-----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, WWwEE6hEXH/WrTJDycbccfBkoRb98oD9ofDjOw+3L0H2oCN9pnCfdqxkJZeebcIp cOyB9cExgnm6rjml4ltKSw== 0000857115-99-000004.txt : 19990715 0000857115-99-000004.hdr.sgml : 19990715 ACCESSION NUMBER: 0000857115-99-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990714 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: SEC FILE NUMBER: 000-19022 FILM NUMBER: 99664289 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 GTWY2 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, 1999 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: (727)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 Part III of this Form 10-K or any amendment to this Form 10-K. X Number of Units Title of Each Class March 31, 1999 Beneficial Assignee Certificates 2,310 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, 1999, 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, 1999. 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, 1999, 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, 1999 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 United States Department of Agriculture - Rural Development) ("USDA-RD") 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 USDA-RD 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, 1999 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 15.1% of the Series' total assets, Series 3 is 11.8%, Series 4 is 7.3%, Series 5 is 12.6% and Series 6 is 13.7%. The following table provides certain summary information regarding the Project Partnerships in which Gateway had an interest as of December 31, 1998: Item 2 - Properties (continued): SERIES 2 OCCU- LOCATION OF # OF DATE PROPERTY PANCY PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE - ----------- ----------- ----- -------- -------- ----- Claxton Elderly Claxton, GA 24 9/90 $ 799,538 100% Deerfield II Douglas, GA 24 9/90 854,562 83% Hartwell Family Hartwell, GA 24 9/90 859,698 96% Cherrytree Apts. Albion, PA 33 9/90 1,439,636 91% Springwood Apts. Westfield, NY 32 9/90 1,511,700 94% Lakeshore Apts. Tuskegee, AL 34 9/90 1,267,543 91% Lewiston Lewiston, NY 25 10/90 1,233,935 100% Charleston Charleston, AR 32 9/90 1,076,098 81% Sallisaw II Sallisaw, OK 47 9/90 1,517,589 96% Pocola Pocola, OK 36 10/90 1,245,870 89% Inverness Club Inverness, FL 72 9/90 3,496,824 93% Pearson Elderly Pearson, GA 25 9/90 781,460 100% Richland Elderly Richland, GA 33 9/90 1,057,871 91% Lake Park Lake Park, GA 48 9/90 1,794,542 94% Woodland Terrace Waynesboro, GA 30 9/90 1,079,615 97% Mt. Vernon Elderly Mt. Vernon, GA 21 9/90 700,935 91% Lakeland Elderly Lakeland, GA 29 9/90 955,815 93% Prairie Apartments Eagle Butte, SD 21 10/90 1,257,226 100% Sylacauga Heritage Sylacauga, AL 44 12/90 1,759,614 93% Manchester Housing Manchester, GA 49 1/91 1,781,302 96% Durango C.W.W. Durango, CO 24 1/91 1,292,590 100% Columbus Seniors Columbus, KS 16 5/92 514,126 100% ----- ----------- 723 $28,278,089 ==== =========== The aggregate average effective rental per unit is $3,387 per year ($282 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 93% and its average effective annual rental per unit was $4,584 ($382 per month) on December 31, 1998. 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, 1998 the real estate taxes were $64,017. Item 2 - Properties (continued): SERIES 3 OCCU- LOCATION OF # OF DATE PROPERTY PANCY PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE - ----------- ----------- ----- -------- -------- ----- Poteau II Poteau, OK 52 8/90 $1,789,148 96% Sallisaw Sallisaw, OK 52 8/90 1,744,103 100% Nowata Properties Oolagah, OK 32 8/90 1,148,484 94% Waldron Properties Waldron, AR 24 9/90 860,273 96% Roland II Roland, OK 52 10/90 1,804,010 87% Stilwell Stilwell, OK 48 10/90 1,597,701 92% Birchwood Apts. Pierre, SD 24 9/90 1,051,392 92% Hornellsville Arkport, NY 24 9/90 1,097,600 92% Sunchase II Watertown, SD 41 9/90 1,344,334 98% CE McKinley II Rising Sun, MD 16 9/90 796,134 100% Weston Apartments Weston, AL 10 11/90 339,949 50% Countrywood Apts. Centreville, AL 40 11/90 1,519,764 100% Wildwood Apts. Pineville, LA 28 11/90 1,084,325 86% Hancock Hawesville, KY 12 12/90 440,425 100% Hopkins Madisonville, KY 24 12/90 927,256 100% Elkhart Apts. Elkhart, TX 54 1/91 1,546,912 87% Bryan Senior Bryan, OH 40 1/91 1,186,268 93% Brubaker Square New Carlisle, OH 38 1/91 1,452,524 89% Southwood Savannah, TN 44 1/91 1,792,293 100% Villa Allegra Celina, OH 32 1/91 1,134,780 94% Belmont Senior Cynthiana, KY 24 1/91 935,143 100% Heritage Villas Helena, GA 25 3/91 823,974 92% Logansport Seniors Logansport, LA 32 3/91 1,086,394 94% ---- ----------- 768 $27,503,186 ==== =========== The average effective rental per unit is $2,937 per year ($245 per month). Item 2 - Properties (continued): SERIES 4 OCCU- LOCATION OF # OF DATE PROPERTY PANCY PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE - ----------- ----------- ---- -------- -------- ------ Alsace Soda Springs, ID 24 12/90 $800,927 92% Seneca Apartments Seneca, MO 24 2/91 724,685 100% Eudora Senior Eudora, KS 36 3/91 1,257,482 94% Westville Westville, OK 36 3/91 1,101,686 100% Wellsville Senior Wellsville, KS 24 3/91 810,970 92% Stilwell II Stilwell, OK 52 3/91 1,657,974 96% Spring Hill Sr. Spring Hill, KS 24 3/91 1,036,369 100% Smithfield Smithfield, UT 40 4/91 1,841,135 93% Tarpon Heights Galliano, LA 48 4/91 1,493,434 98% Oaks Apartments Oakdale, LA 32 4/91 1,032,509 97% Wynnwood Common Fairchance, PA 34 4/91 1,679,018 97% Chestnut Howard, SD 24 5/91 1,052,686 50% Apts -St. George St. George, SC 24 6/91 940,861 88% Williston Williston, SC 24 6/91 1,002,600 100% Brackettville Sr. Brackettville, TX 32 6/91 991,966 94% Sonora Seniors Sonora, TX 32 6/91 1,013,315 100% Ozona Seniors Ozona, TX 24 6/91 759,843 96% Fredericksburg Sr. Fredericksburg, TX 48 6/91 1,402,563 100% St. Joseph St. Joseph, IL 24 6/91 976,453 100% Courtyard Huron, SD 21 6/91 846,512 100% Rural Development Ashland, ME 25 6/91 1,422,482 96% Jasper Villas Jasper, AR 25 6/91 1,101,517 92% Edmonton Senior Edmonton, KY 24 6/91 906,714 96% Jonesville Manor Jonesville, VA 40 6/91 1,722,741 98% Norton Green Norton, VA 40 6/91 1,695,989 100% Owingsville Senior Owingsville, KY 22 8/91 848,044 100% Timpson Seniors Timpson, TX 28 8/91 815,916 100% Piedmont Barnesville, GA 36 8/91 1,289,047 89% S.F. Arkansas City Arkansas City, KS 12 8/91 412,031 100% ---- ---------- 879 32,637,469 ==== ========== The average effective rental per unit is $3,272 per year ($273 per month). Item 2 - Properties (continued): SERIES 5 OCCU- LOCATION OF # OF DATE PROPERTY PANCY PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE - ----------- ----------- ---- -------- -------- ----- Seymour Seymour, IN 37 8/91 1,518,441 97% Effingham Effingham, IL 24 8/91 980,617 100% S.F. Winfield Winfield, KS 12 8/91 400,920 92% S.F.Medicine Lodge Medicine Lodge,KS 16 8/91 564,559 94% S.F. Ottawa Ottawa, KS 24 8/91 707,449 96% S.F. Concordia Concordia, KS 20 8/91 686,962 100% Highland View Elgin, OR 24 9/91 882,527 88% Carrollton Club Carrollton, GA 78 9/91 3,217,901 95% Scarlett Oaks Lexington, SC 40 9/91 1,675,974 100% Brooks Hill Ellijay, GA 44 9/91 1,750,689 98% Greensboro Greensboro, GA 24 9/91 866,259 96% Greensboro II Greensboro, GA 33 9/91 1,088,664 100% Pine Terrace Wrightsville, GA 25 9/91 885,185 92% Shellman Shellman, GA 27 9/91 901,648 89% Blackshear Cordele, GA 46 9/91 1,593,662 100% Crisp Properties Cordele, GA 31 9/91 1,127,994 94% Crawford Crawford, GA 25 9/91 907,712 100% Yorkshire Wagoner, OK 60 9/91 2,543,876 97% Woodcrest South Boston, VA 40 9/91 1,574,776 100% Fox Ridge Russellville, AL 24 9/91 889,941 100% Redmont II Red Bay, AL 24 9/91 840,596 100% Clayton Clayton, OK 24 9/91 871,530 79% Alma Alma, AR 24 9/91 957,710 100% Pemberton Village Hiawatha, KS 24 9/91 766,979 88% Magic Circle Eureka, KS 24 9/91 796,127 88% Spring Hill Spring Hill, KS 36 9/91 1,449,378 94% Menard Retirement Menard, TX 24 9/91 762,072 92% Wallis Housing Wallis, TX 24 9/91 578,454 83% Zapata Housing Zapata, TX 40 9/91 1,238,405 88% Mill Creek Grove, OK 60 11/91 1,741,669 100% Portland II Portland, IN 20 11/91 732,163 100% Georgetown Georgetown, OH 24 11/91 921,985 96% Cloverdale Cloverdale, IN 24 1/92 943,909 100% So. Timber Ridge Chandler, TX 44 1/92 1,283,029 96% Pineville Pineville, MO 12 5/92 391,889 100% Ravenwood Americus, GA 24 1/94 887,896 85% ----- ----------- 1,106 39,929,547 ==== =========== The average effective rental per unit is $3,141 per year ($262 per month). Item 2 - Properties (continued): SERIES 6 OCCU- LOCATION OF # OF DATE PROPERTY PANCY PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE - ----------- ----------- ----- -------- -------- ------ Spruce Pierre, SD 24 11/91 1,122,161 92% Shannon O'Neill, NE 16 11/91 650,675 100% Carthage Carthage, MO 24 1/92 698,313 92% Mountain Crest Enterprise, OR 39 3/92 1,238,874 85% Coal City Coal City, IL 24 3/92 1,216,372 100% Blacksburg Terrace Blacksburg, SC 32 4/92 1,323,070 100% Frazer Place Smyrna, DE 30 4/92 1,673,104 100% Ehrhardt Ehrhardt, SC 16 4/92 685,776 81% Sinton Sinton, TX 32 4/92 1,039,306 94% Frankston Frankston, TX 24 4/92 674,981 100% Flagler Beach Flagler Beach, FL 43 5/92 1,653,116 100% Oak Ridge Williamsburg, KY 24 5/92 1,037,966 100% Monett Monett, MO 32 5/92 958,788 100% Arma Arma, KS 28 5/92 870,842 93% Southwest City Southwest City, MO 12 5/92 388,165 100% Meadowcrest Luverne, AL 32 6/92 1,203,738 97% Parsons Parsons, KS 48 7/92 1,532,968 100% Newport Village Newport, TN 40 7/92 1,613,724 100% Goodwater Falls Jenkins, KY 36 7/92 1,393,363 100% Northfield Station Corbin, KY 24 7/92 1,022,561 92% Pleasant Hill Somerset, KY 24 7/92 954,810 96% Winter Park Mitchell, SD 24 7/92 1,252,759 96% Cornell Watertown, SD 24 7/92 1,081,014 96% Heritage Drive So. Jacksonville, TX 40 1/92 1,199,590 98% Brodhead Brodhead, KY 24 7/92 956,534 75% Mt. Village Mt. Vernon, KY 24 7/92 943,158 92% Hazlehurst Hazlehurst, MS 32 8/92 1,181,404 100% Sunrise Yankton, SD 33 8/92 1,366,792 97% Stony Creek Hooversville, PA 32 8/92 1,649,283 84% Logan Place Logan, OH 40 9/92 1,522,650 88% Haines Haines, AK 32 8/92 3,030,343 88% Maple Wood Barbourville, KY 24 8/92 1,007,744 96% Summerhill Gassville, AR 28 9/92 841,241 96% Dorchester St. George, SC 12 9/92 562,272 100% Lancaster Mountain View, AR 33 9/92 1,382,821 100% Autumn Village Harrison, AR 16 7/92 615,604 100% Hardy Hardy, AR 24 7/92 936,545 92% Dawson Dawson, GA 40 11/93 1,474,973 100% ---- ---------- 1,086 43,957,400 ===== ========== The average effective rental per unit is $3,439 per year ($287 per month). Item 2 - Properties (continued): A summary of the cost of the properties at December 31, 1998, 1997 and 1996 is as follows: 12/31/98 SERIES 2 SERIES 3 SERIES 4 Land $1,012,180 $ 985,546 $ 1,188,112 Land Improvements 123,358 242,943 143,608 Buildings 26,240,151 25,157,917 29,897,293 Furniture and Fixtures 902,400 1,116,780 1,408,453 Construction in Progress 0 0 0 ----------- ----------- ---------- Properties, at Cost Less: Accum.Depreciation 28,278,089 27,503,186 32,637,466 7,497,204 9,442,106 8,340,684 Properties, Net ----------- ------------ ---------- 20,780,885 18,061,080 24,296,782 =========== =========== =========== SERIES 5 SERIES 6 TOTAL Land $ 1,456,671 $ 1,779,755 $ 6,422,264 Land Improvements 59,966 475,244 1,045,119 Buildings 36,889,183 39,742,035 157,926,579 Furniture and Fixtures 1,523,727 1,960,336 6,911,696 Construction in Progress 0 0 0 ---------- ---------- ----------- Properties, at Cost 39,929,547 43,957,370 172,305,658 Less: Accum.Depreciation 9,481,184 9,550,937 44,312,115 ---------- ---------- ----------- Properties, Net 30,448,363 34,406,433 127,993,543 =========== =========== ============ 12/31/97 SERIES 2 SERIES 3 SERIES 4 Land $ 1,012,180 $ 985,546 $ 1,188,112 Land Improvements 118,113 242,943 123,230 Buildings 26,235,180 25,126,561 29,953,004 Furniture and Fixtures 887,906 1,079,796 1,345,403 Construction in Progress 0 0 9,011 ---------- ---------- ---------- Properties, at Cost 28,253,379 27,434,846 32,618,760 Less: Accum.Depreciation 6,581,790 8,538,755 7,324,765 ---------- ---------- ---------- Properties, Net 21,671,589 18,896,091 25,293,995 =========== =========== =========== SERIES 5 SERIES 6 TOTAL Land $ 1,461,156 $ 1,779,755 $ 6,426,749 Land Improvements 71,317 478,286 1,033,889 Buildings 36,827,233 39,721,640 157,863,618 Furniture and Fixtures 1,490,535 1,886,188 6,689,828 Construction in Progress 0 0 9,011 ---------- ---------- ----------- Properties, at Cost 39,850,241 43,865,869 172,023,095 Less: Accum.Depreciation 8,170,490 8,136,483 38,752,283 ---------- ---------- ----------- Properties, Net 31,679,751 35,729,386 133,270,812 =========== =========== =========== 12/31/96 SERIES 2 SERIES 3 SERIES 4 Land $ 1,012,180 $ 985,546 $ 1,188,112 Land Improvements 110,157 370,083 120,607 Buildings 26,256,812 24,975,936 29,950,050 Furniture and Fixtures 819,983 1,084,398 1,305,988 Construction in Progress 0 0 0 ----------- ----------- ----------- Properties, at Cost 28,199,132 27,415,963 32,564,757 Less: Accum.Depreciation 5,649,101 7,624,569 6,264,280 ----------- ----------- ----------- Properties, Net $22,550,031 $19,791,394 $26,300,477 =========== =========== =========== SERIES 5 SERIES 6 TOTAL Land $ 1,461,156 $ 1,779,755 $ 6,426,749 Land Improvements 71,068 449,010 1,120,925 Buildings 36,811,454 39,702,357 157,696,609 Furniture and Fixtures 1,468,845 1,821,854 6,501,068 Construction in Progress 0 0 0 ----------- ----------- ------------ Properties, at Cost 39,812,523 43,752,976 171,745,351 Less: Accum.Depreciation 6,839,405 6,668,399 33,045,754 ----------- ----------- ------------ Properties, Net $32,973,118 $37,084,577 $138,699,597 =========== =========== ============ 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, 1999, 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, 1999 Beneficial Assignee Certificates 2,310 General Partner Interest 2 Item 6. Selected Financial Data FOR THE YEARS ENDED MARCH 31,: SERIES 2 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total Revenues $ 41,405 $ 41,272 $ 36,217 $ 36,532 $ 34,922 Net Loss (221,305) (337,693) (582,633) (591,355) (756,064) Equity in Losses of Project Partnerships (126,899) (288,412) (527,175) (537,111) (699,847) Total Assets 853,057 1,045,569 1,345,931 1,893,838 2,449,615 Investments In Project Partnerships 331,579 510,805 814,883 1,350,923 1,901,609 Per BAC: (A) Tax Credits 166.30 166.40 166.40 166.30 166.30 Portfolio Income 12.90 13.10 12.10 11.20 9.70 Passive Loss (144.60) (147.90) (141.90) (126.10) (131.30) Net Loss (35.71) (54.48) (94.00) (95.41) (121.99) FOR THE YEARS ENDED MARCH 31,: SERIES 3 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total Revenues $ 44,329 $ 65,111 $ 31,128 $ 31,179 $ 29,718 Net Loss (187,324) (221,508) (341,282) (470,880) (640,203) Equity in Losses of Project Partnerships (105,820) (198,168) (285,853) (421,996) (579,907) Total Assets 669,866 846,210 1,043,223 1,362,838 1,805,494 Investments In Project Partnerships 218,820 378,000 584,189 901,663 1,348,162 Per BAC: (A) Tax Credits 164.30 176.60 176.40 176.65 175.12 Portfolio Income 14.10 20.10 13.90 14.00 12.00 Passive Loss (145.00) (154.10) (146.40) (143.30) (135.00) Net Loss (33.99) (40.19) (61.93) (85.44) (116.17) Item 6. Selected Financial Data FOR THE YEARS ENDED MARCH 31,: SERIES 4 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total Revenues $ 46,672 $ 44,309 $ 41,455 $ 42,246 $ 40,437 Net Loss (348,671) (485,415) (696,010) (705,639) (758,528) Equity in Losses of Project Partnerships (208,919) (421,886) (635,178) (644,865) (694,726) Total Assets 1,280,602 1,600,054 2,048,377 2,711,102 3,379,586 Investments In Project Partnerships 676,348 981,823 1,423,319 2,073,510 2,737,516 Per BAC: (A) Tax Credits 168.60 168.60 168.60 168.60 168.30 Portfolio Income 14.10 13.70 13.20 12.90 10.30 Passive Loss (136.00) (157.20) (149.30) (142.30) (134.60) Net Loss (49.92) (69.50) (99.65) (101.02) (108.60) FOR THE YEARS ENDED MARCH 31,: SERIES 5 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total Revenues $ 64,661 $ 54,417 $ 52,985 $ 54,273 $ 57,635 Net Loss (403,555) (813,502) (997,362) (781,436) (817,018) Equity in Losses of Project Partnerships (300,042) (728,729) (911,965) (700,127) (739,296) Total Assets 1,932,914 2,306,065 3,078,890 4,041,606 4,790,100 Investments In Project Partnerships 1,145,581 1,500,087 2,268,632 3,211,868 3,950,979 Per BAC: (A) Tax Credits 164.60 164.60 164.70 164.60 162.20 Portfolio Income 14.40 14.10 13.10 12.50 10.90 Passive Loss (149.20) (141.60) (137.80) (124.30) (108.20) Net Loss (46.37) (93.47) (114.60) (89.79) (93.88) Item 6. Selected Financial Data FOR THE YEARS ENDED MARCH 31,: SERIES 6 1999 1998 1997 1996 1995 ---- --- ---- ---- ---- Total Revenues $ 50,722 $ 49,707 $ 47,326 $ 48,446 $ 48,235 Net Loss (701,324) (870,137) (915,827) (821,024) (987,087) Equity in Losses of Project Partnerships (601,405) (761,923) (805,310) (710,986) (875,023) Total Assets 3,272,734 3,930,665 4,748,789 5,612,685 6,375,252 Investments In Project Partnerships 2,464,086 3,102,793 3,912,526 4,769,625 5,525,062 Per BAC: (A) Tax Credits 165.50 165.50 165.40 165.40 161.70 Portfolio Income 12.90 12.90 11.30 10.70 7.70 Passive Loss (129.30) (124.30) (122.10) (117.30) (119.80) Net Loss (68.71) (85.25) (89.72) (80.44) (96.71) (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, 1999, March 31, 1998 and March 31, 1997. The General and Administrative expenses - General Partner and General and Administrative expenses - Other for the year ended March 31, 1999 are comparable to March 31, 1998 and March 31, 1997. 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, 1999, 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 94% at December 31, 1998. Equity in Losses of Project Partnerships decreased from $288,412 for the year ended March 31, 1998 to $126,899 for the year ended March 31, 1999. This decrease was due to additional suspended losses of $575,862 as these losses would reduce the investment in certain Project Partnerships below zero. Equity in Losses of Project Partnerships of $288,412 for the year ended March 31, 1998 were comparable to the year ended March 31, 1997. 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 $939,525, $935,616 and $919,877 for the years ended December 31, 1996, 1997, and 1998 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, 1999, the Series had $169,513 of short-term investments (Cash and Cash Equivalents). It also had $351,965 in Zero Coupon Treasuries with annual maturities providing $49,538 in fiscal year 1999 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 $221,305 for the year ending March 31, 1999. However, after adjusting for Equity in Losses of Project Partnerships of $126,899 and the changes in operating assets and liabilities, net cash used in operating activities was $34,321, of which $37,895 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $42,983, consisting of $12,315 in cash distributions from the Project Partnerships and $30,668 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, 1999 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, 1998. Equity in Losses of Project Partnerships decreased from $285,853 for the year ended March 31, 1997 to $198,168 for the year ended March 31, 1998 and to $105,820 for the year ended March 31, 1999. These decreases were due to suspended losses of $343,378, $463,688 and 548,603 for the years ended March 31, 1997, 1998, and 1999 respectively. These losses would reduce the investment in certain Project Partnerships below zero. (These Project Partnerships reported depreciation and amortization of $925,984, $923,055 and $913,619 for the years ended December 31, 1996, 1997 and 1998, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1999, the Series had $137,981 of short-term investments (Cash and Cash Equivalents). It also had $313,065 in Zero Coupon Treasuries with annual maturities providing $44,063 in fiscal year 1999 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 $187,324 for the year ended March 31, 1999. However, after adjusting for Equity in Losses of Project Partnerships of $105,820 and the changes in operating assets and liabilities, net cash used in operating activities was $48,724, of which $50,027 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $51,083, consisting of $23,805, adjusted by $14,515 included in Other Income, in cash distributions received from the Project Partnerships and $27,278 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, 1999, 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, 1998. Equity in Losses of Project Partnerships decreased from $635,178 for the year ended March 31, 1997 to $421,886 for the year ended March 31, 1998 and to $208,919 for the year ended March 31, 1999. (These Project Partnerships reported depreciation and amortization of $1,043,887, $1,060,885 and $1,016,293 for the years ended December 31, 1996, 1997 and 1998, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1999, the Series had $207,632 of short-term investments (Cash and Cash Equivalents). It also had $396,622 in Zero Coupon Treasuries with annual maturities providing $55,823 in fiscal year 1999 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 $348,671 for the year ended March 31, 1999. However, after adjusting for Equity in Losses of Project Partnerships of $208,919 and the changes in operating assets and liabilities, net cash used in operating activities was $42,177, of which $45,817 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $52,933, consisting of $18,374 in cash distributions from the Project Partnerships and $34,559 from matured Zero Coupon Treasuries. There were no unusual events or trends to describe. A Project Partnership located in Howard, S.D. experienced significant cash shortages from operations in 1998 due to low occupancy as a result of layoffs at a local major employer. The local general partner partially funded the deficit by lending $22,000 in 1997 and $15,855 in 1998, they also have deferred management fees in the amount of $32,727 for these same years. The project received approval for a $40 per unit rent increase as of January 1999. Management does not expect any materially adverse effect to Gateway from this Project Partnership. Series 5 - Gateway closed this series on October 11, 1991 after receiving $8,616,000 from 535 Assignees. As of March 31, 1999, 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 95% as of December 31, 1998. Equity in Losses of Project Partnerships increased from $911,965 for the year ended March 31, 1997 to $728,729 for the year ended March 31, 1998 and decreased to $300,042 for the year ended March 31, 1999. (These Project Partnerships reported depreciation and amortization of $1,380,487, $1,331,686 and $1,312,998 for the years ended December 31, 1996, 1997 and 1998, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1999, the Series had $292,994 of short-term investments (Cash and Cash Equivalents). It also had $494,339 in Zero Coupon Treasuries with annual maturities providing $66,576 in fiscal year 1999 increasing to $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 $403,555 for the year ended March 31, 1999. However, after adjusting for Equity in Losses of Project Partnerships of $300,042 and the changes in operating assets and liabilities, net cash used in operating activities was $59,946, of which $62,738 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $72,127 consisting of $29,054 in cash distributions from the Project Partnerships and $43,073 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, 1999, 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 95% as of December 31, 1998. Equity in Losses of Project Partnerships increased from $805,310 for the year ended March 31, 1997 to $761,923 for the year ended March 31, 1998 and decreased to $601,405 for the year ended March 31, 1999. (These Project Partnerships reported depreciation and amortization of $1,477,003, $1,474,599 and $1,414,757 for the years ended December 31, 1996, 1997 and 1998, respectively.) Overall, management believes these Project Partnerships are operating as expected and are generating tax credits which meet projections. At March 31, 1999, the Series had $408,672 of short-term investments (Cash and Cash Equivalents). It also had $399,976 in Zero Coupon Treasuries with annual maturities providing $55,000 in fiscal year 1999 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 $701,324 for the year ended March 31, 1999. However, after adjusting for Equity in Losses of Project Partnerships of $601,405 and the changes in operating assets and liabilities, net cash used in operating activities was $60,465, of which $59,999 was the Asset Management Fee actually paid. Cash provided by investing activities totaled $62,882 of which $27,865 was received in cash distributions from the Project Partnerships and $35,017 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, 1999 and 1998 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, 1999. These 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 total the following as of March 31, 1999 and 1998 and the equity in their losses total for each of the three years in the period ended March 31, 1999: Assets Partnership Loss March 31, Year Ended March 31, -------- -------------------- 1999 1998 1999 1998 1997 ---- ---- ---- ---- ---- Series 2 $186,641 $329,899 $107,106 $228,377 $293,789 Series 3 118,646 214,464 65,214 143,165 179,637 Series 4 471,161 706,006 187,477 320,588 335,255 Series 5 690,078 908,120 74,842 485,727 574,281 Series 6 1,122,059 1,528,537 301,060 506,231 518,594 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, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1999, 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 July 6, 1999 PART I - Financial Information Item 1. Financial Statements GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1999 AND 1998 SERIES 2 1999 1998 ---- ---- ASSETS Current Assets: Cash and Cash Equivalents $ 169,513 $ 160,851 Investments in Securities 49,538 47,501 ---------- ---------- Total Current Assets 219,051 208,352 Investments in Securities 302,427 326,412 Investments in Project Partnerships, Net 331,579 510,805 ---------- ---------- Total Assets $853,057 $1,045,569 ========== ========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners 44,229 46,190 ---------- ---------- Total Current Liabilities 44,229 46,190 ---------- ---------- Long-Term Liabilities: Payable to General Partners 326,949 296,195 ---------- ---------- Partners' Equity: Assignor Limited Partner Units of limited partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1999 and 1998 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, 1999 and 1998, issued and outstanding 530,860 749,952 General Partners (48,981) (46,768) ---------- ---------- Total Partners' Equity 481,879 703,184 ---------- ---------- Total Liabilities and Partners' Equity $853,057 $1,045,569 ========== ========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1999 AND 1998 SERIES 3 1999 1998 ---- ---- ASSETS Current Assets: Cash and Cash Equivalents $ 137,981 $ 135,622 Investments in Securities 44,063 42,252 ---------- ---------- Total Current Assets 182,044 177,874 Investments in Securities 269,002 290,336 Investments in Project Partnerships, Net 218,820 378,000 ---------- ---------- Total Assets $ 669,866 $846,210 ========== ========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners 48,298 50,773 ---------- ---------- Total Current Liabilities 48,298 50,773 ---------- ---------- Long-Term Liabilities: Payable to General Partners 248,238 234,783 ---------- ---------- Partners' Equity: Assignor Limited Partner Units of limited partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1999 and 1998 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, 1999 and 1998, issued and outstanding 417,412 602,863 General Partners (44,082) (42,209) ----------- ----------- Total Partners' Equity 373,330 560,654 ----------- ----------- Total Liabilities and Partners' Equity $ 669,866 $ 846,210 =========== =========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1999 AND 1998 SERIES 4 1999 1998 ---- ---- ASSETS Current Assets: Cash and Cash Equivalents $ 207,632 $ 196,876 Investments in Securities 55,823 53,529 ----------- ----------- Total Current Assets 263,455 250,405 Investments in Securities 340,799 367,826 Investments in Project Partnerships, Net 676,348 981,823 ----------- ----------- Total Assets $ 1,280,602 $1,600,054 =========== =========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners 53,248 56,202 ---------- ---------- Total Current Liabilities 53,248 56,202 ---------- ---------- Long-Term Liabilities: Payable to General Partners 312,891 280,718 ---------- ---------- Partners' Equity: Assignor Limited Partner Units of limited partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1999 and 1998 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, 1999 and 1998, issued and outstanding 965,972 1,311,156 General Partners (51,509) (48,022) ----------- ----------- Total Partners' Equity 914,463 1,263,134 ----------- ----------- Total Liabilities and Partners' Equity $ 1,280,602 $1,600,054 =========== =========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1999 AND 1998 SERIES 5 1999 1998 ---- ---- ASSETS Current Assets: Cash and Cash Equivalents $ 292,994 $ 280,813 Investments in Securities 69,576 66,717 ----------- ----------- Total Current Assets 362,570 347,530 Investments in Securities 424,763 458,448 Investments in Project Partnerships, Net 1,145,581 1,500,087 ------------ ------------ Total Assets $ 1,932,914 $2,306,065 ============ ============ LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners 71,427 74,748 ----------- ----------- Total Current Liabilities 71,427 74,748 ----------- ----------- Long-Term Liabilities: Payable to General Partners 308,232 274,507 ----------- ----------- Partners' Equity: Assignor Limited Partner Units of limited partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1999 and 1998 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, 1999 and 1998, issued and outstanding 1,613,346 2,012,865 General Partners (60,091) (56,055) ----------- ----------- Total Partners' Equity 1,553,255 1,956,810 ----------- ----------- Total Liabilities and Partners' Equity $ 1,932,914 $2,306,065 =========== =========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1999 AND 1998 SERIES 6 1999 1998 ---- ---- ASSETS Current Assets: Cash and Cash Equivalents $ 408,672 $ 406,255 Investments in Securities 52,341 48,608 ----------- ----------- Total Current Assets 461,013 454,863 Investments in Securities 347,635 373,009 Investments in Project Partnerships, Net 2,464,086 3,102,793 ----------- ----------- Total Assets $ 3,272,734 $3,930,665 =========== =========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners 67,059 70,482 ----------- ----------- Total Current Liabilities 67,059 70,482 ----------- ----------- Long-Term Liabilities: Payable to General Partners 388,370 341,554 ----------- ---------- Partners' Equity: Assignor Limited Partner Units of limited partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1999 and 1998 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, 1999 and 1998, issued and outstanding 2,877,858 3,572,169 General Partners (60,553) (53,540) ---------- ----------- Total Partners' Equity 2,817,305 3,518,629 ---------- ------------ Total Liabilities and Partners' Equity $3,272,734 $3,930,665 =========== =========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) BALANCE SHEETS MARCH 31, 1999 AND 1998 TOTAL SERIES 2 - 6 1999 1998 ---- ---- ASSETS Current Assets: Cash and Cash Equivalents $ 1,216,792 $1,180,417 Investments in Securities 271,341 258,607 ----------- ----------- Total Current Assets 1,488,133 1,439,024 Investments in Securities 1,684,626 1,816,031 Investments in Project Partnerships, Net 4,836,414 6,473,508 ----------- ----------- Total Assets $ 8,009,173 $9,728,563 =========== =========== LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Payable to General Partners 284,261 298,395 ----------- ----------- Total Current Liabilities 284,261 298,395 ----------- ----------- Long-Term Liabilities: Payable to General Partners 1,584,680 1,427,757 ----------- ----------- Partners' Equity: Assignor Limited Partner Units of limited partnership interest consisting of 40,000 authorized BAC's, of which 37,228 at March 31, 1999 and 1998 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, 1999 and 1998, issued and outstanding 6,405,448 8,249,005 General Partners (265,216) (246,594) ----------- ----------- Total Partners' Equity 6,140,232 8,002,411 ----------- ----------- Total Liabilities and Partners' Equity $ 8,009,173 $9,728,563 ============ ============ 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, SERIES 2 1999 1998 1997 ---- ---- ---- Revenues: Interest Income $ 34,468 $ 37,434 $ 36,217 Other Income 6,937 3,838 0 ----------- ----------- ------------ Total Revenues 41,405 41,272 36,217 ----------- ----------- ------------ Expenses: Asset Management Fee-General Partner 68,648 68,773 68,889 General and Administrative: General Partner 7,433 8,267 6,792 Other 12,781 10,502 13,625 Amortization 46,949 3,011 2,369 ----------- ----------- ------------ Total Expenses 135,811 90,553 91,675 ----------- ----------- ------------ Loss Before Equity in Losses of Project Partnerships (94,406) (49,281) (55,458) Equity in Losses of Project Partnerships (126,899) (288,412) (527,175) ----------- ----------- ------------ Net Loss $ (221,305) $ (337,693) $ (582,633) =========== =========== ============ Allocation of Net Loss: Assignees (219,092) (334,316) (576,807) General Partners (2,213) (3,377) (5,826) ----------- ----------- ------------ $ (221,305) $ (337,693) $ (582,633) =========== =========== ============ Net Loss Per Beneficial Assignee Certificate $ (35.71) $ (54.48) $ (94.00) 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, SERIES 3 1999 1998 1997 ---- ---- ---- Revenues: Interest Income $ 29,814 $ 30,145 $ 31,128 Other Income 14,515 34,966 0 ---------- ---------- ---------- Total Revenues 44,329 65,111 31,128 ---------- ---------- ---------- Expenses: Asset Management Fee-General Partner 63,479 63,645 63,792 General and Administrative: General Partner 7,771 8,481 7,102 Other 10,513 10,903 17,278 Amortization 44,070 5,422 (1,615) ---------- ---------- ---------- Total Expenses 125,833 88,451 86,557 ---------- ---------- ---------- Loss Before Equity in Losses of Project Partnerships (81,504) (23,340) (55,429) Equity in Losses of Project Partnerships (105,820) (198,168) (285,853) ----------- ----------- ----------- Net Loss $ (187,324) $ (221,508) $ (341,282) =========== =========== =========== Allocation of Net Loss: Assignees (185,451) (219,293) (337,869) General Partners (1,873) (2,215) (3,413) ----------- ----------- ----------- $ (187,324) $ (221,508) $ (341,282) =========== =========== =========== Net Loss Per Beneficial Assignee Certificate $ (33.99) $ (40.19) $ (61.93) 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, SERIES 4 1999 1998 1997 ---- ---- ---- Revenues: Interest Income $ 39,022 $ 39,924 $ 41,455 Other Income 7,650 4,385 0 --------- --------- --------- Total Revenues 46,672 44,309 41,455 --------- --------- --------- Expenses: Asset Management Fee - General Partner 77,989 78,133 78,270 General and Administrative: General Partner 9,798 10,693 8,953 Other 12,805 13,417 17,019 Amortization 85,832 5,595 (1,955) ---------- ---------- --------- Total Expenses 186,424 107,838 102,287 ---------- ---------- --------- Loss Before Equity in Losses of Project Partnerships (139,752) (63,529) (60,832) Equity in Losses of Project Partnerships (208,919) (421,886) (635,178) ---------- ---------- ---------- Net Loss $ (348,671) $(485,415) $(696,010) ========== ========== ========== Allocation of Net Loss: Assignees (345,184) (480,561) (689,050) General Partners (3,487) (4,854) (6,960) ---------- ---------- ---------- $ (348,671) $(485,415) $(696,010) ========== ========== ========== Net Loss Per Beneficial Assignee Certificate $ (49.92) $ (69.50) $ (99.65) 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, SERIES 5 1999 1998 1997 ---- ---- ---- Revenues: Interest Income $ 50,132 $ 51,284 $ 52,985 Other Income 14,529 3,133 0 ---------- ---------- ---------- Total Revenues 64,661 54,417 52,985 ---------- ---------- ---------- Expenses: Asset Management Fee - General Partner 96,461 96,663 96,844 General and Administrative: General Partner 12,163 13,274 11,114 Other 19,611 16,492 19,418 Amortization 39,939 12,761 11,006 ---------- ---------- ---------- Total Expenses 168,174 139,190 138,382 ---------- ---------- ---------- Loss Before Equity in Losses of Project Partnerships (103,513) (84,773) (85,397) Equity in Losses of Project Partnerships (300,042) (728,729) (911,965) ---------- ---------- ---------- Net Loss $ (403,555) $(813,502) $(997,362) ========== ========== ========== Allocation of Net Loss: Assignees (399,519) (805,367) (987,388) General Partners (4,036) (8,135) (9,974) ---------- ---------- ---------- $ (403,555) $(813,502) $(997,362) ========== ========== ========== Net Loss Per Beneficial Assignee Certificate $ (46.37) $ (93.47) $ (114.60) 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, SERIES 6 1999 1998 1997 ---- ---- ---- Revenues: Interest Income $ 46,807 $ 48,382 $ 47,326 Other Income 3,915 1,325 0 ---------- ---------- ---------- Total Revenues 50,722 49,707 47,326 ---------- ---------- ---------- Expenses: Asset Management Fee - General Partner 106,815 107,120 107,403 General and Administrative: General Partner 12,839 14,012 11,732 Other 17,635 17,513 16,660 Amortization 13,352 19,276 22,048 ---------- ---------- ---------- Total Expenses 150,641 157,921 157,843 ---------- ---------- ---------- Loss Before Equity in Losses of Project Partnerships (99,919) (108,214) (110,517) Equity in Losses of Project Partnerships (601,405) (761,923) (805,310) ---------- ---------- ---------- Net Loss $(701,324) $(870,137) $(915,827) ========== ========== ========== Allocation of Net Loss: Assignees (694,311) (861,436) (906,669) General Partners (7,013) (8,701) (9,158) ---------- ---------- ---------- $(701,324) $(870,137) $(915,827) ========== ========== ========== Net Loss Per Beneficial Assignee Certificate $ (68.54) $ (85.25) $ (89.72) 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, TOTAL SERIES 2 - 6 1999 1998 1997 ---- ---- ---- Revenues: Interest Income $ 200,243 $ 207,169 $ 209,111 Other Income 47,546 47,647 0 ------------ ------------ ------------ Total Revenues 247,789 254,816 209,111 ------------ ------------ ------------ Expenses: Asset Management Fee-General Partner 413,392 414,334 415,198 General and Administrative: General Partner 50,004 54,727 45,693 Other 73,345 68,827 84,000 Amortization 230,142 46,065 31,853 ------------ ------------ ----------- Total Expenses 766,883 583,953 576,744 ------------ ------------ ----------- Loss Before Equity in Losses of Project Partnerships (519,094) (329,137) (367,633) Equity in Losses of Project Partnerships (1,343,085) (2,399,118) (3,165,481) ------------ ------------ ------------ Net Loss $(1,862,179) $(2,728,255) $(3,533,114) ============ ============ ============ Allocation of Net Loss: Assignees (1,843,557) (2,700,973) (3,497,783) General Partners (18,622) (27,282) (35,331) ------------ ------------ ------------ $(1,862,179) $(2,728,255) $(3,533,114) ============ ============ ============ 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, 1999, 1998 AND 1997: General SERIES 2 Assignees Partners Total --------- -------- ----- 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 Net Loss (334,316) (3,377) (337,693) ------------ ---------- ----------- Balance at March 31, 1998 749,952 (46,768) 703,184 Net Loss (219,092) (2,213) (221,305) ------------ ----------- ----------- Balance at March 31, 1999 $ 530,860 $ (48,981) $ 481,879 ============ =========== =========== 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, 1999, 1998 AND 1997: General SERIES 3 Assignees Partners Total --------- -------- ----- 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 Net Loss (219,293) (2,215) (221,508) ------------ ----------- ----------- Balance at March 31, 1998 602,863 (42,209) 560,654 Net Loss (185,451) (1,873) (187,324) ------------ ------------ ----------- Balance at March 31, 1999 $ 417,412 $ (44,082) $ 373,330 ============ ============ =========== 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, 1999, 1998 AND 1997: General SERIES 4 Assignees Partners Total --------- -------- ----- 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 Net Loss (480,561) (4,854) (485,415) ------------ ---------- ------------ Balance at March 31, 1998 1,311,156 (48,022) 1,263,134 Net Loss (345,184) (3,487) (348,671) ------------ ---------- ------------ Balance at March 31, 1999 $ 965,972 $ (51,509) $ 914,463 ============ ========== ============ 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, 1999, 1998 AND 1997: General SERIES 5 Assignees Partners Total --------- -------- ----- 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 Net Loss (805,367) (8,135) (813,502) ------------ ---------- ------------ Balance at March 31, 1998 2,012,865 (56,055) 1,956,810 Net Loss (399,519) (4,036) (403,555) ------------ ----------- ------------ Balance at March 31, 1999 $ 1,613,346 $ (60,091) $ 1,553,255 ============ =========== ============ 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, 1999, 1998 AND 1997: General SERIES 6 Assignees Partners Total --------- -------- ----- 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 Net Loss (861,436) (8,701) (870,137) ------------ ---------- ------------ Balance at March 31, 1998 3,572,169 (53,540) 3,518,629 Net Loss (694,311) (7,013) (701,324) ------------ ----------- ------------ Balance at March 31, 1999 $ 2,877,858 $ (60,553) $ 2,817,305 ============ =========== ============ 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, 1999, 1998 AND 1997: General TOTAL SERIES 2 - 6 Assignees Partners Total --------- -------- ----- 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 Net Loss (2,700,973) (27,282) (2,728,255) ------------- ----------- ------------- Balance at March 31, 1998 8,249,005 (246,594) 8,002,411 Net Loss (1,843,557) (18,622) (1,862,179) ------------- ----------- ------------- Balance at March 31, 1999 $ 6,405,448 $(265,216) $ 6,140,232 ============= =========== ============= 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, 1999, 1998 AND 1997: SERIES 2 1999 1998 1997 - -------- ---- ---- ---- Cash Flows from Operating Activities: Net Loss $ (221,305) $ (337,693) $ (582,633) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 46,949 3,011 2,369 Accreted Interest Income on Investments in Securities (25,554) (27,118) (28,749) Equity in Losses of Project Partnerships 126,899 288,412 527,175 Interest Income from Redemption of Securities 16,834 13,627 10,358 Distributions Included in Other Income (6,937) (3,838) 0 Changes in Operating Assets and Liabilities: Increase in Payable to General Partners 28,793 37,331 34,728 ---------- ---------- ---------- Net Cash Used in Operating Activities (34,321) (26,268) (36,752) ---------- ---------- ---------- Cash Flows from Investing Activities: Distributions Received from Project Partnerships 12,315 16,493 6,497 Redemption of Investment in Securities 30,668 32,065 33,297 ---------- ---------- ---------- Net Cash Provided by Investing Activities 42,983 48,558 39,794 ---------- ---------- ---------- Increase (Decrease) in Cash and Cash Equivalents 8,662 22,290 3,042 Cash and Cash Equivalents at Beginning of Year 160,851 138,561 135,519 ---------- ---------- ---------- Cash and Cash Equivalents at End of Year $ 169,513 $ 160,851 $ 138,561 ========== ========== ========== 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, 1999, 1998 AND 1997: SERIES 3 1999 1998 1997 - - ------ ---- ---- ---- Cash Flows from Operating Activities: Net Loss $ (187,324) $ (221,508) $ (341,282) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 44,070 5,422 (1,615) Accreted Interest Income on Investments in Securities (22,729) (24,121) (25,571) Equity in Losses of Project Partnerships 105,820 198,168 285,853 Interest Income from Redemption of Securities 14,974 12,121 9,212 Distributions Included In Other Income (14,515) (34,966) 0 Changes in Operating Assets and Liabilities: Increase in Payable to General Partners 10,980 24,495 22,486 ---------- ---------- ---------- Net Cash Used in Operating Activities (48,724) (40,389) (50,917) ---------- ---------- ---------- Cash Flows from Investing Activities: Distributions Received from Project Partnerships 23,805 37,565 33,237 Redemption of Investment in Securities 27,278 28,521 29,617 ---------- ---------- ---------- Net Cash Provided by Investing Activities 51,083 66,086 62,854 ---------- ---------- ---------- Increase (Decrease) in Cash and Cash Equivalents 2,359 25,697 11,937 Cash and Cash Equivalents at Beginning of Year 135,622 109,925 97,988 ---------- ---------- ---------- Cash and Cash Equivalents at End of Year $ 137,981 $ 135,622 $ 109,925 ========== ========== ========== 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, 1999, 1998 AND 1997: SERIES 4 1999 1998 1997 - -------- ---- ---- ---- Cash Flows from Operating Activities: Net Loss $ (348,671) $ (485,415) $ (696,010) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 85,832 5,595 (1,955) Accreted Interest Income on Investments in Securities (28,796) (30,559) (32,396) Equity in Losses of Project Partnerships 208,919 421,886 635,178 Interest Income from Redemption of Securities 18,970 15,357 11,676 Distributions Included In Other Income (7,650) (4,385) 0 Changes in Operating Assets and Liabilities: Increase in Payable to General Partners 29,219 37,092 33,284 ---------- ---------- ---------- Net Cash Used in Operating Activities (42,177) (40,429) (50,223) ---------- ---------- ---------- Cash Flows from Investing Activities: Distributions Received from Project Partnerships 18,374 18,400 16,968 Redemption of Investment in Securities 34,559 36,132 37,522 ---------- ---------- ---------- Net Cash Provided by Investing Activities 52,933 54,532 54,490 ---------- ---------- ---------- Increase (Decrease) in Cash and Cash Equivalents 10,756 14,103 4,267 Cash and Cash Equivalents at Beginning of Year 196,876 182,773 178,506 ---------- ---------- ---------- Cash and Cash Equivalents at End of Year $ 207,632 $ 196,876 $ 182,773 ========== ========== ========== 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, 1999, 1998 AND 1997: SERIES 5 1999 1998 1997 - -------- ---- ---- ---- Cash Flows from Operating Activities: Net Loss $ (403,555) $ (813,502) $ (997,362) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 39,939 12,761 11,006 Accreted Interest Income on Investments in Securities (35,890) (38,088) (40,378) Equity in Losses of Project Partnerships 300,042 728,729 911,965 Interest Income from Redemption of Securities 23,644 19,140 14,552 Distributions Included In Other Income (14,529) (3,133) 0 Changes in Operating Assets and Liabilities: Increase in Payable to General Partners 30,403 40,677 34,644 ---------- ---------- ---------- Net Cash Used in Operating Activities (59,946) (53,416) (65,573) ---------- ---------- ---------- Cash Flows from Investing Activities: Distributions Received from Project Partnerships 29,054 30,188 20,264 Redemption of Investment in Securities 43,073 45,035 46,766 ---------- ---------- ---------- Net Cash Provided by Investing Activities 72,127 75,223 67,030 ---------- ---------- ---------- Increase (Decrease) in Cash and Cash Equivalents 12,181 21,807 1,457 Cash and Cash Equivalents at Beginning of Year 280,813 259,006 257,549 ---------- ---------- ---------- Cash and Cash Equivalents at End of Year $ 292,994 $ 280,813 $ 259,006 ========== ========== ========== 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, 1999, 1998 AND 1997: SERIES 6 1999 1998 1997 - -- ----- ---- ---- ---- Cash Flows from Operating Activities: Net Loss $ (701,324) $ (870,137) $ (915,827) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 13,352 19,276 22,048 Accreted Interest Income on Investments in Securities (29,359) (30,091) (30,456) Equity in Losses of Project Partnerships 601,405 761,923 805,310 Interest Income from Redemption of Securities 15,983 12,262 8,978 Distributions Included In Other Income (3,915) (1,325) 0 Changes in Operating Assets and Liabilities: Increase in Payable to General Partners 43,393 52,014 51,930 ---------- ---------- ---------- Net Cash Used in Operating Activities (60,465) (56,078) (58,017) ---------- ---------- ---------- Cash Flows from Investing Activities: Distributions Received from Project Partnerships 27,865 29,859 29,740 Redemption of Investment in Securities 35,017 35,738 36,022 ---------- ---------- ---------- Net Cash Provided by Investing Activities 62,882 65,597 65,762 ---------- ---------- ---------- Increase (Decrease) in Cash and Cash Equivalents 2,417 9,519 7,745 Cash and Cash Equivalents at Beginning of Year 406,255 396,736 388,991 ---------- ---------- ---------- Cash and Cash Equivalents at End of Year $ 408,672 $ 406,255 $ 396,736 ========== ========== ========== 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, 1999, 1998 AND 1997: TOTAL SERIES 2 - 6 1999 1998 1997 - ------------------ ---- ---- ---- Cash Flows from Operating Activities: Net Loss $(1,862,179) $(2,728,255) $(3,533,114) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Amortization 230,142 46,065 31,853 Accreted Interest Income on Investments in Securities (142,328) (149,977) (157,550) Equity in Losses of Project Partnerships 1,343,085 2,399,118 3,165,481 Interest Income from Redemption of Securities 90,405 72,507 54,776 Distributions Included In Other Income (47,546) (47,647) 0 Changes in Operating Assets and Liabilities: Increase in Payable to General Partners 142,788 191,609 177,072 ----------- ----------- ---------- Net Cash Used in Operating Activities (245,633) (216,580) (261,482) ----------- ----------- ---------- Cash Flows from Investing Activities: Distributions Received from Project Partnerships 111,413 132,505 106,706 Redemption of Investment in Securities 170,595 177,491 183,224 ----------- ----------- ---------- Net Cash Provided by Investing Activities 282,008 309,996 289,930 ----------- ----------- ---------- Increase (Decrease) in Cash and Cash Equivalents 36,375 93,416 28,448 Cash and Cash Equivalents at Beginning of Year 1,180,417 1,087,001 1,058,553 ----------- ----------- ---------- Cash and Cash Equivalents at End of Year $1,216,792 $1,180,417 $1,087,001 =========== =========== =========== See accompanying notes to financial statements. GATEWAY TAX CREDIT FUND II LTD. (A Florida Limited Partnership) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, 1998 AND 1997 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 partner, 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, 1999, 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, 1999. 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 limited partner in Project Partnerships ("Investments in Project Partnerships"), using the equity method of accounting, because management believes that Gateway does not have a majority control of the major operating and financial policies of the Project Partnerships in which it invests, 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, and 3)Decreased for the amortization of the acquisition fees and expenses. Amortization is calculated on a straight-line basis over 35 years, as this is the average estimated useful life of the underlying assets. The amortization expense is shown 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. Distributions received from Project Partnerships whose investment has been reduced to zero are included in Other Income. Gateway recognizes a decline in the carrying value of its investment in the Project Partnerships when there is evidence of a non-temporary decline in the recoverable amount of the investment. There is a possibility that the estimates relating to reserves for non-temporary declines in carrying value of the investments in Project Partnerships may be subject to material near term adjustments. Gateway, as a limited partner in the Project Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance and continued eligibility of tax credits. If the cost of operating a property exceeds the rental income earned thereon, Gateway may deem it in its best interest to voluntarily provide funds in order to protect its investment. 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 1998 and 1997 figures have been reclassified, where appropriate, to conform with the financial statement presentation used in 1999. NOTE 3 - INVESTMENT IN SECURITIES: The March 31, 1999 Balance Sheet includes Investment in Securities consisting of U.S. Government Security Strips which represents their cost, plus accreted interest income of $149,034 for Series 2, $132,562 for Series 3, $167,943 for Series 4, $209,319 for Series 5 and $145,663 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 Unrealized Estimated Market Cost Plus Gains and Value Accreted Interest (Losses) ----------------- ----------------- ---------------- Series 2 $ 379,988 $ 351,966 $ 28,022 Series 3 337,882 313,065 24,817 Series 4 428,229 396,622 31,607 Series 5 533,568 494,338 39,230 Series 6 430,861 399,976 30,885 As of March 31, 1999, the cost and accreted interest of debt securities by contractual maturities is as follows: Series 2 Series 3 Series 4 -------- -------- -------- Due within 1 year $ 49,537 $ 44,062 $ 55,824 After 1 year through 5 years 182,488 162,318 205,639 After 5 years through 10 years 119,941 106,685 135,159 ----------- ----------- ----------- Total Amount Carried on Balance Sheet $ 351,966 $ 313,065 $ 396,622 =========== =========== =========== Series 5 Series 6 Total -------- -------- -------- Due within 1 year $ 69,576 $ 52,341 $ 271,340 After 1 year through 5 years 256,304 203,738 1,010,487 After 5 years through 10 years 168,458 143,897 674,140 ----------- ----------- ------------ Total Amount Carried on Balance Sheet $ 494,338 $ 399,976 $ 1,955,967 =========== =========== ============ 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, 1999, 1998 and 1997 the General Partners and affiliates are entitled to compensation and reimbursement for costs and expenses incurred by Gateway as follows: 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. 1999 1998 1997 ---- ---- ---- Series 2 $ 68,648 $ 68,773 $ 68,889 Series 3 63,479 63,645 63,792 Series 4 77,989 78,133 78,270 Series 5 96,461 96,663 96,844 Series 6 106,815 107,120 107,403 ------------ ------------ ---------- Total $ 413,392 $ 414,334 $ 415,198 ============ ============ ========== General and Administrative Expenses - The Managing General Partner is reim bursed for general and administrative expenses of Gateway on an accountable basis. This expense is included in the Statements of Operations. 1999 1998 1997 ---- ---- ---- Series 2 $ 7,433 $ 8,267 $ 6,792 Series 3 7,771 8,481 7,102 Series 4 9,798 10,693 8,953 Series 5 12,163 13,274 11,114 Series 6 12,839 14,012 11,732 --------- --------- --------- $ 50,004 $ 54,727 $ 45,693 Total ========= ========= ========= NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS: SERIES 2 As of March 31, 1999, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 22 Project Partnerships which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Partnership agreement. Upon dissolution proceeds will be distributed according to each Partnership agreement. The following is a summary of Investments in Project Partnerships as of: MARCH 31, 1999 MARCH 31, 1998 -------------- -------------- Capital Contributions to Project Partner- ships and purchase price paid for limited partner interests in Project Partnerships $ 4,524,678 $ 4,524,678 Cumulative equity in losses of Project Partnerships (1) (4,437,682) (4,310,783) Cumulative distributions received from Project Partnerships (69,654) (64,276) ------------ ------------ Investment in Project Partnerships before Adjustment 17,342 149,619 Excess of investment cost over the underlying assets acquired: Acquisition fees and expenses 390,838 390,838 Accumulated amortization of acquisition fees and expenses (76,601) (29,652) ------------ ------------ Investments in Project Partnerships $ 331,579 $ 510,805 ============ ============ (1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $1,142,213 for the year ended March 31, 1999 and cumulative suspended losses of $566,351 for the year ended March 31, 1998 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): SERIES 3 As of March 31, 1999, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 23 Project Partnerships which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Partnership agreement. Upon dissolution proceeds will be distributed according to each Partnership agreement. The following is a summary of Investments in Project Partnerships as of: MARCH 31, 1999 MARCH 31, 1998 -------------- -------------- Capital Contributions to Project Partner- ships and purchase price paid for limited partner interests in Project Partnerships $ 3,888,713 $ 3,888,713 Cumulative equity in losses of Project Partnerships (1) (3,927,601) (3,821,781) Cumulative distributions received from Project Partnerships (155,866) (146,576) ------------ ------------ Investment in Project Partnerships before Adjustment (194,754) (79,644) Excess of investment cost over the underlying assets acquired: Acquisition fees and expenses 491,746 491,746 Accumulated amortization of acquisition fees and expenses (78,172) (34,102) ------------- ------------- Investments in Project Partnerships $ 218,820 $ 378,000 ============ ============ (1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $1,581,681 for the year ended March 31, 1999 and cumulative suspended losses of $1,033,078 for the year ended March 31, 1998 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): SERIES 4 As of March 31, 1999, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 29 Project Partnerships which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Partnership agreement. Upon dissolution proceeds will be distributed according to each Partnership agreement. The following is a summary of Investments in Project Partnerships as of: MARCH 31, 1999 MARCH 31, 1998 -------------- -------------- Capital Contributions to Project Partner- ships and purchase price paid for limited partner interests in Project Partnerships $ 4,952,519 $ 4,952,519 Cumulative equity in losses of Project Partnerships (1) (4,634,186) (4,425,267) Cumulative distributions received from Project Partnerships (100,990) (90,266) ------------ ------------ Investment in Project Partnerships before Adjustment 217,343 436,986 Excess of investment cost over the underlying assets acquired: Acquisition fees and expenses 562,967 562,967 Accumulated amortization of acquisition fees and expenses (103,962) (18,130) ----------- ----------- Investments in Project Partnerships $ 676,348 $ 981,823 ============ ============ (1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $1,002,895 for the year ended March 31, 1999 and cumulative suspended losses of $496,384 for the year ended March 31, 1998 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): SERIES 5 As of March 31, 1999, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 36 Project Partnerships which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Partnership agreement. Upon dissolution proceeds will be distributed according to each Partnership agreement. The following is a summary of Investments in Project Partnerships as of: MARCH 31, 1999 MARCH 31, 1998 -------------- -------------- Capital Contributions to Project Partner- ships and purchase price paid for limited partner interests in Project Partnerships $ 6,164,472 $ 6,164,472 Cumulative equity in losses of Project Partnerships (1) (5,407,399) (5,107,357) Cumulative distributions received from Project Partnerships (146,715) (132,190) ------------- ------------- Investment in Project Partnerships before Adjustment 610,358 924,925 Excess of investment cost over the underlying assets acquired: Acquisition fees and expenses 650,837 650,837 Accumulated amortization of acquisition fees and expenses (115,614) (75,675) ----------- ----------- Investments in Project Partnerships $ 1,145,581 $ 1,500,087 ============ ============ (1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $929,309 for the year ended March 31, 1999 and cumulative suspended losses of $248,554 for the year ended March 31, 1998 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): SERIES 6 As of March 31, 1999, the Partnership had acquired a 99% interest in the profits, losses and tax credits as a limited partner in 38 Project Partnerships which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Partnership agreement. Upon dissolution proceeds will be distributed according to each Partnership agreement. The following is a summary of Investments in Project Partnerships as of: MARCH 31, 1999 MARCH 31, 1998 -------------- -------------- Capital Contributions to Project Partner- ships and purchase price paid for limited partner interests in Project Partnerships $ 7,462,215 $ 7,462,215 Cumulative equity in losses of Project Partnerships (1) (5,496,224) (4,894,819) Cumulative distributions received from Project Partnerships (145,656) (121,706) ------------ ------------ Investment in Project Partnerships before Adjustment 1,820,335 2,445,690 Excess of investment cost over the underlying assets acquired: Acquisition fees and expenses 785,179 785,179 Accumulated amortization of acquisition fees and expenses (141,428) (128,076) ------------ ------------ Investments in Project Partnerships $ 2,464,086 $ 3,102,793 ============ ============ (1) In accordance with the Partnership's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $598,829 for the year ended March 31, 1999 and cumulative suspended losses of $218,323 for the year ended March 31, 1998 are not included. NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued): TOTAL SERIES 2 - 6 The following is a summary of Investments in Project Partnerships: MARCH 31, 1999 MARCH 31, 1998 -------------- -------------- Capital Contributions to Project Partner- ships and purchase price paid for limited partner interests in Project Partnerships $26,992,597 $26,992,597 Cumulative equity in losses of Project Partnerships (1) (23,903,092) (22,560,007) Cumulative distributions received from Project Partnerships (618,881) (555,014) ------------ ------------ Investment in Project Partnerships before Adjustment 2,470,624 3,877,576 Excess of investment cost over the underlying assets acquired: Acquisition fees and expenses 2,881,567 2,881,567 Accumulated amortization of acquisition fees and expenses (515,777) (285,635) ------------- ------------- Investments in Project Partnerships $ 4,836,414 $ 6,473,508 ============= ============= 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: DECEMBER 31, 1998 1997 1996 SERIES 2 ---- ---- ---- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 1,786,180 $ 1,664,759 $ 1,604,887 Investment properties, net 20,780,885 21,671,589 22,550,031 Other assets 10,554 2,370 770 ------------ ----------- ------------ Total assets $22,577,619 $23,338,718 $24,155,688 ============ =========== ============ Liabilities and Partners' Equity: Current liabilities 488,583 455,868 475,053 Long-term debt 23,166,342 23,216,826 23,263,436 ------------ ----------- ------------ Total liabilities 23,654,925 23,672,694 23,738,489 ------------ ----------- ------------ Partners' equity Limited Partner (1,105,102) (387,627) 340,514 General Partners 27,796 53,651 76,685 ------------ ----------- ------------ Total Partners' equity (1,077,306) (333,976) 417,199 ------------ ----------- ------------ Total liabilities and partners' equity $22,577,619 $23,338,718 $24,155,688 ============ ============ ============ SUMMARIZED STATEMENTS OF OPERATIONS Rental and other income $ 4,033,895 $ 3,928,831 $ 3,877,838 Expenses: Operating expenses 1,709,810 1,656,842 1,505,411 Interest expense 2,114,068 2,052,361 2,087,442 Depreciation and amortization 919,877 935,616 939,525 ------------ ------------ ----------- Total expenses 4,743,755 4,644,819 4,532,378 ------------- ------------ ------------ Net loss $ (709,860) $ (715,988) $ (654,540) ============= ============ ============ Other partners' share of net loss (7,099) (7,160) (6,544) ============= =========== ============ Partnerships' share of net loss (702,761) (708,828) (647,996) Suspended losses 575,862 420,416 120,821 ------------ ------------ ------------ Equity in Losses of Project Partnerships $ (126,899) $ (288,412) $ (527,175) ============ ============ ============ As of December 31, 1998, the largest Project Partnership constituted 12.3% and 13.0%, and as of December 31, 1997 the largest Project Partnership constituted 12.2% and 13.3% 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: DECEMBER 31, 1998 1997 1996 SERIES 3 ---- ---- ---- SUMMARIZED BALANCE SHEETS Assets: Current assets $2,135,449 $ 2,087,969 $ 1,983,148 Investment properties, net 18,061,080 18,896,091 19,791,394 Other assets 212,500 216,421 225,290 ------------ ------------ ----------- Total assets $20,409,029 $21,200,481 $21,999,832 ============ ============ =========== Liabilities and Partners' Equity: Current liabilities 479,070 473,232 496,156 Long-term debt 21,720,128 21,786,186 21,846,525 ------------ ------------ ----------- Total liabilities 22,199,198 22,259,418 22,342,681 ------------ ------------ ----------- Partners' equity Limited Partner (2,052,234) (1,365,169) (680,352) General Partners 262,065 306,232 337,503 ------------ ------------ ----------- Total Partners' equity (1,790,169) (1,058,937) (342,849) ------------- ------------ ----------- Total liabilities and partners' equity $20,409,029 $21,200,481 $21,999,832 ============ ============ =========== SUMMARIZED STATEMENTS OF OPERATIONS Rental and other income $ 3,873,356 $ 3,897,285 $ 3,860,435 Expenses: Operating expenses 1,613,589 1,630,694 1,543,041 Interest expense 2,009,194 2,012,078 2,029,124 Depreciation and amortization 913,619 923,055 925,984 ------------ ------------ ----------- Total expenses 4,536,402 4,565,827 4,498,149 Net loss $ (663,046) $ (668,542) $ (637,714) ============ ============ ============ Other partners' share of net loss (8,623) (6,686) (8,583) ============ ============ ============ Partnerships' share of net loss (654,423) (661,856) (629,131) Suspended losses 548,603 463,688 343,278 ------------ ------------ ------------ Equity in Losses of Project Partnerships $ (105,820) $ (198,168) $ (285,853) ============ ============ ============ As of December 31, 1998, the largest Project Partnership constituted 7.8% and 6.5%, and as of December 31, 1997 the largest Project Partnership constituted 7.6% and 6.5% 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: DECEMBER 31, 1998 1997 1996 SERIES 4 ---- ---- ---- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 2,258,054 $ 2,041,655 $ 1,953,151 Investment properties, net 24,296,782 25,293,995 26,300,477 Other assets 18,066 9,175 9,547 ----------- ------------ ------------ Total assets 26,572,902 $27,344,825 $28,263,175 =========== ============ ============ Liabilities and Partners' Equity: Current liabilities 630,630 581,357 586,126 Long-term debt 26,508,044 26,566,388 26,621,848 ------------ ------------ ------------ Total liabilities 27,138,674 27,147,745 27,207,974 ----------- ------------ ------------ Partners' equity Limited Partner (759,474) (26,884) 801,544 General Partners 193,702 223,964 253,657 ----------- ------------ ------------ Total Partners' equity (565,772) 197,080 1,055,201 ----------- ------------ ------------ Total liabilities and partners' equity $26,572,902 $27,344,825 $28,263,175 ============ ============ ============ SUMMARIZED STATEMENTS OF OPERATIONS Rental and other income $ 4,613,372 $ 4,556,702 $ 4,496,298 Expenses: Operating expenses 2,025,711 2,010,724 1,846,670 Interest expense 2,296,338 2,305,229 2,330,476 Depreciation and amortization 1,016,293 1,060,855 1,043,887 ------------ ------------ ------------ Total expenses 5,338,342 5,376,808 5,221,033 Net loss $ (724,970) $ (820,106) $ (724,735) ============ ============ ============ Other partners' share of net loss (9,540) (8,201) 5,368 ============= ============ ============ Partnerships' share of net loss (715,430) (811,905) (730,103) Suspended losses 506,511 390,019 94,925 ------------ ------------ ------------ Equity in Losses of Project Partnerships $ (208,919) $ (421,886) $ (635,178) ============ ============ ============ As of December 31, 1998, the largest Project Partnership constituted 6.0% and 6.2%, and as of December 31, 1997 the largest Project Partnership constituted 5.9% and 5.9% 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: DECEMBER 31, 1998 1997 1996 SERIES 5 ---- ---- ---- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 2,744,515 $ 2,652,154 $ 2,490,991 Investment properties, net 30,448,363 31,679,751 32,973,118 Other assets 2,552 2,552 1,056 ------------ ------------ ------------ Total assets $33,195,430 $34,334,457 $35,465,165 ============ ============ ============ Liabilities and Partners' Equity: Current liabilities 772,090 785,847 814,225 Long-term debt 32,747,276 32,829,165 32,902,094 ------------ ------------ ------------ Total liabilities 33,519,366 33,615,012 33,716,319 ------------ ------------ ------------ Partners' equity Limited Partner (216,969) 788,433 1,770,278 General Partners (106,967) (68,988) (21,432) ----------- ------------ ------------ Total Partners' equity (323,936) 719,445 1,748,846 ----------- ------------ ------------ Total liabilities and partners' equity $33,195,430 $34,334,457 $35,465,165 ============ ============ ============ SUMMARIZED STATEMENTS OF OPERATIONS Rental and other income $ 5,629,872 $ 5,570,816 $ 5,464,443 Expenses: Operating expenses 2,521,833 2,413,360 2,241,929 Interest expense 2,785,745 2,787,267 2,788,862 Depreciation and amortization 1,312,998 1,331,686 1,380,487 ------------ ------------ ------------ Total expenses 6,620,576 6,532,313 6,411,278 Net loss $ (990,704) $ (961,497) $ (946,835) ============ ============ ============ Other partners' share of net loss (9,907) (9,615) (9,469) ============ ============ ============ Partnerships' share of net loss (980,797) (951,882) (937,366) Suspended losses 680,755 223,153 25,401 ----------- ------------ ------------ Equity in Losses of Project Partnerships $ (300,042) $ (728,729) $ (911,965) ============ ============ ============ As of December 31, 1998, the largest Project Partnership constituted 8.0% and 7.7%, and as of December 31, 1997 the largest Project Partnership constituted 7.9% and 7.5% 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: DECEMBER 31, 1998 1997 1996 SERIES 6 ---- ---- ---- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 3,052,306 $ 2,895,432 $ 2,723,043 Investment properties, net 34,406,433 35,729,386 37,084,577 Other assets 21,638 12,783 16,953 ------------ ------------ ------------ Total assets $37,480,377 $38,637,601 $39,824,573 ============ ============ ============ Liabilities and Partners' Equity: Current liabilities 816,353 794,495 905,627 Long-term debt 35,619,894 35,743,123 35,857,657 ------------ ------------ ------------ Total liabilities 36,436,247 36,537,618 36,763,284 ------------ ------------ ------------ Partners' equity Limited Partner 1,248,290 2,262,748 3,184,723 General Partners (204,160) (162,765) (123,434) ------------ ------------ ------------ Total Partners' equity 1,044,130 2,099,983 3,061,289 ------------ ------------ ------------ Total liabilities and partners' equity $37,480,377 $38,637,601 $39,824,573 ============ ============ ============ SUMMARIZED STATEMENTS OF OPERATIONS Rental and other income $ 5,796,738 $ 5,816,156 $ 5,752,444 Expenses: Operating expenses 2,473,136 2,338,842 2,230,157 Interest expense 2,902,662 2,902,564 2,938,880 Depreciation and amortization 1,414,757 1,474,599 1,477,003 ------------ ------------ ------------ Total expenses 6,790,555 6,716,005 6,646,040 Net loss $ (993,817) $ (899,849) $ (893,596) ============ ============ ============ Other partners' share of net loss (11,906) (8,998) (10,408) ============ ============ ============ Partnerships' share of net loss (981,911) (890,851) (883,188) Suspended losses 380,506 128,928 77,878 ------------ ------------ ------------ Equity in Losses of Project Partnerships $ (601,405) $ (761,923) $ (805,310) ============ ============ ============ As of December 31, 1998, the largest Project Partnership constituted 7.0% and 6.0%, and as of December 31, 1997 the largest Project Partnership constituted 7.0% and 6.5% 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: DECEMBER 31, 1998 1997 1996 TOTAL SERIES 2 - 6 ---- ---- ---- SUMMARIZED BALANCE SHEETS Assets: Current assets $ 11,976,504 $ 11,341,969 $ 10,755,220 Investment properties, net 127,993,543 133,270,812 138,699,597 Other assets 265,310 243,301 253,616 -------------- ------------- ------------- Total assets $140,235,357 $144,856,082 $149,708,433 ============== ============= ============= Liabilities and Partners' Equity: 3,186,726 3,090,799 3,277,187 Current liabilities 139,761,684 140,141,688 140,491,560 Long-term debt -------------- ------------- ------------- 142,948,410 143,232,487 143,768,747 Total liabilities -------------- ------------- ------------- Partners' equity Limited Partner (2,885,489) 1,271,501 5,416,707 General Partners 172,436 352,094 522,979 -------------- ------------- ------------- Total Partners' equity (2,713,053) 1,623,595 5,939,686 -------------- ------------- ------------- Total liabilities and partners' equity $140,235,357 $144,856,082 $149,708,433 ============= ============= ============= SUMMARIZED STATEMENTS OF OPERATIONS Rental and other income $23,947,233 $ 23,769,790 $ 23,451,458 Expenses: Operating expenses 10,344,079 10,050,462 9,367,208 Interest expense 12,108,007 12,059,499 12,174,784 Depreciation and amortization 5,577,544 5,725,811 5,766,886 ------------ ------------- ------------- Total expenses 28,029,630 27,835,772 27,308,878 Net loss $ (4,082,397) $ (4,065,982) $ (3,857,420) ============= ============= ============= Other partners' share of net loss (47,075) (40,660) (29,636) Partnerships' share of net (4,035,322) (4,025,322) (3,827,784) loss 2,692,237 1,626,204 662,303 Suspended losses ------------- ------------- ------------- Equity in Losses of Project $ (1,343,085) $ (2,399,118) $ (3,165,481) Partnerships ============= ============= ============= NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS(continued): The Partnership's equity by Series as reflected by the Project Partnerships differs from the Partnership's Investments in Project Partnerships before acquisition fees and expenses and amortization by Series primarily because of suspended losses on the Partnerships books and differences in the accounting treatment of miscellaneous items. By Series these differences are as follows: Equity Per Project Partnership Equity Per Partnership ------------------------ ---------------------- Series 2 $(1,105,102) $ 17,342 Series 3 (2,052,234) (194,754) Series 4 (759,474) 217,343 Series 5 (216,969) 610,358 Series 6 1,248,290 1,825,335 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: 1999 1998 1997 SERIES 2 ---- ---- ---- Net Loss per Financial Statements $ (221,305) $ (337,693) $ (582,633) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (665,541) (532,154) (260,440) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 37,811 (1,093) (1,569) Items Expensed for Financial Statement purposes not expensed for Tax purposes: Asset Management Fee 31,029 34,574 35,831 Amortization Expense 5,270 536 4,458 Other Adjustments (3,839) 0 0 ------------ ------------ ------------ Partnership loss for tax purposes as of December 31 $ (816,575) $ (835,830) $ (804,353) ============ ============ ============ December 31, December 31, December 31, 1998 1997 1996 ------------ ------------ ----------- Federal Low Income Housing Tax Credits $ 1,030,466 $ 1,031,430 $ 1,031,197 =========== =========== ============ 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: 1999 1998 1997 SERIES 3 ---- ---- ---- Net Loss per Financial Statements $ (187,324) $ (221,508) $ (341,282) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (559,823) (509,467) (401,234) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 53,171 (25,303) 5,884 Items Expensed for Financial Statement purposes not expensed for Tax purposes: Asset Management Fee 13,609 21,359 23,595 Amortization Expense 9,979 (3,784) (6,985) Other Adjustments (34,964) 0 0 ------------ ------------ ------------ Partnership loss for tax purposes as of December 31 $ (705,352) $ (738,703) $ (720,022) ============ ============ ============ December 31, December 31, December 31, 1998 1997 1996 ------------ ------------ ----------- Federal Low Income Housing Tax Credits $ 904,132 $ 969,244 $ 972,146 =========== =========== ============ 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: 1999 1998 1997 SERIES 4 ---- ---- ---- Net Loss per Financial Statements $ (348,671) $ (485,415) $ (696,010) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (611,767) (549,870) (289,799) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 68,041 6,099 (1,830) Items Expensed for Financial Statement purposes not expensed for Tax purposes: Asset Management Fee 32,527 33,247 34,607 Amortization Expense 13,104 (5,963) 2,340 Other Adjustments (4,384) 0 0 ------------ ------------ ------------ Partnership loss for tax purposes as of December 31 $ (851,150) $(1,001,902) $ (950,692) ============ ============ ============ December 31, December 31, December 31, 1998 1997 1996 ------------ ------------ ----------- Federal Low Income Housing Tax Credits $ 1,177,677 $ 1,177,677 $ 1,177,678 =========== =========== ============ 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: 1999 1998 1997 SERIES 5 ---- ---- ---- Net Loss per Financial Statements $ (403,555) $ (813,502) $ (997,362) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (828,115) (341,766) (137,165) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 12,889 (355) (330) Items Expensed for Financial Statement purposes not expensed for Tax purposes: Asset Management Fee 34,182 36,068 36,383 Amortization Expense 14,276 9,911 12,854 Other Adjustments (3,133) 0 0 ------------ ------------ ------------ Partnership loss for tax purposes as of December 31 $(1,173,456) $(1,109,644) $(1,085,620) ============ ============ ============ December 31, December 31, December 31, 1998 1997 1996 ------------ ------------ ----------- Federal Low Income Housing Tax Credits $ 1,432,378 $ 1,432,378 $ 1,433,003 =========== =========== ============ 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: 1999 1998 1997 SERIES 6 ---- ---- ---- Net Loss per Financial Statements $ (701,324) $ (870,137) $ (915,827) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (642,061) (331,643) (292,116) Adjustments to convert March 31, fiscal year end to December 31, taxable year end (9,368) (4,171) 319 Items Expensed for Financial Statement purposes not expensed for Tax purposes: Asset Management Fee 47,319 47,356 53,770 Amortization Expense 17,305 21,592 22,377 Other Adjustments (1,325) 0 0 ------------ ------------ ------------ Partnership loss for tax purposes as of December 31 $(1,287,454) $(1,137,003) $(1,131,477) ============ ============ ============ December 31, December 31, December 31, 1998 1997 1996 ------------ ------------ ----------- Federal Low Income Housing Tax Credits $ 1,689,792 $ 1,689,263 $ 1,688,064 =========== =========== ============ 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: 1999 1998 1997 TOTAL SERIES 2 - 6 ---- ---- ---- Net Loss per Financial Statements $(1,862,179) $(2,728,255) $(3,533,114) Equity in Losses of Project Partnerships for tax purposes less than (in excess of) losses for financial statement purposes (3,307,307) (2,264,900) (1,380,754) Adjustments to convert March 31, fiscal year end to December 31, taxable year end 164,544 (24,823) 2,474 Items Expensed for Financial Statement purposes not expensed for Tax purposes: Asset Management Fee 158,666 172,604 184,186 Amortization Expense 59,934 22,292 35,044 Other Adjustments (47,645) 0 0 ------------ ------------ ------------ Partnership loss for tax purposes as of December 31 $(4,833,987) $(4,823,082) $(4,692,164) ============ ============ ============ The difference in the total value of the Partnership's Investment in Project Partnerships is approximately $2,034,000 higher for Series 2, $1,811,000 higher for Series 3, $2,409,000 higher for Series 4, $1,880,000 higher for Series 5 and $1,955,000 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, 1997 and 1996, 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, 1997 and 1996, 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 20, 1998 on our consideration of Springwood Apartments Limited Partnership internal control structure and compliance with laws and regulations. /s/ Vincent & Voss Certified Public Accountants January 20, 1998 Hill, Barth & King, Inc. 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Springwood Apartments Westfield, New York We have audited the accompanying balance sheet of Springwood Apartments Limited Partnership, (A Limited Partnership), as of December 31, 1998, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Springwood Apartments Limited Partnership for the year ended December 31, 1997 were audited by Vincent & Voss, CPAs whose report dated January 20, 1998 expressed an unqualified opinion on those statements. Vincent & Voss, CPAs was merged into Hill, Barth & King, Inc. on January 1, 1999. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements for the year ended December 31, 1998 referred to above present fairly, in all material respects, the financial position of Springwood Apartments Limited Partnership, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports dated January 29, 1999 on our consideration of Springwood Apartments Limited Partnership internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. /s/ Hill, Barth & King, Inc. Certified Public Accountants January 29,1999 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, 1997 and 1996, 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, 1997 and 1996, 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, 1998 on our consideration of Cherrytree Apartments Limited Partnership internal control structure and compliance with laws and regulations. /s/ Vincent & Voss Certified Public Accountants January 28, 1998 Hill, Barth & Kking, Inc. 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Cherrytree Apartments Albion, Pennsylvania We have audited the accompanying balance sheet of Cherrytree Apartments Limited Partnership (A Limited Partnership), as of December 31, 1998, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Cherrytree Apartments Limited Partnership for the year ended December 31, 1997 were audited by Vincent & Voss, CPAs whose report dated January 28, 1998 expressed an unqualified opinion on those statements. Vincent & Voss, CPAs was merged into Hill, Barth & King, Inc. on January 1, 1999. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements for the year ended December 31, 1998 referred to above present fairly, in all material respects, the financial position of Cherrytree Apartments Limited Partnership, and the results of its operations 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 reports dated January 28, 1999 on our consideration of Cherrytree Apartments Limited Partnership internal control over financial reporting and our tests of compliance with certain provisions of laws, regulations, contracts, and grants. /s/ Hill, Barth & King, Inc. Certified Public Accountants January 28, 1999 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, 1997 and 1996, 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, 1997 and 1996, 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, 1998 on our consideration of Wynnwood Commons Associates internal control structure and compliance with laws and regulations. /s/ Vincent & Voss January 28, 1998 Hill, Barth & King, Inc. 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Wynnwood Commons Associates Fairchance, Pennsylvania We have audited the accompanying balance sheet of Wynnwood Commons Associates, (A Limited Partnership), as of December 31, 1998, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Wynnwood Commons Associates for the year ended December 31, 1997 were audited by Vincent & Voss, CPAs whose report dated January 28, 1998 expressed an unqualified opinion on those statements. Vincent & Voss, CPAs was merged into Hill, Barth & King, Inc. on January 1, 1999. 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements for the year ended December 31, 1998 referred to above present fairly, in all material respects, the financial position of Wynnwood Common Associates, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued report dated January 18, 1999 on our consideration of Wynnwood Commons Associates internal control over financial reporting and our tests of compliance with certain provisions of laws, regulations, contracts, and grants. /s/ Hill, Barth & King, Inc. Certified Public Accountants January 18, 1999 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, 1997 and 1996, 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, 1997 and 1996, 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, 1998 on our consideration of Stony Creek Commons Limited Partnership's internal control structure and compliance with laws and regulations. /s/ Vincent & Voss January 27, 1998 Hill, Barth & King, Inc. 544 West 10th Street Erie, PA 16502 PHONE: 814-456-5385 FAX: 814-454-5004 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Stony Creek Commons Hooversville, Pennsylvania We have audited the accompanying balance sheet of Stony Creek Commons (A Limited Partnership), as of December 31, 1998, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Stony Creek Commons for the year ended December 31, 1997 were audited by Vincent & Voss, CPAs whose report dated January 27, 1998 expressed an unqualified opinion on those statements. Vincent & Voss, CPAs was merged into Hill, Barth & King, Inc. on January 1, 1999. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements for the year ended December 31, 1998 referred to above present fairly, in all material respects, the financial position of Stony Creek Commons Limited Partnership, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated January 26, 1999 on our consideration of Stony Creek Commons Limited Partnership internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. /s/ Hill, Barth & King, Inc. Certified Public Accountants January 26, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd. - P.O. Box 2241 Valdosta, GA 31604-2241 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, 1998 and 1997, 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Richland Elderly Housing, Ltd. as of December 31, 1998 and 1997, 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 15, 1999 on our consideration of the Richland Elderly Housing, Ltd.'s internal control structure and a report dated January 15, 1999 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd. - P.O. Box 2241 Valdosta, GA 31604-2241 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, 1998 and 1997, 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 Pearson Elderly Housing, Ltd. as of December 31, 1998 and 1997, 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 15, 1999 on our consideration of the Pearson Elderly Housing, Ltd.'s internal control structure and a report dated January 15, 1999 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-P.O. Box 2241 Valdosta, GA 31604-2241 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, 1998 and 1997, 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 Lake Park Apartments, Ltd. as of December 31, 1998 and 1997, 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 15, 1999 on our consideration of the Lake Park Apartments, Ltd.'s internal control structure and a report dated January 15, 1999 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd. Valdosta, GA 31604-2241 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, 1998 and 1997, and the related statements of income, partners' equity and (equity) 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, 1998 and 1997, 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 15, 1999 on our consideration of the Lakeland Elderly Housing, Ltd.'s internal control structure and a report dated January 15, 1999 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15, 1999 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, 1997 and 1996, 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, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 21, 1998 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 21, 1998 Habif, Arogeti & Wynne, P.C. 1073 West Peachtree Street, N.E. Atlanta, GA 30309-3837 PHONE: 404-892-9651 FAX: 404-876-3913 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Woodland Terrace Apartments, Ltd. We have audited the accompanying balance sheets of WOODLAND TERRACE APARTMENTS, LTD. (a limited partnership), Project No. 58-1854412 as of December 31, 1998, and the related statements of income and expenses, changes in partners' equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of WOODLAND TERRACE APARTMENTS, LTD., for the year ended December 31, 1997, were audited by other auditors whose report dated January 21, 1998 expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the 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 audit provides a reasonable basis for our opinion. In accordance with Government Auditing Standards, we have also issued a report dated February 8, 1999 on our consideration of WOODLAND TERRACE APARTMENTS, LTD.'s (a limited partnership) internal control and a report dated February 8, 1999 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 WOODLAND TERRACE APARTMENTS, LTD. (a limited partnership) as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Habif, Arogeti & Wynne, P.C. Certified Public Accountants Atlanta, Georgia February 8, 1999 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, 1997 and 1996, 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, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 21, 1998on our consideration of Manchester Housing, Ltd.'s internal control structure and a report dated January 21 1998 n its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 21 1998 Habif, Arogeti & Wynne, P.C. 1073 West Peachtree Street, N.E. Atlanta, Georgia 30309-3837 PHONE: 404-892-9651 FAX: 404-876-3913 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Manchester Housing, Ltd. We have audited the accompanying balance sheet of MANCHESTER HOUSING, LTD. (a limited partnership), Project No. 58-1845215 as of December 31, 1998, and the related statements of income, changes in partners' equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of MANCHESTER HOUSING, LTD. as of December 31, 1997, were audited by other auditors whose report dated January 21, 1998 expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MANCHESTER HOUSING, LTD. as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 8, 1999 on our consideration of MANCHESTER HOUSING, LTD.'s internal control and a report dated February 8, 1999 on its compliance with laws and regulations. /s/ Habif, Arogeti & Wynne, P.C. Certified Public Accountants Atlanta, Georgia February 8, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-P.O. Box 2241 Valdosta, GA 31604-2241 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners 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, 1998 and 1997, and the related statements of income, 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Heritage Villas, L.P. as of December 31, 1998 and 1997, 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 11, 1999 on our consideration of Heritage Villas, L.P.'s internal control structure and its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants February 11, 1999 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, 1997and 1996 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, 1997and 1996 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 21 1998on our consideration of the Crisp Properties, L.P.'s internal control structure and a report dated January 21 1998 on its compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 21 1998 Habif, Arogeti & Wynne, P.C. 1073 West Peachtree Street, N.E. Atlanta, GA 30309-3837 PHONE: 404-892-9651 FAX: 404-876-3913 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Crisp Properties, L.P. Valdosta, Georgia We have audited the accompanying balance sheet of CRISP PROPERTIES, L.P. (a limited partnership), Project No. 58-1752804 as of December 31, 1998, and the related statements of income and expenses, changes in partners' equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of CRISP PROPERTIES, L.P. as of December 31, 1997 were audited by other auditors whose report dated January 21, 1998 expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CRISP PROPERTIES, L.P. as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 8, 1999 on our consideration of the CRISP PROPERTIES, L.P.'s internal control and a report dated February 8, 1999 on its compliance with laws and regulations. /s/ Habif, Arogeti & Wynne, P.C. Certified Public Accountants Atlanta, Georgia February 8, 1999 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, 1997 and 1996 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, 1997and 1996 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 21 1998on our consideration of the Blackshear Apartments, L.P.'s internal control structure and a report dated January 21 1998 on it's compliance with laws and regulations. /s/ Goddard, Henderson, Godbee & Nichols, P.C. Certified Public Accountants January 21, 1998 Habif, Arogeti & Wynne, P.C. 1073 West Peachtree Street, N.E. Atlanta, GA 30309-3837 PHONE: 404-892-9651 FAX: 404-876-3913 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Blackshear Apartments, L.P., Phase II We have audited the accompanying balance sheet of BLACKSHEAR APARTMENTS, L.P., PHASE II (a limited partnership), Project No. 58-1925616 as of December 31, 1998, and the related statements of income, changes in partners' equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of BLACKSHEAR APARTMENTS, L.P., PHASE II, as of December 31, 1997 were audited by other auditors whose report dated January 21, 1998 expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BLACKSHEAR APARTMENTS, L.P., PHASE II (a limited partnership) as of December 31, 1998 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 8, 1999 on our consideration of BLACKSHEAR APARTMENTS, L.P., PHASE II'S (a limited partnership) internal control and a report dated February 8, 1999 on it's compliance with laws and regulations. /s/ Habif, Arogeti & Wynne, P.C. Certified Public Accountants Atlanta, Georgia February 8, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-P.O. Box 2241 Valdosta, GA 31604-2241 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, 1998 and 1997, 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, 1998 and 1997, 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 15, 1999 on our consideration of Crawford Rental Housing, L.P.'s internal control structure and a report dated January 15, 1999 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-2241 Valdosta, GA 31604-2241 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 limted partnership), Federal ID No.: 58-1917615, as of December 31, 1998 and 1997, 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, 1998 and 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1999 on our consideration of the Shellman Housing L.P.'s internal control structure and a report dated January 15, 1998 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-P.O. Box 2241 Valdosta, GA 31604-2241 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, 1998 and 1997, 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 Greensboro Properties, L.P., Phase II as of December 31, 1998 and 1997, 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 15, 1999 on our consideration of the Greensboro Properties, L.P., Phase II's internal control structure and a report dated January 15, 1999 on it's compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-P.O. Box 2241 Valdosta, GA 31604-2241 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, 1998 and 1997, 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dawson Elderly, L.P. as of December 31, 1998 and 1997, 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 15, 1999, on our consideration of Dawson Elderly, L.P.'s internal control structure and a report dated January 15, 1999, on it's compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 15,1999 Habif, Arogeti & Wynne, P.C. 1073 West Peachtree Street, N.E. Atlanta, GA 30367-3837 PHONE: 404-892-9651 FAX: 404-876-3913 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, 1998 and 1997, 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, 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PIEDMONT DEVELOPMENT COMPANY OF LAMAR COUNTY, LTD., L.P. as of December 31, 1998 and 1997, 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. In accordance with Government Auditing Standards, we have also issued a report dated February 27, 1999 on our consideration of PIEDMONT DEVELOPMENT COMPANY OF LAMAR COUNTY, LTD., L.P.'s internal control and a report dated February 27, 1999 on its compliance with laws and regulations. /s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia February 27, 1999 Donald W. Causey & Associates, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 256-543-3707 FAX: 256-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Sylacauga Heritage Apartments Ltd. Sylacauga, AL We have audited the accompanying balance sheets of Sylacauga Heritage Apartments, Ltd., a limited partnership, RHS Project No.: 01-061-631025601 as of December 31, 1998 and 1997, 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 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 we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sylacauga Heritage Apartments, Ltd., RHS Project No.: 01-061-631025601 as of December 31, 1998 and 1997, 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 and II for the year ended December 31, 1998 and 1997, 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 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 23, 1999 on our consideration of Sylacauga Heritage Apartments, Ltd., internal control over financial reporting and on our tests of its compliance with certain provisions of laws and regulations. /s/ Donald W. Causey & Associates, P.C. Certified Public Accountants Gadsden, Alabama February 23, 1999 Pailet, Meunier and LeBlanc, L.L.P. 3421 N. Causeway Blvd., Suite 701 Metairie, LA 70002 PHONE: 504-837-0770 FAX: 504-837-7102 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners LOGANSPORT SENIORS APARTMENTS We have audited the accompanying balance sheets of LOGANSPORT SENIORS APARTMENTS, RHS PROJECT NO. 22-016-721126743 as of December 31, 1998 and 1997 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 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, as of December 31, 1998 and 1997 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. Our audits were made for the purpose of forming and opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated March 2, 1999 on our consideration of Logansport Seniors Apartment's internal control and a report dated March 2, 1999 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier and LeBlanc, L.L.P. Certified Public Accountants March 2, 1999 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, 1997 and December 31, 1996, 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, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 4, 1998 on our consideration of Tarpon Height Apartments' internal control structure and a report dated February 4, 1998 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson February 4, 1998 Little & Company 1111 N. 19th St.-P.O. Box 2485 Monroe, LA 71201 PHONE: 318-323-1717 FAX: 318-322-5121 INDEPENDENT AUDITORS' REPORT ---------------------------- Tarpon Heights Apartments, A Louisiana Partnership in Commendam Mansfield, Louisiana We have audited the accompanying balance sheet of Tarpon Heights Apartments, A Louisiana Partnership in Commendam (the Partnership) as of December 31, 1998 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 audit. The financial statements of Tarpon Heights Apartments as of December 31, 1997 were audited by other auditors whose report dated February 4, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards and the Standards for Financial and Compliance 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 Tarpon Heights Apartments, A Louisiana Partnership in Commendam, as of December 31, 1998 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated March 5, 1999, on our consideration of Tarpon Height Apartments, A Louisiana Partnership in Commendam's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules listed in the table of contents are presented for the purpose of additional analysis and are not a required part of the financial statements of Tarpon Heights Apartments, A Louisiana Partnership in Commendam. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Little & Company Certified Public Accountants Monroe, Louisiana March 5, 1999 Pailet, Meunier and LeBlanc, L.L.P. 3421 N. Causeway Blvd., Suite 701 Metairie, LA 70002 PHONE: 504-837-0770 FAX: 504-837-7102 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners THE OAKS APARTMENTS We have audited the accompanying balance sheets of THE OAKS APARTMENTS, RHS PROJECT NO. 22-002-721144868 as of December 31, 1998 and 1997 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 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 as of December 31, 1998 and 1997 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated March 1, 1999 on our consideration of THE OAKS APARTMENTS's internal control and a report dated March 1, 1999 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier and LeBlanc, L.L.P. Certified Public Accountants Metairie, Louisiana March 1, 1999 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, 1997 and December 31, 1996, 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, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 4, 1998 on our consideration of Sonora Seniors Apartments, Ltd.'s internal control structure and a report dated February 4, 1998 on it's compliance with laws and regulations. /s/ Cole, Evans & Peterson February 4, 1998 Little & Company 1111 N. 19th St.-P.O. Box 2485 Monroe, LA 71201 PHONE: 318-323-1717 FAX: 318-322-5121 INDEPENDENT AUDITORS' REPORT ---------------------------- Sonora Seniors Apartments, Ltd. Mansfield, Louisiana We have audited the accompanying balance sheets of Sonora Seniors Apartments, Ltd. (the Partnership) as of December 31, 1998 and the related statements of income, partners' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Sonora Seniors Apartments, Ltd. as of December 31, 1997 were audited by other auditors whose report dated February 4, 1998, expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with generally accepted auditing standards and the Standards for Financial and Compliance 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sonora Seniors Apartments, Ltd. as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated March 5, 1999, on our consideration of Sonora Seniors Apartments, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules listed in the table of contents are presented for the purpose of additional analysis and are not a required part of the financial statements of Sonora Seniors Apartments, Ltd. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Little & Company Certified Public Accountants Monroe, Louisiana March 5, 1999 Pailet, Meunier and LeBlanc, L.L.P. 3421 N. Causeway Blvd., Suite 701 Metairie, LA 70002 PHONE: 504-837-0770 FAX: 504-837-7102 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners FREDERICKSBURG SENIORS APARTMENTS, LTD. We have audited the accompanying balance sheets of FREDERICKSBURG SENIORS APARTMENTS, LTD., RHS PROJECT NO. 49-086-721150308 as of December 31, 1998 and 1997 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 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. as of December 31, 1998 and 1997 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. Our audits were made for the purpose of forming an opinion on th basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated February 22, 1999 on our consideration of FREDERICKSBURG SENIORS APARTMENTS, LTD.'s internal control and a report dated February 22, 1999 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier and LeBlanc, L.L.P. Certified Public Accountants Metairie, Louisiana February 22, 1999 Pailet, Meunier and LeBlanc, L.L.P. 3421 N. Causeway Blvd., Suite 701 Metairie, LA 70002 PHONE: 504-837-0770 FAX: 504-837-7102 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners BRACKETTVILLE SENIORS APARTMENTS, LTD. We have audited the accompanying balance sheets of BRACKETTVILLE SENIORS APARTMENTS, LTD., RHS PROJECT NO. 50-036-721150307 as of December 31, 1998 and 1997 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 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. as of December 31, 1998 and 1997 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. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on pages 16 through 24, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated February 9, 1999 on our consideration of BRACKETTVILLE SENIORS APARTMENTS, LTD.'s internal control and a report dated February 9, 1999 on its compliance with laws and regulations applicable to the financial statements. /s/ Pailet, Meunier and LeBlanc, L.L.P. Certified Public Accountants Metairie, Louisiana February 9, 1999 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, 1997 and December 31, 1996, 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, 1997 and December 31, 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 3, 1998 on our consideration of Timpson Seniors Apartments' internal control structure and a report dated February 3, 1998 on its compliance with laws and regulations. /s/ Cole, Evans & Peterson February 3, 1998 Little & Company 1111 N. 19th St.-P.O. Box 2485 Monroe, LA 71201 PHONE: 318-323-1717 FAX: 318-322-5121 INDEPENDENT AUDITORS' REPORT ---------------------------- Timpson Seniors Apartments, Ltd. Mansfield, Louisiana We have audited the accompanying balance sheet of, Timpson Seniors Apartments, Ltd. as of December 31, 1998 and the related statements of income, partners' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Timpson Seniors Apartments, Ltd. as of December 31, 1997 were audited by other auditors whose report dated February 3, 1998, expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with generally accepted auditing standards and the Standards for Financial and Compliance 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 Timpson Seniors Apartments, Ltd., as of December 31, 1998 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 report dated March 5, 1999, on our consideration of Timpson Seniors Apartments, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules listed in the table of contents are presented for the purpose of additional analysis and are not a required part of the financial statements of Timpson Seniors Apartments, Ltd. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Little & Company Certified Public Accountants Monroe, Louisiana March 5, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners 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, 1998 and 1997, 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 CHARLESTON PROPERTIES, A LIMITED PARTNERSHIP, D/B/A WINGATE APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 18, 1999, on our consideration of the Partnerships's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 18, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners 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, 1998 and 1997, 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 SALLISAW PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE II APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 18, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 19, 1998 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 POCOLA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A NORTH GATE APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 POTEAU PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A NORTH POINTE APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 18, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 18, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 NOWATA PROPERTIES, A LIMITED PARTNERSHIP, D/B/A CROSS CREEK II APARTMENTS as of December 31, 1998 and 1997, 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 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 SALLISAW PROPERTIES, A LIMITED PARTNERSHIP, D/B/A MAYFAIR PLACE APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of n its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 729032079 PHONE: 888-452-7543 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, 1998 and 1997, 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 ROLAND PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A WOODLAND HILLS II APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 STILWELL PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SKYWOOD APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 STILWELL PROPERTIES II, A LIMITED PARTNERSHIP, D/B/A SKYWOOD II APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountant February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 WESTVILLE PROPERTIES, A LIMITED PARTNERSHIP, D/B/A GREYSTONE PLACE APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 MILL CREEK PROPERTIES V, A LIMITED PARTNERSHIP, D/B/A MILL CREEK APARTMENTS V as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Baird, Kurtz, & Dobson CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 888-452-7543 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, 1998 and 1997, 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 PARSONS PROPERTIES, A LIMITED PARTNERSHIP, D/B/A SILVER STONE PLACE as of December 31, 1998 and 1997, 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 report dated February 8, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird, Kurtz, & Dobson CPA Certified Public Accountants February 8, 1999 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-P.O. Box 2241 Valdosta, GA 31604-2241 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners 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, 1998 and 1997, 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Inverness Club, Ltd., L.P. as of December 31, 1998 and 1997, 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, 1999 on our consideration of Inverness Club, Ltd., L.P.'s internal control structure and a report dated January 22, 1999 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 22, 1999 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, 1997 and 1996, 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, 1997 and 1996, 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 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 20, 1998 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, 1998 Henderson & Godbee, P.C. 3488 N. Valdosta Rd.-P.O. Box 2241 Valdosta, GA 31604-2241 PHONE: 912-245-6040 FAX: 912-245-1669 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Carrollton Club, Ltd., L.P. (A Georgia Limited Partnership) Valdosta, Georgia We have audited the accompanying balance sheet of Carrollton Club, Ltd., L.P., (A Georgia Limited Partnership), FmHA Project No.: 10-22-58188314, as of December 31, 1998, and the related statements of operations, changes in partners' (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Carrollton Club, Ltd., L.P. as of December 31, 1997 were audited by other auditors whose report dated January 22, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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., as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 19, 1999 on our consideration of Carrollton Club, Ltd., L.P.'s internal control structure and a report dated January 19, 1999 on its compliance with laws and regulations. /s/ Henderson & Godbee, P.C. Certified Public Accountants January 19, 1999 Grana & Teibel, CPAs, P.C. 300 Corporate Pkwy., Suite 116 N. Amherst, NY 14226 PHONE: 716-862-4270 FAX: 716-862-0007 INDEPENDENT AUDITORS' REPORT ---------------------------- To The Partners of Lewiston Limited Partnership Case No. 37-032-161349932 and RD Housing Director 166 Washington Avenue Batavia, New York 14020 We have audited the accompanying balance sheets of Lewiston Limited Partnership as of December 31, 1998 and 1997, 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, 1998 and 1997, 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 15, 1999, on our consideration of Lewiston Limited Partnership's internal control structure and a report dated January 15, 1999 on its compliance with laws and regulations. /s/ Grana & Teibel, CPAs, P.C. Certified Public Accountants January 15, 1999 VanRheenen, Miller & Rose, P.L.L.C. 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 financial statements of Lancaster House, An Arkansas Limited Partnership, D/B/A Pebble Creek Apartments as of December 31, 1998 and 1997, and for the years then ended, as listed in the table of contents. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lancaster House, An Arkansas Limited Partnership, D/B/A Pebble Creek Apartments as of December 31, 1998 and 1997, 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, 1999 on our consideration of Lancaster House, An Arkansas Limited Partnership, D/B/A Pebble Creek Apartments' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ VanRheenen, Miller & Rose, P.L.L.C. Certified Public Accountants February 5, 1999 Leavitt, Christensen & Co. 9100 W. Blackeagle Dr. Boise, ID 83709 PHONE: 208-322-6769 FAX: 208-322-7307 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, 1998 and 1997, 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, 1998 and 1997, 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 10, 1999 on our consideration of Haines Associates Limited Partnership's internal control 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 February 10, 1999 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, 1997 and 1996, 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, 1997 and 1996, 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, 1998 on our consideration of Woodcrest Associates of South Boston, VA, LTD's internal control structure and a report dated February 6, 1998 on its compliance with laws and regulations. /s/ Oscar N. Harris Associates, P.A. Certified Public Accountants February 6, 1998 Bernard Robinson & Company, L.L.P. 109 Muirs Chapel Rd.-P.O. Box 19608 Greensboro, NC 27410 (27419) PHONE: 336-294-4494 FAX: 336-547-0840 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Woodcrest Associates of South Boston, Va., Ltd. Charlotte, North Carolina We have audited the accompanying balance sheet of Woodcrest Associates of South Boston, Va., Ltd.(a Virginia limited partnership) as of December 31, 1998, and the related statements of operations, partners' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Woodcrest Associates of South Boston, Va., Ltd. as of December 31, 1997, were audited by other auditors whose report dated February 6, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Woodcrest Associates of South Boston, Va., Ltd. as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated February 5, 1999, on our consideration of the Partnership's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Bernard Robinson & Company, L.L.P. Certified Public Accountants Greensboro, North Carolina February 5, 1999 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 as of December 31, 1998 and 1997, 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 my 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 as of December 31, 1998 and 1997, 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. My 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 to 17 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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 March 10, 1999 on my consideration of Norton Green Limited Partnership's internal control and a report dated March 10, 1999 on its compliance with laws and regulations applicable to the financial statements. /s/ Thomas C. Cunningham, CPA PC Certified Public Accountant March 10, 1999 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 as of December 31, 1998 and 1997, 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 my 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 as of December 31, 1998 and 1997, 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. My 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 to 17 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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 March 10, 1999 on my consideration of Jonesville Manor Limited Partnership's internal control and a report dated March 10, 1999 on its compliance with laws and regulations applicable to the financial statements. /s/ Thomas C. Cunningham, CPA PC Certified Public Accountant March 10, 1999 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 Supplemental balance sheets of Blacksburg Terrace Limited Partnership as of December 31, 1998 and 1997, 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 my 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 Blacksburg Terrace Limited Partnership as of December 31, 1998 and 1997, 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 pages 15 to 17 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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 March 8, 1999 on my consideration of Blacksburg Terrace Limited Partnership's internal control and a report dated March 8, 1999 on its compliance with laws and regulations applicable to the financial statements. /s/ Thomas C. Cunningham, CPA PC Certified Public Accountants March 8, 1999 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 as of December 31, 1998 and 1997, 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, 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 Newport Village Limited Partnership of December 31, 1998 and 1997, 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. My 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 to 17 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the 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 March 10, 1999 on my consideration of Newport Village Limited Partnership's internal control and a report dated March 10, 19999 on itsts compliance with laws and regulations applicable to the financial statements /s/ Thomas C. Cunningham, CPA PC Certified Public Accountants March 10, 1999 Lou Ann Montey and Associates, P.C. 8400 N. Mopac Expressway, Suite 304 Austin, TX 78759 PHONE: 512-338-0044 FAX: 512-338-5395 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Zapata Housing, Ltd.-(A Texas Limited Partnership) Burnet, Texas We have audited the accompanying balance sheets of Zapata Housing, Ltd.-(A Texas Limited Partnership) as of December 31, 1998 and 1997, 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 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, 1998 and 1997, 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 14, 1999, on our consideration of the internal control structure of Zapata Housing, Ltd.- (A Texas Limited Partnership) and a report dated January 14, 1999, on its compliance with laws and regulations. /s/ Lou Ann Montey and Associates, P.C. Certified Public Accountants Austin, Texas January 14, 1999 Lou Ann Montey and Associates, P.C. 8400 N. Mopac Expressway, Suite 302 Austin, TX 78759 PHONE: 512-338-0044 FAX: 512-338-5395 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Sinton Retirement, Ltd.-(A Texas Limited Partnership) Burnet, Texas We have audited the accompanying balance sheets of Sinton Retirement, Ltd.- (A Texas Limited Partnership) as of December 31, 1998 and 1997, 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, 1998 and 1997, 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 20, 1999, on our consideration of the internal control structure of Sinton Retirement, Ltd.- (A Texas Limited Partnership) and a report dated January 20, 1999, on its compliance with laws and regulations. /s/ Lou Ann Montey and Associates, P.C. Certified Public Accountants Austin, Texas January 20, 1999 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, 1998 and 1997 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements 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, 1998 and 1997 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 6, 1999 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 6, 1999 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, 1998 and 1997, 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 audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mountain Crest Limited Partnership as of December 31, 1998 and 1997, 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 16, 1999, on our consideration of Mountain Crest Limited Partnership's internal controls and 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 tax 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 16, 1999 Berberich Trahan & Co., P.A. 800 S.W. Jackson St., Suite 1300 Topeka, KS 66612-1268 PHONE: 785-234-3427 FAX: 785-233-1768 INDEPENDENT AUDITORS' REPORT ---------------------------- The Partners Eudora Senior Housing, L.P. We have audited the accompanying balance sheets of Eudora Senior Housing, L.P., RHS Project No. 18-023-481065040, D/B/A Pinecrest Apartments II (Partnership), as of December 31, 1998 and 1997, 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 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 Eudora Senior Housing, L.P., RHS Project No. 18-023-481065040, as of December 31, 1998 and 1997, and the results of its operations, changes in partners' equity (deficit) 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 25, 1999 on our consideration of Eudora Senior Housing, L.P.I's internal control and a report dated January 25, 1999 on its compliance with laws and regulations applicable to the financial statements. Berberich Trahan & Co., P.A. Certified Public Accountants Topeka, Kansas January 25, 1999 Audit Principal: Virginia A. Powell IA Federal ID Number: 48-1066439 Baird, Kurtz & Dobson, CPA 5000 Rogers Avenue, Suite 700 Ft. Smith, AR 72903-2079 PHONE: 501-452-1040 FAX: 501-452-5542 INDEPENDENT AUDITORS' REPORT ---------------------------- Partners 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, 1998 and 1997, 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 SPRING HILL HOUSING, L.P., A LIMITED PARTNERSHIP, D/B/A SPRING HILL APARTMENTS as of December 31, 1998 and 1997, 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 report dated February 18, 1999, on our consideration of the internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Baird Kurtz & Dobson CPA Certified Public Accountants February 18, 1999 Eide Bailly LLP 100 N. Phillips, Ste.800-P.O. Box 5126 Sioux Falls, SD 57717-5126 PHONE: 605-339-1999 FAX: 605-339-1306 INDEPENDENT AUDITORS' REPORT ---------------------------- The Partners Sunchase II, Ltd. Watertown, South Dakota We have audited the accompanying balance sheets of Sunchase II, Ltd. (a limited partnership) as of December 31, 1998 and 1997, 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sunchase II, Ltd. as of December 31, 1998 and 1997, 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 performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 11 and 12 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Sunchase II, Ltd. 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 9, 1999 on our consideration of Sunchase II, Ltd.'s internal control over financial reporting and our test of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Eide Bailly LLP Certified Public Accountants Sioux Falls, South Dakota February 9, 1999 Eide Bailly LLP 100 N.Phillips, Ste.800-P.O. Box 5126 Sioux Falls, SD 57117-5126 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, 1998 and 1997, 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 applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Courtyard, Ltd. as of December 31, 1998 and 1997, 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 14 and 15 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 29, 1999 on our consideration of Courtyard, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. /s/ Eide Bailly LLP Certified Public Accountants Sioux Falls, South Dakota January 29, 1999 Eide Bailly LLP 100 N. Phillips, Ste.800-P.O. Box 5126 Sioux Falls, SD 57117-5126 PHONE: 605-339-1999 FAX: 605-339-1306 INDEPENDENT AUDITORS' REPORT ---------------------------- The Partners Sunrise, Ltd. Yankton, South Dakota We have audited the accompanying balance sheets of Sunrise Ltd. (a limited partnership) as of December 31, 1998 and 1997, 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 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, 1998 and 1997, 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 of Sunrise, Ltd. 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 8, 1999 on our consideration of Sunrise, Ltd.'s internal control over financial reporting and our tests of compliance with certain provisions of laws, regulations, contracts and grants. /s/ Eide Bailly LLP Certified Public Accountants Sioux Falls, South Dakota February 8, 1999 Johnson, Hickey & Murchison, P.C. 651 East Fourth Street, Suite 200 Chattanooga, TN 37403-1924 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, 1998 and 1997, 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Southwood, L.P. as of December 31, 1998 and 1997, 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 our report dated January 27, 1999, on the Partnership's compliance and internal control over financial reporting. /s/ Johnson, Hickey & Murchison, P.C. Certified Public Accountants January 27, 1999 Bob T. Robinson 2084 Dunbarton Drive Jackson, MS 39216 PHONE: 601-982-3875 FAX: 601-982-3876 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Hazlehurst Manor, L.P. Hazlehurst, Mississippi I have audited the accompanying balance sheets of Hazlehurst Manor L.P., (RD Case Number 28-015-640803081), as of December 31, 1998 and 1997, 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. 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 Hazlehurst Manor, L.P., as of December 31, 1998 and 1997 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. My audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental information, including separate reports on compliance with laws and regulations and on internal controls, is presented for the purposes of additional analysis and is not a required part of the financial statements of Hazlehurst Manor, L.P. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in my opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. /s/ Bob T. Robinson Certified Public Accountant March 4, 1999 Donald W. Causey & Associates, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 256-543-3707 FAX: 256-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Lakeshore Apartments Ltd. Tuskegee, Alabama We have audited the accompanying balance sheets of Lakeshore Apartments, Ltd., a limited partnership, RHS Project No.: 01-044-631014228 as of December 31, 1998 and 1997, 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 my audits. We 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 we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the 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 Lakeshore Apartments, Ltd., RHS Project No.: 01-044-631014228 as of December 31, 1998 and 1997, 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 and II for the year ended December 31, 1998 and 1997, 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 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 8, 1999 on our consideration of Lakeshore Apartments, Ltd., internal control over financial reporting and on our tests of its compliance with certain provisions of laws and regulations. /s/ Donald W. Causey & Associates, P.C. Certified Public Accounta Gadsden, Alabama February 8, 1999 Donald W. Causey & Associates, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 256-543-3707 FAX: 256-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Countrywood Apartments Ltd. Centerville, Alabama We have audited the accompanying balance sheets of Countrywood Apartments, Ltd., a limited partnership, RHS Project No.: 01-004-630943678 as of December 31, 1998 and 1997, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted 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 we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the 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 Countrywood Apartments, Ltd., RHS Project No.: 01-004-630943678 as of December 31, 1998 and 1997, 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 and II for the year ended December 31, 1998 and 1997, 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 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 2, 1999 on our consideration of Countrywood Apartments, Ltd.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws and regulations. /s/ Donald W. Causey & Associates, P.C. Certified Public Accountant Gadsden, Alabama February 2, 1999 Donald W. Causey & Associates, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 256-543-3707 FAX: 256-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Wildwood Apartments Ltd. Pineville, Louisiana We have audited the accompanying balance sheets of Wildwood Apartments, Ltd., a limited partnership, RHS Project No.: 22-040-630954515 as of December 31, 1998 and 1997, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted 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 we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the 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 Wildwood Apartments, Ltd., RHS Project No.: 22-040-630954515 as of December 31, 1998 and 1997, 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 and II for the year ended December 31, 1998 and 1997, 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 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 10, 1999 on our consideration of Wildwood Apartments, Ltd.'s, internal control over financial reporting and on our tests of its compliance with certain provisions of laws and regulations. /s/ Donald W. Causey & Associates, P.C. Certified Public Accountants Gadsden, Alabama February 10, 1999 Donald W. Causey & Associates, P.C. 516 Walnut Street - P.O. Box 775 Gadsden, AL 35902 PHONE: 256-543-3707 FAX: 256-543-9800 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Meadowcrest Apartments Ltd. Luverne, Alabama We have audited the accompanying balance sheets of Meadowcrest Apartments, Ltd., a limited partnership, RHS Project No.: 01-021-631047203 as of December 31, 1998 and 1997, 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 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 we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the 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 Meadowcrest Apartments, Ltd., RHS Project No.: 01-021-631047203 as of December 31, 1998 and 1997, 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 and II for the year ended December 31, 1998 and 1997, 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 our opinion is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated February 9, 1999 on our consideration of Meadowcrest Apartments, Ltd., internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. /s/ Donald W. Causey & Associates, P.C. Certified Public Accountants Gadsden, Alabama February 9, 1999 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 64804 We have audited the accompanying balance sheets of Seneca Apartments, L.P. (a limited partnership) as of December 31, 1998 and 1997, 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 audit. We conducted our audit in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Seneca Apartments, L.P. as of December 31, 1998 and 1997, 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 report dated February 24, 1999 on our consideration of Seneca Apartments, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. Our audit was conducted for the purpose of forming an opinion the the basic financial statements taken as a whole. The Supplemental Letter on pages 14- 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 audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 24, 1999 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 64804 We have audited the accompanying balance sheets of Carthage Seniors, L.P. (a limited partnership) as of December 31, 1998 and 1997, 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 audit. We conducted our audit in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Carthage Seniors, L.P. as of December 31, 1998 and 1997, 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 report dated February 24, 1999 on our consideration of Carthage Seniors, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplemental Letter on pages 14- 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 audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 24, 1999 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 64804 We have audited the accompanying balance sheets of Southwest City Apartments, L.P. (a limited partnership) as of December 31, 1998 and 1997, 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 audit. We conducted our audit in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Southwest City Apartments, L.P. as of December 31, 1998 and 1997, 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 report dated February 24, 1999 on our consideration of Southwest City Apartments, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplemental Letter on pages 14- 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 audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 24, 1999 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 64804 We have audited the accompanying balance sheets of Pineville Apartments, L.P. (a limited partnership) as of December 31, 1998 and 1997, 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 audit. We conducted our audit in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pineville Apartments, L.P. as of December 31, 1998 and 1997, 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 report dated February 24, 1999 on our consideration of Pineville Apartments, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplemental Letter on pages 14- 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 audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 24, 1999 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 64804 We have audited the accompanying balance sheets of Monett Seniors, L.P. (a limited partnership) as of December 31, 1998 and 1997, 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 audit. We conducted our audit in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Monett Seniors, L.P. as of December 31, 1998 and 1997, 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 report dated February 24, 1999 on our consideration of Monett Seniors, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplemental Letter on pages 14- 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 audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 24, 1999 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 Columbus Seniors, L.P. Joplin, Missouri 64804 We have audited the accompanying balance sheets of Columbus Seniors, L.P. (a limited partnership) as of December 31, 1998 and 1997, 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 audit. We conducted our audit in accordance with generally accepted auditing Standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Columbus Seniors, L.P. as of December 31, 1998 and 1997, 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 report dated February 24, 1999 on our consideration of Columbus Seniors, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. Our audit was conducted for the purpose of forming and opinion on the basic financial statements taken as a whole. The Supplemental Letter on pages 14- 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 audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 24, 1999 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 64804 We have audited the accompanying balance sheets of Arma Seniors, L.P. (a limited partnership) as of December 31, 1998 and 1997, 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 audit. We conducted our audit in accordance with generally accepted auditing standards and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration AUDIT PROGRAM. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Arma Seniors, L.P. as of December 31, 1998 and 1997, 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 report dated February 24, 1999 on our consideration of Arma Seniors, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplemental Letter on pages 14- 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 audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Turk & Giles, CPAs, P.C. Certified Public Accountants February 24, 1999 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, 1998 and 1997, and the related statement of income, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my 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, 1998 and 1997, and the results of its operations and its cash flows for the years 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 take 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, 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 March 17, 1999 on my consideration of Yorkshire Retirement Village's compliance and on internal control over financial reporting. /s/ Suellen Doubet, CPA Wagoner, OK 74467 March 17, 1999 Chester M. 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 To the Partners We have audited the accompanying balance sheets of Rural Development Group, d/b/a Ashland Estates, (a limited partnership) as of December 31, 1998 and 1997, 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Rural Development Group, d/b/a Ashland Estates as of December 31, 1998 and 1997, 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 report dated February 5, 1999 on our consideration of Rural Development Group, d/b/a Ashland Estates' internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. /s/ Chester Kearney, CPA Certified Publice Accountants Presque Isle, Maine February 5, 1999 Richard A. Strauss 1310 Lady Street 9th Floor, Keenan Building 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, 1998 and 1997, 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, 1998 and 1997, 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. In accordance with Government Auditing Standards, I have also issued a report dated February 4, 1999, on my consideration of Scarlett Oaks Limited Partnership's internal control and a report dated February 4, 1999 on its compliance with laws and regulations. This report is intended for the information of management and the Department of Agriculture, Rural 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 4, 1999 David G. Pelliccione, C.P.A., P.C. 329 Eisenhower Drive, Suite B-200 Savannah, GA 31406 PHONE: 912-354-2334 FAX: 912-354-2443 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Brooks Hill Apartments, L.P. We have audited the accompanying balance sheets of BROOKS HILL APARTMENTS, L.P., as of December 31, 1998 and 1997 and the related statement 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 audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BROOKS HILL APARTMENTS, L.P., as of December 31, 1998 and 1997, 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 report dated February 11, 1999 on our consideration of BROOKS HILL APARTMENTS, L.P.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was made for the purpose of forming an opinion on the basic financial statements of BROOKS HILL APARTMENTS, L.P., taken as a whole. The supplemental information on pages 9 and 10 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. /s/ David G. Pelliccione Certified Public Accountants Savannah, Georgia February 11, 1999 K.B. Parrish & Company LLP 151 N. 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 balance sheets of Village Apartments of Seymour II, L.P. (a limited partnership) as of December 31, 1998 and 1997, and the related statements of operations, changes in partnership 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, 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 and the audit program require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Village Apartments of Seymour II, L.P. at December 31, 1998 and 1997, and the results of its operations, changes in partnership capital (deficit) 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 15, 1999 on our consideration of the partnership's internal control and a report dated January 15, 1999 on its compliance with laws and regulations. Respectfully submitted, /s/ K.B. Parrish & Company LLP Certified Public Accountants Indianapolis, Indiana January 15, 1999 Scheiner, Mister & Grandizio, P.A. 1301 York Road, Suite 705, Heaver Plaza 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, 1998 and 1997, 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, 1998 and 1997, 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 13, 1999 on our consideration of the Partnership's internal control and a report dated January 13, 1999 on its compliance with laws and regulations. /s/ Scheiner, Mister & Grandizio, P.A. Certified Public Accountants January 13, 1999 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, 1997 and 1996, 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, 1997 and 1996, 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 16, 1998 on our consideration of Bryan Senior Village Limited Partnership's internal control structure and a report dated January 16, 1998 on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Larry C. Stemen CPA & Associates Certified Public Accountants Columbus, Ohio January 16, 1998 Fentress, Dunbar & Brown, CPAs, LLC 6660 North High Street, Suite 3F Worthington, OH 43085-2537 PHONE: 614-825-0011 FAX: 614-825-0014 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Bryan Senior Village Limited Partnership DBA Plaza Senior Village Apartments Mansfield, Ohio We have audited the accompanying balance sheet of Bryan Senior Village Limited Partnership (a limited partnership), DBA Plaza Senior Village Apartments, Case No. 41-086-341561720, as of December 31, 1998, and the related income statement, changes in partners' equity (deficit), 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 financial statements based on our audit. The financial statements of Bryan Senior Village Limited Partnership as of December 31, 1997, were audited by other auditors whose report dated January 16, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration "Audit Program" issued in December 1989. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bryan Senior Village Limited Partnership, DBA Plaza Senior Village Apartments, Case No. 41-086- 341561720, at December 31, 1998, 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. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1999 on our consideration of Bryan Senior Village Limited Partnership's internal control and a report dated January 15, 1999, on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Fentress, Dunbar & Brown, CPAs, LLC Certified Public Accountants Worthington, Ohio January 15, 1999 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, 1997 and 1996, 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, 1997 and 1996, 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 16, 1998 on our consideration of Brubaker Square Limited Partnership's internal control structure and a report dated January 16, 1998 on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Larry C. Stemen CPA & Associates Certified Public Accountants Columbus, Ohio January 16, 1998 Fentress, Dunbar & Brown, CPAs, LLC 6660 North High Street, Suite 3F Worthington, OH 43085-2537 PHONE: 614-825-0011 FAX: 614-825-0014 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Brubaker Square Limited Partnership DBA Brubaker Square Apartments Mansfield, Ohio We have audited the accompanying balance sheet of Brubaker Square Limited Partnership (a limited partnership), DBA Brubaker Square Apartments, Case No. 41-092-341561718, as of December 31, 1998, and the related income statement, changes in partners' equity (deficit), 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 financial statements based on our audit. The financial statements of Brubaker Square Limited Partnership as of December 31, 1997, were audited by other auditors whose report dated January 16, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration "Audit Program" issued in December 1989. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Brubaker Square Limited Partnership, DBA Brubaker Square Apartments, Case No. 41-092-341561718, at December 31, 1998, and the results of its operations, changes in partners' equity (deficit),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, 1999, on our consideration of Brubaker Square Limited Partnership's internal control and a report dated January 15, 1999, on its compliance with specific requirements applicable to Rural Development Services Programs. /s/ Fentress, Dunbar & Brown, CPAs, LLC Certified Public Accountants Worthington, Ohio January 15, 1999 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, 1997 and 1996, 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, 1997 and 1996, 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 16, 1998 on our consideration of Villa Allegra Limited Partnership's internal control structure and a report dated January 16, 1998 on its compliance with specific requirements applicable to Rural Development Services programs. /s/ Larry C. Stemen CPA & Associates Certified Public Accountants Columbus, Ohio January 16, 1998 Fentress, Dunbar & Brown, CPAs, LLC 6660 North High Street, Suite 3F Worthington, OH 43085-2537 PHONE: 614-825-0011 FAX: 614-825-0014 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Villa Allegra Limited Partnership DBA Villa Allegra Apartments Mansfield, Ohio We have audited the accompanying balance sheet of Villa Allegra Limited Partnership (a limited partnership), DBA Villa Allegra Apartments, Case No. 41-054-341561716, as of December 31, 1998, and the related income statement, changes in partners' equity (deficit), 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 financial statements based on our audit. The financial statements of Villa Allegra Limited Partnership as of December 31, 1997, were audited by other auditors whose report dated January 16, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the U.S. Department of Agriculture, Farmers Home Administration "Audit Program" issued in December 1989. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Villa Allegra Limited Partnership, DBA Villa Allegra Apartments, Case No. 41-054-341561716, at December 31, 1998, and the results of its operations, changes in partners' equity (deficit),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, 1999, on our consideration of Villa Allegra Limited Partnership's internal control and a report dated January 15, 1999, on its compliance with specific requirements applicable to Rural Development Services Programs. /s/ Fentress, Dunbar, & Brown, CPAs, LLC Certified Public Accountants Worthington, Ohio January 15, 1999 Fentress, Dunbar, & Brown, CPAs, LLC 6660 North High Street, Suite 3F Worthington, OH 43085-2537 PHONE: 614-825-0011 FAX: 614-825-0014 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Logan Place 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, Case No. 41-037-341643639, as of December 31, 1998 and 1997, and the related income statement, 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, 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 require that we plan and perform our audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Logan Place Limited Partnership, DBA Logan Place Apartments, Case No. 41-037-341643639, at December 31, 1998 and 1997, 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. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1999, on our consideration of Logan Place Limited Partnership's internal control and a report dated January 15, 1999, on its compliance with specific requirements applicable to Rural Development Services Programs. Worthington, Ohio January 15, 1999 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 R.R.H., Ltd. We have audited the accompanying basic financial statements of Flagler Beach Villas R.R.H., Ltd., as of and for the years ended December 31, 1998 and 1997, 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Flagler Beach Villas R.R.H., Ltd. as of December 31, 1998 and 1997, 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 report dated January 25, 1999 on our consideration of Flagler Beach Villas R.R.H., Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. 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 10 to 16 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The information on pages 10 to 15 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 16, 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. /s/ Duggan, Joiner, Birkenmeyer, Stafford & Furman, PA Certified Public Accountants January 25, 1999 Smith, Lambright & Associates, P.C, 505 E. Tyler - P.O. Box 912 Athens, TX 75751 PHONE: 903-675-5674 FAX: 903-675-5676 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Owners Elkhart Apartments Limited Athens, Texas 75751 We have audited the accompanying Balance Sheet of the Elkhart Apartments Limited as of December 31, 1998 and 1997, and the related Statements of Income and Expenses, Changes in Partners's Equity (Deficit), and Cash Flows for the years then ended. These financial statements are the responsibility of the 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, the standards applicable to financial audits contained in 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Elkhart Apartments Limited as of December 31, 1998 and 1997, 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 report dated March 8, 1999 on our consideration of the Elkhart Apartments Limited's internal control over financial reporting and our tests of its compliance with certain laws, regulations, contracts and grants. Our audit was performed for the purpose of forming an opinion on the financial statements of the Elkhart Apartments Limited, taken as a whole. The accompanying supplemental letter is presented for purposes of additional analysis as required by the U.S. Department of Agriculture, Rural Development Agency, and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. /s/ Smith, Lambright & Associates, P.C. Certified Public Accountants March 8, 1999 Smith, Lambright & Associates, P.C. 505 E. Tyler - P.O. Box 912 Athens, TX 75751 PHONE: 903-675-5674 FAX: 903-675-5676 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Owners South Timber Ridge Apartments, Ltd. Athens, Texas 75751 We have audited the accompanying Balance Sheet of South Timber Ridge Apartments, Ltd. as of December 31, 1998 and 1997, and the related Statements of Income and Expenses, Changes in Partner's Equity (Deficit), and Cash Flows 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, the standards applicable to financial audits contained in 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of South Timber Ridge Apartments, Ltd. as of December 31, 1998 and 1997, 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 report dated February 19, 1999 on our consideration of South Timber Ridge Apartments, Ltd.'s internal control over financial reporting and our tests of its compliance with certain laws, regulations, contracts and grants. Our audit was performed for the purpose of forming an opinion on the financial statements of South Timber Ridge Apartments, Ltd., taken as a whole. The accompanying supplemental letter is presented for purposes of additional analysis as required by the U.S. Department of Agriculture, Rural Development Agency, and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects, in relation to the financial statements taken as a whole. /s/ Smith, Lambright & Associates, P.C. Certified Public Accountants February 19, 1999 Smith, Lambright & Associates, P.C. 505 E. Tyler - P.O. Box 912 Athens, TX 75751 PHONE: 903-675-5674 FAX: 903-675-5676 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Owners Heritage Drive South, Limited Athens, Texas 75751 We have audited the accompanying Balance Sheet of Heritage Drive South, Limited as of December 31, 1998 and 1997, and the related Statements of Income and Expenses, Changes in Partner's Equity (Deficit), and Cash Flows 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, the standards applicable to financial audits contained in 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Heritage Drive South, Limited as of December 31, 1998 and 1997, 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 report dated March 2, 1999 on our consideration of Heritage Drive South, Limited's internal control over financial reporting and our tests of its compliance with certain laws, regulations, contracts and grants. Our audit was performed for the purpose of forming an opinion on the financial statements of Heritage Drive South, Limited, taken as a whole.. The accompanying supplemental letter is presented for purposes of additional analysis as required by the U.S. Department of Agriculture, Rural Development Agency, and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects, in relation to the financial statements taken as a whole. /s/ Smith, Lambright & Associates. P.C. Certified Public Accountants March 2, 1999 Miller, Mayer, Sullivan & Stevens LLP 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, 1998 and 1997 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Goodwater Falls, Ltd. as of December 31, 1998 and 1997, 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 report dated February 5, 1999 on our consideration of Goodwater Falls, Ltd.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. 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, LLP Certified Public Accountants Lexington, Kentucky February 5, 1999 Lou Ann Montey and Associates, P.C. 8400 N. Mopac Expressway, Suite 304 Austin, TX 78759 PHONE 512-338-0044 FAX 512-338-5395 INDEPENDENT AUDITORS' REPORT ---------------------------- To The Partners Frankston Retirement, Ltd. - (A Texas Limited Partnership) Burnet, Texas We have audited the accompanying balance sheets of Frankston Retirement Ltd.-(A Texas Limited Partnership) as of December 31, 1998 and 1997, and the related statement 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 audit 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 our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above presents fairly, in all material respects, the financial position of Frankston Retirement, Ltd. - (A Texas Limited Partnership) as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the year then ended in conformity with Generally Accepted Accounting Principles. In accordance with Government Auditing Standards, we have also issued a report dated January 15, 1999, on our consideration of the internal control structure of Frankston Retirement, Ltd. - (A Texas Limited Partnership) and a report dated January 15, 1999, on its compliance with laws and regulations. Lou Ann Montey and Associates, P.C. Certified Public Accountants Austin, Texas January 15, 1999 Lou Ann Montey and Associates, P.C. 8400 N. Mopac Expressway, Suite 304 Austin, TX 78759 PHONE 512-338-0044 FAX 512-338-5395 INDEPENDENT AUDITORS' REPORT ----------------------------- To The Partners Wallis Housing, Ltd. - (A Texas Limited Partnership) Burnet, Texas We have audited the accompanying balance sheets of Wallis Housing, Ltd. - (A Texas Limited Partnership) as of December 31, 1998 and 1997, and the related statement of income (loss), 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 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 our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above presents fairly, in all material respects, the financial position of Wallis Housing, Ltd. - (A Texas Limited Partnership) as of December 31, 1998 and 1997, 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 16, 1999, on our consideration of the internal control structure of Wallis Housing, Ltd. - (A Texas Limited Partnership) and a report dated January 16, 1999, on its compliance with laws and regulations. Lou Ann Montey and Associates, P.C. Certified Public Accountants Austin, Texas January 16, 1999 Lou Ann Montey and Associates, P.C. 8400 N. Mopac Expressway, Suite 304 Austin, TX 78759 PHONE 512-338-0044 FAX 512-338-5395 INDEPENDENT AUDITORS' REPORT ------------------------- To The Partners Menard Retirement, Ltd. - (A Texas Limited Partnership) Burnet, Texas We have audited the accompanying balance sheets of Menard Retirement, Ltd. - - (A Texas Limited Partnership) as of December 31, 1998 and 1997 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 audit. 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 our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above presents fairly, in all material respects, the financial position of Menard Retirement, Ltd. - - (A Texas Limited Partnership) as of December 31, 1998 and 1997, 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 20, 1999, on our consideration of the internal control structure of Menard Retirement, Ltd. - (A Texas Limited Partnership) and a report dated January 20, 1999, on its compliance with laws and regulations. Lou Ann Montey and Associates, P.C. Certified Public Accountants Austin, Texas January 20, 1999 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 55, 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. J. Davenport Mosby, age 43, 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. Teresa L. Barnes, age 52, 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 36, 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, 1999. 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, 1999, 1998 and 1997 the General Partners and affiliates are entitled to compensation and reimbursement for costs and expenses incurred by Gateway as follows: 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. 1999 1998 1997 ---- ---- ---- Series 2 $ 68,648 $ 68,773 $ 68,889 Series 3 63,479 63,645 63,792 Series 4 77,989 78,133 78,270 Series 5 96,461 96,663 96,844 Series 6 106,815 107,120 107,403 ------------ ------------ ---------- Total $ 413,392 $ 414,334 $ 415,198 ============ ============ ========== General and Administrative Expenses - The Managing General Partner is reim bursed for general and administrative expenses of Gateway on an accountable basis. This expense is included in the Statements of Operations. 1999 1998 1997 ---- ---- ---- Series 2 $ 7,433 $ 8,267 $ 6,792 Series 3 7,771 8,481 7,102 Series 4 9,798 10,693 8,953 Series 5 12,163 13,274 11,114 Series 6 12,839 14,012 11,732 --------- --------- --------- $ 50,004 $ 54,727 $ 45,693 Total ========= ========= ========= 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 Partnership 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, 1998 SERIES 2 Apartment Properties Mortgage Loan Partnership Location # of Units Balance - ----------- -------- ---------- ------------- Claxton Elderly Claxton, GA 24 $ 659,961 Deerfield II Douglas, GA 24 703,907 Hartwell Family Hartwell, GA 24 707,353 Cherrytree Apts. Albion, PA 33 1,202,929 Springwood Apts. Westfield, NY 32 1,256,522 Lakeshore Apts. Tuskegee, AL 34 1,056,630 Lewiston Lewiston, NY 25 1,002,427 Charleston Charleston, AR 32 845,720 Sallisaw II Sallisaw, OK 47 1,200,424 Pocola Pocola, OK 36 990,042 Inverness Club Inverness, FL 72 2,994,175 Pearson Elderly Pearson, GA 25 634,483 Richland Elderly Richland, GA 33 869,921 Lake Park Lake Park, GA 48 1,489,474 Woodland Terrace Waynesboro, GA 30 889,989 Mt. Vernon Elderly Mt. Vernon, GA 21 575,735 Lakeland Elderly Lakeland, GA 29 783,774 Prairie Apartments Eagle Butte, SD 21 978,420 Sylacauga Heritage Sylacauga, AL 44 1,389,300 Manchester Housing Manchester, GA 49 1,461,251 Durango C.W.W. Durango, CO 24 1,035,641 Columbus Sr. Columbus, KS 16 438,264 ------------ $ 23,166,342 ============ 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, 1998 SERIES 2 Apartment Properties Cost At Acquisition -------------------- Net Improvements Buildings, Capitalized Improvements Subsequent to Partnership Land and 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 38,917 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 (4,183) Woodland Terrace 36,400 1,047,107 (3,892) Mt. Vernon Elderly 21,750 680,437 (1,252) Lakeland Elderly 28,000 930,574 (2,759) Prairie Apartments 66,500 1,150,214 40,512 Sylacauga Heritage 66,080 1,648,081 45,453 Manchester Housing 36,000 1,746,076 (774) Durango C.W.W. 140,250 1,123,454 28,886 Columbus Sr. 64,373 444,257 5,496 ----------- ------------ ------------ $1,115,553 $26,819,761 $342,775 =========== ============ ============ 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, 1997 SERIES 2 Apartment Properties Gross Amount At Which Carried At December 31, 1998 -------------------- Buildings, Improvements Partnership Land and 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. 22,845 1,488,855 1,511,700 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 1,706,542 1,794,542 Woodland Terrace 36,400 1,043,215 1,079,615 Mt. Vernon Elderly 21,750 679,185 700,935 Lakeland Elderly 28,000 927,815 955,815 Prairie Apartments 81,240 1,175,986 1,257,226 Sylacauga Heritage 66,080 1,693,534 1,759,614 Manchester Housing 36,000 1,745,302 1,781,302 Durango C.W.W. 140,250 1,152,340 1,292,590 Columbus Sr. 68,273 445,853 514,126 ----------- ------------ ------------ $1,135,538 $27,142,551 $28,278,089 =========== ============ ============ 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, 1998 SERIES 2 Apartment Properties Partnership Accumulated Depreciation Depreciable Life - ----------- ------------------------ ---------------- Claxton Elderly $ 240,446 5-27.5 Deerfield II 257,353 5-27.5 Hartwell Family 264,783 5-27.5 Cherrytree Apts. 299,154 5-27.5 Springwood Apts. 345,458 5-40 Lakeshore Apts. 293,054 5-40 Lewiston 247,481 5-40 Charleston 380,605 5-25 Sallisaw II 513,747 5-25 Pocola 389,842 5-27.5 Inverness Club 956,073 5-27.5 Pearson Elderly 217,299 5-30 Richland Elderly 284,767 5-30 Lake Park 512,484 5-30 Woodland Terrace 293,634 5-30 Mt. Vernon Elderly 193,236 5-30 Lakeland Elderly 258,615 5-30 Prairie Apartments 293,490 5-40 Sylacauga Heritage 379,539 5-40 Manchester Housing 472,116 5-30 Durango C.W.W. 246,654 5-40 Columbus Sr. 157,375 5-27.5 ----------- $7,497,205 =========== 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, 1998 SERIES 3 Apartment Properties Mortgage Loan Partnership Location # of Units Balance - ----------- -------- ---------- ------------- Poteau II Poteau, OK 52 $ 1,308,808 Sallisaw Sallisaw, OK 52 1,315,971 Nowata Properties Oolagah, OK 32 859,513 Waldron Properties Waldron, AR 24 642,211 Roland II Roland, OK 52 1,315,116 Stilwell Stilwell, OK 48 1,197,343 Birchwood Apts. Pierre, SD 24 790,993 Hornellsville Arkport, NY 24 898,197 Sunchase II Watertown, SD 41 1,198,051 CE McKinley II Rising Sun, MD 16 628,869 Weston Apartments Weston, AL 10 275,769 Countrywood Apts. Centreville, AL 40 1,204,860 Wildwood Apts. Pineville, LA 28 852,081 Hancock Hawesville, KY 12 370,066 Hopkins Madisonville, KY 24 754,271 Elkhart Apts. Elkhart, TX 54 1,154,013 Bryan Senior Bryan, OH 40 1,087,665 Brubaker Square New Carlisle, OH 38 1,120,905 Southwood Savannah, TN 44 1,491,288 Villa Allegra Celina, OH 32 904,491 Belmont Senior Cynthiana, KY 24 768,826 Heritage Villas Helena, GA 25 680,257 Logansport Seniors Logansport, LA 32 900,564 ------------ $ 21,720,128 ============ 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, 1998 SERIES 3 Apartment Properties Cost At Acquisition -------------------- Net Improvements Buildings, Capitalized Improvements Subsequent to Partnership Land and 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 48,729 Hornellsville 41,225 1,018,523 37,852 Sunchase II 113,115 1,198,373 32,846 CE McKinley II 11,762 745,635 38,737 Weston Apartments 0 339,144 805 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 1,361,096 149,831 Bryan Senior 74,000 1,102,728 9,540 Brubaker Square 75,000 1,376,075 1,449 Southwood 15,000 1,769,334 7,959 Villa Allegra 35,000 1,097,214 2,566 Belmont Senior 43,600 891,543 0 Heritage Villas 21,840 801,128 1,006 Logansport Seniors 27,621 1,058,773 0 ----------- ------------ ------------ $1,104,746 $26,034,529 $363,911 =========== ============ ============ 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, 1998 SERIES 3 Apartment Properties Gross Amount At Which Carried At December 31, 1998 -------------------- Buildings, Improvements Partnership Land and 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. 124,505 926,887 1,051,392 Hornellsville 41,225 1,056,375 1,097,600 Sunchase II 113,115 1,231,219 1,344,334 CE McKinley II 11,749 784,385 796,134 Weston Apartments 0 339,949 339,949 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 1,394,936 1,546,912 Bryan Senior 74,000 1,112,268 1,186,268 Brubaker Square 75,000 1,377,524 1,452,524 Southwood 15,000 1,777,293 1,792,293 Villa Allegra 35,000 1,099,780 1,134,780 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 ----------- ------------ ------------ $1,228,489 $26,274,697 $27,503,186 =========== ============ ============ 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, 1998 SERIES 3 Partnership Accumulated Depreciation Depreciable Life - ----------- ------------------------ ---------------- Poteau II $ 748,800 5-25 Sallisaw 702,657 5-25 Nowata Properties 454,189 5-25 Waldron Properties 342,679 5-25 Roland II 753,219 5-25 Stilwell 668,775 5-25 Birchwood Apts. 274,270 5-40 Hornellsville 407,548 5-27.5 Sunchase II 400,193 5-40 CE McKinley II 301,783 5-27.5 Weston Apartments 138,173 5-27.5 Countrywood Apts. 575,660 5-27.5 Wildwood Apts. 346,774 5-30 Hancock 130,528 5-27.5 Hopkins 274,811 5-27.5 Elkhart Apts. 520,052 5-25 Bryan Senior 481,444 5-27.5 Brubaker Square 526,724 5-27.5 Southwood 307,890 5-50 Villa Allegra 441,206 5-27.5 Belmont Senior 202,084 5-40 Heritage Villas 232,057 5-30 Logansport Seniors 210,590 5-40 ----------- $9,442,106 =========== 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, 1998 SERIES 4 Apartment Properties Mortgage Loan Partnership Location # of Units Balance - ----------- -------- ---------- ------------- Alsace Village Soda Springs, ID 24 $ 639,432 Seneca Apartments Seneca, MO 24 610,487 Eudora Senior Eudora, KS 36 961,866 Westville Westville, OK 36 862,244 Wellsville Senior Wellsville, KS 24 649,970 Stilwell II Stilwell, OK 52 1,293,364 Spring Hill Senior Spring Hill, KS 24 699,646 Smithfield Smithfield, UT 40 1,544,268 Tarpon Heights Galliano, LA 48 1,248,002 Oaks Apartments Oakdale, LA 32 842,816 Wynnwood Common Fairchance, PA 34 1,375,576 Chestnut Apartments Howard, SD 24 858,322 St. George St. George, SC 24 757,251 Williston Williston, SC 24 800,831 Brackettville Sr. Brackettville, TX 32 824,480 Sonora Seniors Sonora, TX 32 846,173 Ozona Seniors Ozona, TX 24 633,565 Fredericksburg Sr. Fredericksburg,TX 48 1,208,446 St. Joseph St. Joseph, IL 24 830,674 Courtyard Huron, SD 21 713,522 Rural Development Ashland, ME 25 1,209,938 Jasper Villas Jasper, AR 25 862,373 Edmonton Senior Edmonton, KY 24 758,838 Jonesville Manor Jonesville, VA 40 1,355,813 Norton Green Norton, VA 40 1,346,524 Owingsville Senior Owingsville, KY 22 708,770 Timpson Seniors Timpson, TX 28 675,560 Piedmont Barnesville, GA 36 1,048,215 S.F. Arkansas City Arkansas City, KS 12 341,078 ------------ $ 26,508,044 ============ 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, 1998 SERIES 4 Apartment Properties Cost At Acquisition -------------------- Net Improvements Buildings, Capitalized Improvements Subsequent to Partnership Land and Equipment Acquisition - ----------- ---- ------------- ---------------- Alsace Village $ 15,000 $ 771,590 $ 14,337 Seneca Apartments 76,212 640,702 7,771 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 60,422 Tarpon Heights 85,000 1,408,434 0 Oaks Apartments 42,000 989,522 987 Wynnwood Common 68,000 1,578,814 32,204 Chestnut Apartments 57,200 977,493 17,993 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 7,873 Courtyard 24,500 810,110 11,902 Rural Development 38,200 1,361,892 22,390 Jasper Villas 27,000 1,067,890 6,627 Edmonton Senior 40,000 866,714 0 Jonesville Manor 100,000 1,578,135 44,606 Norton Green 120,000 1,535,373 40,616 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 3 ----------- ------------ ------------ $1,298,972 $31,049,651 $288,846 =========== ============ ============ 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, 1998 SERIES 4 Apartment Properties Gross Amount At Which Carried At December 31, 1998 -------------------- Buildings, Improvements Partnership Land and Equipment Total - ----------- ---- ------------- ----- Alsace Village $ 20,999 $ 779,928 $ 800,927 Seneca Apartments 76,212 648,473 724,685 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 86,862 1,754,273 1,841,135 Tarpon Heights 85,000 1,408,434 1,493,434 Oaks Apartments 42,000 990,509 1,032,509 Wynnwood Common 81,233 1,597,785 1,679,018 Chestnut Apartments 63,800 988,886 1,052,686 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 28,000 948,453 976,453 Courtyard 27,054 819,458 846,512 Rural Development 38,200 1,384,282 1,422,482 Jasper Villas 27,000 1,074,517 1,101,517 Edmonton Senior 40,000 866,714 906,714 Jonesville Manor 100,000 1,622,741 1,722,741 Norton Green 120,000 1,575,989 1,695,989 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 16,800 395,231 412,031 ----------- ------------ ------------ $1,331,720 $31,305,749 $32,637,469 =========== ============ ============ 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, 1998 SERIES 4 Apartment Properties Partnership Accumulated Depreciation Depreciable Life - ----------- ------------------------ ---------------- Alsace Village $ 257,718 5-27.5 Seneca Apartments 271,986 5-27.5 Eudora Senior 374,688 5-27.5 Westville 340,636 5-27.5 Wellsville Senior 251,227 5-25 Stilwell II 517,206 5-27.5 Spring Hill Senior 346,254 5-25 Smithfield 345,600 5-40 Tarpon Heights 282,184 5-40 Oaks Apartments 200,459 5-40 Wynnwood Common 351,865 5-40 Chestnut Apartments 254,199 5-40 St. George 316,310 5-27.5 Williston 319,510 5-27.5 Brackettville Sr. 178,310 5-40 Sonora Seniors 189,903 5-40 Ozona Seniors 136,821 5-40 Fredericksburg Sr. 262,865 5-40 St. Joseph 291,486 5-27.5 Courtyard 228,826 5-27.5 Rural Development 456,116 5-27.5 Jasper Villas 233,403 5-40 Edmonton Senior 192,099 5-40 Jonesville Manor 499,481 5-27.5 Norton Green 518,273 5-27.5 Owingsville Senior 179,169 5-40 Timpson Seniors 180,407 5-40 Piedmont 240,553 5-27.5 S.F. Arkansas City 123,133 5-27.5 ----------- $8,340,687 =========== 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, 1998 SERIES 5 Apartment Properties Mortgage Loan Partnership Location # of Units Balance - ----------- -------- ---------- ------------- Seymour Seymour, IN 37 $ 1,245,474 Effingham Effingham, IL 24 806,745 S.F. Winfield Winfield, KS 12 332,101 S.F.Medicine Lodge Medicine Lodge,KS 16 454,111 S.F. Ottawa Ottawa, KS 24 571,963 S.F. Concordia Concordia, KS 20 554,933 Highland View Elgin, OR 24 716,960 Carrollton Club Carrollton, GA 78 2,695,251 Scarlett Oaks Lexington, SC 40 1,394,948 Brooks Hill Ellijay, GA 44 1,467,368 Greensboro Greensboro, GA 24 738,704 Greensboro II Greensboro, GA 33 909,654 Pine Terrace Wrightsville, GA 25 729,806 Shellman Shellman, GA 27 742,488 Blackshear Cordele, GA 46 1,325,176 Crisp Properties Cordele, GA 31 935,722 Crawford Crawford, GA 25 747,994 Yorkshire Wagoner, OK 60 2,093,560 Woodcrest South Boston, VA 40 1,300,460 Fox Ridge Russellville, AL 24 738,849 Redmont II Red Bay, AL 24 697,497 Clayton Clayton, OK 24 671,976 Alma Alma, AR 24 736,070 Pemberton Village Hiawatha, KS 24 640,214 Magic Circle Eureka, KS 24 656,231 Spring Hill Spring Hill, KS 36 1,132,450 Menard Retirement Menard, TX 24 630,513 Wallis Housing Wallis, TX 24 444,857 Zapata Housing Zapata, TX 40 983,899 Mill Creek Grove, OK 60 1,440,139 Portland II Portland, IN 20 585,691 Georgetown Georgetown, OH 24 744,319 Cloverdale Chandler, TX 24 761,053 S. Timber Ridge Cloverdale, IN 44 1,068,059 Pineville Pineville, MO 12 321,356 Ravenwood Americus, GA 24 730,685 ------------ $ 32,747,276 ============ 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, 1998 SERIES 5 Apartment Properties Cost At Acquisition -------------------- Net Improvements Buildings, Capitalized Improvements Subsequent to Partnership Land and Equipment Acquisition - ----------- ---- ------------- ---------------- Seymour $ 59,500 $ 1,452,557 $ 6,384 Effingham 38,500 940,327 1,790 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 35,836 Carrollton Club 248,067 722,560 2,247,274 Scarlett Oaks 44,475 992,158 639,341 Brooks Hill 0 214,335 1,536,354 Greensboro 15,930 61,495 788,834 Greensboro II 21,330 92,063 975,271 Pine Terrace 14,700 196,071 674,414 Shellman 13,500 512,531 375,617 Blackshear 60,000 413,143 1,120,519 Crisp Properties 48,000 578,709 501,285 Crawford 16,600 187,812 703,300 Yorkshire 100,000 2,212,045 231,831 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 23,963 Spring Hill 70,868 1,318,926 59,584 Menard Retirement 21,000 721,251 19,622 Wallis Housing 13,900 553,230 11,324 Zapata Housing 44,000 1,120,538 73,867 Mill Creek 28,000 414,429 1,299,240 Portland II 43,102 410,683 278,378 Georgetown 0 149,483 772,502 Cloverdale 40,000 583,115 320,794 S. Timber Ridge 43,705 1,233,570 5,953 Pineville 59,661 328,468 3,760 Ravenwood 14,300 873,596 0 ----------- ------------ ------------ $1,418,219 $25,157,470 $ 13,353,858 =========== ============ ============ 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, 1998 SERIES 5 Apartment Properties Gross Amount At Which Carried At December 31, 1998 -------------------- Buildings, Improvements Partnership Land and Equipment Total - ----------- ---- ------------- ----- Seymour $59,500 $ 1,458,941 $ 1,518,441 Effingham 38,500 942,117 980,617 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 16,220 866,307 882,527 Carrollton Club 248,068 2,969,833 3,217,901 Scarlett Oaks 44,475 1,631,499 1,675,974 Brooks Hill 77,500 1,673,189 1,750,689 Greensboro 15,930 850,329 866,259 Greensboro II 16,845 1,071,819 1,088,664 Pine Terrace 14,700 870,485 885,185 Shellman 13,500 888,148 901,648 Blackshear 60,000 1,533,662 1,593,662 Crisp Properties 48,000 1,079,994 1,127,994 Crawford 16,600 891,112 907,712 Yorkshire 100,788 2,443,088 2,543,876 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 22,660 773,467 796,127 Spring Hill 70,868 1,378,510 1,449,378 Menard Retirement 21,000 740,873 761,873 Wallis Housing 13,900 564,554 578,454 Zapata Housing 46,323 1,192,082 1,238,405 Mill Creek 28,000 1,713,669 1,741,669 Portland II 15,000 717,163 732,163 Georgetown 50,393 871,592 921,985 Cloverdale 40,000 903,909 943,909 S. Timber Ridge 43,705 1,239,523 1,283,228 Pineville 59,661 332,228 391,889 Ravenwood 14,300 873,596 887,896 ----------- ------------ ------------ $1,516,637 $38,412,910 $39,929,547 =========== ============ ============ 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, 1998 SERIES 5 Partnership Accumulated Depreciation Depreciable Life - ----------- ------------------------ ---------------- Seymour $ 432,904 5-27.5 Effingham 275,262 5-27.5 S.F. Winfield 120,540 5-27.5 S.F.Medicine Lodge 155,949 5-27.5 S.F. Ottawa 214,383 5-27.5 S.F. Concordia 204,423 5-27.5 Highland View 167,340 5-40 Carrollton Club 724,831 5-27.5 Scarlett Oaks 418,849 5-27.5 Brooks Hill 380,782 5-27.5 Greensboro 189,220 5-30 Greensboro II 238,644 5-30 Pine Terrace 202,724 5-30 Shellman 220,665 5-30 Blackshear 356,117 5-30 Crisp Properties 260,717 5-30 Crawford 211,452 5-30 Yorkshire 398,042 5-50 Woodcrest 300,877 5-40 Fox Ridge 166,388 5-50 Redmont II 163,122 5-50 Clayton 244,048 5-27.5 Alma 291,897 5-25 Pemberton Village 226,255 5-27.5 Magic Circle 225,124 5-27.5 Spring Hill 416,033 5-25 Menard Retirement 116,865 5-30 Wallis Housing 146,758 5-30 Zapata Housing 248,574 5-27.5 Mill Creek 525,068 5-25 Portland II 173,045 5-27.5 Georgetown 184,767 5-50 Cloverdale 288,021 5-27.5 S. Timber Ridge 375,087 5-25 Pineville 122,682 5-27.5 Ravenwood 93,729 5-27.5 ----------- $9,481,184 =========== 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, 1998 SERIES 6 Apartment Properties Mortgage Loan Partnership Location # of Units Balance - ----------- -------- ---------- ------------- Spruce Pierre, SD 24 $ 918,137 Shannon Apartments O'Neill, NE 16 537,489 Carthage Carthage, MO 24 578,444 Mt. Crest Enterprise, OR 39 1,008,737 Coal City Coal City, IL 24 984,349 Blacksburg Terrace Blacksburg, SC 32 1,091,505 Frazier Smyrna, DE 30 1,480,546 Ehrhardt Ehrhardt, SC 16 565,661 Sinton Sinton, TX 32 856,040 Frankston Frankston, TX 24 562,739 Flagler Beach Flagler Beach, FL 43 1,391,658 Oak Ridge Williamsburg, KY 24 817,521 Monett Monett, MO 32 791,888 Arma Arma, KS 28 721,366 Southwest City Southwest City, MO 12 320,641 Meadowcrest Luverne, AL 32 1,012,190 Parsons Parsons, KS 48 1,269,085 Newport Village Newport, TN 40 1,311,580 Goodwater Falls Jenkins, KY 36 1,144,729 Northfield Station Corbin, KY 24 804,960 Pleasant Hill Square Somerset, KY 24 794,421 Winter Park Mitchell, SD 24 1,008,022 Cornell Watertown, SD 24 875,408 Heritage Drive S. Jacksonville, TX 40 987,947 Brodhead Brodhead, KY 24 793,261 Mt. Vilage Mt. Vernon, KY 24 788,504 Hazelhurst Hazlehurst, MS 32 985,286 Sunrise Yankton, SD 33 1,166,298 Stony Creek Hooversville, PA 32 1,353,017 Logan Place Logan, OH 40 1,260,361 Haines Haines, AK 32 2,398,312 Maple Wood Barbourville, KY 24 800,734 Summerhill Gassville, AR 28 802,186 Dorchester St. George, SC 12 467,101 Lancaster Mountain View, AR 33 1,129,936 Autumn Village Harrison, AR 16 255,998 Hardy Hardy, AR 24 387,572 Dawson Dawson, GA 40 1,196,265 ------------ $ 35,619,894 ============ 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, 1998 SERIES 6 Apartment Properties Cost At Acquisition -------------------- Net Improvements Buildings, Capitalized Improvements Subsequent to Partnership Land and Equipment Acquisition - ----------- ---- ------------- ---------------- Spruce $ 60,040 $ 108,772 $ 953,349 Shannon Apartments 5,000 94,494 551,181 Carthage 115,814 578,597 3,902 Mt. Crest 64,914 1,143,675 30,285 Coal City 60,055 1,121,477 34,840 Blacksburg Terrace 39,930 1,278,860 4,280 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 5,764 Arma 85,512 771,316 14,014 Southwest City 67,303 319,272 1,590 Meadowcrest 72,500 1,130,651 587 Parsons 49,780 1,483,188 0 Newport Village 61,350 1,470,505 81,869 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 36,640 Cornell 32,000 1,017,572 31,442 Heritage Drive S. 44,247 1,151,157 4,186 Brodhead 21,600 932,468 2,466 Mt. Vilage 55,000 884,596 3,562 Hazelhurst 60,000 1,118,734 2,670 Sunrise 90,000 1,269,252 7,540 Stony Creek 0 1,428,656 220,627 Logan Place 39,300 1,477,527 5,823 Haines 189,323 2,851,953 (10,933) Maple Wood 79,000 924,144 4,600 Summerhill 23,000 788,157 30,084 Dorchester 13,000 239,455 309,817 Lancaster 37,500 1,361,272 (15,951) Autumn Village 20,000 595,604 0 Hardy 0 473,695 462,820 Dawson 40,000 346,569 1,088,404 ----------- ------------ ------------ $2,094,010 $37,723,952 $ 4,139,408 =========== ============ ============ 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, 1998 SERIES 6 Apartment Properties Gross Amount At Which Carried At December 31, 1998 -------------------- Buildings, Improvements Partnership Land and Equipment Total - ----------- ---- ------------- ----- Spruce $ 84,155 $ 1,038,006 $ 1,122,161 Shannon Apartments 6,631 644,044 650,675 Carthage 115,814 582,499 698,313 Mt. Crest 64,914 1,173,960 1,238,874 Coal City 60,055 1,156,317 1,216,372 Blacksburg Terrace 39,930 1,283,140 1,323,070 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 170,229 788,559 958,788 Arma 89,512 781,330 870,842 Southwest City 67,303 320,862 388,165 Meadowcrest 72,500 1,131,238 1,203,738 Parsons 49,780 1,483,188 1,532,968 Newport Village 61,350 1,552,374 1,613,724 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 1,157,759 1,252,759 Cornell 35,592 1,045,422 1,081,014 Heritage Drive S. 44,248 1,155,342 1,199,590 Brodhead 21,600 934,934 956,534 Mt. Vilage 55,000 888,158 943,158 Hazelhurst 60,000 1,121,404 1,181,404 Sunrise 91,600 1,275,192 1,366,792 Stony Creek 104,800 1,544,483 1,649,283 Logan Place 39,300 1,483,350 1,522,650 Haines 189,323 2,841,020 3,030,343 Maple Wood 79,000 928,744 1,007,744 Summerhill 23,000 818,241 841,241 Dorchester 13,000 549,272 562,272 Lancaster 37,500 1,345,321 1,382,821 Autumn Village 20,000 595,604 615,604 Hardy 21,250 915,265 936,515 Dawson 40,000 1,434,973 1,474,973 ----------- ------------ ------------ $2,254,999 $41,702,371 $43,957,370 =========== ============ ============ 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, 1998 SERIES 6 Partnership Accumulated Depreciation Depreciable Life - ----------- ------------------------ ---------------- Spruce $ 254,936 5-30 Shannon Apartments 115,724 5-40 Carthage 255,100 5-27.5 Mt. Crest 346,223 5-27.5 Coal City 210,297 5-27.5 Blacksburg Terrace 383,105 5-27.5 Frazier 463,686 5-27.5 Ehrhardt 170,608 5-27.5 Sinton 149,076 5-50 Frankston 96,119 5-30 Flagler Beach 287,403 5-40 Oak Ridge 259,422 5-27.5 Monett 290,138 5-27.5 Arma 286,332 5-27.5 Southwest City 126,732 5-27.5 Meadowcrest 235,491 5-40 Parsons 418,047 5-27.5 Newport Village 418,462 5-27.5 Goodwater Falls 262,024 5-27.5 Northfield Station 190,536 5-27.5 Pleasant Hill Square 179,337 5-27.5 Winter Park 261,121 5-40 Cornell 184,621 5-40 Heritage Drive S. 323,127 5-25 Brodhead 166,104 5-40 Mt. Vilage 161,071 5-50 Hazelhurst 203,459 5-40 Sunrise 298,096 5-27.5 Stony Creek 278,055 5-27.5 Logan Place 312,076 5-27.5 Haines 710,611 5-27.5 Maple Wood 236,042 5-27.5 Summerhill 215,571 5-27.5 Dorchester 129,983 5-27.5 Lancaster 244,244 5-40 Autumn Village 104,698 5-40 Hardy 150,655 5-40 Dawson 172,605 5-40 ----------- $9,550,937 =========== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1998 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Reconciliation of Land, Building & Improvements current year changes: SERIES 2 Balance at beginning of period - December 31, 1997 $28,253,379 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 29,173 Other 0 --------- 29,173 Deductions during period: Cost of real estate sold 4,463 Other 0 --------- (4,463) ------------ Balance at end of period - December 31, 1998 $28,278,089 ============ Reconciliation of Accumulated Depreciation current year changes: Balance at beginning of period - December 31, 1997 $6,581,790 Current year expense 919,878 Less Accumulated Depreciation of (4,463) real estate sold 0 Other ---------- 915,415 ----------- Balance at end of period - December 31, 1998 $7,497,205 =========== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1998 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Reconciliation of Land, Building & Improvements current year changes: SERIES 3 Balance at beginning of period - December 31, 1997 $27,434,846 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 69,740 Other 0 --------- 69,740 Deductions during period: Cost of real estate sold 1,400 Other 0 --------- (1,400) ------------ Balance at end of period - December 31, 1998 $27,503,186 ============ Reconciliation of Accumulated Depreciation current year changes: Balance at beginning of period - December 31, 1997 $8,538,755 Current year expense 904,751 Less Accumulated Depreciation of (1,400) real estate sold ---------- Other 903,351 ----------- Balance at end of period - December 31, 1998 $9,442,106 =========== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1998 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Reconciliation of Land, Building & Improvements current year changes: SERIES 4 Balance at beginning of period - December 31, 1997 $32,609,749 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 27,720 Other 0 --------- 27,720 Deductions during period: Cost of real estate sold 0 Other 0 0 --------- ------------ Balance at end of period - December 31, 1998 $32,637,469 ============ Reconciliation of Accumulated Depreciation current year changes: Balance at beginning of period - December 31, 1997 $7,324,765 Current year expense 1,015,919 Less Accumulated Depreciation of 0 real estate sold 3 Other ---------- 1,015,922 ----------- Balance at end of period - December 31, 1998 $8,340,687 =========== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1998 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Reconciliation of Land, Building & Improvements current year changes: SERIES 5 Balance at beginning of period - December 31, 1997 $39,850,241 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 79,306 Other 0 --------- 79,306 Deductions during period: Cost of real estate sold 0 Other 0 --------- 0 ------------ Balance at end of period - December 31, 1998 $39,929,547 ============ Reconciliation of Accumulated Depreciation current year changes: Balance at beginning of period - December 31, 1997 $8,170,490 Current year expense 1,310,694 Less Accumulated Depreciation of 0 real estate sold 0 Other ---------- 1,310,694 ----------- Balance at end of period - December 31, 1998 $9,481,184 =========== SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY PROJECT PARTNERSHIPS INVESTED IN AS OF DECEMBER 31, 1998 GATEWAY TAX CREDIT FUND II LTD. NOTES TO SCHEDULE III Reconciliation of Land, Building & Improvements current year changes: SERIES 6 Balance at beginning of period - December 31, 1997 $43,865,869 Additions during period: Acquisitions through foreclosure 0 Other acquisitions 0 Improvements, etc. 91,501 Other 0 --------- 91,501 Deductions during period: Cost of real estate sold 0 Other 0 --------- 0 ------------ Balance at end of period - December 31, 1998 $43,957,370 ============ Reconciliation of Accumulated Depreciation current year changes: Balance at beginning of period - December 31, 1997 $8,136,483 Current year expense 1,414,454 Less Accumulated Depreciation of 0 real estate sold 0 Other ---------- 1,414,454 ----------- Balance at end of period - December 31, 1998 $9,550,937 =========== GATEWAY TAX CREDIT FUND II LTD. SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE AS OF DECEMBER 31, 1998 SERIES2 MONTHLY # OF INTEREST DEBT TERM PARTNERSHIP UNITS BALANCE RATE SERVICE (YEARS) - ----------- ------ -------- -------- -------- ------ Claxton Elderly 24 659,961 8.75% 5,883 50 Deerfield II 24 703,907 8.75% 6,284 50 Hartwell Family 24 707,353 8.75% 5,307 50 Cherrytree Apts. 33 1,202,929 8.75% 9,011 50 Springwood Apts. 32 1,256,522 8.75% 9,218 50 Lakeshore Apts. 34 1,056,630 8.75% 7,905 50 Lewiston 25 1,002,427 9.00% 7,720 50 Charleston 32 845,720 8.75% 6,333 50 Sallisaw II 47 1,200,424 8.75% 8,980 50 Pocola 36 990,042 8.75% 7,407 50 Inverness Club 72 2,994,175 8.75% 27,905 50 Pearson Elderly 25 634,483 9.00% 4,926 50 Richland Elderly 33 869,921 8.75% 6,517 50 Lake Park 48 1,489,474 9.00% 11,466 50 Woodland Terrace 30 889,989 8.75% 6,666 50 Mt. Vernon Elderly 21 575,735 8.75% 4,309 50 Lakeland Elderly 29 783,774 8.75% 5,882 50 Prairie Apartments 21 978,420 9.00% 7,515 50 Sylacauga Heritage 44 1,389,300 8.75% 10,536 50 Manchester Housing 49 1,461,251 8.75% 10,958 50 Durango C.W.W. 24 1,035,641 9.00% 7,739 50 Columbus Sr. 16 438,264 8.25% 3,102 50 ------------ $23,166,342 =========== GATEWAY TAX CREDIT FUND II LTD. SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE AS OF DECEMBER 31, 1998 SERIES 3 MONTHLY # OF INTEREST DEBT TERM PARTNERSHIP UNITS BALANCE RATE SERVICE (YEARS) - ----------- ------ -------- -------- -------- ------ Poteau II 52 1,308,808 9.50% 10,682 50 Sallisaw 52 1,315,971 9.50% 10,654 50 Nowata Properties 32 859,513 9.50% 6,905 50 Waldron Properties 24 642,211 9.00% 4,950 50 Roland II 52 1,315,116 9.50% 10,657 50 Stilwell 48 1,197,343 9.50% 9,727 50 Birchwood Apts. 24 790,993 9.50% 6,410 50 Hornellsville 24 898,197 9.00% 6,927 50 Sunchase II 41 1,198,051 9.00% 9,279 50 CE McKinley II 16 628,869 8.75% 5,146 50 Weston Apartments 10 275,769 9.00% 2,131 50 Countrywood Apts. 40 1,204,860 9.00% 9,310 50 Wildwood Apts. 28 852,081 9.50% 6,906 50 Hancock 12 370,066 9.50% 3,119 50 Hopkins 24 754,271 8.75% 5,815 50 Elkhart Apts. 54 1,154,013 9.00% 9,198 40 Bryan Senior 40 1,087,665 10.00% 9,455 50 Brubaker Square 38 1,120,905 9.00% 8,646 50 Southwood 44 1,491,288 9.25% 11,752 50 Villa Allegra 32 904,491 9.00% 7,053 50 Belmont Senior 24 768,826 9.00% 6,001 50 Heritage Villas 25 680,257 8.75% 5,110 50 Logansport Seniors 32 900,564 8.75% 6,745 50 ------------ $21,720,128 =========== GATEWAY TAX CREDIT FUND II LTD. SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE AS OF DECEMBER 31, 1998 SERIES 4 MONTHLY # OF INTEREST DEBT TERM PARTNERSHIP UNITS BALANCE RATE SERVICE (YEARS) - ----------- ------ -------- -------- -------- ------ Alsace Village 24 639,432 9.00% 4,915 50 Seneca Apartments 24 610,487 9.00% 4,692 50 Eudora Senior 36 961,866 8.75% 7,269 50 Westville 36 862,244 8.75% 6,448 50 Wellsville Senior 24 649,970 8.75% 4,859 50 Stilwell II 52 1,293,364 8.75% 9,672 50 Spring Hill Senior 24 699,646 8.75% 5,236 50 Smithfield 40 1,544,268 8.75% 11,746 50 Tarpon Heights 48 1,248,002 8.75% 9,347 50 Oaks Apartments 32 842,816 9.00% 6,663 50 Wynnwood Common 34 1,375,576 8.75% 10,300 50 Chestnut Apartments 24 858,322 8.75% 6,419 50 St. George 24 757,251 8.75% 5,677 50 Williston 24 800,831 9.00% 6,147 50 Brackettville Sr. 32 824,480 8.75% 6,172 50 Sonora Seniors 32 846,173 8.75% 6,337 50 Ozona Seniors 24 633,565 8.75% 4,744 50 Fredericksburg Sr. 48 1,208,446 8.75% 9,050 50 St. Joseph 24 830,674 9.00% 6,379 50 Courtyard 21 713,522 9.25% 5,622 50 Rural Development 25 1,209,938 9.25% 9,539 50 Jasper Villas 25 862,373 8.75% 6,450 50 Edmonton Senior 24 758,838 9.00% 5,688 50 Jonesville Manor 40 1,355,813 8.75% 10,159 50 Norton Green 40 1,346,524 8.75% 10,085 50 Owingsville Senior 22 708,770 9.00% 5,297 50 Timpson Seniors 28 675,560 8.75% 5,058 50 Piedmont 36 1,048,215 8.75% 7,856 50 S.F. Arkansas City 12 341,078 10.62% 3,056 50 ------------ $26,508,044 =========== GATEWAY TAX CREDIT FUND II LTD. SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE AS OF DECEMBER 31, 1998 SERIES 5 MONTHLY # OF INTEREST DEBT TERM PARTNERSHIP UNITS BALANCE RATE SERVICE (YEARS) - ----------- ------ -------- -------- -------- ------ Seymour 37 1,245,474 8.75% 9,346 50 Effingham 24 806,745 8.75% 6,032 50 S.F. Winfield 12 332,101 11.37% 3,016 50 S.F.Medicine Lodge 16 454,111 10.62% 4,049 50 S.F. Ottawa 24 571,963 10.62% 5,126 50 S.F. Concordia 20 554,933 11.87% 5,498 50 Highland View 24 716,960 8.75% 5,473 40 Carrollton Club 78 2,695,251 7.75% 18,064 50 Scarlett Oaks 40 1,394,948 8.25% 9,870 50 Brooks Hill 44 1,467,368 8.25% 10,398 50 Greensboro 24 738,704 7.75% 4,937 50 Greensboro II 33 909,654 7.75% 6,129 50 Pine Terrace 25 729,806 8.25% 5,172 50 Shellman 27 742,488 8.25% 5,264 50 Blackshear 46 1,325,176 8.25% 9,389 50 Crisp Properties 31 935,722 8.25% 6,632 50 Crawford 25 747,994 8.25% 5,302 50 Yorkshire 60 2,093,560 8.25% 14,842 50 Woodcrest 40 1,300,460 8.25% 9,402 50 Fox Ridge 24 738,849 9.00% 5,673 50 Redmont II 24 697,497 8.75% 5,355 50 Clayton 24 671,976 8.25% 4,760 50 Alma 24 736,070 8.75% 8,018 50 Pemberton Village 24 640,214 8.75% 4,782 50 Magic Circle 24 656,231 8.75% 4,913 50 Spring Hill 36 1,132,450 8.25% 8,018 50 Menard Retirement 24 630,513 8.75% 4,715 50 Wallis Housing 24 444,857 8.75% 3,688 50 Zapata Housing 40 983,899 8.75% 7,377 50 Mill Creek 60 1,440,139 8.25% 10,192 50 Portland II 20 585,691 8.75% 4,388 50 Georgetown 24 744,319 8.25% 5,265 50 Cloverdale 24 761,053 8.75% 5,693 50 S. Timber Ridge 44 1,068,059 8.75% 7,986 50 Pineville 12 321,356 8.25% 2,318 50 Ravenwood 24 730,685 7.25% 4,595 50 ------------ $32,747,276 =========== GATEWAY TAX CREDIT FUND II LTD. SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE AS OF DECEMBER 31, 1998 SERIES 6 MONTHLY # OF INTEREST DEBT TERM PARTNERSHIP UNITS BALANCE RATE SERVICE (YEARS) - ----------- ------ -------- -------- -------- ------ Spruce 24 918,137 8.75% 6,857 50 Shannon Apartments 16 537,489 8.75% 4,014 50 Carthage 24 578,444 8.75% 4,371 50 Mt. Crest 39 1,008,737 8.25% 7,150 50 Coal City 24 984,349 7.75% 6,578 50 Blacksburg Terrace 32 1,091,505 8.25% 7,738 50 Frazier 30 1,480,546 8.25% 10,470 50 Ehrhardt 16 565,661 7.75% 3,791 50 Sinton 32 856,040 8.25% 6,063 50 Frankston 24 562,739 8.75% 4,207 50 Flagler Beach 43 1,391,658 8.25% 9,864 50 Oak Ridge 24 817,521 8.25% 5,800 50 Monett 32 791,888 8.25% 5,598 50 Arma 28 721,366 8.75% 5,388 50 Southwest City 12 320,641 8.25% 2,271 50 Meadowcrest 32 1,012,190 8.25% 7,160 50 Parsons 48 1,269,085 7.75% 8,485 50 Newport Village 40 1,311,580 7.75% 8,798 50 Goodwater Falls 36 1,144,729 7.75% 7,980 50 Northfield Station 24 804,960 7.75% 5,379 50 Pleasant Hill Square 24 794,421 7.75% 5,315 50 Winter Park 24 1,008,022 8.25% 7,131 50 Cornell 24 875,408 8.25% 6,193 50 Heritage Drive S. 40 987,947 8.25% 6,990 50 Brodhead 24 793,261 7.75% 5,303 50 Mt. Vilage 24 788,504 8.25% 5,574 50 Hazelhurst 32 985,286 8.25% 7,105 50 Sunrise 33 1,166,298 8.75% 8,711 50 Stony Creek 32 1,353,017 8.75% 9,065 50 Logan Place 40 1,260,361 8.25% 8,909 50 Haines 32 2,398,312 8.25% 16,950 50 Maple Wood 24 800,734 7.75% 5,381 50 Summerhill 28 802,186 8.25% 5,911 50 Dorchester 12 467,101 7.75% 3,118 50 Lancaster 33 1,129,936 7.75% 7,775 50 Autumn Village 16 255,998 7.00% 2,608 50 Hardy 24 387,572 6.00% 3,639 18 Dawson 40 1,196,265 7.25% 7,524 50 ------------ $35,619,894 =========== 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 13, 1999 By:/s/ Ronald M. Diner Ronald M. Diner President Date: July 13, 1999 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 13, 1999 By:/s/ Ronald M. Diner Ronald M. Diner President Date: July 13, 1999 By:/s/ Sandra L. Furey Sandra L. Furey Secretary and Treasurer Date: July 13, 1999 By:/s/ J. Davenport Mosby J. Davenport Mosby Vice President 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 ANNUAL PERIOD ENDED MARCH 31, 1999. 12-MOS MAR-31-1999 MAR-31-1999 1,216,792 1,955,967 0 0 0 1,488,133 0 0 8,009,173 284,261 0 0 0 0 6,140,232 8,009,173 0 247,789 0 0 766,883 0 0 (1,862,179) 0 (1,862,179) 0 0 0 (1,862,179) (49.52) (49.52) EPS IS NET LOSS PER $1,000 LIMITED PARTNERSHIP UNIT.
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