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

                                   FORM 10-K/A
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
                          -----------------
                                      OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from               to 
                               -------------    -------------            
Commission file number 0-14353
                       -------

                      BALCOR REALTY INVESTORS 85-SERIES I
                       A REAL ESTATE LIMITED PARTNERSHIP
             -----------------------------------------------------
            (Exact name of registrant as specified in its charter)

           Illinois                                      36-3244978
-------------------------------                      ------------------- 
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

        2355 Waukegan Rd.
      Bannockburn, Illinois                                60015
----------------------------------------             -------------------       
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
                                                   ---------------
Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----
Securities registered pursuant to Section 12(g) of the Act:

                         Limited Partnership Interests
                         -----------------------------
                               (Title of class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
-----------------------------------------------------------------------
Results of Operations
---------------------

Operations
----------

Summary of Operations
---------------------

During 1996, Balcor Realty Investors 85 - Series I A Real Estate Limited
Partnership (the "Partnership") recognized gains in connection with the 1996
sales of six of the Partnership's properties, which was the primary reason for
the increase in net income for 1996 as compared to 1995. The Pinebrook
Apartments, which was owned by a joint venture consisting of the Partnership
and an affiliate was sold in 1995. The Partnership recognized its share of the
gain on sale, which is the primary reason the Partnership generated higher net
income in 1995 as compared to 1994. Further discussion of the Partnership's
operations is summarized below.

1996 Compared to 1995
---------------------

The Partnership sold the Willowbend, Forest Ridge - Phase I, Boulder Springs,
Timberlake - Phase I, Forestwood and Heather Ridge apartment complexes in 1996.
As a result, the Partnership recognized gains totaling $33,803,968.  These
sales also resulted in a decrease in rental and service income during 1996 as
compared to 1995.

Due to higher average cash balances resulting from net proceeds received in
connection with the 1996 property sales, interest income on short-term
investments increased for 1996 as compared to 1995. 

Pinebrook Apartments, in which the Partnership held a minority joint venture
interest, was sold during February 1995. As a result of the $780,279 gain
recognized during 1995 in connection with the sale, the Partnership recognized
a decrease in participation in income from joint ventures with affiliates
during 1996 as compared to 1995. The February 1996 sale of Seabrook Apartments,
in which the Partnership also held a minority joint venture interest, resulted
in the recognition of a $167,739 gain in 1996, which partially offset the above
decrease. 

Interest expense on mortgage notes payable decreased during 1996 as compared to
1995 primarily due to the 1996 property sales.

Depreciation expense decreased during 1996 as compared to 1995 due to the 1996
property sales.

Amortization of deferred expenses decreased during 1996 as compared to 1995 due
to the 1996 property sales.
<PAGE>
Property operating expense decreased by approximately $1,304,000 in 1996 as
compared to 1995 due to the 1996 property sales. This decrease was offset by an
increase in payroll, utilities and exterior repair and maintenance expenditures
at several of the Partnership's properties of approximately $388,000.

Real estate tax expense decreased during 1996 as compared to 1995 due to the
1996 property sales.

Property management fees decreased during 1996 as compared to 1995 due to the
1996 property sales.

In 1996, the Partnership recognized extraordinary debt extinguishment expense
comprised of prepayment penalties related to the Willowbend, Timberlake - Phase
I, Forestwood and Heather Ridge mortgage loans and the write off of the
remaining unamortized deferred expenses related to the repayment of the
mortgage loans in connection with the six property sales totaling $2,031,779. 

1995 Compared to 1994
---------------------

Increased rental rates during 1995 at most of the Partnership's properties
resulted in increased rental and service income during 1995 as compared to
1994.

Interest income on short-term investments increased in 1995 as compared to 1994
due to an increase in interest rates earned on short-term investments.

Pinebrook Apartments, in which the Partnership held a minority joint venture
interest, was sold during February 1995. As a result of the gain recognized in
connection with the sale, the Partnership recognized income from participation
in joint ventures with affiliates during 1995 as compared to a loss in 1994.

The Partnership incurred legal, consulting, printing and postage costs in
connection with a tender offer during the fourth quarter of 1995. As a result,
administrative expenses increased during 1995 as compared to 1994.

North Hill Apartments is owned by a joint venture consisting of the Partnership
and an affiliate. In connection with the December 1994 North Hill Apartments
refinancing, the joint venture received a refund relating to prior year
payments made to Mutual Benefit Life Insurance Company representing its 1%
guaranty fee on the original North Hill Apartments mortgage loan. As a result,
the joint venture recognized a $534,659 extraordinary gain on forgiveness of
debt in 1994, of which $133,665 represents the Partnership's share.

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

The cash position of the Partnership increased by approximately $14,003,000 as
of December 31, 1996 as compared to December 31, 1995, primarily due to Net
Cash Proceeds received from the 1996 property sales. The Partnership's cash
flow provided by operating activities of approximately $2,103,000, was
generated primarily from the operations of the Partnership's properties and was
<PAGE>
partially offset by the payment of administrative expenses. The Partnership's
net cash provided by investing activities of approximately $71,839,000,
consisted primarily of the proceeds received from the 1996 property sales. Cash
was used in the Partnership's financing activities of approximately $59,939,000
primarily for the repayment of the mortgage loans in connection with the 1996
property sales which totaled approximately $43,686,000, principal payments on
mortgage notes payable of approximately $1,285,000 and distributions to Limited
Partners of approximately $15,795,000. In addition, in January 1997, the
Partnership made a special distribution of $12,818,035 to the Limited Partners
and in February 1997 received net proceeds of approximately $11,389,000 from
the sale of Templeton Park Apartments. 
       
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. The
Partnership defines cash flow generated from its properties as an amount equal
to the property's revenue receipts less property related expenditures, which
include debt service payments. During 1996 and 1995, the Templeton Park
Apartments generated positive cash flow. The Boulder Springs, Forest Ridge -
Phase I, Timberlake - Phase I, Forestwood, Heather Ridge and Willowbend
apartment complexes which were sold in 1996, also generated positive cash flow
in 1995 and prior to their sales in 1996. The remaining property in which the
Partnership holds a minority joint venture interest, North Hill Apartments,
generated positive cash flow during 1996 and 1995. Seabrook Apartments, in
which the Partnership held a minority joint venture interest, was sold in
February 1996 and generated  marginal cash flow deficits in 1995 and prior to
its sale in 1996. In addition, Pinebrook Apartments, in which the Partnership
held a minority joint venture interest, was sold in February 1995 and generated
a marginal cash flow deficit prior to its sale. As of December 31, 1996, the
occupancy rate at Templeton Park Apartments was 93%. 

Templeton Apartments is located in northeast Colorado Springs, Colorado which
is considered a good sub-market; however, it ranks behind the northwestern and
southwestern sections of the city. The entire multi-family market consists of
approximately 30,000 units which averaged 96% occupancy in 1996. Average
occupancy at the property in 1996 was 95%, while the sub-market occupancy for
similar product type averaged 97%. Due to higher density and lower curb appeal,
Templeton Apartments is considered only average for the sub-market and,
therefore, runs slightly behind the higher quality properties. As Colorado
Springs has continued its economic recovery, the housing market has seen some
construction of multi-family units with approximately 1,400 units built in 1996
and another 2,000 units currently being planned for 1997. The additional supply
in the market may cause a softening in the overall market.

During 1996, the Partnership sold Seabrook Apartments, in which it held a
minority joint venture interest, and the Willowbend, Forest Ridge - Phase I,
Boulder Springs, Timberlake - Phase I, Forestwood and Heather Ridge apartment
complexes. During 1997, the Partnership sold its remaining property, the
Templeton Park Apartments, for a sale price of $23,300,000. Currently, the
General Partner has entered a contract to sell its remaining property, the
North Hill Apartments, in which the Partnership holds a minority joint venture
interest. A majority of the proceeds from the sale of the Templeton Park
<PAGE>
Apartments will be distributed in 1997. The Partnership will retain a portion
of the cash to satisfy obligations of the Partnership as well as establish a
reserve for contingencies. The timing of the termination of the Partnership and
final distribution of cash will depend upon the nature and extent of
liabilities and contingencies which exist or may arise. Such contingencies may
include legal and other fees stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in "Item 3. Legal
Proceedings". In the absence of any such contingency, the reserves will be paid
within twelve months of the last property being sold. In the event a
contingency exists, reserves may be held by the Partnership for a longer period
of time.

The Seabrook Apartments was owned by a joint venture consisting of the
Partnership and two affiliates. In February 1996, the joint venture sold the
property in an all cash sale for $5,915,000. From the proceeds of the sale, the
joint venture paid $5,081,898 to the third party mortgage holder in full
satisfaction of the first mortgage loan, and paid $190,517 in selling costs.
The net proceeds of the sale were $642,585, of which $103,770 was the
Partnership's share. Pursuant to the terms of the sale, $250,000 of the
proceeds were retained by the joint venture until August 1996 at which time the
proceeds were released by the joint venture. The proceeds received by the
Partnership were distributed as part of special distributions to the Limited
Partners in July and October 1996. See Note 7 of Notes to Financial Statements
for additional information.  

In March 1996, the Partnership sold the Willowbend Apartments in an all cash
sale for $9,985,000. From the proceeds of the sale, the Partnership paid
$5,790,869 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $240,515 in selling costs and paid $243,712 of prepayment
penalties. The remainder of the proceeds were distributed as part of a special
distribution to the Limited Partners in July 1996. See Note 10 of Notes to
Financial Statements for additional information.

In June 1996, the Partnership sold the Forest Ridge - Phase I Apartments in an
all cash sale for $11,600,000. From the proceeds of the sale, the Partnership
paid $7,589,194 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $131,000 in selling costs. Pursuant to the terms
of the sale, $500,000 of the proceeds were retained by the Partnership until
October 1996 at which time the proceeds were released by the Partnership. The
proceeds were distributed as part of special distributions to the Limited
Partners in July 1996 and October 1996. See Note 10 of Notes to Financial
Statements for additional information.

In September 1996, the Partnership sold the Boulder Springs Apartments in an
all cash sale for $14,831,000. From the proceeds of the sale, the Partnership
paid $8,046,954 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $449,784 in selling costs. Pursuant to the terms
of the sale, $500,000 of the proceeds will be retained by the Partnership until
June 1997. The remainder of the proceeds were distributed as part of a special
distribution to the Limited Partners in October 1996. See Note 10 of Notes to
Financial Statements for additional information.
<PAGE>
In September 1996, the Partnership sold the Timberlake Apartments - Phase I in
an all cash sale for $18,134,077. From the proceeds of the sale, the
Partnership paid $11,387,150 to the third party mortgage holder in full
satisfaction of the first mortgage loan, paid $424,282 in selling costs and
paid $530,383 of prepayment penalties. Pursuant to the terms of the sale,
$250,000 of the proceeds were retained by the Partnership until December 1996
at which time the proceeds were released by the Partnership. The proceeds were
distributed as part of a special distribution to the Limited Partners in
January 1997. See Note 10 of Notes to Financial Statements for additional
information.

In October 1996, the Partnership sold the Forestwood Apartments in an all cash
sale for $10,050,000. From the proceeds of the sale, the Partnership paid
$5,754,000 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $336,012 in selling costs and paid $230,160 of prepayment
penalties. Pursuant to the terms of the sale, $250,000 of the proceeds were
retained by the Partnership until February 1997, at which time the proceeds
were released by the Partnership. A portion of the proceeds was distributed as
a special distribution to the Limited Partners in January 1997 and the
remainder of the proceeds will be distributed as a special distribution to the
Limited Partners in 1997. See Note 10 of Notes to Financial Statements for
additional information.

In November 1996, the Partnership sold the Heather Ridge Apartments in an all
cash sale for $8,890,000. From the proceeds of the sale, the Partnership paid
$5,117,987 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $271,760 in selling costs and paid $115,175 of prepayment
penalties. The proceeds were distributed as a special distribution to the
Limited Partners in January 1997. See Note 10 of Notes to Financial Statements
for additional information.

In February 1997, the Partnership sold the Templeton Park Apartments in an all
cash sale for $23,300,000. From the proceeds of the sale, the Partnership paid
$11,458,759 to the third party mortgage holder in full satisfaction of the
first mortgage loan, paid $451,499 in selling costs and paid $1,025,000 to the
lender as a percentage of proceeds in excess of the outstanding mortgage debt.
Available proceeds will be distributed as a special distribution to the Limited
Partners in 1997. See Note 14 of Notes to Financial Statements for additional
information.

The Partnership made four distributions in 1996 and 1995 and one distribution
in 1994 totaling $191.00, $77.50 and $5.00 per Interest, respectively. See
Statement of Partner's Capital for additional information. Distributions were
comprised of $31.00 per Interest of Net Cash Receipts and $160.00 per Interest
of Net Cash Proceeds in 1996, $48.50 per Interest of Net Cash Receipts and
$29.00 per Interest of Net Cash Proceeds in 1995, and $5.00 per Interest of Net
Cash Receipts in 1994. Distributions increased in 1996 as compared to 1995
primarily due to property sales. Distributions increased in 1995 as compared to
1994 since the Partnership commenced distributions in the fourth quarter of
1994 as a result of improved property operations at the Partnership's
properties.
<PAGE>
In January 1997, the Partnership made a distribution of $13,479,611 ($163.00
per Interest) to the holders of Limited Partnership Interests representing a
distribution of Net Cash Receipts of $8.00 per Interest for the fourth quarter
of 1996 and a special distribution of $155.00 per Interest representing Net
Cash Proceeds received from sales of the Timberlake - Phase I, Forestwood and
Heather Ridge apartment complexes. Including the January 1997 distribution,
Limited Partners have received cumulative cash distributions of $436.50 per
$1,000 Interest as well as certain tax benefits. Of this amount, $92.50 has
been from Net Cash Receipts and $344.00 has been from Net Cash Proceeds. A
majority of the proceeds from the sale of Templeton Park Apartments will be
distributed in 1997. In light of results to date investors will not recover all
of their original investment. 

Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.

Certain statements in this Form 10-K constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Act of 1934, as amended. These statements may
include projections of revenues, income or losses, capital expenditures, plans
for future operations, financing plans or requirements, and plans relating to
properties of the Partnership, as well as assumptions relating to the
foregoing.

The forward-looking statements made by the Partnership are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Partnership to differ materially
from any future results, performance or achievements expressed or implied by
the forward-looking statements.
<PAGE>
SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                           BALCOR REALTY INVESTORS 85-SERIES I
                           A REAL ESTATE LIMITED PARTNERSHIP


                           By:  /s/ Jayne A. Kosik
                               --------------------------------
                                Jayne A. Kosik
                                Managing Director and Chief
                                Financial Officer (Principal
                                Accounting Officer) of Balcor
                                Partners-XVI, the General Partner

Date:  April 4, 1997
      --------------

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

      Signature                   Title                     Date
---------------------  ------------------------------  --------------
                       President and Chief Executive
                       Officer (Principal Executive
                       Officer) of Balcor Partners-
/s/ Thomas E. Meador   XVI, the General Partner        April 4, 1997
---------------------                                  --------------
    Thomas E. Meador

                       Managing Director and
                       Chief Financial Officer 
                       (Principal Accounting Officer)
                       of Balcor Partners-XVI, the
/s/ Jayne A. Kosik     General Partner                 April 4, 1997
---------------------                                  --------------
    Jayne A. Kosik
<PAGE>