SECOND AMENDMENT TO
                                   SECOND AMENDED AND RESTATED AGREEMENT
                                           OF LIMITED PARTNERSHIP
                                                     OF
                                        SYDNEY ENGEL ASSOCIATES L.P.


        This Second  Amendment to the Second  Amended and Restated  Agreement of
Limited Partnership ("Second Amendment") of SYDNEY ENGEL ASSOCIATES L.P. is made
and entered into as of the 21st day of April, 1997, by and among the undersigned
parties.

        WHEREAS,  as of  June  1,  1990,  THE  ENGEL  GROUP,  INC.,  a New  York
corporation  with an office at 124  Atlantic  Avenue,  Lynbrook,  New York 11563
("Engel"), THE RICHMAN GROUP, INC., a Delaware corporation with an office at 599
West Putnam Avenue,  Greenwich,  Connecticut  06830  ("Richman") and TWIN CASTLE
GROUP INC., a New York  corporation  with an office at 550 Brush Avenue,  Bronx,
New York  10465  ("Twin  Castle")  (Engel,  Richman  and Twin  Castle  sometimes
hereinafter  being  referred  to  collectively  as  the  "General  Partners"  or
individually  as a "General  Partner")  and AMERICAN TAX CREDIT  PROPERTIES  III
L.P., a Delaware  limited  partnership  with an office c/o Richman (the "Limited
Partner")  entered  into the Second  Amended and  Restated  Agreement of Limited
Partnership   (the   "Agreement")   of  Sydney  Engel   Associates   L.P.   (the
"Partnership"); and

        WHEREAS,  as of March 24,  1997,  the General  Partners  and the Limited
Partner  entered  into a First  Amendment  of the  Agreement,  which inter alia,
authorized  the  execution of a Certificate  of Adoption of the Revised  Limited
Partnership  Act (Article 8-A of the  Partnership  Law of the State of New York)
(the  "Revised  Act")  and  an  Amendment  thereto  changing  the  name  of  the
Partnership to Sydney Engel Associates L.P.

        WHEREAS,  the parties now desire to enter into this Second  Amendment to
(i) continue the  Partnership,  (ii) effect the  withdrawal  of Twin Castle as a
General  Partner and the  transfer of its  interest  to the  Partnership,  (iii)
reassign  the  interests of the  Partners,  and (iv)  authorize  the filing of a
Certificate  reflecting  the  withdrawal  with the New York State  Department of
State.

        NOW, THEREFORE, in consideration of the foregoing, of mutual promises of
the parties hereto and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,  the parties agree to continue the
Partnership  pursuant to the Revised Act, as set forth in this Second Amendment,
as follows:

        1. All initially  capitalized  terms shall have the meanings ascribed to
them in the Agreement,  unless otherwise provided herein.  This Agreement may be
signed in counterparts.

        2. Upon the execution of the Second Amendment by the parties hereto, the
Managing  General  Partner shall take all actions  necessary and  appropriate to
assure  compliance  with  Section  121-202 of the  Revised  Act  reflecting  the
withdrawal  of Twin  Castle.  All fees for the  filing  shall be paid out of the
Partnership's assets.

        3. Article II of the  Agreement is amended to delete "TWIN CASTLE GROUP,
INC." from the definition of "General Partners".

        4. (a)  Schedule  A of the  Agreement  is  amended  to  reflect  the 
withdrawal  of Twin  Castle as a General  Partner and the transfer of its 
interest to the  Partnership.  Upon such withdrawal and transfer, the interests 
of Engel and Richman in the Partnership shall be:

              Engel          2/3%
              Richman        1/3%






<PAGE>

The Interest of the Limited Partner shall remain 99%.

               (b) The parties  confirm that the  withdrawal  of Twin Castle and
the transfer of its  Interest  have been  accomplished  in  accordance  with the
provisions of Section 6.01 of the  Agreement.  The parties  further  confirm and
ratify Section 6.01(b) of the Agreement, which provides that:

               "In  the  event  that  a  General  Partner   withdraws  from  the
Partnership  or  sells  transfers  of  assigns  his or its  entire  Interest  in
compliance with Section  6.01(a),  he or it shall be and shall remain liable for
all obligations and liabilities  incurred by him or it as General Partner before
such withdrawal,  sale, transfer or assignment shall have become effective,  but
shall  be free  of any  obligation  or  liability  incurred  on  account  of the
activities of the  Partnership  from and after the time such  withdrawal,  sale,
transfer or assignment shall have become effective."

               (c) The execution of this Second Amendment by the Limited Partner
constitutes its consent to the withdrawal  described herein and to the amendment
of the Agreement pursuant to Article XIV thereof.

        5. The withdrawal of Twin Castle from the Partnership  also  constitutes
its disclaimer and  renunciation of any further fees,  profits or other payments
arising out of or pertaining to the  Partnership  and/or the Project,  including
but not limited to, the  Partnership  Administration  Services  Agreement by and
among Engel, Richman and Twin Castle and the Development  Agreement by and among
Sydney Engel, Richard P.
Richman and Michael Contillo, both dated June 1, 1990.

        IN WITNESS  WHEREOF,  the parties have affixed their  signatures to this
Second  Amendment  to the  Second  Amended  and  Restated  Agreement  of Limited
Partnership of Sydney Engel Associates L.P. as of the date first above written.

<TABLE>
<CAPTION>
                                GENERAL PARTNERS:
<S>                                              <C>
ATTEST/WITNESS:                                  THE ENGEL GROUP, INC.


/s/ Michael S. Weiss                             By: /s/ Sydney Engel
                                                         Sydney EngelPresident


ATTEST/WITNESS:                                  THE RICHMAN GROUP, INC.


/s/ Ann H. McGuire                               By: /s/ Richard P. Richman
                                                 Richard P. Richman, President


                                                 WITHDRAWING GENERAL PARTNER:

ATTEST/WITNESS:                                  TWIN CASTLE GROUP, INC.


/s/ Vincent Anzalone                             By: /s/ Michael Contillo
                                               Michael Contillo, President
</TABLE>






<PAGE>
<TABLE>
<CAPTION>



                                LIMITED PARTNER:
<S>                                              <C>
                                   AMERICAN TAX CREDIT PROPERTIES III L.P.

                         By:  Richman  Tax  Credit  Properties  III L.P.,  its
                              general partner

ATTEST/WITNESS:           By: Richman Housing Credits Inc., its general partner


/s/ Mary K. Holzer              By: /s/ David Salzman
                                David Salzman, Vice President

</TABLE>







<PAGE>
STATE OF NEW YORK      )
                              )     SS.:
COUNTY OF NASSAU       )

        On this 15th day of April, 1997, before me personally came Sydney Engel,
to me known,  who being by me duly sworn,  did depose and say that he resides at
206 Albon Road, Hewlett,  New York; that he is the President of THE ENGEL GROUP,
INC., the corporation  described in and which executed the foregoing instrument;
and that he signed his name  thereto by order of the board of  directors of said
corporation.


                                                   /s/ Michael S. Weiss
                                  Notary Public




STATE OF CONNECTICUT )
                              )     SS.: Greenwich
COUNTY OF Fairfield )

        On this 18th day of April,  1997,  before me personally  came Richard P.
Richman  to me known,  who being by me duly  sworn,  did  depose and say that he
resides at 7 Dwight Lane, Greenwich,  CT, 06831; that he is the President of THE
RICHMAN  GROUP,  INC.,  the  corporation  described  in and which  executed  the
foregoing instrument;  and that he signed his name thereto by order of the board
of directors of said corporation.

                                                   /s/ Mary K. Holzer
                                  Notary Public




STATE OF NEW YORK      )
                              )     SS.:
COUNTY OF BRONX        )

        On this day of April,  1997, before me personally came MICHAEL CONTILLO,
to me known,  who being by me duly sworn,  did depose and say that he resides at
New York;  that he is the President of TWIN CASTLE GROUP,  INC., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the board of directors of said corporation.



                                  Notary Public







<PAGE>

STATE OF Conn.)
                             )      SS.: Greenwich
COUNTY OF Fairfield)

        On this  18th day of  April,  1997,  before  me  personally  came  DAVID
SALZMAN,  to me known,  who being by me duly  sworn,  did depose and say that he
resides at 12 Varian Lane,  Scarsdale,  NY, 10583; that he is the Vice-President
of RICHMAN HOUSING CREDITS INC., the corporation described in and which executed
the foregoing  instrument;  which  corporation is the general partner of Richman
Tax Credit  Properties  III L.P.,  the general  partner of  AMERICAN  TAX CREDIT
PROPERTIES  III L.P.,  the limited  partnership  which  executed  the  foregoing
instrument;  that  the  execution  of the  instrument  by  AMERICAN  TAX  CREDIT
PROPERTIES  III L.P. was duly  authorized  according to the Limited  Partnership
Agreement; that RICHMAN HOUSING CREDITS INC., the general partner of its general
partner,  executed the instrument on behalf of the limited partnership  pursuant
to said  authorization and that he signed his name thereto by order of the board
of directors of said corporation.


                                                   /s/ Ann H. McGuire
                                  Notary Public