, Inc., a real estate development firm. He was previously a loan officer at Marine Midland Realty Credit Corp., and spent three years with Common, Dann & Co., a New York regional investment firm. He has served as a member of the Board of Directors of the Council for Rural Housing and Development, a national organization of developers, managers and syndicators of properties developed under the RECD Section 515 program, and is a member of the Board of Directors of the Florida Council for Rural Housing and Development. Mr. Diner has been a speaker and panel member at state and national seminars relating to the low-income housing credit. Alan L. Weiner, age 36, is a Vice President and a Director. He is a Senior Vice President of Raymond James & Associates, Inc. which he joined in 1983. Mr. Weiner earned an MBA from the Wharton Business School (1983) and is a Phi Beta Kappa graduate of the University of Florida (1981), where he received a BS with high honors. J. Davenport Mosby, age 41, is a Vice President and a Director. He is a Senior Vice President of Raymond James & Associates, Inc. which he joined in 1982. Mr. Mosby received an MBA from the Harvard Business School (1982). He graduated magna cum laude with a BA from Vanderbilt University where he was elected to Phi Beta Kappa. Mr. Mosby is the head of the real estate investment banking group and the Limited Partnership Trading Desk. Teresa L. Barnes, age 50, is a Vice President. Ms. Barnes is a Senior Vice President of Raymond James & Associates, Inc., which she joined in 1969. Sandra L. Furey, age 34, is Secretary, Treasurer. Ms. Furey has been employed by Raymond James & Associates, Inc. since 1980 and currently serves as Closing Administrator for the Gateway Tax Credit Funds. Raymond James Partners, Inc. - Raymond James Partners, Inc. has been formed to act as the general partner, with affiliated corporations, in limited partnerships sponsored by Raymond James Financial, Inc. Raymond James Partners, Inc. is a general partner for purposes of assuring that Gateway and other partnerships sponsored by affiliates have sufficient net worth to meet the minimum net worth requirements of state securities administrators. Information regarding the officers and directors of Raymond James Partners, Inc. is included on pages 58 and 59 of the Prospectus under the section captioned "Management" (consisting of pages 56 through 59 of the Prospectus) which is incorporated herein by reference. Item 11. Executive Compensation Gateway has no directors or officers. Item 12. Security Ownership of Certain Beneficial Owners and Management Neither of the General Partners nor their directors and officers own any units of the outstanding securities of Gateway as of March 31, 1997. Gateway is a Limited Partnership and therefore does not have voting shares of stock. To the knowledge of Gateway, no person owns of record or beneficially, more than 5% of Gateway's outstanding units. Item 13. Certain Relationships and Related Transactions Gateway has no officers or directors. However, various kinds of compensation and fees are payable to the General Partners and their affiliates during the organization and operations of Gateway. Additionally, the General Partners will receive distributions from Gateway if there is cash available for distribution or residual proceeds as defined in the Partnership Agreement. The amounts and kinds of compensation and fees are described on pages 15 to 18 of the Prospectus under the caption "Management Compensation", which is incorporated herein by reference. The Payable to General Partners primarily represents the asset management fees owed to the General Partners at the end of the period. It is unsecured, due on demand and, in accordance with the limited partnership agreement, non-interest bearing. Within the next 12 months, the Managing General Partner does not intend to demand payment on the portion of Asset Management Fees payable classified as long-term on the Balance Sheet. The Payable to Project Partnerships represents unpaid capital contributions to the Project Partnerships and will be paid after certain performance criteria are met. Such contributions are in turn payable to the general partner of the Project Partnerships. For the years ended March 31, 1997, 1996 and 1995 the General Partners and affiliates are entitled to compensation and reimbursement for costs and expenses incurred by Gateway as follows: Acquisition Fees - Acquisition fees are paid for services rendered by the Managing General Partner in selecting properties for acquisition and providing other services in connection with the acquisition of interests in Project Partnerships. The acquisition fees paid or payable to the General Partners will not exceed the amount that is equal to 8% of the gross proceeds. The fees paid are included in Investments in Project Partnerships on the Balance Sheets. 1997 1996 1995 ---- ---- ---- Series 2 $ 0 $ 0 $ 0 Series 3 0 0 0 Series 4 0 0 0 Series 5 0 0 13,602 Series 6 0 0 0 ------- -------- --------- Total $ 0 $ 0 $ 13,602 ======= ======== ========= Asset Management Fee - The Managing General Partner is entitled to be paid an annual asset management fee equal to 0.25% of the aggregate cost of Gateway's interest in the projects owned by the Project Partnerships. The asset management fee will be paid only after all other expenses of Gateway have been paid. These fees are included in the Statements of Operations. Series 2 $ 68,889 $ 68,998 $ 69,024 Series 3 63,792 63,927 64,043 Series 4 78,270 78,384 78,571 Series 5 96,844 97,010 97,163 Series 6 107,403 107,665 107,910 -------- --------- --------- Total $415,198 $ 415,984 $ 416,711 ======== ========= ========= General and Administrative Expenses - The Managing General Partner is reimbursed for general and administrative expenses of Gateway on an accountable basis. This expense is included in the Statements of Operations. Series 2 $ 6,792 $ 6,812 $ 8,330 Series 3 7,102 7,104 8,709 Series 4 8,953 8,978 10,456 Series 5 11,114 11,144 13,682 Series 6 11,732 11,765 14,388 -------- --------- -------- Total $ 45,693 $ 45,803 $ 55,565 ======== ========= ========= PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K a.(1) Financial Statements (2) Financial Statement Schedules - Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Project Partnerships All other schedules are omitted because they are not applicable or not required, or because the required information is shown either in the financial statements or in the notes thereto. (3) Exhibit Index - The following are included with Form S-11, Registration No. 33- 31821 and amendments and supplements thereto previously filed with the Securities and Exchange Commission. Table Number 1.1 Form of Dealer Manager Agreement, including Soliciting Dealer Agreement 1.2 Escrow Agreement between Gateway Tax Credit Fund II Ltd. and Southeast Bank, NA 3.1 The form of Partnership Agreement of the Part- nership is included as Exhibit "A" to the Prospectus 3.1.1 Certificate of Limited Partnership of Gateway Tax Credit Fund II Ltd. 3.1.2 Amendment to Certificate of Limited Partnership of Gateway Tax Credit Fund II Ltd. 3.2 Articles of Incorporation of Raymond James Partners, Inc. 3.2.1 Bylaws of Raymond James Partners, Inc. 3.3 Articles of Incorporation of Raymond James Tax Credit Funds, Inc. 3.3.1 Bylaws of Raymond James Tax Credit Funds, Inc. 3.4 Amended and Restated Agreement of Limited Partnership of Nowata Properties, An Oklahoma Limited Partnership 3.5 Amended and Restated Agreement of Limited Partnership of Poteau Properties II, An Oklahoma Limited Partnership 3.6 Amended and Restated Agreement of Limited Partnership of Sallisaw Properties, An Oklahoma Limited Partnership 3.7 Amended and Restated Agreement of Limited Partnership of Waldron Properties, An Arkansas Limited Partnership 3.8 Amended and Restated Agreement of Limited Partnership of Roland Properties II, An Oklahoma Limited Partnership 3.9 Amended and Restated Agreement of Limited Partnership of Stilwell Properties, An Oklahoma Limited Partnership 3.10 Amended and Restated Agreement of Limited Partnership of Birchwood Apartments Limited Partnership 3.11 Amended and Restated Agreement of Limited Partnership of Sunchase II, Ltd. 3.12 Amended and Restated Agreement of Limited Partnership of Hornellsville Apartments 3.13 Amended and Restated Agreement of Limited Partnership of CE McKinley II Limited Partnership 3.14 Amended and Restated Agreement of Limited Partnership of Hartwell Family, Ltd., L.P. 3.15 Amended and Restated Agreement of Limited Partnership of Deerfield II Ltd., L.P. 3.16 Amended and Restated Agreement of Limited Partnership of Claxton Elderly, Ltd., L.P. 3.17 Amended and Restated Agreement of Limited Partnership of Inverness Club, Ltd., L.P. 3.18 Amended and Restated Agreement of Limited Partnership of Lake Park Ltd., L.P. 3.19 Amended and Restated Agreement of Limited Partnership of Lakeland Elderly Apartments, Ltd., L.P. 3.20 Amended and Restated Agreement of Limited Partnership of Mt. Vernon Elderly Housing, Ltd., L.P. 3.21 Amended and Restated Agreement of Limited Partnership of Pearson Elderly Housing, Ltd., L.P. 3.22 Amended and Restated Agreement of Limited Partnership of Woodland Terrace Apartments, Ltd., L.P. 3.23 Amended and Restated Agreement of Limited Partnership of Richland Elderly Housing, Ltd., L.P. 3.24 Amended and Restated Agreement of Limited Partnership of Lakeshore Apartments Limited Partnership 3.25 Amended and Restated Agreement of Limited Partnership of Lewiston Limited Partnership 3.26 Amended and Restated Agreement of Limited Partnership of Springwood Apartments Limited Partnership 3.27 Amended and Restated Agreement of Limited Partnership of Cherrytree Apartments Limited Partnership 3.28 Amended and Restated Agreement of Limited Partnership of Charleston Properties, An Arkansas Limited Partnership 3.29 Amended and Restated Agreement of Limited Partnership of Sallisaw Properties II, An Oklahoma Limited Partnership 3.30 Amended and Restated Agreement of Limited Partnership of Pocola Properties, An Oklahoma Limited Partnership 3.31 Amended and Restated Agreement of Limited Partnership of Prairie Apartments Limited Partnership 3.32 Amended and Restated Agreement of Limited Partnership of Manchester Housing, Ltd., L.P. 3.33 Amended and Restated Agreement of Limited Partnership of Sylacauga Heritage Apartments, Ltd. 3.34 Amended and Restated Agreement of Limited Partnership of Durango C.W.W. Limited Partnership 3.35 Amended and Restated Agreement of Limited Partnership of Alsace Village Limited Partnership 3.36 Amended and Restated Agreement of Limited Partnership of Seneca Apartments, L.P. 3.37 Amended and Restated Agreement of Limited Partnership of Westville Properties, a Limited Partnership 3.38 Amended and Restated Agreement of Limited Partnership of Stilwell Properties II, Limited Partnership 3.39 Amended and Restated Agreement of Limited Partnership of Wellsville Senior Housing, L.P. 3.40 Amended and Restated Agreement of Limited Partnership of Spring Hill Senior Housing, L.P. 3.41 Amended and Restated Agreement of Limited Partnership of Eudora Senior Housing, L.P. 3.42 Amended and Restated Agreement of Limited Partnership of Smithfield Greenbriar Limited Partnership 3.43 Amended and Restated Agreement of Limited Partnership of Tarpon Heights Apartments, A Louisiana Partnership in Commendam 3.44 Amended and Restated Agreement of Limited Partnership of Oaks Apartments, A Louisiana Partnership in Commendam 3.45 Amended and Restated Agreement of Limited Partnership of Countrywood Apartments, Limited 3.46 Amended and Restated Agreement of Limited Partnership of Weston Apartments 3.47 Amended and Restated Agreement of Limited Partnership of Wildwood Apartments, Limited 3.48 Amended and Restated Agreement of Limited Partnership of Hopkins Properties, Limited 3.49 Amended and Restated Agreement of Limited Partnership of Hancock Properties, Limited 3.50 Amended and Restated Agreement of Limited Partnership of Southwood, L.P. 3.51 Amended and Restated Agreement of Limited Partnership of Belmont Senior Apts., Ltd. 3.52 Amended and Restated Agreement of Limited Partnership of Elkhart Apts., Ltd. 3.53 Amended and Restated Agreement of Limited Partnership of Bryan Senior Village Limited Partnership 3.54 Amended and Restated Agreement of Limited Partnership of Brubaker Square Limited Partnership 3.55 Amended and Restated Agreement of Limited Partnership of Villa Allegra Limited Partnership 3.56 Amended and Restated Agreement of Limited Partnership of Heritage Villas, L.P. 3.57 Amended and Restated Agreement of Limited Partnership of Logansport Seniors Apts., a Louisiana Partnership Commendam 3.58 Amended and Restated Agreement of Limited Partnership of Wynnwood Common Associates 3.59 Amended and Restated Agreement of Limited Partnership of Piedmont Development Company of Lamar County, Ltd., (L.P.) 3.60 Amended and Restated Agreement of Limited Partnership of Sonora Seniors Apts., Ltd. 3.61 Amended and Restated Agreement of Limited Partnership of Fredericksburg Seniors, Ltd. 3.62 Amended and Restated Agreement of Limited Partnership of Ozona Seniors, Ltd. 3.63 Amended and Restated Agreement of Limited Partnership of Brackettville Seniors, Ltd. 3.64 Amended and Restated Agreement of Limited Partnership of Timpson Seniors Apartments, Ltd. 3.65 Amended and Restated Agreement of Limited Partnership of Chestnut Apartments Limited Partnership 3.66 Amended and Restated Agreement of Limited Partnership of Jasper Villas Apartments Limited Partnership 3.67 Amended and Restated Agreement of Limited Partnership of Norton Green Limited Partnership 3.68 Amended and Restated Agreement of Limited Partnership of Jonesville Manor Limited Partnership 3.69 Amended and Restated Agreement of Limited Partnership of Edmonton Senior, Ltd. 3.70 Amended and Restated Agreement of Limited Partnership of Owingsville Senior, Ltd. 3.71 Amended and Restated Agreement of Limited Partnership of Courtyard, Ltd. 3.72 Amended and Restated Agreement of Limited Partnership of Rural Development Group 3.73 Amended and Restated Agreement of Limited Partnership of Williston Properties, A Limited Partnership 3.74 Amended and Restated Agreement of Limited Partnership of St. George Properties, A Limited Partnership 3.75 Amended and Restated Agreement of Limited Partnership of Village Apartments of St. Joseph II Limited Partnership 3.76 Amended and Restated Agreement of Limited Partnership of Village Apartments of Effingham Limited Partnership 3.77 Amended and Restated Agreement of Limited Partnership of Village Apartments of Seymour II, L.P. 3.78 Amended and Restated Agreement of Limited Partnership of Country Place Apartments - Portland II, Ltd. 3.79 Amended and Restated Agreement of Limited Partnership of Country Place Apartments - Georgetown Limited Partnership 3.80 Amended and Restated Agreement of Limited Partnership of South Timber Ridge Apts., Ltd. 3.81 Amended and Restated Agreement of Limited Partnership of Cloverdale RRH Assoc. 3.82 Amended and Restated Agreement of Limited Partnership of Shannon Apartments Limited Partnership 3.83 Amended and Restated Agreement of Limited Partnership of Spruce Apartments Limited Partnership 3.84 Amended and Restated Agreement of Limited Partnership of Carthage Senior, L.P. 3.85 Amended and Restated Agreement of Limited Partnership of Ehrhardt Place Limited Partnership 3.86 Amended and Restated Agreement of Limited Partnership of Country Place Apartments - Coal City, Limited Partnership 5.1O Opinion regarding legality of Honigman Miller Schwartz and Cohn 5.1.1 Opinion regarding legality of Riden, Earle & Kiefner, PA 8.1 Tax opinion and consent of Honigman Miller Schwartz and Cohn 8.1.1 Tax opinion and consent of Riden, Earle & Kiefner, PA 24.1 The consent of Spence, Marston & Bunch 24.2 The consent of Spence, Marston, Bunch, Morris Co. appears on page II-7 24.3 The consent of Goddard, Henderson, Godbee & Nichols, PC with respect to the financial statements of Lake Park Apartments, Ltd. 24.4 The consent of Goddard, Henderson, Godbee & Nichols, PC with respect to the financial statements of Richland Elderly Housing, Ltd. 24.5 The consent of Goddard, Henderson, Godbee & Nichols, PC with respect to the financial statements of Pearson Elderly Housing, Ltd. 24.6 The consent of Goddard, Henderson, Godbee & Nichols, PC with respect to Mt. Vernon Elderly Housing, Ltd. 24.7 The consent of Goddard, Henderson, Godbee & Nichols, PC with respect to the financial statements of Woodland Terrace Apartments, Ltd. 24.8 The consent of Goddard, Henderson, Godbee & Nichols, PC with respect to the financial statements of Lakeland Elderly Housing, Ltd. 24.9 The consent of Grana & Teibel, PC with respect to Lewiston LP 24.10 The consent of Beall & Company with respect to Nowata Properties 24.11 The consent of Beall & Company with respect to Sallisaw Properties 24.12 The consent of Beall & Company with respect to Poteau Properties II 24.13 The consent of Beall & Company with respect to Charleston Properties 24.14 The consent of Beall & Company with respect to Roland Properties II 24.15 The consent of Beall & Company with respect to Stilwell Properties 24.16 The consent of Donald W. Causey, CPA, PC 24.17 The consent of Charles Bailly & Company, CPA 24.18 The consent of Honigman Miller Schwartz and Cohn to all references made to them in the Prospectus included as a part of the Registration Statement of Gateway Tax Credit Fund II Ltd., and all amendments thereto 24.18.1 The consent of Riden, Earle, & Kiefner, PA to all references made to them in the Prospectus included as a part of the Registration Statement of Gateway Tax Credit Fund II Ltd., and all amendments thereto is included in Exhibit 8.1.1. 28.1 Table VI (Acquisition of Properties by Program) of Appendix II to Industry Guide 5, Preparation of Registration Statements Relating to Interests in Real Estate Limited Partnerships b. Reports filed on Form 8-K - NONE GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 2 Apartment Properties # of Mtg.Loan Partnership Location Units Balance Claxton Elderly Claxton, GA 24 $ 662,704 Deerfield II Douglas, GA 24 706,899 Hartwell Family Hartwell, GA 24 710,354 Cherrytree Apts. Albion, PA 33 1,207,892 Springwood Apts. Westfield, NY 32 1,261,960 Lakeshore Apts. Tuskegee, AL 34 1,061,022 Lewiston Lewiston, NY 25 1,006,457 Charleston Charleston, AR 32 849,369 Sallisaw II Sallisaw, OK 47 1,205,414 Pocola Pocola, OK 36 994,156 Inverness Club Inverness, FL 72 3,005,900 Pearson Elderly Pearson, GA 25 639,211 Richland Elderly Richland, GA 33 873,564 Lake Park Lake Park, GA 48 1,495,448 Woodland Terrace Waynesboro, GA 30 893,521 Mt. Vernon Elderly Mt. Vernon, GA 21 578,182 Lakeland Elderly Lakeland, GA 29 787,512 Prairie Apartments Eagle Butte, SD 21 982,285 Sylacauga Heritage Sylacauga, AL 44 1,394,990 Manchester Housing Manchester, GA 49 1,467,278 Durango C.W.W. Durango, CO 24 1,039,101 Columbus Sr. Columbus, KS 16 440,217 ----------- Total Series 2 $23,263,436 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 3 # of Mtg.Loan Partnership Location Units Balance Poteau II Poteau, OK 52 $ 1,315,799 Sallisaw Sallisaw, OK 52 1,321,118 Nowata Properties Oolagah, OK 32 862,820 Waldron Properties Waldron, AR 24 645,123 Roland II Roland, OK 52 1,320,471 Stilwell Stilwell, OK 48 1,202,736 Birchwood Apts. Pierre, SD 24 794,213 Hornellsville Arkport, NY 24 902,365 Sunchase II Watertown, SD 41 1,204,241 CE McKinley II Rising Sun, MD 16 641,155 Weston Apartments Weston, AL 10 277,151 Countrywood Apts. Centreville, AL 40 1,210,851 Wildwood Apts. Pineville, LA 28 855,578 Hancock Hawesville, KY 12 374,199 Hopkins Madisonville, KY 24 761,190 Elkhart Apts. Elkhart, TX 54 1,165,777 Bryan Senior Bryan, OH 40 1,096,129 Brubaker Square New Carlisle, OH 38 1,126,146 Southwood Savannah, TN 44 1,496,892 Villa Allegra Celina, OH 32 910,393 Belmont Senior Cynthiana, KY 24 774,777 Heritage Villas Helena, GA 25 683,149 Logansport Seniors Logansport, LA 32 904,252 ----------- Total Series 3 $21,846,525 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 4 # of Mtg.Loan Partnership Location Units Balance Alsace Village Soda Springs, ID 24 $ 641,920 Seneca Apartments Seneca, MO 24 612,863 Eudora Senior Eudora, KS 36 965,747 Westville Westville, OK 36 865,774 Wellsville Senior Wellsville, KS 24 652,592 Stilwell II Stilwell, OK 52 1,298,661 Spring Hill Senior Spring Hill, KS 24 702,597 Smithfield Smithfield, UT 40 1,550,456 Tarpon Heights Galliano, LA 48 1,253,113 Oaks Apartments Oakdale, LA 32 850,400 Wynnwood Common Fairchance, PA 34 1,381,085 Chestnut Apartments Howard, SD 24 861,837 St. George St. George, SC 24 760,667 Williston Williston, SC 24 803,922 Brackettville Sr. Brackettville, TX 32 827,685 Sonora Seniors Sonora, TX 32 849,612 Ozona Seniors Ozona, TX 24 636,084 Fredericksburg Sr. Fredericksburg,TX 48 1,213,358 St. Joseph St. Joseph, IL 24 833,930 Courtyard Huron, SD 21 716,203 Rural Development Ashland, ME 25 1,214,449 Jasper Villas Jasper, AR 25 865,931 Edmonton Senior Edmonton, KY 24 762,803 Jonesville Manor Jonesville, VA 40 1,361,387 Norton Green Norton, VA 40 1,352,038 Owingsville Senior Owingsville, KY 22 711,608 Timpson Seniors Timpson, TX 28 678,156 Piedmont Barnesville, GA 36 1,055,111 S.F. Arkansas City Arkansas City, KS 12 341,859 ----------- Total Series 4 $26,621,848 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 5 # of Mtg.Loan Partnership Location Units Balance Seymour Seymour, IN 37 $ 1,251,266 Effingham Effingham, IL 24 810,025 S.F. Winfield Winfield, KS 12 332,691 S.F.Medicine Lodge Medicine Lodge,KS 16 455,152 S.F. Ottawa Ottawa, KS 24 573,313 S.F. Concordia Concordia, KS 20 555,772 Highland View Elgin, OR 24 719,775 Carrollton Club Carrollton, GA 78 2,708,675 Scarlett Oaks Lexington, SC 40 1,401,122 Brooks Hill Ellijay, GA 44 1,473,923 Greensboro Greensboro, GA 24 740,332 Greensboro II Greensboro, GA 33 918,930 Pine Terrace Wrightsville, GA 25 733,002 Shellman Shellman, GA 27 745,868 Blackshear Cordele, GA 46 1,330,697 Crisp Properties Cordele, GA 31 939,746 Crawford Crawford, GA 25 751,305 Yorkshire Wagoner, OK 60 2,103,023 Woodcrest South Boston, VA 40 1,310,336 Fox Ridge Russellville, AL 24 741,765 Redmont II Red Bay, AL 24 700,228 Clayton Clayton, OK 24 675,057 Alma Alma, AR 24 738,996 Pemberton Village Hiawatha, KS 24 642,721 Magic Circle Eureka, KS 24 658,801 Spring Hill Spring Hill, KS 36 1,137,569 Menard Retirement Menard, TX 24 633,095 Wallis Housing Wallis, TX 24 454,616 Zapata Housing Zapata, TX 40 988,339 Mill Creek Grove, OK 60 1,446,557 Portland II Portland, IN 20 588,270 Georgetown Georgetown, OH 24 747,505 Cloverdale Chandler, TX 24 764,146 S. Timber Ridge Cloverdale, IN 44 1,072,241 Pineville Pineville, MO 12 322,776 Ravenwood Americus, GA 24 734,459 ----------- Total Series 5 $32,902,094 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 6 # of Mtg.Loan Partnership Location Units Balance Spruce Pierre, SD 24 $ 921,705 Shannon Apartments O'Neill, NE 16 539,577 Carthage Carthage, MO 24 581,804 Mt. Crest Enterprise, OR 39 1,013,230 Coal City Coal City, IL 24 989,254 Blacksburg Terrace Blacksburg, SC 32 1,096,439 Frazier Smyrna, DE 30 1,487,549 Ehrhardt Ehrhardt, SC 16 568,497 Sinton Sinton, TX 32 859,965 Frankston Frankston, TX 24 564,910 Flagler Beach Flagler Beach, FL 43 1,397,817 Oak Ridge Williamsburg, KY 24 821,225 Monett Monett, MO 32 795,295 Arma Arma, KS 28 724,170 Southwest City Southwest City, MO 12 322,101 Meadowcrest Luverne, AL 32 1,016,639 Parsons Parsons, KS 48 1,275,490 Newport Village Newport, TN 40 1,318,326 Goodwater Falls Jenkins, KY 36 1,157,728 Northfield Station Corbin, KY 24 808,961 Pleasant Hill Square Somerset, KY 24 798,500 Winter Park Mitchell, SD 24 1,012,281 Cornell Watertown, SD 24 879,255 Heritage Drive S. Jacksonville, TX 40 992,319 Brodhead Brodhead, KY 24 797,238 Mt. Village Mt. Vernon, KY 24 791,872 Hazelhurst Hazlehurst, MS 32 992,305 Sunrise Yankton, SD 33 1,170,865 Stony Creek Hooversville, PA 32 1,359,690 Logan Place Logan, OH 40 1,265,747 Haines Haines, AK 32 2,408,487 Maple Wood Barbourville, KY 24 807,019 Summerhill Gassville, AR 28 805,912 Dorchester St. George, SC 12 469,366 Lancaster Mountain View, AR 33 1,140,517 Autumn Village Harrison, AR 16 280,930 Hardy Hardy, AR 24 422,246 Dawson Dawson, GA 40 1,202,426 ----------- Total Series 6 $35,857,657 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 2 Net Apartment Properties Cost At Acquisition Date Improvements Buildings Capitalized Improvements Subsequent to Partnership Land & Equipment Acquisition Claxton Elderly $ 33,400 $ 766,138 $ 0 Deerfield II 33,600 820,962 0 Hartwell Family 22,700 836,998 0 Cherrytree Apts. 62,000 1,376,297 1,339 Springwood Apts. 21,500 1,451,283 28,300 Lakeshore Apts. 28,600 1,238,749 194 Lewiston 38,400 1,178,185 17,350 Charleston 16,000 1,060,098 0 Sallisaw II 37,500 1,480,089 0 Pocola 22,500 1,223,370 0 Inverness Club 205,500 3,111,565 179,759 Pearson Elderly 15,000 767,590 (1,130) Richland Elderly 31,500 1,027,512 (1,141) Lake Park 88,000 1,710,725 0 Woodland Terrace 36,400 1,047,107 (3,424) Mt. Vernon Elderly 21,750 680,437 (1,252) Lakeland Elderly 28,000 930,574 (2,759) Prairie Apartments 66,500 1,150,214 22,427 Sylacauga Heritage 66,080 1,648,081 19,149 Manchester Housing 36,000 1,746,076 (2,283) Durango C.W.W. 140,250 1,123,454 8,292 Columbus Sr. 64,373 444,257 (1,003) ----------- ------------ --------- Total Series 2 $ 1,115,553 $ 26,819,761 $ 263,818 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 3 Net Apartment Properties Cost At Acquisition Date Improvements Buildings Capitalized Improvements Subsequent to Partnership Land & Equipment Acquisition Poteau II $ 76,827 $ 1,712,321 $ 0 Sallisaw 70,000 1,674,103 0 Nowata Properties 45,500 1,102,984 0 Waldron Properties 26,000 834,273 0 Roland II 70,000 1,734,010 0 Stilwell 37,500 1,560,201 0 Birchwood Apts. 116,740 885,923 15,506 Hornellsville 41,225 1,018,523 35,769 Sunchase II 113,115 1,198,373 8,586 CE McKinley II 11,762 745,635 35,131 Weston Apartments 0 339,144 194 Countrywood Apts. 55,750 1,447,439 16,575 Wildwood Apts. 48,000 1,018,897 17,428 Hancock 20,700 419,725 0 Hopkins 43,581 885,087 (1,412) Elkhart Apts. 35,985 1,361,096 129,643 Bryan Senior 74,000 1,102,728 7,529 Brubaker Square 75,000 1,376,075 1,431 Southwood 15,000 1,769,334 7,959 Villa Allegra 35,000 1,097,214 1,343 Belmont Senior 43,600 891,543 0 Heritage Villas 21,840 801,128 1,006 Logansport Seniors 27,621 1,058,773 0 ----------- ------------ --------- Total Series 3 $ 1,104,746 $ 26,034,529 $ 276,688 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 4 Net Apartment Properties Cost At Acquisition Date Improvements Buildings Capitalized Improvements Subsequent to Partnership Land & Equipment Acquisition Alsace Village $ 15,000 $ 771,590 $ 12,888 Seneca Apartments 76,212 640,702 1,761 Eudora Senior 50,000 1,207,482 0 Westville 27,560 1,074,126 0 Wellsville Senior 38,000 772,971 (1) Stilwell II 30,000 1,627,974 0 Spring Hill Senior 49,800 986,569 0 Smithfield 82,500 1,698,213 56,907 Tarpon Heights 85,000 1,408,434 0 Oaks Apartments 42,000 989,522 987 Wynnwood Common 68,000 1,578,814 18,971 Chestnut Apartments 57,200 977,493 15,871 St. George 22,600 915,400 2,861 Williston 25,000 959,345 18,255 Brackettville Sr. 28,600 963,366 0 Sonora Seniors 51,000 962,315 0 Ozona Seniors 40,000 719,843 0 Fredericksburg Sr. 45,000 1,357,563 0 St. Joseph 28,000 940,580 7,466 Courtyard 24,500 810,110 7,198 Rural Development 38,200 1,361,892 22,390 Jasper Villas 27,000 1,067,890 4,827 Edmonton Senior 40,000 866,714 0 Jonesville Manor 100,000 1,578,135 8,060 Norton Green 120,000 1,535,373 37,693 Owingsville Senior 28,000 820,044 0 Timpson Seniors 13,500 802,416 0 Piedmont 29,500 1,259,547 0 S.F. Arkansas City 16,800 395,228 0 ----------- ------------ --------- Total Series 4 $ 1,298,972 $ 31,049,651 $ 216,134 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 5 Net Apartment Properties Cost At Acquisition Date Improvements Buildings Capitalized Improvements Subsequent to Partnership Land & Equipment Acquisition Seymour $ 59,500 $ 1,452,557 $ 5,938 Effingham 38,500 940,327 1,233 S.F. Winfield 18,000 382,920 0 S.F.Medicine Lodge 21,600 542,959 0 S.F. Ottawa 25,200 687,929 (5,680) S.F. Concordia 28,000 658,961 1 Highland View 16,220 830,471 25,576 Carrollton Club 248,067 722,560 2,247,274 Scarlett Oaks 44,475 992,158 636,104 Brooks Hill 0 214,335 1,531,305 Greensboro 15,930 61,495 788,834 Greensboro II 21,330 92,063 979,756 Pine Terrace 14,700 196,071 674,414 Shellman 13,500 512,531 379,033 Blackshear 60,000 413,143 1,119,175 Crisp Properties 48,000 578,709 497,328 Crawford 16,600 187,812 703,300 Yorkshire 100,000 2,212,045 222,521 Woodcrest 70,000 842,335 662,441 Fox Ridge 39,781 848,996 1,164 Redmont II 25,000 814,432 1,164 Clayton 35,600 835,930 0 Alma 45,000 912,710 0 Pemberton Village 12,020 767,228 (12,269) Magic Circle 22,660 749,504 3,963 Spring Hill 70,868 1,318,926 59,584 Menard Retirement 21,000 721,251 19,622 Wallis Housing 13,900 553,230 7,263 Zapata Housing 44,000 1,120,538 73,867 Mill Creek 28,000 414,429 1,299,240 Portland II 43,102 410,683 258,989 Georgetown 0 149,483 741,603 Cloverdale 40,000 583,115 310,051 S. Timber Ridge 43,705 1,233,570 3,149 Pineville 59,661 328,468 891 Ravenwood 14,300 873,596 0 ----------- ------------ ----------- Total Series 5 $ 1,418,219 $ 25,157,470 $13,236,834 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 6 Net Apartment Properties Cost At Acquisition Date Improvements Buildings Capitalized Improvements Subsequent to Partnership Land & Equipment Acquisition Spruce $ 60,040 $ 108,772 $ 927,758 Shannon Apartments 5,000 94,494 546,979 Carthage 115,814 578,597 (744) Mt. Crest 64,914 1,143,675 22,418 Coal City 60,055 1,121,477 4,130 Blacksburg Terrace 39,930 1,278,860 4,279 Frazier 51,665 1,619,209 2,230 Ehrhardt 9,020 671,750 5,006 Sinton 42,103 985,010 12,193 Frankston 30,000 639,068 5,913 Flagler Beach 118,575 1,534,541 0 Oak Ridge 40,000 995,782 2,184 Monett 170,229 782,795 3,722 Arma 85,512 771,316 1,985 Southwest City 67,303 319,272 (666) Meadowcrest 72,500 1,130,651 587 Parsons 49,780 1,483,188 0 Newport Village 61,350 1,470,505 50,315 Goodwater Falls 32,000 1,142,517 218,846 Northfield Station 44,250 977,220 1,091 Pleasant Hill Square 35,000 893,323 26,487 Winter Park 95,000 1,121,119 22,397 Cornell 32,000 1,017,572 18,854 Heritage Drive S. 44,247 1,151,157 267 Brodhead 21,600 932,468 0 Mt. Village 55,000 884,596 0 Hazelhurst 60,000 1,118,734 2,670 Sunrise 90,000 1,269,252 767 Stony Creek 0 1,428,656 197,539 Logan Place 39,300 1,477,527 1,799 Haines 189,323 2,851,953 (15,673) Maple Wood 79,000 924,144 4,600 Summerhill 23,000 788,157 29,099 Dorchester 13,000 239,455 309,817 Lancaster 37,500 1,361,272 (18,104) Autumn Village 20,000 595,604 0 Hardy 0 473,695 457,865 Dawson 40,000 346,569 1,088,404 ----------- ------------ ---------- Total Series 6 $ 2,094,010 $ 37,723,952 $3,935,014 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 2 Gross Amount At Which Carried At Apartment Properties December 31, 1996 Buildings, Improvements Partnership Land & Equipment Total Claxton Elderly $ 33,400 $ 766,138 $ 799,538 Deerfield II 33,600 820,962 854,562 Hartwell Family 22,700 836,998 859,698 Cherrytree Apts. 62,000 1,377,636 1,439,636 Springwood Apts. 21,500 1,479,583 1,501,083 Lakeshore Apts. 28,600 1,238,943 1,267,543 Lewiston 38,400 1,195,535 1,233,935 Charleston 16,000 1,060,098 1,076,098 Sallisaw II 37,500 1,480,089 1,517,589 Pocola 22,500 1,223,370 1,245,870 Inverness Club 205,500 3,291,324 3,496,824 Pearson Elderly 15,000 766,460 781,460 Richland Elderly 31,500 1,026,371 1,057,871 Lake Park 88,000 1,710,725 1,798,725 Woodland Terrace 36,400 1,043,683 1,080,083 Mt. Vernon Elderly 21,750 679,185 700,935 Lakeland Elderly 28,000 927,815 955,815 Prairie Apartments 73,284 1,165,857 1,239,141 Sylacauga Heritage 66,080 1,667,230 1,733,310 Manchester Housing 36,000 1,743,793 1,779,793 Durango C.W.W. 140,250 1,131,746 1,271,996 Columbus Sr. 64,373 443,254 507,627 ----------- ----------- ----------- Total Series 2 $ 1,122,337 $27,076,795 $28,199,132 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 3 Gross Amount At Which Carried At Apartment Properties December 31, 1996 Buildings, Improvements Partnership Land & Equipment Total Poteau II $ 76,827 $ 1,712,321 $ 1,789,148 Sallisaw 70,000 1,674,103 1,744,103 Nowata Properties 45,500 1,102,984 1,148,484 Waldron Properties 26,000 834,273 860,273 Roland II 70,000 1,734,010 1,804,010 Stilwell 37,500 1,560,201 1,597,701 Birchwood Apts. 124,505 893,664 1,018,169 Hornellsville 41,225 1,054,292 1,095,517 Sunchase II 113,115 1,206,959 1,320,074 CE McKinley II 138,889 653,639 792,528 Weston Apartments 0 339,338 339,338 Countrywood Apts. 55,750 1,464,014 1,519,764 Wildwood Apts. 48,000 1,036,325 1,084,325 Hancock 20,700 419,725 440,425 Hopkins 43,581 883,675 927,256 Elkhart Apts. 151,976 1,374,748 1,526,724 Bryan Senior 74,000 1,110,257 1,184,257 Brubaker Square 75,000 1,377,506 1,452,506 Southwood 15,000 1,777,293 1,792,293 Villa Allegra 35,000 1,098,557 1,133,557 Belmont Senior 43,600 891,543 935,143 Heritage Villas 21,840 802,134 823,974 Logansport Seniors 27,621 1,058,773 1,086,394 ----------- ----------- ----------- Total Series 3 $ 1,355,629 $26,060,334 $27,415,963 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 4 Gross Amount At Which Carried At Apartment Properties December 31, 1996 Buildings, Improvements Partnership Land & Equipment Total Alsace Village $ 15,000 $ 784,478 $ 799,478 Seneca Apartments 76,212 642,463 718,675 Eudora Senior 50,000 1,207,482 1,257,482 Westville 27,560 1,074,126 1,101,686 Wellsville Senior 38,000 772,970 810,970 Stilwell II 30,000 1,627,974 1,657,974 Spring Hill Senior 49,800 986,569 1,036,369 Smithfield 84,852 1,752,768 1,837,620 Tarpon Heights 85,000 1,408,434 1,493,434 Oaks Apartments 42,000 990,509 1,032,509 Wynnwood Common 68,000 1,597,785 1,665,785 Chestnut Apartments 63,800 986,764 1,050,564 St. George 22,600 918,261 940,861 Williston 25,000 977,600 1,002,600 Brackettville Sr. 28,600 963,366 991,966 Sonora Seniors 51,000 962,315 1,013,315 Ozona Seniors 40,000 719,843 759,843 Fredericksburg Sr. 45,000 1,357,563 1,402,563 St. Joseph 28,000 948,046 976,046 Courtyard 25,295 816,513 841,808 Rural Development 38,200 1,384,282 1,422,482 Jasper Villas 27,000 1,072,717 1,099,717 Edmonton Senior 40,000 866,714 906,714 Jonesville Manor 100,000 1,586,195 1,686,195 Norton Green 120,000 1,573,066 1,693,066 Owingsville Senior 28,000 820,044 848,044 Timpson Seniors 13,500 802,416 815,916 Piedmont 29,500 1,259,547 1,289,047 S.F. Arkansas City 16,800 395,228 412,028 ----------- ----------- ----------- Total Series 4 $ 1,308,719 $31,256,038 $32,564,757 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 5 Gross Amount At Which Carried At Apartment Properties December 31, 1996 Buildings, Improvements Partnership Land & Equipment Total Seymour $ 59,500 $ 1,458,495 $ 1,517,995 Effingham 38,500 941,560 980,060 S.F. Winfield 18,000 382,920 400,920 S.F.Medicine Lodge 21,600 542,959 564,559 S.F. Ottawa 25,200 682,249 707,449 S.F. Concordia 28,000 658,962 686,962 Highland View 16,220 856,047 872,267 Carrollton Club 248,068 2,969,833 3,217,901 Scarlett Oaks 44,475 1,628,262 1,672,737 Brooks Hill 77,500 1,668,140 1,745,640 Greensboro 15,930 850,329 866,259 Greensboro II 21,330 1,071,819 1,093,149 Pine Terrace 14,700 870,485 885,185 Shellman 13,500 891,564 905,064 Blackshear 60,000 1,532,318 1,592,318 Crisp Properties 48,000 1,076,037 1,124,037 Crawford 16,600 891,112 907,712 Yorkshire 100,788 2,433,778 2,534,566 Woodcrest 70,000 1,504,776 1,574,776 Fox Ridge 39,781 850,160 889,941 Redmont II 25,000 815,596 840,596 Clayton 35,600 835,930 871,530 Alma 45,000 912,710 957,710 Pemberton Village 12,020 754,959 766,979 Magic Circle 22,660 753,467 776,127 Spring Hill 70,868 1,378,510 1,449,378 Menard Retirement 21,000 740,873 761,873 Wallis Housing 13,900 560,493 574,393 Zapata Housing 46,323 1,192,082 1,238,405 Mill Creek 28,000 1,713,669 1,741,669 Portland II 26,102 686,672 712,774 Georgetown 50,393 840,693 891,086 Cloverdale 40,000 893,166 933,166 S. Timber Ridge 43,705 1,236,719 1,280,424 Pineville 59,661 329,359 389,020 Ravenwood 14,300 873,596 887,896 ----------- ----------- ----------- Total Series 5 $ 1,532,224 $38,280,299 $39,812,523 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 6 Gross Amount At Which Carried At Apartment Properties December 31, 1996 Buildings, Improvements Partnership Land & Equipment Total Spruce $ 84,155 $ 1,012,415 $ 1,096,570 Shannon Apartments 5,000 641,473 646,473 Carthage 115,814 577,853 693,667 Mt. Crest 64,914 1,166,093 1,231,007 Coal City 60,055 1,125,607 1,185,662 Blacksburg Terrace 39,930 1,283,139 1,323,069 Frazier 51,665 1,621,439 1,673,104 Ehrhardt 9,020 676,756 685,776 Sinton 42,103 997,203 1,039,306 Frankston 30,000 644,981 674,981 Flagler Beach 118,575 1,534,541 1,653,116 Oak Ridge 40,000 997,966 1,037,966 Monett 170,229 786,517 956,746 Arma 89,512 769,301 858,813 Southwest City 67,303 318,606 385,909 Meadowcrest 72,500 1,131,238 1,203,738 Parsons 49,780 1,483,188 1,532,968 Newport Village 61,350 1,520,820 1,582,170 Goodwater Falls 32,000 1,361,363 1,393,363 Northfield Station 44,250 978,311 1,022,561 Pleasant Hill Square 35,000 919,810 954,810 Winter Park 95,000 1,143,516 1,238,516 Cornell 35,591 1,032,835 1,068,426 Heritage Drive S. 44,247 1,151,424 1,195,671 Brodhead 21,600 932,468 954,068 Mt. Village 55,000 884,596 939,596 Hazelhurst 60,000 1,121,404 1,181,404 Sunrise 90,000 1,270,019 1,360,019 Stony Creek 80,000 1,546,195 1,626,195 Logan Place 41,099 1,477,527 1,518,626 Haines 189,323 2,836,280 3,025,603 Maple Wood 79,000 928,744 1,007,744 Summerhill 23,000 817,256 840,256 Dorchester 13,000 549,272 562,272 Lancaster 37,500 1,343,168 1,380,668 Autumn Village 20,000 595,604 615,604 Hardy 21,250 910,310 931,560 Dawson 40,000 1,434,973 1,474,973 ----------- ----------- ----------- Total Series 6 $ 2,228,765 $41,524,211 $43,752,976 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 2 Apartment Properties Accumulated Depreciable Partnership Depreciation Life Claxton Elderly $ 182,923 5-27.5 Deerfield II 197,569 5-27.5 Hartwell Family 203,826 5-27.5 Cherrytree Apts. 226,386 5-27.5 Springwood Apts. 268,060 5-40 Lakeshore Apts. 223,054 5-40 Lewiston 187,704 5-40 Charleston 299,874 5-25 Sallisaw II 401,972 5-25 Pocola 297,187 5-27.5 Inverness Club 704,676 5-27.5 Pearson Elderly 162,398 5-30 Richland Elderly 211,279 5-30 Lake Park 392,137 5-30 Woodland Terrace 220,418 5-30 Mt. Vernon Elderly 144,913 5-30 Lakeland Elderly 191,841 5-30 Prairie Apartments 210,525 5-40 Sylacauga Heritage 278,885 5-40 Manchester Housing 347,404 5-30 Durango C.W.W. 182,266 5-40 Columbus Sr. 113,804 5-27.5 ----------- Total Series 2 $ 5,649,101 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 3 Apartment Properties Accumulated Depreciable Partnership Depreciation Life Poteau II $ 618,722 5-25 Sallisaw 575,825 5-25 Nowata Properties 370,408 5-25 Waldron Properties 278,978 5-25 Roland II 621,938 5-25 Stilwell 550,439 5-25 Birchwood Apts. 222,677 5-40 Hornellsville 333,364 5-27.5 Sunchase II 341,268 5-40 CE McKinley II 239,893 5-27.5 Weston Apartments 114,062 5-27.5 Countrywood Apts. 470,971 5-27.5 Wildwood Apts. 274,157 5-30 Hancock 100,237 5-27.5 Hopkins 211,037 5-27.5 Elkhart Apts. 391,162 5-25 Bryan Senior 401,818 5-27.5 Brubaker Square 430,262 5-27.5 Southwood 236,341 5-50 Villa Allegra 354,837 5-27.5 Belmont Senior 154,747 5-40 Heritage Villas 173,988 5-30 Logansport Seniors 157,438 5-40 ----------- Total Series 3 $ 7,624,569 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 4 Apartment Properties Accumulated Depreciable Partnership Depreciation Life Alsace Village $ 195,851 5-27.5 Seneca Apartments 217,111 5-27.5 Eudora Senior 288,786 5-27.5 Westville 259,160 5-27.5 Wellsville Senior 194,861 5-25 Stilwell II 393,640 5-27.5 Spring Hill Senior 270,920 5-25 Smithfield 250,681 5-40 Tarpon Heights 210,760 5-40 Oaks Apartments 150,701 5-40 Wynnwood Common 265,372 5-40 Chestnut Apartments 182,299 5-40 St. George 249,961 5-27.5 Williston 248,557 5-27.5 Brackettville Sr. 129,680 5-40 Sonora Seniors 141,577 5-40 Ozona Seniors 100,614 5-40 Fredericksburg Sr. 194,732 5-40 St. Joseph 220,272 5-27.5 Courtyard 166,844 5-27.5 Rural Development 356,678 5-27.5 Jasper Villas 172,526 5-40 Edmonton Senior 144,246 5-40 Jonesville Manor 365,842 5-27.5 Norton Green 385,985 5-27.5 Owingsville Senior 133,029 5-40 Timpson Seniors 134,390 5-40 Piedmont 144,873 5-27.5 S.F. Arkansas City 94,332 5-27.5 ----------- Total Series 4 $ 6,264,280 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 5 Apartment Properties Accumulated Depreciable Partnership Depreciation Life Seymour $ 314,878 5-27.5 Effingham 205,183 5-27.5 S.F. Winfield 92,646 5-27.5 S.F.Medicine Lodge 121,356 5-27.5 S.F. Ottawa 164,555 5-27.5 S.F. Concordia 156,412 5-27.5 Highland View 117,497 5-40 Carrollton Club 497,333 5-27.5 Scarlett Oaks 301,633 5-27.5 Brooks Hill 257,817 5-27.5 Greensboro 127,851 5-30 Greensboro II 161,170 5-30 Pine Terrace 140,348 5-30 Shellman 158,512 5-30 Blackshear 246,511 5-30 Crisp Properties 183,335 5-30 Crawford 147,211 5-30 Yorkshire 283,348 5-50 Woodcrest 212,727 5-40 Fox Ridge 121,240 5-50 Redmont II 117,696 5-50 Clayton 175,720 5-27.5 Alma 221,946 5-25 Pemberton Village 167,851 5-27.5 Magic Circle 166,203 5-27.5 Spring Hill 308,272 5-25 Menard Retirement 92,171 5-30 Wallis Housing 106,635 5-30 Zapata Housing 188,217 5-27.5 Mill Creek 389,213 5-25 Portland II 132,083 5-27.5 Georgetown 134,790 5-50 Cloverdale 218,670 5-27.5 S. Timber Ridge 269,156 5-25 Pineville 89,170 5-27.5 Ravenwood 50,049 5-27.5 ----------- Total Series 5 $ 6,839,405 GATEWAY TAX CREDIT FUND II LTD. SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 SERIES 6 Apartment Properties Accumulated Depreciable Partnership Depreciation Life Spruce $ 192,742 5-30 Shannon Apartments 79,261 5-40 Carthage 199,100 5-27.5 Mt. Crest 248,395 5-27.5 Coal City 144,032 5-27.5 Blacksburg Terrace 280,350 5-27.5 Frazier 332,820 5-27.5 Ehrhardt 119,151 5-27.5 Sinton 107,719 5-50 Frankston 68,718 5-30 Flagler Beach 201,177 5-40 Oak Ridge 183,285 5-27.5 Monett 207,134 5-27.5 Arma 214,042 5-27.5 Southwest City 95,859 5-27.5 Meadowcrest 163,850 5-40 Parsons 294,982 5-27.5 Newport Village 281,817 5-27.5 Goodwater Falls 180,328 5-27.5 Northfield Station 133,893 5-27.5 Pleasant Hill Square 124,880 5-27.5 Winter Park 173,602 5-40 Cornell 123,935 5-40 Heritage Drive S. 225,251 5-25 Brodhead 112,825 5-40 Mt. Village 110,055 5-50 Hazelhurst 137,275 5-40 Sunrise 205,097 5-27.5 Stony Creek 188,142 5-27.5 Logan Place 213,366 5-27.5 Haines 493,549 5-27.5 Maple Wood 164,784 5-27.5 Summerhill 151,821 5-27.5 Dorchester 87,676 5-27.5 Lancaster 164,782 5-40 Autumn Village 70,742 5-40 Hardy 99,125 5-40 Dawson 92,837 5-40 ----------- Total Series 6 $ 6,668,399 SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Series 2 Reconciliation of Land, Building & Improvements current year changes: Balance at beginning of period - December 31, 1995 $ 28,152,495 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 46,637 Other 0 ---------- 46,637 Deductions during period: Cost of real estate sold 0 Other 0 ---------- 0 -------------- Balance at end of period - December 31, 1996 $ 28,199,132 ============== Reconciliation of Accumulated Depreciation current year changes Balance at beginning of period - December 31, 1995 $ 4,712,310 Current year expense 936,791 Less Accumulated Depreciation of real estate sold 0 -------------- Balance at end of period - December 31, 1996 $ 5,649,101 ============== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Series 3 Reconciliation of Land, Building & Improvements current year changes: Balance at beginning of period - December 31, 1995 $ 27,364,904 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 51,059 Other 0 ---------- 51,059 Deductions during period: Cost of real estate sold 0 Other 0 ---------- 0 -------------- Balance at end of period - December 31, 1996 $ 27,415,963 ============== Reconciliation of Accumulated Depreciation current year changes Balance at beginning of period - December 31, 1995 $ 6,707,453 Current year expense 917,116 Less Accumulated Depreciation of real estate sold 0 -------------- Balance at end of period - December 31, 1996 $ 7,624,569 ============== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Series 4 Reconciliation of Land, Building & Improvements current year changes: Balance at beginning of period - December 31, 1995 $ 32,504,267 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 65,315 Other 0 ---------- 65,315 Deductions during period: Cost of real estate sold 4,825 Other 0 ---------- 4,825 ------------- Balance at end of period - December 31, 1996 $ 32,564,757 ============== Reconciliation of Accumulated Depreciation current year changes Balance at beginning of period - December 31, 1995 $ 5,226,315 Current year expense 1,042,790 Less Accumulated Depreciation of real estate sold (4,825) -------------- Balance at end of period - December 31, 1996 $ 6,264,280 ============== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Series 5 Reconciliation of Land, Building & Improvements current year changes: Balance at beginning of period - December 31, 1995 $ 39,777,554 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 45,969 Other 0 ---------- 45,969 Deductions during period: Cost of real estate sold 11,000 Other 0 ---------- 11,000 -------------- Balance at end of period - December 31, 1996 $ 39,812,523 ============== Reconciliation of Accumulated Depreciation current year changes Balance at beginning of period - December 31, 1995 $ 5,473,574 Current year expense 1,377,543 Less Accumulated Depreciation of real estate sold (11,000) Prior year adjustment (712) -------------- Balance at end of period - December 31, 1996 $ 6,839,405 ============== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1996 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Series 6 Reconciliation of Land, Building & Improvements current year changes: Balance at beginning of period - December 31, 1995 $ 43,680,267 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 72,709 Other 0 ---------- 72,709 Deductions during period: Cost of real estate sold 0 Other 0 ---------- 0 ------------- Balance at end of period - December 31, 1996 $ 43,752,976 ============== Reconciliation of Accumulated Depreciation current year changes Balance at beginning of period - December 31, 1995 $ 5,205,351 Current year expense 1,463,048 Less Accumulated Depreciation of real estate sold 0 -------------- Balance at end of period - December 31, 1996 $ 6,668,399 ============== SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) By: Raymond James Tax Credit Funds,Inc. Raymond James Tax Credit Funds, Inc. Date: July 11, 1997 By:/s/ Ronald M. Diner Ronald M. Diner President Date: July 11, 1997 By:/s/ Sandra L. Furey Sandra L. Furey Secretary and Treasurer SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused to be signed on its behalf by the undersigned hereunto duly authorized. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) By: Raymond James Tax Credit Funds,Inc. Managing General Partner Date: July 11, 1997 By:/s/ Ronald M. Diner Ronald M. Diner President Date: July 11, 1997 By:/s/ Sandra L. Furey Sandra L. Furey Secretary and Treasurer Date: July 11, 1997 By:/s/ Alan L. Weiner Alan L. Weiner Sr. Vice President and Director EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED MARCH 31, 1997. 12-MOS MAR-31-1997 MAR-31-1997 1,087,001 2,174,660 0 0 0 1,335,155 0 0 12,265,210 282,242 0 0 0 0 10,730,666 12,265,210 0 209,111 0 0 576,744 0 0 (3,533,114) 0 (3,533,114) 0 0 0 (3,533,114) (93.96) (93.96) EPI IS NET LOSS PER $1,000 LIMITED PARTNERSHIP UNIT.
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