FORM 10-K/A

               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549


[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
    ACT OF 1934

For the fiscal year ended December 31, 1997

	                                     OR

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934

For the transition period from            to   

Commission File Number:  0-20737

             AMERICA FIRST APARTMENT INVESTORS, L.P.
     (Exact name of registrant as specified in its charter)

Delaware                                                47-0797793            
(State or other jurisdiction                            (IRS Employer 
of incorporation or organization)                       Identification No.)


Suite 400, 1004 Farnam Street, Omaha, Nebraska          68102       
(Address of principal executive offices)                (Zip Code)


(402) 444-1630                              
(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

	                                    None

Securities Registered Pursuant to Section 12(g) of the Act:

	    Beneficial Unit Certificates representing assignments of limited 
     partnership interests in America First Apartment Investors, L.P. (the 
     "BUCs") 

     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 (Section 229.405 of the chapter) is not contained
herein, and will not be contained, to the best of the 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] 

	    The aggregate market value of the BUCs on March 3, 1997, based upon the 
final sales price per BUC reported in The Wall Street Journal on March 4, 
1997, was $52,752,941.

	                     DOCUMENTS INCORPORATED BY REFERENCE

	                                   None










<PAGE>                              - i -
                               TABLE OF CONTENTS

	                                                                          Page

	                                   PART I

Item  1. Business	                                                           1
Item  2. Properties	                                                         2
Item  3. Legal Proceedings	                                                  4
Item  4. Submission of Matters to a Vote of Security Holders	                4

	                                   PART II

Item  5. Market for the Registrant's Common Equity and Related 
         Stockholder Matters	                                                4
Item  6. Selected Financial Data	                                            5
Item  7. Management's Discussion and Analysis of Financial Condition
	        and Results of Operations	                                          6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk         14
Item  8. Financial Statements and Supplementary Data	                       14
Item  9. Changes in and Disagreements With Accountants on Accounting and
	        Financial Disclosure	                                              14

	                                  PART III

Item 10.  Directors and Executive Officers of the Registrant	               15
Item 11.  Executive Compensation	                                           16
Item 12.  Security Ownership of Certain Beneficial Owners and Management	   16
Item 13.  Certain Relationships and Related Transactions	                   16

	                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K	  17

SIGNATURES	                                                                 39









































<PAGE>                              - ii -
	                                   PART I

	    Item 1.  Business.  America First Apartment Investors, L.P. (the 
Registrant or the Partnership) was formed on March 7, 1996, under the Delaware 
Revised Uniform Limited Partnership Act for the purpose of acquiring, holding, 
operating, selling and otherwise dealing with multifamily real estate and 
other types of commercial real estate and interests therein.  The Partnership 
will pursue its purpose in order to (i) preserve investors' capital and (ii) 
provide regular cash distributions to investors.

     The Partnership commenced operations on August 20, 1996, when it merged 
with America First Tax Exempt Mortgage Fund 2 Limited Partnership (the Prior 
Partnership).  Under the terms of the merger agreement, the Partnership was 
the surviving partnership and effectively took over the operations of the 
Prior Partnership.  As of the record date established for the Merger, a total 
of 5,212,167 Beneficial Unit Certificates (BUCs) representing assigned limited 
partnership interests in the Prior Partnership were outstanding.  BUC holders 
of the Prior Partnership received one BUC in the Partnership for each BUC of 
the Prior Partnership outstanding as of the record date.

     After completion of the offering of its BUCs in 1986, the Prior 
Partnership acquired nine tax-exempt mortgage bonds with an aggregate 
principal amount of $90,765,000.  These tax-exempt bonds were issued by 
various state and local authorities to provide construction and permanent 
financing of eight multifamily housing properties and one commercial property 
located in eight states.  The Prior Partnership subsequently acquired five of 
the properties through foreclosure or deed in lieu of foreclosure or through 
the acquisition of an indirect ownership interest.  The Prior Partnership also 
acquired an additional multifamily property which is adjacent to one of the 
foreclosed properties that was originally intended to be part of a 
consolidated property.  These properties, along with three mortgage bonds, 
were acquired by the Partnership in connection with the Merger.  The other 
mortgage bond was repaid by the borrower in 1988.  The Partnership acquired 
one additional multifamily housing property in 1996 and two additional 
multifamily housing properties in 1997.  In addition, in 1997, the Partnership 
also acquired a property through a deed in lieu of foreclosure on one of its 
tax-exempt mortgage bonds.  As of December 31, 1997, these properties had a 
depreciated cost of $64,267,471.  A description of the real estate acquired by 
the Registrant appears in Note 6 of the Notes to the Financial Statements 
filed in response to Item 8 hereof.  For further information regarding these 
properties, see Item 7, Management's Discussion and Analysis of Financial 
Condition and Results of Operations.

     Of the three mortgage bonds acquired by the Partnership in connection 
with the Merger, one property was deeded to the Partnership in lieu of 
foreclosure on the mortgage bond and one mortgage bond was prepaid to the 
Partnership in 1997.  The one remaining mortgage bond had a carrying value (at 
estimated fair value) of $13,006,526 as of December 31, 1997.  Under the terms 
of the bond, the principal amount does not amortize over its terms.  The 
mortgage bond provides for the payment of base interest to the Registrant and 
for the payment of contingent interest based on the level of net cash flow and 
net realized capital appreciation generated by the underlying property.  A 
description of the tax-exempt mortgage bond held by the Registrant at December 
31, 1997 (and the property collateralizing such bond) appears in Note 5 of the 
Notes to the Financial Statements filed in response to Item 8 hereof.  For 
further information regarding this property, see Item 7, Management's 
Discussion and Analysis of Financial Condition and Results of Operations.

     The amount of cash received by the Registrant from tax-exempt mortgage 
bonds and the real estate is a function of the net rental revenues generated 
by the properties financed or owned by the Partnership.  Net rental revenues 
from a multifamily apartment complex depend on the rental and occupancy rates 
of the property and on the level of operating expenses.  Occupancy rates and 
rents are directly affected by the supply of, and demand for, apartments in 
the market areas in which a property is located.  This, in turn, is affected 
by several factors such as local or national economic conditions, the amount 
of new apartment construction and interest rates on single-family mortgage 
loans.  In addition, factors such as government regulation (such as zoning 
laws), inflation, real estate and other taxes, labor problems and natural 
disasters can affect the economic operations of a property.






<PAGE>                              - 1 -
     In each city in which the properties financed or owned by the Registrant 
are located, such properties compete with a substantial number of other 
apartment complexes.  Apartment complexes also compete with single-family 
housing that is either owned or leased by potential tenants.  The principal 
method of competition is to offer competitive rental rates.  Such properties 
also compete by emphasizing regular maintenance and property amenities.

     The Registrant believes that each of the properties it has financed or 
owns is in compliance in all material respects with federal, state and local 
regulations regarding hazardous waste and other environmental matters and the 
Registrant is not aware of any environmental contamination at any of such 
properties that would require any material capital expenditure by the 
Registrant for the remediation thereof.  

	    The Registrant is engaged solely in the business of providing financing 
for the acquisition and improvement of real estate and the operation of real 
estate acquired.  Accordingly, the presentation of information about industry 
segments is not applicable and would not be material to an understanding of 
the Registrant's business taken as a whole.

	    The Registrant has no employees.  Certain services are provided to the 
Registrant by employees of America First Companies L.L.C. which is the general 
partner of the general partner of the Registrant, and the Registrant 
reimburses America First Companies L.L.C. for such services at cost.  The 
Registrant is not charged, and does not reimburse, for the services performed 
by managers and officers of America First Companies L.L.C..

	    Item 2.  Properties.  The Prior Partnership had invested in eight 
mortgage bonds collateralized by first mortgages on multifamily housing 
properties and one mortgage bond collateralized by a first mortgage on a 
commercial property.  Foreclosure proceedings and other actions were 
instituted with respect to six of the properties which has resulted in the 
Registrant owning or indirectly owning six of these properties at December 31, 
1997.  The Prior Partnership also acquired an additional multifamily property 
which is adjacent to one of the foreclosed properties that was originally 
intended to be part of a consolidated property.  In addition, the Partnership 
acquired one additional multifamily housing property in 1996 and two 
additional multifamily housing properties in 1997.  One mortgage bond was 
prepaid by the borrower each in 1988 and 1997.  Properties owned by the 
Registrant or collateralizing mortgage bonds held by the Registrant are 
described in the following table:

<TABLE>
<CAPTION>
                                                                        Average
                                                         Number     Square Feet            Federal
Property Name                  Location                of Units        Per Unit          Tax Basis
--------------------------     -------------------     --------     -----------     ---------------
<S>                            <C>                     <C>          <C>             <C>
Avalon Ridge                   Renton, WA                  356           1,076                    (1)
Covey at Fox Valley(3)         Aurora, IL                  216             948      $    9,698,717
The Park at Fifty Eight(3)     Chattanooga, TN             196             876           3,657,715
Shelby Heights(3)              Bristol, TN                 100             980           2,671,009
Coral Point(2)                 Mesa, AZ                    336             780           9,956,509
Park at Countryside(3)         Port Orange, FL             120             720           3,168,507
The Retreat (4)                Atlanta, GA                 226             855           8,927,245
Jackson Park Place(3)          Fresno, CA                  296             822          11,868,922
Park Trace Apartments(3)       Norcross, GA                260             806          13,948,633
                                                       --------                     ---------------
                                                         2,106                          63,897,257
                                                       ========
The Exchange at Palm Bay            Palm Bay, FL        72,002(5)                        4,336,631
                                                       ========                     ---------------
                                                                                    $   68,233,888
                                                                                    ===============
</TABLE>
(1) Property collateralizes a mortgage loan owned by the Partnership.  Since 
    the Partnership does not own the property, the federal tax basis is not 
    applicable.
(2) Property serves as collateral on borrowings against the line of credit as 
    described in Note 8 to the Financial Statements filed in response to Item 
    8 hereof.
(3) Property serves as collateral for multifamily housing refunding bonds as 
    described in Note 7 to the Financial Statements filed in response to Item 
    8 hereof.

<PAGE>                              - 2 -
(4) Property serves as collateral for multifamily housing refunding bonds as 
    described in Note 5 to the Financial Statements filed in response to Item 
    8 hereof.
(5) Represents square feet.

     Depreciation is taken on each property acquired on a straight-line basis 
over the estimated useful life of the properties (27-1/2 years on multifamily 
residential apartments and 31-1/2 years on The Exchange at Palm Bay).

     The average annual occupancy rate and average effective rental rate per 
unit or per square foot for each of the properties for each of the last five 
years are listed in the following table.  Information with respect to The 
Retreat for periods prior to April 10, 1997, Park Trace Apartments prior to 
October 24, 1997, and Park at Countryside for periods prior to December 30, 
1996, the dates the properties were acquired by the Registrant, is not 
available to the Registrant and accordingly is not presented in the table.

<TABLE>
<CAPTION>
                                                       1997         1996         1995         1994         1993
                                                  ----------   ----------   ----------   ----------   ----------
<S>                                               <C>          <C>          <C>          <C>          <C>
Property Collateralizing Mortgage Bonds
-----------------------------------------
 AVALON RIDGE
 Average Occupancy Rate                                  95%          84%           84%          84%          86% 
 Average Effective Annual Rental Per Unit             $7,089       $5,264        $5,835       $6,343       $6,195

Real Estate Acquired
--------------------
 COVEY AT FOX VALLEY
 Average Occupancy Rate                                  94%          95%           94%          95%          96%
 Average Effective Annual Rental Per Unit             $8,691       $8,574        $8,057       $7,782       $7,568 

 THE PARK AT FIFTY EIGHT
 Average Occupancy Rate                                  97%          96%           97%          96%          93% 
 Average Effective Annual Rental Per Unit             $4,880       $4,774        $4,937       $4,768       $4,372 

 SHELBY HEIGHTS
 Average Occupancy Rate                                  92%          92%           95%          97%          96% 
 Average Effective Annual Rental Per Unit             $5,649       $5,653        $5,611       $5,601       $5,377 

 CORAL POINT
 Average Occupancy Rate                                  94%          96%           96%          97%          92% 
 Average Effective Annual Rental Per Unit             $5,966       $5,825        $5,537       $5,183       $4,740

 THE EXCHANGE AT PALM BAY
 Average Occupancy Rate                                  65%          56%           43%          39%          38% 
 Average Effective Annual Rental Per Square Foot      $ 5.85       $ 4.89        $ 3.52       $ 3.27       $ 3.16

 PARK AT COUNTRYSIDE
 Average Occupancy Rate                                  97%          N/A           N/A          N/A          N/A 
 Average Effective Annual Rental Per Unit             $6,086          N/A           N/A          N/A          N/A

 JACKSON PARK PLACE
 Average Occupancy Rate                                  93%          93%           96%          95%          86%
 Average Effective Annual Rental Per Unit             $5,631       $5,703        $5,773       $5,585       $5,046

 THE RETREAT
 Average Occupancy Rate                                  94%          N/A           N/A          N/A          N/A 
 Average Effective Annual Rental Per Unit             $6,403          N/A           N/A          N/A          N/A

 PARK TRACE APARTMENTS
 Average Occupancy Rate                                  86%          N/A           N/A          N/A          N/A 
 Average Effective Annual Rental Per Unit             $6,717          N/A           N/A          N/A          N/A

</TABLE>

     In the opinion of the Partnership's management, each of the properties 
owned by the Partnership is adequately covered by insurance.  For additional 
information concerning the properties, see "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" and Notes 5 and 6 
to the Partnership's Financial Statements.  A discussion of general 
competitive conditions to which these properties are subject is included in 
Item 1 hereof.

<PAGE>                              - 3 -
	    Item 3.  Legal Proceedings.  There are no material pending legal 
proceedings to which the Registrant is a party or to which any of its property 
is subject.

	    Item 4.  Submission of Matters to a Vote of Security Holders.  No matter 
was submitted during the fourth quarter of the fiscal year ended December 31, 
1997, to a vote of the Registrant's security holders.

	                                   PART II

	    Item 5.  Market for the Registrant's Common Equity and Related 
Stockholder Matters.

	    (a)	Market Information.  The BUCs trade on the NASDAQ Stock Market under 
the trading symbol "APROZ".  Prior to August 20, 1996, the BUCs of the Prior 
Partnership traded under the trading symbol "ATAXZ".  The following table sets 
forth the high and low final sale prices for the BUCs for each quarterly 
period from January 1, 1996, through December 31, 1997.

<TABLE>
<CAPTION>

               1996(1)                                 High           Low
           -----------                              ---------      ---------
           <S>                                      <C>            <C>
           1st Quarter                              $ 9-3/4        $ 8-1/2
           2nd Quarter                              $ 9-3/4        $ 8-3/4
           3rd Quarter                              $ 9-1/2        $ 7-3/4
           4th Quarter				                          $ 9-3/8        $ 8-3/8

               1997                    		              High  		       Low
          	-----------			                           ---------      ---------
           1st Quarter                              $ 9-1/2        $ 8-5/8
           2nd Quarter                              $ 9-3/8        $ 8-3/4
           3rd Quarter                              $ 9-7/8        $ 8-7/8
           4th Quarter				                          $10-1/2        $ 9-3/8

</TABLE>

(1) The market price per share information includes that of America First 
    Apartment Investors L.P. from August 20, 1996 (the Merger Date), through 
    December 31, 1996, and America First Tax Exempt Fund 2 Limited Partnership 
    for periods prior to the Merger Date.

	    (b)	BUC Holders.  The approximate number of BUC holders on December 31, 
1997, was 3,118.

	    (c)	Distributions.  Cash distributions are being made on a monthly 
basis.  Total cash distributions paid or accrued to BUC Holders during the 
fiscal years ended December 31, 1997, and December 31, 1996, equaled 
$3,909,126 and $3,921,671, respectively.  The cash distributions paid per BUC 
during the fiscal years ended December 31, 1997, and December 31, 1996, were 
as follows:

<TABLE>
<CAPTION>
	                                                       Per BUC
	                                          Year Ended            Year Ended 
                                       December 31, 1997		   December 31, 1996
                                       -----------------     -----------------
<S>                                    <C>                   <C>
Income			                              $           -         $          .5272
Return of Capital			                              .7500                 .2228
                                       -----------------     -----------------
Total			                               $          .7500      $          .7500
                                       =================     =================
</TABLE>

	    See Item 7,  Management Discussion and Analysis of Financial Condition 
and Results of Operations, for information regarding the sources of funds used 
for cash distributions and for a discussion of factors, if any, which may 
adversely affect the Registrant's ability to make cash distributions at the 
same levels in 1998 and thereafter.



<PAGE>                              - 4 -
     Item 6.  Selected Financial Data.  Set forth below is selected financial 
data for the Partnership which includes the financial data of America First 
Apartment Investors, L.P. from August 20, 1996 (the Merger Date), through 
December 31, 1997, and America First Tax Exempt Fund 2 Limited Partnership for 
periods prior to the Merger Date.  The information set forth below should be 
read in conjunction with the consolidated and combined Financial Statements 
and Notes thereto filed in response to Item 8 hereof.										

<TABLE>
<CAPTION>
                                                            For the        For the	    	  For the      		For the      		For the
		                                                       Year Ended	   	Year Ended 		  Year Ended	 	  Year Ended	   	Year Ended
                                                    		Dec. 31, 1997		Dec. 31, 1996		Dec. 31, 1995		Dec. 31, 1994		Dec. 31, 1993
                                                      -------------  -------------  -------------  -------------  -------------
<S>                                                   <C>            <C>            <C>            <C>            <C>
Mortgage bond investment income                     	 $  1,611,956   $  2,107,486 	 $  2,234,610 	 $  2,452,200 	 $  2,327,505
Contingent interest                                        290,520           -              -              -              -
Rental income		                                          9,511,041      5,763,648 		   5,116,073    		4,949,664    		4,566,703
Interest income on temporary cash investments		             35,532         51,557 		      55,720 		      37,303 		      43,507
General and administrative expenses		                   (1,263,054)    (1,146,709)	    	(792,300)    		(689,987)	    	(719,720)
Real estate operating expenses		                        (4,514,450)    (3,047,804)		  (2,359,827)		  (2,397,067)	  	(2,268,252)
Depreciation		                                          (1,897,586)    (1,165,059)		  (1,197,490)  		(1,183,588)  		(1,172,244)
Interest expense                                        (1,132,494)      (118,382)          -              -              -
Realized loss on disposition of mortgage bond           (3,000,000)          -              -              -              -
                                                      -------------  -------------  -------------  -------------  -------------
Net income (loss)                                     $   (358,535)  $  2,444,737 	 $  3,056,786 	 $  3,168,525 	 $  2,777,499
                                                      =============  =============  =============  =============  =============
Net income (loss), basic and diluted, per
   Beneficial Unit Certificate (BUC)                  $       (.08)  $        .46 	 $        .57 	 $        .60 	 $        .52 
                                                      =============  =============  =============  =============  =============
Total cash distributions paid or accrued per BUC	     $      .7500   $      .7500	  $      .7500 	 $      .7500 	 $      .7500 
                                                      =============  =============  =============  =============  =============
Investment in tax-exempt mortgage bonds               $ 13,006,526   $ 31,566,526 	 $ 31,566,526 	 $	31,566,526 	 $	31,566,526 
                                                      =============  =============  =============  =============  =============
Investment in real estate, net of accumulated
   depreciation (and	valuation allowance	for
   years 1995 and prior)                              $ 64,267,471   $ 30,199,846 	 $ 25,890,570 	 $	26,770,652 	 $	27,925,464 
                                                      =============  =============  =============  =============  =============
Total assets	                                         $ 87,123,522    $	64,923,401 	 $ 59,630,449 	 $ 60,520,431 	 $	61,328,763
                                                      =============  =============  =============  =============  =============
Bonds payable                                         $ 27,035,000   $  2,750,000   $       -      $       -      $       -   
                                                      =============  =============  =============  =============  =============
</TABLE>

































<PAGE>                              - 5 -
     Item 7.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

Liquidity and Capital Resources

America First Tax Exempt Mortgage Fund 2 (the Prior Partnership) originally 
acquired nine tax-exempt mortgage bonds, the proceeds of which were used to 
provide construction and/or permanent financing for eight multifamily housing 
properties and one commercial property.  The Prior Partnership subsequently 
acquired five of the properties through foreclosure or deed in lieu of 
foreclosure and one tax-exempt mortgage bond was prepaid in full.  During 
1996, the Prior Partnership acquired an additional multifamily property which 
is adjacent to one of the foreclosed properties that was originally intended 
to be part of a consolidated property.

On August 20, 1996, the Prior Partnership merged with America First Apartment 
Investors, L.P. (the Partnership).  Under the terms of the merger agreement, 
the Partnership was the surviving partnership and effectively took over the 
operations of the Prior Partnership.  Unit holders of the Prior Partnership 
received one Beneficial Unit Certificate (BUC) of the New Partnership for each 
BUC they held in the Prior Partnership as of the record date.  The Prior 
Partnership was terminated under the provisions of the Prior Partnership's 
Partnership Agreement.

During 1996, the Partnership acquired The Park at Fifty-Eight Phase I and Park 
at Countryside and during 1997 the Partnership acquired The Retreat and Park 
Trace Apartments.  In addition, Jackson Park Place was conveyed to the 
Partnership during 1997 through a deed in lieu of foreclosure.  At December 31 
1997, the Partnership continued to hold one tax-exempt mortgage bond with a 
carrying value, at estimated fair value, of $13,006,526 and eight real estate 
properties with a total depreciated cost of $64,267,471.

The following table shows the various occupancy levels of the properties 
owned or financed by the Partnership at December 31, 1997:

<TABLE>
<CAPTION>
                                                                                                       Number      Percentage
                                                                                        Number       of Units        of Units
Property Name                          Location                                       of Units       Occupied        Occupied
-------------------------------        -----------------------                       ----------     ----------     -----------
<S>                                    <C>                                           <C>            <C>            <C>
Jackson Park Place                     Fresno, CA                                          296            280             95%
Avalon Ridge(1)                        Renton, WA                                          356            339             95%
Covey at Fox Valley                    Aurora, IL                                          216            199             92%
The Park at Fifty Eight                Chattanooga, TN                                     196            181             92%
Shelby Heights                         Bristol, TN                                         100             85             85%
Coral Point                            Mesa, AZ                                            336            314             93%
Park at Countryside                    Port Orange, FL                                     120            115             96%
The Retreat                            Atlanta, GA                                         226            211             93%
Park Trace Apartments                  Norcross, GA                                        260            217             83%
                                                                                     ----------     ----------     -----------
                                                                                         2,106          1,941             92%
                                                                                     ==========     ==========     ===========
The Exchange at Palm Bay               Palm Bay, FL                                     72,002(2)      60,900(2)          85%
                                                                                     ==========     ==========     ===========
</TABLE>
(1) Property securing tax-exempt mortgage bond held by the Partnership.
(2) Represents square feet.

Net rental income earned on the properties owned by the Partnership represents 
its principal source of income and distributable cash.  In addition, the 
partnership continues to earn interest income on its remaining tax-exempt 
mortgage bond and on temporary cash investments.  The principal amount of the 
tax-exempt mortgage bond does not amortize over its term.  The tax-exempt 
mortgage bond provides for the payment of base interest at a fixed rate.  In 
addition, the Partnership may earn contingent interest based on a 
participation in the net cash flow and net sale or refinancing proceeds from 
the real estate collateralizing the tax-exempt mortgage bond.  During 1997, 
the Partnership received contingent interest of $290,520 on its Jackson Park 
Place mortgage bond.  However, this mortgage was prepaid during 1997.  The 
Partnership did not receive any other contingent interest on its mortgage 
bonds during 1997 and does not expect to earn any on its remaining mortgage 
bond during 1998.  The Partnership may draw on reserves to pay operating 
expenses or to supplement cash distributions to Beneficial Unit Certificate 
(BUC) Holders.  
<PAGE>                               - 6 -
The Partnership has a $15 million revolving loan credit agreement (the Line of 
Credit) with the First National Bank of Boston (the Bank) that is used by the 
Partnership to provide interim financing for the acquisition of multifamily 
residential properties.  The Line of Credit expires on December 19, 1998.  The 
Line of Credit bears interest at 1/2% above the Bank's base rate (which base 
rate was 9% as of December 31, 1997).  The maximum amount available for 
borrowings under the Line of Credit was $10,290,000 at December 31, 1997.  The 
Partnership did not have any borrowings against the Line of Credit at December 
31, 1997.  The Line of Credit contains covenants which include, among others, 
restrictions on the amount of indebtedness the Partnership may incur and 
minimum debt service coverage requirements.  The Partnership intends to repay 
any borrowings under the Line of Credit through the refunding of existing 
tax-exempt bonds that are associated with certain properties owned by the 
Partnership.

On April 2, 1998, the Partnership expects to receive proceeds of $13,090,000 
through the offering of multifamily housing revenue refunding bonds on Coral 
Point.  The bonds were rated "A" by Standard and Poor's Corporation, bear 
interest at an effective rate of 4.96% and have a 10-year maturity.  Proceeds 
from the offering will be utilized to acquire additional multifamily housing 
properties.

In accordance with the terms of the Loan Agreement underlying the $8,760,000 
in tax-exempt mortgage bonds collateralized by Jackson Park Place (Jackson), 
the Partnership exercised its option to require the owner of Jackson to prepay 
the tax-exempt mortgage bonds.  The Partnership entered into a Settlement 
Agreement with the owner of Jackson that provided for the Partnership to 
acquire Jackson at appraised value on May 7, 1997.  In accordance with the 
terms of the Loan Agreement, the following disbursements were made:  (i) 
$2,100,000 to America First Participating/Preferred Equity Mortgage Fund 
(PREP), an affiliated fund, representing payment of the outstanding balance of 
its Participating Loan on Jackson; (ii) $69,480 to PREP representing 
contingent interest income on its Participating Loan; (iii) $371,220 to 
America First Capital Associates Limited Partnership Four (AFCA 4) and $88,780 
to the general partner of PREP representing due and unpaid administrative 
fees; (iv) $290,520 to the Partnership representing contingent interest income 
on the tax-exempt mortgage bonds; and (v) $360,000 to the owner of Jackson.  
These disbursements were funded with borrowings on the Partnership's Line of 
Credit.  The Partnership also incurred costs of $18,096 in conjunction with 
the acquisition.

On July 30,1997, the limited partnership which owns Jefferson Place     
(Jefferson Place L.P.) received proceeds of $12,200,000 from the offering of 
multifamily housing revenue refunding bonds collateralized by Jefferson Place 
and The Retreat.  The Partnership, in turn, received $12,200,000 from 
Jefferson Place L.P. representing full payment of its $12,800,000 in 
tax-exempt mortgage bonds on Jefferson Place.  In addition to receiving 
$12,200,000 in cash which resulted in a liability to Jefferson Place L.P. of 
$2,400,000, the Partnership also received a $3,500,000 subordinate note 
representing past due interest on the $12,800,000 tax-exempt mortgage bonds.  
The Partnership did not record this past due interest as management considered 
its collectability to be doubtful.  Interest on the subordinate note, at the 
rate of 8.5%, is payable monthly solely out of excess cash flow generated by 
Jefferson Place.  Final payment of all outstanding principle and interest is 
due July 1, 2023.  All payments due under the $3,500,000 note are subordinate 
to payments due under the $12,200,000 in tax-exempt mortgage bonds.  The 
Partnership has not recorded the subordinate note on its balance sheet due to 
it doubtful collectability.  Any interest and principle payments received 
under the terms of the subordinate note will be recorded as income when 
received.  As a result of this refinancing, the Partnership realized a loss of 
$3,000,000.  Concurrently, the unrealized holding losses related to the 
investment in tax-exempt mortgage bonds, which is a separate component of 
partners' capital, was reduced by $3,000,000.  Proceeds from the offering were 
utilized by the Partnership primarily to pay down the Line of Credit.

Excluding proceeds received from the payoff of the Jefferson Place Apartments 
tax-exempt mortgage bonds, the Partnership received proceeds of $24,365,000 
during 1997 through the offering of tax-exempt multifamily  housing revenue 
refunding bonds on three properties it acquired through foreclosure.  Proceeds 
of $3,450,000 were received in March related to Shelby Heights and proceeds of 
$12,410,000 and $8,505,000 were received in December relating to Covey at Fox 
Valley and Jackson Park Place, respectively.  Proceeds from the bond issuances 
are being utilized to provide permanent financing for property acquisitions.



<PAGE>                               - 7 -
In addition to acquiring Jackson Park Place, the Partnership also acquired two 
additional multifamily properties during 1997, The Retreat and Park Trace 
Apartments.  The Retreat, a 226-unit property, was acquired in April for 
$9,115,697 and Park Trace Apartments, a 260-unit property, was acquired in 
October for $14,038,016.  Permanent financing for these acquisitions was 
provided by proceeds the Partnership received through the offering of 
tax-exempt multifamily housing revenue refunding bonds as described above.

During the year ended December 31, 1997, $299,919 of undistributed income was 
placed in reserves.  The total amount held in reserves at December 31, 1997, 
was $6,696,977.  Future distributions to BUC Holders will depend upon the 
amount of net rental income  and interest income the Partnership receives, the 
size of reserves established by the Partnership and the extent to which 
withdrawals are made from reserves.  

The Partnership believes that cash provided by operating activities, its Line 
of Credit, proceeds from the issuance of tax-exempt mortgage bonds and, if 
necessary, withdrawals from the Partnership's reserves will be adequate to 
meet its short-term and long-term liquidity requirements, including the 
payments of distributions to BUC Holders.  Under the terms of the Partnership 
Agreement, the Partnership has the authority to enter into short-term and 
long-term debt financing arrangements.  The Partnership is not authorized to 
issue additional BUCs to meet short-term and long-term liquidity requirements.

AFCA 4 has conducted a review of its computer systems to identify those areas 
that could be affected by the "Year 2000" issue and has developed a plan to 
resolve the issue.  AFCA 4 believes the Year 2000 problem can be resolved 
without significant operational difficulties.  The Partnership does not 
maintain its own computer systems and does not reimburse AFCA 4 for any 
capital expenses associated with computer systems.  Therefore, no material 
effect to the Partnership's results of operations, financial position or cash 
flows is anticipated from the "Year 2000" issue or its resolution.

Distributions

Cash distributions paid or accrued per BUC were as follows:
<TABLE>
<CAPTION>
                                                                          For the               For the               For the
                                                                       Year Ended            Year Ended            Year Ended
                                                                    Dec. 31, 1997         Dec. 31, 1996         Dec. 31, 1995
                                                                   ---------------       ---------------       ---------------
<S>                                                                <C>                   <C>                   <C>
Regular monthly distributions
	Income                                                            $         -           $        .5272        $        .5217 
	Return of capital                                                          .7500                 .2228                 .2283 
                                                                   ---------------       ---------------       ---------------
                                                                   $        .7500        $        .7500        $        .7500 
                                                                   ===============       ===============       ===============
Distributions
	Paid out of current and prior undistributed cash flow             $        .7500        $        .7500        $        .7500 
                                                                   ===============       ===============       ===============
</TABLE>

Asset Quality 

It is the policy of the Partnership to make a periodic review of its real 
estate, including the property collateralizing the Partnership's remaining 
mortgage bond and adjust, when necessary, the carrying value of such real 
estate or the mortgage bond.  Each real estate property held by the 
Partnership is recorded at the lower of cost or net realizable value.  The 
Partnership's mortgage bond is classified as available-for-sale and is, 
therefore, carried at the estimated fair value of the underlying real 
property.    












<PAGE>                               - 8 -
The fair value of all real estate owned or financed by the Partnership is 
based on management's best estimate of the net realizable value of the 
properties which may vary from the ultimate value realized from these 
properties.  The net realizable value of the properties is determined based on 
the discounted estimated future cash flows from the properties, including 
estimated sales proceeds.  The calculation of discounted estimated future cash 
flows includes certain variables such as the assumed inflation rates for rents 
and expenses, capitalization rates and discount rates.  These variables are 
supplied to the Partnership by an independent real estate appraisal firm based 
upon local market conditions for each property.  In certain cases, additional 
factors such as the replacement value of the property or comparable sales of 
similar properties are also taken into consideration.  The carrying value of 
each real estate property owned by the Partnership is adjusted when there are 
significant declines in the estimated net realizable value.  The carrying 
value of the mortgage bond is periodically reviewed and adjustments are made 
when there are significant changes in the estimated net realizable value of 
the underlying collateral for the bond.  

Based on the foregoing methodology, valuation and reviews performed during 
1997 indicated that the carrying value  of the Partnership's real estate and 
mortgage bond recorded on the balance sheet at December 31, 1997, required no 
adjustment.

The following sets forth certain information regarding the real estate owned 
by the Partnership and the remaining tax-exempt mortgage bond held by the 
Partnership:

REAL ESTATE OWNED

Jackson Park Place

Jackson Park Place Apartments, located in Fresno, California, had an average 
occupancy rate of 93% during 1997 and 1996.  The Partnership earned interest 
of $248,700 on the mortgage bond through May 7, 1997, the date on which 
Jackson Park Place was acquired by the Partnership.  This interest represented 
the full amount of base interest due for such period.  In addition, the 
Partnership received contingent interest of $290,520.  Subsequent to its 
acquisition, Jackson Park Place generated net cash flow of approximately 
$505,000.  Tax-exempt refunding bonds collateralized by this property were 
issued in December 1997 and bear interest at an effective rate of 5.8%.  Debt 
service payments were not required on the bonds during 1997.  The bonds had a 
principal balance of $8,505,000 at December 31, 1997.  The last principal 
payment is due on December 1, 2027.  The Partnership earned interest of 
$744,600 on the mortgage bond in 1996 representing the full amount of base 
interest due for the year.  No contingent interest was earned in 1996. 

Covey at Fox Valley

Covey at Fox Valley Apartments, located in Aurora, Illinois, had an average 
occupancy rate of 94% during 1997 compared to 95% during 1996.  This property 
generated net cash flow of $1,246,000 in 1997 compared to $978,000 in 1996.  
This increase is principally due to a decrease in real estate taxes and 
property operating expenses.  Tax-exempt refunding bonds collateralized by 
this property and Park Trace Apartments were issued in December 1997 and bear 
interest at an effective rate of 5.3%.  Debt service payments were not 
required on the bonds during 1997.  The bonds had a principal balance of 
$12,410,000 at December 31, 1997.  The bonds have a mandatory redemption date 
of November 1, 2007.

The Park at Fifty Eight

The Park at Fifty Eight Apartments, located in Chattanooga, Tennessee, had an 
average occupancy rate of 97% during 1997 compared to 96% during 1996.  This 
property generated net cash flow, excluding debt service, of $420,000 in 1997 
compared to $234,000 in 1996.  This increase is attributable primarily to the 
acquisition of Phase I of this apartment complex in May 1996.  In May 1996, 
tax-exempt refunding bonds, with a total principal balance of $2,750,000 and 
collateralized by this property were issued.  The bonds bear interest at an 
effective rate of 6.65%.  Debt service on these bonds totaled $237,281 in 
1997.  At December 31, 1997, the remaining principal balance of the bonds was 
$2,670,000.  The final principal payment is due on March 1, 2021.





<PAGE>                               - 9 -
Shelby Heights

Shelby Heights Apartments, located in Bristol, Tennessee, had an average 
occupancy rate of 92% during 1997 and 1996.  This property generated net cash 
flow, excluding debt service, of approximately $313,000 in 1997 compared to 
$331,000 in 1996.  This decrease is attributable to slightly higher real 
estate operating expenses, primarily real estate taxes and insurance.  
Tax-exempt refunding bonds collateralized by this property and Park at 
Countryside were issued in March 1997 and bear interest at an effective rate 
of 6.1%.  Debt service on the bonds totaled $222,451 in 1997.  The bonds had a 
remaining principal balance of $3,450,000 at December 31, 1997.  The final 
principal payment is due on March 1, 2022.

Coral Point

Coral Point, located in Mesa, Arizona, had an average occupancy rate of 94% 
during 1997 compared to 96% during 1996.  This property generated net cash 
flow of $1,103,000 in 1997 compared with $1,124,000  in 1996.  This decrease 
is attributable to a $67,000 increase in real estate operating expenses, 
primarily capital improvements.  The increase in operating expenses was 
partially offset by a $46,000 increase in rental revenues during the year that 
was a result of increased rental rates.

Park at Countryside

Park at Countryside, located in Port Orange, Florida was acquired by the 
Partnership on December 30, 1996.  It had an average occupancy of rate of 97% 
in 1997.  The property generated net cash flow, excluding debt service, of 
$257,000 in 1997.  Tax-exempt refunding bonds collateralized by this property 
and Shelby Heights were issued in March 1997 and bear interest at an effective 
rate of 6.1%.  Debt service on the bonds totaled $222,451 in 1997.  The bonds 
had a remaining principal balance of $3,450,000 at December 31, 1997.  The 
final principal payment is due on March 1, 2022.

The Retreat

The Retreat, located in Atlanta, Georgia, was acquired by the Partnership on 
April 10, 1997.  From the date of acquisition through December 31, 1997, the 
property had an average occupancy of 94% and generated net cash flow of 
$630,000.  This property collateralizes certain tax-exempt refunding bonds 
that were issued July 30, 1997 by Jefferson Place, L.P..

Park Trace Apartments

Park Trace Apartments, located in Norcross, Georgia, was acquired by the 
Partnership on October 24, 1997.  From the date of acquisition through December 
31, 1997, the property had an average occupancy of 86% and generated net cash 
flow of $194,000.  Tax-exempt refunding bonds, collateralized by this property 
and Covey at Fox Valley, were issued in December 1997 and bear interest at an 
effective rate of 5.3%.  Debt service payments were not required on the bonds 
during 1997.  The bonds had a principal balance of $12,410,000 at December 31, 
1997.  The bonds have a mandatory redemption date of November 1, 2007.

The Exchange at Palm Bay

The Exchange at Palm Bay, located in Palm Bay, Florida, is an office/warehouse 
facility.  This property continues to experience low occupancy due to the 
large amount of similar commercial real estate in the surrounding area.  The 
property's average leased space was 65% in 1997 compared to 56% in 1996.  The 
property generated operating cash flow of approximately $244,000 in 1997 
compared to $40,000 in 1996.  The increase in cash flow is due to a decrease 
in real estate operating expenses of $134,000 and an increase in rental 
revenue of $70,000 due to the increase in average occupancy.  The decrease of 
$134,000 in real estate operating expenses is due primarily to decreases in 
administrative and capital improvements.











<PAGE>                               - 10 -
TAX EXEMPT BOND

Avalon Ridge

Avalon Ridge Apartments, located in Renton, Washington, had an average 
occupancy rate of 95% during 1997 compared to 84% during 1996.  Interest is 
recognized as income on this mortgage bond on a cash basis.  Interest earned 
in 1997 was $838,182 compared to $443,169 in 1996 and was approximately 
$756,000 less than the amount needed to pay the base interest in 1997.  Net 
cash flow generated by the property, excluding interest, increased 
approximately $440,000 from 1996 to 1997 due to a 37% increase in rental 
income resulting from an increase in average occupancy and rental rate 
increases.

At December 31, 1997, the Partnership's tax-exempt mortgage bond was 
classified as nonperforming.  The bond will continue to be classified as 
nonperforming until such time that the property collateralizing the mortgage 
bond generates sufficient net cash flow to bring the mortgage bond fully 
current as to interest payments.  The Partnership's management is closely 
monitoring this property in an effort to maximize cash flow generated. In 
addition, an affiliate of the Partnership's general partner provides property 
management services for this property.  As such, the Partnership is able to 
influence certain aspects of the operations of the property which should 
better position the property to increase long-term cash flow from operations.

Results of Operations

The tables below compare the results of operations for each year shown.  The 
results of operations for 1996 include the combined accounts of the 
Partnership from August 20, 1996 (the Merger Date), through December 31, 1996, 
and the accounts of the Prior Partnership from January 1, 1996, until the 
Merger Date.  Results of operations for 1995 include the accounts of the Prior 
Partnership.

<TABLE>
<CAPTION>
                                                                              For the             For the             For the
                                                                           Year Ended          Year Ended          Year Ended
                                                                        Dec. 31, 1997       Dec. 31, 1996       Dec. 31, 1995
                                                                       ---------------     ---------------     ---------------
<S>                                                                    <C>                 <C>                 <C>
Mortgage bond investment income                                        $    1,611,956      $    2,107,486      $    2,234,610
Contingent interest                                                           290,520                -                   -
Rental income                                                               9,511,041           5,763,648           5,116,073 
Interest income on temporary cash investments                                  35,532              51,557              55,720
                                                                       ---------------     ---------------     ---------------
                                                                           11,449,049           7,922,691           7,406,403
                                                                       ---------------     ---------------     ---------------
General and administrative expenses                                         1,263,054           1,146,709             792,300
Real estate operating expenses                                              4,514,450           3,047,804           2,359,827
Depreciation                                                                1,897,586           1,165,059           1,197,490 
Interest expense                                                            1,132,494             118,382                - 
Realized loss on disposition of mortgage bond                               3,000,000                -                   -
                                                                       ---------------     ---------------     ---------------
                                                                           11,807,584           5,477,954           4,349,617 
                                                                       ---------------     ---------------     ---------------
Net income (loss)                                                      $     (358,535)     $    2,444,737      $    3,056,786 
                                                                       ===============     ===============     ===============
</TABLE>

















<PAGE>                               - 11 -
<TABLE>
<CAPTION>
                                                                             Increase            Increase
                                                                            (Decrease)          (Decrease)
                                                                            From 1996           From 1995
                                                                       ---------------     ---------------
<S>                                                                    <C>                 <C>
Mortgage bond investment income                                        $     (495,530)     $     (127,124) 
Contingent interest                                                           290,520                -
Rental income                                                               3,747,393             647,575  
Interest income on temporary cash investments                                 (16,025)             (4,163) 
                                                                       ---------------     ---------------
                                                                            3,526,358             516,288 
                                                                       ---------------     ---------------
General and administrative expenses                                           116,345             354,409
Real estate operating expenses                                              1,466,646             687,977 
Depreciation                                                                  732,527             (32,431)
Interest expense                                                            1,014,112             118,382 
Realized loss on disposition of mortgage bond                               3,000,000                -
                                                                       ---------------     ---------------
                                                                            6,329,630           1,128,337
                                                                       ---------------     ---------------
Net income (loss)                                                      $   (2,803,272)     $     (612,049) 
                                                                       ===============     ===============
</TABLE>

Mortgage bond investment income decreased $495,530 from 1996 to 1997.  The 
decrease is primarily attributable to:  (i) a $496,000 decrease resulting from 
the acquisition of Jackson Park Place in settlement of the mortgage bond for 
real estate in May 1997; and (ii) a $395,000 decrease resulting primarily from 
the disposition of the Jefferson Place mortgage bond in July 1997.  These 
decreases in investment income were partially offset by a $395,000 increase in 
cash flow received from the tax-exempt bond secured by Avalon Ridge which pays 
interest on a modified cash basis.  The increase in net cash flow received 
from Avalon Ridge is due primarily to an increase in average occupancy and 
rental rate increases from 1996 to 1997.

Mortgage bond investment income decreased $127,124 from 1995 to 1996 as a 
result of a decrease in cash flow from Avalon Ridge of $173,147 which was 
partially offset by an increase in the cash flow received from Jefferson Place 
of $46,023.  Interest on the tax-exempt bonds on both of these properties was 
recognized on a modified cash basis during the year.  The decrease in cash 
flow received from Avalon Ridge is due to a decrease in rental rates which was 
partially offset by lower real estate operating expenses, primarily 
administrative expenses.  The increase in cash flow received from Jefferson 
Place is due to an increase in rental revenue which was partially offset by 
higher real estate operating expenses, primarily property taxes.  Rental 
income generated by this property increased due to a slight increase in 
average occupancy and rental rate increases.

Rental income increased $3,747,393 from 1996 to 1997.  This increase was 
primarily attributable to:  (i) a $1,166,000 increase resulting from the 
acquisition of Jackson Park Place in the settlement of the mortgage bond 
secured by this property in May 1997; (ii) a $1,128,000 increase resulting 
from the acquisition of The Retreat in April 1997; (iii) a $743,000 increase 
resulting from the acquisition of Park at Countryside in December 1996; (iv) a 
$347,000 increase resulting from the acquisition of Park Trace Apartments in 
October 1997; (v) a $182,000 increase resulting primarily from increased 
rental rates on Covey at Fox Valley, Shelby Heights and Coral Point and 
increased average occupancy at The Exchange at Palm Bay; and (vi) a $181,000 
increase resulting primarily from the acquisition of Phase I of The Park at 
Fifty-Eight in May 1996.  

Rental income increased $647,575 from 1995 to 1996, primarily due to:  (i) a 
$330,000 increase resulting primarily from the acquisition of Phase I of The 
Park at Fifty-Eight in May 1996; (ii) a $207,000 increase from Covey at 
Fox Valley and Coral Point due primarily to rental rate increases and (iii) a 
$98,000 increase from The Exchange at Palm Bay due to an increase in leased 
space during 1996.  







<PAGE>                               - 12 -
Excluding property tax refunds of approximately $180,000 received by Covey at 
Fox Valley in 1997, real estate operating expenses increased $1,646,713 from 
1996 to 1997.  This increase is attributable to:  (i) a $599,000 increase 
resulting from the acquisition of Jackson Park Place in the settlement of the 
mortgage bond secured by this property in May 1997; (ii) a $547,000 increase 
resulting from the acquisition of The Retreat in April 1997; (iii) a $489,000 
increase resulting from the acquisition of Park at Countryside in December 
1996; (iv) a $141,000 increase resulting from the acquisition of Park Trace 
Apartments in October 1997; and (v) a $72,000 increase in property 
improvements and advertising expenses at Shelby Heights and Coral Point.  
These increases were partially offset by (i) a $134,000 decrease in 
administrative expenses and property improvements at The Exchange at Palm Bay; 
and (ii) a $67,000 decrease in real estate taxes and labor expenses at Covey 
at Fox Valley and The Park at Fifty-Eight.

Excluding property tax refunds of approximately $252,000 received by Covey at 
Fox Valley in 1995, real estate operating expenses increased $435,977 from 
1995 to 1996.  This increase is attributable to: (i) a $311,000 increase from  
The Park at Fifty Eight resulting from the acquisition of Phase I of this 
apartment complex in May 1996 and from various property improvements; (ii) a 
$102,000 increase in repairs and maintenance expenses and property 
improvements at Covey at Fox Valley and The Exchange at Palm Bay; (iii) 
leasing commissions of approximately $85,000 incurred by The Exchange at Palm 
Bay in connection with leasing additional space to tenants; and (iv) a $31,000 
increase in real estate operating expenses at certain properties acquired by 
the Partnership in foreclosure.  These increases were partially offset by a 
$93,000 decrease in repairs and maintenance expenses at Coral Point.

Depreciation expense increased $732,527 from 1996 to 1997 and is primarily 
attributable to:  (i) a $258,000 increase resulting from the acquisition of 
Jackson Park Place in the settlement of the mortgage bond secured by this 
property in May 1997; (ii) a $200,000 increase resulting from the acquisition 
of The Retreat in April 1997; (iii) a $174,000 increase resulting from the 
acquisition of Park at Countryside in December 1996; (iv) a $71,000 increase 
resulting from the acquisition of Park Trace Apartments in October 1997; and 
(v) a $30,000 increase resulting primarily from the acquisition of Phase I of 
The Park at Fifty-Eight in May 1996.

Depreciation expense decreased $32,431 from 1995 to 1996 due to the adoption 
of Statement of Financial Accounting Standards No. 121 (FAS 121) on January 1, 
1996.  This decrease was partially offset by an increase in depreciation 
expense of approximately $51,000 due to the acquisition of Phase I of the Park 
at Fifty Eight in May 1996.  FAS 121 requires that depreciation be calculated 
on the adjusted carrying value of the properties.

Interest expense increased $1,014,112 from 1996 to 1997 and is primarily 
attributable to (i) approximately $776,000 on the Partnership's Line of Credit 
used to acquire new properties; (ii) approximately $172,000 on bonds payable 
of $3,450,000 which were issued in March 1997; and (iii) a $67,000 increase on 
bonds payable of $2,750,000 which were issued in May 1996.  Interest expense of 
$118,382 was incurred in 1996 on the $2,750,000 of bonds payable which were 
issued in May 1996.

Interest income on temporary cash investments decreased $16,025 from 1996 to 
1997 due primarily to a decrease in the average reserve balance attributable 
to withdrawals made from Partnership reserves during 1997 to acquire 
additional apartment complexes.  Interest income on temporary cash investments 
decreased $4,163 from 1995 to 1996 due primarily to a decrease in the average 
reserve balance attributable to withdrawals made from Partnership reserves 
during 1996 to supplement distributions to BUC Holders.

General and administrative expenses increased $116,345 from 1996 to 1997.  
This increases is primarily due to:  (i) an increase of approximately $171,000 
in salaries and related expenses; (ii) an increase of approximately $126,000 
in administrative fees on the newly acquired properties; and (iii) net 
increases of approximately $6,000 in other general and administrative 
expenses.  These increases were partially offset by a decrease of 
approximately $186,000 of costs incurred in conjunction with the Merger.








<PAGE>                               - 13 -
General and administrative expenses increased $354,409 from 1995 to 1996.  
This increase is primarily due to (i) approximately $186,000 of costs incurred 
in conjunction with the Merger; (ii) an increase of approximately $98,000 in 
salaries and related expenses; (iii) an increase of approximately $32,000 in 
professional fees; (iv) an increase of approximately $12,000 in servicing 
fees; and (v) net increases of approximately $26,000 in other general and 
administrative expenses.

The table below segregates the results of operations for the Partnership's 
real estate operations and tax-exempt mortgage bond investments activities for 
each year shown.

<TABLE>
<CAPTION>
                                                                              For the             For the             For the
		                                                                         Year Ended	         Year Ended          Year Ended
		                                                                      Dec. 31, 1997	      Dec. 31, 1996       Dec. 31, 1995
                                                                       ---------------     ---------------     ---------------
<S>                                                                    <C>                 <C>                 <C>
Real estate operations:
	Rental income	                                                        $    9,511,041      $    5,763,648      $    5,116,073
	Operating expenses		                                                      (4,514,450)         (3,047,804)	        (2,359,827)
	Depreciation		                                                            (1,897,586)         (1,165,059)	        (1,197,490)
                                                                       ---------------     ---------------     ---------------
			                                                                         3,099,005           1,550,785	          1,558,756
                                                                       ---------------     ---------------     ---------------
Tax-exempt mortgage bonds investments:
	Mortgage bond investment income		                                     $    1,611,956           2,107,486           2,234,610
 Contingent interest                                                          290,520                -                   -
 Realized loss on disposition of mortgage bond                             (3,000,000)               -                   -
                                                                       ---------------     ---------------     ---------------
                                                                           (1,097,524)          2,107,486           2,234,610
                                                                       ---------------     ---------------     ---------------
Interest income on temporary cash investments                                  35,532              51,557              55,720
General and administrative expenses		                                      (1,263,054)         (1,146,709)	          (792,300)
Interest expense                                                           (1,132,494)           (118,382)               -
                                                                       ---------------     ---------------     ---------------
Net income	(loss)                                                      $     (358,535)     $    2,444,737      $    3,056,786
                                                                       ===============     ===============     ===============
</TABLE>

     This report contains forward looking statements that reflect 
management's current beliefs and estimates of future economic circumstances, 
industry conditions, the Partnership's performance and financial results.  All 
statements, trend analysis and other information concerning possible or 
assumed future results of operations of the Partnership and the real estate 
investments it has made (including, but not limited to, the information 
contained in "Management's Discussion and Analysis of Financial Condition and 
Results of Operations"), constitute forward-looking statements.  BUC holders 
and others should understand that these forward looking statements are subject 
to numerous risks and uncertainties and a number of factors could affect the 
future results of the Partnership and could cause those results to differ 
materially from those expressed in the forward looking statements contained 
herein.

     Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.  
The requirements of Item 7A of Form 10-K are not applicable to the Partnership 
prior to its Annual Report on Form 10-K for the year ended December 31, 1998.

	    Item 8.  Financial Statements and Supplementary Data.  The Financial 
Statements and supporting schedules of the Registrant are set forth in Item 14 
hereof and are incorporated herein by reference.  In addition, the Financial 
Statements of Jefferson Place, L.P. and Sunpointe Associates Limited 
Partnership (Avalon Ridge) are set forth in Item 14 hereof and are 
incorporated by reference.  The financial statements of Jefferson Place, L.P. 
and Sunpointe Associates Limited Partnership are included pursuant to SAB 
Topic 1I.

	    Item 9.  Changes in and Disagreements With Accountants on Accounting and 
Financial Disclosure.  There were no disagreements with the Registrant's 
independent accountants on accounting principles and practices or financial 
disclosure during the fiscal years ended December 31, 1997 and 1996.




<PAGE>                               - 14 -
	                                  PART III

	    Item 10.  Directors and Executive Officers of the Registrant.  The 
Registrant has no directors or officers.  Management of the Registrant 
consists of the general partner of the Registrant, America First Capital 
Associates Limited Partnership Four ("AFCA"), and its general partner, America 
First Companies L.L.C.  The following individuals are managers and officers of 
America First Companies L.L.C., and each serves for a term of one year: 	 	

<TABLE>
<CAPTION>
    Name                    Position Held                 Position Held Since
-----------------------   --------------------------   -----------------------
<S>                       <C>                          <C>
Michael B. Yanney	        Chairman of the Board,	              1987
	                         President, Chief Executive 
	                         Officer and Manager

Michael Thesing	          Vice President, Secretary,	          1987
	                         Treasurer and Manager

William S. Carter, M.D.	  Manager	                             1994

George Kubat	             Manager	                             1994

Martin A. Massengale	     Manager	                             1994

Alan Baer	                Manager	                             1994

Gail Walling Yanney	      Manager	                             1996

Mariann Byerwalter        Manager                              1997
</TABLE>

	    Michael B. Yanney, 64, has served as the Chairman, President and Chief 
Executive Officer of America First Companies L.L.C. and its predecessors since 
1984.  From 1977 until the organization of the first such fund in 1984, Mr. 
Yanney was principally engaged in the ownership and management of commercial 
banks.  Mr. Yanney also has investments in private corporations engaged in a 
variety of businesses.  From 1961 to 1977, Mr. Yanney was employed by Omaha 
National Bank and Omaha National Corporation (now part of U.S. Bank), where he 
held various positions, including the position of Executive Vice President and 
Treasurer of the holding company.  Mr. Yanney also serves as a member of the 
boards of directors of Burlington Northern Santa Fe Corporation, Forest Oil 
Corporation, Lozier Corporation, Freedom Communications, Inc., Magnum 
Resources, RCN Corporation, Rio Grande Medical Technologies, Inc., Mid-America 
Apartment Communities, Inc. and PKS Information Services, Inc..

	    Michael Thesing, 43, has been Vice President and Chief Financial Officer 
of affiliates of America First Companies L.L.C. since July 1984.  From January 
1984 until July 1984 he was employed by various companies controlled by Mr. 
Yanney.  He was a certified public accountant with Coopers & Lybrand from 1977 
through 1983.

	    William S. Carter, M.D., 71, is a retired physician.  Dr. Carter 
practiced medicine for 30 years in Omaha, Nebraska, specializing in 
otolaryngology (disorders of the ears, nose and throat).

	    George Kubat, 52, is the President and Chief Executive Officer of 
Phillips Manufacturing Co., an Omaha, Nebraska, based manufacturer of drywall 
metals and construction materials.  Prior to assuming that position in 
November 1992, Mr. Kubat was a certified public accountant with Coopers & 
Lybrand in Omaha, Nebraska, from 1969.  He was the tax partner in charge of 
the Omaha office from 1981 to 1992.  Mr. Kubat currently serves on the board 
of directors of Sitel Corporation and American Business Information, Inc..

	    Martin A. Massengale, 64, is President Emeritus of the University of 
Nebraska, Director of the Center for Grassland Studies and Foundation 
Distinguished Professor.  Prior to becoming President in 1991, he served as 
Interim President from 1989, as Chancellor of the University of Nebraska 
Lincoln from 1981 until 1990 and as Vice Chancellor for Agriculture and 
Natural Resources from 1976 to 1981.  Prior to that time, he was a professor 
and associate dean of the College of Agriculture at the University of 
Arizona.  Dr. Massengale currently serves on the board of directors of Woodmen 
Accident & Life Insurance Company and IBP, Inc. and is a member of the Board 
of Trustees of the Great Plains Funds, Inc.
<PAGE>                               - 15 -
	    Alan Baer, 75, is presently Chairman of Alan Baer & Associates, Inc., a 
management company located in Omaha, Nebraska.  He is also Chairman of Lancer 
Hockey, Inc., Baer Travel Services, Wessan Telemarketing, Total Security 
Systems, Inc. and several other businesses.  Mr. Baer is the former Chairman 
and Chief Executive Officer of the Brandeis Department Store chain which, 
before its acquisition, was one of the larger retailers in the Midwest.  Mr. 
Baer has also owned and served on the board of directors of several banks in 
Nebraska and Illinois.

	    Gail Walling Yanney, 61, is a retired physician.  Dr. Walling practiced 
anesthesia and was most recently the Executive Director of the Clarkson 
Foundation until October of 1995.  In addition, she was a director of FirsTier 
Bank, N.A., Omaha prior to its merger with First Bank, N.A..  Ms. Yanney is 
the wife of Michael B. Yanney.

	    Mariann Byerwalter, 37, is Vice President of Business Affairs and Chief 
Financial Officer of Stanford University.  Ms. Byerwalter was Executive Vice 
President of America First Eureka Holdings, Inc. ("AFEH") and EurekaBank from 
1988 to January 1996.  Ms. Byerwalter was Chief Financial Officer and Chief 
Operating Officer of AFEH, and Chief Financial Officer of EurekaBank from 1993 
to January 1996.  She was an officer of BankAmerica Corporation and its 
venture capital subsidiary from 1984 to 1987.  She served as Vice President 
and Executive Assistant to the President of Bank of America and was a Vice 
President in the bank's Corporate Planning and Development Department.

	    Item 11.  Executive Compensation.  Neither the Registrant nor AFCA has 
any managers or officers.  None of the managers or executive officers of 
America First Companies L.L.C. (the general partner of AFCA) receive 
compensation from the Registrant and AFCA receives no reimbursement from the 
Registrant for any portion of their salaries.  Remuneration paid by the 
Registrant to AFCA pursuant to the terms of its limited partnership agreement 
during the year ended December 31, 1997, is described in Note 9 of the Notes 
to the Financial Statements filed in response to Item 8 hereof.

	    Item 12.  Security Ownership of Certain Beneficial Owners and Management.  

     (a) No person is known by the Registrant to own beneficially more than 5% 
of the Registrant's BUCs.

	    (b)	William S. Carter, M.D. owns 2,000 BUCs.  No other manager or officer 
of America First Companies L.L.C. and no partner of AFCA owns any BUCs.

	    (c) There are no arrangements known to the Registrant, the operation of 
which may at any subsequent date result in a change in control of the 
Registrant.

	    Item 13.  Certain Relationships and Related Transactions.  The general 
partner of the Fund is AFCA and the sole general partner of AFCA is America 
First Companies L.L.C.  

	    Except as described herein, the Registrant is not a party to any 
transaction or proposed transaction with AFCA, America First Companies, L.L.C. 
or with any person who is:  (i) a manager or executive officer of America 
First Companies L.L.C. or any general partner of AFCA; (ii) a nominee for 
election as a manager of America First Companies L.L.C.; (iii) an owner of 
more than 5% of the BUCs; or, (iv) a member of the immediate family of any of 
the foregoing persons.

	    During 1997, the Registrant paid or reimbursed AFCA or America First 
Companies L.L.C. $2,148,734 for certain costs and expenses incurred in 
connection with the operation of the Registrant.  These costs and expenses 
included legal and accounting fees and investor communication costs, such as 
printing and mailing charges, and costs incurred in connection with the 
offering of multifamily housing refunding bonds and the acquisition of real 
estate.  See Note 9 to Notes to Financial Statements filed in response to Item 
8 hereof for a description of these costs and expenses.

     Pursuant to the Limited Partnership Agreement, AFCA is entitled to an 
administrative fee from the Partnership based on the original amount of the 
mortgage bonds which were foreclosed on and the purchase price of any 
additional properties acquired by the Partnership.  The amount of such fees 
paid to AFCA 4 was $352,190 in 1997.




<PAGE>                               - 16 -
     During 1997, AFCA 4 received administrative fees of $371,220 from the 
owner of Jackson Park Place in conjunction with the Settlement Agreement 
described in Item 7.  Since these fees are not Partnership expenses, they have 
not been reflected in the accompanying financial statements.

     AFCA is entitled to receive a property acquisition fee from the 
Registrant in connection with the identification, evaluation and acquisition 
of additional properties and the financing thereof.  The Registrant paid 
acquisition fees of $325,184 to AFCA during 1997.

     The general partner of the property partnership which owned Jefferson 
Place was principally owned by an employee of America First Companies L.L.C. 
through July 30, 1997.  Such employee has a nominal interest in America First 
Companies L.L.C..  AFCA and an affiliated mortgage fund also own small 
interests in the general partner.  The general partner has a nominal interest 
in the property partnership's profits, losses and cash flow which is 
subordinate to the interest of the Registrant and the mortgage bond.  The 
general partner did not receive cash distributions from the property 
partnership in 1997.  On July 30, 1997, the Partnership acquired the general 
partnership interest in the property partnership.

     America First Properties Management Company, L.L.C.  (the "Manager") has 
been retained to provide property management services with respect to the 
day-to-day operation of Covey at Fox Valley, The Park at Fifty Eight, Shelby 
Heights, Coral Point, Jefferson Place, Avalon Ridge, Park at Countryside 
(beginning in January 1997), the Retreat (beginning in April 1997), Jackson 
Park Place (beginning in May 1997) and Park Trace Apartments (beginning in 
October 1997).  The property management agreements provide that the Manager is 
entitled to receive a management fee equal to a stated percentage of the gross 
revenues generated by the property under management.  Management fees payable 
to the Manager range from 4.5% to 5% of gross revenues.  Because the Manager 
is an affiliate of AFCA, the management fees payable by the Registrant to the 
Manager may not exceed the lesser of (i) the rates that the Registrant would 
pay an unaffiliated manager for similar services in the same geographic 
location or (ii) the Manager's actual cost for providing such services.  
During the year ended December 31, 1997, the Registrant paid the Manager 
property management fees of $617,079.

 	                                   PART IV

	    Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 
8-K.  (a) The following documents are filed as part of this report:

		          1A.	Financial Statements of the Registrant.  The following 
     financial statements of the Registrant are included in response to Item 8 
     of this report:

		           Independent Accountants' Report.

		           Balance Sheets of the Registrant as of December 31, 1997, and 
             December 31, 1996.

		           Statements of Income of the Registrant for the years ended 
             December 31, 1997, December 31, 1996, and December 31, 1995.

		           Statements of Partners' Capital of the Registrant for the years 
             ended December 31, 1997, December 31, 1996, and December 31, 1995.

		           Statements of Cash Flows of the Registrant for the years ended 
             December 31, 1997, December 31, 1996, and December 31, 1995.

		           Notes to Financial Statements of the Registrant.

		           Schedule III--Real Estate and Accumulated Depreciation for the 
             years ended December 31, 1997 and December 31, 1996.











<PAGE>                               - 17 -
           B.	Financial Statements of Sunpointe Associates Limited 
     Partnership ("Sunpointe").  The following financial statements of 
     Sunpointe are included in response to Item 8 of this report:

		           Independent Auditors' Report.

		           Balance Sheets of Sunpointe as of December 31, 1997 and December 
             31, 1996.

		           Statements of Income of Sunpointe for the years ended December 
             31, 1997, December 31, 1996 and December 31, 1995.

		           Statements of Changes in Partners' Equity (Deficit) of Sunpointe 
             for the years ended December 31, 1997, December 31, 1996 and 
             December 31, 1995.

		           Statements of Cash Flows of Sunpointe for the years ended 
             December 31, 1997, December 31, 1996 and December 31, 1995.

		           Notes to Financial Statements of Sunpointe.		

           C.	Financial Statements of Jefferson Place L.P. ("Jefferson").  
     The following financial statements of Jefferson are included in response 
     to Item 8 of this report:

		           Independent Auditors' Report.

		           Balance Sheets of Jefferson as of December 31, 1996 and 
             December 31, 1995.

		           Statements of Income of Jefferson for the years ended 
             December 31, 1996 and December 31, 1995.

		           Statements of Changes in Partners' Equity (Deficit) of 
             Jefferson for the years ended December 31, 1996 and December 
             31, 1995.

		           Statements of Cash Flows of Jefferson for the years ended 
             December 31, 1996 and December 31, 1995.

		           Notes to Financial Statements of Jefferson.

						       2.	Financial Statement Schedules.  The information required to be
    set forth in the financial statement schedule is included in the Financial
    Statements filed in response to Item 8 hereof.

		           3.	Exhibits.  The following exhibits were filed as required by 
    Item 14(c) of this report.  Exhibit numbers refer to the paragraph numbers 
    under Item 601 of Regulation S-K:

			            3.	Articles of Incorporation and Bylaws of America First 
            Fiduciary Corporation Number Eight (incorporated by reference to 
            Form S-11 Registration Statement filed May 8, 1986, with the 
            Securities and Exchange Commission by America First Tax Exempt 
            Mortgage Fund 2 Limited Partnership (Commission File No. 33-5521)).

               4(a) Form of Certificate of Beneficial Unit Certificate 
            incorporated by reference to Exhibit 4.1 to Registration Statement 
            on Form S-4 (Commission File No. 333-2920) filed by the Registrant 
            on March 29, 1996).

               4(b) Agreement of Limited Partnership of the Registrant 
            (incorporated by reference to Exhibit 4(b) to Form 8-K (Commission 
            File No. 0-20737) filed by the Registrant on August 23, 1996).

               4(c) Agreement of Merger, dated March 28, 1996, between the 
            Registrant and America First Tax Exempt Mortgage Fund 2 Limited 
            Partnership (incorporated by reference to Exhibit 4.3 to Amendment 
            No. 1 to Registration Statement on Form S-4 (Commission File No. 
            333-2920) filed by the Registrant on May 17, 1996).






<PAGE>                               - 18 -
			            10(a).	$18,755,000 Washington State Housing Finance Commission 
            Multifamily Housing Mortgage Revenue Note (Sunpointe Apartments 
            Projects) Series 1987 (incorporated herein by reference to Form 
            10-K dated December 31, 1987, filed pursuant to Section 13 or 15(d) 
            of the Securities Exchange Act of 1934 by America First Tax Exempt 
            Mortgage Fund 2 Limited Partnership (Commission File No. 0-15329)).

			            10(b).	Lender Loan Agreement and Indenture of Trust among 
            Washington State Housing Finance Commission, the Registrant and 
            FirsTier Bank, National Association, dated September 1, 1987, 
            (incorporated herein by reference to Form 10-K dated December 31, 
            1987, filed pursuant to Section 13 or 15(d) of the Securities 
            Exchange Act of 1934 by America First Tax Exempt Mortgage Fund 2 
            Limited Partnership (Commission File No. 0-15329)).

			            10(c).	Construction Loan Agreement between the Registrant and 
            Sunpointe Associates Limited Partnership, dated September 1, 1987, 
            (incorporated herein by reference to Form 10-K dated December 31, 
            1987, filed pursuant to Section 13 or 15(d) of the Securities 
            Exchange Act of 1934 by America First Tax Exempt Mortgage Fund 2 
            Limited Partnership (Commission File No. 0-15329)).

               10(d). Settlement Agreement among the Registrant and Jackson 
            Park Place, Artel Farms, Inc., and David A. Dyck dated April 11, 
            1997 (incorporated herein by reference to Form 10-Q dated June 30, 
            1997 filed pursuant to Section 13 or 15(d) of the Securities 
            Exchange Act of 1934 by America First Apartment Investors, L.P. 
            (Commission File No. 0-20737)).

               10(e). $12,410,000 Promissory Note, dated December 11, 1997, 
            from Park Trace Apartments Limited Partnership to the City of 
            Aurora, Illinois (The Covey at Fox Valley Apartment Project) 
            Series 1997.

               10(f). Loan Agreement, dated December 1, 1997, between Park 
            Trace Apartments Limited Partnership and City of Aurora, Illinois 
            (The Covey at Fox Valley Apartment Project) Series 1997.

               10(g). Indenture of Trust, dated December 1, 1997, between City 
            of Aurora, Illinois and UMB Bank, National Association (The Covey 
            at Fox Valley Apartment Project) Series 1997.

               10(h). Revolving Credit Loan Agreement, dated December 19, 
            1996, between America First Apartment Investors, L.P. and The 
            First National Bank of Boston.

			            24.	Power of Attorney.

	    (b)	The Registrant filed the following reports on Form 8-K during the 
last quarter of the period covered by this report.

     Item Reported             Financial Statements        Date of Report
                                     Filed

     2. Acquisition or                 No                  November 10, 1997
        Disposition of
        Assets


     2. Acquisition or                 No                  October 24, 1997
        Disposition of
        Assets














<PAGE>                               - 19 -
INDEPENDENT ACCOUNTANTS' REPORT

To the Partners
America First Apartment Investors L.P.:

We have audited the accompanying balance sheets of America First Apartment 
Investors L.P. (formerly America First Tax Exempt Mortgage Fund 2 Limited 
Partnership) as of December 31, 1997 and 1996, and the related statements of 
income (loss), partners' capital and cash flows for each of the three years in 
the period ended December 31, 1997.  These financial statements are the 
responsibility of the Partnership's management.  Our responsibility is to 
express an opinion on these financial statements based on our audits.  

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

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of America First Apartment 
Investors L.P. at December 31, 1997 and 1996, and the results of its 
operations and its cash flows for each of the three years in the period ended 
December 31, 1996, in conformity with generally accepted accounting principles.



Omaha, Nebraska
March 26, 1998                                    /s/Coopers & Lybrand L.L.P.





To the Partners
America First Apartment Investors L.P.:

Our report on the financial statements of America First Apartment Investors 
L.P. (formerly Tax Exempt Mortgage Fund 2 Limited Partnership) is included in 
this Form 10-K.  In connection with our audits of such financial statements, 
we have also audited the related financial statement schedule listed in Item 
14.

In our opinion, the financial statement schedule referred to above, when 
considered in relation to the basic financial statements taken as a whole, 
present fairly, in all material aspects, the information required to be 
included therein.



Omaha, Nebraska
March 26, 1998                                    /s/Coopers & Lybrand L.L.P.




















<PAGE>                              - 20 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                              Dec. 31, 1997       Dec. 31, 1996
                                                                                             --------------      --------------
<S>                                                                                          <C>                 <C>
Assets
 Cash and temporary cash investments, at cost which
  approximates market value (Note 4)                                                         $   7,879,934       $   2,021,860
 Investment in tax-exempt mortgage bonds, at estimated fair value (Note 5)                      13,006,526          31,566,526
 Investment in real estate, net of accumulated depreciation (Note 6)                            64,267,471          30,199,846
 Interest receivable                                                                               108,623             186,320
 Other assets                                                                                    1,860,968             948,849
                                                                                             --------------      --------------
                                                                                             $  87,123,522       $  64,923,401 
                                                                                             ==============      ==============
Liabilities and Partners' Capital
 Liabilities                                                                                                                   
  Accounts payable (Note 9)                                                                  $   1,861,162       $   1,454,694
  Bonds payable (Note 7)                                                                        27,035,000           2,750,000 
  Line of credit (Note 8)                                                                             -              3,584,200
  Due to Jefferson Place L.P.                                                                    2,400,000                -
  Distribution payable (Note 3)                                                                    329,051             329,051 
                                                                                             --------------      --------------
                                                                                                31,625,213           8,117,945
                                                                                             --------------      --------------
 Partners' Capital
  General Partner                                                                                    7,037               4,038
  Beneficial Unit Certificate Holders
  ($10.65 per BUC in 1997 and $10.90 in 1996)                                                   55,491,272          56,801,418
                                                                                             --------------      --------------
                                                                                                55,498,309          56,805,456 
                                                                                             --------------      --------------
                                                                                             $  87,123,522        $  64,923,401 
                                                                                             ==============      ==============

The accompanying notes are an integral part of the consolidated and combined financial statements.
</TABLE>





































<PAGE>                               - 21 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1997       Dec. 31, 1996       Dec. 31, 1995
                                                                                                 (Combined)
                                                                         --------------      --------------      --------------
<S>                                                                      <C>                 <C>                 <C>
Income
 Mortgage bond investment income (Note 5)                                $   1,611,956       $   2,107,486       $   2,234,610 
 Contingent interest (Note 5)                                                  290,520                -                   -
 Rental income                                                               9,511,041           5,763,648           5,116,073 
 Interest income on temporary cash investments                                  35,532              51,557              55,720 
                                                                         --------------      --------------      --------------
                                                                            11,449,049           7,922,691           7,406,403
                                                                         --------------      --------------      --------------
Expenses
 General and administrative expenses (Note 9)                                1,263,054           1,146,709             792,300 
 Real estate operating expenses                                              4,514,450           3,047,804           2,359,827 
 Depreciation                                                                1,897,586           1,165,059           1,197,490 
 Interest expense                                                            1,132,494             118,382                -    
 Realized loss on disposition of mortgage bond                               3,000,000                -                   -
                                                                         --------------      --------------      --------------
                                                                            11,807,584           5,477,954           4,349,617
                                                                         --------------      --------------      --------------
Net income (loss)                                                        $    (358,535)      $   2,444,737       $   3,056,786
                                                                         ==============      ==============      ==============
Net income (loss) allocated to:
 General Partner                                                         $      42,485       $      36,098       $      42,543 
 BUC Holders                                                                  (401,020)          2,408,639           3,014,243 
                                                                         --------------      --------------      --------------
                                                                         $    (358,535)      $   2,444,737       $   3,056,786
                                                                         ==============      ==============      ==============
Net income (loss), basic and diluted, per BUC                            $        (.08)      $         .46       $         .57 
                                                                         ==============      ==============      ==============
Weighted average number of BUCs outstanding                                  5,212,167           5,228,895           5,245,623
                                                                         ==============      ==============      ==============

The accompanying notes are an integral part of the consolidated and combined financial statements.
</TABLE>


































<PAGE>                               - 22 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FROM DECEMBER 31, 1994, TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                                                                  	Beneficial Unit
                                                                                 Certificate Holders
                                                           General           
                                                           Partner           # of BUCs              Amount               Total
                                                    ---------------     ---------------     ---------------     ---------------
<S>                                                 <C>                 <C>                 <C>                 <C>
Partners' Capital (excluding net unrealized
 holding losses):
Balance at December 31, 1994                        $        4,750           5,245,623      $   68,277,168      $   68,281,918
Net income                                                  42,543                -              3,014,243           3,056,786
Cash distributions paid or accrued (Note 3)
 Income                                                    (39,740)               -             (2,736,727)         (2,776,467)
 Return of capital                                            -                   -             (1,197,490)         (1,197,490)
                                                    ---------------     ---------------     ---------------     ---------------
Balance at December 31, 1995                                 7,553           5,245,623          67,357,194          67,364,747
Net income                                                  36,098                -              2,408,639           2,444,737
Cash distributions paid or accrued (Note 3)
 Income                                                    (39,613)               -             (2,756,612)         (2,796,225)
 Return of capital                                            -                   -             (1,165,059)         (1,165,059)
Purchase of units                                             -                (33,456)           (294,270)           (294,270)
                                                    ---------------     ---------------     ---------------     ---------------
Balance at December 31, 1996                                 4,038           5,212,167          65,549,892          65,553,930
Net income (loss)                                           42,485                -               (401,020)           (358,535)
Cash distributions paid or accrued (Note 3)
 Income                                                    (39,486)               -             (2,011,594)         (2,051,080)
 Return of capital                                            -                   -             (1,897,532)         (1,897,532)
Purchase of units                                             -                   -                   -                   -
                                                    ---------------     ---------------     ---------------     ---------------
Balance at December 31, 1997                                 7,037           5,212,167          61,239,746          61,246,783
                                                    ---------------     ---------------     ---------------     ---------------
Net unrealized holding losses:
Balance at December 31, 1995 and 1996                         -                   -             (8,748,474)         (8,748,474)
Net change (realized loss)                                    -                   -             (3,000,000)         (3,000,000)
                                                    ---------------     ---------------     ---------------     ---------------
                                                              -                   -             (5,748,474)         (5,748,474)
                                                    ---------------     ---------------     ---------------     ---------------
Balance at December 31, 1997                        $        7,037           5,212,167      $   55,491,272      $   55,498,309
                                                    ===============     ===============     ===============     ===============

The accompanying notes are an integral part of the consolidated and combined financial statements.
</TABLE>






























<PAGE>                               - 23 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1997       Dec. 31, 1996       Dec. 31, 1995
                                                                                                 (Combined)
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>   
Cash flows from operating activities                                                                                           
 Net income (loss)                                                      $     (358,535)     $    2,444,737      $    3,056,786
  Adjustments to reconcile net income to net cash 
   provided by operating activities
    Depreciation                                                             1,897,586           1,165,059           1,197,490 
    Amortization                                                               165,536               4,526                -
    Realized loss on disposition of mortgage bond                            3,000,000                -                   -
    Decrease (increase) in interest receivable                                  77,697              10,281              (7,435)
    Decrease (increase) in other assets                                        191,581            (492,459)            (40,080)
    Increase in accounts payable                                               406,468             771,681              27,189
                                                                        ---------------     ---------------     ---------------
 Net cash provided by operating activities                                   5,380,333           3,903,825           4,233,950 
                                                                        ---------------     ---------------     ---------------
Cash flows from investing activities
 Real estate capital improvements                                             (680,889)           (168,599)           (317,408) 
 Acquisition of real estate                                                (26,524,322)         (5,305,736)               -  
 Proceeds from disposition of mortgage bond                                 12,200,000                -                   -
                                                                        ---------------     ---------------     ---------------
 Net cash used in investing activities                                     (15,005,211)         (5,474,335)           (317,408)
                                                                        ---------------     ---------------     ---------------
Cash flows from financing activities
 Distributions paid                                                         (3,948,612)         (3,963,396)         (3,973,957) 
 Net borrowing (repayments) on line of credit                               (3,584,200)          3,584,200                -  
 Proceeds from issuance of bonds payable                                    24,365,000           2,750,000                - 
 Bond issuance and line of credit costs paid                                (1,269,236)           (396,724)               - 
 Principal payments on bonds payable                                           (80,000)               -                   -
 Purchase of units                                                                -               (294,270)               - 
                                                                        ---------------     ---------------     ---------------
 Net cash provided by (used in) financing activities                        15,482,952           1,679,810          (3,973,957)
                                                                        ---------------     ---------------     ---------------
Net increase (decrease) in cash and temporary cash investments               5,858,074             109,300             (57,415)
Cash and temporary cash investments at beginning of year                     2,021,860           1,912,560           1,969,975
                                                                        ---------------     ---------------     ---------------
Cash and temporary cash investments at end of year                      $    7,879,934      $    2,021,860      $    1,912,560
                                                                        ===============     ===============     ===============
Supplemental disclosure of cash flow information:
 Cash paid during the year for interest                                 $      898,046      $       53,133      $         - 
                                                                        ===============     ===============     ===============
Supplemental schedule of non-cash investing and financing activities:
 Settlement of mortgage bond for real estate                            $    8,760,000      $         -         $         -
 Due to Jefferson Place L.P.                                                 2,400,000                -                   -

The accompanying notes are an integral part of the consolidated and combined financial statements.
</TABLE>






















<PAGE>                               - 24 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. Organization

America First Apartment Investors, L.P. (the Partnership) was formed on March 
7, 1996, under the Delaware Revised Uniform Limited Partnership Act for the 
purpose of acquiring, holding, operating, selling or otherwise dealing with 
multifamily residential properties and other types of commercial real estate 
and interests therein.  The Partnership commenced operations on August 20, 
1996, when it merged with America First Tax Exempt Mortgage Fund 2 Limited 
Partnership (the Prior Partnership).  Under the terms of the merger agreement, 
the Partnership was the surviving partnership and effectively took over the 
operations of the Prior Partnership.  Unit holders of the Prior Partnership 
received one Beneficial Unit Certificate (BUC) of the Partnership for each BUC 
they held in the Prior Partnership as of the record date.  The Prior 
Partnership was terminated under the provisions of the Prior Partnership's 
Partnership Agreement.  The Partnership will terminate on December 31, 2016, 
unless terminated earlier under the provisions of its Partnership Agreement.  
The General Partner of the Partnership is America First Capital Associates 
Limited Partnership Four (AFCA 4).

2. Summary of Significant Accounting Policies

 A) Financial Statement Presentation
    The consolidated financial statements include the accounts of the 
    Partnership and its subsidiaries.  All significant intercompany 
    transactions and accounts have been eliminated in consolidation.

    The accompanying 1996 consolidated financial statements include the 
    combined accounts of the Partnership from August 20, 1996 (the Merger 
    Date), through December 31, 1996, and the accounts of the Prior 
    Partnership from January 1, 1996, until the Merger Date.  Financial 
    Statements for 1995 include the accounts of the Prior Partnership.

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

 B) Investment in Tax-Exempt Mortgage Bonds
    Investment securities are classified as held-to-maturity, available-
    for-sale, or trading.  Investments classified as available-for-sale are 
    reported at fair value with any unrealized gains or losses excluded from 
    earnings and reflected as a separate component of partners' capital.  
    Subsequent increases and decreases in the net unrealized gain/loss on the 
    available-for-sale securities are reflected as adjustments to the carrying 
    value of the portfolio and adjustments to the component of partners' 
    capital.  The Partnership does not have investment securities classified 
    as held-to-maturity or trading.  

    The carrying value of tax-exempt mortgage bonds is periodically reviewed 
    and adjusted when there are significant changes in the fair value of the 
    underlying collateral (see Note 2D).

    Accrual of mortgage bond investment income is excluded from income when, 
    in the opinion of management, collection of related interest is doubtful. 
    This interest is recognized as income when it is received.

 C) Investment in Real Estate
    The Partnership's investment in real estate consists of property acquired 
    through foreclosure or deed in lieu of foreclosure and other real estate 
    acquired.  Each real estate property acquired is recorded at the lower of 
    cost or estimated net realizable value.  The carrying value of each 
    property is periodically reviewed and adjusted when there are significant 
    declines in the estimated net realizable value (see Note 2D). 






<PAGE>                               - 25 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

    Depreciation of real estate is based on the estimated useful life of the 
    property (27-1/2 years on multifamily residential apartments and 31-1/2 
    years on The Exchange at Palm Bay) using the straight-line method.  
    Depreciation of real estate improvements on The Exchange at Palm Bay is 
    based on the term of the related tenant lease using the straight-line 
    method.

 D) Fair Value of Real Estate
    The fair value of the real estate (including real estate which 
    collateralizes the Partnership's remaining tax-exempt bond) is based on 
    management's best estimate of the net realizable value of the properties 
    which may differ from the ultimate values realized from these properties.  
    The net realizable value of the properties is determined based on the 
    discounted estimated future cash flows from the properties, including 
    estimated sales proceeds.  The calculation of discounted estimated future 
    cash flows includes certain variables such as the assumed inflation rates 
    for rents and expenses, capitalization rates and discount rates.  These 
    variables are supplied to the Partnership by an independent real estate 
    appraisal firm based upon local market conditions for each property.  In 
    certain cases, additional factors such as the replacement value of the 
    property or comparable sales of similar properties are also taken into 
    consideration.

 E) Income Taxes
    No provision has been made for income taxes since Beneficial Unit 
    Certificate (BUC) Holders are required to report their share of the     
    Partnership's taxable income for federal and state income tax purposes.
    The tax basis of the Partnership's assets and liabilities exceeded the 
    reported amounts by $11,240,910 and $11,746,353 at December 31, 1997, and 
    December 31, 1996, respectively.

 F) Temporary Cash Investments
    Temporary cash investments are invested in short-term debt securities 
    purchased with an original maturity of three months or less.

 G) Net Income per BUC
    Net income per BUC has been calculated based on the weighted average 
    number of BUCs outstanding during each year presented.

 H) New Accounting Pronouncement
    The Financial Accounting Standards Board has issued Financial Accounting 
    Standards No. 128 "Earnings Per Share" (FAS 128).  FAS 128, which is 
    effective for periods ending after December 15, 1997, did not 
    have an impact on the Partnership's computation, presentation or 
    disclosure of earnings per BUC as no dilutive common share equivalents 
    existed at December 31, 1997.

3. Partnership Income, Expenses and Cash Distributions

The Partnership Agreement contains provisions for the distribution of Net 
Operating Income, Net Sale Proceeds and Liquidation Proceeds and for the 
allocation of income and expenses for tax purposes among AFCA 4 and BUC 
Holders.  Income and expenses will be allocated to each BUC Holder on a 
monthly basis based on the number of BUCs held by each BUC Holder as of the 
last day of the month for which such allocation is to be made.  Distributions 
of Net Operating Income and Net Sale Proceeds will be made to each BUC Holder 
of record on the last day of each distribution period based on the number of 
BUCs held by each BUC Holder as of such date.

Net Operating Income, as defined in the Limited Partnership Agreement, in each 
distribution period will be distributed 99% to the BUC Holders and 1% to
AFCA 4.

The portion of Net Sale Proceeds, as defined in the Limited Partnership 
Agreement, will be distributed 100% to the BUC Holders.







<PAGE>                               - 26 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

Liquidation Proceeds, as defined in the Limited Partnership Agreement, 
remaining after repayment of any debts or obligations of the Partnership 
(including loans from AFCA 4) and after the establishment of any reserve AFCA 
4 deems necessary, will be distributed to AFCA 4 and BUC Holders to the extent 
of positive balances in their capital accounts.  Any remaining Liquidation 
Proceeds will be distributed in the same manner as the Net Sale Proceeds.

Cash distributions are presently made on a monthly basis but may be made 
quarterly or semiannually if AFCA 4 so elects.  Cash distributions included in 
the financial statements represent the actual cash distributions made during 
each year and the cash distributions accrued at the end of each year.

4. Partnership Reserve Account

The Partnership maintains a reserve account which totaled $6,696,981 at 
December 31, 1997. The reserve account was established to maintain working 
capital for the Partnership and is available to supplement distributions to 
investors or for any other contingencies related to the ownership of the 
mortgage bonds, real estate acquired and the operation of the Partnership, 
including the acquisition of additional properties.  

On July 10, 1996, management announced its intent to utilize a portion of the 
reserve account to purchase up to a total of 50,000 BUCs of the Partnership in 
open market transactions.  Through December 31, 1997, 33,456 BUCs had been 
acquired at a cost of $294,270 (none during 1997). 

5. Investment in Tax-Exempt Mortgage Bonds

The tax-exempt mortgage bonds consisted of three such bonds issued by various 
state and local governments, agencies or authorities to finance the 
construction and/or permanent financing of apartment projects.  During 1997, 
two of the tax-exempt mortgage bonds were repaid.  The remaining bond was 
issued to finance Avalon Ridge Apartments in Renton, Washington.  However, 
this mortgage bond does not constitute an obligation of such housing 
authority, nor is the taxing power of any state or local government pledged to 
the payment of principal or interest on the mortgage bond.  The mortgage bond 
is a nonrecourse obligation of the owner of Avalon Ridge Apartments and the 
sole source of funds to pay principal and interest on the mortgage bond is the 
net cash flow or the sale or refinancing proceeds generated by this property.  
The mortgage bond is collateralized by a first mortgage on Avalon Ridge 
Apartments and all related personal property and an assignment of rents.

Each of the mortgage bonds provided for the payment of base interest and for 
the payment of additional contingent interest out of a portion of the net cash 
flow of the properties, and out of a portion of the sale or refinancing 
proceeds from a property, subject to various priority payments.  The principal 
of the remaining mortgage bond does not amortize during the term thereof, but 
will be required to be repaid in a lump sum payment at the expiration of its 
term.  Principal and accrued interest on the remaining mortgage bond will 
become due and payable upon the sale of the financed property.  Accordingly, 
the Partnership has classified such bond as available-for-sale.  The 
Partnership may waive compliance with any of the terms of the mortgage bond.




















<PAGE>                               - 27 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

Descriptions of the tax-exempt mortgage bonds owned by the Partnership during 
1997 are as follows:

<TABLE>
<CAPTION>
                                                                                    Base                                Income
                                                        Number       Maturity   Interest             Carrying           Earned
  Property Name                     Location          of Units   	       Date       Rate(1)            Amount          in 1997
  -----------------------------     ---------------   --------   -------------   --------    -----------------     ------------
  <S>                               <C>               <C>        <C>             <C>         <C>                   <C>
  Performing:
   Jackson Park Place               Fresno, CA           296          09/01/11      8.5%     $           -   (3)   $   248,700
                                                                                             -----------------     ------------
  Nonperforming:(2)
   Jefferson Place                  Olathe, KS           352          12/01/10      8.5%                 -   (4)       525,073
   Avalon Ridge                     Renton, WA           356          09/01/11      8.5%           18,755,000          838,183
                                                                                             -----------------     ------------
                                                                                                   18,755,000        1,363,256
                                                                                             -----------------     ------------
                                                                                                                   $ 1,611,956
  Unrealized holding losses                                                                        (5,748,474)     ============
                                                                                             -----------------
  Balance at December 31, 1997 (at estimated fair value)                                     $     13,006,526
                                                                                             =================

</TABLE>
<TABLE>
<CAPTION>
 									                                                                    For the		           For the		           For the
									                                                                  Year Ended	        	Year Ended	        	Year Ended
									                                                               Dec. 31, 1997		     Dec. 31, 1996		     Dec. 31, 1995
													                                                          ---------------     ---------------     ---------------
<S>                                                                    <C>                 <C>                 <C>  
Reconciliation of the carrying amounts of the
 mortgage bonds is as follows:
 	Balance at beginning of year						                                   $   40,315,000      $   40,315,000 	    $  	40,315,000 
   Settlement of mortgage bond for real estate (3)                         (8,760,000)               -                   - 
   Disposition of mortgage bond (4)                                       (12,800,000)               -                   -
                                                                       ---------------     ---------------     ---------------
  Balance at end of year                                                   18,755,000          40,315,000          40,315,000
                                                                       ===============     ===============     ===============
The following summarizes the activity in the
 unrealized holding losses:													 
  Balance at beginning of year							                                  $    8,748,474      $    8,748,474 	    $    8,748,474 
   Change in unrealized holding losses (realized loss)                     (3,000,000)                -               - 
                                                                       ---------------     ---------------     ---------------
  Balance at end of year                                               $    5,748,474      $    8,748,474      $    8,748,474
                                                                       ===============     ===============     ===============

</TABLE>

(1) In addition to the base interest rate shown, the bonds bear additional 
    contingent interest as defined in each revenue note which, when combined 
    with the interest shown, is limited to a cumulative, noncompounded amount 
    not greater than 13% per annum.  The Partnership received contingent 
    interest of $290,520 in 1997 (See (3)).  The Partnership did not receive 
    any additional contingent interest in 1996 or 1995.

(2) Nonperforming bonds are bonds which are not fully current as to interest 
    payments.  The amount of foregone interest on nonperforming bonds was 
    $865,586 for 1997, $1,319,289 for 1996 and $1,192,165 for 1995.











<PAGE>                               - 28 -
(3) In accordance with the terms of the Loan Agreement underlying the 
    $8,670,00 in tax-exempt mortgage bonds collateralized by Jackson Park 
    Place (Jackson), the Partnership exercised its option to require the owner 
    of Jackson to prepay the tax-exempt mortgage bonds.  The Partnership 
    entered into a Settlement Agreement with the owner of Jackson that 
    provided for the Partnership to acquire Jackson at appraised value on May 
    7, 1997.  In accordance with the terms of the Loan Agreement, the 
    following disbursements were made:  (i) $2,100,000 to America First 
    Participating/Preferred Equity Mortgage Fund (PREP), an affiliated fund, 
    representing payment of the outstanding balance of its Participating Loan 
    on Jackson; (ii) $69,480 to PREP representing contingent interest income 
    on its Participating Loan; (iii) $371,220 to AFCA 4 and $88,780 to the 
    general partner of PREP representing due and unpaid administrative fees; 
    (iv) $290,520 to the Partnership representing contingent interest income 
    on the tax-exempt mortgage bonds; and (v) $360,000 to the owner of 
    Jackson.  These disbursements were funded with borrowings on the 
    Partnership's Line of Credit.  The Partnership also incurred costs of 
    $18,096 in conjunction with the acquisition.

(4) On July 30, 1997, the limited partnership which owns Jefferson Place 
    (Jefferson L.P.) received proceeds of $12,200,000 from the offering of 
    multifamily housing revenue refunding bonds collateralized by Jefferson 
    Place and The Retreat.  The Partnership, in turn, received $12,200,000 
    from Jefferson Place L.P. representing full payment of its $12,800,000 in 
    tax-exempt mortgage bonds on Jefferson Place.  As a result, the 
    Partnership realized a loss of $3,000,000.  Concurrently, the unrealized 
    holding losses related to the investment in tax-exempt mortgage bonds, 
    which is a separate component of partners' capital, was reduced by 
    $3,000,000.  In addition to receiving $12,200,000 in cash which resulted 
    in a liability to Jefferson Place L.P. of $2,400,000, the Partnership also 
    received a $3,500,000 subordinate note representing past due interest on 
    the $12,800,000 tax-exempt mortgage bonds.  The Partnership did not record 
    this past due interest as management considered its collectability to be 
    doubtful.  Interest on the subordinate note, at the rate of 8.5%, is 
    payable monthly solely out of excess cash flow generated by Jefferson 
    Place.  Final payment of all outstanding principal and interest is due 
    July 1, 2023.  All payments due under the $3,500,000 note are subordinate 
    to payments due under the $12,200,000 in tax-exempt mortgage bonds.  The 
    Partnership has not recorded the subordinate note on its balance sheet due 
    to its doubtful collectability.  Any interest and principal payments 
    received under the terms of the subordinate note will be recorded as 
    income when received.

Unaudited combined condensed financial information of the properties 
collateralizing the Partnership's investment in tax-exempt mortgage bonds is 
as follows:
<TABLE>
<CAPTION>
                                                                        Dec. 31, 1997       Dec. 31, 1996
                                                                       ---------------     ---------------
<S>                                                                    <C>                 <C>
Assets
  Real estate                                                          $   11,637,996      $   25,235,016
  Restricted deposits and funded reserves                                     106,977             319,314
  Other assets                                                                166,531             319,593
                                                                       ---------------     ---------------
                                                                           11,911,504      $   25,873,923
                                                                       ===============     ===============
Liabilities and Partners' Capital
  Liabilities
    Mortgage and notes payable                                         $   20,000,000      $   43,660,000 
    Accrued interest payable                                                6,484,223          11,407,628
    Other liabilities                                                       1,258,536           2,673,311
  Partners' Capital (Deficit)                                             (15,831,255)        (31,867,016) 
                                                                       ---------------     ---------------
                                                                           11,911,504      $   25,873,923 
                                                                       ===============     ===============

Rental income                                                          $    3,934,455      $    5,575,983 
                                                                       ===============     ===============
Net loss                                                               $     (945,757)     $   (3,274,784) 
                                                                       ===============     ===============
</TABLE>



<PAGE>                               - 29 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

6. Investment in Real Estate

During 1997, the Partnership acquired three multifamily properties, The 
Retreat, Jackson Park Place and Park Trace Apartments.  Interim financing for 
The Retreat and Park Trace Apartments was primarily provided from proceeds 
from the Partnership's line of credit and subsequently permanently financed 
through the reissuance of tax-exempt refunding bonds (see Note 7).  Jackson 
Park Place was conveyed to the Partnership through a deed in lieu of 
foreclosure (see Note 5).

The Partnership's investment in real estate is comprised of the following:
<TABLE>
<CAPTION>
                                                                                    Building         Carrying         Carrying
                                                     Number                              and         Value at         Value at
  Property Name                 Location            of Units  	        Land     Improvements    Dec. 31, 1997    Dec. 31, 1996
  --------------------------    -----------------   --------    ------------   --------------   --------------   --------------
  <S>                           <C>                 <C>         <C>            <C>              <C>              <C>
  Covey at Fox Valley(1)        Aurora, IL             216      $ 1,320,000    $  10,028,338    $  11,348,338    $  11,348,338
  The Exchange at Palm Bay      Palm Bay, FL        72,002(2)     1,296,002        3,989,949        5,285,951        4,605,062
  The Park at Fifty Eight(1),(3)Chattanooga, TN        196          231,113        4,122,226        4,353,339        4,353,339
  Shelby Heights(1)             Bristol, TN            100          175,000        2,952,847        3,127,847        3,127,847
  Coral Point(1)                Mesa, AZ               336        2,240,000        8,960,000       11,200,000       11,200,000
  Park at Countryside(1)        Port Orange, FL        120          647,000        2,616,648        3,263,648        3,245,454 
  The Retreat (4)               Atlanta, GA            226        1,800,000        7,315,697        9,115,697             -
  Jackson Park Place            Fresno, CA             296        1,400,000       10,712,415       12,112,415             -
  Park Trace Apartments (1)     Norcross, GA           260        2,246,000       11,792,016       14,038,016             -
                                                                                               --------------    --------------
                                                                                                  73,845,251        37,880,040
  Less accumulated depreciation                                                                   (9,577,780)       (7,680,194)
                                                                                               --------------    --------------
  Balance at end of year                                                                       $  64,267,471     $  30,199,846
                                                                                               ==============    ==============
</TABLE>
(1) Property is encumbered as described in Note 7.
(2) Represents square feet.
(3) Property consists of Phase II (96 units acquired through foreclosure) and 
    Phase I (100 units purchased on May 16, 1996).
(4) Property serves as collateral for $12,200,000 of multifamily revenue 
    refunding bonds issued on Jefferson Place as described in Note 5.

<TABLE>
<CAPTION>
                                                              									      For the             For the             For the
                                                              									   Year Ended          Year Ended          Year Ended
                                                              									Dec. 31, 1997       Dec. 31, 1996       Dec. 31, 1995
	                                                                     ---------------     ---------------     ---------------
<S>                                                                   <C>                 <C>                 <C>
Reconciliation of the carrying values of the
 real estate held is as follows:
  Balance at beginning of year	                      			              $   30,199,846      $   29,390,570      $   30,270,652
   Capital improvements		                                            		      680,889             168,599             317,408
   Acquisition of real estate                                             26,524,322           5,305,736                - 
   Settlement of mortgage bond for real estate                             8,760,000                -                   -
   Depreciation								                                                   (1,897,586)         (1,165,059)	        (1,197,490)
   Write-down of impaired real estate                                           -             (3,500,000)               - 
                                                         								     ---------------     ---------------     ---------------
  Balance at end of year					                                         $   64,267,471      $   30,199,846      $   29,390,570 
                                                        								      ===============     ===============     ===============
The following summarizes the activity in the
 valuation allowance:
   Balance at beginning of year		        					                        $         -         $    3,500,000      $	   3,500,000 
   Write-down of impaired real estate                                           -             (3,500,000)               -
                                                                      ----------------    ----------------    ---------------
  Balance at end of year                                              $         -         $         -         $    3,500,000 
                                                                      ================    ================    ===============
</TABLE>





<PAGE>                               - 30 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

7.  Bonds Payable

Bonds payable were originated by the Partnership through the issuance of 
tax-exempt refunding bonds.  Bonds payable at December 31, 1997, consists of 
the following:

<TABLE>
<CAPTION>

                        Effective Final     
                        Interest  Maturity                                      Annual            	         	Carrying
Collateral              Rate      Date      Payment Schedule                    Payments    		      				       Amount	
----------------------- --------- --------  ----------------------------------- ---------------------   -------------
<S>                     <C>       <C>       <C>                                 <C>                     <C>
The Park at Fifty Eight   6.65%   3/1/2021  semiannual payments of              range from $224,000     $  2,670,000
 					    																																		principal and/or interest           to $228,000
                                            are due each March 1 and September 1

Shelby Heights and	       6.10%   3/1/2022  semiannual payments of              range from $266,000        3,450,000      
 Park at Countryside                        principal and/or interest           to $276,000
                                            are due each March 1 and September 1																								

Covey at Fox Valley       5.30%  11/1/2007  semiannual payments of              $586,000 in 1998,         12,410,000
 and Park Trace Apartments                  interest are due each May 1         $658,000 thereafter
                                            and November 1

Jackson Park Place        5.80%  12/1/2027  monthly payment of                  $611,901                   8,505,000
                                            principal and interest                                    
                                            are due the 1st of each month
                                                                                                        -------------
Balance at December 31, 1997				 																																														 			                     $ 27,035,000
																																																																																																								=============
</TABLE>

Principal maturities on the bonds payable are as follows:

               Year              Amount
         ----------------    ----------------  
               1998          $       228,402
               1999                  234,859
               2000                  251,701
               2001                  268,950
               2002                  281,631
             Thereafter           25,769,457
                             ----------------
                             $    27,035,000
                             ================

8.  Line of Credit

The Partnership has a $15 million revolving loan credit agreement (the Line of 
Credit) with The First National Bank of Boston (the Bank).  The Line of Credit 
provides interim financing for the acquisition of multifamily residential 
properties.  It expires on December 19, 1998.  The Line of Credit bears 
interest, which is payable monthly, at 1/2% above the Bank's base rate (which 
base rate was 9% as of December 31, 1997).  In addition, the Partnership pays 
a facility fee of 1/4 of 1% on the unused portion of the line which is payable 
quarterly in arrears.  The Line of Credit is collateralized by Coral Point; 
however, the Partnership may substitute other real estate owned as collateral, 
subject to the approval of the Bank.  The maximum amount available for 
borrowings under the Line of Credit was $10,290,000 at December 31, 1997. The 
Partnership did not have any borrowings against the Line of Credit at December 
31, 1997.  The Line of Credit contains convenants which include, among others, 
restrictions on the amount of indebtedness the Partnership may incur and 
minimum debt service coverage requirements.







<PAGE>                               - 31 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

9. Transactions with Related Parties

Substantially all of the Partnership's general and administrative expenses and 
certain costs capitalized by the Partnership are paid by AFCA 4 or an 
affiliate and reimbursed by the Partnership.  The capitalized costs were 
incurred in connection with the offering of multifamily housing revenue 
refunding bonds and the acquisition of real estate.  The amount of such 
expenses reimbursed to AFCA 4 or an affiliate are shown below.  The reimbursed 
expenses are presented on a cash basis and do not reflect accruals made at the 
end of each year.  

<TABLE>
<CAPTION>
									                                              1997	               1996		              1995
                                            ---------------     ---------------     ---------------
<S>                                         <C>                 <C>                 <C>
Costs capitalized by the Partnership        $      735,971      $       199,060     $          -
Interest on line of credit                         621,148                 -                   -
Reimbursable salaries and benefits							          528,916              482,635             370,211
Professional fees and expenses								              71,722               56,325              40,360 
Other expenses								                              51,324               33,564 		           27,088
Investor services and custodial fees								        36,488               60,199 	            51,664 
Registration fees							                            32,296               24,466     		       18,037
Report preparation and distribution			              22,431               16,017     		       16,854 
Insurance								                                   22,133               23,030     		       19,136
Consulting and travel expenses					                 16,008                9,970     		        3,936
Telephone								                                   10,297                8,363 		            8,729
Restructuring costs                                   -                 186,385                -                 
Stock certificates                                    -                   1,952                - 							
                                            ---------------     ---------------     ---------------
								                                    $    2,148,734      $     1,101,966     $       556,015
                                            ===============     ===============     ===============
</TABLE>

Pursuant to the Limited Partnership Agreement, AFCA 4 is entitled to an 
administrative fee from the Partnership based on the original amount of the 
mortgage bonds which were foreclosed on and the purchase price of any 
additional properties acquired by the Partnership.  The amount of such fees 
paid to AFCA 4 was $352,190 in 1997, $226,200 in 1996, and $226,200 in 1995.  
During 1997, AFCA 4 received administrative fees of $371,220 from the owner of 
Jackson Park Place in conjunction with the Settlement Agreement.

AFCA 4 did not receive any administrative fees from property owners in 1997.  
AFCA 4 received from property owners administrative fees of $26,280 in 1996 
and $8,066 in 1995.  Since these fees are not Partnership expenses, they have 
not been reflected in the accompanying financial statements.  

Pursuant to the terms of the Limited Partnership Agreement, AFCA 4 is entitled 
to receive a property acquisition fee from the Partnership in connection with 
the identification, evaluation and acquisition of additional properties and 
the financing thereof.  The Partnership paid acquisition fees of $325,184 and 
$39,863 to AFCA 4 during 1997 and 1996, respectively.  No such fees were paid 
to AFCA 4 during 1995.

The general partner of the property partnership which owned Jefferson Place 
was principally owned by an employee of an affiliate of AFCA 4 through July 
30, 1997.  Such employee has a nominal interest in the affiliate.  AFCA 4 and 
an affiliated mortgage fund also own small interests in the general partner.  
The general partner has a nominal interest in the property partnership's 
profits, losses and cash flow which is subordinate to the interest of the 
Partnership and the mortgage bond.  The general partner did not receive cash 
distributions from the partnership in 1997, 1996, or 1995.  On July 30, 1997, 
the Partnership acquired the general partnership interest in the property 
partnership.








<PAGE>                               - 32 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

An affiliate of AFCA 4 was retained to provide property management services 
for Covey at Fox Valley, The Park at Fifty Eight, Shelby Heights, Coral Point, 
Jefferson Place, Avalon Ridge, Park at Countryside (beginning in January 
1997), the Retreat (beginning in April 1997), Jackson Park Place (beginning in 
May 1997) and Park Trace Apartments (beginning October 1997).  The fees for 
services provided represent the lower of (i) costs incurred in providing 
management of the property, or (ii) customary fees for such services 
determined on a competitive basis and amounted to $611,079 in 1997, $431,730 
in 1996, and $382,143 in 1995.

10. Fair Value of Financial Instruments

The following methods and assumptions were used by the Partnership in 
estimating the fair value of its financial instruments:

  Cash and temporary cash investments:  Fair value approximates the carrying 
  value of such assets.

  Investment in tax-exempt mortgage bonds:  Fair value is based on 
  management's best estimate of the net realizable value of the underlying 
  collateral of the bonds.  See Note 2D.

  Bonds payable:  Fair value is based on estimated future cash flows 
  discounted using the quoted market rate, from an independent source, of 
  similar obligations.

  Line of Credit:  Given the short-term nature of the Line of Credit as well 
  as its variable rate of interest, fair value approximates carrying value.

<TABLE>
<CAPTION>
                                                  At December 31, 1997                    At December 31, 1996
                                          -----------------------------------     -----------------------------------
                                                Carrying           Estimated            Carrying           Estimated
                                                  Amount          Fair Value              Amount          Fair Value
                                          ---------------     ---------------     ---------------     ---------------
<S>                                       <C>                 <C>                 <C>                 <C>
Cash and temporary cash investments       $    7,879,934      $    7,879,934      $    2,021,860      $    2,021,860
Investment in tax-exempt mortgage bonds       13,006,526          13,006,526          31,566,526          31,566,526 
Bonds payable                                 27,035,000          27,737,000           2,750,000           2,812,869 
Line of Credit                                      -                   -              3,584,200           3,584,200  
</TABLE>

11.	Summary of Unaudited Quarterly Results of Operations												
<TABLE>
<CAPTION>													
							                                                     First		            Second		             Third		            Fourth
From January 1, 1997 to December 31, 1997		           				Quarter	           	Quarter		           Quarter		           Quarter
													                                      ---------------     ---------------     ---------------     ---------------
<S>                                                <C>                 <C>                 <C>                 <C>
Total income					                                  $   	2,331,310    	 $    3,066,182    	 $   	2,891,992    	 $    3,159,565
Total expenses		                                   				(1,434,255)	        (2,267,619)	       	(5,425,977)(1)      (2,679,733)
													                                      ---------------     ---------------     ---------------     ---------------
Net income	(loss)                                  $      897,055  	   $      798,563    	 $   (2,533,985)   	 $     	479,832
													                                      ===============     ===============     ===============     ===============
Net income (loss), basic and diluted, per BUC	     $          .17    	 $         	.15    	 $ 	       (.49)   	 $       	  .09
													                                      ===============     ===============     ===============     ===============
Market Price per BUC
 High sale						                                            9-1/2 		            9-3/8 		            9-7/8 		           10-1/2 
 Low sale						                                             8-5/8   		          8-3/4 		            8-7/8             		9-3/8
													                                      ===============     ===============     ===============     ===============
</TABLE>
(1) During the third quarter of 1997, the Partnership realized a loss of 
    $3,000,000 on the disposition of its tax-exempt mortgage bond on Jefferson 
    Place.







<PAGE>                               - 33 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997

<TABLE>
<CAPTION>	
							                                                     First		            Second		             Third		            Fourth
From January 1, 1996 to December 31, 1996		           				Quarter	           	Quarter		           Quarter		           Quarter
													                                      ---------------     ---------------     ---------------     ---------------
<S>                                                <C>                 <C>                 <C>                 <C>
Total income					                                  $   	1,903,369    	 $    1,957,324    	 $   	1,978,146    	 $    2,083,852
Total expenses		                                   				(1,254,579)	        (1,362,323)	       	(1,463,702)		       (1,397,350)
													                                      ---------------     ---------------     ---------------     ---------------
Net income					                                    $      648,790  	   $      595,001    	 $      514,444    	 $     	686,502
													                                      ===============     ===============     ===============     ===============
Net income per BUC					                            $          .12    	 $         	.11    	 $ 	        .10    	 $       	  .13
													                                      ===============     ===============     ===============     ===============
Market Price per BUC(1)
 High sale						                                            9-3/4 		            9-3/4 		            9-1/2 		            9-3/8 
 Low sale						                                             8-1/2   		          8-3/4 		            7-3/4             		8-3/8
										                                         ===============     ===============     ===============     ===============
</TABLE>

(1) The market price per share information includes that of America First 
    Apartment Investors L.P. from August 20, 1996 (the Merger Date), through 
    December 31, 1997, and America First Tax Exempt Fund 2 Limited Partnership 
    for periods prior to the Merger Date.

The BUCs are quoted on the NASDAQ Stock Market under the symbol APROZ.  Prior 
to the Merger Date, the BUCs were quoted under the symbol ATAXZ.  The high and 
low quarterly prices of the BUCs shown represent the final sales prices and 
were compiled from the Monthly Statistical Reports provided to the Partnership 
by the National Association of Securities Dealers, Inc.

12.	Unaudited Pro Forma Statements of Operations

The unaudited pro forma statements of operations are presented as if the 
acquisitions of Park Trace Apartments, Jackson Park Place, and The Retreat had 
occurred at the beginning of the year preceding the acquisition.  The 
unaudited pro forma statements of operations are not necessarily indicative of 
what the actual results of operations would have been had transactions been 
consummated as of the beginning of each period presented.

<TABLE>	
<CAPTION>
                                                                  1997                                    1996
                                                   -----------------------------------     -----------------------------------
                                          	          		Historical	          Pro Forma		        Historical		         Pro Forma
													                                      ---------------     ---------------     ---------------     ---------------
<S>                                                <C>                 <C>                 <C>                 <C>
Income	      				                                  $   11,449,049    	 $   13,678,754    	 $   	7,922,691    	 $   12,579,266
Expenses		                                         			 11,807,584 	        14,668,475 	       	 5,477,954 		       10,711,184
													                                      ---------------     ---------------     ---------------     ---------------
Net income	(loss)                                  $     (358,535) 	   $     (989,721)   	 $    2,444,737    	 $    1,868,082
													                                      ===============     ===============     ===============     ===============
Net income (loss), basic and diluted, per BUC	     $         (.08)   	 $         (.20)   	 $ 	        .46    	 $       	  .35
													                                      ===============     ===============     ===============     ===============
</TABLE>


















<PAGE>                               - 34 -
Schedule III

AMERICA FIRST APARTMENT INVESTORS, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996

<TABLE>
<CAPTION>
								                                                                                              Costs Capitalized
					                                                                        Initial Cost			              Subsequent
                            Description			 	                                to Partnership			           to Acquisition
---------------------------------------------------------------------  -------------------------   ------------------------
                                                                                		 				Building	      Building
						                                                                                   and	           and		         Carrying
Property	                 Location	         # of Units	  Encumbrances	       Land	 	 Improvements	  Improvements	 	      Costs
------------------------  ---------------  ------------  ------------  -----------   ------------   ------------   ------------
<S>                       <C>              <C>           <C>           <C>           <C>            <C>            <C>
Covey at Fox Valley	      Aurora, IL	         216 	           (a)	     $1,320,000  	 $11,090,000 	  $      -       $      -
The Exchange at Palm Bay	 Palm Bay, FL	    72,002 sq ft       (b)	      1,296,002(d)   4,349,682 	      825,830 	 	       -
The Park at Fifty Eight   Chattanooga, TN	    196 	           (c)	        231,113(e)	  2,553,474 	    1,818,485           -
Shelby Heights	           Bristol, TN	        100 	           (b)	        175,000  		  3,275,000 	         -         	    -
Coral Point	              Mesa, AZ	           336 	           (a)	      2,240,000  		  8,960,000 	         -             	-
Park at Countryside       Port Orange, FL     120             (b)         647,000      2,598,454           -              -
                                                                        -----------   ------------   ------------   ------------
				                                                                    $5,909,115    $32,826,610	   $ 2,644,315		  $     -
																                                                        ===========   ============   ============   ============
</TABLE>
<TABLE>
<CAPTION>
                               Gross Amount at December 31, 1996
                           -----------------------------------------
                                           Building		                  Accumulated			                                  Which
						                                       and	             Total	  Depreciation	        Date of	      Date   Depreciation
Property	                        Land	   Improvements	      (f),(g)	           (h)	   Construction	  Acquired	   is Computed
------------------------   -----------   ------------   ------------   ------------   ------------   --------   ------------
<S>                        <C>           <C>            <C>            <C>            <C>            <C>        <C>
Covey at Fox Valley	       $1,320,000  	 $10,028,338 	  $11,348,338 	  $ 3,174,388  	      1989	       1989	     27.5 years
The Exchange at Palm Bay	   1,296,002  	   3,309,060 	    4,605,062 	    1,540,765  	      1988	       1990(d)   31.5 years
The Park at Fifty Eight	      231,113  	   4,122,226 	    4,353,339 	      566,028  	      1987	       1991(e)   27.5 years
Shelby Heights	               175,000  	   2,952,847 	    3,127,847 	      645,930  	      1987	       1991	     27.5 years
Coral Point	                2,240,000  	   8,960,000 	   11,200,000 	    1,753,083  	      1987	       1991	     27.5 years
Park at Countryside           647,000      2,598,454      3,245,454           -            1983        1996      27.5 years
                           -----------   ------------   ------------   ------------
				                       $5,909,115	   $31,970,925	   $37,880,040	   $ 7,680,194
																           ===========   ============   ============   ============
</TABLE>

(a) The encumbrance represents the borrowing on a line of credit with The 
    First National Bank of Boston which is collateralized by these 
    properties.  The line of credit bears interest at 1/2% above of The First 
    National Bank of Boston's Base Rate (8.75% at December 31, 1996) and 
    expires on December 19, 1997.
(b) The Partnership has no encumbrances against these properties.	
(c) The encumbrance represents bonds payable originated by the Partnership 
    through the issuance of tax-exempt refunding bonds of $2,750,000 
    collateralized by this property.  The bonds bear interest at an effective 
    rate of 6.65%.  The final payment of principal is due on March 1, 2021.
(d) Land with a cost of $1,150,318 and $145,684 was acquired in 1990 and 1996, 
    respectively.
(e) Land with a cost of $135,000 and $96,113 was acquired in 1991 and 1996, 
    respectively.















<PAGE>                              - 35 -
(f) Reconciliation of Real Estate:															

<TABLE>
<CAPTION>
                                      	     	        		1996
                                             ---------------
<S>                                          <C>
Balance - beginning of year			               $   35,905,705
Acquisitions			                                   5,305,736
Improvements			                                     168,599
Write-down of impaired real estate(1)            (3,500,000)
                                             ---------------
Balance - end of year			                     $   37,880,040
									                                    ===============
</TABLE>

(1) On January 1, 1996, the Partnership adopted Statement of Financial 
    Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived 
    Assets and for Long-Lived Assets to be Disposed of" (FAS 121).  As a 
    result of adopting FAS 121, the Partnership wrote down the carrying value 
    of each impaired property to estimated net realizable value thus 
    eliminating the valuation allowance on real estate acquired.

(g) As of December 31, 1996, the aggregate cost of the Partnership's 
    investment in real estate for federal income tax purposes amounted to 
    $34,071,705.
(h)	Reconciliation of Accumulated Depreciation:								

<TABLE>
<CAPTION>
				                                         1996
                                   ---------------
<S>                                <C>
Balance - beginning of year			     $    6,515,135
Depreciation expense			                 1,165,059
                                   ---------------
Balance - end of year			           $    7,680,194
                                   ===============
</TABLE>





































<PAGE>                             -  36 -
Schedule III

AMERICA FIRST APARTMENT INVESTORS, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997

<TABLE>
<CAPTION>
								                                                                                              Costs Capitalized
					                                                                         Initial Cost			              Subsequent
                            Description			 	                                 to Partnership			           to Acquisition
---------------------------------------------------------------------  --------------------------   ------------------------
                                                                                 		 				Building	      Building
						                                                                                    and	           and		         Carrying
Property	                 Location	         # of Units	  Encumbrances	        Land	 	 Improvements	  Improvements	 	      Costs
------------------------  ---------------  ------------  ------------  ------------   ------------   ------------   ------------
<S>                       <C>              <C>           <C>           <C>           <C>            <C>            <C>
Covey at Fox Valley	      Aurora, IL	         216 	           (c)	     $ 1,320,000  	 $11,090,000 	  $      -       $      -
The Exchange at Palm Bay	 Palm Bay, FL	    72,002 sq ft       (b)	       1,296,002(d)   4,349,682 	    1,506,719 	 	       -
The Park at Fifty Eight   Chattanooga, TN	    196 	           (c)	         231,113(e)	  2,553,474 	    1,818,485           -
Shelby Heights	           Bristol, TN	        100 	           (c)	         175,000  		  3,275,000 	         -         	    -
Coral Point	              Mesa, AZ	           336 	           (a)	       2,240,000  		  8,960,000 	         -             	-
Park at Countryside       Port Orange, FL     120             (c)          647,000      2,598,454         18,194           -
The Retreat               Atlanta, GA         226             (f)        1,800,000      7,315,697           -              -
Jackson Park Place        Fresno, CA          296             (c)        1,400,000     10,712,415           -              -
Park Trace Apartments     Norcross, GA        260             (c)        2,246,000     11,792,016           -              -
                                                                       ------------   ------------   ------------   ------------
				                                                                   $11,355,115    $62,646,738    $ 3,343,398		  $     -
																                                                       ============   ============   ============   ============
</TABLE>
<TABLE>
<CAPTION>
                               Gross Amount at December 31, 1997
                           ------------------------------------------
                                            Building		                  Accumulated			                                  Which
						                                        and	             Total	  Depreciation	        Date of	      Date   Depreciation
Property	                         Land	   Improvements	      (f),(g)	           (h)	   Construction	  Acquired	   is Computed
------------------------   ------------   ------------   ------------   ------------   ------------   --------   ------------
<S>                        <C>           <C>            <C>            <C>            <C>            <C>        <C>
Covey at Fox Valley	       $ 1,320,000  	 $10,028,338 	  $11,348,338 	  $ 3,525,872  	      1989	       1989	     27.5 years
The Exchange at Palm Bay	    1,296,002  	   3,989,949 	    5,285,951 	    1,868,339  	      1988	       1990(d)   31.5 years
The Park at Fifty Eight	       231,113  	   4,122,226 	    4,353,339 	      729,218  	      1987	       1991(e)   27.5 years
Shelby Heights	                175,000  	   2,952,847 	    3,127,847 	      750,989  	      1987	       1991	     27.5 years
Coral Point	                 2,240,000  	   8,960,000 	   11,200,000 	    2,078,901  	      1987	       1991	     27.5 years
Park at Countryside            647,000      2,616,648      3,263,648         95,117         1983        1996      27.5 years
The Retreat                  1,800,000      7,315,697      9,115,697        199,507                     1997      27.5 years
Jackson Park Place           1,400,000     10,712,415     12,112,415        258,369                     1997      27.5 years
Park Trace Apartments        2,246,000     11,792,016     14,038,016         71,468                     1997      27.5 years
                           ------------   ------------   ------------   ------------
				                       $11,355,115	   $62,490,136	   $73,845,251	   $ 9,577,780
																           ============   ============   ============   ============
</TABLE>

(a) The encumbrance represents the borrowing on a line of credit with The 
    First National Bank of Boston which is collateralized by this 
    property.  The line of credit bears interest at 1/2% above of The First 
    National Bank of Boston's Base Rate (which base rate was 9% at December 
    31, 1997) and expires on December 19, 1998.
(b) The Partnership has no encumbrances against these properties.	
(c) The encumbrance represents bonds payable originated by the Partnership 
    through the issuance of tax-exempt refunding bonds of totaling $27,035,000 
    at December 31, 1997.  (See Note 7 to the accompanying Financial 
    Statements).
(d) Land with a cost of $1,150,318 and $145,684 was acquired in 1990 and 1996, 
    respectively.
(e) Land with a cost of $135,000 and $96,113 was acquired in 1991 and 1996, 
    respectively.
(f) The encumbrance represents $12,200,000 of multifamily revenue refunding 
    bonds issued on Jefferson Place.  (See Note 5 to the accompanying 
    Financial Statements).






<PAGE>                              - 37 -
(f) Reconciliation of Real Estate:															

<TABLE>
<CAPTION>
                                      	     	        		1997
                                             ---------------
<S>                                          <C>
Balance - beginning of year			               $   37,880,040
Acquisitions			                                  35,284,322
Improvements			                                     680,889
                                             ---------------
Balance - end of year			                     $   73,845,251
									                                    ===============
</TABLE>

(g) As of December 31, 1996, the aggregate cost of the Partnership's 
    investment in real estate for federal income tax purposes amounted to 
    $68,233,888.
(h)	Reconciliation of Accumulated Depreciation:								

<TABLE>
<CAPTION>
				                                         1997
                                   ---------------
<S>                                <C>
Balance - beginning of year			     $    7,680,194
Depreciation expense			                 1,897,586
                                   ---------------
Balance - end of year			           $    9,577,780
                                   ===============
</TABLE>













































<PAGE>                              - 38 -




































                   SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
                     (A Washington Limited Partnership)

                            FINANCIAL STATEMENTS

                  DECEMBER 31, 1997 AND 1996 AND FOR THE YEARS
                     ENDED DECEMBER 31, 1997, 1996 AND 1995


































                             TABLE  OF  CONTENTS



                                                                       PAGE

REPORT OF CERTIFIED PUBLIC ACCOUNTANTS ON
	THE FINANCIAL STATEMENTS		                                              1

FINANCIAL STATEMENTS

		BALANCE SHEETS		                                                       2

		STATEMENTS OF INCOME		                                                 3

		STATEMENTS OF CHANGES IN PARTNERS'(DEFICIT)                            4

		STATEMENTS OF CASH FLOWS		                                             5

NOTES TO FINANCIAL STATEMENTS		                                        6-8























































 

To the Partners
Sunpointe Associates Limited Partnership
Omaha, Nebraska


INDEPENDENT AUDITORS' REPORT

We have audited the accompanying balance sheets of Sunpointe Associates 
Limited Partnership, (a Washington Limited Partnership) (the "Partnership"), 
as of December 31, 1997 and 1996, and the related statements of income, 
changes in partners' deficit and cash flows for the years ended December 31, 
1997, 1996 and 1995.  These financial statements are the responsibility of the 
Partnership's management.  Our responsibility is to express an opinion on 
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Sunpointe Associates Limited 
Partnership as of December 31, 1997 and 1996, and the results of its 
operations, changes in partners' deficit and cash flows for the years ended 
December 31, 1997, 1996 and 1995, in conformity with generally accepted 
accounting principles.

The accompanying financial statements have been prepared assuming that the 
Partnership will continue as a going concern.  As discussed in Note 9 to the 
financial statements, the Partnership has experienced recurring losses from 
operations and has a working and net capital deficiency that raise substantial 
doubt about the Partnership's ability to continue as a going concern.  The 
accompanying financial statements do not include any adjustments that might 
result from the outcome of this uncertainty.



St. Louis, MO	                   /s/Mueller, Prost, Purk & Willbrand, P.C.
January 27, 1998                    Certified Public Accountants
































<PAGE>                               - 1 -






































                             FINANCIAL STATEMENTS






































SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
(A Washington Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                                                   	1997	               1996
                                                                                          ---------------     ---------------
<S>                                                                                       <C>                 <C>
ASSETS
 Current Assets
 	Cash		                                                                                  $		     24,611	     $		     38,867
 	Tenant accounts receivable, less allowance for doubtful
 		accounts of $41,107 and $23,194				                                                            16,700			           11,010
 	Prepaid expenses				                                                                            25,888			           12,930
 	Other receivables				                                                                           32,180                -
                                                                                          ---------------     ---------------
				Total Current Assets				                                                                      99,379		 	          62,807
                                                                                          ---------------     ---------------
 Funded Deposits Held in Trust
	 Security deposits				                                                                           67,152			           67,551
                                                                                          ---------------     ---------------
 Restricted Deposits and Funded Reserves
 	Taxes and insurance escrow				                                                                 106,977			          120,628
                                                                                          ---------------     ---------------
 Property and Equipment
 	Land				                                                                                     3,261,280			        3,261,280
 	Land improvements				                                                                          439,162			          439,162
 	Buildings				                                                                               13,132,765			       13,132,765
 	Equipment				                                                                                  601,082			          601,082
                                                                                          ---------------     ---------------
				Total Property and Equipment				                                                          17,434,289			       17,434,289
 	Less: Accumulated depreciation				                                                          (5,796,293)			      (5,267,020)
                                                                                          ---------------     ---------------
				Net Property and Equipment				                                                            11,637,996			       12,167,269
                                                                                          ---------------     ---------------
				Total Assets		                                                                        $		 11,911,504	     $		 12,418,255
                                                                                          ===============     ===============

LIABILITIES AND PARTNERS' (DEFICIT)

 Current Liabilities
 	Accounts payable		                                                                      $		     37,468	     $		      9,405
 	Prepaid rents				                                                                               29,862			           17,908
 	Accrued expenses				                                                                            27,025			           27,500
 	Accrued interest payable				                                                                 6,484,223			        5,637,084
                                                                                          ---------------     ---------------
				Total Current Liabilities				                                                              6,578,578			        5,691,897
                                                                                          ---------------     ---------------
 Deposit Liabilities
 	Security deposits				                                                                          100,681			           81,487
                                                                                          ---------------     ---------------
 Long-Term Liabilities
 	Mortgage payable				                                                                        20,000,000			       20,000,000
 	Due to limited partner				                                                                      90,000			           90,000
 	Accrued administrative fees				                                                                973,500	          		856,612
                                                                                          ---------------     ---------------
				Total Long-Term Liabilities				                                                           21,063,500			       20,946,612
                                                                                          ---------------     ---------------
				Total Liabilities 				                                                                    27,742,759			       26,719,996
                                                                                          ---------------     ---------------

PARTNERS' (DEFICIT)

 Partners' (Deficit)				                                                                     (15,831,255)			     (14,301,741)
                                                                                          ---------------     ---------------
				Total Liabilities and Partners' (Deficit)		                                           $		 11,911,504	     $ 		12,418,255
                                                                                          ===============     ===============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.





<PAGE>                               - 2 -
SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
(A Washington Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
	                                                                               1997                1996	               1995
                                                                      ---------------     ---------------     ---------------
<S>                                                                   <C>                 <C>                 <C>
Income
	Rental income		                                                      $    2,534,829      $		  1,888,209	     $		  2,068,885
	Interest income				                                                           7,991               8,804			            7,341
	Income from forfeited security deposits				                                  18,905              23,212		           	38,021
	Other income				                                                            141,300              88,320			           98,087
                                                                      ---------------     ---------------     ---------------
				Total Income				                                                       2,703,025           2,008,545			        2,212,334
                                                                      ---------------     ---------------     ---------------
Expenses
	Operating Expenses
		Utilities				                                                               323,720            276,804			          279,381
		Salaries and wages				                                                      321,429            234,465			          238,349
		Real estate taxes				                                                       213,505            216,528			          211,014
		Advertising				                                                              77,316             67,239			           68,107
		Professional fees				                                                        64,691             52,940			           72,453
		Insurance				                                                                30,102             22,044			           27,518
		Personal property taxes				                                                    -                  -			               1,862
                                                                       ---------------    ---------------     ---------------
				Total Operating Expenses				                                            1,030,763            870,020			          898,684
                                                                       ---------------    ---------------     ---------------
	Maintenance Expenses
		Repairs and maintenance				                                                 457,398            387,251			          359,904
		Security				                                                                 50,886             66,725			           85,726
		Supplies				                                                                 51,546             32,712			           68,543
		Cleaning				                                                                 28,779             12,105			           22,023
                                                                       ---------------     --------------     ---------------
				Total Maintenance Expenses 				                                           588,609            498,793			          536,196
                                                                       ---------------     --------------     ---------------
	Management Expenses
		Management fees				                                                          83,164             74,870			           74,072
		Administrative and office				                                                71,848             56,342			           59,685
  Consulting fee                                                               20,112               -                   -
                                                                       ---------------     --------------     ---------------
				Total Management Expenses				                                             175,124            131,212			          133,757
                                                                       ---------------     --------------     ---------------
 Mortgage Interest		                                                        1,718,675        		1,718,675		        	1,718,675
                                                                       ---------------     --------------     ---------------
	Other Expenses
		Depreciation			                                                             529,273           	529,273			          529,273
		Administrative fees				                                                     172,182            162,670			          157,255
		Bad debt expense				                                                         17,913             23,194			             -
                                                                       ---------------     --------------     ---------------
				Total Other Expenses				                                                  719,368            715,137			          686,528
                                                                       ---------------     --------------     ---------------
				Total Expenses				                                                      4,232,539          3,933,837			        3,973,840
                                                                       ---------------     --------------     ---------------
Net Loss		                                                             $   (1,529,514)     $		(1,925,292)	    $ 		(1,761,506)
                                                                       ===============     ==============     ===============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
















<PAGE>                               - 3 -
SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
(A Washington Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
	                                           General
	                                           Partner		                     Limited Partners	
                                     ---------------   ----------------------------------------------------
                                            	Sunset	           Shelter
	                                           Terrace	       Corporation	          Shelter	              The	            Total
	                                       Investments,	        of Canada	         American	          Axelrod	         Partners'
	                                               Inc.	          Limited	     Holding, Inc.	         Company	          Deficit
                                     ---------------   ----------------   ---------------   ---------------   ---------------
<S>                                  <C>               <C>                <C>               <C>               <C>
Balance, December 31, 1994	         	$		 (1,083,375)	  $		  (1,700,023)	  $		 (5,293,142)	  $		 (2,538,403)	  $		(10,614,943)

Prior Period Adjustment
 (see Note 8)                             1,067,240          1,697,582            (3,396)       (2,761,426)             -

Net Loss for the Year				                    (1,761)			           (440)			      (879,432)			      (879,873)			    (1,761,506)
                                     ---------------   ----------------   ---------------   ---------------   ---------------
Balance, December 31, 1995				              (17,896)			         (2,881)			    (6,175,970)			    (6,179,702)			   (12,376,449)

Net Loss for the Year				                    (1,926)			           (480)			      (961,203)			      (961,683)			    (1,925,292)
                                     ---------------   ----------------   ---------------   ---------------   ---------------
Balance, December 31, 1996		          	    	(19,822)	   	      	(3,361)	    		(7,137,173)	    		(7,141,385)	   		(14,301,741)

Net Loss for the Year                        (1,530)              (306)         (763,686)         (763,992)       (1,529,514)
                                     ---------------   ----------------   ---------------   ---------------   ---------------
Balance, December 31, 1997           $      (21,352)   $        (3,667)   $   (7,900,859)   $   (7,905,377)   $  (15,831,255)
                                     ===============   ================   ===============   ===============   ===============
Profit/Loss Ratio                               0.1%             0.025%           49.925%            49.95%              100%
                                     ===============   ================   ===============   ===============   ===============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.







































<PAGE>                               - 4 -
SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
(A Washington Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                                1997               	1996	               1995
                                                                      ---------------     ---------------     ---------------
<S>                                                                   <C>                 <C>                 <C>
Cash Flows from Operating Activities
	Net loss		                                                           $   (1,529,514)     $		 (1,925,292)	    $		 (1,761,506)
	Adjustments to reconcile net loss to net cash 
		provided (used) by operating activities
			Depreciation				                                                          529,273             529,273			          529,273
			Change in assets - (increase) decrease
				Tenant accounts receivable				                                            (5,690)              4,738			          (15,748)
				Prepaid expenses				                                                     (12,958)             20,893			          (20,067)
				Other receivables				                                                    (32,180)                537			             (505)
			Change in liabilities - increase (decrease)
				Accounts payable				                                                      28,063               1,655			           (2,085)
				Prepaid rents				                                                         11,954               5,833			           12,075
				Accrued expenses				                                                        (475)             21,000			             (215)
				Accrued interest payable				                                             847,139           1,229,418			        1,060,009
				Security deposits				                                                     19,593              18,084			           (4,572)
				Accrued administrative fees				                                          116,888             116,888			          116,888
                                                                      ---------------    ----------------     ---------------
				Total Adjustments				                                                  1,501,607           1,948,319			        1,675,053
                                                                      ---------------    ----------------     ---------------
Net Cash Provided (Used) by Operating Activities				                         (27,907)             23,027			          (86,453)
                                                                      ---------------    ----------------     ---------------
Cash Flows from Financing Activities
	Net deposit and withdrawals in restricted deposits
		and funded reserves				                                                     13,651              3,820			           11,580
                                                                      ---------------    ----------------     ---------------
    Net Cash Provided by Financing Activities                                 13,651              3,820              11,580
                                                                      ---------------    ----------------     ---------------
Net Increase (Decrease) in Cash				                                          (14,256)             26,847			          (74,873)
Cash - Beginning of Year				                                                  38,867              12,020			           86,893
                                                                      ---------------    ----------------     ---------------
Cash - End of Year		                                                  $       24,611     $		      38,867	     $		     12,020
                                                                      ===============    ================     ===============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
































<PAGE>                               - 5 -
SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
(A Washington Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

NOTE 1	ORGANIZATION

Sunpointe Associates Limited Partnership, a Washington Limited Partnership, 
(the "Partnership"), was formed on September 3, 1987, pursuant to the terms of 
an Agreement of Limited Partnership for the purpose of acquiring and operating 
the Avalon Ridge Apartments complex, a 356-unit apartment complex located in 
Renton, Washington (the "Project"). The Partnership will dissolve on December 
31, 2037, unless sooner dissolved pursuant to any provision of the Partnership 
Agreement.

The Agreement of Limited Partnership which was amended on June 30, 1991, and 
December 31, 1991, admitted a new general partner and changed the profit and 
loss allocation percentages to the partners.  The general partner of the 
Partnership is Sunset Terrace Investments, Inc. (the "General Partner"), a 
California corporation.  The limited partners of the Partnership are Shelter 
Corporation of Canada Limited, a Canadian corporation, Shelter American 
Holding, Inc., a Delaware corporation, and the Axelrod Company, a Washington 
corporation.

NOTE 2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting

The accompanying financial statements have been prepared on the accrual basis 
of accounting.  The Partnership also reports its operating results for income 
tax purposes on the accrual basis.  No provision for income taxes is made 
because any liability for income taxes is that of the individual partners and 
not that of the Partnership.

Use of Estimates

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

Security Deposits

The security deposit liability exceeds the security deposit cash account in 
1997 and 1996 by $33,529 and $13,936, respectively.  Management has stated 
that both of these deficiencies are included in the operating account for each 
respective year and can be transferred to the security deposit account as 
necessary.

Tenant Accounts Receivable

The Partnership provides an allowance for doubtful accounts equal to the 
estimated collection loss that will be incurred in the collection of 
receivables.  Bad  debt expense of $17,913, $23,194 and $0 was recorded for 
the periods ended December 31, 1997, 1996 and 1995, respectively.

Property and Equipment

Property and equipment are recorded at cost.  Major additions and improvements 
are capitalized to the property accounts while replacements, maintenance and 
repairs which do not improve or extend the useful life of the respective 
assets are expensed currently.  	

Depreciation is calculated using the straight-line method over estimated 
useful lives ranging from 7 to 27.5 years.  The total depreciation expensed 
for the years ending December 31, 1997, 1996 and 1995 was $529,273 each year.

Concentration of Credit Risk

The Project maintains the majority of its cash balances in one financial 
institution.  The balances are insured by the Federal Deposit Insurance 
Corporation up to $100,000.  At December 31, 1997 and 1996, the Project's 
uninsured cash balances totaled $0 and $16,586, respectively.


<PAGE>                               - 6 -
SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
(A Washington Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)

Advertising

The Company follows the policy of charging the costs of advertising to expense 
as incurred.  Advertising expense was $77,316, $67,239 and $68,107 for the 
years ended December 31, 1997, 1996 and 1995, respectively.

NOTE 3	STATEMENTS OF CASH FLOWS

For purposes of the statements of cash flows, the Partnership considers all 
highly liquid debt instruments purchased with a maturity of three months or 
less to be cash equivalents.

Cash paid during the years for:
<TABLE>
<CAPTION>                                  1997             1996	             1995
                                 ---------------  ---------------   ---------------
<S>                              <C>              <C>               <C>
Interest		                       $      871,536   $		    489,257	   $	    	658,666
</TABLE>

NOTE 4	RESTRICTED DEPOSITS AND FUNDED RESERVES

Taxes and insurance escrow reserves, consisting of money market funds, are 
maintained under the control of the mortgage note holder for the benefit of 
the Partnership and in an interest-bearing account with a federally insured 
financial institution.  Disbursements from the escrow are for real estate 
taxes and insurance premiums.  Interest earned on the funds is transferred to 
operating cash quarterly.

NOTE 5	MORTGAGE PAYABLE

The Partnership entered into a $1,245,000 mortgage payable agreement with 
America First Participating/Preferred Equity Mortgage Fund on September 1, 
1987, maturing September 1, 1999.  The note bears base interest at the rate of 
10%, due on the fifteenth day of each month.  Maximum construction period 
deferred interest at the rate of 3% per annum is due during the first interest 
period, which extends from the date of inception to August 17, 1989. It shall 
be paid, to the extent possible, from 50% of the net sale or refinancing 
proceeds.  Contingent interest and deferred interest, also at 3% per annum, is 
due during the second interest period, which extends from August 18, 1989, to 
the date of full payment.  They shall be paid from 50% of the net cash flow.

Pursuant to a promissory note dated September 1, 1987, the Partnership owes 
Washington Mortgage Corporation $18,755,000 plus interest.  The interest of 
Washington Mortgage Corporation was purchased and assigned to Washington State 
Housing Finance Commission (the "Commission") under the Assignment of 
Developer Documents dated September 1, 1987.  Part of the interest of the 
Commission has been assigned to FirsTier Bank, National Association, as 
Trustee under the Lender Loan Agreement and Indenture of Trust dated September 
1, 1987.  The note bears base interest at the rates of 9.5% per annum and 8.5% 
per annum during the first and second interest periods, respectively.  The 
note bears deferred contingent interest in amounts equal to 3.5% per annum and 
4.5% per annum during the first and second interest periods, respectively.  
During the third interest period, the note bears contingent interest at an 
annual rate of 4.5% on the outstanding principal amount.  The note matures on 
September 1, 2011.

NOTE 6	MANAGEMENT FEE TRANSACTIONS

Management Fees

On August 20, 1994, America First Properties Management Company, LLC, an 
affiliate of the general partner, took over management of the Partnership.  
Their fee is 3.75% of gross receipts when net operating income is less than 
$103,000 and 4.5% when net operating income is greater than $103,000.  
Management fees for the years ending December 31, 1997, 1996 and 1995 were 
$83,164, $74,870 and $74,072, respectively.  At December 31, 1997 and 1996, 
the Partnership owed America First Properties Management Company, LLC, $9,087 
and $6,848, respectively.


<PAGE>                               - 7 -
SUNPOINTE ASSOCIATES LIMITED PARTNERSHIP
(A Washington Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)

NOTE 7 RELATED PARTY TRANSACTIONS

Due to Limited Partner

The Partnership has outstanding operating deficit loans borrowed from the 
limited partner at December 31, 1997 and 1996, of $90,000 each year.

NOTE 8 PRIOR-PERIOD ADJUSTMENT

Partners' deficit as of December 31, 1994 has been adjusted to correct an 
error due to ownership transfers of partner accounts not made from 1989 to 
1991.  The error had no effect on net loss for the years ended December 31, 
1997, 1996 and 1995.

NOTE 9	GOING CONCERN CONSIDERATIONS

The Partnership's operations have produced a cumulative deficit of $15,831,255 
since commencement of rental operations in 1987, as well as recurring 
operating losses.  The considerations raise substantial doubt about the 
Partnership's ability to continue as a going concern.  Management has 
addressed this concern by implementing an operating plan designed to 
reposition the Project and substantially increase long-term cash flow from 
operations.  This plan includes:  (1) investment of a significant portion of 
property cash flow in upgrading and improving the condition and appearance of 
the Project; and (2) implementation of stringent resident qualification 
standards designed to improve the resident profile and, ultimately, property 
operations.  In addition, management is also considering reissuance of the 
bonds at lower interest rates so that the Project can support monthly interest 
payments.










































<PAGE>                               - 8 -



































                            JEFFERSON PLACE, L.P.
                      (A Missouri Limited Partnership)

                            FINANCIAL STATEMENTS

                         DECEMBER 31, 1996 AND 1995




































                      T A B L E   O F   C O N T E N T S

	                                                                      PAGE


REPORT OF CERTIFIED PUBLIC ACCOUNTANTS ON
	THE FINANCIAL STATEMENTS			                                            1

FINANCIAL STATEMENTS

		BALANCE SHEETS			                                                     2

		STATEMENTS OF INCOME			                                               3

		STATEMENTS OF CHANGES IN PARTNERS'
			EQUITY (DEFICIT)			                                                  4

		STATEMENTS OF CASH FLOWS			                                           5

NOTES TO FINANCIAL STATEMENTS			                                        6-9

 























































To the Partners
Jefferson Place, L.P.
Omaha, Nebraska


INDEPENDENT AUDITORS' REPORT

We have audited the accompanying balance sheets of Jefferson Place, L.P.,  (a 
Missouri Limited Partnership) (the "Partnership"), as of December 31, 1996 and 
1995, and the related statements of income, 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.  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 Jefferson Place, L.P., as of 
December 31, 1996 and 1995, and the results of its operations and the changes 
in partners' equity (deficit) and cash flows for the years then ended in 
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the 
Partnership will continue as a going concern. As discussed in Note 10 to the 
financial statements, the Partnership has experienced recurring losses from 
operations and has a working capital deficiency and a net capital deficiency 
that raise substantial doubt about the Partnership's ability to continue as a 
going concern. The accompanying financial statements do not include any 
adjustments that might result from the outcome of this uncertainty.



January 31, 1997	                   /s/Mueller, Prost, Purk & Willbrand, P.C.
                                       Certified Public Accountants


































<PAGE>                              - 1 -
 





































                             FINANCIAL STATEMENTS
 





































JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
      	                                                                                             1996	               1995
                                                                                           --------------     ---------------
<S>                                                                                        <C>                <C>
ASSETS
 Current Assets
 	Cash		                                                                                   $   		121,353	     $    		108,614
	 Tenant accounts receivable				                                                                  14,315			            3,042
 	Prepaid expenses				                                                                            22,402			           22,293
                                                                                           --------------     ---------------
				Total Current Assets				                                                                     158,070			          133,949
                                                                                           --------------     ---------------
 Funded Deposits Held in Trust
 	Security deposits				                                                                           27,211			           16,438
                                                                                           --------------     ---------------
 Restricted Deposits and Funded Reserves
 	Taxes and insurance escrow				                                                                  39,407			           34,214
                                                                                           --------------     ---------------
 Property and Equipment
 	Land				                                                                                       339,063			          339,063
 	Buildings				                                                                               10,894,462			       10,894,462
 	Equipment				                                                                                  398,521			          398,521
                                                                                           --------------     ---------------
				Total Property and Equipment				                                                          11,632,046			       11,632,046
 	Less: Accumulated depreciation				                                                          (6,099,164)			      (5,521,434)
                                                                                           --------------     ---------------
				Net Property and Equipment 				                                                            5,532,882			        6,110,612
                                                                                           --------------     ---------------
 Other Assets
 	Utility Deposits				                                                                             2,250			            2,250
                                                                                           --------------     ---------------
				Total Assets		                                                                         $	  5,759,820	     $	  	6,297,463
                                                                                           ==============     ===============

LIABILITIES
 Current Liabilities
 	Accounts payable		                                                                       $	    	36,622	     $		       -
 	Other accrued expenses				                                                                      14,406			           12,623
 	Prepaid rent				                                                                                 7,918			           17,943
 	Accrued real estate taxes				                                                                   61,250			           58,222
 	Accrued interest payable				                                                                 3,493,114			        3,116,962
                                                                                          ---------------     ---------------
				Total Current Liabilities				                                                              3,613,310			        3,205,750
                                                                                          ---------------     ---------------
 Deposit Liabilities
 	Security deposits				                                                                           64,623			           53,872
                                                                                          ---------------     ---------------
 Long-Term Liabilities
 	Mortgage payable 				                                                                       12,800,000			       12,800,000
 	Accrued administrative fees				                                                                755,019			          679,219
                                                                                          ---------------     ---------------
				Total Long-Term Liabilities				                                                           13,555,019			       13,479,219
                                                                                          ---------------     ---------------
 				Total Liabilities				                                                                    17,232,952			       16,738,841
                                                                                          ---------------     ---------------
PARTNERS' EQUITY (DEFICIT)
	General partner				                                                                             (73,727)			         (63,409)
	Limited partners				                                                                        (11,399,405)			     (10,377,969)
                                                                                          ---------------     ---------------
				Total Partners' Equity (Deficit)			                                                      (11,473,132)	      	(10,441,378)
                                                                                          ---------------     ---------------
				Total Liabilities and 
				  Partners' Equity (Deficit)		                                                        $		  5,759,820	     $	  	6,297,463
                                                                                          ===============     ===============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.




<PAGE>                              - 2 -
JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                                                    1996	               1995
                                                                                          ---------------     ---------------
<S>                                                                                       <C>                 <C>
Income
	Rental income		                                                                          $		  1,669,087	     $  		1,603,103
	Interest income				                                                                              11,360		           	10,903
	Other income				                                                                                 99,162			           95,944
	Income from forfeited security deposits				                                                      16,883			           15,567
                                                                                          ---------------     ---------------
				Total Income				                                                                           1,796,492			        1,725,517
                                                                                          ---------------     ---------------
Expenses
	Operating Expenses
		Salaries and wages				                                                                         195,447			          186,022
		Real estate taxes				                                                                          122,499			          116,444
		Insurance				                                                                                   27,734			           27,007
		Utilities				                                                                                  152,644			          144,925
		Professional fees				                                                                            9,736			           11,052
		Advertising and promotional fees				                                                            29,618			           34,090
                                                                                          ---------------     ---------------
				Total Operating Expenses 				                                                                537,678			          519,540
                                                                                          ---------------     ---------------
	Maintenance Expenses
		Repairs and maintenance				                                                                    180,241			          184,491
		Security				                                                                                     5,880			            5,824
		Cleaning				                                                                                     9,417			            8,603
		Supplies				                                                                                    20,748			           23,816
                                                                                          ---------------     ---------------
				Total Maintenance Expenses 				                                                              216,286			          222,734
                                                                                          ---------------     ---------------
	Management Expenses
		Administrative and office				                                                                   23,772			           24,358
		Management fees				                                                                             89,436			           83,866
                                                                                          ---------------     ---------------
				Total Management Expenses				                                                                113,208			          108,224
                                                                                          ---------------     ---------------
	Mortgage Interest Expense				                                                                 1,294,544			        1,276,370
                                                                                          ---------------     ---------------
	Other Expenses
		Administrative fees		                                                                    		     88,800	      		     88,800
		Depreciation				                                                                               577,730			          578,958
                                                                                          ---------------     ---------------
				Total Other Expenses				                                                                     666,530			          667,758
                                                                                          ---------------     ---------------
				Total Expenses				                                                                         2,828,246			        2,794,626
                                                                                          ---------------     ---------------
    Net Loss		                                                                            $		 (1,031,754)	    $ 		(1,069,109)
                                                                                          ===============     ===============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.



















<PAGE>                              - 3 -
JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                            	Limited Partners	
                                        --------------------------------------------------------------------------------------
                                           Special        Class A
                                General    Limited        Limited
                                Partner    Partner        Partner            Class B Limited Partners
	                           ----------- ---------- -------------- ----------------------------------------------
                                           Liberty        Liberty                                         Chase          Total
                                    JHC Associates     Tax Credit  DRI Equity    Mark D.   Susan L.  Properties,       Limited
                            Corporation   IV, L.P. Plus III, L.P. Corporation      Rose       Rose          Inc.      Partners
                            ----------- ---------- -------------- ----------- ---------- ---------- ------------ -------------
<S>                         <C>         <C>        <C>            <C>         <C>        <C>        <C>          <C>
Balance, December 31, 1994		$ 	(52,718)	$	(52,718)	$	 (3,781,735)	$  	78,470	 $(280,988)	$(280,988)	$(5,001,592)	$ (9,319,551)
									
Net Loss for the year				      (10,691)			(10,691)			   (908,743)		  	(1,390)	  	(6,949)		  (6,949)		  (123,696)			(1,058,418)
									                   ----------- ---------- -------------- ----------- ---------- ---------- ------------ -------------
Balance, December 31, 1995			 	(63,409)			(63,409)			 (4,690,478)			  77,080 		(287,937)		(287,937)		(5,125,288)	 (10,377,969)
									
Net Loss for the year				      (10,318)			(10,318)			   (876,991)			  (1,341)	  	(6,706)		  (6,706)			 (119,374)			(1,021,436)
									                   ----------- ---------- -------------- ----------- ---------- ---------- ------------ -------------
Balance, December 31, 1996		$ 	(73,727)	$	(73,727)	$	 (5,567,469)	$	  75,739	 $(294,643)	$(294,643)	$(5,244,662)	$(11,399,405)
									                   =========== ========== ============== =========== ========== ========== ============ =============
Partners' Percentage of
  Partnership Losses				          1.00%			   1.00%			      85.00%			    0.13%		    0.65%			   0.65%		     11.57%			     99.00%
                            =========== ========== ============== =========== ========== ========== ============ =============
</TABLE>
<TABLE>
<CAPTION>
                                    Total
                                 Partners'
                                  Deficit
                            --------------
<S>                         <C> 									
Balance, December 31, 1994		$ 	(9,372,269)
									
Net Loss for the year				   		 (1,069,109)
									                   --------------
Balance, December 31, 1995				(10,441,378)
									
Net Loss for the year				   		 (1,031,754)
									                   --------------
Balance, December 31, 1996		$	(11,473,132)
									                   ==============
Partners' Percentage of
  Partnership Losses				    		     100.00%
                            ==============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.






















<PAGE>                              - 4 -
JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
	                                                                                                   1996	               1995
                                                                                          ---------------     ---------------
<S>                                                                                       <C>                 <C>
Cash Flows from Operating Activities
	Net loss		                                                                               $		 (1,031,754)	    $		 (1,069,109)
	Adjustments to reconcile net loss to net cash provided
		by operating activities
			Depreciation				                                                                              577,730			          578,958
			Change in assets - (increase) decrease
				Tenant accounts receivable				                                                               (11,273)			          (1,932)
				Property tax refund receivable				                                                              -			               8,139
				Prepaid expenses				                                                                            (109)			            (352)
			Change in liabilities - increase (decrease)
				Accounts payable				                                                                          36,622			             -
				Other accrued expenses				                                                                     1,783			           (5,979)
				Prepaid rent				                                                                             (10,025)			          13,605
				Accrued real estate taxes				                                                                  3,028			           10,897
				Accrued interest payable				                                                                 376,152			          412,612
				Security deposits				                                                                         10,751			            5,186
				Accrued administrative fees				                                                               75,800			           77,800
                                                                                          ---------------     ---------------
				Total Adjustments				                                                                      1,060,459			        1,098,934
                                                                                          ---------------     ---------------
    Net Cash Provided by Operating Activities			                                                  28,705			           29,825
                                                                                          ---------------     ---------------
Cash Flows from Financing Activities
	Net deposit and withdrawals in restricted deposits and
		funded reserves				                                                                            (15,966)			          (3,155)
                                                                                          ---------------     ---------------
				Net Cash Used by Financing Activities				                                                    (15,966)			          (3,155)
                                                                                          ---------------     ---------------
Net Increase in Cash				                                                                          12,739			           26,670
Cash - Beginning of Year				                                                                     108,614			           81,944
                                                                                          ---------------     ---------------
Cash - End of Year		                                                                      $		    121,353	     $		    108,614
                                                                                          ===============     ===============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.































<PAGE>                              - 5 -
JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

NOTE 1	ORGANIZATION

Jefferson Place, L.P., a Missouri Limited Partnership, (the "Partnership"), 
was formed on April 18, 1985, pursuant to the terms of an Agreement of Limited 
Partnership for the purpose of acquiring and operating the Jefferson Place 
Apartments complex (the "Project"), a 352-unit apartment complex located in 
Olathe, Kansas. The Partnership will dissolve on December 31, 2033, unless 
sooner dissolved pursuant to any provision of the Partnership agreement.

On October 1, 1990, pursuant to the Second Amended and Restated Agreement of 
Limited Partnership, DRI Equity Corporation withdrew from the Partnership as 
general partner and became a Class B limited partner with a .13% interest.  
DRI assigned its interest to JHC Corporation as the general partner with a 1% 
interest. Liberty Associates IV L.P. is the Partnership's special limited 
partner with a 1% interest and has the authority, among other things, to 
remove the general partner under certain circumstances and to consent to the 
sale of the Partnership's assets. The Partnership has three other Class B 
limited partners, Mark D. Rose (.65%), Susan L. Rose (.65%), and Chase 
Properties, Inc., a Missouri corporation (11.57%), as well as a Class A 
limited partner, Liberty Tax Credit Plus III L.P., a Delaware limited 
partnership who owns an 85% interest.

NOTE 2 	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting

The accompanying financial statements have been prepared on the accrual basis 
of accounting.  The Partnership also reports its operating results for income 
tax purposes on the accrual basis.  No provision for income taxes is made 
because any liability for income taxes is that of the individual partners and 
not that of the Project.

Use of Estimates

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

Security Deposits

The security deposit liability exceeds the security deposit cash account by 
$37,412 and $37,434 as of December 31, 1996 and 1995, respectively.  
Management has stated that this deficiency will be funded from the operating 
cash account as cash flow becomes available.

Bad Debts

The Partnership records bad debts using the direct write off method which is 
not materially different from the allowance method.  No bad debt expense was 
recorded for the years ended December 31, 1996 and 1995.

Property and Equipment

Property and equipment are recorded at cost.  Major additions and improvements 
are capitalized to the property accounts while replacements, maintenance and 
repairs which do not improve or extend the useful life of the respective 
assets are expensed currently.

Depreciation is calculated using the straight-line method over estimated 
useful lives ranging from 5 to 19 years.  The total depreciation expensed for 
1996 and 1995 was $577,730 and $578,958, respectively.

Concentration of Credit Risk

The Partnership maintains the majority of its cash balances in one financial 
institution.  The balances are insured by the Federal Deposit Insurance 
Corporation up to $100,000.  At December 31, 1996 and 1995, the Partnership's 
uninsured cash balances totaled $20,992 and $16,585, respectively.

<PAGE>                              - 6 -
JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)

NOTE 3	STATEMENT OF CASH FLOWS

For purposes of the statement of cash flows, the Partnership considers all 
highly liquid debt instruments purchased with a maturity of three months or 
less to be cash equivalents.  Cash includes cash and security deposits.

Cash paid during the years for:	           1996	           1995
                                     -----------     -----------
Interest		                           $		918,392	     $		863,758


NOTE 4	RESTRICTED DEPOSITS AND FUNDED RESERVES

Taxes and insurance escrow reserves, consisting of money market funds, are 
maintained under the control of the mortgage note holder for the benefit of 
the Partnership and in an interest-bearing account with a federally insured 
financial institution.

Disbursements from the escrow are for real estate taxes and insurance 
premiums. Interest earned on the funds is transferred to the operating cash 
account quarterly.

NOTE 5	MORTGAGE PAYABLE

The Partnership financed the construction of the Project with Multi-Family 
Housing Revenue Notes ("Notes") issued by the City of Olathe, Kansas ("City") 
in the face amount of $12,800,000.  On December 1, 1986, the Notes were 
purchased by America First Tax-Exempt Mortgage Fund 2 Limited Partnership 
("America First").  The Notes are nonrecourse obligations of the owners of the 
Partnership. The Notes are not an obligation to the City, nor is the taxing 
power of the City pledged to the payment of principal and interest on the 
Notes.  The net cash flow of the Partnership and the proceeds from the sale or 
refinancing of the Partnership are the sole source of funds to pay principal 
and interest on the Notes.  The Notes are collateralized by all real and 
personal property of the Partnership and an assignment of rents.  The 
principal balance of the Notes is due in a lump sum on December 1, 2010.  Base 
interest on the Notes accrues at 8.5% per annum.

In connection with the reorganization of the Partnership on October 1, 1990, 
the terms of the Notes were amended pursuant to a mortgage modification 
agreement.  The mortgage modification agreement was to induce America First to 
waive defaults under the original Note and to induce the new limited partners 
to infuse additional capital. The mortgage modification agreement provides, 
among other provisions, for the following:

1) America First agrees not to declare a default under the Notes, mortgage and 
   related documents during the term of the modification agreement, which 
   expires December 31, 2002.

2) America First agrees to accept the monthly cash flow from the Partnership 
   as partial payment of base interest.  If the monthly cash flow is less than 
   the amount of base interest due for each month, the unpaid base interest 
   accrues and will be paid from excess cash flow in future months. The 
   difference between the base interest on the Notes and the payments  to 
   America First from available monthly cash flow will bear interest at 8.5% 
   per annum until paid. For the years ended December 31, 1996 and 1995, 
   mortgage interest expense included additional interest on accrued base 
   interest of $206,542 and $188,370, respectively.

3) The mortgage modification agreement also specifies 
   the allocation of sale or refinancing proceeds of the Partnership among the 
   partners and payment of accrued interest to America First.









<PAGE>                              - 7 -
JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)

NOTE 6	ACCRUED INTEREST PAYABLE

Accrued interest payable as of December 31, 1996 and 1995, consisted of the 
following:

<TABLE>
<CAPTION>
                                                  	1996	             1995
                                           -------------     -------------
<S>                                        <C>               <C>
Accrued interest payable on bond		         $		2,503,804	     $		2,334,194
Accrued interest on unpaid interest				         989,310			        782,768
                                           -------------     -------------
Total Accrued Interest Payable		           $		3,493,114	     $		3,116,962
                                           =============     =============
</TABLE>

NOTE 7	CONTINGENT INTEREST

In addition to base interest, the Notes provide for the payment of additional 
contingent interest that is payable only to the extent the Partnership 
generates excess net cash flows or from the sale or refinancing proceeds of 
the Partnership, subject to various priority payments. Contingent interest 
during the construction period (December 1, 1986 through August 31, 1987) at 
3.5% per annum totaled $118,890. Contingent interest at 4.5% per annum, 
excluding contingent construction period interest, totaled $4,800,000 through 
December 31, 1996 and 1995, respectively. Contingent interest amounts have not 
been accrued in the accompanying financial statements.

NOTE 8	RELATED PARTY TRANSACTIONS

Management Fees

On May 1, 1993, America First Properties Management, Inc., an affiliate of the 
general partner, took over management of the Partnership. Their fee is 5% of 
collected receipts, effective July, 1995. Management fees for 1996 and 1995 
were $89,436 and $83,866, respectively.  The Partnership owed America First 
Properties Management, Inc. $7,666 and $4,564 at December 31, 1996 and 1995, 
respectively.

Administrative Fees

Under the terms of the Notes, the Partnership accrues administrative fees of 
$6,400 per month to an affiliate of America First. Under the terms of the 
Second Amended and Restated Agreement of Limited Partnership, the Partnership 
accrues additional administrative fees of $1,000 per month to Liberty 
Associates IV, L.P.  Administrative fees totaled $88,800 for each year.  
Accrued and unpaid administrative fees totaled $755,019 and $679,219 at 
December 31, 1996 and 1995, respectively. 

Administrative fees payable to America First are to be paid solely from the 
proceeds of a sale or refinancing.  Administrative fees payable to Liberty 
Associates IV, L.P. are paid from excess cash flow after the payment of all 
operating expenses except interest.

NOTE 9	CONTINGENCIES

Pursuant to a Tax Credit Guaranty Agreement signed on October 1, 1990, the 
Partnership and America First guarantee Liberty Tax Credit Plus III, L.P. 
("Liberty") specified minimum amounts of tax credits to be generated by the 
Partnership through the rental of apartments to qualified tenants. If the 
Partnership fails to generate tax credits of approximately $131,000 annually 
for years 1991 through 1997 for the benefit of Liberty, America First and the 
Partnership will be required to pay Liberty an amount equal to $.633 for each 
$1 of credits below the specified minimum amounts.

Tax credits generated by the Partnership in 1996 and 1995 were in excess of 
the minimum amount of such credits specified in the Tax Credit Guaranty 
Agreement.


<PAGE>                              - 8 -
JEFFERSON PLACE, L.P.
(a Missouri Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)

NOTE 10	GOING CONCERN CONSIDERATIONS

The Partnership's operations have produced a cumulative deficit of $11,473,132 
and $10,441,378 for the years ended December 31, 1996 and 1995, respectively, 
since commencement of rental operations in 1985, as well as recurring 
operating losses. The considerations raise substantial doubt about the 
Partnership's ability to continue as a going concern.  Management has 
addressed this concern by implementing an operating plan designed to 
reposition the Project and substantially increase long-term cash flow from 
operations.  This plan includes:  (1) investment of a significant portion of 
property cash flow in upgrading and improving the condition and appearance of 
the Project; and (2) implementation of stringent resident qualification 
standards designed to improve the resident profile and, ultimately, property 
operations.  In addition, management is also considering reissuance of the 
bonds at lower interest rates so that the Project can support monthly interest 
payments.























































<PAGE>                              - 9 -
	                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.

Dated:  June 10, 1998         AMERICA FIRST APARTMENT INVESTORS, L.P.

                              By America First Capital
                                   Associates Limited
                                   Partnership Four, General
                                   Partner of the Registrant

                              By America First Companies L.L.C.,
                                   General Partner of America First Capital
                                   Associates Limited Partnership Four

                              By /s/ Michael Thesing             
                                   Michael Thesing
                                   Vice President, Secretary,
                                   Treasurer and Chief Financial
                                   Officer (Vice President and Principal 
                                   Financial Officer of Registrant)





















































<PAGE>                               - 39 -
 	   Pursuant to the requirements of the Securities and 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.

Date:  June 10, 1998  	            By	/s/ Michael B. Yanney*	
		                                    Michael B. Yanney
		                                    Chairman of the Board, President, 
                                      Chief Executive Officer and Manager


Date:  June 10, 1998  	            By	/s/ Michael Thesing	
		                                    Michael Thesing
				                                  Vice President, Secretary, Treasurer 
                                      and Manager (Chief Financial and 
                                      Accounting Officer)


Date:  June 10, 1998	              By /s/ William S. Carter, M.D.*
		                                    William S. Carter, M.D.
		                                    Manager 


Date:  June 10, 1998	              By /s/George Kubat*
		                                    George Kubat
		                                    Manager


Date:  June 10, 1998               By	/s/ Martin A. Massengale*	
		                                    Martin A. Massengale
		                                    Manager


Date:  June 10, 1998               By	/s/ Alan Baer*	
		                                    Alan Baer
 		                                   Manager


Date:  June 10, 1998               By	/s/ Gail Walling Yanney*	
		                                     Gail Walling Yanney
		                                     Manager

Date:  June 10, 1998	              By	/s/ Mariann Byerwalter*	
		                                    Mariann Byerwalter
 		                                   Manager


        	 
*By Michael Thesing Attorney in Fact


/s/ Michael Thesing		
Michael Thesing

 






















<PAGE>                               - 40 -
AFTER THE ENDORSEMENT AS HEREON PROVIDED AND PLEDGE OF THIS NOTE, THIS NOTE 
MAY NOT BE ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO AN 
ASSIGNEE OF THE CITY OF AURORA, ILLINOIS.

                            PROMISSORY NOTE

$12,410,000.00	                                    Dated December 11, 1997

     FOR VALUE RECEIVED, PARK TRACE APARTMENTS LIMITED PARTNERSHIP, a Georgia 
limited partnership (the "Borrower"), by this promissory note (this "Note") 
hereby promises to pay to the order of the CITY OF AURORA, ILLINOIS (the 
"Issuer") the principal sum of Twelve Million Four Hundred Ten Thousand 
Dollars ($12,410,000) and to pay interest on the unpaid principal amount of 
the Bonds (as defined in the Agreement hereinafter mentioned), from the date 
hereof at the interest rate from time to time as provided in the hereinafter 
referred to Indenture.  Terms not otherwise defined in this Note have the 
respective meanings set forth in the Indenture.

     The principal and interest on this Note shall be payable on the dates and 
in the amounts as provided in Section 4.2 of the Loan Agreement dated as of 
December 1, 1997 (the "Agreement"), between the Borrower and the Issuer, with 
the final payment of all outstanding principal and interest on this Note to be 
paid on November 1, 2027.  Both principal and interest under this Note shall 
be made in funds that are immediately available on the due date of such 
payments and in lawful money of the United States of America at the principal 
office of UMB Bank, N.A., Kansas City, Missouri (the "Trustee") in accordance 
with the Agreement and the Indenture of Trust dated as of December 1, 1997 
(the "Indenture") between the Issuer and the Trustee.  The Borrower may make 
optional prepayments upon this Note as provided in the Agreement, with such 
prepayments being first applied to interest and next to principal.  The 
Borrower will prepay this Note in whole on the date which is 180 days after 
the cancellation of a mandatory tender of the Bonds on the Rate Adjustment 
Date in accordance with the Indenture as provided in Section 8.2 of the 
Agreement.

     This Note is made pursuant to the Agreement wherein, among other things, 
the Issuer has agreed to loan to the Borrower and the Borrower has agreed to 
take a loan in the principal amount above, being the proceeds from the sale of 
the Issuer's Multifamily Housing Revenue Refunding Bonds (The Covey at Fox 
Valley Apartments Project) Series 1997 (the "Bonds"), the proceeds to be 
disbursed in accordance with the provisions of Section 3.3(1) of the 
Agreement.  The Bonds are being issued by the Issuer pursuant to the Indenture.

     The obligations of the Borrower to perform and observe the agreements on 
its part contained herein and in the Agreement shall be absolute and 
unconditional and payment of the Basic Payments and the Additional Charges and 
all other payments required of the Borrower under this Note and the Agreement 
shall be paid without notice or demand and without setoff, counterclaim, or 
defense for any reason and without abatement or deduction or defense (except 
for a defense based on prepayment pursuant to Section 8.1 of the Agreement).  
The Borrower will not suspend or discontinue any such payments for any cause, 
including but not limited to any acts or circumstances that may constitute 
failure of consideration, destruction or damage to the Project or the 
Borrower's business, the taking of the Project or the Borrower's business by 
Condemnation or otherwise, the lawful prohibition of the Borrower's use of the 
Project or the Borrower's business, the interference with such use by any 
private person or corporation, the invalidity or unenforceability or lack of 
due authorization or other infirmity of this Note and the Agreement, the lack 
of right, power or authority of the Issuer to enter into the Agreement, 
eviction by paramount title, commercial frustration of purpose, bankruptcy or 
insolvency of the Issuer or the Trustee, change in the tax or other laws or 
administrative rulings or actions of the United States of America or of the 
State or any political subdivision thereof, or failure of the Issuer to 
perform and observe any agreement, whether express or implied, or any duty, 
liability or obligation arising out of or connected with the Agreement, or for 
any other cause whether similar or dissimilar to the foregoing, any present or 
future law to the contrary notwithstanding, it being the intention of the 
parties hereto that the payment of Basic Payments and other amounts payable by 
the Borrower under this Note and the Agreement shall be paid in full when due 
without any delay or diminution whatever.






<PAGE>                              - 1 -
     If this Note shall be placed in the hands of an attorney or attorneys for 
collection, the Borrower agrees to pay, in addition to the amount due hereon, 
the reasonable costs and expenses of collection, including reasonable 
attorneys' fees.  All parties to this Note, whether principal, surety, 
guarantor or endorser, hereby waive presentment for payment, demand, protest, 
notice or protest and notice of dishonor.



                                   PARK TRACE APARTMENTS LIMITED
  		                               PARTNERSHIP, a Georgia limited partnership

                                   By:	Park Trace Operating 
                                       Company, a Georgia corporation, its 
                                       General Partner


                                   By  /s/ Michael Thesing
			                                    Its Vice President
		
























































<PAGE>                             - 2 -
	                            ENDORSEMENT

     Pay to the order of UMB Bank, N.A., without recourse, as Trustee of the 
Bonds referred to in the within mentioned Agreement, as security for said 
Bonds.  This endorsement is given without any warranty as to the authority or 
genuineness of the signatures of the maker of the Note.



	                                           CITY OF AURORA, ILLINOIS

                                            By  /s/ 	
                                                Mayor































































<PAGE>                             - 3 -
                        ____________________________

                              LOAN AGREEMENT
                        ____________________________


                                 between

                         CITY OF AURORA, ILLINOIS
                                as Issuer

                                   and

                          PARK TRACE APARTMENTS
                           LIMITED PARTNERSHIP
                               as Borrower


                     _________________________________

                               Relating to

                               $12,410,000
               	Multifamily Housing Revenue Refunding Bonds
               	(The Covey at Fox Valley Apartments Project)
                                Series 1997

                                  of the

                        City of Aurora, Illinois


                      _____________________________

                       Dated as of December 1, 1997
                      _____________________________


The interests of the Issuer in this Agreement, excluding certain rights 
retained by the Issuer pursuant to Section 4.6 hereof, have been assigned to 
UMB Bank, N.A., Kansas City, Missouri, as Trustee, pursuant to an Indenture of 
Trust dated as of December 1, 1997, between the City of Aurora, Illinois and 
UMB Bank, N.A.

































<PAGE>                             - i -
                              TABLE OF CONTENTS

(This Table of Contents is not a part of the Loan Agreement, but is included 
only for convenience of reference.)
                                                                       	Page 

                                  ARTICLE I

                DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION

Section 1.1.  Definitions	                                                2
Section 1.2.  Schedule and Exhibit	                                       2
Section 1.3.  Rules of Interpretation	                                    2

                                 ARTICLE II

                   REPRESENTATIONS OF ISSUER AND BORROWER

Section 2.1.  Representations of the Issuer	                              3
Section 2.2.  Representations of the Borrower	                            4
Section 2.3.  General Tax Representations, 
                Warranties and Covenants of Borrower	                     7
Section 2.4.  Residential Rental Project	                                 9
Section 2.5.  Tax Exemption; Regulatory Agreement	                        9
Section 2.6.  Representations of Borrower as Single Purpose Entity	       9

                                ARTICLE III

                    ISSUANCE OF BONDS; PAYMENT OF COSTS

Section 3.1.  Issuance of Bonds	                                         13
Section 3.2.  No Warranty by Issuer	                                     13
Section 3.3.  Disbursements From the Bond Proceeds Fund and the Costs 
                of Issuance Fund	                                        13
Section 3.4.  Payment of Issuance Costs by Borrower	                     13
Section 3.5.  Title Insurance	                                           14
Section 3.6.  Establishment of Rate Period for the Bonds	                15

                                ARTICLE IV

                THE LOAN, LOAN REPAYMENT AND ADDITIONAL CHARGES

Section 4.1.  The Loan	                                                  15
Section 4.2.  Loan Repayment	                                            15
Section 4.3.  Additional Charges	                                        16
Section 4.4.  Borrower's Obligations Unconditional	                      17
Section 4.5.  Borrower's Remedies	                                       17
Section 4.6.  Assignment of Issuer's Rights            	                 18

                                ARTICLE V

                             PROJECT COVENANTS

Section 5.1.  Project, Title, Operation and Maintenance	                 18
Section 5.2.  Sale, Transfer or Disposition 
                of Borrower's Interest in Project	                       19
Section 5.3.  Advances	                                                  19
Section 5.4.  Alterations to the Project and Removal of Equipment	       19
Section 5.5.  Insurance	                                                 20
Section 5.6.  Taxes, Assessments and Other Governmental Charges	         20
Section 5.7.  Utilities	                                                 20

                                 ARTICLE VI

                    DAMAGE, DESTRUCTION AND CONDEMNATION

Section 6.1.  Damage and Destruction	                                    20
Section 6.2.  Condemnation	                                              20
Section 6.3.  Parties To Give Notice	                                    20







<PAGE>                             - ii -
                                 ARTICLE VII

                             BORROWER'S COVENANTS

Section 7.1.  Covenant for the Benefit of the Bondholders	               21
Section 7.2.  Inspection and Access	                                     21
Section 7.3.  Annual Statement, Annual Budget, Certificate of 
                Compliance and Other Reports and Continuing 
                Disclosure	                                              21
Section 7.4.  Indemnity by Borrower	                                     22
Section 7.5.  Status of Borrower	                                        24
Section 7.6.  Filing of Financing Statements	                            24
Section 7.7.  Proceedings Relating to a Determination of Taxability	     24

                                ARTICLE VIII

               BORROWER'S OPTIONS; TERMINATION OF AGREEMENT

Section 8.1.  Optional Prepayment	                                       25
Section 8.2.  Mandatory Prepayment	                                      25
Section 8.3.  Direction of Investments	                                  25
Section 8.4.  Termination of Agreement	                                  25

                                 ARTICLE IX

                       EVENTS OF DEFAULT AND REMEDIES

Section 9.1.  Events of Default	                                         26
Section 9.2.  Remedies	                                                  27
Section 9.3.  Disposition of Funds	                                      28
Section 9.4.  Nonexclusive Remedies	                                     28
Section 9.5.  Attorneys' Fees and Expenses	                              28
Section 9.6.  Effect of Waiver	                                          28
Section 9.7.  Issuer and Trustee May File Proofs of Claim	               28
Section 9.8.  Restoration of Positions	                                  28
Section 9.9.  Suits To Protect the Project	                              29
Section 9.10. Performance by Third Parties	                              29
Section 9.11. Nonrecourse Obligation	                                    29
Section 9.12. Trustee's Exercise of the Issuer's Remedies	               30

                                  ARTICLE X

                             GENERAL PROVISIONS

Section 10.1.  Amounts Remaining in Funds	                               30
Section 10.2.  Notices	                                                  30
Section 10.3.  Binding Effect	                                           31
Section 10.4.  Severability	                                             31
Section 10.5.  Amendments, Changes and Modifications	                    32
Section 10.6.  Execution in Counterparts	                                32
Section 10.7.  Required Approvals	                                       32
Section 10.8.  Limitation on Issuer's Liability	                         32
Section 10.9.  Representations of Borrower	                              33

Schedule 1-Legal Descriptions
Exhibit A-Form of Promissory Note




















<PAGE>                             - iii -
                                LOAN AGREEMENT


     THIS LOAN AGREEMENT (this "Agreement") is made and entered into as of 
December 1, 1997 by and between the CITY OF AURORA, ILLINOIS, a municipal 
corporation and home rule unit of local government under the Constitution of 
the State of Illinois (the "Issuer"), and PARK TRACE APARTMENTS LIMITED 
PARTNERSHIP, a Georgia limited partnership (the "Borrower"). 

                                  RECITALS:

     1.	The Issuer is authorized under the provisions of Ordinance No. 4519, 
approved March 23, 1976, as from time to time amended, and codified as 
Division 4 of Article V of Chapter 2 of the City of Aurora Code of Ordinances, 
and Section 6(a) of Article VII of the Constitution of the State 
(collectively, the "Act"), to issue economic development revenue bonds for the 
purpose of financing economic development projects, which authorization 
includes projects for use as multifamily residential rental facilities, and to 
refund its outstanding bonds by the issuance of its refunding bonds.

     2.	Pursuant to the Act the Issuer has financed the acquisition and 
construction of a multifamily residential rental facility consisting of the 
216-unit project known as The Covey at Fox Valley (the "Covey Project") 
located at 2160 Walcott Road within the incorporated limits of the Issuer, and 
constituting a "project" within the meaning of the Act, for Pebco-Fox Valley, 
Ltd., an Illinois limited partnership (the "Original Owner"), by the issuance 
of the Issuer's Multi-Family Housing Revenue Bonds (Pebco-Fox Valley, Ltd. 
Project) Series 1985 (the "Series 1985 Bonds") in the original principal 
amount of $12,500,000.

     3.	The Issuer issued its City of Aurora Multifamily Housing Mortgage 
Revenue Note (Covey at Fox Valley Project) Series 1986 in the original 
principal amount of $12,410,000 (the "Prior Note"), the proceeds of which were 
applied to refund and redeem the Series 1985 Bonds.

     4.	All of the right title and interest of the Original Owner in the Covey 
Project has been transferred to America First Apartment Investors, L.P. 
("America First"), an affiliate of the Borrower, and the owner of the Prior 
Note.

     5.	Prior to the issuance of the Bonds, the Borrower will acquire all 
right, title and interest in the Covey Project and a 260-unit multifamily 
housing project known as Park Trace Apartments, located at 3450 Jones Mill 
Road in the City of Norcross, Gwinnett County, Georgia (the "Park Trace 
Project," and together with the Covey Project, the "Project").

     6.	The Borrower has requested that the Issuer issue bonds the proceeds of 
which will be used to refund and redeem the Prior Note.

     7.	The Issuer deems it desirable and in keeping with its purposes to 
issue its Multifamily Housing Revenue Refunding Bonds (The Covey at Fox Valley 
Apartments Project) Series 1997 in the original principal amount of 
$12,410,000 (the "Bonds"), for the purposes of providing proceeds for the 
making of a mortgage refinancing loan (the "Loan") to the Borrower, the 
proceeds of which will be used to refund and redeem the Prior Note and thereby 
refinance the Covey Project for the Borrower, under the terms and conditions 
contained in this Agreement and the Indenture of Trust dated as of December 1, 
1997 (the "Indenture"), between the Issuer and UMB Bank, N.A., as trustee (the 
"Trustee").

     8.	Under the terms of this Agreement, the Borrower has agreed to the 
repayment of the sums borrowed under this Agreement, the Borrower has executed 
the Note (defined below) to evidence its obligation to repay the amounts due 
under this Agreement, the Borrower has executed, or caused to be executed, the 
Mortgage and the Assignment (as such terms are defined in the Indenture) to 
secure, among other things, the Borrower's payment and other obligations under 
this Agreement.

     9.	The execution and delivery of this Agreement and the issuance of the 
Bonds have been in all respects duly and validly authorized by the Issuer.






<PAGE>                             - 1 -
                                  AGREEMENT:

                                  ARTICLE I

              DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION

     Section 1.1.  Definitions.  In this Agreement, all capitalized terms used 
herein and not defined herein shall have the meanings ascribed thereto in 
Section 1.1 of the Indenture.

     Section 1.2.  Schedule and Exhibit.  The following Schedule and Exhibit 
are attached to and by reference made a part of this Agreement:

          (1)	Schedule 1:  Legal Descriptions; and

          (2)	Exhibit A:  Form of Promissory Note.

     Section 1.3.  Rules of Interpretation.

     (1)	This Agreement shall be governed by and construed in accordance with 
the laws and judicial decisions of the State of Illinois (the "State"), except 
as they may be preempted by federal rules, regulations and laws applicable to 
the Issuer.  The Issuer and the Borrower expressly acknowledge and agree that 
any judicial action to enforce any rights of the Issuer under this Agreement 
shall be brought and maintained at the option of the Issuer in Kane County, 
Illinois, in the United States District Court for the Northern District of 
Illinois, or in any United States Bankruptcy Court in any case involving or 
having jurisdiction over the Borrower, over the Covey Project or over the Park 
Trace Project.

     (2)	The words "herein," "hereof" and "hereunder" and words of similar 
import, without reference to any particular section or subdivision, refer to 
this Agreement as a whole rather than to any particular section or subdivision 
of this Agreement.

     (3)	References in this Agreement to any particular article, section or 
subdivision hereof are to the designated article, section or subdivision of 
this Agreement as originally executed.

     (4)	All accounting terms not otherwise defined herein have the meanings 
assigned to them in accordance with tax basis accounting principles; and all 
computations provided for herein shall be made in accordance with tax basis 
accounting principles consistently applied and applied on the same basis as in 
prior years.

     (5)	The Table of Contents and titles of articles and sections herein are 
for convenience of reference only and are not a part of this Agreement, and 
shall not define or limit the provisions hereof.

     (6)	Unless the context hereof clearly requires otherwise, the singular 
shall include the plural and vice versa and the masculine shall include the 
feminine and vice versa.

     (7)	Articles, sections, subsections and clauses mentioned by number only 
are those so numbered which are contained in this Agreement.

     (8)	For purposes of this Agreement and the Indenture, a Petition in 
Bankruptcy shall be deemed dismissed only if the petition is dismissed by 
order of a court of competent jurisdiction and no further appeal rights exist 
from such order.

     (9)	Any opinion of counsel required hereunder shall be a written opinion 
of such counsel.

     (10)	References to the Bonds as "tax exempt" or to the "tax exempt status 
of the Bonds" are to the exclusion of interest on the Bonds from gross income 
for federal income tax purposes pursuant to Section 103(a) of the Code, 
irrespective of such forms of taxation as the alternative minimum tax, 
environmental tax or branch profits tax on foreign corporations, as is 
consistent with the approach taken in Section 59(i) of the Code.






<PAGE>                             - 2 -
                                  ARTICLE II

                     REPRESENTATIONS OF ISSUER AND BORROWER

     Section 2.1.  Representations of the Issuer.  The Issuer makes the 
following representations and warranties as the basis for its covenants herein:

          (1)	The Issuer is a municipal corporation and home rule unit of 
     government under the Constitution of the State.

          (2)	The Issuer has lawful power and authority under the Act to enter 
     into this Agreement and the Indenture and to carry out its obligations 
     hereunder and under the Indenture.  By proper action of its governing 
     body, the Issuer has been duly authorized to execute and deliver this 
     Agreement, acting by and through its duly authorized officers.  The 
     Indenture, the Regulatory Agreement and this Agreement have been duly 
     executed and delivered by the Issuer and each constitutes a valid, legal, 
     binding and enforceable obligation of the Issuer (subject to bankruptcy, 
     insolvency or creditors rights laws generally and principles of equity 
     generally) without offset, defense or counterclaim.  The execution, 
     delivery and performance of the Indenture and this Agreement by the 
     Issuer will not violate any law, regulation, order or decree of any 
     governmental authority and all consents, approvals, authorizations, 
     orders or filings of or with any court or governmental agency or body, if 
     any, required for the execution, delivery and performance of such 
     documents by the Issuer have been obtained or made.

          (3)	There is no pending action, suit or proceeding, arbitration or 
     governmental investigation against such entity, an adverse outcome of 
     which would materially affect performance under the Indenture and this 
     Agreement by the Issuer.

          (4)	The Covey Project constitutes a "project" within the meaning of 
     the Act, and the lending of the proceeds of the Bonds to the Borrower for 
     the purposes specified in this Agreement will further the public purposes 
     of the Act.

          (5)	To refinance the costs of the Covey Project, the Issuer is 
     issuing the Bonds in the aggregate principal amount of $12,410,000.  The 
     Bonds will bear interest and be scheduled to mature and will be subject 
     to tender, purchase and redemption prior to maturity in accordance with 
     the provisions of the Indenture.  The Bonds are to be issued under and 
     secured by the Indenture, pursuant to which the payments, revenues and 
     receipts derived by the Issuer pursuant to this Agreement, other than 
     certain Unassigned Issuer Rights (as defined in Section 4.6), will be 
     pledged and assigned to the Bondholders as security for payment of the 
     principal of, premium, if any, and interest on the Bonds.

          (6)	To its knowledge, no member of the governing body of the Issuer 
     or any other officer or employee of the Issuer has any significant or 
     conflicting interest, financial, employment or otherwise, in the 
     Borrower, the Covey Project or in the transactions contemplated hereby. 

          (7)	Under the provisions of the Indenture, the Issuer's interest in 
     this Agreement and certain payments due under this Agreement are pledged 
     and assigned to the Trustee for the benefit of Bondholders as security 
     for the payment of the principal and purchase price of, and interest and 
     premium, if any, on the Bonds and the Issuer will not otherwise or 
     further assign its interest in this Agreement.

          (8)	To the extent within its reasonable control, the Issuer will not 
     knowingly engage in any activity which might result in the income of the 
     Issuer to be received hereunder becoming taxable to it or interest on the 
     Bonds becoming taxable to the Holders thereof under federal income tax 
     laws.

          (9)	The execution, delivery and performance of the Indenture and 
     this Agreement by the Issuer will not cause or constitute a default under 
     or conflict with its organizational documents or other agreements to 
     which it is a party or otherwise materially adversely affect performance 
     of the duties of the Issuer under such organizational documents or other 
     agreements.




<PAGE>                             - 3 -
     Section 2.2.  Representations of the Borrower.  The Borrower makes the 
following representations and warranties as the basis for its covenants herein:

          (1)	The Borrower is a limited partnership duly formed and validly 
     existing under the laws of the State of Georgia, is in good standing 
     under the laws of the State of Georgia and of the State, and is duly 
     authorized to conduct its business in the State and all other states 
     where its activities require such authorization, has power and authority 
     to enter into this Agreement and the other Related Documents to which the 
     Borrower is a party, and to use the Covey Project and for the purpose set 
     forth in this Agreement, and by proper corporate action has authorized 
     the execution and delivery of this Agreement and the other Related 
     Documents to which the Borrower is a party, and has approved the 
     Indenture.

	         (2)	This Agreement and the other Related Documents to which the 
     Borrower is a party have been duly executed and delivered by the 
     Borrower; such documents constitute valid, legal, binding and enforceable 
     obligations of the Borrower (subject to bankruptcy, insolvency or 
     creditors rights generally and principles of equity generally), without 
     offset, defense or counterclaim; the execution, delivery and performance 
     of such documents by the Borrower will not violate any law, regulation, 
     order or decree of any governmental authority; and all consents, 
     approvals, authorizations, orders or filings of or with any court or 
     governmental agency or body, if any, required for the execution, delivery 
     and performance of such documents by the Borrower have been obtained or 
     made.

          (3)	The execution and delivery of this Agreement and the other 
     Related Documents to which the Borrower is a party, the consummation of 
     the transactions contemplated thereby, and the fulfillment of the terms 
     and conditions thereof do not and will not conflict with or result in a 
     breach of any of the terms or conditions of the Borrower's Limited 
     Partnership Agreement, any restriction or any agreement or instrument to 
     which the Borrower is now a party or by which it is bound or to which any 
     property of the Borrower is subject, and do not and will not constitute a 
     default under any of the foregoing, or, to the best of the Borrower's 
     knowledge, cause the Borrower to be in violation of any order, decree, 
     statute, rule or regulation of any court or any state or federal 
     regulatory body having jurisdiction over the Borrower or the Project and 
     do not and will not result in the creation or imposition of any lien, 
     charge or encumbrance of any nature upon any of the property or assets of 
     the Borrower contrary to the terms of any instrument or agreement to 
     which the Borrower is a party or by which it is bound.

          (4)	The use of the Project, as it is being operated, complies with 
     all presently applicable zoning, development, pollution control, water 
     conservation, environmental and other laws, regulations, rules and 
     ordinances of the federal government and the State and the State of 
     Georgia, as applicable, the respective agencies thereof and the Issuer; 
     the Borrower has obtained all necessary approvals of and licenses, 
     permits, consents and franchises from federal, state, county, municipal 
     or other governmental authorities having jurisdiction over the Project to 
     operate the Project and to enter into, execute and perform its 
     obligations under this Agreement and the other Related Documents to which 
     the Borrower is a party.

          (5)	In addition to the Bonds, no other obligations have been or are 
     expected to be issued before or after the Bonds by or on behalf of any 
     state, territory or possession of the United States, or any political 
     subdivision of any of the foregoing, or the District of Columbia under 
     Section 103 of the Code and regulations, (a) the proceeds of which will 
     be used primarily with respect to facilities, the principal user or users 
     of which will be the Borrower or "related persons" (as defined in Section 
     147(a)(2) of the Code) thereto, and (b) which will be (i) sold (or in the 
     case of variable rate obligations, issued) less than fifteen (15) days 
     apart, (ii) sold (or in the case of variable rate obligations, issued) 
     pursuant to the same plan of financing, and (iii) payable from the same 
     source of funds, determined without regard to guarantees from unrelated 
     parties.






<PAGE>                             - 4 -
          (6)	The Borrower is not in the trade or business of selling 
     properties such as the Covey Project and has acquired the Covey Project 
     for investment purposes only or otherwise for use by the Borrower in its 
     trade or business, and therefore the Borrower has no present intention to 
     voluntarily sell, surrender or otherwise transfer, in whole or part, its 
     interest in the Covey Project in the foreseeable future. 

          (7)	There are no actions, suits, proceedings or inquiries or 
     investigations at law or in equity pending or, to the knowledge of the 
     Borrower, threatened against the Borrower or any property of the Borrower 
     in any court or before any federal, state, municipal or other 
     governmental agency, which, if decided adversely to the Borrower, would 
     have a material adverse effect upon the Borrower or upon the business or 
     properties of the Borrower or upon its power, authority and right to 
     enter into this Agreement and the other Related Documents to which the 
     Borrower is a party; and the Borrower is not in default with respect to 
     any order of any court or governmental agency.

          (8)	The Borrower has not incurred, and will not incur, any 
     indebtedness for borrowed money other than under this Agreement and the 
     Related Documents.

          (9)	The Borrower has filed all federal and state income tax returns, 
     if any, which, to the knowledge of the Borrower, are required to be filed 
     and has paid all taxes shown on said returns and all assessments and 
     governmental charges received by it to the extent that they have become 
     due.

          (10)	The Borrower has reviewed and approved the provisions of the 
     Indenture.

          (11)	To the best of the Borrower's knowledge, no member of the 
     governing body of the Issuer or any other officer of the Issuer has any 
     significant or conflicting interest, financial, employment or otherwise, 
     in the Borrower, the Covey Project or the transactions contemplated 
     hereby.

          (12)	There has been no material adverse change in the financial 
     condition, prospects or business affairs of the Borrower or the 
     feasibility or physical condition of the Project since November 26, 1997.

          (13)	The covenants, representations and warranties of the Borrower 
     in the Regulatory Agreement are true and correct and are incorporated 
     herein by reference and made a part of this Agreement.

          (14)	The Borrower has made and shall continue to make all required 
     contributions to all employee benefit plans, if any, and the Borrower has 
     no knowledge of any material liability which has been incurred by the 
     Borrower which remains unsatisfied for any taxes or penalties with 
     respect to any employee benefit plan or any multi-employer plan, and each 
     such plan as been administered in compliance with its terms and the 
     applicable provisions of ERISA and any other federal or State law.

          (15)	The Borrower (a) has not entered into the transaction or any 
     Related Document with the actual intent to hinder, delay or defraud any 
     creditor, and (b) received reasonably equivalent value in exchange for 
     its obligations hereunder and under the Related Documents.  Giving effect 
     to the transactions contemplated by the Related Documents, the fair 
     salable value of the Borrower's assets exceeds and will, immediately 
     following the execution and delivery of the Related Documents, exceed the 
     Borrower's total liabilities, including, without limitation, 
     subordinated, unliquidated, disputed or contingent liabilities.  The fair 
     salable value of the Borrower's assets is and, immediately following the 
     execution and delivery of the Related Documents, will be greater than the 
     Borrower's probable liabilities, including the maximum amount of its 
     contingent liabilities or its debts as such debts become absolute and 
     matured.  The Borrower's assets do not and, immediately following the 
     execution and delivery of the Related Documents will not, constitute 
     unreasonably small capital to carry out its business as conducted or as 
     proposed to be conducted.  The Borrower does not intend to, and does not 
     believe that it will, incur debts and liabilities (including, without 
     limitation, contingent liabilities and other commitments) beyond its 
     ability to pay such debts as they mature (taking into account the timing 
     and amounts to be payable on or in respect of obligations of the 
     Borrower).

<PAGE>                             - 5 -
          (16)	The Borrower has no known material contingent liabilities.

          (17)	The Borrower has no material financial obligation under any 
     indenture, mortgage, deed of trust, loan or lease agreement or other 
     agreement or instrument to which the Borrower is a party or by which the 
     Borrower or the Project are otherwise bound, other than obligations 
     incurred in the ordinary course of business and other than this Agreement 
     and the other Related Documents to which the Borrower is a party.

          (18)	The Borrower has not borrowed or received other debt financing 
     that has not been heretofore repaid in full.

          (19)	The Borrower is not (a) an "investment company" or a company 
     "controlled by an investment company" within the meaning of the 
     Investment Company Act of 1940, as amended; (b) a "holding company" or a 
     "subsidiary company" of a "holding company" or an "affiliate" of either a 
     "holding company" or a "subsidiary company" within the meaning of the 
     Public Utility Holding Company Act of 1935, as amended; or (c) subject to 
     any other federal or state law or regulation which purports to restrict 
     its ability to borrow money.

          (20)	Except as disclosed in the Title Policy, there are no pending 
     or, to the knowledge of the Borrower, proposed special or other 
     assessments for public improvements affecting the Project, nor, to the 
     knowledge of the Borrower, are there any contemplated improvements to the 
     Project that may result in such special or other assessments.

          (21)	No statement of fact made herein or in the Related Documents to 
     which the Borrower is a party made by the Borrower contains any untrue 
     statement of a material fact or omits to state any material fact 
     necessary to make statements made herein or therein by the Borrower not 
     misleading.  There is no fact presently known to the Borrower which has 
     not been disclosed which adversely affects nor as far as the Borrower can 
     foresee would adversely affect the business, operations or conditions 
     (financial or otherwise) of the Borrower.

          (22)	The Project has adequate rights of access to public ways and is 
     served by adequate water, sanitary sewer and storm drainage facilities.  
     All public utilities necessary to the continued use and enjoyment of the 
     Project as presently used and enjoyed are located in the public 
     right-of-way abutting the Project and all such utilities are connected so 
     as to serve the Project without passing over other property.  All roads 
     necessary for the full utilization of the Project for its current purpose 
     have been completed and dedicated to public use and accepted by all 
     governmental authorities or are the subject of access easements for the 
     benefit of the Project.

          (23)	The Project is not located in a flood hazard area as defined by 
     the Federal Insurance Administration.

     Section 2.3.  General Tax Representations, Warranties and Covenants of 
Borrower.  The Borrower further represents, warrants and covenants as follows:

          (1)	The Borrower presently intends to use or operate the Covey 
     Project in a manner consistent with the Regulatory Agreement and 
     presently intends to use or operate, and will use and operate, the Covey 
     Project in accordance with the terms of the Regulatory Agreement during 
     the period set forth therein, and knows of no reason why the Covey 
     Project will not be so operated.  If in the future there is a cessation 
     of that operation, the Borrower will use its best efforts to resume that 
     operation or accomplish an alternate use by the Borrower or others which 
     will be consistent with the Act and the tax-exempt status of the Bonds.  
     The Borrower is not now in default under the Regulatory Agreement and 
     specifically agrees to continue to meet their requirements.

           (2)	The Borrower will assist the Issuer in filing all appropriate 
     returns, reports and attachments to income tax returns as of now or 
     hereafter required by the provisions of the Code, including without 
     limitation the Information Return for Private Activity Bond Issues (Form 
     8038, Rev. March, 1995) required under the Code.

          (3)	The weighted average maturity of the Bonds, calculated in 
     accordance with the requirements of Section 147(b) of the Code, is less 
     than 120% of the remaining average reasonably expected economic life of 
     the Covey Project.

<PAGE>                             - 6 -
          (4)	No proceeds of the Bonds shall be invested in federally insured 
     deposits or accounts except as part of a bona fide debt service fund or a 
     reasonably required reserve fund.

          (5)	The Borrower covenants and agrees that it will not use or permit 
     the use of any of the funds provided by the Issuer hereunder or any other 
     funds of the Borrower, directly or indirectly, in such manner as would, 
     or enter into, or allow any "related person" (as defined in Section 
     147(a)(2) of the Code) to enter into, any arrangement, formal or 
     informal, for the purchase of the Bonds that would, or take or omit to 
     take any other action that would, to the knowledge of the Borrower, cause 
     the Bonds to be an "arbitrage bond" within the meaning of Section 148 of 
     the Code or "federally guaranteed" within the meaning of Section 149(b) 
     of the Code and applicable regulations promulgated from time to time 
     thereunder.

          (6)	In the event that at any time the Borrower is of the opinion or 
     is otherwise aware that for purposes of this Section 2.3 or Section 5.7 
     of the Indenture it is necessary to restrict or to limit the yield on the 
     investment of any moneys held by, or on behalf of, the Issuer under the 
     Indenture, the Borrower shall obtain an opinion of Bond Counsel, which 
     shall determine the limitations and so instruct and direct in writing the 
     Issuer to take such actions as the Borrower believes are necessary in 
     order to comply with these limitations under the Indenture.

          (7)	The Borrower covenants to comply with the covenants and 
     procedures set forth in Section 5.7 of the Indenture and the 
     Non-Arbitrage Certificate and to deposit in the Rebate Fund such amounts 
     as may be necessary to maintain the amount on deposit in the Rebate Fund 
     at the Rebate Requirement.

          (8)	Notwithstanding any provisions of this Section 2.3, if the 
     Borrower shall provide to the Issuer and the Trustee an opinion of Bond 
     Counsel that any specified action required under this Section 2.3 or 
     Section 5.7 of the Indenture is no longer required or that some further 
     or different action is required to maintain the exclusion from federal 
     income tax of interest on the Bonds, the Issuer, the Trustee and the 
     Borrower may conclusively rely on such opinion in complying with the 
     requirements of this Section 2.3 and Section 5.7 of the Indenture and be 
     protected in so doing, and the covenants hereunder shall be deemed to be 
     modified to that extent.

          (9)	The Borrower further agrees that it shall not discriminate on 
     the basis of race, creed, color, sex, handicap, familial status or 
     national origin in the lease, use or occupancy of the Covey Project or in 
     connection with the employment or application for employment of persons 
     for the construction, operation and management of the Covey Project.

          (10)	The Borrower further warrants and covenants that it has not 
     executed and will not execute any other agreement, or any amendment or 
     supplement to any other agreement, with provisions contradictory to, or 
     in opposition to, the provisions hereof, of the Indenture, of this 
     Agreement, of the Regulatory Agreement, and that in any event, the 
     requirements of this Agreement and the Regulatory Agreement are paramount 
     and controlling as to the rights and obligations herein set forth and 
     supersede any other requirements in conflict herewith and therewith.

          (11)	No Event of Default has occurred and is continuing under the 
     Prior Regulatory Agreement (as defined in the Regulatory Agreement).

     Section 2.4.  Residential Rental Project.  The Borrower covenants and 
agrees to own, operate and manage the Covey Project as a "residential rental 
project" (as such phrase is utilized in Section 103(b)(4)(A) of the Prior 
Code) in accordance with the Regulatory Agreement.

     Section 2.5.  Tax Exemption; Regulatory Agreement.  The Borrower hereby 
covenants, represents and agrees as follows:

          (1)	The Borrower will not take or omit to take any action with 
     respect to this Agreement or the Covey Project that would adversely 
     affect the exclusion of the interest on the Bonds from gross income for 
     federal income tax purposes.




<PAGE>                             - 7 -
          (2)	The Borrower will take such action or actions, including 
     amendment of the Regulatory Agreement, as may be necessary in the opinion 
     of Bond Counsel, to preserve or perfect the exclusion of interest on the 
     Bonds from gross income for federal income tax purposes.

          (3)	The Borrower will file of record such documents and take such 
     other steps as are necessary in order to insure that the requirements and 
     restrictions of the Regulatory Agreement will be binding upon all owners 
     of the Covey Project, including, but not limited to, the execution and 
     recordation of the Regulatory Agreement in the real property records of 
     Kane County and DuPage County, Illinois.

          (4)	The Borrower will include the requirements and restrictions 
     contained in the Regulatory Agreement in any deed or other document 
     transferring any interest in the Covey Project to another person to the 
     end that such transferee has notice of, and is bound by such 
     restrictions, and to obtain the agreement from any transferee so to abide.

          (5)	The Borrower will provide to the Issuer and the Trustee notice 
     of any action (other than actions in its ordinary course of business) 
     which impacts the Issuer's rights hereunder or under the Regulatory 
     Agreement.

     Section 2.6.  Representations of Borrower as Single Purpose Entity. 

     (1)	The Borrower covenants and agrees that it shall not:

          (a)	(i) incur, create or assume any indebtedness except (A) 
     indebtedness in an amount not to exceed $150,000 incurred in the ordinary 
     course of business and payable within 60 days of the date the 
     indebtedness was incurred, represented by an invoice, statement of 
     account, check, work request, purchase order or other similar document 
     representing expenses relating to activities of the Borrower undertaken 
     in accordance with its charter, or (B) indebtedness which will not result 
     in a downgrade, withdrawal or qualification of the rating on the Bonds as 
     confirmed in writing by the Rating Agency, or (ii) transfer or lease the 
     Project or any interest therein, except as permitted under the Mortgage;

          (b)	engage, directly or indirectly, in any business other than that 
     arising out of or entering into this Agreement and the other Related 
     Documents to which the Borrower is a party and the ownership, management, 
     leasing, construction, development, operation and maintenance of the 
     Project;

          (c)	commingle its assets with the assets of any other entity;

          (d)	partition the Project;

          (e)	without the unanimous consent of its partners (including the 
     vote of the Independent Director (as hereinafter defined) of the general 
     partner), voluntarily file or consent to the filing of a petition for 
     bankruptcy, reorganization, assignment for the benefit of creditors or 
     similar proceeding under any federal or state bankruptcy, insolvency, 
     reorganization or other similar law;

          (f)	while the Bonds are outstanding, the Borrower or its general 
     partner shall not (i) dissolve, liquidate, consolidate, merge or sell 
     substantially all of its assets; or (ii) engage in any business other 
     than the ownership and operation of the Project; or

          (g)	amend the Limited Partnership Agreement without written 
     confirmation from the Rating Agency that the rating on the Bonds shall 
     not be downgraded, withdrawn or qualified as a result thereof.

     The Borrower represents and warrants that as of the date hereof it does 
not have any indebtedness or obligations which would cause it to be in 
violation of the foregoing covenants.









<PAGE>                             - 8 -
     Further, the Borrower covenants that it will do or cause to be done all 
things necessary to preserve and keep in full force and effect its existence, 
will not engage in, seek or consent to any dissolution, winding up, 
liquidation, consolidation, merger or asset sale, and will maintain adequate 
capitalization (taking into account, among other things, the market value of 
its assets) for its business purposes; will pay all expenses of the Project 
from assets of the Borrower; will maintain separate books and records and bank 
accounts and will maintain a separate business office (which may be a 
management office at the Project); will at all times hold itself out to the 
public as a separate and distinct legal entity (including in its leasing 
activities, in entering into any contract and in preparing its financial 
statements) and will observe partnership formalities in conducting its 
business; will file its own tax returns and other financial statements or, if 
part of a consolidated group, will join in the consolidated tax return of such 
group as a separate member thereof; and will cause its management to meet 
regularly to carry on its business.

     (2)	The Borrower shall do all things necessary to preserve and keep in 
full force and effect its existence, rights and privileges under the laws of 
the State of Georgia and its right to own and operate the Project under the 
terms of this Agreement and otherwise transact business in the State and the 
State of Georgia.  The Borrower hereby represents and warrants that the 
Borrower (i) is a duly organized and validly existing limited partnership 
under the laws of the State of Georgia and is duly authorized to conduct its 
business in the State and all other states where its activities require such 
authorization, (ii) has the power and authority to own its properties and to 
carry on its business as now being conducted and as proposed to be conducted, 
and (iii) has the power to execute, deliver and perform its obligations under 
this Agreement and all of the other Related Documents.  The execution and 
delivery by the Borrower of this Agreement and each of the other Related 
Documents to be executed by the Borrower, the Borrower's performance of its 
respective obligations hereunder and thereunder and the creation of the 
security interest and liens provided for in the Mortgage and the other Related 
Documents, to which the Borrower is a party, have been duly authorized by all 
requisite action on the part of the Borrower, and will not violate any legal 
requirement, any order of any court or other governmental authority, the 
Limited Partnership Agreement of the Borrower or any material indenture, 
agreement or other instrument to which the Borrower is a party, or by which 
the Borrower is bound, or be in conflict with, result in a breach of, 
constitute (with due notice or lapse of time or both) a default under any of 
the foregoing or result in the creation or imposition of any Lien, of any 
nature whatsoever, upon any of the property or assets of the Borrower except 
the Liens created under the Mortgage and under the other Related Documents to 
which the Borrower is a party.  The Borrower is not required to obtain any 
consent, approval or authorization from, or to file any declaration or 
statement with, any governmental authority in connection with or as a 
condition to the execution, delivery or performance of this Agreement or the 
other Related Documents by the Borrower.  The Borrower further represents and 
warrants that it is, and, so long as this Agreement shall remain in effect, 
shall do all things necessary to continue to be, an entity which is formed or 
organized solely for the purpose of holding, directly, an ownership interest 
in the Project, does not engage in any business unrelated to the Project and 
the financing thereof, does not have any assets other than those related to 
its interest in the Project or the financing thereof or any indebtedness other 
than as permitted by the Mortgage or the other Related Documents to which the 
Borrower is a party, has its own separate books and records and its own 
accounts, in each case which are separate and apart from the books and records 
and accounts of any other entity and will maintain the same as official 
records, holds itself out as being an entity, separate and apart from any 
other entity and will conduct its business in its own name.

     (3)	At least one general partner of the Borrower is a corporation meeting 
the Single Purpose Entity requirements of the Rating Agency and has at least 
one duly appointed member of its board of directors who shall not have been, 
at the time of such appointment or at any time in the preceding five years, a 
direct or indirect legal or beneficial owner in the general partner of the 
Borrower or the Borrower or of the affiliates of either, a creditor, supplier, 
employee, director, manager or contractor (or member of the immediate family 
of any of the foregoing) of the general partner of the Borrower or the 
Borrower or any of the affiliates of either or a person who controls the 
general partner of the Borrower or the Borrower or the affiliates of either 
(an "Independent Director").  Each general partner of the Borrower will not 
cause or allow, and will not cause or allow the general partner's board of 
directors to take any action requiring the unanimous affirmative vote of 100% 
of the members of its board of directors unless an Independent Director shall 
have participated in such vote.
<PAGE>                             - 9 -
     (4)	The Borrower's Limited Partnership Agreement shall provide that, so 
long as the Bonds are Outstanding, the Borrower will only dissolve upon the 
bankruptcy of the general partner.

     (5)	The Borrower will not fail to correct any known misunderstanding 
regarding the separate identity of the Borrower.

     (6)	The Borrower will not assume or guarantee or become obligated for the 
debts of any other entity or hold out its credit as being available to satisfy 
the obligations of any other entity; will allocate fairly and reasonably any 
overhead for shared office space; will not pledge its assets for the benefit 
of any other person or entity; will not make loans to any person or entity; 
will not identify its affiliates as a division or part of the Borrower and 
will not enter into or be a party to any transaction with its affiliates 
except in the ordinary course of business and on terms which are intrinsically 
fair and are no less favorable to it than would be obtained in a comparable 
arm's-length transaction with an unrelated third party.

     (7)	Financial and operational services, including, without limitation, 
maintenance of the Borrower's books and records, have been and will be 
performed on behalf of the Borrower by its general partner or by independent 
contractors engaged by its General Partner.  The Borrower has and will make 
payments to its general partner or such independent contractors for services 
rendered and expenses incurred on its behalf in an amount equal to the fair 
value of such services and expenses.  To the extent the Borrower leases 
premises from the Manager, the Borrower has paid and will pay compensation or 
rental that is intrinsically fair and not less favorable to the Borrower than 
would be obtained in a transaction with an unrelated third party.

     (8)	All distributions of the Borrower to the Manager have been and will 
be declared and paid by the Borrower in accordance with applicable law.  There 
are no agreements with respect to the Manager, written or otherwise, between 
the Borrower and any third party, including the Manager, pursuant to which the 
Borrower or such third party has agreed to extend credit or make payment to or 
for, or guaranty the performance of, the other.

     (9)	The Borrower shall comply with the provisions of the Borrower's 
Limited Partnership Agreement and the uniform limited partnership law of the 
State of Georgia.

     (10)	There are no agreements between or among the Borrower and the 
Manager other than the (i) with respect to the Covey Project, the Property 
Management Agreement dated August 1, 1992, as amended by the Addendum to 
Property Management Agreement dated as of July 1, 1995, each between America 
First Apartment Investors, L.P. and the Manager, assigned to the Borrower 
pursuant to the Assignment of Property Management Agreement dated as of 
December 11, 1997, and (ii) with respect to the Park Trace Project, the 
Property Management Agreement dated as of November 1, 1997, between the 
Borrower and the Manager.  There are no agreements, written or oral, with any 
party or course of prior dealing that would supplement, qualify, define, amend 
or otherwise modify the terms of the Borrower's Limited Partnership Agreement.

     (11)	The Borrower will not acquire obligations or securities of its 
partners or of the partners, members or shareholders of its partners.

     (12)	Correspondence on behalf of the Borrower shall be sent on its own 
letterhead (if any) or on the letterhead of the Manager.

     Any limited partnership which can make the representations and warranties 
and satisfy the covenants set forth in this Section 2.6 shall constitute a 
"Single Purpose Entity."

                                 ARTICLE III

                   ISSUANCE OF BONDS; PAYMENT OF COSTS

     Section 3.1.  Issuance of Bonds.  The Issuer has contracted for the sale 
of the Bonds authorized by the Indenture, and the Borrower has approved and 
does approve the terms of the Indenture.  Forthwith upon execution of this 
Agreement, the other Related Documents and the Indenture, or as soon 
thereafter as practicable, the Issuer will execute the Bonds and deliver the 
Bonds to the Underwriter or to its order upon payment of the purchase price 
and filing with the Trustee of the opinion of Bond Counsel as to the legality 
of the Bonds and the furnishing of all other documents required to be 
furnished before such delivery. The proceeds of the Bonds will be deposited 
with the Trustee and disbursed in accordance with Section 5.2 of the Indenture.
<PAGE>                             - 10 -
     Section 3.2.  No Warranty by Issuer.  The Borrower recognizes that, 
because the components of the Project have been and are to be designated and 
selected by it, THE ISSUER HAS NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY 
FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, AND THE ISSUER MAKES NO 
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO 
THE SAME OR THE LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS 
FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF, OR AS TO 
THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL 
RISKS INCIDENT THERETO ARE TO BE BORNE BY THE BORROWER.  IN THE EVENT OF ANY 
DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROJECT OR ANY FIXTURE OR OTHER ITEM 
CONSTITUTING A PORTION THEREOF, WHETHER PATENT OR LATENT, THE ISSUER SHALL 
HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO.  THE PROVISIONS OF 
THIS SECTION 3.2 HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE 
EXCLUSION AND NEGATION OF ANY WARRANTIES OR REPRESENTATIONS BY THE ISSUER, 
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR OTHER ITEM 
CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM 
COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT.

     Section 3.3.  Disbursements From the Bond Proceeds Fund and the Costs of 
Issuance Fund.

     (1)	Pursuant to Section 5.2 of the Indenture, the Issuer has authorized 
and directed the Trustee to deposit the proceeds of the Bonds (other than 
accrued interest on the Bonds) into the Bond Proceeds Fund and to immediately 
transfer the balance in the Bond Proceeds Fund to the Prior Note Holder (as 
defined in Exhibit A to the Indenture) to be applied solely to the redemption 
of the Prior Note.

     (2)	The Issuer has authorized and directed the Trustee to make payments 
from the Costs of Issuance Fund to pay the costs of issuing the Bonds, and to 
reimburse the Borrower for any of the foregoing paid or incurred by the 
Borrower before or after the execution and delivery of this Agreement and the 
issuance and delivery of the Bonds in accordance with the requirements of 
Section 5.10 of the Indenture.

     Section 3.4.  Payment of Issuance Costs by Borrower.  The Borrower agrees 
that it will provide any and all funds required for the prompt and full 
payment of all costs of issuance of the Bonds, including, but not limited to, 
the following items:

          (1)	all legal (including Bond Counsel and counsel to the Borrower, 
     the Underwriter and the Trustee), abstractors', financial and accounting 
     fees and expenses, administrative fees, Rating Agency fees, printing and 
     engraving costs and other expenses incurred and to be incurred on or 
     before or in connection with issuance of the Bonds;

          (2)	premiums on all insurance required to be taken out and 
     maintained until this Agreement is terminated pursuant to Section 8.3 
     hereof;

          (3)	all mortgage registry taxes and recording fees and other taxes, 
     charges, assessments, license or registration fees of every nature 
     whatsoever incurred and to be incurred in connection with this financing;

          (4)	all initial fees and expenses of the Trustee, the Paying Agent 
     and the Issuer; 

          (5)	all fees and expenses for title insurance, survey and related 
     matters; and

          (6)	other costs of issuance.	

     Section 3.5.  Title Insurance.

     (1)	The Borrower agrees to furnish to the Issuer and the Trustee a 
mortgagee's policy or policies of title insurance issued by the Title Company, 
in Standard ALTA form, dated the Dated Date concerning the Project (the "Title 
Policy"), in form and substance reasonably satisfactory to the Issuer, naming 
the Issuer and the Trustee as insureds, in an amount not less than the 
original principal amount of the Bonds, insuring:

          (a)	that fee title to the Premises is in the Borrower;

          (b)	that the Mortgage is a valid first lien upon the Premises, 
     subject only to Permitted Encumbrances defined in the Mortgage;

<PAGE>                             - 11 -
          (c)	that the Project and its use does not violate any zoning or 
     other use restrictions covering the Premises and that coverage provided 
     includes the standard ALTA "Form 9" endorsement, if available, or, if not 
     available, an endorsement which, in the opinion of Independent Counsel, 
     is comparable;

          (d)	that the following standard exceptions be waived and insured: 

     (i) facts which would be disclosed by a comprehensive survey of the 
     Premises, (ii) mechanic's, contractors' or materialmen's liens and lien 
     claims, (iii) rights of parties in possession other than residential 
     tenants under leases with a term of one year or less and (iv) all other 
     exceptions noted in Schedule B, Section 1 of the Title Policy; and

          (e)	such other matters as the Issuer or the Trustee may reasonably 
     request.

     (2)	At such time or times as provided in Section 5.8 of the Indenture, 
the Borrower agrees to furnish to the Issuer and the Trustee, at the 
Borrower's expense, a title search certificate addressed to the Issuer and the 
Trustee evidencing, in conjunction with any lien waivers, lien-free completion 
of the repair or restoration of the Project.

     (3)	The Borrower hereby represents that the Permitted Encumbrances do not 
and will not materially adversely affect (a) the ability of the Borrower to 
pay the Basic Payments in a timely manner or (b) the use or operation of the 
Project for the use currently being made thereof or the value of the Project.

     (4)	The Borrower has good and marketable fee simple title to the Project, 
and good title to the personal property, subject to no liens, charges or 
encumbrances other than the Permitted Encumbrances.

     (5)	Upon the execution by the Borrower and the recording of the Mortgage, 
and upon the execution and filing of UCC-1 financing statements, the Trustee 
will have a valid first lien on the Project and a valid security interest in 
the personal property subject to no liens, charges or encumbrances other than 
the Permitted Encumbrances.

     Section 3.6.  Establishment of Rate Period for the Bonds.  Not less than 
60 days prior to the Rate Adjustment Date, commencing 60 days prior to the 
Initial Rate Adjustment Date, the Borrower will give written notice to the 
Trustee, the Tender Agent, the Rating Agency and the Remarketing Agent of the 
Rate Period to be in effect for the Bonds commencing with the Initial Rate 
Adjustment Date and any subsequent Rate Adjustment Date and the Rating 
Agency's expected rating on the Bonds effective on the Rate Adjustment Date 
(which rating must be no lower than "A-" on the Rate Adjustment Date).


                                 ARTICLE IV

             THE LOAN, LOAN REPAYMENT AND ADDITIONAL CHARGES

     Section 4.1.	The Loan.

     (1)	The Issuer agrees, upon the terms and conditions specified in this 
Agreement, to lend to the Borrower the proceeds received by the Issuer from 
the sale of the Bonds, excluding any accrued interest, by causing the proceeds 
to be deposited with the Trustee for disposition as provided in this Agreement 
and in the Indenture.  The obligation of the Issuer to make the Loan shall be 
deemed fully discharged upon the deposit of the proceeds of the Bonds with the 
Trustee.  The Loan shall be evidenced by the Note, in the form attached as 
Exhibit A.  Contemporaneously with the issuance of the Bonds, the Issuer will 
endorse the Note without recourse to the order of and will pledge the Note to 
the Trustee, as the assignee of the Issuer.  The Borrower will repay the Loan 
in accordance with the provisions of the Note and this Agreement.

     (2)	Notwithstanding anything to the contrary contained herein, the 
Borrower covenants that it shall make payments, at such times and in such 
amount to assure that payment of the principal of and premium, if any, and 
interest on the Bonds shall be made when due, whether at maturity, by call for 
redemption, by declaration or otherwise.





<PAGE>                             - 12 -
     Section 4.2.  Loan Repayment.

     (1)	Subject to the Borrower's right of prepayment granted in Article 
VIII, the Borrower acknowledges its indebtedness to the Issuer and agrees to 
repay the Loan, and to pay interest on the amount of the Loan outstanding from 
time to time, in the amounts and at the times necessary to enable the Trustee, 
on behalf of the Issuer, to pay all amounts payable with respect to the Bonds 
when due, whether as principal, premium, interest or otherwise, and whether at 
maturity or by redemption or acceleration of maturity or otherwise ("Basic 
Payments").  To provide for the payment of the Basic Payments, the Borrower 
covenants to pay or cause to be paid to the Trustee and hereby assigns to the 
Trustee all Project Revenues and Extraordinary Revenues.  Amounts in the 
Surplus Fund in excess of $5,000 shall be distributed to the Borrower promptly 
as provided in Section 5.4(2) of the Indenture upon the Trustee's receipt of a 
certificate of the Borrower that no accounts payable by the Borrower are more 
than 60 days past due, except those which are being contested in good faith by 
the Borrower.  The Borrower hereby agrees that all Project Revenues received 
by the Borrower shall be transferred to the Trustee within one Business Day of 
receipt.  The Borrower and the Manager are solely responsible for the 
collection of rentals paid by tenants of the Project.  The Borrower will 
deposit Project Revenues in a depository account established in the name of 
the Borrower with a federal depository institution or state-chartered 
depository institution subject to regulations regarding fiduciary funds on 
deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b) 
solely for that purpose, which account will be invested in Permitted 
Investments.  The aggregate amount of all accounts maintained by the Borrower 
at any one such depository shall not exceed $100,000.  The Trustee is under no 
obligation to monitor receipt of rents paid by tenants.  The Borrower may 
retain in its depository account a balance of up to $10,000 from the Project 
Revenues to cover insufficient funds checks from tenants.  The Borrower 
further agrees that all Proceeds shall be held, disbursed and utilized as 
provided in Section 3.14 of the Covey Project Mortgage and Section 3.13 of the 
Park Trace Project Mortgage, as applicable.

     (2)	The Borrower hereby appoints the Trustee as the general depository to 
receive any moneys derived from the Project and tenant rentals during all 
times when the Bonds shall be Outstanding, and to hold such moneys in trust 
pursuant hereto.

     Section 4.3.  Additional Charges.  The Borrower agrees to pay, when due, 
all costs and expenses incurred in connection with the issuance of the Bonds 
(in the aggregate, the "Additional Charges"), including without limitation, 
the expenses listed in Section 3.4, the Ordinary Fees and Expenses, and each 
and all of the following:

          (1)	upon the occurrence of an Event of Default under the Indenture, 
     or otherwise with the prior written consent of the Borrower, to or upon 
     the order of the Trustee, when due, all fees of the Trustee for services 
     rendered under the Indenture and as agent of the Borrower under the 
     Continuing Disclosure Agreement and any other amounts due under Section 
     7.4 which are not included in Ordinary Fees and Expenses, and all fees 
     and charges of any registrars, legal counsel, accountants, engineers, 
     public agencies and others incurred in the performance, on request of the 
     Issuer, of services required under the Indenture for which such persons 
     are entitled to payment or reimbursement, provided that the Borrower may, 
     upon notice to the Issuer and without creating a default hereunder, 
     contest in good faith the necessity or reasonableness of any such 
     services, fees or expenses other than Ordinary Fees and Expenses, as set 
     forth in the Indenture, any fees or charges of public agencies and any 
     fees or expenses resulting directly or indirectly from a default by the 
     Borrower;

          (2)(a)	all indemnity payments required to be made under Section 7.4 
     (such indemnity payments being due to the Issuer upon written demand 
     therefor and accruing interest at the Default Rate following 60 days 
     after notice of demand therefor); (b) all reasonable expenses (including 
     reasonable legal fees under Section 9.5) and expenses incurred by the 
     Issuer to exercise its rights under this Agreement following an Event of 
     Default; and (c) all other expenses incurred by the Issuer in relation to 
     the Project which are not otherwise required to be paid by the Borrower 
     under the terms of this Agreement or any separate fee agreement, 
     including costs incurred as a result of a request by the Borrower; 

          (3)	interest, at the Default Rate, on all payments not made by the 
     Borrower under Section 4.2 and under this Section 4.3 when due, to the 
     parties entitled thereto; and
<PAGE>                             - 13 -
          (4)	(i) to pay to the Trustee and the Tender Agent from time to time 
     reasonable compensation for all services rendered by it (including the 
     reasonable compensation, expenses and disbursements of its agents and 
     counsel) under the Indenture and any other agreements relating to the 
     Bonds to which the Trustee is a party; (ii) except as otherwise expressly 
     provided in the Indenture, this Agreement or such other agreements 
     related to the Bonds or the Project, to reimburse the Trustee and the 
     Tender Agent upon its request for all reasonable fees, expenses, 
     disbursements and advances (including reasonable counsel fees) incurred 
     or made by the Trustee and the Tender Agent (provided that the Trustee or 
     the Tender Agent shall not be required to make advances) in accordance 
     with any provision of the Indenture or other agreements to which the 
     Trustee or the Tender Agent is a party (including, but not limited to, 
     the reasonable compensation and the expenses and disbursements of their 
     agents and counsel and the cost of printing Bonds), except any such 
     expense, disbursement or advance (provided that the Trustee or the Tender 
     Agent shall not be required to make advances) as may be attributable to 
     its negligence or willful misconduct, (iii) to the Trustee for deposit to 
     the Rebate Fund, arbitrage rebate as calculated by the Arbitrage 
     Consultant in accordance with the Non-Arbitrage Certificate, and (iv) to 
     pay to the Arbitrage Consultant reasonable compensation for all services 
     rendered by it.

     Section 4.4.  Borrower's Obligations Unconditional.  The obligations of 
the Borrower to perform and observe the other agreements on its part contained 
herein shall be absolute and unconditional and payment of the Basic Payments 
and the Additional Charges and all other payments required of the Borrower 
under this Agreement shall be paid without notice or demand and without 
setoff, counterclaim, or defense for any reason and without abatement or 
deduction or defense (except for a defense based on prepayment pursuant to 
Section 8.1).  The Borrower will not suspend or discontinue any such payments, 
and will perform and observe all of its other agreements in this Agreement, 
and, except as expressly permitted in Section 8.4, will not terminate this 
Agreement for any cause, including but not limited to any acts or 
circumstances that may constitute failure of consideration, destruction or 
damage to the Project or the Borrower's business, the taking of the Project or 
the Borrower's business by Condemnation or otherwise, the lawful prohibition 
of the Borrower's use of the Project or the Borrower's business, the 
interference with such use by any private person or corporation, the 
invalidity or unenforceability or lack of due authorization or other infirmity 
of this Agreement, the lack of right, power or authority of the Issuer to 
enter into this Agreement, eviction by paramount title, commercial frustration 
of purpose, bankruptcy or insolvency of the Issuer or the Trustee, change in 
the tax or other laws or administrative rulings or actions of the United 
States of America or of the State or any political subdivision thereof, or 
failure of the Issuer to perform and observe any agreement, whether express or 
implied, or any duty, liability or obligation arising out of or connected with 
this Agreement, or for any other cause whether similar or dissimilar to the 
foregoing, any present or future law to the contrary notwithstanding, it being 
the intention of the parties hereto that the payment of Basic Payments and 
other amounts payable by the Borrower under this Agreement and the Note shall 
be paid in full when due without any delay or diminution whatever.

     Section 4.5.  Borrower's Remedies.  Nothing contained in this Article 
shall be construed to release the Issuer from the performance of any of its 
agreements herein, and if the Issuer should fail to perform any such 
agreements, the Borrower may (subject to the limitations of Section 10.8) 
institute such action against the Issuer as the Borrower may deem necessary to 
compel such performance so long as such action shall not violate the 
Borrower's agreements in Section 4.4 or diminish or delay the amounts required 
to be paid by the Borrower pursuant to Sections 4.2 and 4.3.  The Borrower, 
however, acknowledges and agrees that any pecuniary obligation of the Issuer 
created by or arising out of this Agreement shall be payable solely out of the 
proceeds derived from this Agreement, the sale of the Bonds, any insurance and 
Condemnation awards, or amounts received upon the sale or other disposition of 
the Project upon a default by the Borrower or otherwise.










<PAGE>                             - 14 -
     Section 4.6.  Assignment of Issuer's Rights.  As security for the payment 
of the Bonds, the Issuer will pledge the amounts payable hereunder and assign, 
without recourse or liability, to the Trustee, the Issuer's rights under this 
Agreement, including the right to receive payments hereunder (but excluding 
the Unassigned Issuer's Rights, and hereby directs the Borrower to make said 
payments directly to the Trustee, or otherwise upon the order of the Trustee.  
The Borrower herewith assents to such assignment and will make payments under 
this Agreement directly to the Trustee, or otherwise upon the order of the 
Trustee without defense or setoff by reason of any dispute between the 
Borrower and the Issuer, the Bondholders or the Trustee.

                                  ARTICLE V

                              PROJECT COVENANTS

     Section 5.1.  Project, Title, Operation and Maintenance.

     (1)	The Issuer shall not be under any obligation to operate, maintain or 
repair the Premises.  The Borrower agrees that until this Agreement is 
terminated pursuant to Section 8.4, it will, at its own expense, (a) keep the 
Project in safe repair and in such operating condition as is needed for its 
operations; (b) make all necessary repairs and replacements to the Premises 
(whether ordinary or extraordinary, structural or nonstructural); (c) operate 
the Project in a sound and economic manner in accordance with usual business 
practice; and (d) operate the Project in compliance with all applicable 
environmental laws, zoning laws, the Americans with Disabilities Act of 1990 
and laws regulating construction, occupancy or maintenance of property of a 
character included in the Project.

     (2)	The Borrower shall pay all expenses of the operation and maintenance 
of the Project including, but without limitation, adequate insurance thereon 
and insurance against all liability for injury to persons or property arising 
from the operation thereof, and all taxes and special assessments levied upon 
or with respect to the Project and payable during the Term of this Agreement, 
all in conformance with and subject to any good faith contest provisions 
provided in the Mortgage.

     (3)	In the event the Borrower shall fail to maintain, or cause to be 
maintained, the full insurance coverage required by this Agreement or shall 
fail to keep the Project in as reasonably safe condition as its operating 
conditions will permit, or shall fail to keep the Project in good repair and 
good operating condition and make all necessary repairs and replacements to 
the Project, the Issuer or the Trustee may (but shall be under no obligation 
to) contract for the required policies of insurance and pay the premiums on 
the same or make any required repairs, renewals and replacements; and the 
Borrower agrees to reimburse the Issuer or the Trustee to the extent of the 
amounts so advanced, and in addition shall pay interest on any such amount at 
the Default Rate from the date such amount was due until the date such amount 
was paid or reimbursed by the Borrower.

     (4)	The Borrower shall obtain or cause to be obtained all necessary 
permits and approvals for the operation and maintenance of the Project and 
shall comply with all lawful requirements of any governmental body regarding 
the use or condition of the Project, whether existing or later enacted or 
whether involving any change in governmental policy or requiring structural or 
other changes to part or all of the Project and irrespective of the cost of 
making the same.

     (5)	Notwithstanding the provisions of this Section 5.1, the Borrower may 
in good faith contest the validity or the applicability of any law, ordinance, 
rule or regulation provided that during the period of such contest and any 
appeal therefrom, (i) such failure to comply with such requirement or 
requirements will not adversely affect the lien of the Mortgage or the 
Assignment or materially endanger such liens or the Project or any part 
thereof, (ii) will not subject the Project or any part thereof to loss or 
forfeiture and (iii) the Borrower will post with the Trustee, for the benefit 
of the Bondholders, cash or a bond in an amount equal to 125% of the disputed 
amount.

     (6)	The Borrower agrees not to permit or suffer others to commit a 
nuisance in or about the Premises or themselves commit a nuisance in 
connection with their use or occupancy of the Premises.




<PAGE>                             - 15 -
     Section 5.2.  Sale, Transfer or Disposition of Borrower's Interest in 
Project.  Except as otherwise provided in Section 2.3 of the Mortgage and, 
with respect to the Covey Project, Section 10 of the Regulatory Agreement, the 
Borrower will not sell, transfer or otherwise dispose of its interest in the 
Project under this Agreement, or any portion thereof, except to a purchaser 
which qualifies as a Single Purpose Entity (as such term is defined in Section 
2.6).  Upon the satisfaction of the conditions set forth therein, the assignor 
shall be relieved of all further liability occurring on and after the 
effective date of the sale, transfer or disposition.

     Section 5.3.  Advances.  The Borrower acknowledges and agrees that under 
this Agreement and certain of the other Related Documents, the Bondholders 
may, but shall be under no obligation to, take certain action and make certain 
advances relating to the Project from certain funds held under the Indenture 
or otherwise, or to certain other matters as expressly provided therein, and 
the Borrower shall be obligated to repay all such advances on demand with 
interest from the date such payment was originally due until paid, at the 
Default Rate.

     Section 5.4.  Alterations to the Project and Removal of Equipment.

     (1)	The Borrower shall not, except as provided in the Mortgage, remodel 
or make any additions, modifications, alterations, improvements or changes 
(collectively referred to as "alterations") in or to the Project or remove any 
equipment therefrom other than in the ordinary course of business in the 
operation of the Project.  Notwithstanding the provisions of the Covey Project 
Mortgage, no such alteration or removal will be made if to do so would impair 
the character of the Covey Project as a "project" within the meaning of the 
Act, or impair the exclusion of interest on the Bonds from gross income for 
federal income tax purposes.

     (2)	The Borrower shall be entitled to use funds held by the Trustee in 
the Repair and Replacement Subaccount under the Indenture to pay for capital 
improvements, replacements and maintenance, including, but not limited to, 
appliances, air conditioners, furnaces, hot water heaters, roofs, carpeting, 
floor vinyl, decks, pool equipment replacement, concrete replacement, tie 
walls, gutters, downspouts, window replacement, blinds and similar items, and 
for the costs of alterations or replacements.

     Section 5.5.  Insurance.  The Borrower shall procure and maintain, or 
cause to be procured or maintained, continuously in effect during the term of 
this Agreement, policies of insurance, including specifically contractual 
liability insurance (with respect to the indemnifications made by the Borrower 
in the Indenture and in the Related Documents), with respect to the Project 
insuring against such risks and in such amounts as are required by the 
Mortgage.
 
     Section 5.6.	Taxes, Assessments and Other Governmental Charges.  The 
Borrower shall promptly pay and discharge, prior to the same becoming 
delinquent, all taxes and assessments, general and special, and other 
governmental charges of any kind whatsoever that may be lawfully taxed, 
charged, levied, assessed or imposed upon or against or be payable for or in 
respect of the Project, or any part thereof or interest therein or any 
buildings, improvements, machinery and equipment at any time installed thereon 
by the Borrower, or the income therefrom or Basic Payments and other amounts 
payable under this Agreement, including any new taxes and assessments not of 
the kind enumerated above to the extent that the same are lawfully made, 
levied or assessed in lieu of or in addition to taxes or assessments now 
customarily levied against real or personal property, and further including 
all utility charges, assessments and other general governmental charges and 
impositions whatsoever, foreseen or unforeseen, which if not paid when due 
would impair the security of the Bonds or encumber the Borrower's title to the 
Project; provided that with respect to any special assessments or other 
governmental charges that are lawfully levied and assessed which may be paid 
in installments, the Borrower shall be obligated to pay only such installments 
thereof as become due and payable during the Loan Term. 

     Section 5.7.	Utilities.  All utilities and utility services used by the 
Borrower in, on or about the Project shall be paid for by the Borrower and 
shall be contracted for by the Borrower in the Borrower's own name, and the 
Borrower shall, at its sole cost and expense, procure any and all permits, 
licenses or authorizations necessary in connection therewith.




<PAGE>                             - 16 -
                                  ARTICLE VI

                    DAMAGE, DESTRUCTION AND CONDEMNATION

     Section 6.1.  Damage and Destruction.  If there are Outstanding Bonds 
when the Project is damaged or destroyed by fire or other casualty, the 
Borrower shall restore the Project, prepay the Loan in whole or in part or 
take such other action, as is required or permitted by the Mortgage and the 
other Related Documents.

     Section 6.2.  Condemnation.  If there are Outstanding Bonds when the 
Project or any part thereof is taken by Condemnation, the Borrower shall 
restore the Project, prepay the Loan in whole or in part or take such other 
action, as is required or permitted by the Mortgage and the other Related 
Documents.

     Section 6.3.  Parties To Give Notice.  In the case of material damage to 
or destruction of all or any part of the Project, the Borrower shall give 
prompt notice thereof to the Issuer (in the case of the Covey Project only), 
the Trustee and the Rating Agency in the manner prescribed by Section 10.2.  
In the case of a taking or proposed taking of all or any part of the Project 
by Condemnation, the party hereto upon which notice of such taking or proposed 
taking is served shall give prompt notice thereof to the Issuer (in the case 
of the Covey Project only), the Trustee and the Rating Agency in the manner 
prescribed by Section 10.2. Any such notice shall describe generally the 
nature and extent of such damage, destruction, taking or proposed taking.

                                 ARTICLE VII

                             BORROWER'S COVENANTS

     Section 7.1.  Covenant for the Benefit of the Bondholders.  The Borrower 
recognizes the authority of the Issuer to assign its interest in and pledge 
moneys receivable under this Agreement (other than the Unassigned Issuer's 
Rights) to the Trustee as security for the payment of the principal of and 
interest and redemption premiums, if any, on the Bonds, and the payment of all 
Additional Charges.  The Borrower hereby agrees to be bound by, and joins with 
the Issuer in the grant of, a security interest to the Trustee in any right 
and interest the Borrower may have in sums held in the Funds described in 
Article 5 of the Indenture, pursuant to the terms and conditions thereof, to 
secure payment of the Bonds and payments made under the Related Documents.  
Each of the terms and provisions of this Agreement is a covenant for the use 
and benefit of the Bondholders, so long as the Bonds shall remain Outstanding; 
but upon payment in full of the Bonds in accordance with Article 7 of the 
Indenture and of all fees, expenses and charges of the Paying Agent and the 
Trustee, all references in this Agreement to the Bonds and the Bondholders 
thereof shall be ineffective, and the Bondholders shall thereafter have no 
rights hereunder, save and except those that shall have theretofore vested or 
that arise from provisions hereunder which survive termination of this 
Agreement.

     Section 7.2.  Inspection and Access.

     (1)	The Borrower agrees that the Issuer, the Trustee and their duly 
authorized agents, shall have the right to examine and inspect during normal 
business hours, and for that purpose to enter upon, the Premises, and shall 
also have such right of access thereto at reasonable times and under 
reasonable conditions and subject to the rights of tenants in possession as 
may be reasonably necessary to cause the Project to be properly maintained in 
accordance with Article 5 and in accordance with the applicable provisions of 
the other Related Documents.

     (2)	The Borrower hereby covenants to execute, acknowledge and deliver all 
such further documents, and do all such other acts and things as may be 
necessary in order to grant to the Issuer and the Trustee the rights of access 
and entry described herein and agrees that such rights of access and entry 
shall not be terminated, curtailed or otherwise limited by any assignment, 
lease or other transfer of the Premises by the Borrower to any other person 
and subject to the rights of tenants in possession at reasonable times and 
under reasonable conditions. 






<PAGE>                             - 17 -
     Section 7.3.  Annual Statement, Annual Budget, Certificate of Compliance 
and Other Reports and Continuing Disclosure.

     (1)	The Borrower covenants and agrees with the Issuer, as long as any 
amount owed by the Borrower under this Agreement remains unpaid, at the 
Borrower's sole cost and expense, to furnish the Rating Agency, the Trustee 
and any beneficial owner of the lesser of $1,000,000 principal amount of the 
Bonds or 25% of the principal amount of the Bonds then Outstanding (which has 
filed a written request with the Borrower) with annual audited operating 
statements, which shall be prepared by, or with respect to, the Borrower.

     (2)	At the time the Borrower causes to be furnished any annual financial 
statements required by subparagraph (1) above, the Borrower shall also furnish 
to the Rating Agency and the Trustee a certificate, executed by a Borrower 
Representative, declaring that during the same fiscal year covered by such 
statements and continuing to the date of execution of the certificate, the 
Borrower has fully complied with the terms and conditions of this Agreement 
and the other Related Documents.

     (3)	The Borrower shall deliver or cause the Manager to deliver to the 
Trustee, not later than the thirtieth day preceding each Fiscal Year, the 
Annual Budget for such Fiscal Year (for the Fiscal Year commencing January 1, 
1998, not later than January 7, 1998), which shall include all proposed 
Current Expenses with respect to the Project, together with rents and other 
income projected to be produced by the Project.  The Annual Budget may be 
amended from time to time by the Borrower, with the written consent of the 
Manager, or the Manager, with the written consent of the Borrower, as 
applicable.  A copy of any amended Annual Budget shall be promptly provided to 
the Trustee.

     (4)	The Borrower will, at the request of the Underwriter, but at the 
Borrower's sole expense, furnish to the Underwriter at such times and in such 
form as the Underwriter may reasonably require (a) a copy of such other 
reports containing such information as is necessary to comply with any lawful 
reporting or continuing registration requirements imposed by any agency of the 
State under the Act, any other applicable State law or blue sky laws as the 
same now exist or may hereafter be amended or by any agency of any other state 
in which the Bonds have been sold, or (b) such information as is necessary to 
comply with federal securities law; provided in either case that the Borrower 
shall not be required to file a general consent to the service of process in 
any jurisdiction.

     (5)	The Borrower hereby covenants and agrees that it will comply with and 
carry out all of the provisions of the Continuing Disclosure Agreement.  
Notwithstanding any other provision of this Agreement, failure of the Borrower 
to comply with the Continuing Disclosure Agreement shall not be considered an 
Event of Default; however, any Bondholder or Beneficial Owner may take such 
actions as may be necessary and appropriate, including seeking specific 
performance by court order, to cause the Borrower to comply with its 
obligations under this Section 7.3.  For purposes of this Section, "Beneficial 
Owner" means any person which (a) has the power, directly or indirectly, to 
vote or consent with respect to, or to dispose of ownership of, any Bonds 
(including persons holding Bonds through nominees, depositories or other 
intermediaries), or (b) is treated as the owner of any Bonds for federal 
income tax purposes.

     Section 7.4.  Indemnity by Borrower.

     (1)	The Borrower will pay, defend, and will protect, indemnify, and save 
the Trustee, its officers, agents and employees, the Issuer, its officers and 
employees and any person who controls the Issuer within the meaning of the 
Securities Act of 1933 (the "Indemnified Parties") from and against all 
liabilities, losses, damages, costs, expenses (including attorneys' fees), 
causes of action (whether in contract, tort, or otherwise), suits, claims, 
demands and judgments of every kind, character and nature whatsoever 
(collectively referred to herein as the "Liabilities") directly or indirectly 
arising from or relating to the Bonds, this Agreement, the Loan, the Project, 
the Mortgage, the Assignment, the Indenture or any document related to the 
issuance and sale of the Bonds, including, but not limited to, the following:

          (a)	any injury to or death of any person or damage to property in or 
     upon the Project or growing out of or connected with the use, non-use, 
     condition or occupancy of the Project or any part thereof;



<PAGE>                             - 18 -
          (b)	violation of any agreement or condition of this Agreement or any 
     other Related Document;

          (c)	violation by the Borrower of any contract, agreement, or 
     restriction relating to the Project;

          (d)	violation of any law, ordinance, or regulation affecting the 
     Project, or any part thereof or the ownership, occupancy, or use thereof;

          (e)	the issuance and sale of the Bonds or any of them; and

          (f)	any statement, information, or certificate furnished by the 

     Borrower to the Issuer which is misleading, untrue, or incorrect in any 
     respect.

     (2)	The Borrower also agrees to indemnify and hold harmless each of the 
Indemnified Parties from and against the Liabilities directly or indirectly 
arising from or relating to (i) any errors or omissions of any nature 
whatsoever contained in any legal proceedings or other official representation 
or inducement made by the Issuer pertaining to the Bonds, provided, however, 
nothing in this subsection shall be deemed to provide the Issuer with 
indemnification for the Issuer's omissions or misstatements contained in any 
disclosure document relating to the Bonds with respect to the Issuer or any 
unrelated litigation in connection with the Issuer and (ii) any fraud or 
misrepresentations or omissions occurring during any proceedings of the Issuer 
relating to the issuance of the Bonds or pertaining to the financial condition 
of the Borrower which, if known to the Underwriter and the Bondholders 
purchasing the Bonds, might be considered a factor in its decision to purchase 
the Bonds.

     (3)	Nothing in Sections 7.4(1) and 7.4(2) shall be deemed to provide 
indemnification to an Indemnified Party with respect to Liabilities arising 
from the fraud, gross negligence (with respect to the Issuer), negligence 
(with respect to the Trustee), or willful misconduct of such Indemnified Party.

     (4)	Promptly after receipt by an Indemnified Party of notice of the 
commencement of any action or proceeding with respect to which indemnification 
is being sought hereunder, such Indemnified Party will notify the Borrower of 
the commencement of such proceeding.  Such notification shall be a necessary 
condition precedent to indemnification hereunder, but failure to so notify the 
Borrower will not relieve it from any liability to an Indemnified Party which 
the Borrower may have otherwise.  If the Borrower so elects, it may assume the 
defense of such action or proceeding, including the employment of counsel 
reasonably satisfactory to the Indemnified Party and will pay the fees and 
disbursements of such counsel.  No Indemnified Party shall settle any 
complaint, claim, action, suit or other proceeding for which indemnification 
is being sought hereunder, without the prior consent of the Borrower.  
However, notwithstanding the foregoing, (i) if counsel for such Indemnified 
Person and counsel for the Borrower agree that (A) having common counsel to 
represent both the Borrower and the Indemnified Party would present a conflict 
of interest or (B) defenses are available to such Indemnified Party which are 
not available to the Borrower or (i) if the Borrower fails to assume the 
defense of the action or proceeding in a timely manner, then such Indemnified 
Person may employ separate counsel to represent or defend it in any such 
action or proceeding and the Borrower will pay the reasonable fees and 
disbursements of such counsel.  However, in no event shall the Borrower be 
liable for more than one counsel (in addition to any local counsel) separate 
from its own counsel for the Indemnified Parties in connection with any one 
action or separate but similar or related actions in the same jurisdiction 
arising out of the same general allegations or circumstances.  In any action 
or proceeding the defense of which the Borrower assumes, the Indemnified Party 
will have the right to participate in such litigation and to retain its own 
counsel at such Indemnified Party's own expense.

     (5)	The Indemnified Parties, other than the Issuer, shall be considered 
to be third party beneficiaries of this agreement for purposes of Section 
7.4(1)-(4).








<PAGE>                             - 19 -
     Section 7.5.  Status of Borrower.

     (1)	Throughout the term of this Agreement, the Borrower will maintain its 
existence as a limited partnership organized under the laws of the State of 
Georgia, in good standing in the State of Georgia and qualified to transact 
business in the State and the State of Georgia and will not wind up or 
otherwise dispose of all or substantially all of its assets except as provided 
in the Mortgage and Section 5.2 of this Agreement.

     (2)	Notwithstanding the provisions of the Covey Project Mortgage, the 
Borrower shall not effect a merger, consolidation or transfer if the result 
thereof would cause the interest on the Bonds (in the hands of any person who 
is not a "substantial user" of the Covey Project or a "related person") to 
become includable in gross income for federal income tax purposes.

     (3)	Upon any change in the status of the Borrower, by way of 
substitution, sale or otherwise of the Borrower, the Issuer shall be promptly 
informed and, if requested, the Borrower as newly constituted shall deliver to 
the Issuer and the Trustee an instrument in form satisfactory to each of them 
affirming the liability of the Borrower hereunder, subject in all events to 
the terms and conditions of Section 9.11.

     Section 7.6.  Filing of Financing Statements.  The Borrower agrees that 
it will, at its sole expense, file or cause to be filed, any financing 
statements or continuation statements required or requested by the Issuer to 
perfect and preserve the security interest of the Issuer and the Trustee in 
this Agreement and the payments to be made hereunder, as granted in the 
Indenture.  The Borrower further agrees that it will, at its sole expense, 
furnish to the Issuer and the Trustee the opinions and take such actions as 
are required by Section 4.4 of the Indenture in the form and at such times as 
required by Section 4.4 of the Indenture.

     Section 7.7.  Proceedings Relating to a Determination of Taxability.  If 
any action or proceeding is commenced which questions the exclusion of 
interest on the Bonds from gross income under Section 103(a) of the Code or 
which might result in a Determination of Taxability, the Borrower, the Issuer, 
the Trustee or the Bondholders may contest such action or possible 
Determination of Taxability.  All costs of such contest shall be borne by the 
Borrower.  No such action or proceeding shall be settled without the consent 
of the Trustee and the Holders of all Outstanding Bonds. 

                                ARTICLE VIII

                BORROWER'S OPTIONS; TERMINATION OF AGREEMENT

     Section 8.1.  Optional Prepayment.  Except during the continuance of an 
Event of Default, the Borrower may at any time transmit funds directly to the 
Trustee for deposit in the Bond Fund, in addition to amounts, if any, 
otherwise required at that time pursuant to this Agreement, and direct that 
said money, once it has become Protected Funds, be utilized by the Trustee, in 
accordance with the Indenture, to:

          (1)	redeem the Bonds which are then or will be redeemable in 
     accordance with the terms of the Indenture on a date specified by the 
     Borrower, provided that redemption shall not be completed until and 
     unless the moneys deposited in the Bond Fund have become Protected Funds; 
     or

          (2)	provide for the discharge of the Bonds prior to their maturity 
     or redemption date as provided in Section 7.1 of the Indenture on a 
     Discharge Date.

     Section 8.2.  Mandatory Prepayment.  The Borrower shall prepay the Loan 
in whole (i) on the date which is 180 days after the cancellation of a 
mandatory tender of the Bonds on the Rate Adjustment Date in accordance with 
Section 3A.1(3) of the Indenture, or (ii) 90 days after a Determination of 
Taxability.

     Section 8.3.  Direction of Investments.  Except during the continuance of 
an Event of Default, the Borrower shall have the right during the Lease Term 
to direct the Trustee to invest or reinvest all money held for the credit of 
Funds established by Article 5 of the Indenture in accordance with Article 6 
of the Indenture.



<PAGE>                             - 20 -
     Section 8.4.  Termination of Agreement.

     (1)	Except during the continuance of an Event of Default, the Borrower 
shall have the option to terminate this Agreement if (i) the Bonds have been 
paid in full or if provision is otherwise made for payment of the Bonds in 
such manner that the Indenture will be discharged under Article 7 thereof on 
or before the date of termination, (ii) such prepayment and termination is 
allowed by the Mortgage, (iii) the Borrower provides the Trustee and the 
Issuer with an opinion of Bond Counsel to the effect that all such conditions 
have been satisfied and (iv) written notice has been provided to the Rating 
Agency, provided that this Agreement may not be terminated unless and until 
(a) all of the Borrower's obligations under the Related Documents have been 
satisfied and (b) all of the Borrower's obligations with respect to the 
Issuer's fees and any rebate obligation have been satisfied and the Borrower 
has so certified to the Issuer and the Trustee.  All obligations of the 
Borrower under Sections 4.3 and 7.4 shall survive termination of this 
Agreement.

     (2)	Notwithstanding the foregoing, the Borrower may not terminate this 
Agreement unless and until the Trustee has on deposit an amount equal to the 
sum of the following:

          (a)	Protected Funds on deposit in any of the Funds established under 
     Article 5 of the Indenture and available for that purpose which are 
     sufficient to discharge the Indenture in accordance with Article 7 
     thereof; plus

          (b)	to the extent not paid under subsection (a) above, an amount 
     equal to the Trustee's fees, expenses and charges under the Indenture and 
     any other amounts due under Section 7.4 hereof, accrued and, to the 
     extent determinable, to accrue until the Bonds are fully paid and 
     redeemed and all other advances, fees, costs and expenses reasonably 
     incurred and to be incurred on or before the termination date by the 
     Trustee under the Indenture and by the Issuer and the Trustee under this 
     Agreement and/or the other Related Documents; provided that in any event, 
     in order to effect prepayment or discharge of the Outstanding Bonds the 
     Borrower shall, prior to the termination date, satisfy the requirements 
     of Section 8.1, including the requirement that all funds used to redeem 
     the Bonds be Protected Funds.

     (3)	On the termination date, a closing shall be held at any office 
mutually agreed upon among the Issuer, the Borrower and the Trustee (which 
closing may be conducted by first-class mail or recognized overnight delivery 
service).  At the closing the Issuer and the Trustee shall, upon 
acknowledgment of receipt of the sum set forth in subsection (2) above, 
execute and deliver to the Borrower such release and other instruments as the 
Borrower reasonably determines is necessary to terminate this Agreement.  All 
further obligations of the Borrower under this Agreement (except as 
specifically provided in Sections 4.3 and 7.4) shall thereupon terminate, 
provided, however, that the Borrower shall also remain obligated to pay or 
reimburse the Issuer, and the Trustee for the payment of all other fees, costs 
and expenses unaccounted for in the sum paid in accordance with subsection (2) 
above and reasonably incurred before or subsequent to such closing in 
connection with the Bonds and to pay arbitrage rebate.


                                  ARTICLE IX

                       EVENTS OF DEFAULT AND REMEDIES

     Section 9.1.  Events of Default.  Any one or more of the following events 
is an Event of Default under this Agreement, and the term "Event of Default," 
wherever used herein, means any one of the following events, whatever the 
reason for such default and whether it shall be voluntary or involuntary or be 
effected by operation of law or pursuant to any judgment, decree or order of 
any court or any order, rule or regulation of any administrative or 
governmental body:

          (a)	if the Borrower shall fail to pay on the due date thereof (i) 
     any Basic Payment due under Section 4.2 on the date such payment is due; 
     (ii) any Additional Charge when due and such failure shall continue for 5 
     days after receipt by the Borrower of a notice to the Borrower by the 
     Issuer or the Trustee stating that such Additional Charges were not 
     received on the due date; or (iii) the full amount of the Loan on the 
     date specified in Section 8.2;

<PAGE>                             - 21 -
          (b)	if the Borrower shall fail in any respect to observe and perform 
     or shall breach in any respect any other covenant, condition or agreement 
     on its part under this Agreement and shall fail to remedy such default or 
     breach within thirty days after mailing of a notice to it by the Issuer 
     or the Trustee, specifying such default or breach and requesting that it 
     be remedied, or such longer period of time (up to an additional 30 days) 
     as may be necessary to remedy such default or breach provided that (i) 
     the Borrower has commenced action during the 30 days necessary to remedy 
     such default or breach; and (ii) the Borrower is proceeding with 
     reasonable diligence to remedy the default or breach;

          (c)	if an Act of Bankruptcy shall occur with respect to the Borrower 
     or its general partner;

          (d)	if the Borrower or its general partner shall be dissolved, 
     liquidated or cease doing business (other than when a new entity assumes 
     the obligations of the Borrower under the conditions permitting such 
     action contained in Section 5.2 and Section 2.3 of the Mortgage);

          (e)	if a default should occur under the Indenture, the Regulatory 
     Agreement or any Related Document and any applicable period for remedying 
     such default has expired; 

          (f)	abandonment by the Borrower of the Project prior to payment in 
     full of the Bonds when due or pursuant to the provisions of Article 7 of 
     the Indenture, provided that actions taken by the Borrower in accordance 
     with the provisions of this Agreement shall not be a default under this 
     paragraph (f); or

          (g)	if any representation or warranty made by the Borrower in this 
     Agreement, or in any document or certificate furnished to the Issuer, the 
     Trustee, the Bondholders or the Underwriter, in connection herewith or 
     therewith or pursuant hereto or thereto shall prove at any time to be, in 
     any material respect, incorrect or misleading as of the date made.

     Section 9.2.  Remedies.

     (1)	Whenever any Event of Default shall have occurred and be continuing, 
the Trustee may declare all Basic Payments payable for the remainder of the 
Term of this Agreement (in an amount equal to that necessary to pay in full 
the Bonds and the interest thereon, assuming acceleration of the Bonds under 
the Indenture and to pay all other indebtedness due under the Related 
Documents and under this Agreement and the Related Documents) to be 
immediately due and payable, whereupon the same shall become immediately due 
and payable by the Borrower.

     (2)	Subject in all events to the provisions of Section 9.11, whenever any 
Event of Default shall have occurred and be continuing, any one or more of the 
following remedial steps may also be taken to the extent permitted by law:

          (a)	the Trustee, as assignee of the Issuer, subject to paragraph (b) 
     below, may take whatever action at law or in equity may appear necessary 
     or appropriate to collect all sums then due and thereafter to become due, 
     or to enforce performance and observance of any obligation, agreement, 
     covenant, representation or warranty of the Borrower, under this 
     Agreement or any Related Document; or to otherwise compensate the Issuer 
     or the Trustee for any damages on account of such Event of Default; 

          (b)	the Trustee, as assignee of the Issuer, will proceed to exercise 
     its remedies under the Mortgage if the Loan has not been paid in full on 
     the date specified in Section 8.2; and 

          (c)	the Issuer (without the prior written consent of the Trustee if 
     the Trustee is not enforcing the Issuer's rights in a manner to protect 
     the Issuer or is otherwise taking action that brings adverse consequences 
     to the Issuer), may take whatever action at law or in equity may appear 
     necessary or appropriate to enforce its rights of indemnification under 
     Section 7.4 and to collect all sums then due and thereafter to become due 
     to the Issuer under Sections 4.3(2), 7.4 and 9.5 of this Agreement; 
     provided that the Issuer will not take any action which would prejudice 
     the rights of the Trustee or the Bondholders.





<PAGE>                             - 22 -
     Section 9.3.  Disposition of Funds.  Any amounts collected pursuant to 
action taken under Section 9.2 (other than sums collected for the Issuer on 
account of its rights to indemnification and certain direct payments to be 
made to the Issuer under Sections 4.3(2), 7.4 and 9.5 which sums shall be paid 
directly to the Issuer) shall be applied in accordance with the provisions of 
the Indenture.

     Section 9.4.  Nonexclusive Remedies.  No remedy herein conferred upon or 
reserved to the Issuer or the Trustee is intended to be exclusive of any other 
available remedy or remedies, but each and every such remedy shall be 
cumulative and shall be in addition to every other remedy given under this 
Agreement or now or hereafter existing at law or in equity or by statute.  No 
delay or omission to exercise any right or power accruing upon any Event of 
Default shall impair any such right or power or shall be construed to be a 
waiver thereof, but any such right and power may be exercised from time to 
time and as often as may be deemed expedient.  In order to entitle the Issuer 
or the Trustee to exercise any remedy reserved to it in this Article, it shall 
not be necessary to give any notice, other than such notice as may be herein 
expressly required or as may be required by law.

     Section 9.5.  Attorneys' Fees and Expenses.  If an Event of Default shall 
exist under this Agreement and the Issuer or the Trustee employ attorneys or 
incur other expenses for the collection of any amounts due hereunder, or for 
the enforcement of performance of any obligation or agreement on the part of 
the Borrower, the Borrower shall upon demand pay to the Issuer or the Trustee, 
as the case may be, the reasonable fees of such attorneys and such other 
expenses so incurred.

     Section 9.6.  Effect of Waiver.  In the event any agreement contained in 
this Agreement is breached by either party and thereafter such breach is 
waived by the other party, such waiver shall be limited to the particular 
breach so waived and shall not be deemed to waive any other breach hereunder. 

     Section 9.7.  Issuer and Trustee May File Proofs of Claim.  In case of 
the pendency of any receivership, insolvency, liquidation, bankruptcy, 
reorganization, arrangement, adjustment, composition or other judicial 
proceeding relative to the Borrower or the property of the Borrower, the 
Trustee or the Issuer (with the prior consent of the Trustee), shall be 
entitled and empowered, by intervention in such proceeding or otherwise:

          (1)	to file and prove a claim and to file such other papers or 
     documents as may be necessary or advisable in order to have the claims of 
     the Issuer and the Trustee (including any claim for the reasonable 
     compensation, expenses, disbursements and advances of the Issuer and 
     Trustee, their agents and counsel) allowed in such judicial proceeding; 
     and

          (2)	to collect and receive any moneys or other property payable or 
     deliverable on any such claims, and to distribute the same.

     Section 9.8.  Restoration of Positions.  If the Issuer or the Trustee has 
instituted any proceeding to enforce any right or remedy under this Agreement, 
and such proceeding has been discontinued or abandoned for any reason, or has 
been determined adversely to the Issuer or the Trustee, then and in every such 
case the Borrower, the Trustee and the Issuer shall, subject to any 
determination in the proceeding, be restored to the positions they held prior 
to commencement of such proceedings, and thereafter all rights and remedies of 
the Issuer and the Trustee shall continue as though no such proceeding had 
been instituted.

     Section 9.9.  Suits To Protect the Project.  If the Borrower shall fail 
to do so after 30 days prior written notice from the Trustee, the Trustee 
shall have power to institute and to maintain such proceedings as either of 
them may deem expedient to prevent any impairment of the Project or any 
portion thereof, by any acts which may be unlawful or in violation of this 
Agreement, and such suits and proceedings as the Trustee may deem expedient to 
protect its interests in the Project or any portion thereof, including power 
to institute and maintain proceedings to restrain the enforcement of or 
compliance with any governmental enactment, rule or order that may be 
unconstitutional or otherwise invalid, if the enforcement of, or compliance 
with, such enactment, rule or order would impair or adversely affect the 
Project or be prejudicial to the interests of the Trustee.




<PAGE>                             - 23 -
     Section 9.10.  Performance by Third Parties.  The Trustee may permit 
third parties to perform any and all acts or take such action as may be 
necessary for and on behalf of the Borrower to cure any Event of Default 
hereunder.  The acceptance by the Trustee of any such performance by third 
parties shall not in any way diminish or absolve the Borrower of primary 
liability hereunder.

     Section 9.11.  Nonrecourse Obligation.  Except as otherwise provided in 
the Mortgage or as otherwise set forth below, the liability of the Borrower 
under this Agreement shall be limited to the Project and any other collateral 
securing this Agreement, the Indenture or the Bonds.  Notwithstanding the 
foregoing, (i) the Borrower shall be liable under this Agreement for payments 
or expenditures due or to be made under this Agreement to the extent of any 
funds or property of the Project coming into the hands of the Borrower or any 
affiliate of the Borrower which the Borrower has distributed at a time when 
amounts were due and payable by the Borrower hereunder which were not paid or 
at a time when the Borrower was in default hereunder, which default was not 
subsequently cured and (ii) the Borrower shall not be exonerated or exculpated 
and shall be liable for any loss or deficiency suffered or sustained by the 
Issuer or the Trustee as a result of:

          (a)	any fraud or false representations by the Borrower with regard 
     to any matter relating to the financing evidenced and secured by the 
     Bonds, the Indenture and the Related Documents;

          (b)	misapplication of insurance or condemnation proceeds;

          (c)	collection of rents for more than one month in advance and/or 
     failure to apply rents while an Event of Default exists under this 
     Agreement to the payment of current maintenance, repairs, taxes or other 
     bona fide operating expenses to independent third parties for goods 
     purchased or services rendered at arms length prices and terms all of 
     which are recognized as such under generally accepted accounting 
     principles and thereafter to Basic Payments due under Section 4.2 and 
     Additional Charges;

          (d)	failure to deliver security deposits of tenants, together with 
     all interest which is required by law to be paid to such tenants, to the 
     Issuer or the Trustee following an Event of Default and demand therefor 
     by the Issuer or the Trustee;

          (e)	permitting or suffering to occur any intentional or negligent 
     waste of all or any portion of the Project;

          (f)	failure to comply with any law, governmental standard or 
     regulation applicable to the Borrower or the Project with respect to 
     Environmental Laws or Hazardous Materials (as such terms are defined in 
     the Mortgage) or a misrepresentation of the Borrower with respect to the 
     same;

          (g)	any willful misconduct or gross negligence of the Borrower or 
     any intentional tort created or suffered by the Borrower and resulting in 
     loss or damage to the Project;

          (h)	failure to make timely payments of required taxes for the 
     current and any prior years affecting the Project; provided that so long 
     as the Borrower has made all required deposits for the payment of such 
     taxes with the Trustee pursuant to the terms of this Agreement and the 
     Mortgage, the Borrower shall not be liable hereunder;

          (i)	failure by the Borrower to pay Additional Charges under 
     paragraphs (1), (3) and (4) of Section 4.3 of this Agreement or to 
     indemnify the Issuer and the Trustee in accordance with Section 7.4 of 
     this Agreement;

          (j)	liability of the Borrower under Section 8.14 of the Covey 
     Project Mortgage and Section 8.15 of the Park Trace Project Mortgage; or

          (k)	willful failure to observe the covenants set forth in Sections 
     2.2, 2.3, 2.4, 2.5 and 2.6 of this Agreement.






<PAGE>                             - 24-
     Section 9.12.  Trustee's Exercise of the Issuer's Remedies.  Whenever any 
Event of Default has occurred and is continuing, the Trustee may, but except 
as otherwise provided in the Indenture shall not be obligated to, exercise any 
or all of the rights of the Issuer under this Article, upon notice as required 
of the Issuer.  In addition, the Trustee shall have available to it all of the 
remedies prescribed by the Indenture.


                                  ARTICLE X

                             GENERAL PROVISIONS

     Section 10.1.  Amounts Remaining in Funds.  Except during the continuance 
of an Event of Default, any amounts remaining in the Funds created under 
Article 5 of the Indenture upon expiration or earlier termination of this 
Agreement, as provided herein shall be distributed as provided in Section 5.12 
of the Indenture.

     Section 10.2.  Notices.  All notices, certificates or other 
communications hereunder shall be given to all parties identified below, shall 
be in writing (except as otherwise expressly provided herein) and shall be 
sufficiently given and shall be deemed given when delivered by hand delivery, 
telegram or facsimile or served by depositing the same with the United States 
Postal Service, or any official successor thereto, designated as Registered or 
Certified Mail, Return Receipt Requested, bearing adequate postage, or 
delivery by reputable private courier such as Federal Express, Airborne, DHL 
or similar overnight delivery service, and addressed as hereinafter provided.  
Notices, except to the Trustee, shall be deemed given when mailed as provided 
herein.  Notices to the Trustee shall be deemed given only when received by 
the Trustee.  All parties identified below may, by written notice given by 
each to the others, designate any address or addresses to which notices, 
certificates or other communications to them shall be sent when required as 
contemplated by this Agreement.  Any notice, certificate, report, financial 
statement or other communication properly provided by legal counsel on behalf 
of any party hereunder shall be deemed properly provided by the party 
represented by such counsel.  Until otherwise provided by the respective 
parties, all notices, certificates and communications to each of them shall be 
addressed as follows:  	To the Issuer:		City of Aurora, Illinois 				44 East 
Downer Place 				Aurora, Illinois  60507 				Attention:  City Clerk

     To the Borrower:	Park Trace Apartments Limited Partnership
          c/o America First Companies
          19th Floor
          399 Park Avenue
          New York, New York  10022
          Attention:  Joseph Grego

     With a copy to:		America First Companies
          Suite 400
          1004 Farnam Street
          Omaha, Nebraska  68102
          Attention:  Lynn Muse

     To the Trustee:		UMB Bank, N.A.
          928 Grand Avenue, 13th Floor
          Kansas City, Missouri  64106
          Attention:  Corporate Trust Department

     To the Underwriter:	Stern Brothers & Co.
          8000 Maryland Avenue, Suite 1020
          St. Louis, Missouri  63105-3752
          Attention:  Senior Vice President

     Section 10.3.  Binding Effect.  This Agreement shall inure to the benefit 
of and shall be binding upon the Issuer and Borrower and their respective 
successors and assigns.  Insofar as this Agreement provides for rights of the 
Trustee, this Agreement shall also inure to the benefit of the Trustee.









<PAGE>                             - 25 -
     Section 10.4.  Severability.

     (1)	If any provision of this Agreement shall be held or deemed to be or 
shall, in fact, be inoperative or unenforceable as applied in any particular 
case in any jurisdiction or jurisdictions or in all jurisdictions or in all 
cases because it conflicts with any provisions of any constitution or statute 
or rule of public policy, or for any other reason, such circumstances shall 
not have the effect of rendering the provision in question inoperative or 
unenforceable in any other case or circumstance, or of rendering any other 
provisions herein contained invalid, inoperative or unenforceable to any 
extent whatever.

     (2)	The invalidity of any one or more phrases, sentences, clauses or 
paragraphs contained in this Agreement shall not affect the remaining portions 
of this Agreement or any part thereof. 

     Section 10.5.  Amendments, Changes and Modifications.  Except as 
otherwise provided in this Agreement or in the Indenture, subsequent to the 
issuance of the Bonds and before the lien of the Indenture is satisfied and 
discharged in accordance with its terms, this Agreement may not be effectively 
amended, changed, modified, altered or terminated prior to receipt by the 
Trustee of the written consent of the holders of all of the Bonds then 
outstanding (such consent to be obtained as provided in Article 11 of the 
Indenture) and the Issuer to the extent any proposed amendment, change or 
modification relates to the Unassigned Issuer Rights.

     Section 10.6.  Execution in Counterparts.  This Agreement may be 
simultaneously executed in several counterparts, each of which shall be an 
original and all of which shall constitute but one and the same instrument.

     Section 10.7.  Required Approvals.  Consents and approvals required by 
this Agreement to be obtained from the Borrower, the Issuer or the Trustee 
shall be in writing and shall not be unreasonably withheld or delayed.  
Consents of Bondholders shall be in writing.

     Section 10.8.  Limitation on Issuer's Liability.

     (1)	No covenant, agreement or obligation contained herein shall be deemed 
to be a covenant, agreement or obligation of any present or future officer or 
employee of the Issuer in his individual capacity, and neither the officers 
nor employees of the Issuer executing the Bonds shall be liable personally on 
the Bonds or be subject to any personal liability or accountability by reason 
of the issuance thereof.  No officer or employee of the Issuer shall incur any 
personal liability with respect to any other action taken by him pursuant to 
this Agreement or the Act, provided such officer or employee acts in good 
faith.  No agreements or provisions contained in this Agreement nor any 
agreement, covenant or undertaking by the Issuer contained in any document 
executed by the Issuer in connection with the Project or the issuance, sale 
and delivery of the Bonds shall give rise to any pecuniary liability of the 
Issuer or a charge against its general credit or taxing powers, or shall 
obligate the Issuer financially in any way except with respect to the Project 
and the application of revenues therefrom pursuant to this Agreement and the 
proceeds of the Bonds.  No failure of the Issuer to comply with any term, 
condition, covenant or agreement herein shall subject the Issuer to liability 
for any claim for damages, costs or other financial or pecuniary charge except 
to the extent that the same can be paid or recovered from the Project or 
revenues therefrom or from proceeds of the Bonds; and no execution of any 
claim, demand, cause of action or judgment shall be levied upon or collected 
from the general credit or funds of the Issuer. Nothing herein shall preclude 
a proper party in interest from seeking and obtaining specific performance 
against the Issuer for any failure to comply with any term, condition, 
covenant or agreement herein; provided, that no costs, expenses or other 
monetary relief shall be recoverable from the Issuer except as may be payable 
from the Project or Project Revenues. 

     (2)	No recourse shall be had for the payment of the principal of or 
premium or interest on the Bonds or for any claim based thereon or upon any 
obligation, covenant or agreement contained in this Agreement against any 
past, present or future officer or employee of the Issuer, or of any successor 
public corporation, as such either directly or through the Issuer or any 
successor public corporation, under any rule of law or equity, statute or 
constitution or by the enforcement of any assessment or penalty or otherwise, 
and all such liability of any such officers or employees as such is hereby 
expressly waived and released as a condition of, and consideration for, the 
execution of this Agreement and the issuance of the Bonds.

<PAGE>                             - 26 -
     (3)	Anything in this Agreement to the contrary notwithstanding, it is 
expressly understood and agreed by the parties hereto that (i) the Issuer may 
rely conclusively on the truth and accuracy of any certificate, opinion, 
notice or other instrument furnished to the Issuer by the Borrower as to the 
existence of any fact or state of affairs required hereunder to be noticed by 
the Issuer; (ii) the Issuer shall not be under any obligation hereunder to 
perform any record keeping or to provide any legal services, and (iii) none of 
the provisions of this Agreement shall require the Issuer to expend or risk 
its own funds or otherwise incur financial liability in the performance of any 
of its duties or in the exercise of any of its rights or powers hereunder, 
unless it shall first have been adequately indemnified to its satisfaction 
against the cost, expenses, and liability which may be incurred thereby.

     (4)	Neither the officers nor employees of the Issuer nor any person 
executing the Bonds shall be liable personally on the Bonds by reason of the 
issuance thereof.  The Bonds and the interest thereon shall be special 
obligations of the Issuer payable solely out of the payments, revenues and 
receipts derived by the Issuer from the Project pursuant to this Agreement and 
not from any other fund or source of the Issuer, and are secured by a pledge 
and assignment of the Trust Estate to the Trustee in favor of the Bondholders, 
as provided in the Indenture. The Bonds and the interest thereon shall not be 
deemed to constitute a debt or liability of the Issuer, the State, or any 
political subdivision thereof, and the issuance thereof shall not, directly or 
indirectly or contingently, obligate the Issuer, the State, or any political 
subdivision thereof, to levy any form of taxation or penalty therefor or to 
make any appropriation for its payment.  Nothing in the Bonds or the 
proceedings of the Issuer authorizing the issuance of the Bonds or in the 
Indenture or this Agreement shall be construed to authorize the Issuer to 
create a debt or liability of the Issuer, the State, or any political 
subdivision thereof within the meaning of any constitutional or statutory.

     Section 10.9.  Representations of Borrower.  All representations made in 
this Agreement by the Borrower are based on the Borrower's independent 
investigation of the facts and law, and accordingly no such representations 
are made in reliance upon any representations made or legal advice given by 
the Issuer, its Bond Counsel, the Trustee or any of their agents, officers or 
employees.







     IN WITNESS WHEREOF, the Issuer and the Borrower have caused this 
Agreement to be executed by their duly authorized officers.

                                  CITY OF AURORA, ILLINOIS



                                   By  /s/
					                                  Mayor
ATTEST: 


/s/ Cheryl M. Vonhoff				
     City Clerk



                                  PARK TRACE APARTMENTS LIMITED
                                   PARTNERSHIP,  a Georgia limited partnership

                                  By:	Park Trace Operating Company, 
                                    a Georgia corporation, its General Partner


                                  By  /s/ Michael Thesing
                                          Its Vice President






<PAGE>                             - 27 -
                                  SCHEDULE 1

                             LEGAL DESCRIPTIONS



The Covey Project:

Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 
21, 22, 23, 24, 25, 26, 27, 28, 29, 30 and 33 of Fox Valley Village, Unit 28, 
in the City of Aurora, Kane and DuPage Counties, Illinois.


Park Trace Project:






























































<PAGE>                             - 28 -
                                  EXHIBIT A

                           FORM OF PROMISSORY NOTE

AFTER THE ENDORSEMENT AS HEREON PROVIDED AND PLEDGE OF THIS NOTE, THIS NOTE 
MAY NOT BE ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO AN 
ASSIGNEE OF THE CITY OF AURORA, ILLINOIS.

                               PROMISSORY NOTE

$12,410,000.00			                                       Dated December __, 1997

     FOR VALUE RECEIVED, PARK TRACE APARTMENTS LIMITED PARTNERSHIP, a Georgia 
limited partnership (the "Borrower"), by this promissory note (this "Note") 
hereby promises to pay to the order of the CITY OF AURORA, ILLINOIS (the 
"Issuer") the principal sum of Twelve Million Four Hundred Ten Thousand 
Dollars ($12,410,000) and to pay interest on the unpaid principal amount of 
the Bonds (as defined in the Agreement hereinafter mentioned), from the date 
hereof at the interest rate from time to time as provided in the hereinafter 
referred to Indenture.  Terms not otherwise defined in this Note have the 
respective meanings set forth in the Indenture.

     The principal and interest on this Note shall be payable on the dates and 
in the amounts as provided in Section 4.2 of the Loan Agreement dated as of 
December 1, 1997 (the "Agreement"), between the Borrower and the Issuer, with 
the final payment of all outstanding principal and interest on this Note to be 
paid on November 1, 2027.  Both principal and interest under this Note shall 
be made in funds that are immediately available on the due date of such 
payments and in lawful money of the United States of America at the principal 
office of UMB Bank, N.A., Kansas City, Missouri (the "Trustee") in accordance 
with the Agreement and the Indenture of Trust dated as of December 1, 1997 
(the "Indenture") between the Issuer and the Trustee.  The Borrower may make 
optional prepayments upon this Note as provided in the Agreement, with such 
prepayments being first applied to interest and next to principal.  The 
Borrower will prepay this Note in whole on the date which is 180 days after 
the cancellation of a mandatory tender of the Bonds on the Rate Adjustment 
Date in accordance with the Indenture as provided in Section 8.2 of the 
Agreement.

     This Note is made pursuant to the Agreement wherein, among other things, 
the Issuer has agreed to loan to the Borrower and the Borrower has agreed to 
take a loan in the principal amount above, being the proceeds from the sale of 
the Issuer's Multifamily Housing Revenue Refunding Bonds (The Covey at Fox 
Valley Apartments Project) Series 1997 (the "Bonds"), the proceeds to be 
disbursed in accordance with the provisions of Section 3.3(1) of the 
Agreement.  The Bonds are being issued by the Issuer pursuant to the Indenture.

     The obligations of the Borrower to perform and observe the agreements on 
its part contained herein and in the Agreement shall be absolute and 
unconditional and payment of the Basic Payments and the Additional Charges and 
all other payments required of the Borrower under this Note and the Agreement 
shall be paid without notice or demand and without setoff, counterclaim, or 
defense for any reason and without abatement or deduction or defense (except 
for a defense based on prepayment pursuant to Section 8.1 of the Agreement).  
The Borrower will not suspend or discontinue any such payments for any cause, 
including but not limited to any acts or circumstances that may constitute 
failure of consideration, destruction or damage to the Project or the 
Borrower's business, the taking of the Project or the Borrower's business by 
Condemnation or otherwise, the lawful prohibition of the Borrower's use of the 
Project or the Borrower's business, the interference with such use by any 
private person or corporation, the invalidity or unenforceability or lack of 
due authorization or other infirmity of this Note and the Agreement, the lack 
of right, power or authority of the Issuer to enter into the Agreement, 
eviction by paramount title, commercial frustration of purpose, bankruptcy or 
insolvency of the Issuer or the Trustee, change in the tax or other laws or 
administrative rulings or actions of the United States of America or of the 
State or any political subdivision thereof, or failure of the Issuer to 
perform and observe any agreement, whether express or implied, or any duty, 
liability or obligation arising out of or connected with the Agreement, or for 
any other cause whether similar or dissimilar to the foregoing, any present or 
future law to the contrary notwithstanding, it being the intention of the 
parties hereto that the payment of Basic Payments and other amounts payable by 
the Borrower under this Note and the Agreement shall be paid in full when due 
without any delay or diminution whatever.


<PAGE>                             - 29 -
     If this Note shall be placed in the hands of an attorney or attorneys for 
collection, the Borrower agrees to pay, in addition to the amount due hereon, 
the reasonable costs and expenses of collection, including reasonable 
attorneys' fees.  All parties to this Note, whether principal, surety, 
guarantor or endorser, hereby waive presentment for payment, demand, protest, 
notice or protest and notice of dishonor.

                                  PARK TRACE APARTMENTS LIMITED
		                                 PARTNERSHIP,  a Georgia limited partnership

                                  By:	Park Trace Operating Company, 
                                    a Georgia corporation, its General Partner


                                  By 
                                         Its Vice President

		
	
                            ENDORSEMENT


     Pay to the order of UMB Bank, N.A., without recourse, as Trustee of the 
Bonds referred to in the within mentioned Agreement, as security for said 
Bonds.  This endorsement is given without any warranty as to the authority or 
genuineness of the signatures of the maker of the Note.

                                  CITY OF AURORA, ILLINOIS

	 

                                  By 
                                             Mayor











































<PAGE>                             - 30 -
                           	CITY OF AURORA, ILLINOIS

                                     	as

                                   	ISSUER

                                    	and

                               	UMB BANK, N.A.

                                    	as

                                  	TRUSTEE



                             	INDENTURE OF TRUST



	                        Dated as of December 1, 1997


                                	Relating to 

                         	City of Aurora, Illinois

                                	$12,410,000
                 	Multifamily Housing Revenue Refunding Bonds
                 	(The Covey at Fox Valley Apartments Project)
                                 	Series 1997













































<PAGE>                              - i -
	                              TABLE OF CONTENTS




     (This Table of Contents is included for convenience of reference only, 
and is not a part of the Indenture of Trust) 	

                                                                      Page 
                                    ARTICLE 1 

                  DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS 

Section 1.1.  	Definitions	                                            4 
Section 1.2.  	Rules of Interpretation	                               17

                                    ARTICLE 2

                                    THE BONDS

Section 2.1.   Authorized Amount and Form of Bonds	                   18
Section 2.2.   Initial Issue	                                         19
Section 2.3.   Execution	                                             20
Section 2.4.   Authentication	                                        21
Section 2.5.   Conditions Precedent to the Delivery of Bonds	         21
Section 2.6.   Additional Bonds	                                      22
Section 2.7.   Mutilated, Lost or Destroyed Bonds	                    23
Section 2.8.   Registration and Exchange of Bonds; 
               Book-Entry System of Bonds	                            24
Section 2.9.   Ownership of Bonds	                                    25
Section 2.10.  Preparation of Definitive Bonds; Temporary Bonds	      25
Section 2.11.  Registration, Transfer and Exchange 
                 of Registered Bonds	                                 25
Section 2.12.  Nonpresentment of Bonds	                               27
Section 2.13. 	Interest Rights Preserved	                             27
Section 2.14.  Destruction of Bonds	                                  27

                                    ARTICLE 3

                   REDEMPTION OR PURCHASE OF BONDS BEFORE MATURITY

Section 3.1.  	Redemption or Purchase	                                27
Section 3.2.  	Notice of Redemption or Purchase	                      29
Section 3.3.  	Cancellation	                                          30
Section 3.4.  	Method of Redemption or Purchase	                      30

                                    ARTICLE 3A

                          TENDER AND PURCHASE OF BONDS

Section 3A.1.  Mandatory Tender of Bonds and Notices to Bondholders	  27
Section 3A.2.  Irrevocability of Notices; Return 
                 of Improperly Completed Documents	                   29
Section 3A.3.  Notice of Principal Amount of Bonds Tendered	          30
Section 3A.4.  Remarketing of Tendered Bonds	                         30
Section 3A.5.  Notice of Principal Amount of Bonds Remarketed	        30
Section 3A.6.  Purchase of Tendered Bonds	                            30
Section 3A.7.  Purchase Fund	                                         30
Section 3A.8.  No Sales After Event of Default	                       30
Section 3A.9.  Remarketing Agent	                                     30
Section 3A.10. Qualifications of Remarketing Agent	                   30

                                    ARTICLE 4

                                GENERAL COVENANTS

Section 4.1.  	Payment of Principal, Premium and Interest	            35
Section 4.2.  	Performance of Covenants	                              35
Section 4.3.  	Instruments of Further Assurance	                      36
Section 4.4.  	Recording and Filing	                                  36
Section 4.5.  	Books and Records	                                     36
Section 4.6.  	Bondholders' Access to Bond Register	                  36
Section 4.7.  	Rights Under Loan Agreement	                           37
Section 4.8.  	Rights Under Mortgage and Assignment	                  37
Section 4.9.  	Continuing Disclosure	                                 37

<PAGE>                              - ii -
                                    ARTICLE 5

                               FUNDS AND ACCOUNTS

Section 5.1.  	Trust Funds Pledged and Assigned to the Trustee	       37
Section 5.2.  	Bond Proceeds Fund; Disbursement of Bond Proceeds	     38
Section 5.3.	  Revenue Fund and Bond Fund	                            38
Section 5.4.  	Surplus Fund	                                          39
Section 5.5.  	Purchase of Bonds at Request of Borrower	              40
Section 5.6.  	Deposit of Funds With Paying Agent	                    40
Section 5.7.  	Rebate Fund	                                           41
Section 5.8.  	Mortgage Recovery Fund	                                41
Section 5.9.  	Servicing Fund	                                        44
Section 5.10.  Costs of Issuance Fund	                                45
Section 5.11.  Interest Earned on Funds	                              45
Section 5.12.  Final Balances	                                        45

                                    ARTICLE 6

                                   INVESTMENTS

Section 6.1.  	Investments by Trustee	                                46
Section 6.2.  	Computation of Balances in Funds	                      46
Section 6.3.  	Downgrade of Rating	                                   46

                                    ARTICLE 7

                               DISCHARGE OF LIEN

Section 7.1.  	Payment of Bonds; Satisfaction, Defeasance and
                 Discharge of Bonds and	Obligation to Bondholders	    47
Section 7.2.  	Cancellation of Surrendered Bonds	                     49
Section 7.3.  	Payment of Bonds	                                      49
Section 7.4.  	Application of Deposited Money	                        49
Section 7.5.  	Survival of Certain Provisions	                        49

                                    ARTICLE 8

                          DEFAULT PROVISIONS AND REMEDIES

Section 8.1.  	Events of Default	                                     49
Section 8.2.  	Acceleration	                                          50
Section 8.3.  	Remedies	                                              51
Section 8.4.  	Direction of Proceedings by Bondholders	               51
Section 8.5.  	Waiver of Stay or Extension Laws	                      51
Section 8.6.  	Priority of Payment and Application of Moneys	         52
Section 8.7.  	Remedies Vested in Trustee	                            53
Section 8.8.  	Rights and Remedies of Holders	                        54
Section 8.9. 	 Termination of Proceedings	                            54
Section 8.10. 	Waiver of an Event of Default	                         54
Section 8.11. 	Correction of an Event of Default	                     55

                                    ARTICLE 9

                                   THE TRUSTEE

Section 9.1.  	Acceptance of the Trustee	                             55
Section 9.2.  	Trustee's Fees, Charges and Expenses	                  58
Section 9.3.  	Notice to Holders of Default	                          59
Section 9.4.  	Intervention by Trustee	                               59
Section 9.5.  	Successor Trustee	                                     59
Section 9.6.  	Resignation by Trustee	                                59
Section 9.7.  	Removal of Trustee                  	                  59
Section 9.8.  	Appointment of Successor Trustee	                      60
Section 9.9.  	Acceptance by Successor Trustees	                      60
Section 9.10.  Right of Trustee To Pay Taxes and Other Charges	       60
Section 9.11.  Trustee Protected in Relying Upon Resolutions	         61
Section 9.12.  Successor Trustee as Custodian 
                 of Funds and Paying Agent	                           61







<PAGE>                              - iii -
Section 9.13.  Co-Trustee	                                            61
Section 9.14. 	Obligations as to Reporting	                           63
Section 9.15. 	Appointment of Bond Registrar and Paying Agent	        63
Section 9.16. 	Successor Paying Agent or Bond Registrar	              63
Section 9.17. 	Confirmation of the Trustee	                           63
Section 9.18. 	Certain Representations of Trustee	                    64
Section 9.19. 	Tender Agent	                                          64

                                   ARTICLE 10

                            SUPPLEMENTAL INDENTURES

Section 10.1.  Supplemental Indentures Not 
                 Requiring Consent of Bondholders	                    65
Section 10.2.  Supplemental Indentures Requiring 
                 Consent of Bondholders	                              66
Section 10.3.  Notice to Rating Agency	                               67
Section 10.4.  Opinion of Bond Counsel	                               67
Section 10.5.  Rights of Trustee	                                     67

                                   ARTICLE 11

                        AMENDMENTS TO RELATED DOCUMENTS

Section 11.1.  Amendments Not Requiring Bondholder Consent	           67
Section 11.2.  Amendments Requiring Bondholder Consent	               68
Section 11.3.  Opinion of Bond Counsel	                               69
Section 11.4.  Rights of Trustee	                                     69

                                   ARTICLE 12

                            MISCELLANEOUS PROVISIONS

Section 12.1.  Consent of Holders	                                    69
Section 12.2.  Rights Under Indenture	                                69
Section 12.3.  Severability	                                          69
Section 12.4.  Notices	                                               70
Section 12.5.  Required Approvals	                                    71
Section 12.6.  Counterparts	                                          71
Section 12.7.  Limitation of Liability of Issuer and Its
                 Officers, Employees and Agents	                      71
Section 12.8.  Determination of Taxability	                           72
Section 12.9.  Notice to the Rating Agency	                           73

EXHIBIT A-(FORM OF REQUISITION CERTIFICATE) BOND PROCEEDS FUND
EXHIBIT B-(FORM OF REQUISITION CERTIFICATE) MORTGAGE RECOVERY FUND
EXHIBIT C-FORM OF BOND
EXHIBIT D-PRELIMINARY NOTICE OF MANDATORY TENDER
EXHIBIT E-NOTICE OF CANCELED MANDATORY TENDER
EXHIBIT F-NOTICE OF ELECTION TO RETAIN BONDS


























<PAGE>                              - iv -
                             INDENTURE OF TRUST




     THIS INDENTURE OF TRUST dated as of December 1, 1997 (the "Indenture"), 
by and between the CITY OF AURORA, ILLINOIS, a municipal corporation and home 
rule unit of local government under the Constitution of the State of Illinois 
(the "Issuer"), and UMB BANK, N.A., a national association organized and 
existing under the laws of the United States of America and authorized to 
accept and execute trusts of the character herein set forth, with its 
principal corporate trust office in Kansas City, Missouri, as trustee (the 
"Trustee"): 	

                                  RECITALS:

     1.	The Issuer is authorized under the provisions of Ordinance No. 4519, 
adopted March 23, 1976, as from time to time amended, and codified as Division 
4 of Article V of Chapter 2 of the City of Aurora Code of Ordinances, and 
Section 6(a) of Article VII of the Constitution of the State (collectively, 
the "Act"), to issue economic development revenue obligations for the purposes 
of financing economic development projects, which authorization includes 
projects for use as multifamily residential rental facilities, and to refund 
its outstanding bonds by the issuance of its refunding bonds.

     2.	Pursuant to the Act the Issuer has financed the acquisition and 
construction of a multifamily residential rental facility consisting of the 
216-unit project known as The Covey at Fox Valley (the "Covey Project") 
located at 2160 Walcott Road within the incorporated limits of the Issuer, 
constituting a "project" within the meaning of the Act, for Pebco-Fox Valley, 
Ltd., a Georgia limited partnership (the "Original Developer"), by the 
issuance of the Issuer's Multi-Family Housing Revenue Bonds (Pebco-Fox Valley, 
Ltd. Project) Series 1985 (the "Series 1985 Bonds") in the original principal 
amount of $12,500,000.

     3.	The Issuer issued its City of Aurora Multifamily Housing Mortgage 
Revenue Note (Covey at Fox Valley Project) Series 1986 in the original 
principal amount of $12,410,000 (the "Prior Note"), the proceeds of which were 
applied to refund and redeem the Series 1985 Bonds.

     4.	All of the right title and interest of the Original Owner in the Covey 
Project has been transferred to American National Bank and Trust Company of 
Chicago, as trustee under the Trust Agreement dated June 20, 1989, known as 
Trust No. 108642-05 (the "Land Trust"), the sole beneficiary of which is 
[America First Apartment Investors, L.P. ("America First"), an affiliate of ] 
Park Trace Apartments Limited Partnership, a Georgia limited partnership (the 
"Borrower")[, and the owner of the Prior Note].

     5.	Contemporaneously with the issuance of the Bonds the Borrower will 
acquire all [right, title and interest of America First in the Land Trust and 
all] right, title and interest in a 260-unit multifamily housing project known 
as Park Trace Apartments, located at 3450 Jones Mill Road in the City of 
Norcross, Gwinnett County, Georgia (the "Park Trace Project", and together 
with the Covey Project, the "Project").

     6.	The Borrower has requested that the Issuer issue bonds the proceeds of 
which will be used to refund and redeem the Prior Note.

     7.	The Issuer deems it desirable and in keeping with its purposes to 
issue its Multifamily Housing Revenue Refunding Bonds (The Covey at Fox Valley 
Apartments Project) Series 1997 in the original principal amount of 
$12,410,000 (the "Bonds"), for the purposes of providing proceeds for the 
making of a loan (the "Loan") to the Borrower, the proceeds of which will be 
used to refund and redeem the Prior Note and thereby refinance the Covey 
Project for the Borrower.

     8.	Under the terms of a Loan Agreement dated as of December 1, 1997 (the 
"Loan Agreement"), the Issuer has agreed to make the Loan and the Borrower has 
agreed to the repayment of the Loan and the Borrower has executed the Mortgage 
and the Assignment (as such terms are hereinafter defined) to secure, among 
other things, the Borrower's Loan repayment and other obligations under the 
Loan Agreement. 




<PAGE>                              - 1 -
     9.	The execution and delivery of this Indenture and the issuance of the 
Bonds have been in all respects duly and validly authorized by the Issuer.

     10.	Terms not otherwise defined in the recitals or granting clauses 
hereof shall have the meanings as hereinafter defined.

     11.	All things necessary to make the Bonds, when authenticated by the 
Trustee and issued as provided in this Indenture, valid, binding and legal 
limited obligations of the Issuer according to the import thereof, and to 
constitute this Indenture a valid contract for the security of the Bonds, have 
been done and performed; and the creation, execution and delivery of this 
Indenture, and the creation, execution and issuance of said Bonds, subject to 
the terms hereof, have in all respects been duly authorized.

     NOW THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS INDENTURE 
WITNESSETH:	

                              GRANTING CLAUSES

     The Issuer, in consideration of the premises and the acceptance by the 
Trustee of the trusts hereby created and of the purchase and acceptance of the 
Bonds by the Holders (as hereinafter defined) thereof, in order to secure the 
payment of the principal of and interest and premium, if any, on the Bonds 
according to their tenor and effect and the performance and observance by the 
Issuer of all the covenants expressed or implied herein and in the Bonds, does 
hereby grant, Mortgage, grant a security interest in, assign, transfer in 
trust, and pledge to the Trustee, and to its successors in trust, and to them 
and their assigns forever, the following: 

                            GRANTING CLAUSE FIRST

     All rights, title, interest and privileges of the Issuer in, to and under 
the Loan Agreement, including, but not limited to, all sums which the Issuer 
is entitled to receive from the Borrower pursuant to the Loan Agreement, 
including the Project Revenues (as hereinafter defined) (but excluding the 
rights of the Issuer to receive notices, approvals, consents, requests and 
other communications and to receive indemnification and certain direct 
payments to be made to it pursuant to Sections 4.3(2), 4.3(3), 4.3(5), 7.4 and 
9.5 of the Loan Agreement), the Funds (as hereinafter defined) excluding funds 
held in the Rebate Fund and excluding funds held in the Bond Proceeds Fund 
(all as hereinafter defined), and all other sums (except the Purchase Fund and 
arbitrage rebate whether or not deposited in the Rebate Fund) which are 
required to be deposited in the Funds in accordance with Article 5; 

                            GRANTING CLAUSE SECOND

     All the Issuer's rights, title, interest and privileges in all property 
mortgaged, pledged and assigned under the Mortgage and the Assignment to 
secure the Bonds, and any and all other property of every name and nature 
which may from time to time hereafter by delivery or by writing of any kind be 
subjected to the lien hereof by the Issuer or by anyone on its behalf or with 
its written consent, and the Trustee is hereby authorized to receive any and 
all such property at any and all times and to hold and apply the same as 
additional security hereunder subject to the terms hereof; and 

                            GRANTING CLAUSE THIRD

     The earnings derived from the investment of any of the foregoing sums as 
provided herein. 

     TO HAVE AND TO HOLD all the same (herein called the "Trust Estate") with 
all privileges and appurtenances hereby granted and assigned, or agreed or 
intended so to be, to the Trustee and its successors in trust and to them and 
their assigns forever; 

     SUBJECT TO the rights of the Borrower under the Loan Agreement, the 
Regulatory Agreement (as hereinafter defined), the Mortgage and the 
Assignment; 








<PAGE>                              - 2 -
     IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth, first 
for the equal and proportionate benefit, security and protection of all 
Holders from time to time of the Bonds issued under and secured by this 
Indenture, without privilege, priority or distinction as to the lien or 
otherwise of any of the Bonds over any of the others except as otherwise 
provided herein, second for the benefit of the Trustee to secure the payment 
of Ordinary Fees and Expenses, and third for the benefit of the Trustee to 
secure the payment of Extraordinary Fees and Expenses, all as herein provided, 
and for the uses and purposes and upon the terms, agreements and conditions 
set forth herein;

     PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall 
well and truly pay, or cause to be paid, or provide fully for payment as 
herein provided of the principal of the Bonds and the interest due or to 
become due thereon (together with premium, if any), at the time and in the 
manner set forth in the Bonds according to the true intent and meaning 
thereof, and shall make the payments into the Bond Fund (as hereinafter 
defined) as required under Article 5 or shall provide, as permitted hereby, 
for the payment thereof by depositing with the Trustee sums sufficient for 
payment of the entire amount due or to become due thereon as herein provided, 
and shall well and truly keep, perform and observe all the covenants and 
conditions pursuant to the terms of this Indenture to be kept, performed and 
observed by it, and shall pay to the Trustee all sums of money due or to 
become due to it in accordance with the terms and provisions hereof and of the 
Related Documents (as hereinafter defined), then this Indenture and the rights 
hereby granted shall cease, terminate and be void except as otherwise provided 
herein; otherwise, this Indenture shall be and remain in full force and 
effect. 

     THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all 
Bonds issued and secured hereunder are to be issued, authenticated and 
delivered and all said payments and other revenues and other income and funds 
hereby pledged and assigned, are to be dealt with and disposed of under, upon 
and subject to the  terms, conditions, stipulations, covenants, agreements, 
trusts, uses and purposes as hereinafter expressed, and the Issuer has agreed 
and covenanted, and does hereby agree and covenant, with the Trustee and with 
the respective holders and owners of said Bonds, as follows: 

                               ARTICLE 1

                 DEFINITIONS AND GENERAL PROVISIONS

     Section 1.1.  Definitions.  In this Indenture the following terms have 
the following meanings unless the context hereof clearly requires otherwise, 
and any other terms defined in the Related Documents shall have the same 
meanings when used herein as assigned them in the Related Documents unless the 
context or use thereof indicates another or different meaning or intent: 

     "Act" means Ordinance No. 4519, adopted March 23, 1976, as from time to 
time amended, and codified as Division 4 of Article V of Chapter 2 of the City 
of Aurora Code of Ordinances, and Section 6(a) of Article VII of the 
Constitution of the State.

     "Act of Bankruptcy" means any of the following events:

          (a)	The Borrower or the Issuer shall (i) apply for or consent to the 
     appointment of, or the taking of possession by, a receiver, custodian, 
     trustee, liquidator or the like of the Borrower or the Issuer or of all 
     or a substantial part of the property of the Borrower or the Issuer, (ii) 
     commence a voluntary case under the Bankruptcy Code (as now or hereafter 
     in effect) or (iii) file a petition with respect to itself seeking to 
     take advantage of any other law relating to bankruptcy, insolvency, 
     reorganization, winding-up or composition or adjustment of debts; or

          (b)	A proceeding or case shall be commenced without the application 
     or consent of the Borrower or the Issuer, as the case may be, in any 
     court of competent jurisdiction, seeking (i) the liquidation, 
     reorganization, dissolution, winding-up or the composition or adjustment 
     of debts of the Borrower or the Issuer, (ii) the appointment of a 
     trustee, receiver, custodian, liquidator or the like of the Borrower or 
     the Issuer or of all or any substantial part of the assets of the 
     Borrower or the Issuer or (iii) similar relief in respect of the Borrower 
     or the Issuer under any law relating to bankruptcy, insolvency, 
     reorganization, winding-up or composition or adjustment of debts and such 
     proceeding or case shall not be dismissed within 60 days of such filing.

<PAGE>                              - 3 -
     For purposes of this Indenture and the Loan Agreement, an Act of 
Bankruptcy shall be deemed dismissed only if (i) the petition is dismissed by 
order of a court of competent jurisdiction and no further rights exist from 
such order and (ii) the Borrower or the Issuer, as the case may be, notifies 
the Trustee that such a dismissal has occurred. 

     "Additional Bonds" means additional bonds issued pursuant to Section 2.6 
of this Indenture.

     "Additional Charges" means the payments required by Section 4.3 of the 
Loan Agreement.

     "Agreement" means the Loan Agreement.

     "Annual Budget" means the budget prepared by the Borrower or the Manager 
with respect to the Project in accordance with Section 7.3(c) of the Loan 
Agreement.

     "Arbitrage Consultant" means any accountant, law firm or consultant 
experienced in the calculation of arbitrage rebate selected by the Trustee and 
approved by the Issuer and the Borrower.

     "Assignment" means the Covey Project Assignment and the Park Trace 
Project Assignment. 

     "Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978, 
as amended, or any similar or succeeding federal bankruptcy law.

     "Bond Closing" means the date on which there is delivery by the Issuer 
of, and payment for, the Bonds.

     "Bond Counsel" means any firm of nationally recognized bond counsel 
experienced in tax exempt private activity bond financing selected by the 
Issuer and acceptable to the Trustee and the Borrower.

     "Bond Fund" means the Fund by that name created by Section 5.3.

     "Bondholder" or "Holder" means the person in whose name a Bond is 
registered in the Bond Register.

     "Bond Proceeds Fund" means the Fund created under Section 5.2.

     "Bond Purchase Agreement" means the Bond Purchase Agreement dated 
November __, 1997, by and among the Issuer, the Borrower and the Underwriter, 
whereby the Underwriter agrees to purchase all of the Bonds at closing.

     "Bond Register" means the register maintained by the Bond Registrar 
pursuant to Section 2.11. 

     "Bond Registrar" means UMB Bank, N.A., Kansas City, Missouri, and any 
successor thereto appointed, qualified and then acting as such under the 
provisions of this Indenture.

     "Bond Year" means the one-year period beginning on December 2 and ending 
on the next succeeding December 1, provided that the first Bond Year shall 
begin on the date of the Bond Closing and end on December 1, 1998.

     "Bonds" means the Multifamily Housing Revenue Refunding Bonds (The Covey 
at Fox Valley Apartments Project) Series 1997 of the Issuer issued in the 
original principal amount of $12,410,000 pursuant to this Indenture. 

     "Borrower" means Park Trace Apartments Limited Partnership, a Georgia 
limited partnership, its successors and assigns, and any surviving, resulting 
or transferee entity which may assume its obligations under the Related 
Documents. 

     "Business Day" means any day other than a Saturday, Sunday, legal holiday 
or a day on which banking institutions in the city where the principal 
corporate trust office of the Trustee and the Bond Registrar are located are 
authorized by law or executive order to close. 






<PAGE>                              - 4 -
     "Code" or "Internal Revenue Code" means the Internal Revenue Code of 
1986, as amended, and, with respect to a specific section thereof, such 
reference shall be deemed to include (a) the regulations promulgated by the 
United States Department of the Treasury under such section, (b) any successor 
provision of similar import hereafter enacted, (c) any corresponding provision 
of any subsequent Internal Revenue Code and (d) the regulations promulgated 
under the provisions described in (b) and (c). 

     "Condemnation" or the phrase "eminent domain" as used herein shall 
include the taking or requisition by governmental authority or by a person, 
firm or corporation acting under governmental authority and a conveyance made 
under threat of Condemnation, provided such conveyance is made with the 
approval of the Trustee, which approval shall not be unreasonably withheld, 
and "Condemnation Award" shall mean payment for property condemned or conveyed 
under threat of Condemnation. 

     "Construction Statement" has the meaning set forth in Section 
5.8(6)(a)(2).

     "Continuing Disclosure Agreement" means that certain Continuing 
Disclosure Agreement between the Borrower and UMB Bank, N.A., as an agent of 
the Borrower, in its capacity as dissemination agent, dated the date of 
issuance and delivery of the Bonds, as originally executed and as it may be 
amended from time to time in accordance with the terms thereof.

     "Costs of Issuance" means, with respect to any Bonds, all expenses 
incurred in connection with the authorization, sale, issuance and delivery of 
the Bonds, including, without limitation, Underwriter's spread, discount or 
fees (including any premium on the resale of the first delivery of the Bonds), 
counsel fees (including Bond Counsel, Underwriter's Counsel, Trustee's Counsel 
and Issuer's counsel, as well as any other specialized counsel fees incurred 
in connection with the issuance of the Bonds), Issuer's costs, financial 
advisory fees and accountant fees related to issuance of the Bonds, printing 
costs (for the Bonds and preliminary and final offering materials), costs 
incurred in connection with the required public approval process and costs of 
feasibility studies necessary to the issuance of the Bonds (as opposed to 
studies related to completion of the Project, but not to the Bond financing), 
Mortgage banking fees, initial Trustee, Registrar and Paying Agent fees, 
Rating Agency fees, title insurance fees, survey fees and recording and filing 
fees, including any applicable documentary stamp taxes, intangible tax and the 
Mortgage registration tax. 

     "Costs of Issuance Fund" means the Fund by that name created by Section 
5.10. 

     "Covey Project" means the Premises, the Facility and any and all Project 
Equipment as they may at any time exist with respect to the 216-unit project 
known as The Covey at Fox Valley, located at 2160 Walcott Road within the 
incorporated limits of the Issuer.

     "Covey Project Assignment" means the Covey at Fox Valley Assignment of 
Rents and Leases dated as of December 1, 1997, from the Borrower to the 
Trustee with respect to the Covey Project, as the same may from time to time 
be amended or supplemented as provided therein and in this Indenture.

     "Covey Project Mortgage" means the Mortgage, Security Agreement, 
Assignment of Leases and Rents and Fixture Financing Statement dated as of 
December 1, 1997, from the Land Trust and the Borrower to the Trustee with 
respect to the Covey Project, as the same may from time to time be replaced, 
amended or supplemented as provided therein and in this Indenture and the 
Covey Project Assignment.

     "Current Expenses" means all operating expenses of the Borrower which are 
not otherwise specifically described in Section 5.9(2) hereof, including 
administrative expenses and property management fees with respect to the 
Project incurred in its ordinary operations.

     "Dated Date" means December __, 1997.

     "Mortgage" means the Covey Project Mortgage and the Park Trace Project 
Mortgage.

     "Default Rate" means the interest rate equal to 4% in excess of the 
floating prime rate listed in the "Money Rates" section of The Wall Street 
Journal as the base rate on corporate loans posted by the nation's largest 
banks established from time to time.
<PAGE>                              - 5 -
     "Determination of Taxability" means a final judgment or order of a court 
of original jurisdiction, a final order of any other court of competent 
jurisdiction, or a final ruling or decision of the Internal Revenue Service, 
in any such case to the effect that the interest on any of the Bonds (other 
than interest on any Bond for a period during which such Bond is held by a 
"substantial user" of any facility financed with the proceeds of the Bonds or 
a "related person," as such terms are used in Section 147(a) of the Code and 
except as a result of any minimum tax, preference tax or other similar tax) is 
not excludable for federal income purposes from the gross income of the 
recipients thereof subject to federal income taxes.  With respect to the 
foregoing, a judgment or order of a court or a ruling or decision of the 
Internal Revenue Service shall be considered final only if no appeal or action 
for judicial review has been filed and the time for filing such appeal or 
action has expired.

     "Discharge Date" means the date on which all Outstanding Bonds are 
discharged under Article 7 hereof. 

     "DTC Letter of Representations" means the Blanket Issuer Letter of 
Representations executed by the Issuer and accepted by The Depository Trust 
Company in connection with establishing the book-entry-only status of the 
Bonds.

     "Eligible Account" shall have the meaning as set forth in Section 5.1 
hereof.

     "Event of Default" means any of the events set forth in Section 8.1 
hereof.

     "Extraordinary Fees and Expenses" means all fees and expenses charged or 
incurred by the Trustee under this Indenture or Section 4.4 of the Loan 
Agreement, other than Ordinary Fees and Expenses. 

     "Extraordinary Revenues" means Proceeds, but such term shall not include 
use and occupancy insurance proceeds and rental loss insurance proceeds.

     "Facility" means the buildings and improvements located on the respective 
Project Premises as they may now or from time to time exist. 

     "Final Payment Date" means the Maturity Date, the Discharge Date or the 
Purchase Date on which all Outstanding Bonds either mature, are to be 
redeemed, are discharged under Article 7, or are purchased under Section 5.5, 
whichever date is earliest. 

     "Funds" means, collectively, the Bond Fund, the Bond Proceeds Fund, the 
Rebate Fund, the Revenue Fund, the Surplus Fund, the Mortgage Recovery Fund, 
the Servicing Fund and the Costs of Issuance Fund. 

     "Holder" or "Bondholder" means the person in whose name a Bond is 
registered in the Bond Register. 

     "Indenture" means this Indenture of Trust by and between the Issuer and 
the Trustee, as the same may from time to time be amended or supplemented as 
herein provided. 

     "Independent Accountant" means a certified public accountant or firm of 
certified public accountants registered and qualified to practice as such 
under the laws of the State, and not employed by the Issuer or the Borrower, 
except to perform independent audits of the books and records of either or 
both of them or other similar periodic reviews and to perform other 
independent services. 

     "Independent Counsel" means any attorney acceptable to the Trustee, duly 
admitted to practice law before the highest court of any state or of the 
District of Columbia, who may be counsel to the Borrower or the Issuer but who 
may not be an officer or an employee of the Borrower or the Issuer. 

     "Initial Rate Adjustment Date" means December 1, 2007.

     "Insider" means the Borrower, any partner of the Borrower, the Issuer, 
any guarantor of the Bonds, any other person directly or indirectly 
controlling or controlled by, or under direct or indirect common control with, 
any of the foregoing, or any person which is an "insider" of the Borrower or 
any guarantor within the meaning of the Bankruptcy Code.


<PAGE>                              - 6 -
     "Interest Payment Date" means June 1 and December 1 in each and every 
year, commencing on June 1, 1998.

     "Internal Revenue Code" or "Code" means the Internal Revenue Code of 
1986, as amended, and, with respect to a specific section thereof, such 
reference shall be deemed to include (a) the regulations promulgated by the 
United States Department of Treasury under such section, (b) any successor 
provision of similar import hereafter enacted, (c) any corresponding provision 
of any subsequent Internal Revenue Code, and (d) the regulations promulgated 
under the provisions described in (b) and (c). 

     "Issuer" means the City of Aurora, Illinois, and its successors and 
assigns.

     "Land Trust" means American National Bank and Trust Company of Chicago, 
as trustee under the Trust Agreement dated June 20, 1989, known as Trust No. 
108642-05.

     "Limited Partnership Agreement" means the Amended and Restated Limited 
Partnership Agreement of the Borrower, together with any amendments and 
supplements thereto permitted thereby.

     "Loan" means the loan of proceeds of the Bonds by the Issuer to the 
Borrower described in Section 4.1 of the Loan Agreement. 

     "Loan Agreement" means the Loan Agreement dated as of December 1, 1997, 
by and between the Issuer and Borrower, as the same may from time to time be 
amended or supplemented as provided therein and in this Indenture.

     "Lower Income Tenant" has the meaning set forth in the Regulatory 
Agreement.

     "Lower Income Unit" has the meaning set forth in the Regulatory Agreement.

     "Manager" means America First Properties Management, Inc., a Nebraska 
corporation, and any successor manager of the Project.

     "Maturity Date" means any date on which principal of or interest or 
premium, if any, on the Bonds is due, whether at stated maturity, on an 
Interest Payment Date, or upon redemption or acceleration, or otherwise.  

     "Mortgaged Property" means the properties, real, personal or mixed, 
described in the Granting Clauses of the Mortgage, as they may at any time 
exist. 

     "Mortgagee" means, collectively, the Issuer with respect to the Park 
Trace Mortgage and the Trustee and any co-trustee or successor trustee 
appointed, qualified and acting as such under this Indenture, with respect to 
the Covey Project, as beneficiaries under the Mortgage. 

     "Mortgage Recovery Fund" means the Fund created by Section 5.8. 

     "Net Proceeds" shall have the meaning set forth in the Mortgage. 

     "Non-Arbitrage Certificate" means the Non-Arbitrage Certificate executed 
by the Issuer and all exhibits attached thereto including any letter of 
instructions delivered by Bond Counsel attached thereto dated as of the date 
of issuance of the Bonds.

     "Note" means the Promissory Note executed by the Borrower and the Land 
Trust in favor of the Issuer, endorsed by the Issuer, without recourse, to the 
Trustee.

     "Notice of Election to Retain Bonds" means the Notice of Election to 
Retain Bonds in substantially the form attached as Exhibit F delivered by a 
Bondowner to the Tender Agent, in connection with the mandatory tender of 
Bonds as specified in Section 3A.1, by which the Bondowner elects to retain 
Bonds as of the applicable Rate Adjustment Date.








<PAGE>                              - 7 -
     "Notice of Canceled Mandatory Tender" means the Notice of Canceled 
Mandatory Tender in substantially the form attached as Exhibit E delivered by 
the Trustee to the Bondowners, the Remarketing Agent and the Borrower, if the 
mandatory tender of Bonds on the Rate Adjustment Date is canceled as specified 
in Section 3A.1.

     "Ordinary Fees and Expenses" means the fees and expenses charged or 
incurred by the Trustee in the fulfillment of its obligations hereunder which 
are reimbursable to the Trustee from the Trust Estate in an aggregate annual 
amount equal to $_____.

     "Outstanding Bonds" or "Bonds Outstanding" means, as of the date of 
determination, all Bonds theretofore issued and delivered under this Indenture 
except: 

          (A)	Bonds theretofore cancelled by the Trustee or Paying Agent or 
     delivered to the Trustee or Paying Agent cancelled or for cancellation; 

          (B)	Bonds for which payment or redemption moneys or securities (as 
     provided in Article 7) shall have been theretofore deposited with the 
     Trustee or Paying Agent in trust for the Holders of such Bonds; provided, 
     however, that if such Bonds are to be redeemed, notice of such redemption 
     shall have been duly given pursuant to this Indenture or irrevocable 
     action shall have been taken to call such Bonds for redemption at a 
     stated redemption date; and 

          (C)	Bonds in exchange for or in lieu of which other Bonds shall have 
     been issued and delivered pursuant to Section 2.7 or other provisions of 
     this Indenture; provided, however, that in  determining whether the 
     Holders of the requisite principal amount of Outstanding Bonds have given 
     any request, demand, authorization, direction, notice, consent or waiver 
     hereunder, Bonds owned by the Issuer or the Borrower shall be disregarded 
     and deemed not to be Outstanding Bonds (unless the Borrower owns all the 
     Bonds otherwise outstanding, in which case they shall be deemed 
     outstanding), except that in determining whether the Trustee shall be 
     protected in relying upon any such request, demand, authorization, 
     direction, notice, consent or waiver, only Bonds which the Trustee knows 
     to be so owned shall be disregarded. 

     "Park Trace Project" means the Premises, the Facility and any and all 
Project Equipment as they may at any time exist to the 260-unit multifamily 
housing project located at 3450 Jones Mill Road in the City of Norcross, 
Gwinnett County, Georgia, constituting part of the Project.

     "Park Trace Project Assignment" means the Park Trace Assignment of Rents 
and Leases dated as of December 1, 1997, from the Borrower to the Trustee with 
respect to the Park Trace Project, as the same may from time to time be 
amended or supplemented as provided therein and in this Indenture.

     "Park Trace Project Mortgage" means the Deed to Secure Debt, Security 
Agreement, Assignment of Leases and Rents and Fixture Financing Statement 
dated as of December 1, 1997, from the Borrower to the Issuer with respect to 
the Park Trace Project, as the same may from time to time be replaced, amended 
or supplemented as provided therein and in this Indenture, and the Park Trace 
Project Assignment, assigned by the Issuer to the Trustee pursuant to the 
Assignment of Deed to Secure Debt, and the Collateral Assignment of Rents and 
Leases dated as of December 1, 1997.

     "Paying Agent" means the Bond Registrar, the Trustee or any other entity 
designated pursuant to this Indenture as the agent of the Issuer and Trustee 
to receive and disburse the principal of and premium, if any, and interest on 
the Bonds. 

     "Payment Date" means the Maturity Date, the Purchase Date, the Interest 
Payment Date or the Discharge Date, as the case may be. 

     "Permitted Encumbrances" means the Permitted Encumbrances defined in the 
Mortgage. 








<PAGE>                              - 8 -
     "Permitted Investments" means:

          (a)	to the extent permitted by applicable law for investment of 
     moneys of the Issuer:

[to be reviewed]

               (i)	certificates or interest-bearing notes or obligations of 
          the United States, or those for which the full faith and credit of 
          the United States are pledged for the payment of principal and 
          interest;

               (ii)	investments in any of the following obligations, provided 
          such obligations are backed by the full faith and credit of the 
          United States: (a) direct obligations or fully guaranteed 
          certificates of beneficial interest of the Export-Import Bank of the 
          United States, (b) debentures of the Federal Housing Administration, 
          (c) guaranteed Mortgage-backed bonds of the Government National 
          Mortgage Association, (d) certificates of beneficial interest of the 
          Farmers Home Administration, (e) obligations of the Federal 
          Financing Bank, (f) project notes and local authority bonds of the 
          United States Department of Housing and Urban Development, (g) 
          obligations of the Private Export Funding Corp. or (h) other such 
          obligations which would not result in a downgrade, withdrawal or 
          qualification of the rating on the Bonds as evidenced in writing 
          from the Rating Agency;

               (iii)	investments in (a) senior obligations of the Federal Home 
          Loan Bank System, (b) participation certificates or senior debt 
          obligations of the Federal Home Loan Mortgage Corporation, (c) 
          Mortgage-backed securities and senior debt obligations (excluding 
          stripped Mortgage securities that are valued greater than par on the 
          portion of the unpaid principal) of the Federal National Mortgage 
          Association or (d) senior debt obligations of the Student Loan 
          Marketing Association;

               (iv)	repurchase agreements with primary dealers and/or banks 
          rated "A" or better by the Rating Agency collateralized with the 
          obligations described in (i) or (ii) above held by a third-party 
          custodian, at levels set forth in paragraph (b) below;

               (v)	money market mutual funds registered with the Securities 
          Exchange Commission conforming to Rule 2a-7 of the Investment 
          Company Act of 1940, that invest primarily in direct obligations 
          issued by the U.S. Treasury and repurchase agreements backed by 
          those obligations, including funds for which the Trustee or an 
          affiliate of the Trustee acts as an advisor, and rated in the 
          highest category by the Rating Agency;

               (vi)	certificates of deposit of any bank as defined in the 
          Illinois Banking Act (including the Trustee) whose short-term 
          obligations are rated "A-1" or better by the Rating Agency provided 
          that such certificates of deposit are fully secured by the 
          obligations described in (i) or (ii) above, at the levels set forth 
          in paragraph (b) below, the Trustee has a perfected first security 
          interest in the obligations securing the certificates and the 
          Trustee holds (or shall have the option to appoint a bank as its 
          agent to hold) the obligations securing the certificates;

               (vii)	certificates of deposit of any bank as defined in the 
          Illinois Banking Act (including the Trustee) which care fully 
          insured by the Federal Deposit Insurance Corporation;

               (viii)	commercial paper rated "A-1+" or better by the Rating 
          Agency; 

               (ix)	obligations of, or obligations fully guaranteed by, any 
          state of the United States of America or any political subdivision 
          thereof which obligations are rated by the Rating Agency in the 
          highest rating categories (without regard to any refinement or 
          gradation of rating category by numerical modifier or otherwise and 
          without regard to credit enhancement) assigned by such rating agency 
          to obligations of that nature;



<PAGE>                              - 9 -
               (x)	shares of an investment company (1) registered under the 
          Investment Company Act of 1940, whose shares are registered under 
          the Securities Act of 1933, and (2) which invests solely in 
          securities described in one or more of clauses (i) through (iv) 
          above, and rated AAAm or AAAm-G by the Rating Agency, including an 
          investment company managed by the Trustee or an affiliate of the 
          Trustee; and

               (xi)	any other investment that would not result in the 
          downgrade, withdrawal or qualification of the rating assigned to the 
          Bonds as evidenced in writing by the Rating Agency.

provided that (1) if any instrument is rated, the instrument shall not have an 
"r" highlighter affixed to its rating,  (2) the terms of the obligation shall 
have a predetermined, fixed principal amount due at maturity without variance 
or change, and (3) if any obligation (other than an obligation described in 
clauses (v) and (x)) bears interest at a variable rate, the interest rate 
shall be tied to a single interest rate index plus a single fixed spread, if 
any, and shall move proportionately with such rate index.  For purposes of 
this subparagraph, the fact that the Trustee or an affiliate of Trustee is 
providing services to and receiving remuneration from the foregoing investment 
company or trust as an investment advisor, custodian, transfer agent, 
registrar, or otherwise shall not preclude the Trustee from investing in the 
securities of such investment company or investment trust.

          (b)	Collateral Percentage Levels of United States Government 
     Securities for Repurchase Agreements and Bank Certificates of Deposit.


     Remaining Maturity


     Frequency of    1 year     5 years     10 years     15 years     30 years
     Valuation      or less     or less      or less      or less      or less
     ------------   -------     -------      -------      -------      -------
     Daily             102         105          106          107          113
     Weekly            103         110          111          113          118
     Monthly           106         116          119          123										130
     Quarterly         106         118          128          130          135

Further Requirements:

          (i)	on each valuation date, the market value of the collateral shall 
     be in an amount equal to the indicated collateral percentage of the 
     obligation (including unpaid accrued interest) that is being secured;

          (ii)	in the event the collateral level is below its required 
     collateral percentage on a valuation date, such percentage shall be 
     restored within the following restoration periods: one Business Day for 
     daily valuations, two Business Days for weekly valuations and one month 
     for monthly and quarterly valuations.  The use of different restoration 
     periods affects the requisite collateral percentage; and

          (iii)	the Trustee is hereby required to terminate the repurchase 
     agreement upon a failure to maintain the requisite collateral percentage 
     after the restoration period and, if not paid by the counterparty in 
     federal funds against transfer of the repurchase agreement, to liquidate 
     the collateral.

     "Preliminary Notice of Mandatory Tender" means the Preliminary Notice of 
Mandatory Tender of Bonds in substantially the form attached as Exhibit D 
delivered by the Trustee to the Bondowners, the Remarketing Agent and the 
Borrower, in connection with the mandatory tender of Bonds as specified in 
Section 3A.1.

     "Premises" means, with respect to the Covey Project or the Park Trace 
Project, as applicable, the property and interests in real property described 
in the Mortgage as the "Real Property" with respect to the Covey Project or 
the Park Trace Project, as applicable.







<PAGE>                              - 10 -
     "Principal Office" means (i) for the Trustee, the corporate trust office 
of the Trustee located at 928 Grand Avenue, 13th Floor, Kansas City, Missouri  
64106, Attention:  Corporate Trust Department, or such other office or offices 
as the Trustee may designate from time to time, or the office of any successor 
Trustee where it principally conducts its business of serving as trustee under 
indentures pursuant to which municipal or governmental obligations are issued, 
and (ii) for the Tender Agent, the corporate trust office of the Trustee above 
or such other office or offices as the Tender Agent may designate from time to 
time, or the office of any successor Tender Agent where it principally 
conducts its business of serving as a tender agent  for municipal or 
governmental obligations.

     "Principal Payment Date" means any date on which principal of the Bonds 
is payable pursuant to the provisions hereof.

     "Prior Code" means the Internal Revenue Code of 1954, as amended.

     "Prior Note" means the City of Aurora Multifamily Housing Mortgage 
Revenue Note (Covey at Fox Valley Project) Series 1986 in the original 
principal amount of $12,410,000.

     "Proceeds" means the proceeds of any insurance recovery or condemnation 
award (or payment in lieu of condemnation) less all expenses incurred by and 
reimbursement to the Trustee and the Issuer in connection therewith.

     "Project" means the Covey Project and the Park Trace Project.

     "Project Engineer" means an engineer for the Project and any successor 
thereto appointed by the Borrower with the consent of the Issuer, which shall 
(a) be an architect, engineer or firm of architects or engineers who is not a 
full-time employee of either the Issuer or the Borrower, (b) have at least 
five years' experience in its field and (c) be licensed to operate in the 
State of Illinois.

     "Project Equipment" means, with respect to the Project, the property 
described as "Personal Property" in the respective Mortgage. 

     "Project Insurance Premiums" means the aggregate amount of the annual (or 
other periodic installments) premiums payable in consideration of the policies 
of insurance required to be  maintained pursuant to Section 5.5 of the 
Agreement.

     "Project Premises" means, with respect to the Project, the property and 
interests in real property described in the Mortgage as the "Real Property." 

     "Project Revenues" means all gross revenues and receipts derived by the 
Borrower from the operation of the Project, including tenant rentals and all 
other moneys as may be paid to or on behalf of the Borrower or to which the 
Borrower may be entitled with respect to the Project (including, without 
limitation, revenues from rentals of the retail space therein), excluding 
securities deposits and including earnings on the foregoing.  Such term shall 
not include Extraordinary Revenues.

     "Protected Funds" means any:

          (a)	proceeds of any other revenue bonds of the Issuer issued to 
     refund in whole or part the Bonds or any other payments made by a party 
     other than the Borrower or the Issuer to purchase or pay debt service on 
     the Bonds, or any other funds (so long as an opinion of counsel familiar 
     with bankruptcy matters and acceptable to the Trustee and the Issuer is 
     first filed with the Trustee stating in effect that the proceeds of such 
     revenue bonds, or other payments or funds, as the case may be, to the 
     Bondholders, will not constitute voidable preferences under Sections 547 
     or 550 of the Bankruptcy Code if the Borrower, the Issuer or other third 
     party making the payments were to become a debtor under the Bankruptcy 
     Code); 

          (b)	moneys held by the Trustee in the Bond Fund, the Servicing Fund 
     or the Mortgage Recovery Fund for a period of at least 91 consecutive 
     days, prior to and during which period no Act of Bankruptcy shall have 
     occurred as evidenced by a certificate of the Borrower; 





<PAGE>                              - 11 -
          (c)	cash proceeds (as defined in the Illinois Uniform Commercial 
     Code) of any collateral pledged to the Trustee to secure payment of the 
     Bonds or the Borrower's obligations under the Loan Agreement which are 
     delivered to the Trustee within ten days after receipt thereof by the 
     Borrower; and 

          (d)	investment earnings from the foregoing funds.

     "Purchase Date" means the date on which any Outstanding Bonds are 
purchased pursuant to Section 5.5.

     "Purchase Fund" means the Fund by that name created by Section 5.3.

     "Qualified Project Period" has the meaning set forth in the Regulatory 
Agreement.

     "Rate Adjustment Date" means the date as of which the interest rate on 
the Bonds, as determined on the Rate Determination Date in accordance with 
Section 2.2(2)(a), will be effective, which will be the Initial Rate 
Adjustment Date and thereafter December 1 in the year determined by the 
Borrower by written notice to the Remarketing Agent, the Trustee and the 
Tender Agent not less than 60 days prior to the next occurring Rate Adjustment 
Date.

     "Rate Determination Date" means no later than 4:00 P.M., New York time, 
on the third Business Day immediately preceding a Rate Adjustment Date.

     "Rate Period" means the period from a Rate Adjustment Date to, but not 
including, the next Rate Adjustment Date.

     "Rating Agency" means Standard & Poor's Ratings Services, a Division of 
The McGraw-Hill Companies, Inc., or any other nationally recognized rating 
agency from time to time providing the rating borne by the Bonds, approved by 
the Issuer. 

     "Rebate Fund" means the Fund so designated in Section 5.7 into which the 
Trustee is to deposit arbitrage rebate paid by the Borrower pursuant to 
Section 4.3 of the Loan Agreement.

     "Rebate Requirement" means the amount of arbitrage rebate computed for 
payment as of the last day of every fifth Bond Year pursuant to Treasury 
Regulation Section 1.148-3 or any successor regulation as may be applicable 
thereto; provided, however, that an opinion of Bond Counsel to the effect that 
no money held under the Indenture is subject to rebate shall be accepted by 
the Issuer and the Trustee as a substitute for such annual calculation as long 
as a calculation is run, at a minimum, as of the last day of each fifth Bond 
Year.

     "Record Date" means with respect to any Interest Payment Date, (a) the 
fifteenth day of the month (whether or not a Business Day) next preceding such 
Payment Date or (b) if there is a default in payment of interest due on such 
Payment Date, a special Record Date for the payment of such defaulted interest 
established by notice mailed by the Trustee on behalf of the Issuer; notice of 
such special Record Date shall be mailed not less than 15 days preceding such 
special Record Date, to the Holder at the close of business on the fifth 
Business Day preceding the date of mailing.

     "Regulatory Agreement" means the Amended and Restated Regulatory 
Agreement dated as of December 1, 1997, among the Borrower, the Issuer and the 
Trustee, together with any amendments and supplements thereto permitted 
thereby.

     "Related Documents" means the Loan Agreement, the Note, the Regulatory 
Agreement, the Mortgage, the Assignment and the Remarketing Agreement.

     "Related Person" means a "related person" within the meaning of Section 
103(b)(6)(C) of the Prior Code.

     "Remarketing Agent" means the remarketing agent at the time serving as 
such under the Remarketing Agreement and designated as the Remarketing Agent 
for purposes of this Indenture.  The initial Remarketing Agent is Stern 
Brothers & Co., St. Louis, Missouri.




<PAGE>                              - 12 -
     "Remarketing Agreement" means the Remarketing Agreement dated as of 
December 1, 1997, between the Borrower and the Remarketing Agent, or, if this 
Remarketing Agreement is terminated, any other agreement which may from time 
to time be entered into between the Borrower and any Remarketing Agent with 
respect to the remarketing or placement of the Bonds.

     "Remarketing Proceeds" means proceeds from the resale by the Remarketing 
Agent of Bonds delivered for purchase pursuant to Section 3A.1 that have not 
been commingled with other funds which do not constitute Remarketing Proceeds 
and investment earnings on the proceeds.  Remarketing Proceeds do not include 
any moneys provided by an Insider.

     "Related Person" means a "related person" within the meaning of Section 
103(b)(6)(C) of the Prior Code.

     "Representative" means any officer of the Issuer or the general partner 
of the Borrower, or any other person at any time designated to act on behalf 
of the Issuer or the Borrower, as the case may be, as evidenced by a written 
certificate furnished to such other party and the Trustee containing the 
specimen signature of such person and signed for the Issuer by its Mayor or 
for the Borrower by the Vice President of the general partner of the Borrower.

     "Requisition" means a requisition certificate in the form of Exhibit B.

     "Responsible Agent" means any person duly authorized and designated by 
the Trustee, the Bond Registrar and the Paying Agent to act on its behalf in 
carrying out the applicable duties and powers of such entity as set forth in 
this Indenture; any action required by the Trustee, the Bond Registrar and the 
Paying Agent under this Indenture may be taken by a Responsible Agent.

     "Revenue Fund" means the Fund by that name created by Section 5.3.

     "Series 1985 Bonds" means the Multi-Family Housing Revenue Bonds 
(Pebco-Fox Valley, Ltd. Project) Series 1985 of the Issuer issued in the 
original principal amount of $12,500,000, refunded in part with the proceeds 
of the Prior Note.

     "Servicing Fund" means the Fund created by Section 5.9.

     "State" means the State of Illinois.

     "Surplus Fund" means the Fund by that name created by Section 5.4.

     "Tender Agent" means initially the Trustee and any successor tender agent 
appointed pursuant to Section 9.19.  The Tender Agent shall act as Paying 
Agent for Tendered Bonds.

     "Tendered Bonds" means any Bonds required to be tendered for purchase 
pursuant to Section 3A.1, unless a proper waiver has been made by the Holder 
of such Bonds, whether or not such Bonds are actually tendered.

     "Title Company" means Lawyers Title Insurance Corporation, Phoenix, 
Arizona, its successors and assigns.

     "Treasury" means the United States Department of the Treasury, and any 
successor to its functions. 

     "Treasury Regulations" means all proposed, temporary or final federal 
income tax regulations issued or amended with respect to the Code by the 
Treasury or the Internal Revenue Service.

     "Trustee" means UMB Bank, N.A., Kansas City, Missouri, and any co-trustee 
or successor trustee appointed, qualified and then acting as such under the 
provisions of this Indenture.

     "Trust Estate" means the Trust Estate as defined and set forth in the 
Granting Clauses hereof. 

     "Undelivered Bonds" means Bonds which are deemed to have been tendered to 
the Trustee or Tender Agent, as applicable, for purchase pursuant to Section 
3._ but which have not been surrendered to the Trustee or Tender Agent, as 
applicable.




<PAGE>                              - 13 -
     "Underwriter" means Stern Brothers & Co., and its respective successors 
and assigns.

     "Unprotected Funds" means any funds that are not Protected Funds. 

     Section 1.2.  Rules of Interpretation.

     (1)	This Indenture shall be governed by and construed in accordance with 
the laws and judicial decisions of the State of Illinois, except as they may 
be preempted by Federal rules, regulations and laws applicable to the Issuer.  
The Issuer and the Trustee expressly acknowledge and agree that any judicial 
action to enforce any rights of the Issuer under this Indenture may be brought 
and maintained at the option of the acting party in the District Court for 
Kane* County, Illinois or in the United States District Court for the 
_________ District of Illinois or in any United States Bankruptcy Court in any 
case involving or having jurisdiction over the Borrower or over the Project.

     (2)	The words "herein" and "hereof" and "hereunder" and words of similar 
import, without reference to any particular section or subdivision, refer to 
this Indenture as a whole rather than to any particular section or subdivision 
of this Indenture. 

     (3)	References in this Indenture to any particular article, section or 
subdivision hereof are to the designated article, section or subdivision of 
this Indenture as originally executed. 

     (4)	All accounting terms not otherwise defined herein have the meanings 
assigned to them in accordance with generally accepted accounting principles; 
and all computations provided for herein shall be made in accordance with 
generally accepted accounting principles consistently applied and applied on 
the same basis as in prior years. 

     (5)	The Table of Contents and titles of articles and sections herein are 
for convenience of reference only and are not a part of this Indenture and 
shall not deny or limit the provisions hereof. 

     (6)	Unless the context hereof clearly requires otherwise, the singular 
shall include the plural and vice versa and the masculine shall include the 
feminine and vice versa.  

     (7)	Articles, sections, subsections and clauses mentioned by number only 
are those so numbered which are contained in this Indenture. 

     (8)	Any opinion of counsel called for herein shall be a written opinion 
of such counsel. 

     (9)	References to the Bonds as "tax-exempt" or to the "tax-exempt status 
of the Bonds" are to the exclusion of interest on the Bonds from gross income 
for federal income tax purposes pursuant to Section 103(a) of the Code, 
irrespective of such forms of taxation as the alternative minimum tax, 
environmental tax or branch profits tax on foreign corporations, as is 
consistent with the approach taken in Section 59(i) of the Code.

                                  ARTICLE 2

                                  THE BONDS

     Section 2.1.  Authorized Amount and Form of Bonds.  Bonds secured by this 
Indenture shall be issued in fully registered form without coupons and in 
substantially the form set forth herein with such appropriate variations, 
omissions and insertions as are permitted or required by this Indenture, and 
in accordance with the further provisions of this Article 2.  The aggregate 
principal amount of Bonds that shall be initially issued hereunder shall be 
$12,410,000, unless duplicate Bonds are issued as provided in Section 2.7.  
Additional Bonds may be issued hereunder in accordance with Section 2.6 
hereof. The Bonds, together with the Certificate of Authentication, the form 
of Assignment and the registration information thereon, shall be in 
substantially the forms found at Exhibit C.

     Section 2.2.  Initial Issue.

     (1)	The Bonds shall be initially issued in the aggregate principal amount 
of $12,410,000 and shall:

          (a)	be dated as of the Dated Date;

<PAGE>                              - 14 -
          (b)	be issued and delivered as fully registered book-entry-only 
     bonds without coupons, in the denominations of $5,000 or any integral 
     multiple thereof of a single maturity, and be numbered sequentially R-1 
     upwards;

          (c)	bear interest as provided in subsections (2) and (3), payable 
     semiannually on each Interest Payment Date, such interest to accrue from 
     the Dated Date thereof, or, in the case of transfer or exchange after the 
     first Interest Payment Date, from the most recent Interest Payment Date 
     to which interest has been paid or provided for under this Indenture; if 
     a payment of defaulted interest is to be made, the Trustee shall 
     establish the time of such payment as provided herein and shall establish 
     the associated special Record Date therefor as provided in the definition 
     of "Record Date;" and

          (d)	mature on December 1, 2027.

     (2)	The Bonds will bear interest from the Dated Date to the Initial Rate 
Adjustment Date at the annual interest rate of 5.30%.  Thereafter, the 
Remarketing Agent will determine the interest rate for the Bonds for the Rate 
Period commencing with each Rate Adjustment Date to be the lowest rate which, 
in the best judgment of the Remarketing Agent, on the Rate Determination Date, 
would result in the market value of the Bonds on the Rate Adjustment Date 
being equal to 100% of their principal amount.  In determining the interest 
rate, the Remarketing Agent will have due regard for general financial 
conditions and such other conditions as, in the judgment of the Remarketing 
Agent, have a bearing on the interest rate on the Bonds, including then 
prevailing market conditions, the yields at which comparable securities are 
then being sold and the tender and redemption provisions applicable to the 
Bonds during the forthcoming Rate Period.  Each determination of the interest 
rate for the Bonds will be conclusive and binding upon the Bondholders, the 
Issuer, the Borrower, the Tender Agent, the Remarketing Agent and the 
Trustee.  Upon written request, the Remarketing Agent will give the Issuer, 
the Trustee, the Borrower and the Tender Agent Immediate Notice of the 
interest rate on the Bonds at any time.

     (3)	If the conditions to the remarketing of the Bonds on the Rate 
Adjustment Date are not satisfied in accordance with Section 3A.1(3), the 
Bonds will bear interest at the Default Rate from the Rate Adjustment Date.

     (4)	The Bonds shall:

          (a)	be payable in such coin or currency of the United States of 
     America as at the time of payment is legal tender for payment of public 
     and private debts, by check or draft, at the principal corporate trust 
     office of the Paying Agent, or a duly appointed successor Paying Agent, 
     except that interest on the Bonds payable on other than the Maturity 
     Date, the Purchase Date, any date of mandatory special redemption or the 
     Discharge Date will be payable by check or draft mailed by the Trustee to 
     the Holders of such Bonds on the applicable Record Date (the "Record Date 
     Holders" as defined in the form of Bond set forth in Exhibit C hereto) at 
     the last addresses thereof as shown in the Bond Register on the 
     applicable Record Date, and principal of and any premium on any Bonds 
     shall be payable upon presentation of the Bonds at the principal 
     corporate trust office of the Trustee;

          (b)	be subject to redemption and purchase upon the terms and 
     conditions and at the redemption prices specified in Article 3; and

          (c)	be subject to mandatory tender for purchase upon the terms and 
     conditions and at the tender price specified in Article 3A.

     (5)	Notwithstanding the foregoing, if the date for payment of the 
principal of, premium, if any, or interest on the Bonds shall be a day which 
is not a Business Day, then the date for such payment shall be the next 
succeeding day which is a Business Day, and payment on such later date shall 
have the same force and effect as if made on the nominal date of payment.









<PAGE>                              - 15 -
     (6)	Notwithstanding the foregoing, any Holder of at least $1,000,000 
principal amount of any Bonds (or a lesser amount of such Bonds if such Bonds 
constitute all the Outstanding Bonds at the time), upon payment by the Holder 
of the cost of such wire transfer as an Ordinary Fee or Expense, may file with 
the Trustee an instrument satisfactory to the Trustee requesting the amounts 
payable by the Trustee to such Holder be paid by transferring by electronic 
transfer in immediately available funds, on the day such payment is due, the 
amount to be distributed to such Holder to a designated account maintained by 
such Holder at any other bank in the United States.  The electronic transfer 
request must describe the name, address and ABA routing number of the bank 
(located in the continental United States) and the account number and 
acknowledge an electronic transfer fee payable by the Bondholder.  The Trustee 
shall pay all amounts payable by the Trustee hereunder to such Holder by 
transfer directly to said designated bank in accordance with the provisions of 
any such instrument, provided that if such amount represents a payment of the 
principal of any Bond, such Bond shall have been presented to the Trustee.  
All payments so made shall be valid and effective to satisfy and discharge the 
liability upon such Bonds.

     Section 2.3.  Execution; Limited Obligations.

     (1)	Bonds shall be signed by, or executed with the facsimile or manual 
signature of, the Mayor of the Issuer and attested by the facsimile or manual 
signature of the City Clerk of the Issuer.  In case any officer of the Issuer 
whose signature or whose facsimile signature shall appear on any Bonds shall 
cease to be such officer before the delivery of such Bonds, such signature or 
such facsimile shall nevertheless be valid and sufficient for all purposes, 
the same as if he had remained in office until such delivery, and also any 
Bond may be signed by such persons as at the actual time of the execution of 
such Bond shall be the proper officers to sign such Bond although at the date 
of such Bond such persons may not have been such officers. 

     (2)	The Bonds are limited obligations of the Issuer payable solely from 
revenues and funds pledged therefor under this Indenture.  No Bondowner shall 
ever have the right to compel the exercise of the taxing power of the Issuer 
or the State or any political subdivision thereof to pay the principal of the 
Bonds or the interest hereon or any other cost incident hereto, or to enforce 
payment hereof against any property of the Issuer, the State or any political 
subdivision thereof.  The Bonds and the interest thereon shall not be deemed 
to constitute a debt or liability of the Issuer, the State, or any political 
subdivision thereof, and the issuance thereof shall not, directly or 
indirectly or contingently, obligate the Issuer, the State, or any political 
subdivision thereof, to levy any form of taxation therefor or to make any 
appropriation for its payment.  Nothing in the Bonds, the proceedings of the 
Issuer authorizing the issuance of the Bonds or this Indenture shall be 
construed to authorize the Issuer to create a debt or liability of the Issuer, 
the State, or any political subdivision thereof within the meaning of any 
constitutional or statutory provision of the State.

     Section 2.4.  Authentication.  No Bond shall be valid or obligatory for 
any purpose or be entitled to any security or benefit under this Indenture 
unless a Certificate of Authentication on such Bond, substantially in the form 
set forth in Exhibit C hereto, shall have been duly executed manually by a 
Responsible Agent of the Bond Registrar. Certificates of Authentication on 
different Bonds need not be signed by the same person.  The Bond Registrar 
shall authenticate the signatures of officers of the Issuer on each Bond by 
execution of the Certificate of Authentication on the Bond; and the 
Certificate of Authentication so executed on each Bond shall be conclusive 
evidence that it has been authenticated and delivered under this Indenture. 

     Section 2.5.  Conditions Precedent to the Delivery of Bonds.  Upon the 
execution and delivery of this Indenture, the Issuer shall execute and deliver 
to the Bond Registrar, and the Bond Registrar shall authenticate, the Bonds 
and shall deliver the Bonds to or upon the order of the Underwriter at such 
time or times as may be directed by the Issuer after the Trustee has received 
the following: 

     (1)	original executed counterparts of the Loan Agreement, the Note 
endorsed by the Issuer to the Trustee and this Indenture;

     (2)	copies of original executed counterparts of the Mortgage, the 
Assignment, the Regulatory Agreement, the Continuing Disclosure Agreement and 
UCC financing statements with evidence of recording or that they will be 
recorded;


<PAGE>                              - 16 -
     (3)	copies of original executed counterparts of all Related Documents not 
specifically referred to in paragraphs (1) and (2) above;

     (4)	a copy, duly certified by the City Clerk or his or her deputy, of the 
ordinance passed and approved by the governing body of the Issuer, authorizing 
the execution and delivery of this Indenture and the Loan Agreement and the 
issuance of the Bonds;

     (5)	a request and authorization (which may be part of a certificate of 
the Issuer) to the Trustee on behalf of the Issuer, signed by its Mayor, to 
deliver the Bonds to the purchaser identified upon payment to the Trustee for 
the account of the Issuer of a specified sum plus accrued interest;

     (6)	the opinion of counsel to the Borrower in the form required by Bond 
Counsel and counsel to the Underwriter, compliance with such form to be 
evidenced by Bond Counsel's delivery of its opinion required in clause (8) 
below;

     (7)	the opinion of counsel to the Issuer, in the form required by Bond 
Counsel, compliance with such form to be evidenced by Bond Counsel's delivery 
of its opinion required in clause (8) below;

     (8)	the opinion of Bond Counsel, to the effect that the Bonds have been 
duly and validly issued and the interest on the Bonds is excludable from gross 
income for federal income tax purposes and the supplemental opinion of Bond 
Counsel that the Bonds are exempt from registration under the Securities Act 
of 1933, as amended, and exempt from qualification under the Trust Indenture 
Act of 1939;

     (9)	a copy of the title insurance policy specified in the Mortgage;

     (10)	a letter from the Rating Agency evidencing that the Bonds have 
received a rating of "A-" or better from the Rating Agency;

     (11)	a copy of the instruction letter delivered to and accepted by the 
Title Company in connection with the closing of the refinancing of the Project 
by the Borrower;

     (12)	a copy of the executed DTC Letter of Representations in connection 
with issuance of the Bonds;

     (13)	evidence of the payment in full and discharge of the Prior Note and 
release of any liens against the Project in a form acceptable to Bond Counsel 
and other such documents as required by Bond Counsel, compliance with such 
form to be evidenced by Bond Counsel's delivery of its opinion required in 
clause (8) above; and

     (14)	any other documents or opinions which the Trustee, the Issuer or 
Bond Counsel may reasonably require.

     Section 2.6.  Additional Bonds.  In addition to the Bonds initially 
issued hereunder, the Issuer and the Borrower may from time to time, and upon 
satisfaction of the conditions specified in this Section 2.6, agree upon and 
approve the issuance and delivery of Additional Bonds on a parity with the 
Bonds pursuant to this Indenture. Any issuance of Additional Bonds shall be 
authorized by a supplement to this Indenture establishing the terms thereof. 
Each issue of Additional Bonds shall be secured by the Trust Estate 
hereunder.  No Additional Bonds shall be issued under this Section 2.6 unless 
at the time of such issuance the following conditions have been met (such 
facts to be shown by a certificate of the Trustee): 

     (1)	the Trustee shall have received a copy, duly certified by the City 
Clerk or his or her deputy, of the ordinance adopted and approved by the 
governing body of the Issuer, approving the issuance of the Additional Bonds;

     (2)	the Trustee shall have received original executed counterparts of the 
supplement to this Indenture and amendments to each of the Related Documents 
authorizing the issuance of such Additional Bonds;

     (3)	to the best knowledge of the Trustee, there is no Event of Default 
then existing under this Indenture, or any Related Document or any amendments 
or supplements thereto;

     (4)	the Trustee shall have received an opinion of Independent Counsel 
that the Mortgage, as amended, continues to be a first lien against the 
Project;
<PAGE>                              - 17 -
     (5)	the Trustee shall have received an opinion of Bond Counsel that the 
Additional Bonds have been duly and validly issued and the issuance of the 
Additional Bonds will not adversely affect the exclusion of interest on the 
Series 1997A Bonds and the Series 1997B Bonds from gross income for federal 
income tax purposes and a supplemental opinion of Bond Counsel that the 
Additional Bonds are exempt from registration under the Securities Act of 
1933, as amended, and exempt from qualification under the Trust Indenture Act 
of 1939;

     (6)	the Trustee shall have received a letter from the Rating Agency to 
the effect that the Additional Bonds have received a rating from the Rating 
Agency of at least "A-" or higher and that the rating on the Outstanding Bonds 
immediately prior to the issuance of the Additional Bonds will not be 
qualified, withdrawn or downgraded by the Rating Agency;

     (7)	the Additional Bonds:

          (a)	shall be denominated and payable in United States dollars;

          (b)	shall not rank senior in any respect to the Bonds then 
     outstanding; and

          (c)	shall not have a maturity date beyond the Maturity Date of the 
     Bonds then outstanding; and

     (8)	any other documents or opinions which the Trustee, the Issuer, or 
Bond Counsel may reasonably require.

     Section 2.7.  Mutilated, Lost, Destroyed or Undelivered Bonds.

     (1)	In case any Bond issued hereunder shall become mutilated or be 
destroyed or lost, the Issuer shall, if not then prohibited by law, cause to 
be executed, and the Bond Registrar shall authenticate and deliver, a new Bond 
of like amount, maturity date and tenor, but bearing a number not 
contemporaneously outstanding, in exchange and substitution for and upon 
cancellation of any such mutilated Bond, or in lieu of and in substitution for 
any such Bond destroyed or lost, upon the Holder's paying the reasonable 
expenses and charges of the Bond Registrar and the Issuer and, in the case of 
a Bond destroyed or lost, the Holder's filing with the Bond Registrar of 
evidence satisfactory to the Bond Registrar and the Trustee that such Bond was 
destroyed or lost, and of the Holder's ownership thereof, and furnishing the 
Issuer, the Trustee and the Bond Registrar with indemnity satisfactory to 
them.  If the mutilated, destroyed or lost Bond has already matured or been 
called for redemption in accordance with its terms, it shall not be necessary 
to issue a new Bond prior to payment.

     (2)	In the event that there are Undelivered Bonds, the Trustee shall 
authenticate and deliver, with such delivery to occur at the Principal Office 
of the Trustee to the new Holder or Holders thereof a new Bond or Bonds of 
like amount in Authorized Denominations registered in the name of the new 
Holder or Holders thereof.  It shall be the duty of the Trustee to hold the 
moneys received from the remarketing of a replacement Bond issued in place of 
an Undelivered Bond, without liability for interest thereon, for the benefit 
of the former Bondowner, who shall thereafter be restricted exclusively to 
such moneys for any claim of whatever nature under this Indenture or with 
respect to the Undelivered Bond and so long as the moneys held by the Trustee 
equal the full amount due on such Bond on the Rate Adjustment Date, such Bond 
shall thereafter no longer be secured by this Indenture (except for such 
moneys so held).

     Section 2.8.  Registration and Exchange of Bonds; Book-Entry System of 
Bonds.














<PAGE>                              - 18 -
     (1)	The Bonds will be issued as a single Bond for each stated maturity in 
the name of The Depository Trust Company, New York, New York (the "Securities 
Depository"), or its nominee, which will act as securities depository for the  
Bonds.  During the term of the Bonds, ownership and subsequent transfers of 
ownership will be reflected by book entry on the records of the Securities 
Depository and those financial institutions for whom the Securities Depository 
effects book-entry transfers (collectively, the "DTC Participants").  No 
person for whom a DTC Participant has an interest in any Bond (a "Beneficial 
Owner") shall receive a bond certificate representing an interest in the Bonds 
except in the event that the Securities Depository or the Issuer shall 
determine, at its option, to terminate the book-entry system described in this 
Section 2.8 (in which event, the provisions of Section 2.10 shall apply).  
Payment of principal of and premium, if any, and interest on, the Bonds will 
be made by the Trustee in accordance with the DTC Letter of Representations in 
immediately available funds to the Securities Depository, which will in turn 
remit such payment of principal, premium if any, and interest to its DTC 
Participants, which will in turn remit such principal premium if any, and 
interest to the Beneficial Owners of the Bonds until and unless the Securities 
Depository or the Issuer elects to terminate the book-entry system, whereupon 
the Issuer shall deliver bond certificates to the Beneficial Owners of the 
Bonds or their nominees and shall bear the expense of such delivery.  Bond 
certificates delivered to the Securities Depository under this section may not 
be transferred or exchanged except as provided in this section.  In the event 
of a conflict between the provisions of this Section and the DTC Letter of 
Representations, the DTC Letter of Representations will control.

     (2)	The Securities Depository, or its nominee, will be the sole 
Bondholder of the Bonds, and no investor or other party purchasing, selling or 
otherwise transferring ownership of any Bonds will receive, hold or deliver 
any bond certificates as long as the Securities Depository is the sole 
Bondholder.

     (3)	The Bonds may not be transferred or exchanged except:

          (a)	to any successor of the Securities Depository (or its nominee) 
     or any successor to the Substitute Depository designated pursuant to 
     (b)(ii) below, provided that any successor of the Securities Depository 
     or any Substitute Depository must be a qualified and registered "clearing 
     agency" as provided in Section 17A of the Securities Exchange Act of 
     1934, as amended;

          (b)	to a Substitute Depository designated by or acceptable to the 
     Issuer upon (i) the determination by the Securities Depository that the 
     Bonds shall no longer be eligible for depository services or (ii) 
     determination by the Issuer that the Securities Depository is no longer 
     able to carry out its functions, provided that any such Substitute 
     Depository must be qualified to act as such, as provided in subparagraph 
     (1) above; or

          (c)	to those persons to whom transfer is requested in written 
     transfer instructions from the Issuer in the event that:

               (i)	the Securities Depository shall resign or discontinue its 
          services for the Bonds, but only if the Issuer is unable to locate a 
          qualified successor within two months following the resignation or 
          determination of ineligibility; or

               (ii)	upon a determination by the Issuer that the continuation 
          of the book-entry system described herein, which precludes the 
          issuance of certificates to any Bondholder, other than the 
          Securities Depository (or its nominee), is no longer in the best 
          interest of the Beneficial Owners of the Bonds (in which event the 
          Borrower must provide for an increase in the Ordinary Fees and 
          Expenses payable hereunder and must verify with the Rating Agency 
          that such increase will not adversely affect the rating on the 
          Bonds).

     (4)	The Depository Trust Company, New York, New York, is hereby appointed 
the Securities Depository for the Bonds.







<PAGE>                              - 19 -
     Section 2.9.  Ownership of Bonds.  The Issuer, the Trustee, the Bond 
Registrar and the Paying Agent may deem and treat the Holder of any Bond, 
whether or not such Bond shall be overdue, as the absolute owner of such Bond 
for the purpose of receiving payment thereof (subject to the provisions of 
Section 2.2(4) and (5) as to payment of interest) and for all other purposes 
whatsoever, and the Issuer (or any agent thereof), the Trustee, the Bond 
Registrar and the Paying Agent shall not be affected by any notice to the 
contrary. 

     Section 2.10.  Preparation of Definitive Bonds; Temporary Bonds.  While 
the Bonds are registered in book-entry format pursuant to Section 2.8, Bonds 
shall be held by the Securities Depository or its agent in typewritten form.  
Following termination of the book-entry system definitive Bonds shall be 
lithographed or printed on steel engraved borders at the expense of the 
Borrower.  Until the definitive Bonds are prepared, the Issuer may execute, in 
the same manner as is provided in Section 2.3 (except that manual signatures 
may be used), and deliver, in lieu of definitive Bonds, but subject to the 
same provisions, limitations and conditions as the definitive Bonds, except as 
to the denominations thereof, one or more temporary Bonds in typewritten form 
(which shall be registered as to principal and interest), substantially of the 
tenor of the definitive Bonds, in any denominations authorized by the Issuer, 
and with such omissions, insertions and variations as may be appropriate to 
temporary Bonds.  The Issuer shall prepare and execute and, upon the surrender 
of such temporary Bonds for exchange and the cancellation of such surrendered 
temporary Bonds, deliver in exchange therefor, at the principal corporate 
trust office of the Bond Registrar, definitive Bonds of the same aggregate 
principal amount as the temporary Bonds surrendered.  Any costs relating to 
such surrender and cancellation shall be paid by the Borrower.  Until so 
exchanged, the temporary Bonds shall in all respects be entitled to the same 
benefits and security as definitive Bonds issued pursuant to this Indenture.  
All temporary Bonds surrendered in exchange for a definitive Bond or Bonds 
shall be forthwith cancelled by the Bond Registrar. 

     Section 2.11.  Registration, Transfer and Exchange of Registered Bonds.

     (1)	In the event of termination of the book-entry system as set forth in 
Section 2.8 the Trustee shall, at the expense of the Borrower, prepare, 
execute and authenticate  fully executed Bonds, shall cause to be kept at the 
principal corporate trust office of the Bond Registrar a Bond Register in 
which, subject to such reasonable regulations as the Bond Registrar may 
prescribe, the Issuer shall execute and provide for the registration of Bonds 
and the registration of transfers of Bonds.  The Bond Register shall contain a 
record of every Bond, including bond number and principal amount at any time 
authenticated hereunder, together with the name and address of the Holder 
thereof, the date of authentication, the date of transfer or payment, and such 
other matters as are appropriate for the Bond Register in the estimation of 
the Bond Registrar and the Trustee. 

     (2)	The transfer of each Bond is subject to registration by the Holder 
thereof only upon compliance with the conditions for registration of transfer 
imposed on the Holder under this subsection (2) and subsection (6) below.  
Upon surrender of any Bond at the principal corporate trust office of the Bond 
Registrar, the Issuer shall execute (if necessary), and the Bond Registrar 
shall authenticate and deliver, in the name of the designated transferee or 
transferees (but not registered in blank or to "bearer" or a similar 
designation), one or more new Bonds of any authorized denomination or 
denominations of a like aggregate principal amount, having the same stated 
maturity and interest rate, as requested by the transferor. 

     (3)	At the option of the Holder, Bonds may be exchanged for other Bonds 
of any authorized denomination or denominations of a like aggregate principal 
amount and stated maturity, upon surrender of the Bonds to be exchanged at the 
principal corporate trust office of the Bond Registrar, and upon payment of 
the taxes, if any, hereinafter referred to.  Whenever any Bonds are so 
surrendered for exchange, the Issuer shall execute (if necessary), and the 
Bond Registrar shall authenticate and deliver, the Bonds which the Holder 
making the exchange is entitled to receive. 

     (4)	All Bonds delivered in exchange for or upon transfer of Bonds shall 
be valid special obligations of the Issuer evidencing the same debt, and 
entitled to the same benefits under this Indenture, as the Bonds surrendered 
for such exchange or transfer. 




<PAGE>                              - 20 -
     (5)	Registration of the transfer of a Bond may be made on the Bond 
Register by the Holder in person or by the Holder's attorney duly authorized 
in writing.  Every Bond presented or surrendered for registration of transfer 
or exchange shall (if so required by the Issuer or the Bond Registrar) be duly 
endorsed or be accompanied by a written instrument or instruments of transfer, 
in the form printed on the Bond or in another form satisfactory to the Bond 
Registrar, duly executed and with guaranty of signature of the Holder thereof 
or his, her or its attorney duly authorized in writing, and shall include 
written instructions as to the details of the transfer of the Bond. 

     (6)	No service charge shall be made to the Holder for any registration, 
transfer or exchange, but the Bond Registrar and Issuer may require payment of 
a sum sufficient to cover any tax, fee or other governmental charge that may 
be imposed in connection with any transfer or exchange of Bonds, other than 
exchanges expressly provided in this Indenture to be made without expense or 
without charge to Bondholders, and any legal or unusual costs of transfers and 
lost bonds. 

     (7)	Subject to the provisions of subsection (8) below, the Bond Registrar 
shall endeavor to comply with rules applicable to transfer agents registered 
with the Securities and Exchange Commission as to the 72-hour "turnaround" 
standard established for the transfer of registered corporate securities.

     (8)	The Bond Registrar shall not be required (a) to transfer or exchange 
any Bond during a period beginning at the opening of business 15 days before 
the day of the mailing of a notice of redemption or purchase of Bonds under 
this Indenture and ending at the close of business on the day of such 
publication or mailing or (b) to transfer or exchange any Bond so selected for 
redemption or purchase in whole or in part.

     (9)	 In the event any Bondholder fails to provide a correct taxpayer 
identification number to the Bond Registrar, the Bond Registrar may make a 
charge against the Bondholder sufficient to pay any governmental charge 
required to be paid as a result of the failure.  In compliance with Section 
3406 of the Code, this amount may be deducted by the Paying Agent from amounts 
payable to the Bondholder under this Indenture or the Bonds.

     Section 2.12.  Nonpresentment of Bonds.  In the event any Bond shall not 
be presented for payment when the principal hereof becomes due, if Protected 
Funds (if required and, if not required, other funds) sufficient to pay such 
Bonds shall have been paid to the Trustee (or other Paying Agent, if any) for 
the benefit of the registered owner thereof, all liability of the Issuer to 
the registered owner thereof for the payment of such Bond shall forthwith 
cease, determine and be completely discharged, and thereupon it shall be the 
duty of the Trustee or other Paying Agent to hold such fund or funds, without 
liability for interest thereon, for the benefit of the Holder of such Bond, 
who shall thereafter be restricted exclusively to such fund or funds, for any 
claim of whatever nature on his part under this Indenture or on, or with 
respect to, said Bond.  Any moneys still held by the Trustee (or other Paying 
Agent, if any) after six years from the date on which the Bond with respect to 
such amount was paid to the Trustee or other Paying Agent, if any, shall 
first, if and to the extent permitted by law, be paid to the Trustee or other 
Paying Agent, if any, to the extent of any amounts owed by the Borrower 
hereunder, and any remaining balance to the Borrower and shall be discharged 
from the trust and all liability of the Trustee or other Paying Agent, if any, 
with respect to such funds shall cease; and the Holder of such Bond shall 
thereafter be entitled to look only to the Borrower for payment, and the 
Borrower shall not be liable for any interest thereon.

     Section 2.13.  Interest Rights Preserved.  Each Bond delivered upon 
transfer of or in exchange for or in lieu of any other Bond shall carry all 
the rights to interest accrued and unpaid, and to accrue, which were carried 
by such other Bond. 

     Section 2.14.  Destruction of Bonds.  Whenever any Outstanding Bond shall 
be delivered to the Bond Registrar or the Trustee for cancellation pursuant to 
this Indenture, upon payment of the principal amount and interest represented 
thereby or for replacement pursuant to Section 2.7 or transfer pursuant to 
Section 2.11, such Bond shall be canceled and destroyed by the Bond Registrar 
or the Trustee, as the case may be, and counterparts of a certificate of 
cancellation evidencing such cancellation shall be furnished by the Bond 
Registrar, or the Trustee, as the case may be, to the Bond Registrar or the 
Trustee, as appropriate, and to the Issuer at its written request.



<PAGE>                              - 21 -
                             ARTICLE 3

                   REDEMPTION OR PURCHASE OF BONDS

     Section 3.1.  Redemption or Purchase.  Subject to the provisions of 
Sections 3.2 and 3.4, the Bonds are subject to redemption or purchase as 
follows:

     (1)	Calamity Redemption or Purchase.  The Bonds are subject to redemption 
or purchase in whole or in part, on any Business Day from Protected Funds, in 
the event of damage to or destruction or condemnation of the Project or any 
part thereof as provided in the Loan Agreement and the Mortgage, at a 
redemption or purchase price equal to the principal amount thereof plus 
accrued interest, without premium. 

     (2)	Optional Redemption or Purchase.

          (a)	To and including the Initial Rate Adjustment Date, the Bonds are 
     subject to redemption or purchase at the option of the Borrower, from 
     Protected Funds, in whole or in part on any date, at a redemption or 
     purchase price equal to the percentage of principal amount set forth in 
     the following table, plus accrued interest to the designated redemption 
     date:

     Optional Redemption Periods	                       Redemption
     (dates inclusive)Price     
     ---------------------------                   
     	December 1, 2005 to November 30, 2006	               101.0%
     	December 1, 2006 to December 1, 2007	                100.0

          (b)	After the Initial Rate Adjustment Date, the Bonds are subject to 
     redemption or purchase at the option of the Borrower, from Protected 
     Funds, in whole or in part on any date, at a redemption or purchase price 
     equal to the percentage of principal amount set forth in the following 
     table, plus accrued interest to the designated redemption date:

     Length of Rate	        Redemption Prices as a 	            Call Protection
     Period (In Years)*	    Percentage of Principal Amounts	    Period*
     ------------------     -------------------------------     ---------------
     Greater than 10	       102% after 7 years declining 1%	    7 years
		                          per 12 months to 100%

     Less than or equal to  102% after 4 years declining 1%	    4 years
     10 and greater than 7  per 12 months to 100%

     Less than or equal to  102% after 3 years declining 1%	    3 years
     7 and greater than 5	  per 12 months to 100%

     Less than or equal to  101% after 2 years declining 1/2%	  2 years
     5 and greater than 2	  per 6 months to 100%

     2	                     100-1/2% after 1 year declining    	1 year
                            1/2% per 6 months to 100%

*Measured from and including the first day of such Rate Period. 	 The Borrower 
will have the option to purchase the Bonds in lieu of this redemption.  If the 
Borrower exercises its option to purchase as provided in Section 3.4, the 
Borrower is obligated to provide all Protected Funds necessary, together with 
other Protected Funds held by the Trustee, to pay the principal of and accrued 
interest on the Bonds to the date of purchase, all as required by Section 3.4.

     (3)	Mandatory Special Redemption or Purchase Upon Determination of 
Taxability.  The Bonds are subject to mandatory redemption in whole on any 
date, at a redemption price equal to the principal amount thereof, without 
premium, plus accrued interest, to the date of redemption, upon a 
Determination of Taxability.  In the event of a Determination of Taxability 
the Borrower shall have the option to purchase the Bonds in lieu of 
redemption.  If the Borrower exercises its option to purchase as provided in 
Section 3.4 hereof, the Borrower is obligated to provide all funds necessary, 
together with other Protected Funds held by the Trustee, to pay the principal 
of and accrued interest on the Bonds to the date of purchase all as required 
by Section 3.4. 




<PAGE>                              - 22 -
     (4)	Mandatory Special Redemption or Purchase Upon Failed Remarketing.  
The Bonds are subject to mandatory redemption in whole on any date, at a 
redemption price equal to the principal amount thereof, without premium, plus 
accrued interest, to the date of redemption, if the Bonds are not remarketed 
on a Rate Adjustment Date in accordance with Section 3A.1(3).  The Borrower 
will have the option to purchase the Bonds in lieu of this redemption.  If the 
Borrower exercises its option to purchase as provided in Section 3.4, the 
Borrower is obligated to provide all Protected Funds necessary, together with 
other Protected Funds held by the Trustee, to pay the principal of and accrued 
interest on the Bonds to the date of purchase all as required by Section 3.4.

     (5)	No Other Redemption or Purchase Rights.  Except as provided in this 
Section 3.1 and in Section 8.2, the Bonds shall not be subject to redemption 
or purchase prior to their stated maturity date. 

     Section 3.2.  Notice of Redemption or Purchase.

     (1)	To effect the redemption or purchase of the Bonds under Section 3.1, 
the Trustee shall promptly give notice within the time, in the manner and with 
the effect provided by this Section 3.2.  Notice of redemption or purchase 
shall be mailed by first class mail not less than 30 days prior to the 
redemption or purchase date by the Trustee to the Paying Agent, the Holders of 
Bonds to be redeemed or purchased and the Rating Agency.  No defect in or 
failure to give notice shall affect the validity of the proceedings for 
redemption or purchase of any Bond.  Such notice, which shall be prepared by 
the Trustee at the expense of the Borrower, shall state the subsection under 
Section 3.1 pursuant to which the Bonds are being called for redemption or 
purchase and the date on which and the place where they shall be presented for 
redemption, and, unless all Outstanding Bonds are to be redeemed, each such 
notice shall refer to the Bonds to be redeemed by their numbers and 
maturities.  The Trustee shall rescind such notice to each Bondholder at least 
four Business Days before the date on which such redemption or purchase is 
scheduled to occur, if Protected Funds sufficient to redeem such Bonds, 
including accrued interest thereon to the redemption or purchase date and any 
premium, shall not have been deposited with the Paying Agent.  Except as 
specifically provided in this Indenture, the Bonds thus called for redemption, 
provided Protected Funds, if required, and, if not required, other funds for 
their redemption have been duly deposited, shall not, on or after the 
specified redemption date, bear any interest and, except for the purpose of 
payment, shall not be entitled to the lien of the Indenture or the benefits of 
the Loan Agreement.

     (2)	In addition to the notice prescribed by the foregoing paragraph, the 
Trustee shall give notice of the redemption or purchase of any Bond or Bonds 
or portions thereof at least 30 days before the redemption or purchase date by 
overnight express delivery service, certified mail or telecopy to all 
registered securities depositories then in the business of holding substantial 
amounts of obligations of the character of the Bonds (such depositories now 
being The Depository Trust Company, Garden City, New York; Pacific Securities 
Depository Trust Company, San Francisco, California; and Philadelphia 
Depository Trust, Philadelphia, Pennsylvania) and to two or more national 
information services that disseminate information regarding municipal bond 
redemptions; provided that any defect in or any failure to give any notice of 
redemption or purchase prescribed by this paragraph shall not affect the 
validity of the proceedings for the redemption or purchase of any Bond.

     (3)	Not less than 40 days prior to each redemption date, the Bond 
Registrar shall furnish the names and addresses of the Holders of the Bonds as 
of the Record Date immediately preceding such redemption date to the Trustee. 

     Section 3.3.  Cancellation.  Subject to the provisions of Section 2.12, 
all Bonds which have been redeemed shall be cancelled by the Trustee as 
provided in Section 2.14 and shall not be reissued. 

     Section 3.4.  Method of Redemption or Purchase.

     (1)	The Trustee shall redeem or purchase Bonds under subsection (1), (2) 
or (4) of Section 3.1 only if it has received written notice and instructions 
to so redeem or purchase at least 40 days before the redemption date, and the 
Trustee has been provided with immediately available funds, which are 
Protected Funds, sufficient for such purpose when added to other Protected 
Funds held under the Indenture, at least four Business Days prior to the 
redemption or purchase date.



<PAGE>                              - 23 -
     (2)	The Trustee shall redeem or purchase Bonds under subsection (3) of 
Section 3.1 in accordance with the Borrower's instructions within 45 days of 
the occurrence of a Determination of Taxability, upon receipt of (i) written 
notice and instructions from the Borrower and (ii) at least four Business Days 
prior to the redemption date or purchase date immediately available funds, 
which are Protected Funds, sufficient for such purpose when added to other 
Protected Funds held under the Indenture.

     (3)	To effect the partial redemption or purchase of Bonds under Section 
3.1, the Trustee, prior to giving notice of redemption or purchase, shall 
assign to each Bond then outstanding a distinctive number for each $5,000 of 
the principal amount of such Bond.  The Trustee shall then select Bonds for 
redemption or purchase, using such method of selection as it shall deem proper 
in its discretion, from the numbers so assigned to such Bonds, as many numbers 
as, at $5,000 for each number, shall equal the principal amount of such Bonds 
to be redeemed or purchased.  The Bonds to be redeemed or purchased shall be 
the Bonds to which were assigned numbers so selected; provided, however, that 
only so much of the principal amount of each such Bond of a denomination of 
more than $5,000 shall be redeemed or purchased as shall equal $5,000 for each 
number assigned to it and so selected.  If a Bond may be redeemed or purchased 
only in part, it shall be surrendered to the Trustee (with, if the Issuer or 
Trustee so requires, a written instrument of transfer in form satisfactory to 
the Issuer and Trustee duly executed by the Holder thereof or his, her or its 
attorney duly authorized in writing) and the Issuer shall execute (if 
necessary) and the Bond Registrar shall authenticate and deliver to the Holder 
of such Bond, without service charge, a new Bond or Bonds of the same series, 
of any authorized denomination or denominations, as requested by such Holder, 
having the same stated maturity and interest rate in aggregate principal 
amount equal to and in exchange for the unredeemed or unpurchased portion of 
the principal of the Bond so surrendered. 

     (4)	After Bonds are called for redemption or purchase pursuant to this 
Article 3, sums in the Bond Fund consisting of Protected Funds sufficient to 
effect such redemption or purchase shall be irrevocably set aside for such 
purpose and applied for no other purpose under this Indenture.

     (5)	Upon the setting aside of funds to purchase Bonds pursuant to this 
Article 3, the Holder of such Bond or Bonds purchased shall have no claim to 
interest accruing on the Bonds following the date established for the purchase 
thereof and such Holder may look only to those funds set aside in the Bond 
Fund for the payment of the purchase price of such Bonds.

                                  ARTICLE 3A

                        TENDER AND PURCHASE OF BONDS

     Section 3A.1.	Mandatory Tender of Bonds and Notices to Bondowners.

     (1)	Mandatory Tender and Election to Retain Bonds.  All Bonds are 
required to be tendered to the Tender Agent for purchase on the Rate 
Adjustment Date, except Bonds, or portion thereof, which will be in Authorized 
Denominations with respect to which the Holders thereof have delivered to the 
Tender Agent by hand or by mail at its Principal Office a properly completed 
Notice of Election to Retain Bonds, together with a signature guaranty, on or 
prior to the fifth Business Day next preceding the Rate Adjustment Date, 
subject to the provisions of subsection (3).  Any Bondowner required to tender 
Bonds under this subsection shall tender its Bonds in escrow to the Tender 
Agent for purchase at its Principal Office prior to 10:30 A.M., New York time, 
on the Rate Adjustment Date.  The tender and purchase of Bonds will become 
mandatory if the Tender Agent has received Remarketing Proceeds on the Rate 
Adjustment Date in an amount sufficient to pay all Tendered Bonds.  The 
failure to tender Bonds on the Rate Adjustment Date is the equivalent of a 
tender, and the untendered Bonds will become Undelivered Bonds for which 
replacement Bonds will be executed, authenticated and delivered as provided in 
Section 2.7(2).

     (2)	Preliminary Notice of Mandatory Tender.  Upon the Trustee's receipt 
of the written notice from the Borrower in accordance with Section 8.2 of the 
Loan Agreement, the Trustee will send the Preliminary Notice of Mandatory 
Tender to Bondowners of the mandatory tender for purchase of Bonds on the Rate 
Adjustment Date not less than 45 calendar days prior to the Rate Adjustment 
Date.




<PAGE>                              - 24 -
     (3)	Cancellation of Mandatory Tender; Notice.  If the Trustee does not 
receive Remarketing Proceeds in accordance with Section 3A.4(2) by 11:00 A.M., 
New York time, on the Rate Adjustment Date and written confirmation from the 
Rating Agency that the Bonds will be rated no lower than the rating set forth 
in the Preliminary Notice of Mandatory Tender for the Rate Period commencing 
on the Rate Adjustment Date, the mandatory tender of the Bonds will be 
automatically canceled.  The Trustee will promptly send the Notice of Canceled 
Mandatory Tender to the Bondholders and the Tender Agent and will promptly 
return tendered Bonds to the respective Holders.

     (4)	Failure to Give Notice.  Any defect in any notice as provided in 
subsections (2) and (3) or any failure by any Bondowner to receive any notice 
will not in any way change the Holder's obligation to tender the Bonds for 
purchase on the Rate Adjustment Date.

     Section 3A.2.	Irrevocability of Elections; Return of Improperly Completed 
Documents.  The Tender Agent, to whom a Notice of Election to Retain Bonds has 
been delivered, shall determine whether the Notice of Election to Retain Bonds 
has been properly completed and such determination shall be binding on the 
Holder of the Bond.  Subject to Section 3A.1(3), any election by a Bondholder 
to retain its Bond on the Rate Adjustment Date shall be irrevocable upon 
delivery to the Tender Agent of the Notice of Notice of Election to Retain 
Bonds.  The Tender Agent shall promptly return any incomplete or improperly 
completed Notice of Election to Retain Bonds to the Bondholder.

     Section 3A.3.	Notice of Principal Amount of Bonds Tendered.  Promptly 
after the requisite time by which a Notice of Election to Retain Bonds is 
required to be delivered pursuant to Section 3A.1(1), the Tender Agent shall 
give Immediate Notice to the Trustee, the Remarketing Agent and the Borrower 
of its receipt of Notices of Election to Retain Bonds and specifying the total 
principal amount of Bonds required to be tendered for purchase on the Rate 
Adjustment Date and the aggregate Tender Price therefor.  The written portion 
of such Immediate Notice given by the Tender Agent shall include copies of the 
Notices of Election to Retain Bonds.

     Section 3A.4.	Remarketing of Tendered Bonds.

     (1)	Pursuant to the terms of this Indenture and the Remarketing 
Agreement, and upon receipt of notice from the Tender Agent, specifying the 
principal amount of Tendered Bonds as provided in Section 3A.3, the 
Remarketing Agent will exercise its best efforts to sell all of the Tendered 
Bonds as provided in the Remarketing Agreement.  The Remarketing Agent will 
not remarket any Bonds at a price below par plus accrued interest thereon. 	 	
(2)	The Remarketing Agent will transfer, by wire transfer in immediately 
available funds, the Remarketing Proceeds derived from the sale of Tendered 
Bonds to the Trustee at or before 10:00 A.M., New York time, on the Rate 
Adjustment Date.  The Remarketing Agent is not obligated to transfer any funds 
to the Tender Agent in excess of Remarketing Proceeds that the Remarketing 
Agent has received from purchasers of Tendered Bonds. 

     Section 3A.5.	Notice of Principal Amount of Bonds Remarketed.  The 
Remarketing Agent will provide Immediate Notice to the Trustee, the Tender 
Agent and the Borrower, by 3:00 P.M., New York time, on the second Business 
Day preceding the Rate Adjustment Date, specifying the new interest rate to 
become effective as of the Rate Adjustment Date and the aggregate principal 
amount of Tendered Bonds which have been remarketed, (ii) the aggregate 
principal amount of Tendered Bonds which have not been remarketed, and (iii) 
the amount of Remarketing Proceeds to be paid over to the Tender Agent by the 
Remarketing Agent on the Rate Adjustment Date, which amount shall be equal to 
the proceeds of the remarketing of the Tendered Bonds.  Concurrently with the 
notice described in the preceding sentence, the Remarketing Agent shall also 
give the Trustee (with a copy to the Tender Agent) instructions as to the 
registration and delivery, with such delivery to occur at the Principal Office 
of the Tender Agent to the Remarketing Agent of any Tendered Bonds for whose 
purchase the Remarketing Agent will make a deposit of funds with the Tender 
Agent on the Rate Adjustment Date.










<PAGE>                              - 25 -
     Section 3A.6.	Purchase of Tendered Bonds.

     (1)	Tendered Bonds shall be purchased from the Holders thereof on the 
Rate Adjustment Date at the Tender Price which shall be payable solely from 
the following sources in the order of priority listed:

          (a)	Remarketing Proceeds;

          (b)	Protected Funds from any other source; and

          (c)	moneys from any other source.

     (2)	On each Rate Adjustment Date, all Bonds purchased with Remarketing 
Proceeds shall be delivered and registered as directed by the Remarketing 
Agent pursuant to Section 3A.5.

     (3)	The Tender Agent shall pay the Tender Price for each Tendered Bond 
prior to the Tender Agent's close of business on the Rate Adjustment Date only 
after receipt of the Bond, properly endorsed in blank, together with a 
signature guaranty.  Payment of the Tender Price of any Bond tendered for 
purchase shall be made:  (i) by check or draft mailed to the Holder thereof at 
the Holder's address as it appears on the Bond Register or at such other 
address as is furnished to the Tender Agent in writing by such Holder; or (ii) 
in the case of the purchase from an Holder of $1,000,000 or more in aggregate 
principal amount of Bonds, by electronic transfer to such Holder upon written 
notice from such Holder which written notice accompanies such Holder's Notice 
of Election to Tender Bonds.  The electronic transfer instructions must 
describe the name and ABA routing number of the bank (located in the 
continental United States) and the account number and acknowledge an 
electronic transfer fee payable by the Holder.

     (d)	The Trustee, on the written advice of the Remarketing Agent, will 
authenticate remarketed Bonds in the names of the purchasers thereof and in 
the appropriate denominations, and deliver the Bonds to the Remarketing Agent 
upon the Tender Agent's receipt of the Remarketing Proceeds.  The Trustee will 
cancel, pursuant to Section 2.14, all Bonds which have been physically 
tendered.  Tendered Bonds which have been purchased by the Trustee on behalf 
of the Borrower shall be registered in the name of the Borrower.

     (e)	Notwithstanding anything in this Indenture to the contrary, the 
Trustee shall pay the Tender Price with respect to an Undelivered Bond only 
upon the actual receipt of such Bond, and such Tender Price shall be equal to 
the principal amount of such Bond plus accrued interest to the Rate Adjustment 
Date.  An Undelivered Bond shall not be considered Outstanding pursuant to 
this Indenture.

     Section 3A.7.	Purchase Fund.

     (1)	A special trust fund is hereby created with the Tender Agent and 
designated the Purchase Fund.  The Purchase Fund has not been pledged or 
assigned under this Indenture and is not subject to the lien created by this 
Indenture.  The Tender Agent will deposit the proceeds of the remarketing of 
Tendered Bonds (other than Bonds remarketed to an Insider, which will be 
placed in a separate account in the Purchase Fund).  The Tender Agent will 
remit to the Holders of the Tendered Bonds the funds in the Purchase Fund 
(other than any funds being held for the benefit of former Holders of 
Undelivered Bonds) in payment of the Tender Price of the Tendered Bonds.  
Moneys from the remarketing of Tendered Bonds to an Insider shall be applied 
solely to the purchase price of Bonds held by the Borrower.  The Tender Agent 
shall hold moneys for the former Holders of Undelivered Bonds in a segregated 
escrow account and designated "Undelivered Bond Account." Moneys in the 
Undelivered Bond Account shall not be invested, and the Tender Agent shall not 
be liable to the Issuer, the Borrower or any former Holder of an Undelivered 
Bond for any interest thereon.

     (2)	On any Rate Adjustment Date, the Trustee shall transfer on the Bond 
Register ownership of all of the Tendered Bonds to the names of the respective 
purchasers thereof.  From and after such date, the principal of, and 
redemption premium, if any, and interest on such Bonds shall be payable solely 
to such purchasers, their transferees or the successors thereto.  The Holders 
of Tendered Bonds immediately prior to a Rate Adjustment Date with respect to 
which a Notice of Election to Retain Bonds has not been given pursuant to 
Section 3A.1 shall be entitled solely to payment of the Tender Price for such 
Bonds upon delivery thereof to the Tender Agent as herein provided and shall 
not be entitled to the payment of any principal, redemption premium, if any, 
or interest thereon thereafter.
<PAGE>                              - 26 -
     Section 3A.8.	No Sales After Certain Defaults.  Notwithstanding any 
provision of this Indenture to the contrary, there shall be no sales of Bonds 
pursuant to this Article 3A if an Event of Default has occurred and is 
continuing.  The Trustee shall give Immediate Notice to the Remarketing Agent, 
the Tender Agent, the Borrower and the Bondowners of (i) the occurrence and 
continuation of any Event of Default and that the Event of Default results in 
no purchase or sales of Bonds being permitted pursuant to this Article and 
(ii) the cure of any of Event of Default and that in consequence purchases and 
sales are again permitted pursuant to this Article.

     Section 3A.9.	Remarketing Agent.  The Borrower shall appoint the 
Remarketing Agent for the Bonds, subject to the conditions set forth in 
Section 3A.10.  The Remarketing Agent shall designate to the Trustee its 
principal office and signify its acceptance of the duties and obligations 
imposed upon it hereunder by a written instrument of acceptance or a 
remarketing agent agreement with the Borrower and delivered to the Trustee 
under which the Remarketing Agent will also agree to keep such books and 
records as shall be consistent with prudent industry practice and to make such 
books and records available for inspection by the Issuer, the Trustee, the 
Tender Agent and the Borrower at all reasonable times.

     Section 3A.10.	Qualifications of Remarketing Agent.

     (1)	The Remarketing Agent shall be a member of the National Association 
of Securities Dealers, Inc. or a national banking association and shall meet 
such capitalization or credit requirements as are acceptable to the Rating 
Agency, and authorized by law to perform all the duties imposed upon it by 
this Indenture.  The Remarketing Agent may at any time resign and be 
discharged of the duties and obligations created by this Indenture by giving 
at least 30 days' written notice to the Issuer, the Borrower, the Tender Agent 
and the Trustee.  The Remarketing Agent may be removed at any time, without 
cause, upon at least 30 days' written notice to the Remarketing Agent, at the 
direction of the Borrower by an instrument signed by the Authorized Borrower 
Representative, filed with the Trustee, the Tender Agent, the Issuer and the 
Remarketing Agent.  

     (2)	In the event of the resignation or removal of the Remarketing Agent, 
the Remarketing Agent shall pay over, assign and deliver any moneys and Bonds 
held by it in such capacity to its successor.  In the event that the Borrower 
shall fail to appoint a replacement Remarketing Agent hereunder, the Issuer 
may do so.


                               ARTICLE 4

                          GENERAL COVENANTS

     Section 4.1.  Payment of Principal, Premium and Interest.  Solely from 
the moneys derived from the Loan Agreement (other than to the extent payable 
from proceeds of the Bonds, temporary investments, or amounts recovered by the 
Trustee under the Mortgage or the Assignment), the Issuer will duly and 
punctually pay the principal of, premium, if any, and interest on the Bonds in 
accordance with the terms of the Bonds and this Indenture. Moneys derived from 
the Loan Agreement include all moneys derived from the Granting Clauses set 
forth herein, including, but not limited to, the Project Revenues under the 
Loan Agreement, and trust funds deposited in the Funds (excluding funds held 
in the Bond Proceeds Fund and arbitrage rebate whether or not deposited in the 
Rebate Fund) to the extent hereof and in the manner provided in Article 5 
hereof. Nothing in the Bonds or in this Indenture shall be considered as 
assigning or pledging funds or assets of the Issuer other than those covered 
by the Granting Clauses set forth herein.  















<PAGE>                              - 27 -
     Section 4.2.  Performance of Covenants.

     (1)	The Issuer covenants that it will faithfully perform at all times any 
and all of its covenants, undertakings, stipulations and provisions contained 
in this Indenture, in any and every Bond executed, authenticated and delivered 
hereunder and in all proceedings of its governing body pertaining thereto; 
that it is duly authorized under the Constitution and laws of the State, 
including particularly and without limitation the Act, to issue the Bonds 
authorized hereby, to execute this Indenture, to loan the proceeds of the 
Bonds to the Borrower and to assign and pledge the Borrower's payments under 
the Loan Agreement in the manner and to the extent herein set forth; that all 
action on its part for the issuance of the Bonds and the execution and 
delivery of this Indenture has been duly and effectively taken; and that the 
Bonds in the hands of the Holders thereof are and will be valid and 
enforceable obligations of the Issuer according to the terms thereof. 

     (2)	The Trustee covenants that it will faithfully perform at all times 
any and all of its covenants, undertakings, stipulations and provisions 
contained in this Indenture, and in every Bond executed, authenticated and 
delivered hereunder; that it is duly organized, validly existing, in good 
standing and possesses all licenses and authorizations necessary to enter into 
this Indenture, the Mortgage and the Assignment; that it has full power and 
authority to enter into this Indenture, the Mortgage and the Assignment and 
the transactions contemplated thereby; that the Indenture, the Mortgage and 
the Assignment have been duly executed and delivered by it; that this 
Indenture, the Mortgage and the Assignment constitute legal, valid, binding 
and enforceable obligations of the Trustee (subject to bankruptcy, insolvency 
or creditor rights laws generally and principles of equity generally) without 
offset, defense or counterclaim, that the execution, delivery and performance 
of this Indenture, the Mortgage and the Assignment by the Trustee will not 
cause or constitute, including due notice or lapse of time or both, a default 
under or conflict with organizational documents or other agreements or 
otherwise materially or adversely affect performance of duties; that the 
execution of this Indenture, the Mortgage and the Assignment by the Trustee 
will not violate any law, regulation, order or decree of any governmental 
authority; that all consents, approvals, authorizations, orders or filings of 
or with any court or governmental agency or body, if any, required for the 
execution, delivery and performance of this Indenture, the Mortgage and the 
Assignment by the Trustee have been obtained or made; and that there is no 
pending action, suit, proceeding, arbitration or governmental investigation 
against it, an adverse outcome of which would materially adversely affect its 
performance under this Indenture, the Mortgage or the Assignment.

     Section 4.3.  Instruments of Further Assurance.  The Issuer covenants 
that it has not made, done, executed or suffered, and will not make, do, 
execute or suffer, any act or thing whereby its interest in the Loan Agreement 
or any part thereof is now or at any time hereafter will be impaired, changed 
or encumbered in any manner whatsoever, except as may be expressly permitted 
herein or in the Loan Agreement or as required by law; and that it will do, 
execute, acknowledge and deliver or cause to be done, executed, acknowledged 
and delivered, such instruments supplemental hereto and such further acts, 
instruments and transfers as the Trustee may reasonably require for the better 
assuring, transferring, pledging, assigning and confirming unto the Trustee 
all and singular the sums assigned and pledged hereby to the payment of the 
principal of, premium, if any, and interest on the Bonds. 

     Section 4.4.  Recording and Filing.

     (1)	The Issuer covenants that it will notify the Borrower of the 
Borrower's obligation to deliver the title policy or policies required by 
Section 3.5 of the Loan Agreement as evidence of recordation of the Regulatory 
Agreement, the Mortgage, the Assignment and all related financing statements.

     (2)	On or before December 1 of each fifth calendar year, commencing on 
December 1, 2002, or at such other time or times as the Trustee may request, 
the Borrower, at its sole expense, shall furnish to the Trustee, the Issuer 
and the Rating Agency an opinion of Independent Counsel stating that, in the 
opinion of Independent Counsel, such action has been taken with respect to the 
recording, filing, re-recording and re-filing of the Regulatory Agreement, the 
Mortgage and the Assignment, any supplements thereto and any other requisite 
documents and with respect to the execution and filing of any financing 
statements and continuation statements as are necessary to perfect and 
maintain the perfection of the liens granted hereunder in the Trust Estate and 
to preserve and protect fully the security of the Holders of the Bonds and the 
rights of the Trustee hereunder and under any of the other aforesaid 
instruments for the next five-year period. 
<PAGE>                              - 28 -
     Section 4.5.  Books and Records.  The Trustee covenants that so long as 
any Outstanding Bonds issued hereunder and secured by this Indenture shall be 
unpaid, the Trustee will keep proper books or records and accounts, in which 
full, true and correct entries will be made of all its financial dealings or 
transactions in relation to the Project and the payments derived from the Loan 
Agreement, this Indenture, the Mortgage and the Assignment.  At reasonable 
times and under reasonable regulations established by the Trustee, such books 
shall be open to the inspection of the Holders, the Issuer and the Rating 
Agency, and such accountants or other agencies as the Holders, the Issuer or 
the Rating Agency may from time to time designate in writing to the Trustee. 

     Section 4.6.  Bondholders' Access to Bond Register.  At reasonable times 
and under reasonable regulations established by the Bond Registrar, the Bond 
Register or a copy thereof may be inspected and copied by the Issuer, the 
Trustee or the Holders (or a designated representative thereof) of 10% or more 
in principal amount of the then Outstanding Bonds, such authority of any such 
designated representative to be evidenced to the reasonable satisfaction of 
the Bond Registrar.  Except as otherwise may be provided by law, the Bond 
Register shall not be deemed a public record and shall not be made available 
for  inspection by the public, unless and until written notice to the contrary 
is given to the Bond Registrar by the Issuer.

     Section 4.7.  Rights Under Loan Agreement.  The Loan Agreement sets forth 
covenants and obligations of the Issuer and the Borrower, and reference is 
hereby made to the same for a detailed statement of said covenants and 
obligations.  The Issuer agrees to cooperate in the enforcement of all 
covenants and obligations of the Borrower under the Loan Agreement and agrees 
that the Trustee, in its name may enforce all rights of the Issuer (other than 
those rights contained in Sections 4.4(2), 4.4(3), 4.4(5), 7.4 and 9.5 of the 
Loan Agreement) and all obligations of the Borrower under and pursuant to the 
Loan Agreement and on behalf of the Holders, whether or not the Issuer has 
undertaken to enforce such rights and obligations. 

     Section 4.8.  Rights Under Mortgage and Assignment.

     (1)	The Issuer acknowledges that it is not a party to the Mortgage or the 
Assignment and that such instruments further secure payment of the Bonds, 
interest thereon and amounts due under certain other Related Documents, and 
reference is hereby made to the same for a detailed statement of the 
obligations of the parties thereto.

     (2)	Subject to the terms hereof and of the Mortgage, the Assignment and 
the Regulatory Agreement, until the happening of an Event of Default 
hereunder, the Borrower shall be permitted to possess, use and enjoy the 
Mortgaged Property and to receive and use the issues and profits of the 
Mortgaged Property.

     Section 4.9.  Continuing Disclosure.  Pursuant to Section 7.3 of the Loan 
Agreement, the Borrower has undertaken all responsibility for compliance with 
continuing disclosure requirements, and the Issuer shall have no liability to 
the Holders of the Bonds or any other person with respect to Securities 
Exchange Commission Rule 15c2-12, as amended.  Notwithstanding any other 
provision of this Indenture, failure of the Borrower to comply with the 
Continuing Disclosure Agreement shall not be considered an Event of Default; 
however, a Bondholder or Beneficial Owner may take such actions as may be 
necessary and appropriate, including seeking mandate or specific performance 
by court order, to cause the Borrower to comply with its obligations under 
Section 7.3 of the Loan Agreement.  For purposes of this Section, "Beneficial 
Owner" means any person which (a) has the power, directly or indirectly, to 
vote or consent with respect to, or to dispose of ownership of, any Bonds 
(including persons holding Bonds through nominees, depositories or other 
intermediaries), or (b) is treated as the owner of any Bonds for federal 
income tax purposes.













<PAGE>                              - 29 -
                                    ARTICLE 5

                               FUNDS AND ACCOUNTS

     Section 5.1.  Trust Funds Pledged and Assigned to the Trustee.

     (1)	All payments, revenues and income receivable by the Issuer under the 
Loan Agreement and pledged and assigned by this Indenture to the Trustee, 
together with the balance of the Trust Estate, are to be paid directly to the 
Trustee and, subject to the provisions of Section 8.6, deposited by it in the 
Funds described in this Article 5 and held in trust for the purposes set forth 
herein, and, except as otherwise provided herein, shall not be subject to any 
lien, levy, garnishment or attachment by any creditor of the Issuer or the 
Borrower nor shall they be subject to any assignment or hypothecation by the 
Borrower.  The Trustee shall at all times maintain accurate records of 
deposits into such funds and the sources and timing of such deposits.

     (2)	In addition, each Fund shall constitute a segregated trust account or 
accounts maintained with the corporate trust department of a federal 
depository institution or state-chartered depository institution subject to 
regulations regarding fiduciary funds on deposit similar to Title 12 of the 
Code of Federal Regulations Section 9.10(b) which, in either case, has 
corporate trust power, acting in a fiduciary capacity from all other funds 
held by the Trustee, shall be established in the name of the Trustee and shall 
bear the designation provided below with a qualifier indicating such fund is 
held with respect to the Bonds (an "Eligible Account").  The Trustee shall not 
deposit into such Funds any moneys other than as provided in this Indenture.

     Section 5.2.  Bond Proceeds Fund; Disbursement of Bond Proceeds.

     (1)	A special trust fund is hereby created and designated the Bond 
Proceeds Fund.  The proceeds of the Bonds (less accrued interest which shall 
be deposited in the Bond Fund) shall be deposited with the Trustee on the date 
of Bond Closing for deposit to the Bond Proceeds Fund.

     (2)	Immediately upon deposit of the proceeds of the Bonds to the Bond 
Proceeds Fund and upon receipt of an executed requisition certificate in the 
form of Exhibit A hereto, the Bond Proceeds shall be transferred to the Prior 
Note Holder (as defined in Exhibit A) upon simultaneous receipt by the Trustee 
from the Prior Note Holder of a receipt for the proceeds of the Bonds in the 
form of Exhibit A hereto.

     Section 5.3.	Revenue Fund and Bond Fund.

     (1)	Special trust funds are hereby created and designated the Revenue 
Fund and the Bond Fund.

     (2)	The Trustee shall deposit in the Bond Fund all interest which has 
accrued on the Bonds from the dated date of the Bonds to the date of the Bond 
Closing.

     (3)	All Project Revenues are assigned by the Indenture to the Trustee for 
deposit in the Revenue Fund.

     (4)	All Project Revenues received by the Borrower shall be transferred to 
the Trustee within one Business Day of receipt.  The Borrower is solely 
responsible for the collection of rentals paid by tenants of the Project and 
agrees to deposit Project Revenues in a depository account established solely 
for that purpose, which account shall be invested in Permitted Investments, 
provided that the sums of all accounts maintained by the Borrower at any one 
depository shall not exceed $100,000.  The Trustee is under no obligation to 
monitor receipt of rents paid by tenants.  The Borrower may retain in its 
depository account a balance of up to $10,000 from the Project Revenues to 
cover insufficient funds checks from tenants.

     (5)	Provided no Event of Default has occurred and is continuing, the 
balance of the Revenue Fund shall be distributed by the Trustee within 2 
Business Days of the 15th day of the month as follows:

     FIRST:	to the Bond Fund one-sixth of the interest to become due on the 
next Interest Payment Date and one-sixth of the principal to become due on the 
next Principal Payment Date, provided that (i) monthly deposits from January 
15, 1998 through May 15, 1998 will be equal to a pro rata portion of the 
principal of and interest on the Bonds due on June 1, 1998, and (ii) when the 
amount in the Bond Fund is equal to the next required payment of principal and 
interest no further payments shall be required that month;
<PAGE>                              - 30 -
     SECOND:	to the Rebate Fund the amount calculated by the Arbitrage 
Consultant as due with respect to a particular Bond Year;

     THIRD:	to the Trustee, the amount of its Ordinary Fees and Expenses then 
due, if any and then to the Arbitrage Consultant, the reasonable fees and 
expenses as billed and due to it for services hereunder;

     FOURTH:	to the Real Estate Tax and Insurance Account of the Servicing 
Fund, 1/12 of 100% of the amount budgeted by the Borrower in the Annual Budget 
for annual premiums for insurance required to be maintained pursuant to the 
Loan Agreement and for annual real estate taxes (or payments in lieu of taxes) 
or other charges for governmental services for the current year (except for 
utility charges); provided, however, that distribution by the Trustee to the 
Real Estate Tax and Insurance Account in respect of the first date or dates on 
which premiums for insurance and taxes or other payments described above are 
payable shall be made in amounts equal to the respective quotients obtained by 
dividing (i) the amount of such premiums and (ii) the amount of such taxes or 
other charges by the respective number of months, including the month of 
computation, to and including the month prior to the month in which such 
premiums or taxes are payable;

     FIFTH:	to the Repair and Replacement Account of the Servicing Fund, the 
sum of $10,852.67; and

     SIXTH:	to the Surplus Fund, any moneys not required currently to be paid 
into any of the above Funds to be used to cure any cumulative deficiencies in 
any of the above funds.

     (6)	The Trustee shall also deposit to the Bond Fund any amounts 
transferred thereto pursuant to Sections 5.8 and 5.9 and any amounts deposited 
to effect an optional redemption of Bonds pursuant to Article 3.  Except as 
otherwise provided herein, all Revenues shall be deposited to the Bond Fund 
and used to pay principal of, premium, if any, and interest on the Bonds, when 
due.

     Section 5.4.  Surplus Fund.

     (1)	The Trustee shall establish and maintain a fund separate from any 
other fund established and maintained hereunder, designated the Surplus Fund.

     (2)	Moneys in the Surplus Fund shall be disbursed by the Trustee without 
further authorization, within 2 Business Days of the 20th day of the month, 
upon receipt of a statement to pay the Rating Agency its fees of $5,000 per 
year, or to remedy any deficiency in any other Fund in the order of priority 
set forth in paragraphs (6) and (7) of Section 5.3.

     (3)	Any balance in the Surplus Fund remaining after payment of the items 
listed in clauses FIRST through FIFTH of paragraph (5) of Section 5.3 and 
paragraph (2) of this Section and in excess of $5,000 shall be promptly 
distributed to the Borrower.

     Section 5.5.  Purchase of Bonds at Request of Borrower.  Upon deposit by 
the Borrower in the Bond Fund of sums in excess of amounts required to pay 
principal and interest due on the Bonds on the next Interest Payment Date and 
Principal Payment Date and other payments then and theretofore required to be 
so deposited, which, together with any other available funds in the Bond Fund 
requested to be so used by the Borrower, are sufficient to redeem, provide for 
the discharge of, or purchase, on the open market, one or more Bonds from 
Protected Funds, as provided in Section 8.1 of the Loan Agreement, the Trustee 
shall use such funds, at the written direction of the Borrower, to purchase 
Bonds which are tendered for purchase by the Borrower, in the amount of the 
sums so deposited or available.  All Bonds so purchased by the Trustee shall 
be cancelled as soon as received unless otherwise directed in the request of 
the Borrower.

     Section 5.6.  Deposit of Funds With Paying Agent.

     (1)	If the Trustee is not the Paying Agent, the Trustee shall transfer 
and remit sums from the Bond Fund to the Paying Agent on or before the 
Business Day prior to each Interest Payment Date and Principal Payment Date, 
from the balance then on hand in the Bond Fund, sufficient to pay all 
principal, interest and redemption premiums then due on the Bonds.  The Paying 
Agent shall hold in trust for the Holders of such Bonds all sums so 
transferred to it in Eligible Accounts until paid to such Holders or otherwise 
disposed of as herein provided. 

<PAGE>                              - 31 -
     (2)	Subject to the provisions of Sections 2.12, interest on each Bond 
(including accrued interest to the date of deposit and interest, to the extent 
permitted by law, on overdue installments of interest at the rate borne by 
such Bond) (a) shall cease on its Maturity Date, provided that funds 
sufficient for the payment thereof with accrued interest and any redemption 
premium have been deposited with the Paying Agent on or before the Maturity 
Date, and in the case of redemption, that the requirements of Article 3 have 
been complied with, or (b) shall cease on any date after its Maturity Date on 
which such deposit has been made, and the Holder shall have no further rights 
with respect to the Bonds or under this Indenture except to receive the 
payment so deposited. 

     (3)	The Trustee will cause any Paying Agent which is not the Trustee to 
execute and deliver to it an instrument in which such Paying Agent shall agree 
with the Trustee, subject to the provisions of this Section 5.6, that such 
Paying Agent will: 

          (a)	hold all sums held by it for the payment of principal of (and 
     premium, if any) or interest on Bonds in trust for the benefit of the 
     Holders of such Bonds until such sums shall be paid to such Holders or 
     otherwise disposed of as herein provided; and

          (b)	at any time during the continuance of any default in the making 
     of any such payment of principal (and premium, if any) or interest, upon 
     the written request of the Trustee forthwith pay to the Trustee all sums 
     so held in trust by such Paying Agent.

     Section 5.7.  Rebate Fund.

     (1)	The Trustee shall establish and maintain a fund separate from any 
other fund established and maintained hereunder, designated as the Rebate 
Fund.  There shall be deposited in the Rebate Fund such amounts as are 
required to be deposited therein pursuant to the Non-Arbitrage Certificate at 
the direction of the Arbitrage Consultant.  Subject to the transfer provisions 
provided in subsection (3) below, all amounts on deposit in the Rebate Fund 
shall be held by the Trustee in trust, to the extent required to pay arbitrage 
rebate to the United States of America, and neither the Issuer, the Borrower 
nor the Holders of any Bonds shall have any rights in or claim to such money.  
All amounts held in the Rebate Fund shall be governed by this Section and by 
the Non-Arbitrage Certificate (which is incorporated herein by reference).

     (2)	The Trustee shall be entitled to unconditionally accept and rely upon 
the recommendations, advice, calculations and opinions of the Arbitrage 
Consultant as to actions required or not required to be taken by the Trustee 
to comply with the provisions of Section 148(f) of the Code, including the 
payment of arbitrage rebate.  The Trustee agrees to act in accordance with the 
recommendations, advice and opinions of the Arbitrage Consultant for the 
purpose of complying with any applicable provision of Section 148(f) of the 
Code.

     (3)	Pursuant to the Non-Arbitrage Certificate, the Trustee shall remit 
all rebate installments and a final rebate payment to the United States of 
America pursuant to the final report of the Arbitrage Consultant.  The Trustee 
shall have no obligation to pay any amounts required to be rebated pursuant to 
this Section and the Non-Arbitrage Certificate, other than from moneys held in 
the Funds created under this Indenture or from other moneys provided to it by 
the Borrower.  Any moneys remaining in the Rebate Fund after redemption and 
payment of all of the Bonds, the payment of any other amounts due hereunder 
and payment and satisfaction of any arbitrage rebate shall be withdrawn and 
remitted to the Borrower.

     (4)	Notwithstanding any other provision of this Indenture, including in 
particular Article 7 hereof, the obligation to pay arbitrage rebate to the 
United States of America and to comply with all other requirements of this 
Section and the Non-Arbitrage Certificate shall survive the defeasance or 
payment in full of the Bonds.

     Section 5.8.  Mortgage Recovery Fund.

     (1)	The Trustee shall establish and maintain a special trust fund 
separate from any other fund established and maintained hereunder designated 
as the Mortgage Recovery Fund. 




<PAGE>                              - 32 -
     (2)(a)	Subject to subparagraph (b), in the event there is damage, 
destruction or condemnation of the Project and the Proceeds exceed $250,000 
per occurrence, the Proceeds shall be deposited in the Mortgage Recovery 
Fund.  Moneys in the Mortgage Recovery Fund shall be disbursed in the 
following order of priority to (1) pay or reimburse the Borrower for the costs 
of repairing or replacing the Project, in accordance with paragraph (6) below; 
(2) to the extent permitted by Section 3.14 of the Mortgage, or if the 
Borrower fails to comply with the requirements of paragraph (6) below, redeem 
or purchase Bonds, in whole or in part, or to pay the principal of and 
interest on the Bonds upon the acceleration of the maturity thereof to the 
extent the available Proceeds are Protected Funds; (3) make payments of 
principal and interest on the Bonds; and (4) pay Additional Charges.  The 
Trustee's use of Proceeds is further subject to the provisions of paragraph 
(4) below.  The disposition of Proceeds not exceeding $250,000 per occurrence 
shall be governed by Section 3.14 of the Mortgage.

     (b)	If damage, destruction or condemnation of substantially all of the 
Project occurs, if any damage, destruction or condemnation occurs within six 
months of the final maturity of the Bonds and the Proceeds exceed $250,000 per 
occurrence or if the Project cannot be repaired or replaced to its condition 
immediately prior to such casualty, or in the case of a Condemnation to a 
condition suitable for the continued operation of the remaining portion of the 
Project, prior to expiration of the Borrower's business interruption 
insurance, the Proceeds shall be deposited in the Mortgage Recovery Fund and 
shall be disbursed to redeem or purchase Bonds in accordance with Section 
3.1(1).

     (3)	In the event of a foreclosure of the Mortgage, the Net Proceeds 
realized from the foreclosure sale shall be deposited in the Mortgage Recovery 
Fund and shall be disbursed by the Trustee to (a) redeem Bonds, in whole, to 
the extent Net Proceeds are Protected Funds; (b) make payments of principal 
and interest on the Bonds or other amounts due under the Related Documents; or 
(c) pay Additional Charges.  The Trustee's use of Net Proceeds pursuant to 
clause (c) is subject to the provisions of paragraph (4) below. 

     (4)	Moneys in the Mortgage Recovery Fund shall be transferred by the 
Trustee to the Bond Fund to pay principal of and interest on the Bonds when 
due to the extent funds are not otherwise available to make payment on the 
Bonds when due. 

     (5)	In the event moneys are deposited in the Mortgage Recovery Fund 
pursuant to the Assignment, such moneys shall be disbursed in the manner set 
forth in paragraph (3) above.

     (6)(a)	If amounts in the Mortgage Recovery Fund are to be applied to pay 
or reimburse the Borrower for the costs of repairing or replacing the Project 
the following shall govern:

          (1)	The Trustee shall have been furnished within 120 days after the 
     date of such casualty or condemnation, (i) a written opinion of a Project 
     Engineer based upon plans, specifications and cost estimates provided to 
     the Project Engineer by the Borrower that the Project can be restored 
     within a period of 360 days after the date of such casualty or 
     condemnation to its condition immediately prior to such casualty, or in 
     the case of a Condemnation, to a condition suitable for the continued 
     operation of the remaining portion of the Project, and in any event prior 
     to expiration of the Borrower's business interruption insurance, and (ii) 
     a contract between the Borrower and a general contractor, whereby the 
     general contractor agrees to restore the Project for a fixed price (the 
     "Construction Contract"); 

          (2)	The Borrower shall provide to the Trustee a construction 
     statement itemizing the full cost of the repair or restoration and the 
     time schedule for completion, sworn to by the Borrower or the general 
     contractor (the "Construction Statement") unless an itemized list of the 
     full cost of repair and restoration and the time schedule is set forth in 
     the Construction Contract;

          (3)	The Proceeds to be deposited in the Mortgage Recovery Fund to 
     pay for such repair or restoration must be sufficient to complete such 
     repair or restoration, or the Borrower must deliver to the Trustee for 
     deposit in the Mortgage Recovery Fund the net difference prior to 
     commencing repair or restoration;



<PAGE>                              - 33 -
          (4)	Disbursements from the Mortgage Recovery Fund to pay the cost of 
     such repair or restoration shall be made not more frequently than twice a 
     month for restoration work completed and in place;

          (5)	The Trustee shall retain in the Mortgage Recovery Fund, 10% of 
     each disbursement requested until disbursed in accordance with 
     subparagraph (6)(b), (c) or (d) below; and

          (6)	Disbursements from the Mortgage Recovery Fund for the cost of 
     repair or restoration of the Project shall be made by the Trustee within 
     seven calendar days of the receipt of:

               (i)	a Requisition, signed by the Borrower and approved by the 
          Project Engineer, stating to whom the payment is to be made, the 
          general purpose for which the obligation to be paid was incurred and 
          identifying the obligation as one set forth in the Construction 
          Statement or Construction Contract required above;

			            (ii)	evidence satisfactory to the Trustee furnished by the 
          Borrower that it has filed an amendment to all financing statements 
          satisfying the requirements of the Uniform Commercial Code of the 
          State or the State of Georgia, as applicable, adding to the property 
          description of the Covey Project or the Park Trace Project, as 
          applicable, any items, not previously included, which are acquired 
          as part of the Covey Project or the Park Trace Project; and

               (iii)	a title search certificate as described in Section 3.5 of 
          the Loan Agreement and applicable lien waivers.

     The Trustee shall be fully protected and incur no liability in relying 
upon all statements made by the Borrower in the Requisition.

     (b)	The Trustee shall not honor any Requisition if an Event of Default 
under the Loan Agreement, any Related Document to which the Borrower is a 
party or this Indenture shall have occurred and is continuing nor shall the 
Trustee honor any Requisition to the extent the amount requested exceeds the 
cost allocated to or allowed for such work per the Construction Statement or 
as set forth in the Construction Contract as provided in clause (a)(2) of this 
subsection (6).  All requisitions in the form provided by this Indenture and 
all other statements, orders, certifications and approvals received by the 
Trustee, as required by this Article as conditions of payment from the 
Mortgage Recovery Fund, may be conclusively relied upon by the Trustee, and 
shall be retained by the Trustee, subject at all reasonable times to 
examination by the Borrower, the Issuer, and the agents and representatives 
thereof.

     (c)	In the event that the Borrower does not complete the repair or 
replacement of the Project in accordance with the Construction Statement or as 
set forth in the Construction Contract as provided in clause (a)(2) of this 
subsection (6), the Trustee shall, after 30 days' written notice from the 
Trustee to the Borrower of such failure and continuance of such failure at the 
end of such period, either disburse moneys in the Mortgage Recovery Fund, 
including retainage for the payment of costs of repairing or replacing the 
Project, or disburse moneys in the Mortgage Recovery Fund for any other 
purpose described in paragraph (2) above (other than clause (a)) in the 
priority set forth in paragraph (2).

     (d)	Upon the completion of the repair or replacement of the Project (as 
evidenced by a certificate of the Project Engineer, a certificate of 
occupancy, delivery of construction lien waivers and delivery of an 
endorsement to the title policy insuring a first lien against the Premises), 
the accumulated retainage shall be disbursed to the Borrower and the balance 
in the Mortgage Recovery Fund shall be first, applied to any Additional 
Charges, and second, deposited by the Trustee into the Servicing Fund, unless 
directed in writing by the Borrower to be applied to the redemption or 
purchase of Bonds pursuant to Section 3.1(1).

     Section 5.9.  Servicing Fund.

     (1)	The Trustee shall establish and maintain a special trust fund 
separate from any other fund established and maintained hereunder designated 
as the Servicing Fund.

     (2)	The Trustee shall deposit amounts provided in Section 5.3 hereof into 
the Servicing Fund.  The following accounts shall be established and 
maintained in the Servicing Fund:
<PAGE>                              - 34 -
          (a)	The Real Estate Tax and Insurance Account.  The Trustee shall 
     transfer from the Revenue Fund amounts required by Section 5.3 for 
     deposit to the Real Estate Tax and Insurance Account (the "Real Estate 
     Tax and Insurance Account") and shall maintain separate accounting of 
     payments applicable to each of real estate taxes and assessments and 
     insurance premiums.  Interest accrued on this account shall become a part 
     of this account and may be utilized for the purposes of this account.  
     The Trustee shall pay all of the real estate taxes and assessments with 
     respect to the Project solely from funds earmarked for real estate taxes 
     and assessments and accounted for as part of the Real Estate Tax and 
     Insurance Account not more than 15 days in advance of and in all events 
     not later than when due.  The Trustee shall pay all of the insurance 
     premiums due with respect to the Project solely from funds earmarked for 
     insurance premiums and accounted for as part of the Real Estate Tax and 
     Insurance Account not more than 15 days in advance of and in all events 
     not later than when due.  In the event insurance for the Project is 
     provided through a blanket policy of insurance covering additional 
     properties other than the Project, the Trustee shall pay such portion of 
     the premiums therefor as may be customary.  The Trustee shall disburse 
     amounts upon receipt of a certificate from the Borrower and invoices 
     therefor indicating payment to be made.  Except as provided in the 
     preceding sentence, the Trustee shall not be responsible for payment of 
     real estate taxes and assessments and insurance premiums in the event 
     there are insufficient funds in the Real Estate Tax and Insurance Account 
     to pay the real estate taxes and assessments and insurance premiums when 
     due.  In such event, the Borrower shall, on demand of the Trustee, 
     deposit with the Trustee any amount necessary to make up the deficiency.  
     Amounts in the Real Estate Tax and Insurance Account in excess of the 
     requirements therefor shall be credited against future required transfers 
     from the Revenue Fund.

          (b)	The Repair and Replacement Account.  The Trustee shall transfer 
     from the Revenue Fund amounts required by Section 5.3 for deposit to the 
     Repair and Replacement Account and shall maintain separate accounting 
     thereof (the "Repair and Replacement Account").  The Trustee shall 
     disburse amounts from such funds accounted for as the Repair and 
     Replacement Account to pay or reimburse the Borrower for the payment of 
     capital expenditures and replacements to the Project, exclusive of 
     ordinary or routine maintenance upon receipt by the Trustee of a 
     certificate from the Borrower that it has incurred capital expenditures, 
     repairs or replacements which have not been the subject of a previous 
     request, and invoices therefor indicating payment to be made.  For 
     expenditures in excess of $20,000, the Trustee shall require written 
     certification of the Borrower of lien-free completion of such work.  The 
     Trustee shall be fully protected and incur no liability in relying upon 
     the Borrower's certificate.  Interest accrued on the Repair and 
     Replacement Account shall become a part of the account and may be 
     utilized for the purposes of this account.  In no event shall the Trustee 
     be obligated to consider requests for more than one disbursement from the 
     Repair and Replacement Account each calendar month.  Moneys in the Repair 
     and Replacement Account shall be transferred by the Trustee to the Bond 
     Fund to pay principal of and interest on the Bonds when due to the extent 
     funds are not otherwise available to make payment on the Bonds when due.

     Section 5.10.  Costs of Issuance Fund.  A special trust fund is hereby 
created and designated the Costs of Issuance Fund.  There shall be deposited 
to the credit of the Costs of Issuance Fund on Bond Closing $165,795 by the 
Borrower representing an equity contribution by the Borrower.  The Trustee 
shall disburse amounts in the Costs of Issuance Fund upon written request of 
the Borrower to pay or reimburse the Borrower for Costs of Issuance.  Any 
amounts in the Costs of Issuance Fund on the ninetieth day following the Bond 
Closing shall be transferred to the Borrower. 

     Section 5.11.  Interest Earned on Funds.

     (1)	The interest earned from the investment of money held by the Trustee 
in each of the Funds created under this Article 5 (other than the Rebate Fund) 
shall inure to the benefit of the Borrower, and, except as provided in 
paragraph (2) below, shall be retained in such separate Fund and applied as a 
credit against the payment next due into such separate Fund. 

     (2)	During the continuance of an Event of Default or an event which, with 
notice or lapse of time or both, would become an Event of Default, interest 
earned from the investment of money in the Funds created under this Article 5 
shall be held in each such Fund and not credited against the payments next due 
to or from such separate Funds.
<PAGE>                              - 35 -
     Section 5.12.  Final Balances.  Upon the deposit with the Trustee of 
moneys sufficient to pay all principal of, premium, if any, and interest on 
the Bonds, and upon satisfaction of all claims against the Issuer hereunder 
and under the Related Documents, including any rebate obligation, all fees, 
charges and expenses of the Trustee, the Bond Registrar, the Issuer and any 
Paying Agent which are properly due and payable hereunder, or upon the making 
of adequate provisions for the payment of such amounts as permitted hereby, 
all moneys remaining in all Funds, except:  (1) moneys necessary to pay 
principal of, premium, if any, and interest on the Bonds, which moneys shall 
be held by the Trustee for payment to the Bondholders or to the Borrower 
pursuant to Section 5.6(3); and (2) moneys, if any, set aside pursuant to 
Section 5.7 hereof, shall be remitted to the Borrower.

                             ARTICLE 6 

                            INVESTMENTS

     Section 6.1.  Investments by Trustee.

     (1)	Moneys held hereunder by the Trustee in the Funds, if permitted by 
law, shall, as nearly as may be practicable, be invested by the Trustee:

          (a)	unless an Event of Default, or an event, which with notice or 
     lapse of time or both would become an Event of Default has occurred and 
     is continuing, upon direction of the Borrower given or confirmed in 
     writing (which direction shall specify the amount thereof to be so 
     invested), in Permitted Investments maturing on or before the Business 
     Day prior to the day such amounts are required and in the amounts 
     required, to enable the Trustee to make payments due hereunder on the 
     Bonds or otherwise, but in no event longer than 180 days from the date of 
     acquisition; or

          (b)	if an Event of Default has occurred and is continuing, or an 
     event, which with notice or lapse of this or both would become an Event 
     of Default, in Permitted Investments of the type described in clause 
     (a)(v) of the definition of Permitted Investments.

     (2)	The Trustee shall sell and reduce to cash a sufficient portion of 
investments under the provisions of this Section whenever the cash balance in 
the Fund for which the investment was made is insufficient for its current 
requirements.  Securities so purchased as an investment of money shall be held 
by the Trustee, shall be registered in the name of the Trustee or its nominee 
if registration is required, and shall be deemed at all times a part of the 
applicable Fund, and the interest accruing thereon and any  profit realized 
from such investments shall be credited to the  Fund from which the investment 
was made, subject to any transfer to another Fund as herein provided.  Any 
loss resulting from such investment shall be charged to the Fund from which 
the investment was made, and in the event such loss reduces the amount held in 
such Fund below the amount required to be deposited in such Fund, the Trustee 
shall request the Borrower to transfer to the Trustee for deposit into such 
Fund the amount required to restore amounts in such Fund to the required 
amount.  The Trustee shall not be liable for any loss incurred from the 
purchase or sale of any investment (except for any such loss resulting from 
the gross negligence or willful misconduct of the Trustee or its employees). 

     (3)	The Trustee may purchase from or sell to itself, or through any 
affiliated company, as principal or agent, securities herein authorized so 
long as such purchase or sale is at fair market value.

     Section 6.2.  Computation of Balances in Funds.  In computing the assets 
of any Fund established hereunder, investments and accrued but unpaid interest 
thereon shall be deemed a part thereof, and, except as otherwise provided in 
the Non-Arbitrage Certificate, such investments shall be valued at par value, 
or at the redemption price thereof, if then redeemable at the option of the 
obligor, whichever is lower. 

     Section 6.3.  Downgrade of Rating.  If any rating of a Permitted 
Investment during the term of this Indenture falls below such rating that is 
required pursuant to the definition of "Permitted Investments" then the 
Trustee shall within two Business Days after receiving actual knowledge of the 
downgrade of the rating of an investment notify in writing the Borrower of 
such downgrade.  The Borrower shall within five Business Days of the receipt 
of the downgrade notice from the Trustee, direct the Trustee to sell such 
downgraded investment and reinvest the proceeds in other Permitted Investments.


<PAGE>                              - 36 -
                                  ARTICLE 7

                              DISCHARGE OF LIEN

     Section 7.1.  Payment of Bonds; Satisfaction, Defeasance and Discharge of 
Bonds and Obligation to Bondholders.  Whenever the conditions specified in 
either clause (A) or clause (B) of the following subsection (1) and the 
conditions specified in the following subsections (2), (3), (4) and (5) to the 
extent applicable, shall exist, namely:

     (1)	either:

          (A)	all Bonds have become due and payable and all principal or 
     premium, if any, and interest on the Bonds shall have been paid in full, 
     or all Bonds have been cancelled by the Trustee or delivered to the 
     Trustee for cancellation without payment, except for:

               (i)	Bonds for which Protected Funds have theretofore been 
          deposited in trust or segregated and held in trust by the Paying 
          Agent or Trustee and thereafter repaid to the Borrower or discharged 
          from such trust, as provided in Section 5.6; and

               (ii)	Bonds alleged to have been destroyed, lost or stolen which 
          have been replaced or paid as provided in Section 2.7, and (1) 
          which, prior to the satisfaction and discharge of this Indenture as 
          hereinafter provided, have not been presented to the Paying Agent or 
          Trustee with a claim of ownership and enforceability by the Holder 
          hereof, or (2) whose enforceability by the Holder thereof has been 
          determined adversely to the Holder by a court of competent 
          jurisdiction or other competent tribunal; or   			(B)	the Issuer or 
          the Borrower has deposited or caused to be deposited, as trust 
          funds, with the Trustee cash and/or Permitted Investments of the 
          type described in clause (a)(i) of the definition of that term which 
          are Protected Funds and which do not permit the redemption thereof 
          at the option of the issuer thereof, the principal of, premium, if 
          any, and interest on the Bonds which when due (or upon the 
          redemption thereof at the option of the holder), will, without 
          reinvestment, provide cash which together with the cash, if any, 
          deposited with the Trustee at the same time, shall be sufficient, to 
          pay and discharge the entire indebtedness on Bonds not theretofore 
          cancelled by the Trustee or delivered to the Trustee for 
          cancellation by the payment of interest on and principal (and  
          premium, if any) of the Bonds which have become due and payable or 
          which shall become due at their stated maturity or redemption date, 
          as the case may be (the "Defeasance Collateral"), and which are to 
          be discharged under the provisions hereof, and has made arrangements 
          satisfactory to the Trustee for the giving of notice of redemption, 
          if any, by the Trustee in the name, and at the expense, of the 
          Borrower in the same manner as is provided by Section 3.2;

     (2)	the Issuer or Borrower has paid, caused to be paid or made 
arrangements satisfactory to the Trustee for the payment of all other sums due 
and payable hereunder, including any rebate obligation, and under the Related 
Documents by the Trustee or Borrower;

     (3)	the Borrower has delivered to the Trustee and the Issuer a report of 
an Independent Accountant stating that the payments to be made on any 
securities, together with the cash, if any, deposited pursuant to clause (B) 
of subsection (1) above will be sufficient to pay when due the principal of, 
premium, if any, and interest on the Bonds to be defeased;

     (4)	if discharge is to be effected under clause (B) of subsection (1), an 
opinion of Bond Counsel is delivered to the Trustee and the Issuer stating in 
effect that such discharge will not impair the exclusion of interest on the 
Bonds from gross income for federal income tax purposes;











<PAGE>                              - 37 -
     (5)	the Borrower has delivered to the Trustee and the Issuer an opinion 
of Independent Counsel to the effect that (i) the Defeasance Collateral has 
been duly and validly assigned and delivered to the Trustee, (ii) the security 
interest of the Trustee for the ratable benefit of the Bondholders, with 
respect to Defeasance Collateral, is a first priority perfected security 
interest as security for payment of the Bonds, which opinion may contain, and 
be subject to, conditions, exceptions or qualifications as are then 
customarily included in such opinions, (iii) making the payment which 
accompanies such opinion would not constitute an avoidable preference under 
Section 547 of the Bankruptcy Code or under applicable state law in the event 
of a filing of a petition for relief under the Bankruptcy Code or such 
applicable state law by or against the Borrower and (iv) the Defeasance 
Collateral would not be part of the bankrupt estate under Section 541 of the 
Bankruptcy Code or be subject to the automatic stay under Section 362 of the 
Bankruptcy Code in the event of a filing of a petition for relief under the 
Bankruptcy Code by or against the Borrower; and

     (6)	the Borrower has delivered to the Trustee a letter from the Rating 
Agency to the effect that such deposit will not cause the rating on the Bonds 
to be downgraded, withdrawn or qualified by the Rating Agency;

then, except as otherwise provided in Section 7.5, the rights of the 
Bondholders shall be limited to the cash or cash and securities deposited as 
provided in clause (1)(A) or (1)(B) above, and upon the Borrower's request the 
rights and interest hereby granted or granted by the Related Documents to or 
for the benefit of the Trustee or the Bondholders shall cease, terminate and 
become null and void, and the Issuer and the Trustee shall, at the expense of 
the Borrower, execute and deliver such instruments of satisfaction and 
transfer as may be necessary, and forthwith the estate, right, title and 
interest of the Trustee in and to all of the Project and in and to all rights 
under this Indenture and the Related Documents (except the moneys or 
securities or both deposited as required above, arbitrage rebate and except as 
may otherwise be provided in Section 7.5) shall thereupon be discharged and 
satisfied; except that in any event the obligations of the Borrower under 
Sections 4.4 and 7.4 of the Loan Agreement shall survive.

     Section 7.2.  Cancellation of Surrendered Bonds.  The Issuer or the 
Borrower may at any time surrender to the Trustee for cancellation by the 
Trustee any Bonds previously authenticated and delivered hereunder which the 
Issuer or Borrower acquired in any manner whatsoever, and such Bonds, upon 
such surrender and cancellation, shall be deemed to be paid and retired.  

     Section 7.3.  Payment of Bonds.  Any Bonds shall be deemed paid if the 
conditions set forth in Section 7.1 hereof have been satisfied with respect 
thereto.

     Section 7.4.  Application of Deposited Money.  All money, obligations and 
income thereon deposited with the Trustee pursuant to Section 7.1 for the 
purpose of paying the principal, premium, if any, and interest on Bonds shall 
be applied by the Trustee solely for such purpose.

     Section 7.5.  Survival of Certain Provisions.  Notwithstanding the 
release and discharge of the lien of this Indenture as provided in this 
Article, those provisions of this Indenture set forth in Sections 4.7 and 9.1 
and those provisions relating to arbitrage rebate, the maturity of the Bonds, 
interest payments and dates thereof, redemption of Bonds, exchange and 
transfer of Bonds, replacement of mutilated, destroyed, lost, stolen or Bonds, 
the safekeeping and cancellation of Bonds, non-presentment of Bonds, the 
holding of moneys in trust, and the duties of the Trustee, the Bond Registrar 
and the Paying Agent in connection with all of the foregoing, remain in effect 
and shall be binding upon the Trustee and the Bondholders.

                              ARTICLE 8

                 DEFAULT PROVISIONS AND REMEDIES

     Section 8.1.  Events of Default.  Subject to the provisions of Section 
8.10, each of the following events is hereby defined as and declared to be and 
to constitute an Event of Default (whatever the reason for such an Event of 
Default and whether it shall be voluntary or involuntary or be effected by 
operation of law or pursuant to any judgment, decree or order of any court or 
any order, rule or regulation of any administrative or governmental body):

     (1)	If default shall be made in the due and punctual payment of any 
interest on any Outstanding Bond hereby secured on the due date thereof; or

<PAGE>                              - 38 -
     (2)	If default shall be made in the due and punctual payment of the 
principal of, or any redemption premium, if any, on, any Outstanding Bond on 
the Maturity Date or Purchase Date thereof; or

     (3)	If default shall be made in the due and punctual payment of any other 
moneys required to be paid to the Trustee under the provisions hereof and, 
except with respect to payments required to be made under Section 5.9(2)(a), 
such default shall have continued for a period of five days after written 
notice thereof, specifying such default, shall have been given by the Trustee 
to the Issuer and the Borrower, or to the Issuer, the Borrower and the Trustee 
by the Holders of not less than 25% in aggregate principal amount of the Bonds 
then outstanding; or

     (4)	If default shall be made in the performance or observance of any 
other of the covenants, agreements or conditions on the part of the Issuer 
contained in this Indenture or in the Bonds, and such default shall have 
continued for a period of 30 days after written notice thereof given in the 
manner provided in clause (3) above; or

     (5) 	If the Trustee has actual knowledge, or has been notified in 
writing, that an Event of Default (as defined in the Loan Agreement, the 
Mortgage or the Assignment) has occurred and is continuing; or

     (6)	The entry by a court having jurisdiction over the Borrower or its 
general partner of (A) a decree or order for relief in respect of the Borrower 
or its general partner in an involuntary case or proceeding under any 
applicable federal or State bankruptcy, insolvency, reorganization or other 
similar law or (B) a decree or order adjudging the Borrower or its general 
partner bankrupt or insolvent, or approving as properly filed a petition 
seeking reorganization, arrangement, adjustment or composition of or in 
respect of the Borrower or its general partner under any applicable federal or 
State law, or appointing a custodian, receiver, liquidator, assignee, trustee, 
sequestrator or other similar official of the Borrower or its general partner 
or of any substantial part of its property, or ordering the winding up or 
liquidation of its affairs, and the continuance of any such decree or order 
for relief or any such other decree or order not stayed or dismissed and in 
effect for a period of more than 90 consecutive days; or

     (7)	The commencement by the Borrower or its general partner of a 
voluntary case or proceeding under any applicable federal or State bankruptcy, 
insolvency, reorganization or other similar law or of any other case or 
proceeding to be adjudicated bankrupt or insolvent, or the consent by it to 
the entry of a decree or order for relief in respect of the Borrower or its 
general partner in an involuntary case or proceeding under any applicable 
federal or State bankruptcy, insolvency, reorganization or other similar law 
or to the commencement of any bankruptcy or insolvency case or proceeding 
against it, or the filing by it of a petition or answer or consent seeking 
reorganization or relief under any applicable federal or State law or the 
consent by it to the filing of such petition or to the appointment of or 
taking possession by a custodian, receiver, liquidator, assignee, trustee, 
sequestrator or similar official of the Borrower or its general partner or of 
any substantial part of its property, or the making by it of an assignment for 
the benefit of creditors, or the admission by it in writing of its inability 
to pay its debts generally as they become due, or the taking of corporate 
action by the Borrower or its general partner in furtherance of any such 
action.

     The Trustee shall provide Bondholders and the Rating Agency notice of any 
Event of Default as provided in Section 9.3 hereof.

     Section 8.2.  Acceleration.  The Trustee may (and shall, upon written 
direction of Holders of not less than 25% of the principal amount of Bonds 
Outstanding), upon the occurrence of an Event of Default, and by notice in 
writing delivered to the Issuer and the Borrower, declare the principal of all 
of the Outstanding Bonds and the interest accrued thereon immediately due and 
payable.  The Trustee shall give notice of acceleration to Bondholders in the 
same manner as notice of redemption is given under Section 3.2 (except as to 
the timing thereof) stating the accelerated date upon which the Bonds are due 
and payable, provided that the Trustee shall not be required to delay the 
effective date of acceleration until such notice is given.

     Section 8.3.  Remedies.




<PAGE>                              - 39 -
     (1)	Upon the occurrence of an Event of Default or an event which, with 
notice or lapse of time or both, would become an Event of Default, the Trustee 
(subject to the rights of the Trustee under Article 9, including its receipt 
of indemnity acceptable to it pursuant to Section 9.1 hereof) shall enforce 
any and all rights available to the Issuer, the Trustee or the Bondholders 
under this Indenture, the Loan Agreement, the Regulatory Agreement, the 
Mortgage and the Assignment or otherwise, and, in this regard, is specifically 
authorized to transfer funds from any Fund created pursuant to Article 5 
(except arbitrage rebate whether or not deposited in the Rebate Fund and 
moneys held in trust for the payment of Bonds or interest thereon which have 
matured or otherwise become payable prior to such Event of Default) to the 
Bond Fund for its use in paying principal and interest on the Bonds. 

     (2)	No remedy by the terms of this Indenture conferred upon or reserved 
to the Trustee (or the Bondholders) is intended to be exclusive of any other 
remedy, but each and every such remedy shall be cumulative and shall be in 
addition to any other remedy (i) given to the Trustee or to the Holders 
hereunder or (ii) now or hereafter existing at law or in equity or by statute. 

     (3)	No delay or omission to exercise any right or power accruing upon any 
Event of Default shall impair any such right or power or shall be construed to 
be a waiver of any such Event of Default, or acquiescence therein; and every 
such right and power may be exercised from time to time and as often as may be 
deemed expedient.

     (4)	No waiver of any Event of Default hereunder, whether by the Trustee 
or the Holders, shall extend to or shall affect any subsequent Event of 
Default or impair any rights or remedies consequent thereon.

     Section 8.4.  Direction of Proceedings by Bondholders.  Anything in this 
Indenture to the contrary notwithstanding, the Holders of a majority in 
aggregate principal amount of the Bonds then outstanding, shall have the 
right, at any time, by an instrument or instruments in writing executed and 
delivered to the Trustee and subject to receipt by the Trustee of indemnity 
acceptable to it pursuant to Section 9.1 hereof, to direct the method and 
place of conducting all proceedings to be taken in connection with the 
enforcement of the terms and conditions of this Indenture, the Loan Agreement, 
the Regulatory Agreement, the Mortgage and the Assignment or for the 
appointment of a receiver or any other proceedings hereunder, provided that 
such direction shall not be otherwise than in accordance with the provisions 
of law and of this Indenture, the Loan Agreement, the Regulatory Agreement, 
the Mortgage and the Assignment.  The Trustee may decline to follow any 
direction if the Trustee determines in good faith that the directed proceeding 
would involve it in personal liability.

     Section 8.5.  Waiver of Stay or Extension Laws.  Upon the occurrence of 
an Event of Default, to the extent that such rights may then lawfully be 
waived, neither the Issuer nor anyone claiming through it or under it shall or 
will set up, claim, or seek to take advantage of any appraisement, valuation, 
stay, extension or redemption laws now or hereafter in force, in order to 
prevent or hinder the enforcement of this Indenture, but the Issuer, for 
itself and all who may claim through or under it, hereby waives to the extent 
that it lawfully may do so the benefit of all such laws and all right of 
appraisement and redemption to which it may be entitled under the laws of the 
State.





















<PAGE>                              - 40 -
     Section 8.6.  Priority of Payment and Application of Moneys.  All Bonds 
issued hereunder and secured hereby shall be equally and ratably secured by 
and payable from the Trust Estate, without priority of one Bond over any 
other, except as otherwise expressly provided herein.  Upon the occurrence of 
an Event of Default, all moneys collected pursuant to action taken under the 
Loan Agreement, the Regulatory Agreement, the Mortgage or the Assignment 
(other than sums payable directly to the Issuer under Sections 4.3(2), 4.3(3), 
4.3(5), 7.4 and 9.5 of the Loan Agreement), after payment of the fees, costs 
and expenses (including court costs and reasonable attorneys' fees) of the 
proceedings resulting in the collection of such moneys (including any such 
costs and expenses incurred by the Issuer) and of the fees, expenses, 
liabilities and advances (provided that the Trustee shall not be required to 
make any advances, as set forth in Section 9.1(13) hereof) incurred or made by 
the Trustee, and any amounts needed to be deposited into the Rebate Fund, and 
after any other prior application of such moneys has been made as is required 
by law, or required or permitted by the Related Documents, shall be deposited 
in such fund or funds described in Article 5 of this Indenture as the Trustee 
deems appropriate; and all moneys in the Bond Fund and, at the discretion of 
the Trustee except when otherwise required hereunder, any other Fund described 
in Article 5 (excluding, however, arbitrage rebate, whether or not deposited 
in the Rebate Fund, moneys in the Bond Proceeds Fund and any moneys held in 
trust for the payment of Bonds or interest thereon which have matured or 
otherwise become payable prior to such Event of Default) shall be applied as 
follows:

     (1)	Unless the principal of all the Bonds shall have become or shall have 
been declared due and payable, all such moneys shall be applied:

          FIRST:  To reimburse and/or pay to the Trustee in full for costs, 
     expenses or fees (including, without limitation, all amounts payable as 
     Additional Charges pursuant to the Loan Agreement) not described in the 
     first unnumbered paragraph of this Section 8.6; 

          SECOND:  To the payment to the persons entitled thereto of all 
     installments of interest then due on the Bonds, in the order of the 
     maturity of the installments of such interest and, if the amount 
     available shall not be sufficient to pay in full any particular 
     installment, then to the payment ratably, according to the amounts due on 
     such installment, to the persons entitled thereto, without any 
     discrimination or privilege;

          THIRD:  To the payment to the persons entitled thereto of, first, 
     the unpaid principal of and, second, redemption premium, if any, on any 
     of the Bonds which shall have become due (other than Bonds which have 
     matured or have otherwise become payable prior to such Event of Default 
     and moneys for the payment of which are held in trust pursuant to the 
     provisions of this Indenture) in the order of their due dates and, if the 
     amount available shall not be sufficient to pay in full the unpaid 
     principal and redemption premium, if any, on Bonds due on any particular 
     due date, then first to the payment of principal ratably, according to 
     the amount of principal, due on such date, to the persons entitled 
     thereto, without any discrimination or privilege, and second, to the 
     payment of redemption premium, if any, ratably, according to the amount 
     of redemption premium, due on such date, to the persons entitled thereto, 
     without any discrimination or privilege;

          FOURTH:  To the payment of interest and premium, if any, on and the 
     principal of the Bonds, and to the purchase or redemption of Bonds, as 
     thereafter may from time to time become due, all in accordance with the 
     provisions of Article 5 of this Indenture; and

          FIFTH:  To reimburse and/or pay to the Issuer in full for costs, 
     expenses or fees (including without limitation, all amounts payable as 
     Additional Charges pursuant to the Loan Agreement) not described in the 
     first unnumbered paragraph of this Section 8.6.











<PAGE>                              - 41 -
     (2)	If the principal of all Bonds shall have become due or shall have 
been declared due and payable, all such moneys shall be applied first to 
reimburse the Trustee in full for any fees, costs and expenses not described 
in the first unnumbered paragraph of this Section 8.6; second to the payment 
of the principal and interest then due and unpaid on the Bonds, without 
preference or priority of principal over interest or of interest over 
principal, or of any installment of interest over any other installment of 
interest, or of any Bond over any other Bond, ratably, according to the 
amounts due respectively for principal and interest, to the persons entitled 
thereto, without any discrimination or privilege; third to payment of any 
redemption premium; and fourth to reimburse the Issuer for any costs and 
expenses not described in the first unnumbered paragraph of this Section 8.6.

     (3)	If the principal of all the Bonds shall have been declared due and 
payable, and if such declaration shall thereafter have been rescinded and 
annulled under the provisions of this Article, then, subject to the provisions 
of paragraph (2) of this Section in the event that the principal of all the 
Bonds shall later become due or be declared due and payable, the moneys shall 
be applied in accordance with the provisions of paragraph (1) of this Section.

     Whenever moneys are to be applied by the Trustee pursuant to the 
provisions of this Section, such moneys shall be applied by it at such times, 
and from time to time, as the Trustee shall determine, having due regard to 
the amount of such moneys available for application and the likelihood of 
additional moneys becoming available for such application in the future. 
Whenever the Trustee shall apply such funds, it shall (i) fix the date (which 
shall be an Interest Payment Date unless it shall deem another date more 
suitable) upon which such application is to be made and upon such date 
interest on the amounts of principal to be paid on such dates shall cease to 
accrue and (ii) on or before such date set aside the moneys necessary to 
effect such application.  The Trustee, at the expense of the Borrower, shall 
give to the Bondholders mailed notice of the deposit with it of any such 
moneys and of the fixing of any such date.  Neither the Trustee nor any Paying 
Agent shall be required to make payment of principal or redemption premium to 
the Holder of any Bond until such Bond shall be presented to the Trustee for 
appropriate endorsement or for cancellation if fully paid.

     Whenever all Bonds and interest thereon have been paid under the 
provisions of this Section 8.6, all fees, expenses and charges of the Trustee 
and the Issuer have been paid and arbitrage rebate has been paid or provided 
for, any balance remaining shall be paid to the person entitled to receive the 
same pursuant to Section 5.12.

     Section 8.7.  Remedies Vested in Trustee.  All rights of action 
(including the right to file proof of claims) under this Indenture or under 
any of the Bonds may be enforced by the Trustee without the possession of any 
of the Bonds or the production thereof in any trial or other proceedings 
relating thereto, and any such suit or proceeding instituted by the Trustee 
shall be brought in its name as Trustee without the necessity of joining as 
plaintiffs or defendants any Holders of the Bonds, and any recovery or 
judgment shall be for the equal benefit of the Holders of the Outstanding 
Bonds to the extent and in the manner provided herein.  The Issuer and Trustee 
hereby agree, without in any way limiting the effect and scope thereof, that 
the pledge and assignment hereunder to the Trustee of all rights included 
within the Trust Estate shall constitute an agency appointment coupled with an 
interest on the part of the Trustee which, for all purposes of this Indenture, 
shall be irrevocable and shall survive and continue in full force and effect 
notwithstanding the bankruptcy or insolvency of the Issuer or its default 
hereunder or on the Bonds.

















<PAGE>                              - 42 -
     Section 8.8.  Rights and Remedies of Holders.  No Holder of any Bond 
shall have any right to institute any suit, action or proceeding in equity or 
at law for the enforcement of this Indenture or any Related Document or for 
the execution of any trust hereof or any remedy hereunder or thereunder or for 
the appointment of a receiver, unless (i) a default thereunder shall have 
become an Event of Default and the Holders of 25% in aggregate principal 
amount of the Bonds then outstanding shall have made written request to the 
Trustee and shall have offered it reasonable opportunity either to proceed to 
exercise the powers hereunder granted or to institute such action, suit or 
proceeding in its own name; (ii) such Holders shall have offered to indemnify 
the Trustee as provided in Section 9.1; and (iii) the Trustee shall thereafter 
fail or refuse to exercise within a reasonable period of time the remedies 
hereunder granted, or to institute such action, suit or proceeding in its own 
name.  Such notification, request and offer of indemnity are hereby  declared 
in every such case at the option of the Trustee to be conditions precedent to 
the execution of the powers and trusts of this Indenture, and to any action or 
cause of action for the enforcement of this Indenture or any Related Document, 
or for the appointment of a receiver or for any other remedy hereunder; it 
being understood and intended that no one or more Holders of the Bonds shall 
have any right in any manner whatsoever to affect, disturb or prejudice the 
lien of this Indenture or any Related Document, by its, his, her or their 
action or to enforce any right thereunder except in the manner herein 
provided, and that all proceedings at law or in equity shall be instituted, 
had and maintained in the manner herein provided and for the equal benefit of 
the Holders of all Bonds then outstanding; provided, however, that nothing 
herein shall be construed to preclude any Bondholder from enforcing, or impair 
the right of any Bondholder to enforce, the payment by the Trustee of 
principal of, and interest and premium, if any, on any Bond of such Bondholder 
at or after its date of maturity, if and to the extent that such payment is 
required to be made to such Bondholder by the Trustee from available funds in 
accordance with the terms hereof.

     Section 8.9.  Termination of Proceedings.  In case the Trustee shall have 
proceeded to enforce any right under this Indenture or any Related Document by 
the appointment of a receiver, by entry and possession or otherwise, and such 
proceedings shall have been discontinued or abandoned for any reason, or shall 
have been determined adversely to the Trustee, then and in every such case the 
Issuer, Trustee, the Bondholders and the Borrower shall be restored to their 
former positions and rights hereunder with respect to the property herein 
conveyed, and all rights, remedies and powers of the Trustee shall continue as 
if no such proceedings had been taken.

     Section 8.10.  Waiver of an Event of Default.  The Trustee may, in its 
discretion, and, upon written request of the Holders of 66 2/3% in aggregate 
principal amount of all the Bonds then outstanding with respect to which 
default in the payment of principal, premium and interest exists, waive any 
Event of Default hereunder and its consequences and rescind any declaration of 
acceleration of maturity or principal; provided, however, that there shall not 
be waived (i) any Event of Default in the payment of the principal of or 
premium on any Outstanding Bonds on the redemption date or at the date of 
maturity specified therein or (ii) any Event of Default in the payment when 
due of the interest on any such Bonds, unless prior to such waiver the 
following shall have been paid or provided for (x) all arrearages of interest, 
with interest thereon (to the extent permitted by law) at the rate borne by 
the Bonds with respect to which such Event of Default shall have occurred; (y) 
all  payments of principal and premium, if any, with interest thereon (to the 
extent permitted by law) at the Default Rate with respect to which such Event 
of Default shall have occurred; and (z) all fees, expenses and charges of the 
Trustee and Paying Agent in connection with such Event of Default have been 
provided for.  No such waiver or rescission shall extend to any subsequent or 
other Events of Default, or impair any right consequent thereon.

     Section 8.11.  Correction of an Event of Default.  Anything herein to the 
contrary notwithstanding, no default under Sections 8.1(3) or (4) shall 
constitute an Event of Default until actual notice of such default by 
registered or certified mail shall be given by the Trustee to the Issuer and 
the Borrower and the Issuer and the Borrower shall have had the time permitted 
by the applicable subsection after receipt of such notice to correct said 
default or cause said default to be corrected and the Issuer or Borrower shall 
not have corrected said default or caused said default to be corrected within 
said time; provided, however, if said default occurs under Section 8.1(4) and 
is such that it cannot be corrected within the time permitted by Section 
8.1(4), it shall not constitute an Event of Default if corrective action is 
instituted by the Issuer or Borrower within said time and diligently pursued 
until the default is corrected, but in all events the Event of Default must be 
corrected within 30 days after the 30 day period described in Section 8.1(4).
<PAGE>                              - 43 -
                            ARTICLE 9

                           THE TRUSTEE

     Section 9.1.  Acceptance of the Trustee.  The Trustee, prior to the 
occurrence of an Event of Default, undertakes to perform such duties and only 
such duties as are specifically set forth in this Indenture; and no implied 
covenants or obligations should be read into this Indenture against the 
Trustee.  In case an Event of Default has occurred, the Trustee agrees to 
perform such trusts as a reasonable person would exercise or use under the 
circumstances in the conduct of his or her own affairs, but in any event, only 
upon and subject to the following express terms and conditions:  

     (1)	The Trustee may execute any of the trusts or powers hereof and 
perform any of its duties by or through attorneys, agents, receivers or 
employees, and shall not be answerable for any misconduct or negligence on the 
part of any agent, receiver or attorney appointed with due care, and shall be 
entitled to advice of counsel concerning all matters of trusts hereof and 
duties hereunder, and may in all cases pay such reasonable compensation to any 
attorney, agent, receiver or employee retained or employed by it in connection 
herewith and shall be entitled to reimbursement from the Borrower for such 
payment.  The Trustee may act upon the written opinion or written advice of 
any attorney, surveyor, engineer or accountant selected by it in the exercise 
of reasonable care or, if selected or retained by the Issuer, acceptable to 
the Trustee in the exercise of such care, provided that the only legal advice 
or opinion that the Trustee may rely upon for purposes of securing advice or 
an opinion relating to the tax exempt status of the Bonds is given by Bond 
Counsel.  The Trustee shall not be responsible for any loss or damage 
resulting from any action or in good faith in reliance upon such opinion or 
advice. 

     (2)	The Trustee shall not be responsible for any recital herein, or in 
the Bonds or for the investment of moneys as herein provided (except as 
provided in Section 6.1), or for insuring the Project or collecting any 
property insurance proceeds, or for the validity of the execution by the 
Issuer of this Indenture, or of any supplemental indentures or instruments of 
further assurance, or for the sufficiency of any security for the Bonds, or 
for the value of title of the property herein conveyed, if any, or otherwise 
as to the maintenance of the security hereof; except as otherwise provided in 
Section 4.4 and except that in the event the Trustee enters into possession of 
a part or all of the property conveyed pursuant to any provisions of this 
Indenture, the Mortgage or the Assignment, it shall use due diligence in 
preserving such property.  The Trustee may, but shall be under no duty to, 
require of the Borrower full information and advice as to the performance of 
the covenants, conditions and agreements in the Loan Agreement, the Regulatory 
Agreement, the Mortgage and the Assignment as to the condition of any 
Mortgaged Property and the performance of all other obligations thereunder and 
shall use reasonable efforts, but without any obligation, to advise the Issuer 
and the Borrower of any impending Event of Default known to the Trustee.  The 
Trustee shall not be responsible for any loss suffered in connection with any 
investments made in accordance with Section 6.1 or for insuring the Project, 
or for the recording, re-recording, filing or re-filing of this Indenture or 
any supplemental indenture. 

     (3)	The Trustee shall not be accountable for the use or application of 
any of the Bonds or the proceeds thereof (except as herein expressly provided) 
or for the use or application of any money paid over by the Trustee in 
accordance with the provisions of this Indenture or for the use and 
application of money received by any Paying Agent. The Trustee may become the 
Holder of Bonds secured hereby with the same rights it would have if not 
Trustee. 

     (4)	The Trustee shall be protected in acting upon any written notice, 
order, requisition, request, consent, certificate, opinion (including an 
opinion of Independent Counsel or Bond Counsel), affidavit, letter, telegram 
or other paper or document reasonably believed by it to be genuine and correct 
and to have been signed or sent by the proper person or persons, and the 
Trustee shall be under no duty to make an investigation or inquiry into any 
statement contained therein.  Any action taken by the Trustee pursuant to this 
Indenture upon the request or authority or consent of any person who at the 
time of making such request or giving such authority or consent is the Holder 
of any Bond, shall be conclusive and binding upon all future Holders of the 
same Bond and upon Bonds issued in exchange therefor, upon transfer thereof, 
or in place thereof.


<PAGE>                              - 44 -
     (5)	As to the existence or non-existence of any fact or as to the 
sufficiency or authenticity of any instrument, paper or proceeding, the 
Trustee shall be entitled to rely upon a certificate of the Issuer signed by 
its Representative or a certificate of the Borrower signed by its 
Representative as sufficient evidence of the facts stated therein.  The 
Trustee may accept a certificate of the City Clerk of the Issuer to the effect 
that a motion, resolution or ordinance in the form therein set forth has been 
adopted by the governing body of the Issuer as conclusive evidence that such 
motion or resolution has been duly adopted, and is in full force and effect, 
and may accept such motion, resolution or ordinance as sufficient evidence of 
the facts stated therein and the necessity or expediency of any particular 
dealing, transaction or action authorized or approved thereby, but may at its 
discretion secure such further evidence deemed necessary or advisable, but 
shall in no case be bound to secure the same.

     (6)	The permissive right of the Trustee to take any action under this 
Indenture shall not be construed as a duty and the Trustee shall not be 
answerable, and shall incur no liability, except for its negligence or willful 
misconduct.

     (7)	The Trustee shall not be personally liable for any debts contracted 
or for damages to persons or to personal property injured or damaged, or for 
salaries or nonfulfillment of contracts during any period in which it may be 
in possession of or managing the real and tangible personal property as in 
this Indenture provided.

     (8)	Upon the occurrence and continuance of an Event of Default and at any 
and all reasonable times, the Trustee, and its duly authorized agents, 
attorneys, experts, engineers, accountants and representatives, shall have the 
right fully to inspect any and all of the property comprising the Mortgaged 
Property, including all books, papers and records of the Issuer pertaining to 
the Mortgaged Property and the Bonds, and to take such memoranda from and with 
regard thereto as may be desired.

     (9)	The Trustee shall not be required to give any bond or surety with 
respect to the execution of said trusts and powers or otherwise with respect 
to the premises.

     (10)	Notwithstanding anything contained elsewhere in this Indenture, the 
Trustee shall have the right, but shall not be required, to demand, with 
respect to the authentication of any Bonds, the withdrawal of any cash, the 
release of any property or any action whatsoever within the purview of this 
Indenture, any showings, certificates, opinions (including opinions of 
Independent Counsel), appraisals or other information, or corporate action or 
evidence thereof, in addition to that by the terms hereof required as a 
condition of such action by the Trustee, deemed desirable for the purpose of 
establishing the right of the Issuer to the authentication of any Bonds, the 
withdrawal of any cash, the  release of any property, or the taking of any 
other action by the Trustee.

     (11)	The Issuer shall not be liable for the payment of any sums under 
this Indenture or for providing for the indemnification of the Trustee.

     (12)	Notwithstanding any provision of this Indenture to the contrary, 
before taking any action hereunder, the Trustee may require that it be 
furnished indemnity satisfactory to it for the reimbursement of all expenses 
to which it may be put and to protect it against all liability (except 
liability which is adjudicated to have resulted from the negligence or willful 
misconduct of the Trustee) by reason of any action so taken by the Trustee.

     (13)	No provision of this Indenture or any related document shall require 
the Trustee to expend or risk its own funds, make advances or otherwise incur 
any financial liability in the performance of any of its duties, or the 
exercise of its rights and powers hereunder, if it shall have reasonable 
grounds for believing that repayment of such funds or adequate indemnity 
against such risk or liability is not reasonably assured to it.










<PAGE>                              - 45 -
     (14)	Notwithstanding anything to the contrary contained in this 
Indenture, in the event the Trustee is entitled or required to commence an 
action or otherwise exercise remedies to acquire control or possession of any 
or all of the Project under, but not limited to, Section 7.2 of the Mortgage, 
the Trustee shall not be required to commence any such action or exercise any 
such remedy if the Trustee has determined in good faith that it may incur 
liability under an Environmental Law (as defined below) as the result of the 
presence at, or release on or from the Project of any Hazardous Material (as 
defined below) unless the Trustee has received security or indemnity, from a 
person, in an amount and in a form all satisfactory to the Trustee in its sole 
discretion, protecting the Trustee from all such liability.  The term 
"Hazardous Materials" as used herein shall mean any flammable explosives, 
radon, radioactive materials, asbestos, urea formaldehyde foam insulation, 
polychlorinated biphenyls, petroleum, petroleum-based products, methane, 
hazardous materials, hazardous wastes, hazardous or toxic substances or 
related materials as set forth in the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, 
et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. 
Section 1801, et seq.), the Resource Conservation and Recovery Act, as amended 
(42 U.S.C. Sections 6901, et seq.), the Toxic Substances Control Act, as 
amended (15 U.S.C. Sections 2601, et seq.), or any other applicable 
Environmental Law and the regulations promulgated thereunder.  The term 
"Environmental Laws" shall mean all federal, state and local environmental, 
land use, zoning, health, chemical use, safety and sanitation laws, statutes, 
ordinances and codes relating to the protection of the environment or 
governing the use, storage, treatment, generation, transportation, processing, 
handling, production or disposal of Hazardous Materials and the rules, 
regulations, policies, guidelines, interpretations, decisions, orders and 
directives of federal, state and local governmental agencies and authorities 
with respect thereto.

     (15)	The Trustee is under no obligation to monitor the receipt of rents 
by the Borrower.

     (16)	The Trustee shall not be required to take notice or be deemed to 
have notice of any default hereunder except the failure to make any of the 
payments required by Article IV of the Loan Agreement to be made to the 
Trustee or with respect to acceleration of the Bonds and payment of the Bonds 
upon such acceleration, unless the Trustee shall be specifically notified in 
writing of such default by the Issuer or by the Holders of at least 25% in 
aggregate principal amount of all Bonds then Outstanding.

     (17)	Notwithstanding any other provision of this Indenture to the 
contrary, any provision intended to provide authority to act, right to payment 
of fees and expenses, protection, immunity and indemnification to the Trustee 
shall be interpreted to include any action of the Trustee whether it is deemed 
to be in its capacity as Trustee, Bond Registrar or Paying Agent. 

     Section 9.2.  Trustee's Fees, Charges and Expenses.

     (1)	The Trustee and any Paying Agent shall be entitled to payment and 
reimbursement for Ordinary Fees and Expenses for its ordinary services 
rendered under this Indenture.  In the event it becomes necessary for the 
Trustee to perform extraordinary services, such as upon an Event of Default, 
the Trustee is entitled to payment and reimbursement for its extraordinary 
fees, advances, costs, counsel fees and other expenses reasonably made or 
incurred by the Trustee in and about the execution of the trusts created by 
this Indenture for extraordinary services (unless such services are occasioned 
by the negligence or willful misconduct of the Trustee) in the Event of 
Default.  In this regard the Borrower has agreed in Section 4.3 of the Loan 
Agreement to pay of said fees, advances, counsel fees, costs and expenses, and 
reference is hereby made to the Loan Agreement for the provisions so made.  
Issuer is not liable for the payment of such sums.

     (2)	Upon an Event of Default, but only upon an Event of Default, the 
Trustee shall have liens, with right of payment prior to payment on account of 
interest on or principal or premium, if any, of any Bond, upon the money 
received by them hereunder, or under the Mortgage or the Assignment, for said 
fees, advances, counsel fees, costs and expenses incurred by them.

     (3)	The compensation of the Trustee shall not be limited by any provision 
of law which limits the compensation of a trustee of an express trust.




<PAGE>                              - 46 -
     Section 9.3.  Notice to Holders of Default.  The Trustee shall give to 
the Bondholders and the Rating Agency written notice of all Events of Default 
known to the Trustee, within 45 days after the Trustee has actual knowledge or 
receives written notice of such Event of Default.

     Section 9.4.  Intervention by Trustee.  In any judicial proceeding to 
which the Issuer is a party and which in the opinion of the Trustee and its 
counsel has a substantial bearing on the interests of Bondholders, the Trustee 
may intervene on behalf of Holders and shall do so if requested in writing by 
the Holders of at least 25% of the aggregate principal amount of Outstanding 
Bonds, provided the Trustee has been provided indemnity in accordance with 
Section 9.1.  The rights and obligations of the Trustee under this Section are 
subject to the approval of a court of competent jurisdiction in the premises.

     Section 9.5.  Successor Trustee.  Any corporation, association or agency 
into which the Trustee may be converted or merged, or with which it may be 
consolidated, or to which it may sell or transfer its corporate trust business 
and assets as a whole or substantially as a whole, or any corporation or 
association resulting from any such conversion, sale, merger, consolidation or 
transfer to which it is a party, ipso facto, shall be and become successor 
trustee and paying agent under this Indenture and vested with all of the title 
to the Trust Estate, and all the trusts, powers, discretions, immunities, 
privileges and all other matters as was its predecessor, without the execution 
or filing of any instrument or any further act, deed or conveyance on the part 
of any of the parties hereto, anything herein to the contrary 
notwithstanding.  Each successor Trustee must meet the eligibility criteria 
set forth in Section 9.8.

     Section 9.6.  Resignation by Trustee.  The Trustee and any successor 
trustee may at any time resign from the trusts hereby created by giving 30 
days' written notice to the Issuer and the Borrower and by first-class mail to 
each Bondholder as shown on the Bond Register, and such resignation shall take 
effect upon the appointment of a successor trustee as provided in Section 
9.8.  Such notice to the Issuer or the Borrower may be served personally or 
sent by registered or certified mail, or overnight courier.

     Section 9.7.  Removal of Trustee.  The Issuer or the Holders of a 
majority in aggregate principal amount of the Outstanding Bonds may remove the 
Trustee at any time by an instrument or concurrent instruments in writing 
delivered to the Trustee, Borrower and Issuer, and signed by the Issuer or by 
such Holders of a majority in aggregate principal amount of Bonds then 
Outstanding.  No removal shall take effect until the appointment of a 
successor Trustee as provided in Section 9.8.  The Issuer or the Holders of a 
majority in aggregate principal amount of Bonds then Outstanding may petition 
a court of competent jurisdiction for the removal of the Trustee for cause.

     Section 9.8.  Appointment of Successor Trustee.  In case the Trustee 
hereunder shall resign or be removed, or be dissolved or shall be in course of 
dissolution or liquidation, or otherwise become incapable of acting hereunder, 
or in case it shall be taken under the control of any public officer or 
officers, or of a receiver appointed by a court, a successor may be appointed 
by the Holders of a majority in aggregate principal amount of the Bonds then 
outstanding, by an instrument or concurrent instruments in writing signed by 
such Holders, or by their attorney-in-fact, duly authorized.  Nevertheless, in 
case of such vacancy the Issuer by resolution of its governing body may 
appoint a temporary trustee to fill such vacancy until a successor trustee 
shall be appointed by the Holders in the manner above provided; and any such 
temporary trustee so appointed by the Issuer shall immediately and without 
further act be superseded by the Trustee so appointed by such Holders.  Every 
successor Trustee appointed pursuant to the provisions of this Section 9.8 
must be a trust company or bank having trust powers and having a reported 
capital and surplus not less than $50,000,000.  If a successor Trustee has not 
been appointed within 60 days of resignation or removal, the current Trustee 
may petition a court of competent jurisdiction for the appointment of the 
successor Trustee.











<PAGE>                              - 47 -
     Section 9.9.  Acceptance by Successor Trustees.  Every successor Trustee 
appointed hereunder shall execute, acknowledge and deliver to its predecessor, 
to the Borrower and also to the Issuer, an instrument in writing accepting 
such appointment hereunder, and thereupon such successor, without any further 
act, deed or conveyance shall become fully vested with all the estates, 
properties, rights, powers, trusts, duties and obligations of its predecessors 
as Trustee, Bond Registrar and Paying Agent; but such predecessor shall, 
nevertheless, on the written request of the Issuer, or of its successor 
Trustee, execute and deliver an instrument transferring to such successor 
Trustee all the estates, properties, rights, powers and trusts of such 
predecessor hereunder, and every predecessor Trustee shall deliver all 
securities and moneys held by it as Trustee hereunder to its successor.  
Should any instrument in writing from the Issuer be required by any successor 
Trustee for more fully and certainly vesting in such successor the estates, 
rights, powers and duties hereby vested or intended to be vested in the 
predecessor trustee, any and all such instruments in writing shall, on 
request, be executed, acknowledged and delivered by the Issuer.  The 
resignation of any Trustee and the instrument or instruments removing any 
Trustee and appointing a successor hereunder, together with all other 
instruments provided for in this Article, shall be forthwith filed or recorded 
or both by the successor Trustee in each recording office where this Indenture 
or the Mortgage shall have been filed or recorded or both. 

     Section 9.10.  Right of Trustee To Pay Taxes and Other Charges.  In case 
any tax, assessment or governmental or other charge upon any part of the 
Project is not paid, to the extent, if any, that the same is legally payable, 
the Trustee may, but shall be under no duty to, pay such tax, assessment or 
governmental or other charge, without prejudice, however, to any rights of the 
Trustee or Bondholders hereunder arising as a consequence of such failure; and 
any amount at any time so paid under this Section, Section 5.3 of the Loan 
Agreement, or under the Mortgage, with interest thereon as provided in Section 
5.3 of the Loan Agreement at the Default Rate, shall be repaid to the Trustee 
upon demand out of Additional Charges under the Loan Agreement, and shall 
become so much additional indebtedness secured by the Indenture, and the same 
shall be given a preference in payment over any of the Bonds, except with 
respect to the payment of any principal, interest or premium on the Bonds 
which is then due but not paid, but the Trustee shall be under no obligation 
to make such payment of taxes, assessments or governmental charges unless it 
shall have been requested to do so by the Holders of at least 25% of the 
aggregate principal amount of the Bonds then outstanding and shall have been 
provided with adequate indemnity for the purpose of such payment.  Any such 
payment shall be made upon five days' prior written notice to the Borrower 
unless the delay occasioned by any such written notice could result in the 
forfeiture or termination of any right.

     Section 9.11.  Trustee Protected in Relying Upon Resolutions.  The 
resolutions, orders, requisitions, opinions, certificates and other 
instruments provided for in this Indenture may be accepted by the Trustee as 
conclusive evidence of the facts and conclusions stated therein and shall be 
full warrant, protection and authority to the Trustee. 

     Section 9.12.  Successor Trustee as Custodian of Funds and Paying Agent.  
In the event of a change in the office of the Trustee, the predecessor Trustee 
which has resigned or been removed shall cease to be custodian of the Funds 
described in Article 5 and shall cease to act as Bond Registrar and a Paying 
Agent for principal and interest on the Bonds, and the successor Trustee shall 
be and become such custodian, Bond Registrar and a Paying Agent. 



















<PAGE>                              - 48 -
     Section 9.13.  Co-Trustee.

     (1)	At any time or times, for the purpose of meeting any legal 
requirements of any jurisdiction in which any part of the Trust Estate may at 
the time be located, the Trustee shall have the power to appoint, and, upon 
the request of the Trustee, the Issuer shall for such purpose join with the 
Trustee in the execution, delivery and performance of all instruments and 
agreements necessary or proper to appoint one or more persons either to act as 
co-trustee or co-trustees, jointly with the Trustee, of all or any part of the 
Trust Estate, or to act as separate trustee or  separate trustees of all or 
any part of the Trust Estate, and to vest in such person or persons, in such 
capacity, such right to the Trust Estate or any part thereof, and such rights, 
powers, duties, trusts or obligations as the Trustee may consider necessary or 
desirable, subject to the remaining provisions of this Section 9.13.  Every 
such co-trustee or separate trustee appointed pursuant to the provisions of 
this Section 9.13 must be a trust company or bank having trust powers and 
having a reported capital and surplus not less than $50,000,000, if there be 
such an institution willing, qualified and able to accept the trust upon 
reasonable or customary terms.

     (2)	The Issuer shall execute, acknowledge and deliver all such 
instruments as may be required by any such co-trustee or separate trustee for 
more fully confirming such title, rights, powers, trusts, duties and 
obligations to such co-trustee or separate trustee.

     (3)	Every co-trustee or separate trustee shall, to the extent permitted 
by law but to such extent only, be appointed subject to the following terms, 
namely:

          (a)	All rights, powers, trusts, duties and obligations conferred by 
     this Indenture upon the Trustee with respect to the custody, control or 
     management of moneys, papers, securities and other personal property 
     shall be exercised solely by the Trustee.

          (b)	All rights, powers, trusts, duties and obligations conferred or 
     imposed upon the trustees shall be conferred or imposed upon and 
     exercised or performed by the Trustee, or by the Trustee and such 
     co-trustee or co-trustees or separate trustee or separate trustees 
     jointly, as shall be provided in the instrument appointing such 
     co-trustee or co-trustees or separate trustee or separate trustees; 
     provided, however, the Trustee shall remain responsible for exercising 
     all rights and powers, maintaining all trusts and performing all duties 
     and obligations conferred or imposed upon the trustees, except to the 
     extent that, under the law of any jurisdiction in which any particular 
     act or acts are to be performed, the Trustee shall be incompetent or 
     unqualified to perform such act or acts, in which event such act or acts 
     shall be performed by such co-trustee or co-trustees or separate trustee 
     or separate trustees.

          (c)	Any request in writing by the Trustee to any co-trustee or 
     separate trustee to take or to refrain from taking any action hereunder 
     shall be sufficient warrant for the taking, or the refraining from 
     taking, of such action by such co-trustee or separate trustee. 

          (d)	Any co-trustee or separate trustee may delegate to the Trustee 
     the exercise of any right, power, trust, duty or obligation, 
     discretionary or otherwise. 

          (e)	The Trustee at any time, by an instrument in writing, may accept 
     the resignation of or remove any co-trustee or separate trustee appointed 
     under this Section 9.13.  Upon the request of the Trustee, the Issuer 
     shall join with the Trustee in the execution, delivery and performance of 
     all instruments and agreements necessary or proper to effectuate such 
     resignation or removal.  A successor to any co-trustee or separate 
     trustee so resigned or removed may be appointed in the manner provided in 
     this Section 9.13. 

          (f)	No trustee hereunder shall be personally liable by reason of any 
     act or omission of any other trustee hereunder. 

          (g)	Any demand, request, direction, appointment, removal, notice, 
     consent, waiver or other action in writing delivered to the Trustee shall 
     be deemed to have been delivered to each co-trustee or separate trustee.



<PAGE>                              - 49 -
	         (h)	Any moneys, papers, securities or other items of personal 
     property received by any such co-trustee or separate trustee hereunder 
     shall forthwith, so far as may be permitted by law, be turned over to the 
     Trustee. 

          (i)	Appointment of a co-trustee shall not relieve the Trustee of 
     liability under the Indenture.

     (4)	Upon the acceptance in writing of such appointment by any such 
co-trustee or separate trustee, such co-trustee or separate trustee shall be 
vested with such interest in and to the Trust Estate or any part thereof, and 
with such rights, powers, duties or obligations, as shall be specified in the 
instrument of appointment jointly with the Trustee (except insofar as local 
law makes it necessary for any such co-trustee or separate trustee to act 
alone) subject to all the terms of this Indenture.  Every such acceptance 
shall be filed with the Trustee.  Any co-trustee or separate trustee may, at 
any time by an instrument in writing, constitute the Trustee its or his or her 
attorney-in-fact and agent, with full power and authority to do all acts and 
things and to exercise all discretion on its or his or her behalf and in its 
or his or her name.

     (5)	In case any co-trustee or separate trustee shall die, become 
incapable of acting, resign or be removed, the title to the Trust Estate and 
all rights, powers, trusts, duties and obligations of said co-trustee or 
separate trustee shall, so far as permitted by law, vest in and be exercised 
by the Trustee unless and until a successor co-trustee or separate trustee 
shall be appointed in the manner herein provided. 

     Section 9.14.  Obligations as to Reporting.  The Trustee shall provide to 
the Issuer, upon request monthly reports of the balances in the Funds held 
under Article 5.

     Section 9.15.  Appointment of Bond Registrar and Paying Agent.  The 
Issuer at the direction of the Borrower hereby appoints the Trustee as Bond 
Registrar and Paying Agent under this Indenture. 

     Section 9.16.  Successor Paying Agent or Bond Registrar.  The provisions 
of Sections 9.5 through 9.9 with respect to removal, resignation and 
appointment of a successor trustee shall be equally applicable to the removal, 
resignation and appointment of a successor to the Paying Agent and the Bond 
Registrar.  If permissible under applicable law, the Trustee shall be eligible 
for appointment as successor to the Paying Agent if the Trustee is not then 
already serving in such capacity.  

     Section 9.17.  Confirmation of the Trustee.

     (1)	At any time while Bonds remain outstanding under this Indenture, and 
in any of the following circumstances, to the extent permitted by law, to wit:

          (a)	The Trustee is in doubt as to whether or not this Indenture or 
     any Related Document or instrument requires Bondholders' consent or the 
     consent of the Borrower or the Issuer in connection with any proposed 
     action;

          (b)	The Trustee has substantial doubt as to whether its consent to a 
     proposed action, although authorized, should in the particular 
     circumstances be given;

          (c)	The Trustee's consent is sought or deemed necessary in 
     connection with a proposed action which is not specifically dealt with or 
     contemplated by this Indenture or any Related Document, or it is unclear 
     whether this Indenture or any Related Document is intended to deal with 
     the proposed action; 

          (d)	There is a disagreement as to whether a proposed action may be 
     taken or is required to be taken; 

          (e)	There appears to be a conflict, ambiguity or inconsistency 
     between or among the provisions of this Indenture and any Related 
     Document other than as provided for in Sections 10.1 and 11.1; 

          (f)	There is doubt as to whether or not a proposed action falls 
     within one of the provisions of Sections 10.1 and 11.1 authorizing such 
     action without Bondholders' consent; or


<PAGE>                              - 50 -
          (g)	Bondholders' consent is required by this Indenture or any 
     Related Document but consent cannot be obtained because it is not 
     possible to comply with requirements of this Indenture or any Related 
     Document as to the notice to be given to Bondholders with respect to the 
     proposed matter requiring consent; 

or in any other eventuality in which it shall be necessary to determine a 
question arising under, or to construe, this Indenture or any Related 
Document, the Trustee may, and upon request of the Issuer, the Borrower or the 
Holders of 25% or more in principal amount of Outstanding Bonds shall, proceed 
in accordance with an opinion of Bond Counsel.  If Bondholders' consent cannot 
be obtained because of the circumstances described in (1)(g) above, a court of 
competent jurisdiction may amend or supplement the Loan Agreement or Indenture 
or any Related Document upon a proper showing of the necessity therefor. 

     (2)	In construing and interpreting this Indenture and any other Related 
Document, the objective shall always be to ascertain and effectuate the 
intention of the parties. 

     (3)	The Trustee or successor Trustee shall not be answerable for actions 
taken in compliance with Section 9.17(1).  The Trustee or successor Trustee 
shall not be entitled to require an indemnity bond pursuant to Section 9.1(11) 
prior to taking any action in compliance with Section 9.17(1).

     Section 9.18.  Certain Representations of Trustee.  The Trustee 
represents that:

     (1)	The Trustee is a banking association with trust powers, duly 
organized, validly existing and in good standing under the laws of the United 
States of America, is duly qualified to act as Trustee under this Indenture, 
and has the corporate power to take all action required or permitted of it 
under this Indenture and under Disclosure Agreement.

     (2)	This Indenture has been duly entered into, executed and delivered by 
the Trustee.  The officers of the Trustee who executed and delivered this 
Indenture were, at the dates of such execution and delivery, duly qualified 
and acting officers authorized to perform such acts, and the signatures of 
such officers appearing on this Indenture are their genuine signatures.  The 
execution, delivery and performance by the Trustee of this Indenture has been 
duly authorized by all necessary corporate action on the part of the Trustee 
and presently does not contravene the Articles of Association or Bylaws of the 
Trustee or, to the best of its knowledge after due inquiry, conflict with or 
constitute a breach of or default under any law, administrative regulation, 
consent decree or any agreement or instrument to which the Trustee is subject.

     (3)	The Trustee has a reported capital and surplus not less than 
$50,000,000.  In the event at any time the Trustee is not so qualified, the 
Trustee shall tender its resignation pursuant to Section 9.6 hereof.

     (4)	The Trustee maintains errors and omissions insurance with respect to 
each trust officer administering the Bonds and a fidelity bond in an amount 
which is customary in connection with the performance of corporate trust 
services.

     Section 9.19.  Tender Agent.

     (1)	The Trustee is hereby appointed as the initial Tender Agent for the 
Bonds and with respect to Tendered Bonds, the Paying Agent, and hereby agrees 
to carry out its responsibilities described in this Indenture.  If the Tender 
Agent is other than the Trustee, the Tender Agent shall signify its acceptance 
of the duties and obligations imposed upon it hereunder by a written 
instrument of acceptance delivered to the Issuer, the Borrower, the Trustee 
and the Remarketing Agent, under which the Tender Agent will agree to 
particularly:

          (1)	hold all Bonds delivered to it for purchase hereunder as agent 
     and bailee of, and in escrow for the benefit of, the respective Holders 
     which have so delivered such Bonds; until moneys representing the Tender 
     Price of such Bonds shall have been delivered to or for the account of or 
     to the order of such Holders; and

          (2)	keep such books and records as shall be consistent with prudent 
     industry practice, and make such books and records available for 
     inspection by the other parties.


<PAGE>                              - 51 -
     (b)	The parties hereto shall each cooperate to cause the necessary 
arrangements to be made and to be thereafter continued whereby funds from the 
sources specified herein will be made available for the purchase of Bonds 
presented at the Principal Office of the Tender Agent, and to otherwise enable 
the Tender Agent to carry out its duties under this Indenture.

     (c)	The Tender Agent, the Trustee and the Remarketing Agent shall 
cooperate to the extent necessary to permit the preparation, execution, 
issuance, authentication and delivery by the Tender Agent of replacement Bonds 
in connection with the tender and remarketing of Bonds hereunder.

     (d)	The Issuer, the Trustee and the Borrower acknowledge that, in 
carrying out its responsibilities hereunder, the Tender Agent shall be acting 
solely for the benefit of and as agent for the Holders from time to time of 
the Bonds.  No delivery of the Bonds to the Tender Agent or any agent of the 
Tender Agent or purchase of Bonds by the Tender Agent shall constitute a 
redemption of the Bonds or any extinguishment of the debt evidenced thereby.

     (e)	The Tender Agent (if other than the Trustee) shall meet the 
requirements of a successor Trustee.  The Tender Agent may resign and be 
discharged of the duties and obligation created by this Indenture by giving at 
least 30 days' notice by mail to the Trustee, the Borrower and the Remarketing 
Agent.  No resignation shall not take effect unless and until a successor 
Tender Agent shall be appointed by the Trustee.  The Trustee shall use its 
best efforts to appoint a successor Tender Agent during such 30 day period and 
in the event a successor Tender Agent has not taken office prior to the 
expiration of such 30 day period, the Tender Agent may petition a court of 
applicable jurisdiction to appoint a successor Tender Agent.  The Tender Agent 
may be removed at any time by an instrument signed by the Borrower, with the 
written consent of the Trustee, and filed with the Borrower, the Tender Agent, 
the Remarketing Agent and the Trustee.  Removal shall not take effect unless 
and until a successor Tender Agent shall be appointed by the Trustee with the 
approval of the Borrower.  In the event of the resignation or removal of the 
Tender Agent, the Tender Agent shall deliver any moneys and Bonds held by it 
to its successor, and if there is no successor, to the Trustee.

                           ARTICLE 10

                     SUPPLEMENTAL INDENTURES

     Section 10.1.  Supplemental Indentures Not Requiring Consent of 
Bondholders.  The Issuer and Trustee may, from time to time and at any time, 
without the consent of, or notice to, any of the Holders, and when so required 
by this Indenture shall, enter into an indenture or indentures supplemental to 
this Indenture as shall not be inconsistent with the terms and provisions 
hereof (which supplemental indenture or indentures shall thereafter form a 
part hereof), so as to thereby (1) cure any ambiguity or formal defect or 
omission in this Indenture or in any supplemental indenture, (2) grant to or 
confer upon the Trustee for the benefit of the Holders any additional rights, 
remedies, powers, authority or security that may lawfully be granted to or 
conferred upon the Holders or Trustee, (3) more precisely identify the Trust 
Estate, or any other property which may become a part of the Trust Estate, (4) 
subject to the lien and pledge of this Indenture additional revenues, 
properties or collateral, (5) evidence the appointment of a separate trustee 
or a co-trustee or the succession of a new Trustee or Paying Agent or both 
hereunder, (6) modify, eliminate and/or add to the provisions of this 
Indenture to such extent as shall be necessary to prevent any interest on the 
Bonds from becoming includable in gross income for federal income tax purposes 
or to effect the qualification of this Indenture under the Trust Indenture Act 
of 1939, as then amended, or under any similar federal statute hereafter 
enacted, and to add to this Indenture such other provisions as may be 
expressly permitted by said Trust Indenture Act of 1939, excluding however the 
provisions referred to in Section 316(a)(2) of said Trust Indenture Act of 
1939, (7) provided the conditions contained in Section 2.6 hereof are 
satisfied, to provide for the terms and issuance of Additional Bonds, (8) make 
any other change which is required by any provision of this Indenture or which 
is deemed by the Trustee necessary to reconcile the Indenture with the Related 
Documents, or any amendments thereto, (9) make any change which will become 
effective on a Rate Adjustment Date, provided a summary of the change is sent 
with the Preliminary Notice of Mandatory Tender, or (10) make any other 
change, subject to the Trustee's receipt of written confirmation from the 
Rating Agency that the rating on the Bonds will not be downgraded, withdrawn 
or qualified as a result thereof, which in the judgment of the Trustee, based 
upon an opinion of Bond Counsel, is necessary or desirable and will not 
materially prejudice any non-consenting Bondholder.

<PAGE>                              - 52 -
     Section 10.2.  Supplemental Indentures Requiring Consent of Bondholders.  
Exclusive of supplemental indentures covered by Section 10.1 and subject to 
the terms and provisions contained in this Section, and not otherwise, the 
Trustee, upon receipt of an instrument evidencing the consent to the 
below-mentioned supplemental indenture by the Holders of not less than 51% of 
the aggregate principal amount of the Bonds then outstanding, shall join with 
the Issuer in the execution of such other indenture or indentures supplemental 
hereto as shall be deemed necessary and desirable for the purpose of 
modifying, altering, amending, adding to or rescinding, in any particular, any 
of the terms or provisions contained in this Indenture or in any supplemental 
indenture; provided, however, that nothing herein contained shall permit or be 
construed as permitting (1) an extension of the maturity of the principal of 
or interest on any Bond, (2) a reduction in the principal amount of any Bond 
or the rate of interest thereon, (3) a privilege or priority of any Bond or 
Bonds over any other Bond or Bonds except as may be otherwise expressly 
provided herein, (4) a reduction in the aggregate principal amount of the 
Bonds required for consent to such supplemental indenture or (5) the 
modification of any of the provisions of this Section without the consent of 
the Holders of 100% of the principal amount of all Bonds adversely affected 
thereby ("100% Bondholders' Consent").

     If at any time the Issuer shall request the Trustee to enter into any 
such supplemental indenture for any of the purposes of this Section, the 
Trustee shall, upon being satisfactorily indemnified with respect to expenses, 
cause notice of the proposed execution of such supplemental indenture to be 
mailed by first class mail, postage prepaid, to the Bondholders at the 
addresses shown on the Bond Register.  Such notice shall briefly set forth the 
nature of the proposed supplemental indenture and shall state that copies 
thereof are on file at the principal office of the Trustee for inspection by 
all Bondholders.  The Trustee shall  not, however, be subject to any liability 
to any Bondholder by reason of its failure to mail such notice to any 
particular Bondholder if notice was generally mailed to Bondholders, and any 
such failure shall not affect the validity of such supplemental indenture when 
consented to and approved as provided in this Section.  If the Holders of not 
less than the applicable percentage (as referenced above) in aggregate 
principal amount of the Bonds then outstanding at the time of the execution of 
any such supplemental indenture shall have consented to and approved the 
execution thereof as herein provided, no Bondholder shall have any right to 
object to any of the terms and provisions contained herein or the operation 
thereof, or in any manner to question the propriety of the execution thereof, 
or to enjoin or restrain the Trustee or Issuer from executing the same or from 
taking any action pursuant to the provisions thereof.  Upon the execution of 
any such supplemental indenture as in this Section permitted and provided, 
this Indenture shall be and is deemed to be modified and amended in accordance 
herewith. 

     Anything herein to the contrary notwithstanding, a supplemental indenture 
under this Article 10 which adversely affects the right of the Borrower under 
this Indenture, the Loan Agreement, the Regulatory Agreement, the Mortgage or 
the Assignment shall not become effective unless and until the Borrower shall 
have consented (either in writing or by inaction as provided below) to the 
execution and delivery of such supplemental indenture.  In this regard, the 
Trustee shall cause notice of the proposed execution and delivery of any such 
supplemental indenture, together with a copy of the proposed supplemental 
indenture, to be mailed by certified or registered mail to the Borrower at 
least 15 days prior to the proposed date of execution and delivery of any such 
supplemental indenture. The Borrower shall be deemed to have consented to the 
execution and delivery of any such supplemental indenture if the Trustee does 
not receive a letter signed by a Representative of the Borrower of protest or 
objection thereto on or before 5:30 p.m., Eastern Standard or Eastern Daylight 
time, whichever is then in effect in New York, New York, of the fifteenth day 
after the mailing of said notice and a copy of the proposed supplemental 
indenture to the Borrower unless such fifteenth day falls on a day which is 
not a Business Day, in which event the letter of objection must be received 
not later than the next succeeding Business Day. 

     Section 10.3.  Notice to Rating Agency.  The Trustee shall send a copy of 
each supplemental indenture executed and delivered pursuant to this Article X 
to the Rating Agency.  	Section 10.4.  Opinion of Bond Counsel.  Any amendment 
governed by this Article shall be accompanied by an opinion of Bond Counsel 
that such amendment is permitted by this Indenture and does not impair the 
exclusion of interest on the Bonds from gross income for federal income tax 
purposes nor permit the taking of action which when taken will impair the 
exclusion of interest on the Bonds from gross income for federal income tax 
purposes. 

<PAGE>                              - 53 -
     Section 10.5.  Rights of Trustee.  The Trustee shall not be required to 
agree to any amendment referred to in this Article that modifies the rights, 
duties or immunities of the Trustee.

                                ARTICLE 11

                      AMENDMENTS TO RELATED DOCUMENTS

     Section 11.1.  Amendments Not Requiring Bondholder Consent.  The Issuer 
or the Trustee or both may, without the consent of or notice to the 
Bondholders, consent to any amendment, change or modification of any of the 
Related Documents: 

     (1)	which may be required or permitted without Bondholder consent by the 
provisions of the Related Documents or this Indenture; 

     (2)	for the purpose of curing any ambiguity or formal defect or omission;

     (3)	in connection with additional land, equipment or improvements which 
may be acquired and which constitute a part of the Mortgaged Property, so as 
to (A) more precisely identify the same, (B) substitute or add additional land 
or additional equipment or (C) sell or remove such land or equipment, all as 
provided in the Mortgage; provided, however, that any such amendment, change 
or modification of any of the Related Documents as provided in this Section 
11.1(3) shall not be effective without written confirmation from the Rating 
Agency that such action will not result in the downgrade, withdrawal or 
qualification of the rating on the Bonds;

     (4)	to reconcile any Related Documents with any amendment or supplement 
to the Indenture; or

     (5)	subject to the Trustee's receipt of written confirmation from the 
Rating Agency that the rating on the Bonds will not be downgraded, withdrawn 
or qualified as a result thereof, to effect any other change in a Related 
Document which, in the judgment of the Trustee, will not materially prejudice 
any non-consenting Bondholder. 

     Section 11.2.  Amendments Requiring Bondholder Consent.  Except for (1) 
amendments, changes or modifications as provided in Section 11.1 and (2) 
amendments, changes or modifications permitted by any Related Document, 
neither the Issuer nor Trustee shall consent to any other amendment, change or 
modification of any Related Document without the giving of notice and the 
written approval or consent of the Holders of not less than a majority in 
aggregate principal amount of the Bonds then outstanding given and procured as 
provided in this Section; provided that in no event shall such amendment, 
change or modification relieve the Borrower of the obligation under any 
Related Documents to make when and as due any payments required for the 
payment of principal, interest and any premium due or to become due on the 
Bonds unless the consent of the Holders of all Bonds adversely affected 
thereby is first secured.  If at any time the Issuer and the Borrower shall 
request the consent of the Trustee to any such proposed amendment, change or 
modification of any Related Documents to which the Issuer is a party or the 
Borrower shall request consent of the Trustee to any such proposed amendment, 
change or modification of any other Related Document to which the Issuer is 
not a party, the Trustee shall, upon being satisfactorily indemnified with 
respect to expenses, cause notice of such proposed amendment, change or 
modification to be given in the same manner as provided in Section 10.2 with 
respect to supplemental indentures.  Such notice shall briefly set forth the 
nature of such proposed amendment, change or modification and shall state that 
copies of the instrument embodying the same are on file at the principal 
office of the Trustee for inspection by all Holders.  The Trustee shall not, 
however, be subject to any liability to any Holder by reason of its failure to 
mail such notice to any particular Bondholder if notice was generally mailed 
to Bondholders, and any such failure shall not affect the validity of such 
amendment, change or modification when consented to and approved as provided 
in this Section.  If the Holders of not less than a majority in aggregate 
principal amount of the Bonds then outstanding at the time of the execution of 
any such amendment shall consent to the execution thereof as herein provided, 
no Holder of any Bond shall have any right to object to any of the terms and 
provisions contained therein, or the operation thereof, or in any manner to 
question the propriety of the execution thereof, or to enjoin or restrain the 
Trustee or Issuer from executing the same or from taking any action pursuant 
to the provisions thereof.  Upon the execution of any such amendment, the 
applicable Related Document thereby amended shall be deemed to be modified and 
amended in accordance therewith.  Nothing in this Section contained shall 

<PAGE>                              - 54 -
permit or be construed as permitting any reduction in the payments required to 
be made by Sections 4.2 or 4.3 of the Loan Agreement or a reduction or change 
in the stated maturity of the Bonds. 

     Section 11.3.  Opinion of Bond Counsel.  Any amendment governed by this 
Article shall be accompanied by an opinion of Bond Counsel that such amendment 
does not adversely affect the exclusion of interest on the Bonds from gross 
income for federal income tax purposes nor permit the taking of action which 
when taken will adversely affect the exclusion of interest on the Bonds from 
gross income for federal income tax purposes.

    Section 11.4.  Rights of Trustee.  The Trustee shall not be required to 
consent to any amendment referred to in this Article unless it has first 
received an opinion of Independent Counsel that such amendment is allowed by 
this Indenture.

                               ARTICLE 12

                      MISCELLANEOUS PROVISIONS

     Section 12.1.  Consent of Holders.  Any consent, request, direction, 
approval, objection or other instrument required by this Indenture to be 
signed and executed by the Holders (other than the assignment of a Bond) may 
be in any number of concurrent writings of similar tenor and must be signed or 
executed by such Holders in person or by agent appointed in writing.  Proof of 
the execution of any such consent, request, direction, approval, objection or 
other instrument or of the writing appointing any such agent and of the 
ownership of Bonds, if made in the following manner, shall be sufficient for 
any of the purposes of this Indenture, and shall be conclusive in favor of the 
Trustee with regard to any action taken by it under such request or other 
instrument, namely: 

     (1)	The fact and date of the execution by any person of any such writing 
may be proved by the certificate of any officer in any jurisdiction who by law 
has power to take acknowledgments within such jurisdiction that the person 
signing such writing acknowledged before him the execution thereof, or by an 
affidavit of any witness to such execution; and

     (2)	The fact of the ownership by any person of Bonds and the amounts and 
numbers of such Bonds, and the date of the holding of the same, may be proved 
only by reference to the Bond Register.

     Section 12.2.  Rights Under Indenture.  Nothing expressed or mentioned in 
or to be implied from this Indenture or the Bonds is intended or shall be 
construed to give any person or company other than the parties hereto, and the 
Bondholders, any legal or equitable right, remedy, or claim under or with 
respect to this Indenture or any covenants, conditions and provisions herein 
contained; this Indenture and all of the covenants, conditions and provisions 
hereof being intended to be and being for the sole and exclusive benefit of 
the parties hereto and the Holders of the Bonds hereby secured as herein 
provided.

     Section 12.3.  Severability..  If any provision of this Indenture shall 
be held or deemed to be or shall, in fact, be inoperative or unenforceable as 
applied in any particular case in any jurisdiction or jurisdictions or in all 
jurisdictions or in all cases because it conflicts with any provisions of any 
constitution or statute or rule of public policy, or for any other reason, 
such circumstances shall not have the effect of rendering the provision in 
question inoperative or unenforceable in any other case or circumstance, or of 
rendering any other provisions herein contained invalid, inoperative or 
unenforceable to any extent whatever. 

     Section 12.4.  Notices.  All notices, certificates or other 
communications hereunder shall be given to all parties identified below, shall 
be in writing (except as otherwise expressly provided herein) and shall be 
sufficiently given and shall be deemed given when delivered by hand delivery, 
telegram or facsimile or served by depositing the same with the United States 
Postal Service, or any official successor thereto, designated as Registered or 
Certified Mail, Return Receipt Requested, bearing adequate postage, or 
delivery by reputable private courier such as Federal Express, Airborne, DHL 
or similar overnight delivery service, and addressed as hereinafter provided.  
Notices, except to the Trustee, shall be deemed given when mailed as provided 
herein.  Notices to the Trustee shall be deemed given only when received by 
the Trustee.  All parties identified below may, by written notice given by 
each to the others, designate any address or addresses to which notices, 

<PAGE>                              - 55 -
certificates or other communications to them shall be sent when required as 
contemplated by this Indenture.  Any notice, certificate, report, financial 
statement or other communication properly provided by legal counsel on behalf 
of any party hereunder shall be deemed properly provided by the party 
represented by such counsel.  Until otherwise provided by the respective 
parties, all notices, certificates and communications to each of them shall be 
addressed as follows:

     To the Issuer:	

          City of Aurora, Illinois
          44 East Downer Place
          Aurora, Illinois  60507
          Attention:  City Clerk

     To the Borrower:

          Park Trace Apartments Limited Partnership
          c/o America First Companies
          19th Floor
          399 Park Avenue
          New York, New York  10022
          Attention:  Joseph Grego

     With a copy to:

          America First Companies
          Suite 400
          1004 Farnam Street
          Omaha, Nebraska  68102
          Attention:  Lynn Muse

     To the Trustee:

          UMB Bank, N.A.
          928 Grand Avenue, 13th Floor
          Kansas City, Missouri  64106
          Attention:  Corporate Trust Department

     To the Tender Agent:

          UMB Bank, N.A.
          928 Grand Avenue, 13th Floor
          Kansas City, Missouri  64106
          Attention:  Corporate Trust Department

     To the Bond Registrar
     and Paying Agent:

          UMB Bank, N.A.
          928 Grand Avenue, 13th Floor
          Kansas City, Missouri  64106
          Attention:  Corporate Trust Department

     Any provision in this Indenture relative to the mailing of a notice or 
other paper to Bondholders shall be fully complied with if it is mailed by 
first class mail, postage prepaid, to the Trustee and to each registered owner 
of any Bonds then Outstanding at the address of such registered owner 
appearing upon the Bond Register.

     Section 12.5.  Required Approvals.  Consents and approvals required by 
this Indenture to be obtained from the Borrower, the Issuer or the Trustee 
shall be in writing and shall not be unreasonably withheld or delayed. 

     Section 12.6.  Counterparts.  This Indenture may be simultaneously 
executed in several counterparts, each of which shall be an original and all 
of which shall constitute but one and the same instrument. 

     Section 12.7.  Limitation of Liability of Issuer and Its Officers, 
Employees and Agents.






<PAGE>                              - 56 -
     (1)	No covenant, agreement or obligation contained herein shall be deemed 
to be a covenant, agreement or obligation of any present or future 
councilmember, officer, employee or agent of the Issuer in his or her 
individual capacity, and neither the councilmembers of the Issuer nor any 
officer thereof executing the Bonds shall be liable personally on the Bonds or 
be subject to any personal liability or accountability by reason of the 
issuance thereof.  No councilmember, officer, employee or agent of the Issuer 
shall incur any personal liability with respect to any other action taken by 
him pursuant to this Indenture or the Act, provided such member, officer, 
employee or agent acts in good faith.

     (2)	No agreements or provisions contained in this Indenture nor any 
agreement, covenant or undertaking by the Issuer contained in any document 
executed by the Issuer in connection with the Project, or the issuance, sale 
and delivery of the Bonds shall give rise to any pecuniary liability of the 
Issuer or a charge against its general credit, or shall obligate the Issuer 
financially in any way except as may be payable from the repayments by the 
Borrower under the Loan Agreement and the proceeds of the Bonds.  No failure 
of the Issuer to comply with any term, condition, covenant or agreement herein 
or in any document executed by the Issuer in connection with the issuance and 
sale of the Bonds shall subject the Issuer to liability for any claim for 
damages, costs or other financial or pecuniary charge except to the extent 
that the same can be paid or recovered from the repayments by the Borrower 
under the Loan Agreement or proceeds of the Bonds.  Nothing herein shall 
preclude a proper party in interest from seeking and obtaining, to the extent 
permitted by law, specific performance against the Issuer for any failure to 
comply with any term, condition, covenant or agreement herein, provided that 
no costs, expenses or other monetary relief shall be recoverable from the 
Issuer except as may be payable from the repayments by the Borrower under the 
Loan Agreement or from the proceeds of the Bonds.

     (3)	No recourse shall be had for the payment of the principal of or 
premium or interest on any of the Bonds or for any claim based thereon or upon 
any obligation, covenant or agreement contained in this Indenture against any 
past, present or future officer, director, member, employee or agent of the 
Issuer, or of any successor corporation, as such, either directly or through 
the Issuer or any successor corporation, under any rule of law or equity, 
statute or constitution or by the enforcement of any assessment or penalty or 
otherwise, and all such liability of any such officers, directors, members, 
employees or agents, as such, is hereby expressly waived and released as a 
condition of, and consideration for, the execution of this Indenture and the 
issuance of such Bonds.

     (4)	Anything in this Indenture to the contrary notwithstanding, it is 
expressly understood and agreed by the parties hereto that (a) the Issuer may 
rely conclusively on the truth and accuracy of any certificate, opinion, 
notice, or other instrument furnished to the Issuer by the Trustee or the 
Borrower as to the existence of any fact or state of affairs required 
hereunder to be noticed by the Issuer; (b) the Issuer shall not be under any 
obligation hereunder to perform any record keeping or to provide any legal 
services; and (c) none of the provisions of this Indenture shall require the 
Issuer to expend or risk its own funds or otherwise incur financial liability 
in the performance of any of its duties or in the exercise of any of its 
rights or powers hereunder, unless it shall first have been adequately 
indemnified to its satisfaction against the cost, expenses, and liability 
which may be incurred thereby.

     (5)	Neither the councilmembers of the Issuer nor any person executing the 
Bonds shall be liable personally on the Bonds by reason of the issuance 
thereof.  The Bonds and the interest thereon shall be special obligations of 
the Issuer payable solely out of the rents, revenues and receipts derived by 
the Issuer from the Project and not from any other fund or source of the 
Issuer, and are secured by a pledge and assignment of the Trust Estate to the 
Trustee in favor of the Bondholders, as provided in this Indenture.  The Bonds 
and the interest thereon shall not constitute general obligations of the 
Issuer or the State, and neither the Issuer nor the State shall be liable 
thereon.  The Bonds shall not constitute an indebtedness within the meaning of 
any constitutional or statutory debt limitation or restriction, and are not 
payable in any manner by taxation.







<PAGE>                              - 57 -
     Section 12.8.  Determination of Taxability.   If any action is commenced 
which questions the exclusion of interest on the Bonds from gross income under 
Section 103(a) of the Code or which might result in a Determination of 
Taxability and if requested by the Borrower and if the costs of such contest, 
as estimated by the Trustee, are paid in advance, the Trustee hereby covenants 
that it will contest such action or Determination of Taxability.  All costs of 
such contest shall be borne by the Borrower.

     Section 12.9.  Notice to the Rating Agency.  The Trustee shall notify the 
Rating Agency in writing, at Standard & Poor's Ratings Services, 25 Broadway, 
New York, New York 10004, Attention: Commercial Real Estate Surveillance 
Group, of the occurrence of any of the following events of which the Trustee 
is aware:  (a) any change in the identity of the Trustee; (b) any amendment or 
modification of or change to this Indenture, the Loan Agreement, the Mortgage 
or the Assignment (with a copy of such proposed amendment); (c) payment in 
full, or provision for payment in full, of all Outstanding Bonds; or (d) any 
Event of Default. 



























































<PAGE>                              - 58 -
     IN WITNESS WHEREOF, the City of Aurora, Illinois has caused this 
Indenture to be signed in its name and behalf and attested by its duly 
authorized officers, and to evidence its acceptance of the trusts hereby 
created, UMB Bank, N.A. has caused this Indenture to be signed in its name and 
behalf by its duly authorized officer, all as of the date first above written.



                                  CITY OF AURORA, ILLINOIS


                             					By  /s/
                                        							Mayor
ATTEST: 


/s/ Cheryl M. Vonhoff                                                           
     City Clerk



                                  UMB BANK, N.A., as Trustee




                             						By  /s/
                                   							Authorized Signatory
















































<PAGE>                              - 59 -
                                  	EXHIBIT A

                     	(FORM OF REQUISITION CERTIFICATE)

                            	BOND PROCEEDS FUND 

Date:  December __, 1997

                         	REQUISITION CERTIFICATE

TO:	UMB BANK, N.A., AS TRUSTEE UNDER THE INDENTURE OF TRUST DATED AS OF 
    DECEMBER 1, 1997 BETWEEN THE CITY OF AURORA, ILLINOIS AND THE TRUSTEE.

     Park Trace Apartments Limited Partnership, a Georgia limited partnership 
(the "Borrower"), hereby requests that proceeds of the Bonds in the amount of 
$12,410,000 be paid from the Bond Proceeds Fund to America First Apartment 
Investors, L.P. for the purpose of effecting the redemption and discharge of 
the City of Aurora Multifamily Housing Mortgage Revenue Note (Covey at Fox 
Valley Project) Series 1986 in the full, remaining outstanding principal 
amount of $12,410,000.00:

							                              Payee and Wire Instructions

							                              AMERICA FIRST APARTMENT
							                               INVESTORS, L.P.

PARK TRACE APARTMENTS,			            Bank of Boston
LIMITED PARTNERSHIP,				             100 Federal Street
a Georgia limited partnership				    ABA# 011 000 390
By:	Park Trace Operating Company, 			Attn:  Linda Wheeler/CLS
		its General Partner			       	Ref:  America First Apartment Investors, L.P.

     By ____________________
         Its Vice President

                        	RECEIPT FOR BOND PROCEEDS


     AMERICA FIRST APARTMENT INVESTORS, L.P. (the "Prior Note Holder") hereby 
acknowledges receipt, from UMB BANK, N.A. (the "Trustee"), of $12,410,000, 
which we have been informed consists of proceeds of the City of Aurora, 
Illinois (the "Issuer") Multifamily Housing Revenue Refunding Bonds (The Covey 
at Fox Valley Apartments Project) Series 1997 (the "Bonds"), to be applied to 
redeem and discharge in full the City of Aurora Multifamily Housing Mortgage 
Revenue Note (Covey at Fox Valley Project) Series 1986, on December __, 1997 
(the "Redemption Date").  As consideration for receipt of the foregoing 
amount, the Prior Note Holder hereby warrants to the Issuer and the Trustee 
that it has delivered the Prior Note to the Issuer for cancellation.

     Dated this          day of December, 1997.

						                            AMERICA FIRST APARTMENT INVESTORS, L.P.

							                           By:  America First Capital Associates Limited
							                                Partnership Four, a Delaware limited
								                               partnership, its general partner

							                          	By:  America First Companies, L.L.C.,
									                             	a Delaware limited liability company,
									                             	its general partner


									                         By _________________________
								                         	Title:  _______________________












<PAGE>                              - 60 -
	                                 EXHIBIT B



                      (FORM OF REQUISITION CERTIFICATE)
                            MORTGAGE RECOVERY FUND 


Requisition No.                

Date:                           


                           	REQUISITION CERTIFICATE


TO:	UMB BANK, N.A., AS TRUSTEE UNDER THE INDENTURE OF TRUST DATED AS OF 
DECEMBER 1, 1997 BETWEEN THE CITY OF AURORA, ILLINOIS AND THE TRUSTEE.

     Park Trace Apartments Limited Partnership, a Georgia limited partnership 
(the "Borrower"), hereby requests that the following amounts be paid from the 
Mortgage Recovery Fund to the following payees for the following purposes:

     Amount			            Payee and Address		               Purpose



Less 10% Retainage $                  

     The Borrower hereby certifies that:

     (1)	obligations in the stated amounts have been incurred and performed at 
the Project and are presently due and payable and that each item thereof is a 
proper charge against the Mortgage Recovery Fund and has not been the subject 
of a previous withdrawal from the Mortgage Recovery Fund,

     (2)	to the best of the undersigned's knowledge there has not been filed 
with or served upon the Issuer, the Trustee or the Borrower notice of any 
lien, right or attachment upon, or claim affecting the right of any such 
persons, firms or corporations to receive payment of the respective amounts 
stated in this requisition which has not been released or will not be released 
simultaneously with the payment of such obligation, 

     (3)(A) obligations as stated on this requisition have been properly 
incurred, (B) such work was actually performed or such materials or supplies 
were actually furnished or installed in or about the Project, (C) if 
contested, bond has been made by the Borrower in an amount equal to 125% of 
the contested amount and (D) either such materials or supplies are not subject 
to any lien or security interest or any such lien or security interest will be 
released or discharged upon payment of this requisition, 

     (4)	all rights, title and interest to any and all personal property 
acquired with the proceeds of this requisition is vested in the Borrower.

     (5)	attached hereto are the items required by Section 5.8(6)(a)(6)(ii) 
and (iii) of the Indenture.


Park Trace Apartments Limited Partnership,
a Georgia limited partnership


By                                            
   Borrower Representative


Requested this         day of              ,        .


                          
[PROJECT ENGINEER]





<PAGE>                              - 61 -
                                   EXHIBIT C

                                 FORM OF BOND


No. R-__										                                               $____________

                         	UNITED STATES OF AMERICA 
                             	STATE OF ILLINOIS

	
                        	CITY OF AURORA, ILLINOIS
               	MULTIFAMILY HOUSING REVENUE REFUNDING BOND
              	(THE COVEY AT FOX VALLEY APARTMENTS PROJECT)
                             	SERIES 1997
	

     Unless this Bond is presented by an authorized representative of The 
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its 
agent for registration of transfer, exchange or payment, and any Bond issued 
is registered in the name of Cede & Co. or in such other name as is requested 
by an authorized representative of DTC (and any payment is made to Cede & Co. 
or to such other entity as is requested by an authorized representative of 
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO 
ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., 
has an interest herein.

     As provided in the Indenture referred to herein, until the termination of 
the system of book-entry-only transfers through DTC (or any successor Security 
Depository appointed pursuant to the Indenture), and notwithstanding any other 
provision of the Indenture to the contrary, this Bond may be transferred, in 
whole but not in part, only to a nominee of DTC, or by a nominee of DTC to DTC 
or a nominee of DTC, or by DTC or a nominee of DTC to any successor securities 
depository or any nominee thereof.

     Interest Rate	Maturity Date	Dated Date		CUSIP

     Variable	December 1, 2027	December __, 1997	


REGISTERED HOLDER:  CEDE & CO.	


PRINCIPAL AMOUNT:  

     The City of Aurora, Illinois (the "Issuer"), a municipal corporation and 
home rule unit of local government under the Constitution of the State of 
Illinois, empowered to issue economic development revenue bonds pursuant to 
the provisions of Ordinance No. 4519, adopted March 23, 1976, as from time to 
time amended, and codified as Division 4 of Article V of Chapter 2 of the City 
of Aurora Code of Ordinances, and Section 6(a) of Article VII of the 
Constitution of the State (collectively, the "Act"), for value received, 
promises to pay to the Registered Holder specified above, or registered 
assigns, but only from the Bond Fund established under the Indenture described 
below (the "Bond Fund"), and upon presentation and surrender hereof at the 
principal corporate trust office of the Trustee named below, the Principal 
Amount specified above, on the Maturity Date specified above, or, if this Bond 
is redeemable as stated below, on a prior date on which it shall have been 
duly called for redemption, and to pay interest on said Principal Amount to 
the Record Date Holder hereof, as defined below, solely from the Bond Fund, 
until the Principal Amount is paid or discharged, at the interest rate 
described below.  Interest hereon shall be calculated on the basis of a 
360-day year of twelve 30-day months.  Interest shall be payable semiannually 
on June 1 and December 1 of each year (each an "Interest Payment Date"), 
commencing June 1, 1998.  This Bond shall bear interest from the Dated Date 
specified above or (in the case of transfer or exchange) from the most recent 
Interest Payment Date to which interest has been paid or provided for.  The 
"Record Date Holder" is the person in whose name this Bond is registered (the 
"Holder" hereof) in the Bond Register maintained by UMB Bank, N.A., as Bond 
Registrar, or its successor either (i) on the fifteenth day of the month 
(whether or not a Business Day) next preceding each Interest Payment Date (the 
"Record Date"), irrespective of any transfer or exchange of such Bond 
subsequent to such Record Date and prior to such Interest Payment Date, or  
(ii) if there shall be a default in payment of interest due on such Interest 


<PAGE>                              - 62 -
Payment Date, at the close of business on a date (the "special Record Date") 
for the payment of such defaulted interest established by notice mailed by the 
Trustee on behalf of the Issuer.  Notice of the special Record Date shall be 
mailed not less than 15 days before the special Record Date, to the Holder at 
the close of business on the fifth Business Day preceding the date of 
mailing.  Except as provided in the next sentence, interest shall be payable 
by check or draft mailed to the Holder at his, her or its address as it 
appears on the Bond Register on the Record Date or the special Record Date, as 
the case may be, except as otherwise provided in the Indenture.  All payments 
of principal of and premium, if any, on the Bonds payable on the Maturity 
Date, the Purchase Date or the Discharge Date (each as defined in the 
Indenture) shall only be payable by check or draft upon presentation of the 
Bonds, at the principal corporate trust office of the Trustee.  
Notwithstanding the foregoing, any Holder of at least $1,000,000 principal 
amount of any Bonds (or a lesser amount of such Bonds if such Bonds constitute 
all the Bonds at the time outstanding), upon payment by the Holder of the cost 
of such electronic transfer, may file with the Trustee an instrument 
satisfactory to the Trustee requesting the amounts payable by the Trustee to 
such Holder be paid by transferring by electronic transfer in immediately 
available funds, on the day such payment is due, the amount to be distributed 
to such Holder to a designated account maintained by such Holder at any other 
bank in the continental United States.  The principal of and interest and 
premium, if any, on this Bond are payable in lawful money of the United States 
of America.

     The Bonds (as hereinafter defined) are issued under the provisions of and 
in full compliance with the Act, and a resolution duly adopted by the Issuer 
pursuant to which this Bond is issued and which authorizes the execution and 
delivery of the Loan Agreement (as herein defined) and the Indenture.  This 
Bond and the issue of which it is a part are limited obligations of the 
Issuer, and the principal and premium, if any, and interest thereon are 
payable solely and only from revenues, and other amounts derived by the Issuer 
from the Loan Agreement pledged and assigned by the Issuer to the Trustee 
under the Indenture to secure payment of the principal of, premium, if any, 
and interest on this Bond.

     THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM 
REVENUES AND FUNDS PLEDGED THEREFOR UNDER THE INDENTURE.  NO HOLDER OF THIS 
BOND SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF THE TAXING POWER OF 
THE ISSUER OR THE STATE OF ILLINOIS (THE "STATE") OR ANY POLITICAL SUBDIVISION 
THEREOF TO PAY THE PRINCIPAL OF THIS BOND OR THE INTEREST HEREON OR ANY OTHER 
COST INCIDENT HERETO, OR TO ENFORCE PAYMENT HEREOF AGAINST ANY PROPERTY OF THE 
ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF.  THE BONDS AND THE 
INTEREST THEREON SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE 
ISSUER, THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF, AND THE ISSUANCE 
THEREOF SHALL NOT, DIRECTLY OR INDIRECTLY OR CONTINGENTLY, OBLIGATE THE 
ISSUER, THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF, TO LEVY ANY FORM OF 
TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR ITS PAYMENT.  NOTHING IN 
THE BONDS OR THE PROCEEDINGS OF THE ISSUER AUTHORIZING THE ISSUANCE OF THE 
BONDS OR IN THE INDENTURE SHALL BE CONSTRUED TO AUTHORIZE THE ISSUER TO CREATE 
A DEBT OR LIABILITY OF THE ISSUER, THE STATE, OR ANY POLITICAL SUBDIVISION 
THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OF THE 
STATE.

     NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM 
OR INTEREST ON THIS BOND AGAINST ANY PAST, PRESENT OR FUTURE OFFICER, MEMBER, 
EMPLOYEE OR AGENT OF THE ISSUER, OR OF ANY SUCCESSOR TO THE ISSUER, AS SUCH, 
EITHER DIRECTLY OR THROUGH THE ISSUER OR ANY SUCCESSOR TO THE ISSUER, UNDER 
ANY RULE OF LAW OR EQUITY, STATUTE OR CONSTITUTION OR BY THE ENFORCEMENT OF 
ANY ASSESSMENT OR PENALTY OR OTHERWISE, AND ALL SUCH LIABILITY OF ANY SUCH 
OFFICERS, MEMBERS, EMPLOYEES OR AGENTS, AS SUCH, IS HEREBY EXPRESSLY WAIVED 
AND RELEASED AS A CONDITION OF, AND CONSIDERATION FOR, THE EXECUTION AND 
ISSUANCE OF THIS BOND.

     This Bond is one of a duly authorized series of bonds of the Issuer, 
issued in the initial aggregate principal amount of $12,410,000, known as the 
Multifamily Housing Revenue Refunding Bonds (The Covey at Fox Valley 
Apartments Project) Series 1997 (the "Bonds").  The Bonds are being issued 
under, and secured in accordance with, an Indenture of Trust dated as of 
December 1, 1997 (the "Indenture), by and between the Issuer and UMB Bank, 
N.A., as trustee (the Trustee"), setting forth the terms upon which such Bonds 
are issued.  The Bonds are issued by the Issuer to prepay and discharge the 
Issuer's City of Aurora Multifamily Housing Mortgage Revenue Note (Covey at 
Fox Valley Project) Series 1986 in the original principal amount of 
$12,410,000 (the "Prior Note"), issued to refinance the acquisition and 

<PAGE>                              - 63 -
construction of a 216-unit multifamily residential rental facility located 
within the incorporated limits of the Issuer known as The Covey at Fox Valley 
constituting a "project" within the meaning of the Act (the "Covey Project").  
The proceeds of the Bonds will be applied for such purpose under the terms of 
a Loan Agreement dated as of December 1, 1997 (the "Loan Agreement"), by and 
between the Issuer and Park Trace Apartments Limited Partnership, a Georgia 
limited partnership (the "Borrower"), under the provisions of which the Issuer 
will loan the proceeds of the Bonds to the Borrower.  The loan made pursuant 
to the Loan Agreement (the "Loan") is evidenced by a promissory note (the 
"Note") from the Borrower and the Land Trust (as defined in the Indenture) to 
the Issuer and endorsed without recourse by the Issuer to the Trustee.  The 
Borrower has agreed under the Note and the Loan Agreement to make loan 
payments in amounts and at times sufficient to pay the principal of, premium, 
if any, and interest on the Bonds as the same shall become due and payable.

     Pursuant to the Indenture, the Issuer has assigned and pledged to the 
Trustee, for the equal and ratable benefit of the Holders of the Bonds, all 
revenues and receipts derived by the Borrower from the operation of the Covey 
Project and the 260-unit multifamily housing project located in the City of 
Norcross, Gwinnett County, Georgia (the "Park Trace Project", together with 
the Covey Project, the "Project").  Pursuant to the Mortgage, Security 
Agreement and Fixture Financing Statement dated as of December 1, 1997 (the 
"Covey Project Mortgage") and the Covey at Fox Valley Assignment of Rents and 
Leases dated as of December 1, 1997 (the "Covey Project Assignment"), each 
executed by the Borrower and the Land Trust for the benefit of the Trustee 
with respect to the Covey Project, and the Deed to Secure Debt, Security 
Agreement and Fixture Financing Statement dated as of December 1, 1997 (the 
"Park Trace Project Mortgage", together with the Covey Project Mortgage, the 
"Mortgage") and the Park Trace Assignment of Rents and Leases dated as of 
December 1, 1997 (the "Park Trace Project Assignment", together with the Park 
Trace Project Assignment, the "Assignment") filed with respect to the Park 
Trace Project, each executed by the Borrower for the benefit of the Issuer and 
assigned by the Issuer to the Trustee, the Borrower has granted to the Issuer 
and the Trustee, for the equal and ratable benefit of the Holders of the 
Bonds, first priority Mortgage liens on and security interests in the Project 
and the rents and leases thereof.  Each of the Covey Project Mortgage and the 
Park Trace Project Mortgage may be released or modified in any respect upon 
compliance with certain conditions therein and in the Indenture.

     After the initial delivery of the Bonds, the Issuer and the Borrower may 
from time to time, and upon the conditions stated in the Indenture, agree upon 
and approve the issuance and delivery of Additional Bonds secured by the 
Indenture, the Loan Agreement, the Mortgage and the Assignment.

     Reference is hereby also made to the Loan Agreement, the Indenture, the 
Mortgage and the Assignment, including all supplements thereto, for a 
description of the property encumbered and assigned, the provisions, among 
others, with respect to the nature and extent of the security, the rights of 
the Issuer, and the rights, duties and obligations of the Borrower, the 
Trustee, and the Holders of the Bonds, and the terms upon which the Bonds are 
issued and secured.

                        INTEREST RATE PROVISIONS

     "Initial Rate Adjustment Date" means December 1, 2007.

     "Rate Adjustment Date" means the date as of which the interest rate on 
the Bonds, as determined on the Rate Determination Date, will be effective, 
which will be the Initial Rate Adjustment Date and thereafter December 1 in 
the year determined by the Borrower by written notice to the Remarketing 
Agent, the Trustee and the Tender Agent not less than 60 days prior to the 
next occurring Rate Adjustment Date.

     "Rate Determination Date" means no later than 4:00 P.M., New York time, 
on the third Business Day immediately preceding a Rate Adjustment Date.

     "Rate Period" means the period from a Rate Adjustment Date to, but not 
including, the next Rate Adjustment Date.

     The Bonds will bear interest from the Dated Date to but not including the 
Initial Rate Adjustment Date at the annual interest rate of 5.3%. Thereafter, 
the Remarketing Agent will determine the interest rate for the Bonds for the 
Rate Period commencing with each Rate Adjustment Date to be the lowest rate 
which, in the best judgment of the Remarketing Agent, on the Rate 
Determination Date, would result in the market value of the Bonds on the Rate 

<PAGE>                              - 64 -
Adjustment Date being equal to 100% of their principal amount.  In determining 
the interest rate, the Remarketing Agent will have due regard for general 
financial conditions and such other conditions as, in the judgment of the 
Remarketing Agent, have a bearing on the interest rate on the Bonds, including 
then prevailing market conditions, the yields at which comparable securities 
are then being sold and the tender and redemption provisions applicable to the 
Bonds during the forthcoming Rate Period.  Each determination of the interest 
rate for the Bonds will be conclusive and binding upon the Bondholders, the 
Issuer, the Borrower, the Tender Agent, the Remarketing Agent and the 
Trustee.  Upon written request, the Remarketing Agent will give the Issuer, 
the Trustee, the Borrower or the Tender Agent Immediate Notice of the interest 
rate on the Bonds at any time.

     If the Bonds are not remarketed on a Rate Adjustment Date and the 
mandatory tender of the Bonds is canceled as described below, the Bonds will 
bear interest from the Rate Adjustment Date at the Default Rate.  "Default 
Rate" means the interest rate equal to 4% in excess of the floating prime rate 
listed in the "Money Rates" section of The Wall Street Journal as the base 
rate on corporate loans posted by the nation's largest banks established from 
time to time.

                   	MANDATORY TENDER PROVISIONS

	    Upon the Trustee's receipt of the written notice from the Borrower in 
accordance with the Loan Agreement, the Trustee will send the Preliminary 
Notice of Mandatory Tender to Bondowners of the mandatory tender for purchase 
of Bonds on the Rate Adjustment Date not less than 45 calendar days prior to 
the Rate Adjustment Date.  The Preliminary Notice of Mandatory Tender will 
include expected rating on the Bonds to be in effect for the Rate Period 
commencing on the Rate Adjustment Date.

	    All Bonds are required to be tendered to the Tender Agent for purchase on 
the Rate Adjustment Date, except Bonds, or portion thereof, which will be in 
Authorized Denominations with respect to which the Holders thereof have 
delivered to the Tender Agent by hand or by mail at its Principal Office a 
properly completed Notice of Election to Retain Bonds, together with a 
signature guaranty, on or prior to the fifth Business Day next preceding the 
Rate Adjustment Date.  Any Bondowner required to tender Bonds under this 
subsection shall tender its Bonds in escrow to the Trustee for purchase at its 
Principal Office prior to 10:30 A.M., New York time, on the Rate Adjustment 
Date.  The tender and purchase of Bonds will become mandatory if the Trustee 
has received Remarketing Proceeds on the Rate Adjustment Date in an amount 
sufficient to pay all Tendered Bonds and written confirmation from the Rating 
Agency that the Bonds will be rated no lower than the rating set forth in the 
Preliminary Notice of Mandatory Tender for the Rate Period commencing on the 
Rate Adjustment Date.  The failure to tender Bonds on the Rate Adjustment Date 
is the equivalent of a tender, and the untendered Bonds will become 
Undelivered Bonds for which replacement Bonds will be executed, authenticated 
and delivered as provided in the Indenture.

	    If the Trustee does not receive sufficient Remarketing Proceeds in 
accordance with the Indenture by 11:00 A.M., New York time, on the Rate 
Adjustment Date and written confirmation from the Rating Agency that the Bonds 
will be rated no lower than the rating set forth in the Preliminary Notice of 
Mandatory Tender for the Rate Period commencing on the Rate Adjustment Date, 
the mandatory tender of the Bonds will be automatically canceled.  The Trustee 
will promptly send the Notice of Canceled Mandatory Tender to Bondowners and 
the Tender Agent and will promptly return tendered Bonds to the respective 
Holders.

	    Any defect in any notice as provided above or any failure by any 
Bondowner to receive any notice will not in any way change the Holder's 
obligation to tender the Bonds for purchase on the Rate Adjustment Date.

	    The Tender Agent, to whom a Notice of Election to Retain Bonds has been 
delivered, shall determine whether the Notice of Election to Retain Bonds has 
been properly completed and such determination shall be binding on the Holder 
of the Bond.  If the mandatory tender is not canceled, any election by a 
Bondowner to retain its Bond or Bonds on the Rate Adjustment Date shall be 
irrevocable upon delivery to the Tender Agent of the Notice of Notice of 
Election to Retain Bonds.  The Tender Agent shall promptly return any 
incomplete or improperly completed Notice of Election to Retain Bonds to the 
Bondowner.



<PAGE>                              - 65 -
	                           REDEMPTION PROVISIONS

	    (A)	Calamity Redemption.  The Bonds are subject to purchase or redemption 
in whole or in part on any Business Day, at the written direction of the 
Borrower from Protected Funds, in the event of damage to or destruction or 
condemnation of the Project or any part thereof as provided in the Loan 
Agreement and the Mortgage, at a purchase or redemption price equal to the 
principal amount thereof plus accrued interest without premium.

	    (B)	Optional Redemption or Purchase.

		        (1)	To and including the Initial Rate Adjustment Date, the Bonds are 
     subject to redemption or purchase at the option of the Borrower, from 
     Protected Funds, in whole or in part on any date, at a redemption or 
     purchase price equal to the percentage of principal amount set forth in 
     the following table, plus accrued interest to the designated redemption 
     date:

     Optional Redemption Periods	                Redemption
    	 (dates inclusive)                          Price     
     -------------------------------------       ----------
     December 1, 2005 to November 30, 2006	      101.0%
	    December 1, 2006 to December 1, 2007	       100.0

          (2)	After the Initial Rate Adjustment Date, the Bonds are subject to 
     redemption or purchase at the option of the Borrower, from Protected 
     Funds, in whole or in part on any date, at a redemption or purchase price 
     equal to the percentage of principal amount set forth in the following 
     table, plus accrued interest to the designated redemption date:

     Length of Rate	        Redemption Prices as a 	            Call Protection
     Period (In Years)*	    Percentage of Principal Amounts	    Period*
     ------------------     -------------------------------     ---------------
     Greater than 10	       102% after 7 years declining 1%	    7 years
		                          per 12 months to 100%

     Less than or equal to  102% after 4 years declining 1%	    4 years
     10 and greater than 7  per 12 months to 100%

     Less than or equal to  102% after 3 years declining 1%	    3 years
     7 and greater than 5	  per 12 months to 100%

     Less than or equal to  101% after 2 years declining 1/2%	  2 years
     5 and greater than 2	  per 6 months to 100%

     2	                     100-1/2% after 1 year declining     1 year
                            1/2% per 6 months to 100%


*Measured from and including the first day of such Rate Period. 	 	

     The Borrower will have the option to purchase the Bonds in lieu of this 
redemption.  If the Borrower exercises its option to purchase as provided in 
the Indenture, the Borrower is obligated to provide all Protected Funds 
necessary, together with other Protected Funds held by the Trustee, to pay the 
principal of and accrued interest on the Bonds to the date of purchase.

     (C)	Mandatory Special Redemption or Purchase Upon Determination of 
Taxability.  The Bonds are subject to mandatory redemption in whole on any 
date, at a redemption price equal to the principal amount thereof, without 
premium, plus accrued interest, to the date of redemption, upon a 
Determination of Taxability.  In the event of a Determination of Taxability 
the Borrower shall have the option to purchase the Bonds in lieu of 
redemption.  If the Borrower exercises its option to purchase as provided in 
the Indenture, the Borrower is obligated to provide all funds necessary, 
together with other Protected Funds held by the Trustee, to pay the principal 
of and accrued interest on the Bonds to the date of purchase. 









<PAGE>                              - 66 -
     (D)	Mandatory Special Redemption or Purchase Upon Failed Remarketing.  
The Bonds are subject to mandatory redemption in whole on any date, at a 
redemption price equal to the principal amount thereof, without premium, plus 
accrued interest, to the date of redemption, if the Bonds are not remarketed 
on a Rate Adjustment Date.  The Borrower will have the option to purchase the 
Bonds in lieu of this redemption.  If the Borrower exercises its option to 
purchase as provided in the Indenture, the Borrower is obligated to provide 
all Protected Funds necessary, together with other Protected Funds held by the 
Trustee, to pay the principal of and accrued interest on the Bonds to the date 
of purchase.

     Selection of Bonds for Redemption.  To effect the partial redemption or 
purchase of Bonds under the Indenture, the Trustee, prior to giving notice of 
redemption or purchase, shall assign to each Bond then outstanding a 
distinctive number for each $5,000 of the principal amount of such Bond.  The 
Trustee shall then select by lot, using such method of selection as it shall 
deem proper in its discretion, from the numbers so assigned to such Bonds, as 
many numbers as, at $5,000 for each number, shall equal the principal amount 
of such Bonds to be redeemed.  The Bonds to be redeemed or purchased shall be 
the Bonds to which were assigned numbers so selected; provided, however, that 
only so much of the principal amount of such Bond of a denomination of more 
than $5,000 shall be redeemed or purchased as shall equal $5,000 for each 
number assigned to it and so selected.  If a Bond may be redeemed or purchased 
only in part, it shall be surrendered to the Trustee (with, if the Issuer or 
the Trustee so requires, a written instrument of transfer in form satisfactory 
to the Issuer and the Trustee duly executed by the Holder thereof or his, her 
or its attorney duly authorized in writing) and the Issuer shall execute (if 
necessary) and the Bond Registrar shall authenticate and deliver to the Holder 
of such Bond, without service charge, a new Bond or Bonds of the same series, 
of any authorized denomination or denominations, as requested by such Holder, 
having the same stated maturity and interest rate in aggregate principal 
amount equal to and in exchange for the unredeemed portion of the principal of 
the Bond so surrendered. 

     Notice of Redemption.  Notice of redemption or purchase shall be mailed 
by first class mail, postage prepaid, to each Holder of a Bond to be purchased 
or redeemed at least 30 days prior to the redemption or purchase date.  No 
defect in or failure to give notice of redemption or purchase shall affect the 
validity of the proceedings for redemption or purchase of any Bond not 
affected by such defect.  All Bonds so called for redemption or purchase, 
provided Protected Funds for their redemption or purchase have been duly 
deposited, will, except as otherwise provided in the Indenture, cease to bear 
interest on the specified redemption or purchase date and except for the 
purpose of payment shall not be entitled to the lien of the Indenture or the 
benefits of the Loan Agreement. 

     Business Day Payments.  If the date for payment of the principal of, 
premium, if any, or interest on this Bond shall be a day which is not a 
Business Day, then the date for such payment shall be the next succeeding day 
which is a Business Day, and payment on such later date shall have the same 
force and effect as if made on the nominal date of payment. 

     Enforcement; Modification of Indenture and Related Documents.  The Holder 
of this Bond shall have no right to enforce the provisions of the Indenture or 
to institute action to enforce the covenants therein, or to take any action 
with respect to any Event of Default under the Indenture, or to institute, 
appear in or defend any suit or other proceedings with respect thereto, except 
as provided in the Indenture.  Modifications or alterations of the Indenture, 
of any indenture supplemental thereto or of Related Documents, may be made 
only to the extent and in the circumstances permitted by the Indenture and may 
be made in certain cases without the consent of the holders of the Bonds.

     Consent to Modifications.  With the consent of the Issuer, the Borrower 
and the Trustee, as appropriate, and to the extent permitted by and as 
provided in the Indenture, the terms and provisions of the Indenture and the 
Related Documents or any instrument supplemental thereto may be modified or 
altered by the consent of the Holders of the percentage required by the 
Indenture in an aggregate principal amount of the Bonds outstanding 
thereunder.  Supplemental indentures may also be executed and delivered, 
without consent of or notice to any Holders, for the purpose of curing any 
ambiguity or formal defect or omission in the Indenture or in any supplemental 
indenture, granting for the benefit of the Holders additional rights, 
remedies, powers, authority, revenues, property, collateral or security, more 
precisely identifying the Trust Estate, subjecting the lien and pledge of the 
Indenture to additional rights, remedies, powers, authority or security, 

<PAGE>                              - 67 -
preventing the interest on the Bonds from becoming includable in gross income 
for federal income tax purposes, qualifying the Indenture under the Trust 
Indenture Act of 1939 evidencing appointment of a co-Trustee or successor 
Trustee, successor Paying Agent, or successor Bond Registrar, providing for 
the issuance of Additional Bonds as allowed by the Indenture, reconciling the 
Indenture with Related Documents, making any change which will become 
effective on a Rate Adjustment Date, provided a summary of the change is sent 
with the Preliminary Notice of Mandatory Tender, or making any other change, 
subject to the Trustee's receipt of written confirmation from the Rating 
Agency that the rating on the Bonds will not be downgraded, withdrawn or 
qualified as a result thereof, which in the judgment of the Trustee, based 
upon an opinion of Bond Counsel, is necessary or desirable and will not 
materially prejudice any non-consenting Holders.  Every Holder hereof is 
deemed by the Holder's purchase and retention of this Bond to consent to be 
bound by every supplemental indenture and every modification and amendment 
adopted in accordance with the provisions of the Indenture, whether or not 
noted or endorsed hereon or incorporated herein. 

     Waiver or Consent Conclusive.  The Indenture also contains provisions 
permitting the Trustee, in its discretion, upon written request of the Holders 
of a majority in aggregate principal amount of the Bonds outstanding, on 
behalf of all the Holders of all the Bonds, to waive compliance by the Issuer 
with certain provisions of the Indenture and certain past defaults under the 
Indenture and their consequences.  

     Denomination; Exchange; Treatment of Registered Holder.  The Bonds are 
issued as fully registered book-entry-only bonds without coupons in the 
denomination of $5,000 or any integral multiple thereof of a single maturity.  
The Bonds may be exchanged by the Holder for other Bonds of any authorized 
denominations and of a like aggregate principal amount and stated maturity, 
upon surrender thereof by the Holder at the principal corporate trust office 
of the Bond Registrar, in the manner and subject to the limitations provided 
in the Indenture.  The Issuer, the Trustee, the Bond Registrar and any 
additional Paying Agents may deem and treat the Holder of this Bond as the 
absolute owner of this Bond (whether or not this Bond shall be overdue) for 
the purpose of receiving payment on this Bond (except as otherwise herein 
above provided with respect to the Record Date and special Record Date) and 
for all other purposes, and the Issuer, Trustee, the Bond Registrar and the 
Paying Agent shall not be affected by any notice to the contrary. 

     Registration of Transfer.  In the event of the termination of the 
book-entry system as set forth in the Indenture and subject to the limitations 
provided in the Indenture, the transfer of this Bond is subject to 
registration by the Holder in person or by the Holder's attorney hereof upon 
surrender of this Bond at the principal corporate trust office of the Bond 
Registrar, duly endorsed or accompanied by a written instrument or instruments 
of transfer in the form printed on this Bond or in another form satisfactory 
to the Bond Registrar and executed and with guaranty of signature by the 
Holder hereof or his, her or its attorney duly authorized in writing, 
containing written instructions as to the details of the registration of the 
transfer of the Bond.  Thereupon the Issuer shall execute (if necessary) and 
the Bond Registrar shall authenticate and deliver in the name of the 
transferee or transferees (but not registered in blank or to "bearer" or a 
similar designation), one or more new Bonds of any authorized denomination or 
denominations, of a like principal amount having the same stated maturity and 
interest rate. 

     Service Charges, Taxes.  No service charge shall be made to the Holder 
for any registration, transfer or exchange herein before referred to, but the 
Bond Registrar and the Issuer may require payment of a sum sufficient to cover 
any tax, fee or other governmental charge that may be imposed in connection 
with any transfer or exchange of Bonds, other than exchanges expressly 
provided in the Indenture to be made without charge to Holders, and any legal 
or other unusual costs of transfers and lost bonds. 

     Acceleration.  In certain events, on the conditions, in the manner and 
with the effect set forth in the Indenture, the principal of all the Bonds 
then outstanding under the Indenture may become or may be declared due and 
payable before the stated maturities thereof, together with the interest 
accrued thereon. 

     Governing Law.  This Bond shall be governed by and construed in 
accordance with the laws of the State of Illinois.



<PAGE>                              - 68 -
     This Bond shall not be valid or become obligatory for any purpose or be 
entitled to any benefit or security under the Indenture until it shall have 
been authenticated by the execution by the Bond Registrar on the certificate 
of authentication endorsed hereon. 

     All capitalized terms used in this Bond and not defined herein shall have 
the meaning ascribed thereto in the Indenture.

     IT IS HEREBY CERTIFIED AND DECLARED that all acts, conditions and things 
required to exist, happen and be performed precedent to and in the execution 
and delivery of the Indenture and the issuance of this Bond do exist, have 
happened and have been performed in due time, form and manner as required by 
law. 

     IN WITNESS WHEREOF, the City of Aurora, Illinois has caused this Bond to 
be executed with the facsimile or manual signature of its Mayor and attested 
by facsimile or manual signature of its City Clerk, and has caused this Bond 
to be dated as of the Dated Date shown above. 

    		                            CITY OF AURORA, ILLINOIS

Attest:
		                                By 	
			                                          Mayor
By 					 
	City Clerk

	                     CERTIFICATE OF AUTHENTICATION

     This Bond is one of the Bonds described in the within mentioned Indenture.

Date of Authentication: ________________

		                                UMB BANK, N.A., as
		                                Bond Registrar 

		                                By 	
			                                   Authorized Signature 

                         [FORM OF ASSIGNMENT]


For value received, the undersigned do(es) hereby sell, assign and transfer 
unto:

	

	

	
          	(Name, Address and Tax Identification or Social
                    	Security Number of Assignee)

the within-registered Bond and do(es) hereby irrevocably constitute and 
appoint, attorney, to transfer the same on the registration books of the 
Trustee, with full power of substitution in the premises.

Dated:  ________________

Signature Guaranteed:



_______________________________________
NOTICE: The signature on this guaranteed by an eligible guarantor institution 
(as defined by SEC Rule 17Ad-15 (12 C.F.R. 240.17 Ad-15) or any similar rule 
the Trustee deems applicable).


_______________________________________
NOTICE:  The signature on this assignment must correspond with the name(s) as 
written on the face of the within Bond in every particular without alteration 
or enlargement or any change whatsoever.



<PAGE>                              - 69 -
The following abbreviations, when used in the inscription on the face of the 
within Bond, shall be construed as though they were written out in full 
according to applicable laws or regulations.      



	    TEN COM	 as tenants in common 
	    TEN ENT 	as tenants by the entirety
	    JT TEN	 	as joint tenants with rights of
			           survivorship and not as tenants in common

UNIF GIFT MIN ACT           Custodian           (Cust)                (Minor)

     Under Uniform Gifts to Minors Act

			                                 
     (State)

     Additional abbreviations may also be used though not in the above list.

























































<PAGE>                              - 70 -
	                                     EXHIBIT D

	                     PRELIMINARY NOTICE OF MANDATORY TENDER



	                                   EXHIBIT E

	                       NOTICE OF CANCELED MANDATORY TENDER



	                                   EXHIBIT F

	                       NOTICE OF ELECTION TO RETAIN BONDS





























































<PAGE>                              - 71 -
                       REVOLVING CREDIT LOAN AGREEMENT

                                  	between

                   	AMERICA FIRST APARTMENT INVESTORS, L.P.

                                    	and

                     	THE FIRST NATIONAL BANK OF BOSTON 

                          	As of December 19, 1996

































































<PAGE>                              - i -
                             	TABLE OF CONTENTS

Section									 

1.	  DEFINITIONS AND RULES OF INTERPRETATION	                             8


1.1	 Definitions	                                                         8
1.2 	Rules of Interpretation	                                            17

2.	  REVOLVING CREDIT FACILITY	                                          18


2.1 	Agreement to Make Loan	                                             18
2.2 	Notice and Manner of Borrowing of Loans	                            18
2.3	 Purpose of Loan	                                                    19
2.4	 Advances Do Not Constitute a Waiver	                                19

3.	  THE NOTE, INTEREST RATE OPTIONS, REPAYMENT OF LOAN	                 19


3.1	 The Note	                                                           19
3.2	 The Record	                                                         19
3.3	 Interest on the Loan	                                               20
3.4	 Default Interest/Late Charges	                                      20
3.5	 Prepayment	                                                         20
3.6	 Required Principal Reduction	                                       20
3.7	 Maturity	                                                           20
3.8	 Extension of Maturity Date	                                         20

4.	  COMMITMENT FEE; PAYMENTS AND COMPUTATIONS	                          21


4.1	 Commitment Fee	                                                     21
4.2 	Facility Fee	                                                       21
4.3	 Payments	                                                           21
4.4	 Additional Costs, Etc.	                                             21
4.5	 Capital Adequacy	                                                   23
4.6	 Certificate	                                                        23
4.7	 Charges Against Accounts	                                           23

5.	  COLLATERAL SECURITY AND GUARANTY	                                   23


5.1	 Collateral	                                                         23
5.2	 Substitution of Collateral	                                         24

6.	  REPRESENTATIONS, WARRANTIES AND COVENANTS	                          24


6.1	 Organization; Authority, Etc.	                                      24
6.2	 Title to Assets	                                                    25
6.3	 Financial Statements	                                               25
6.4	 Financial Statements, No Material Changes, Etc.	                    26
6.5	 Franchises, Patents, Copyrights, Etc.	                              26
6.6	 Litigation	                                                         26
6.7	 No Materially Adverse Contracts, Etc.	                              27
6.8	 Compliance With Other Instruments, Laws, Etc.	                      27
6.9	 Tax Status	                                                         27
6.10	No Event of Default	                                                28
6.11	Setoff, Etc.	                                                       28
6.12	Certain Transactions	                                               28
6.13	Subsidiaries	                                                       28
6.14	Partners	                                                           28
6.15	ERISA Plan	                                                         28
6.16	Availability of Utilities	                                          28
6.17	Access	                                                             28
6.18	Condition of Mortgaged Property                                    	29
6.19	Compliance with Requirements	                                       29
6.20	Project Approvals	                                                  29
6.21	Other Contracts	                                                    29
6.22	Violations	                                                         30
6.23	Other Representation	                                               30
6.24	Land Trustee and Trust Agreement	                                   30


<PAGE>                              - ii -
7.	  AFFIRMATIVE COVENANTS OF THE BORROWER	                              31


7.1	 Punctual Payment	                                                   31
7.2	 Records and Accounts	                                               31
7.3	 Financial Statements, Certificates and Information	                 31
7.4	 Insurance	                                                          33
7.5	 Liens and Other Charges	                                            33
7.6	 Inspection of Collateral, Other Properties and Books, Appraisals	   34
7.7 	Compliance with Laws, Contracts, Licenses, and Permits             	34
7.8	 Leases	                                                             34
7.9	 Further Assurance of Title	                                         35
7.10	Publicity	                                                          35
7.11	Further Assurances	                                                 35
7.12	Notices	                                                            35
7.13	Management Contract	                                                36

8.  	NEGATIVE COVENANTS OF THE BORROWER	                                 36


8.1	 Restrictions on Easements, Covenants and Restrictions	              36
8.2	 No Amendments, Terminations or Waivers	                             37
8.3	 Restrictions on Indebtedness	                                       37
8.4 	Restrictions on Liens, Etc.	                                        38
8.5	 Restrictions on Loans and Investments	                              39
8.6	 Merger, Consolidation, Conversion, and Disposition of Assets	       40
8.7	 Sale and Leaseback	                                                 40
8.8	 Distributions	                                                      40
8.9	 Financial Covenants	                                                40

9.  	CONDITIONS TO CLOSING AND ADVANCE OF LOAN PROCEEDS	                 41


9.1 	Loan Documents                                                     	41
9.2	 Contracts	                                                          41
9.3	 Leases	                                                             42
9.4	 Certified Copies of Organization Documents	                         42
9.5	 Resolutions	                                                        42
9.6	 Incumbency Certificate; Authorized Signers	                         42
9.7	 Validity of Liens	                                                  42
9.8	 Deliveries	                                                         42
9.9 	Legal Opinions	                                                     44
9.10	Lien Search	                                                        44
9.11	Appraisal	                                                          44
9.12	Commitment Fee	                                                     44
9.13	Performance; No Default	                                            44
9.14	Representations and Warranties	                                     44
9.15	Proceedings and Documents	                                          44
9.16	Waiver	                                                             45

10.	 EVENTS OF DEFAULT AND REMEDIES	                                     45


10.1	Events of Default	                                                  45
10.2	Termination of Advances and Acceleration	                           48
10.3	Remedies	                                                           49
10.4	Distribution of Collateral Proceeds	                                49
10.5	Power of Attorney	                                                  50
10.6	Waivers                                                            	50

11.	 SETOFF	                                                             50



12.	 EXPENSES	                                                           50



13. 	INDEMNIFICATION	                                                    51



14. 	LIABILITY OF THE LENDER	                                            52



<PAGE>                              - iii -
15.	 RIGHTS OF THIRD PARTIES	                                            52



16. 	SURVIVAL OF COVENANTS, ETC.	                                        53



17.	 ASSIGNMENT AND PARTICIPATION	                                       53


17.1	Conditions to Assignment by Lender	                                 53
17.2	New Notes, Agreement	                                               53
17.3	Participations	                                                     54
17.4	Pledge by the Lender	                                               54
17.5	No Assignment by the Borrower	                                      54

18. 	RELATIONSHIP	                                                       54



19.	 NOTICES	                                                            54



20.	 GOVERNING LAW	                                                      56



21. 	CONSENT TO JURISDICTION; WAIVERS	                                   56



22.	 HEADINGS	                                                           56



23. 	COUNTERPARTS	                                                       56



24. 	ENTIRE AGREEMENT, ETC.	                                             56



25.	 CONSENTS, AMENDMENTS, WAIVERS, ETC.	                                57



26.	 TIME OF THE ESSENCE	                                                57



27.	 SEVERABILITY	                                                       57



28. 	LIMITED RECOURSE	                                                   57


















<PAGE>                              - iv -
	EXHIBITS


A -	Interest Terms and Provisions
B -	Covenant Compliance Worksheet and Certificate
C -	Notice of Borrowing
 
	SCHEDULES


6.12	 -	Insider Transactions
6.13	 - Subsidiaries
6.14	 -	Partners, Beneficiaries, Etc. 
6.20	 -	Project Approvals
8.3	  -	Existing Indebtedness
8.4	  -	Existing Liens
8.5	  -	Existing Investments



























































<PAGE>                              - v -
                               LOAN AGREEMENT


     This LOAN AGREEMENT is made as of the _____ day of December, 1996, by and 
among America First Apartment Investors, L.P. (the "Borrower"), a limited 
partnership organized under the laws of the State of Delaware, having its 
principal place of business at 1004 Farnam Street, Omaha, Nebraska 68102 and 
THE FIRST NATIONAL BANK OF BOSTON (the "Lender"), a national banking 
association, having its principal executive offices at 100 Federal Street, 
Boston, Massachusetts 02110. 

     1. DEFINITIONS AND RULES OF INTERPRETATION.

     1.1 Definitions.  The following terms as used in this Agreement, any 
Exhibit hereto, or in any other Loan Document (unless otherwise defined 
therein) shall have the meanings set forth in this Section 1.  Further, any 
and all terms which are defined in Exhibit A, annexed hereto, shall when used 
herein have the meaning as set forth in such Exhibit A.

     Acquired Property.  See Section 2.3.

     Advance.  Any disbursement of the proceeds of the Loan made or to be made 
by the Lender pursuant to the terms of this Agree-ment. 

     Agreement.  This Loan Agreement, including the Schedules and Exhibits 
hereto.

     Appraisal.  An appraisal of the market value of each Mortgaged Property 
performed by a qualified independent appraiser approved by the Lender.

     Appraised Value.  The market value of each Mortgaged Property determined 
by the most recent Appraisal obtained pursu-ant hereto, as such may be 
reviewed and adjusted by the Lender.  

     Arizona Mortgaged Property.   The real property located in Mesa, Maricopa 
County Arizona, known as Coral Point Apartments, and consisting of 
approximately 15.60715 acres, as described in Exhibit A to the Arizona 
Security Deed, together with (i) the residential apartment complex located 
thereon known as Coral Point, consisting of 336 apartment units in 20 
buildings, and (ii) all materials, furnishings, fixtures, furniture, 
machinery, equipment and all items of tangible or intangible per-sonal 
property now or hereafter owned or acquired by the Borrow-er, and used in 
connection with the operation, ownership, or maintenance thereof.

     Arizona Security Deed.  The Deed of Trust, dated or to be dated on or 
prior to the Closing Date, made by the Borrower in favor of the Lender, to be 
recorded with the Maricopa County Registry of Deeds, Arizona.

     Borrowing Base.  At any time, the lesser of (i) the sum of seventy (70%) 
percent of the Ap-praised Value of each Mortgaged Property or (ii) the sum of 
(x) Mortgaged Property Operating Cash Flow divided by (y) 1.35, with the 
resulting quotient thereof divided by (z) the Mortgage Constant [(x/y)/z].

     Borrowing Conditions.  (i) No event has occurred which is, or solely with 
the passage of time would be, an Event of Default, (ii) the outstanding 
principal balance of the Loan shall not exceed the Maximum Commitment Amount, 
(iii) the Borrower is, and will continue to be after the Advance, in 
compliance with the financial covenants provided for in Section 8.9, herein, 
(iv) the Lender receives satisfactory evidence of the continued priority of 
the Advance, including, without limitation, an endorsement to the Title 
Policy, and (v) the use of the Advance is in compliance with Section 2.3, 
hereof.

     Business Day.  Any day on which the Lender is open for the transaction of 
banking business in Boston, Massachusetts.

     Closing Date.  The first date on which the conditions set forth in 
Section 9 have been satisfied.

     Code.  The Internal Revenue Code of 1986 and the regulations thereunder, 
all as amended and in effect from time to time.





<PAGE>                              - 1 -
     Collateral.  All of the property, rights and interests of the Borrower 
that are or are intended to be subject to the security interests, assignments, 
and mortgage liens created by the Security Documents, including, without 
limitation, the Mortgaged Property.

     Consolidated or consolidated.  With reference to any term defined herein, 
that term as applied to the Borrower and its Subsidiaries, consolidated in 
accordance with generally accepted accounting principles.  At the option of 
the Lender, any financial reports required hereunder shall be submitted, and 
any financial covenants established hereunder shall be calculated, on a 
Consolidated basis by the Borrower.

     Consolidated Interest. For any four (4) calendar quarters of the 
Borrower, determined on an annualized quarterly basis, all interest incurred, 
accrued or capitalized by the Borrower with respect to the Obligations and any 
other Indebtedness.

     Debt Service Charges.  For any four (4) calendar quarters of the 
Bor-rower, the sum of (i) the Consolidated Interest for such period, plus (ii) 
fees payable hereunder, under the other Loan Documents, in connection with the 
Obligations, or in connection with any other Indebtedness plus (iii) current 
maturities of the Obligations and of any other Indebtedness (except for such 
Indebtedness constituting current obligations for the purchase of goods and 
services in the ordinary course of business), for such period, in each case 
determined in accordance with generally accepted accounting principles.

     Default.  A condition or event which would, with either the giving of 
notice or lapse of time or both, constitute an Event of Default. 

     Default Rate.  See Section 3.4. 

     Distribution.  The (i) declaration or payment of any dividend, (ii) 
distribution of cash or other property, (iii) purchase, redemption, or other 
retirement (directly or indirectly), or (iv) other distribution, in each case, 
of, on or in respect of any shares of any class of capital stock, partnership 
interests, or other beneficial or ownership interests of the Borrower. 

     Due Diligence Requirements.  With respect to each Substitute Mortgaged 
Property, the Borrower shall satisfy, in a manner acceptable to the Lender, 
such due diligence requirements as are typical and usual for first mortgage 
real estate loans to be secured by the subject property, including, without 
limitation, the following:

          a.	Property Financial Analysis  A financial analysis, including a 
     review of the lease(s), historical operating statements, cash flow 
     projections, capital expenditure budgets, and market data. 

          b.	Property Inspection  An inspection by an officer of the Lender, 
     as well as representatives of any other participating banks, if 
     applicable.

          c.	Environmental Site Assessment  An Environmental site assessment, 
     dated no later than six (6) months before closing (or substitution of 
     collateral) which indicates that the subject property is free from any 
     environmentally hazardous materials, oil, asbestos and lead paint (other 
     than de minimis quantities incidental to the operation of a multi-family 
     residence, such as cleaning supplies and pool chemicals), prepared by a 
     firm acceptable to the Lender.

          d.	Appraisal  An Appraisal supporting an Appraised Value acceptable 
     to the Lender.

          e.	Structural and Building Inspection Report  A structural 
     inspection report completed by a construction consultant approved by the 
     Lender, with respect to the acceptable condition of the Substitute 
     Mortgaged Property and all building systems.

          f.	Capital Expenditure Budget  A capital expenditure budget, 
     together with evidence that there is adequate cash flow available or 
     reserves maintained to pay for all capital expenditures as shown on the 
     budget.

          g.	Estoppel Certificates and Subordination Agreements  To the extent 
     applicable, Estoppel Certificates and Subordination, Non-Disturbance and 
     Attornment Agreements from all commercial tenants.

<PAGE>                              - 2 -
          h.	General Real Estate Requirements  All requirements typical of a 
     first mortgage real estate loan, including, without limitation, (i) 
     evidence all of applicable permits, licenses, and approvals, (ii) 
     mortgagee title insurance from an acceptable insurer, with such 
     co-insurance as may be required by the Lender, (iii) instrument survey, 
     with surveyor's certificate, (iv) flood insurance or evidence of 
     inapplicability, (v) property insurance in an acceptable amount, (vi) 
     evidence of payment of real estate taxes, and (vii) rent roll and copies 
     of lease, if requested.

     EBITDA.  With respect to any four (4) calendar quarters of the Borrower, 
an amount determined on a consolidated basis in a manner acceptable to the 
Lender in accordance with generally accepted accounting principles, and equal 
to the earnings of the Borrower from continuing operations (excluding 
extraordinary gains) before interest, taxes, depreciation and amortization. 

     ERISA Plan.  Any employee benefit, employee pension, or multi employer 
plan within the meaning of the Employee Retirement Income Security Act of 
1974, as amended and in effect from time to time.

     Event of Default.  See Section 10.1.

     Extension Term.  If the Maturity Date is extended as provided in Section 
3.8, hereof, the period from December __, 1997 until the payment in full of 
the Obligations and the termination of the Loan.

     Financing Statements.  Uniform Commercial Code Form 1 Financing 
Statement(s) from the Borrower in favor of the Lender. 

     General Partner.  America First Capital Associates Limited Partnership 
Four, a limited partnership organized under the laws of the State of Delaware, 
having its principal place of business at 1004 Farnam Street, Omaha, Nebraska 
68102.

     Generally accepted accounting principles.  Principles that are (a) 
consistent with the principles promulgated or adopted by the Financial 
Accounting Standards Board and its predecessors, as in effect from time to 
time and (b) consistently applied with past financial statements of the 
Borrower adopting the same principles; provided that a certified public 
accountant would, insofar as the use of such accounting principles is 
pertinent, be in a position to deliver an unqualified opinion (other than a 
qualification regarding changes in generally accepted accounting principles) 
as to financial statements in which such principles have been properly 
applied. 

     Governmental Authority.  The United States of America, the  State in 
which the Mortgaged Property is located, -the city or town in which the 
Mortgaged Property is located, and any political subdivision, agency, 
authority, depart-ment, commission, board, bureau, or instrumentality of any 
of them.  Guaranty.  The Unconditional Guaranty of Payment and Per-formance, 
dated or to be dated on or prior to the Closing Date, made by the General 
Partner in favor of the Lender. 

     Illinois Mortgaged Property.   The real property located in Aurora, Kane 
and Dupage Counties, Illinois, as described in Exhibit A to the Illinois 
Security Deed, together with (i) the residential apartment complex located 
thereon known as Covey at Fox Valley, consisting of 216 apartment units in 27 
buildings, and (ii) all materials, furnishings, fixtures, furniture, 
machinery, equipment and all items of tangible or intangible per-sonal 
property now or hereafter owned or acquired by the Borrow-er, and used in 
connection with the operation, ownership, or maintenance thereof, such real 
property being owned on the record title by the Land Trustee, for the benefit 
of the Borrower.

     Illinois Security Deed.  The Mortgage and Security Agreement, dated or to 
be dated on or prior to the Closing Date, made by the Land Trustee and the 
Borrower in favor of the Lender, to be recorded with the Kane County and 
Dupage County Registry of Deeds, Illinois.








<PAGE>                              - 3 -
     Indebtedness.  All obligations, contingent and otherwise, that in 
accordance with generally accepted accounting principles should be classified 
upon the obligor's balance sheet as liabil-ities, or to which reference should 
be made by footnotes thereto, including in any event and whether or not so 
classified:  (a) all debt and similar monetary obligations, whether direct or 
indi-rect; (b) all liabilities secured by any mortgage, pledge, security 
interest, lien, charge, or other encumbrance existing on property owned or 
acquired subject thereto, whether or not the liability secured thereby shall 
have been assumed; (c) all liabilities under capitalized leases; and (d) all 
guarantees, endorsements and other contingent obligations whether direct or 
indirect in respect of indebtedness of others, includ-ing the obligations to 
reimburse the issuer in respect of any letters of credit. 

     Indemnity Agreement.  The Indemnity Agreement Regarding Hazardous 
Materials, dated or to be dated on or prior to the Closing Date, made by the 
Borrower and the General Partner in favor of the Lender. 

     Investments.  All expenditures made and all liabilities incurred 
(contingently or otherwise) for the acquisition of stock or Indebtedness of, 
or for loans, advances, capital contributions or transfers of property to, or 
in respect to any guaranties (or other commitments as described under 
Indebtedness), or obliga-tions of, any Person. 

     Land Trustee.  American National Bank and Trust Company of Chicago, a 
national banking association, with its principal offices at 33 LaSalle Street, 
Chicago, Illinois 60690, as trustee under the Trust Agreement,  together with 
any successor or assign thereof.

     Leases.  Any and all leases, licenses and agreements, whether written or 
oral, relating to the use or occupation of space in the Mortgaged Property by 
Persons other than the Borrower. 

     Loan.  The revolving credit facility which is the subject of this 
Agreement. 

     Loan Documents.  This Agreement, the Note, the Indemnity Agreement, the 
Guaranty, and the Security Documents, and all other agreements, documents and 
instruments now or hereafter evidencing, securing or otherwise relating to the 
Loan. 

     Management Company.  America First Properties Management, LLC and any 
other Person with whom, with the prior consent of the Lender,  the Borrower 
will enter into an agreement to manage the operations of the Mortgaged 
Property.

     Management Contract.  The contract(s) entered into, or to be entered 
into, between the Borrower and the Management Company, providing for the 
management of the operation of the Mortgaged Property by the Management 
Company, together with any renewals or replacements thereof.

     Maturity Date. December 19, 1997; provided, however, if extended as 
provided in Section 3.8, herein, December 19, 1998.

     Maximum Commitment Amount.  The lesser of (i) Fifteen Million 
($15,000,000.00) Dollars and (ii) the Borrowing Base.

     Mortgage Constant.  The fixed mortgage constant determined at any time in 
a manner acceptable to the Lender and based upon (i) an assumed interest rate 
equal to the seven (7) year Treasury Rate plus two-hundred (200) basis points, 
and (ii) a twenty-five (25) year mortgage style amortization schedule.

     Mortgaged Property.  The Arizona Mortgaged Property, the Illinois 
Mortgaged Property, and each Substitute Mortgage Property, exclusive of any 
Released Mortgaged Property. 

     Mortgaged Property Operating Cash Flow. At any time, an amount determined 
for the prior twelve (12) months in a manner acceptable to the Lender in 
accordance with generally accepted accounting principles and equal to the sum 
of, for the Mortgaged Property, the gross cash receipts less the operating 
costs and expenses (including a replacement reserve of $200.00 per apartment 
unit per year).  In determining Mortgaged Property Operating Cash Flow, there 
shall be no deduction from gross cash receipts for depreciation, amortization, 
and other non-cash items.



<PAGE>                              - 4 -
     Note.  The Note in the principal face amount of Fifteen Million 
($15,000,000.00) Dollars dated as of the date hereof, made by the Borrower to 
the order of the Lender, together with any extension, renewal, replacement, 
substitution, or modification thereof. 

     Notice of Borrowing.  See Section 2.2.

     Obligations.  All indebtedness, obligations and liabilities of the 
Borrower to the Lender, existing on the date of this Agreement or arising 
thereafter, direct or indirect, joint or several, absolute or contingent, 
matured or unmatured, liquidated or unliquidated, secured or unsecured, 
arising by contract, operation of law or otherwise.

     Obligor(s). The Borrower and the General Partner.

     Operating Cash Flow.  With respect to any four (4) calendar quarters of 
the Borrower, an amount determined in a manner acceptable to the Lender in 
accordance with generally accepted accounting principles and equal to the 
gross cash receipts (after elimination of any extraordinary items of income) 
less all operating costs and ex-penses.  In determining Operating Cash Flow, 
there shall be no deduction from gross cash receipts for depreciation, 
amortization, and other non-cash items.

      Organizational Documents.  For any corporation, partnership, trust, 
limited liability company, limited liability partnership, unincorporated 
association, business or other legal entity, the documents pursuant to which 
such entity has been established or organized, as such documents may be 
amended from time to time.

     Outstanding.  With respect to the Advances or the Loan, the aggregate 
unpaid principal thereof as of any date of determina-tion. 

     Permitted Liens.  Liens, security interests and other encumbrances, 
permitted by Section 8.4.

     Person.  Any individual, corporation, partnership, trust, unincorporated 
association, business, or other legal entity, and any government or any 
governmental agency or political subdivi-sion thereof. 

     Project Approvals.  All approvals, consents, waivers, orders, agreements, 
acknowledgments, authorizations, permits and licenses required under 
applicable Requirements or under the terms of any restriction, covenant or 
easement affecting the Mortgaged Property, or otherwise necessary or 
desirable, for the ownership,  acquisition, -use, occupancy and operation of 
the Mortgaged Property, whether obtained from a Governmental Au-thority or any 
other Person. 

     Record.  Any record, including computer records, maintained by the Lender 
with respect to the balance due under the Loan.

 	   Released Mortgaged Property. Any Mortgaged Property as to which the 
Lender has released its interest as provided in Section 5.2, hereof.

     Requirements.  Any law, ordinance, code, order, rule or regulation of any 
Governmental Authority relating in any way to the acquisition, ownership, use, 
occupancy and operation of the Mortgaged Property.

     Security Deed.  (i) The Arizona Security Deed and the Illinois Security 
Deed, each dated or to be dated on or prior to the Closing Date, made by the 
Borrower in favor of the Lender and (ii) each Substitute Security Deed, to be 
dated after the date hereof, made by the Land Trustee and the Borrower in 
favor of the Lender.

     Security Documents.  The Security Deed, the Assignments of Leases and 
Rents dated as of the date hereof, the Financing Statements and the Guaranty, 
and any other agreement, document or instrument now or hereafter securing the 
Obligations.

     Subsidiary.  Any corporation, partnership, association, trust, or other 
business entity of which the designated parent shall at any time own directly, 
or indirectly through a Subsidiary or Subsidiaries at least a majority (by 
number of votes) of the outstanding voting interests therein.

     Substitute Collateral.  See Section 5.2. 


<PAGE>                              - 5 -
     Substitute Mortgaged Property.   The real property located, as may be 
described from time to time in Exhibit A to each Substitute Security Deed, 
together with (i) the buildings and other improvements located thereon and 
(ii) all materials, furnishings, fixtures, furniture, machinery, equipment and 
all items of tangible or intangible per-sonal property now or hereafter owned 
or acquired by the Borrow-er, and used in connection with the operation, 
ownership, or maintenance thereof.

     Substitute Security Deed.  The Mortgage and Security Agreement, executed 
on or after the date hereof, made by the Borrower in favor of the Lender, to 
be recorded with the appropriate Registry of Deeds, for each parcel of real 
estate which is accepted by the Lender as Substitute Collateral.

     Substitution Notice.  See Section 5.2.

     Survey.  An instrument survey of the Mortgaged Property prepared in 
accordance with the Lender's survey require-ments, such survey to be 
satisfactory to the Lender in form and substance.

     Surveyor Certificate.  With respect to any Survey, a cer-tificate 
executed by the surveyor who prepares such Survey dated as of a recent date 
and containing such information relating to the Mortgaged Property as the 
Lender or the Title Insurance Company may require, such certificate to be 
satisfactory to the Lender in form and substance.

     Taking.  Any condemnation for public use of, or damage by reason of, the 
action of any Governmental Authority, or any transfer by private sale in lieu 
thereof, either temporarily or permanently.

     Title Insurance Company.  Lawyers Title Insurance Company, a Virginia 
corporation, with a usual place of business at 40 E. Mitchell, Phoenix, 
Arizona 85012.

     Title Policy.  An ALTA standard form title insurance policy issued by the 
Title Insurance Company (with such reinsurance or co-insurance as the Lender 
may reasonably require, any such reinsurance to be with direct access 
endorsements) in an amount not less than Fifteen Million ($15,000,000.00) 
Dollars insuring the priority of the Security Deed and that the Borrower holds 
marketable fee simple title to the Arizona Mortgaged Property and the Land 
Trustee holds marketable fee simple title to the Illinois Mortgaged Property 
(allocated in a manner acceptable to the Lender), subject only to such 
exceptions as the Lender may reasonably approve, and shall contain such 
endorsements and affirmative insurance as the Lender in its discretion may 
reasonably require.

     Total Tangible Assets.  The value of all tangible assets of the Borrower 
determined on a consolidated basis in a manner acceptable to the Lender.  In 
determining the Total Tangible Assets, (i) for each multi-family property as 
to which the Borrower owns the fee interest, the value shall be (x) the 
operating cash flow for such property (determined (1) for the prior twelve 
(12) month period and (2) in the same manner as set forth in the definition of 
Mortgaged Property Operating Cash Flow, but for the subject property), less a 
replacement reserve of $200.00 per apartment unit per year, divided by (y) a 
cap rate of ten (10%) percent, and (ii) for each mortgage loan owned by the 
Borrower, a value as accounted for in accordance with generally accepted 
accounting principles.

     Total Liabilities.  All liabilities of the Borrower determined in 
accordance with generally accepted accounting principles and all Indebtedness 
of the Borrower, whether or not so classified.

     Treasury Rate. The latest published rate for United States Treasury Notes 
or Bills as published weekly in the Federal Reserve Statistical Release 
H.15(519) of Selected Interest Rates for the interest rate which corresponds 
to a term equal to seven (7) years.

     Trust Agreement. A certain Trust Agreement dated June 21, 1989, also 
known as Trust No. 108642-05, with the Land Trustee as the trustee thereof, 
pursuant to which Trust Agreement the Borrower, as successor by merger with 
America First Tax Exempt Mortgage Fund 2 Limited Partnership, is the holder of 
the 100% beneficial interest.

     1.2 Rules of Interpretation.



<PAGE>                              - 6 -
     (1) A reference to any Loan Document, agreement, budget, document or 
schedule shall include such agreement, budget, document or schedule as 
revised, amended, modified or supplemented from time to time in accordance 
with its terms and the terms of this Agreement. 

     (2) A reference to any Exhibit hereto shall be deemed to specifically 
incorporate the terms and provisions of such Exhibit herein.

     (3) The singular includes the plural and the plural includes the 
singular. 

     (4) A reference to any law includes any amendment or modification to such 
law. 

     (5) A reference to any Person includes its permitted successors and 
permitted assigns. 

     (6) Accounting terms not otherwise defined herein have the meaning 
assigned to them by generally accepted accounting principles applied on a 
consistent basis by the accounting entity to which they refer. 

     (7) The words "approval" and "approved", as the context so determines, 
means an approval in writing given to the party seeking approval after full 
and fair disclosure to the party giving approval of all material facts 
necessary in order to determine whether approval should be granted. 

     (8) Reference to a particular "Section" refers to that section of this 
Agreement unless otherwise indicated. 

     2. REVOLVING CREDIT FACILITY.

     2.1 Agreement to Make Loan.   Subject to the terms and conditions of this 
Agreement and satisfaction of the Borrowing Conditions, the Lender agrees to 
lend to the Borrower and the Borrower agrees to borrow from the Lender, from  
time to time, Advances,  provided that the aggregate principal amount of the 
Loan at any one time outstanding hereunder shall not exceed the Maximum 
Commitment Amount.  The Borrower may borrow, prepay and reborrow, from the 
date of this Agreement until the Maturity Date, the full amount of the Maximum 
Commitment Amount or any lesser sum that is at least $1,000,000.00 and an 
integral multiple of $500,000.00.  Any Advance not repaid by the Maturity Date 
shall be due and payable on the Maturity Date.

     2.2 Notice and Manner of Borrowing of Loans. 

     (1) Whenever the Borrower desires to obtain an Advance the Borrower shall 
notify the Lender by telex, telegraph or telephone received no later than 
10:00 a.m. on the date three (3) Business Days before the day on which the 
requested Advance is to be made.  Such notice shall specify the effective date 
and amount of each Advance, subject to the limitations set forth in Section 
2.1, and the purpose of such Advance.  Each such notification (a "Notice of 
Borrowing") shall be immediately followed by a written confirmation thereof by 
the Borrower in the form of Exhibit C, annexed hereto,  provided that if such 
written confirmation differs in any mate-rial respect from the action taken by 
the Lender, the records of the Lender shall control absent manifest error.  

     (2) Each request for an Advance as provided above shall constitute a 
certification by the Borrower that Borrowing Conditions have been satisfied as 
of the date of the subject request.

     (3) Subject to the terms and conditions hereof and the determination by 
the Lender that the Borrowing Conditions have been satisfied, including, 
without limitation, receipt of an endorsement to the Title Policy evidencing 
the continued priority of the Advance, the Lender shall make each Advance on 
the effective date specified therefor by crediting the amount of such Advance 
to the Borrower's demand deposit account with the Lender.  

     2.3 Purpose of Loan. The proceeds of the Loan shall be used by the 
Borrower (or a wholly owned Subsidiary of the Borrower) to purchase apartment 
properties (the "Acquired Property).

     2.4 Advances Do Not Constitute a Waiver.  No Advance made by the Lender 
shall constitute a waiver of any of the terms and conditions of this 
Agreement, nor, in the event the Borrower fails to satisfy any such condition, 
shall any such Advance have the effect of precluding the Lender from 
thereafter declaring such failure to satisfy a condition to be an Event of 
Default. 
<PAGE>                              - 7 -
     3. THE NOTE, INTEREST RATE OPTIONS, REPAYMENT OF LOAN.

     3.1 The Note.  The obligation of the Borrower to pay the aggregate unpaid 
principal amount of all Advances made by the Lender hereunder plus accrued 
interest thereon, shall be evidenced by the Note.  In the event the Note is 
lost, destroyed or mutilated at any time prior to payment in full of the 
indebtedness evidenced thereby, the Borrower shall execute a new note 
substantially in the form of the Note.  The Note shall not be necessary to 
establish the indebtedness of the Borrower to the Lender on account of 
Advances made under this Agreement. 

     3.2 The Record.  The Borrower irrevocably authorizes the Lender to make 
or cause to be made, at or about the time of any Advance or at the time of 
receipt of any payment of the principal of the Note, an appropriate notation 
on the Lender's Record reflecting the making of such Advance or (as the case 
may be) the receipt of such payment.  The outstanding amount of the Loan set 
forth on the Lender's Record shall be prima facie evidence of the principal 
amount thereof owing and unpaid to the Lender, but the failure to record, or 
any error in so recording, any such amount on the Lender's Record shall not 
limit or otherwise affect the obligations of the Borrower here-under or under 
the Note to make payments of principal or interest on the Note when due.  
Further, the outstanding amount of the Loan as reflected on the Record from 
time to time shall be considered correct and binding on the Borrower unless 
within twenty(20) Business Days after receipt of any notice by the Borrower of 
such outstanding amount, the Borrower shall notify the Lender to the contrary. 

     3.3 Interest on the Loan.  The Loan shall bear interest at the interest 
rate, and such interest shall be payable, as set forth in Exhibit A.

     3.4 Default Interest/Late Charges.

     (1) Upon the occurrence of an Event of Default, at the Lender's option, 
the Loan and all other amounts payable hereunder or under any of the other 
Loan Documents shall bear interest payable on demand at a rate per annum equal 
to four percent (4%) above the then applicable highest rate of interest under 
the Note until such amount shall be paid in full (after as well as before 
judgment) (the "Default Rate").

     (2) In addition to other charges described in the Loan Documents, and 
without derogating from the right of the Lender to accelerate the Obligations 
upon the occurrence of an Event of Default, the Borrower shall pay to the 
Lender a late charge equal to three (3%) percent of any payment due under the 
Note which is not paid within ten (10) days of the due date thereof. 

     3.5 Prepayment.  The Borrower shall have the right at any time to prepay 
the Note on or before the Maturity Date, as a whole, or in part; provided, 
however, any such prepayment is in an amount not less than $1,000,000.00 and 
an integral multiple of $500,000.00. 

     3.6 Required Principal Reduction. In the event at any time the 
outstanding principal balance of the Loan exceeds the Borrowing Base, the 
Borrower shall pay to the Lender on demand, such excess amount.

     3.7 Maturity.  The Borrower promises to pay on the Matu-rity Date, and 
there shall become absolutely due and payable on the Maturity Date, all 
principal of the Loan outstanding on such date, together with any and all 
accrued and unpaid interest thereon.

      3.8 Extension of Maturity Date.  The Borrower shall have the right to 
the extend the Maturity Date from December 19, 1997 to December 19, 1998; 
subject to (i) the Borrower providing to the Lender a written request for such 
extension, such written request to be provided to the Lender no earlier than 
ninety (90) days and no later than thirty(30) days before the then applicable 
Maturity Date, (ii) the Borrower paying to the Lender with such written 
request an extension fee equal to Seventy-Five Thousand Dollars ($75,000.00), 
which extension fee shall be non-refundable, and (iii) there is occurring and 
continuing on the then applicable Maturity Date no Default or Event of 
Default.  The extension of the Maturity Date as requested above shall not be 
effective until the Lender has provided the Borrower with written notice of 
the satisfaction of the conditions provided for herein and the extension of 
the Maturity Date.





<PAGE>                              - 8 -
     4. COMMITMENT FEE; PAYMENTS AND COMPUTATIONS.

     4.1 Commitment Fee.  The Borrower agrees to pay to the Lender a 
commitment fee in the amount of $150,000.00, of which $75,000.00 was paid upon 
the acceptance of the Lender's Commitment Letter dated October 30, 1996 and of 
which $75,000.00 shall be paid on the Closing Date.  

     4.2 Facility Fee.   A facility fee at the rate of one-quarter of one 
percent (0.25%) per annum on the unused portion of the Loan from the Closing 
Date to the Maturity Date will be payable quarterly in arrears, based upon the 
amount by which the Maximum Commitment Amount exceeds the average unpaid 
principal balance of the Loan during the subject quarter.

     4.3 Payments.

     (1) All payments of principal, interest, fees and any other amounts due 
under the Note or under any of the other Loan Documents shall be sent to the 
Lender at P.O. Box 3012, Boston, Massachusetts 02241-3012, or at such other 
location in the Boston, Massachusetts area that the Lender may from time to 
time designate, in the billing invoice or otherwise, which payment may be made 
by check or wire transfer of immediately available funds in lawful money of 
the United States. 

     (2) All payments by the Borrower under the Note and under any of the 
other Loan Documents shall be made without setoff or counterclaim and free and 
clear of and without deduc-tion for any taxes, levies, imposts, duties, 
charges, fees, deductions, withholdings, compulsory loans, restrictions or 
conditions of any nature now or hereafter imposed or levied by any 
jurisdiction or any political subdivision thereof or taxing or other authority 
therein unless the Borrower is compelled by law to make such deduction or 
withholding.

     4.4 Additional Costs, Etc.  During the Extension Term (and specifically 
not for any period prior to the Extension Term), if any present or future 
applicable law, which expression, as used herein, includes statutes, rules and 
regulations thereunder and interpretations thereof by any competent court or 
by any governmental or other regulatory body or official charged with the 
administration or the interpretation thereof and requests, directives, 
instructions and notices at any time or from time to time hereafter made upon 
or otherwise issued to the Lender by any central bank or other fiscal, 
monetary or other authority (whether or not having the force of law), shall:

     (a)	subject the Lender to any tax, levy, impost, duty, charge, fee, 
deduction or withholding of any nature with respect to this Agreement, the 
other Loan Documents, or the Loans (other than taxes based upon or measured by 
the income or profits of the Lender), or

     (b)	materially change the basis of taxation (except for changes in taxes 
on income or profits) of payments to the Lender of the principal of or the 
interest on any Loans or any other amounts payable to the Lender under this 
Agreement or the other Loan Documents, or

     (c)	impose or increase or render applicable (other than to the extent 
specifically provided for elsewhere in this Agreement) any special deposit, 
reserve, assessment, liquidity, capital adequacy or other similar requirements 
(whether or not having the force of law) against assets held by, or deposits 
in or for the account of, or loans by, or commitments of an office of the 
Lender, or

     (d)	impose on the Lender any other conditions or re-quirements with 
respect to this Agreement, the other Loan Documents, the Loans, or any class 
of loans or commitments of which any of the Loans forms a part; and the result 
of any of the foregoing is

          (i)	to increase the cost to the Lender of making, funding, issuing, 
     renewing, extending or maintaining any of the Loans, or

          (ii)	to reduce the amount of principal, interest or other amount 
     payable to the Lender hereunder on account of any of the Loans, or

          (iii)	to require the Lender to make any payment or to forego any 
     interest or other sum payable hereunder, the amount of which payment or 
     foregone interest or other sum is calculated by reference to the gross 
     amount of any sum receivable or deemed received by the Lender from the 


<PAGE>                              - 9 -
     Borrower hereunder, then, and in each such case, the Borrower will, upon 
demand made by the Lender at any time and from time to time and as often as 
the occasion therefor may arise, pay to the Lender such additional amounts as 
will be sufficient to compensate the Lender for such additional cost, 
reduction, payment or foregone interest or other sum.

     4.5 Capital Adequacy.  During the Extension Term (and specifically not 
for any period prior to the Extension Term), if the Lender shall have 
determined that the adoption of any applicable law, rule, regulation, 
guideline, directive or request (whether or not having force of law) regarding 
capital requirements, or the interpretation or administration thereof by any 
governmental authority, central bank or comparable agency charged with the 
interpretation or administration thereof, or compliance by the Lender with any 
of the foregoing imposes or increases a requirement by the Lender to allocate 
capital resources to the Loans made, or to be made, hereunder, which has or 
would have the effect of reducing the return on the Lender's capital to a 
level below that which the Lender could have achieved (taking into 
consideration the Lender's then existing policies with respect to capital 
adequacy and assuming full utilization of the Lender's capital) but for such 
adoption, change or compliance, by any amount deemed by the Lender to be 
material: (i) the Lender shall promptly after its determination of such 
occurrence give notice thereof to the Borrower; and (ii) the Borrower shall 
pay to the Lender as an additional fee from time-to-time on demand such amount 
as the Lender certifies to be the amount that will compensate it for such 
reduction.  In determining such amounts, the Lender may use any reasonable 
averaging and attribution methods.

     4.6 Certificate.  A certificate setting forth any additional amounts 
payable pursuant to Section 4.4 or Section 4.5 and a brief explanation of such 
amounts which are due, submitted by the Lender to the Borrower, shall be prima 
facie evidence that such amounts are due and owing.

     4.7 Charges Against Accounts.  The Lender shall have the right, and the 
Borrower hereby irrevocably au-thorizes the Lender, to charge any account of 
the Borrower with the Lender, without the further approval of the Borrower, 
for (i) any installment of interest or principal due under the Note, (ii) any 
costs or expenses incurred by the Lender which are to be paid or reimbursed by 
the Borrower under the terms of this Agreement or any of the other Loan 
Documents or (iii) any other sums due to the Lender under the Note, this 
Agreement or any of the other Loan Documents, and any other Obligations, all 
to the extent that the same are not paid by the respective due dates thereof.

     5. COLLATERAL SECURITY AND GUARANTY.

     5.1 Collateral.  The Obligations shall be secured by a perfected first 
priority mortgage lien and security in the Collateral, whether now owned or 
hereafter acquired, pursuant to the terms of the Security Documents to which 
the Borrower is a party.  The Obligations shall also be guaranteed pursuant to 
the terms of the Guaranty. 

     5.2 Substitution of Collateral.

     (1) From time to time and at any time, the Borrower may request in 
writing (the "Substitution Request") that the Lender accept as collateral for 
the Obligations any fee owned parcel of real estate, owned by the Borrower and 
that, in conjunction with such Substitution Request, that the Lender release 
its interest in any Mortgaged Property then constituting part of the 
Collateral.

     (2) The Lender shall determine, in its sole discretion, based upon, among 
other factors, the Due Diligence Requirements, (i) to accept as collateral for 
the Obligations any such fee owned parcel of real estate, owned by the 
Borrower (the "Substitute Collateral") and (ii) to release its interest in any 
Mortgaged Property then constituting all or a portion of the Collateral.

     (3) In connection with any Substitution Request, the Borrower agrees, at 
the Borrower's sole cost and expense, to (i) deliver to the Lender any and all 
information and materials requested by the Lender with respect to the proposed 
Substitute Collateral, including, without limitation, those set forth in the 
Due Diligence Requirements, and (ii) execute any and all documentation 
requested by Lender or Lender's counsel to establish the interest of the 
Lender in the Substitute Collateral and   release the Released Mortgaged 
Property.



<PAGE>                              - 10 -
     6. REPRESENTATIONS, WARRANTIES AND COVENANTS.  The Borrower repre-sents, 
warrants, and covenants to the Lender as follows:

     6.1 Organization; Authority, Etc.

     (1) Organization; Good Standing.  The Borrower is a limited partnership 
duly organized under the laws of the State of Delaware pursuant to the 
Borrower's Organizational Documents, and is, and will at all times be, validly 
existing and in good standing under the laws of such State, and in each 
jurisdiction where required.  The General Partner is a limited partnership 
duly organized under the laws of the State of Delaware pursuant to the General 
Partner's Organizational Documents, and is, and will at all times be, validly 
existing, in good standing, and qualified to do business in each jurisdiction 
where required.  Each Obligor has, and will at all times have, all requisite 
power to own its property and conduct its business as now conducted and as 
presently contemplated. 

     (2) Authorization.  The execution, delivery and performance of this 
Agreement and the other Loan Documents to which any Obligor is or is to become 
a party and the transac-tions contem-plated hereby and thereby (i) are within 
the authority of such Obligor, (ii) have been duly authorized by all necessary 
proceed-ings on the part of such Obligor, (iii) do not conflict with or result 
in any breach or contravention of any provision of law, statute, rule or 
regulation to which such Obligor is subject or any judgment, order, writ, 
injunction, license or permit appli-cable to such Obligor, (iv) do not 
conflict with any provision of the Organizational Documents of such Obligor, 
and (v) do not require the approval or consent of, or filing with, any 
governmental agency or authority other than those already obtained and the 
filing of the Security Documents- and the Financing Statements in the 
appro-priate public records with respect thereto. 

     (3) Enforceability.  The execution and delivery of this Agreement and the 
other Loan Documents to which each Obligor is or is to become a party will 
result in valid and legally binding obliga-tions of such Obligor enforceable 
against it in accordance with the respective terms and provisions hereof and 
thereof, except as enforceability is limited by bankruptcy, insolvency, 
reorganiza-tion, moratorium or other laws relating to or affecting generally 
the enforcement of creditors' rights and except to the extent that 
availability of the remedy of specific performance or injunctive relief is 
subject to the discretion of the court before which any proceeding therefor 
may be brought.

     6.2 Title to Assets.  The Borrower owns all of the assets reflected in 
the balance sheet of the Borrower furnished to the Lender as provided below as 
of the date thereof or acquired since that date (except property and assets 
sold or otherwise disposed of in the ordinary course of business since that 
date). 

     6.3 Financial Statements.  There has been furnished to the Lender: 

     (1) An audited financial statement for the calendar year ending December 
31, 1995 for the predecessor of the Borrower, certified by Coopers & Lybrand. 
Such financial statement has been prepared in accordance with generally 
accepted accounting principles and fairly present the financial condition of 
such Person as at the close of business on the date thereof and the results of 
opera-tions for the calendar year then ended.  As of the date of this 
Agreement, there are no liabilities or contingent liabilities of the Borrower 
known to the General Partner which are not disclosed in said balance sheet and 
the related notes thereto other than the Obligations.

     (2) A balance sheet and a statement of income of the predecessor of the 
Borrower for each of the first two (2) calendar quarters for the calendar year 
ending December 31, 1996, which have been prepared in accordance with 
generally accepted accounting principles consistent with those used in the 
preparation of the annual audited statements delivered pursuant to paragraph 
(a) above and to fairly present the financial condition of the Borrower at the 
close of business on the dates thereof and the results of operations for the 
calendar quarters then ended (subject to year-end adjustments).

     (3) A statement of Mortgaged Property Operating Cash Flow for each 
Mortgaged Property for calendar years 1994 and 1995, and each of the first two 
(2) calendar quarters for the calendar year ending December 31, 1996,  fairly 
presenting the cash receipts and disbursements of such Mortgaged Property for 
such period, such statement to be prepared on a basis consistent with the 
schedule of cash receipts and disburse-ments delivered pursuant to paragraph 
(i) above.
<PAGE>                              - 11 -
     6.4 Financial Statements, No Material Changes, Etc.  The financial 
statements and other reports furnished to the Lender as described in Section 
6.3, above, fairly present the financial condition of the Borrower at the 
close of business on the dates thereof and the results of operations for the 
calendar quarters then ended (subject to year-end adjustments). Since the date 
thereof, there has occurred no adverse change in the financial condition or 
business of each Person as shown on or reflected in the respective balance 
sheet delivered to the Lender as provided above, or the statement of income 
for the calendar year then ended, other than changes in the ordinary course of 
business that have not had any adverse effect either individually or in the 
aggregate on the business or financial condition of such Person.

     6.5 Franchises, Patents, Copyrights, Etc.  The Borrower possesses, and 
will at all times possess, all franchises, patents, copyrights, trademarks, 
trade names, licenses and permits, and rights in respect of the fore-going, 
adequate for the conduct of its business substantially as now conducted or as 
it is intended to be conducted, without known conflict with any rights of 
others. 

     6.6 Litigation.  There are no actions, suits, proceedings or 
investigations of any kind pending or threatened against any Obligor or any of 
the Borrower's Subsidiaries before any court, tribunal or admin-istrative 
agency or board or any mediator or arbitrator that, if adversely determined, 
might, either in any case or in the aggregate, adversely affect the business, 
assets or financial condition of such Person, or result in any liability not 
adequately covered by insurance, or for which adequate reserves are not 
maintained on the balance sheet of such Person, or which question the validity 
of this Agreement or any of the other Loan Documents, any action taken or to 
be taken pursuant hereto or thereto, or any lien or security interest created 
or intended to be created pursuant hereto or thereto, or which will adversely 
affect the ability of the Borrower to use and occupy the Mortgaged Property or 
to pay and perform the Obligations in the manner contemplated by this 
Agreement and the other Loan Documents. 

     6.7 No Materially Adverse Contracts, Etc.  Each Obligor is not subject to 
any charter, corporate or other legal restriction, or any judgment, decree, 
order, rule or regulation that has or is expected in the future to have a 
materially adverse effect on the business, assets or financial condition of 
such Person.  Each Obligor is not, and will not be, a party to any contract or 
agreement that has or is expected, in the judgment of the Bor-rower's 
officers, to have any materially adverse effect on the business of such Person.

     6.8 Compliance With Other Instruments, Laws, Etc.  Each Obligor is not, 
and will not at any time be, in violation of any provision of its 
Organizational Documents or any agreement or instrument to which it may be 
subject or by which it or any of its properties may be bound or any decree, 
order, judgment, statute, license, rule or regulation, in any of the foregoing 
cases in a manner that could result in the imposition of sub-stantial 
penalties or materially and adversely affect the financial condition, 
properties or business of such Obligor.

     6.9 Tax Status.  Each Obligor and Subsidiary thereof (a) has made or 
filed, and will make or file in a timely fashion, all federal and state income 
and all other tax returns, reports and declarations required by any 
jurisdiction to which it is subject, (b) has paid, and will pay when due, all 
taxes and other governmental assessments and charges shown or determined to be 
due on such returns, reports and declarations, except those being contested in 
good faith and by appropriate proceedings, (c) if a partnership, limited 
partnership, limited liability partnership, or limited liability company, has, 
and will maintain, partnership tax classification under the Code, and (d) has 
set aside, and will at all times set aside, on its books provisions reasonably 
adequate for the payment of all taxes for periods subsequent to the period to 
which such returns, reports or declarations apply.  There are no unpaid taxes 
in any material amount claimed to be due by the taxing authority of any 
juris-diction, and the officers, partners or trustees of the Borrower know of 
no basis for any such claim. 

     6.10 No Event of Default.  The Borrower has no actual knowledge that a 
Default or Event of Default has occurred and is continuing. 

     6.11 Setoff, Etc.  The Collateral and the Lender's rights with respect to 
the Collateral are not subject to any setoff, claims, withholdings or other 
defenses.



<PAGE>                              - 12 -
     6.12 Certain Transactions.  Except as set forth on  Sched-ule 6.12 
hereto, (a) none of the officers, trustees, directors, partners, managers, 
members, stockholders, beneficiaries, or employees of any Obligor or 
Subsidiary thereof or (b) to the knowledge of the Borrower, any corporation, 
partnership, trust or other entity in which any such officer, trustee, 
director, partner, manager, member, stockholder, beneficiary, or employee has 
a substantial interest or is an officer, director, trustee, manager or 
partner, is presently a party to any transaction with the Borrower (other than 
for services as employ-ees, officers, trustees, managers and directors). 

     6.13 Subsidiaries.  Except as set forth in Schedule 6.13, the Borrower 
has no Subsidiaries.

     6.14 Partners  Except as set forth in Schedule 6.14, the Borrower has no 
general partners or limited partners.

     6.15 ERISA Plan.  The Borrower does not, and will not maintain or 
contribute to an ERISA Plan.

     6.16 Availability of Utilities.  All utility services necessary and 
sufficient for the use and operation of the Mortgaged Property are presently, 
and will at all times be, available to the boundaries of the Mortgaged 
Property through dedicated public rights of way or through perpetual private 
easements, approved by the Lender, with respect to which the Security Deed 
creates a valid and enforceable first lien.  The Borrower has obtained all 
utility installations and connections required for the operation and servicing 
of the Mortgaged Property for its intended purposes, and at the request of 
Lender, will furnish the Lender with evidence of the existence of utility 
service to the Mortgaged Property.  

     6.17 Access.  The rights of way for all roads necessary for the full 
utilization of the Mortgaged Property for their intended purposes have either 
been acquired by the appropriate Governmen-tal Authority or have been 
dedicated to public use and accepted by such Governmental Authority, all such 
roads shall have been completed, and the right to use all such roads, or 
suitable substitute rights of way approved by the Lender, have been obtained 
and shall be maintained at all times for the Mortgaged Property.  All curb 
cuts and driveways required for the operation and use of the Mortgaged 
Property are existing and shall be maintained at all times for the Mortgaged 
Property. 

     6.18 Condition of Mortgaged Property.  Neither the Mortgaged Property nor 
any part thereof is now damaged or injured in any material respect as a result 
of any fire, explosion, accident, flood or other casualty or has been the 
subject of any Taking, and to the knowledge of the Borrower, no Taking is 
pending or contemplated. 

     6.19 Compliance with Requirements.  The use and occupancy of the 
Mortgaged Property complies with, and will at times comply, in all material 
respects with Requirements. The Borrower will give all such notices to, and 
take all such other actions with respect to, such Governmental Authority as 
may be required under applicable Requirements to use, occupy and operate the 
Mortgaged Property.

     6.20 Project Approvals.

     (1) The Borrower has obtained all material Project Approvals.  All 
Project Approvals obtained by the Borrower have been validly issued and are in 
full force and effect.  The Borrower has no actual knowledge that any Project 
Approvals will terminate, or become void or voidable or terminable, upon any 
sale, transfer or other disposition of the Mortgaged Property, including any 
transfer pursuant to foreclosure sale under the Security Deed.

     (2)  The Borrower will duly perform and comply with all of the terms and 
conditions of all Project Approvals obtained at any time, including all 
Project Approvals listed and described on Schedules 6.20 hereto. 

     6.21 Other Contracts.

     (1) The Borrower has not made, and will not make any, contract or 
arrangement of any kind or type whatsoever (whether oral or written, formal or 
informal), the performance of which by the other party thereto could give rise 
to a lien or encumbrance on the Collateral other than in the ordinary course 
of business. 


<PAGE>                              - 13 -
     (2) The Borrower will not make any contract or arrangement of any kind or 
type whatsoever, with any affiliate of the Borrower unless such contract or 
arrangement is (x) approved in writing in advance by the Lender, which 
approval shall not be unreasonably withheld, (y) on the same terms as would be 
generally available to the Borrower in an arm's length contract or arrangement 
with a third party, and (z) evidenced by a written agreement.  (3) All 
contracts or arrangements with any affiliate of the Borrower are on terms 
which would be generally available to the Borrower in an arm's length contract 
or arrangement with a third party.

     6.22 Violations.  The Borrower has received no notices of, or has any 
knowledge of, any violations of any applicable Re-quirements or Project 
Approvals.

     6.23 Other Representation.

     (1) The tax exempt bonds held by the Borrower are unextinguished and 
valid, the Borrower would be permitted to refund and reissue such bonds, 
subject to the receipt of all appropriate approvals, in an amount sufficient 
to repay in full the Obligations.

     (2) All assets that were owned by America First Tax Exempt Fund 2 Limited 
Partnership, the predecessor in interest to the Borrower, are owned by either 
the Borrower or a wholly owned Subsidiary of the Borrower.

     6.24 Land Trustee and Trust Agreement.  

     (1) The Illinois Mortgaged Property is owned as of record by the Land 
Trustee as provided in Trust Agreement.

     (2) The Borrower is the owner of the one-hundred (100%) beneficial 
interest in the trust established pursuant to the Trust Agreement and is the 
owner of the one-hundred (100%) percent beneficial interest in the Illinois 
Mortgaged Property.

     (3) Pursuant to the Trust Agreement, the Trustee is required to take such 
action as is directed by the beneficiary.  As the holder of the one-hundred 
(100%) beneficial interest therein, the Borrower has directed the Land Trustee 
to execute and deliver to the Lender such documents as the Lender may from 
time to time reasonably require in order to effectuate the transaction 
contemplated herein and to establish and perfect the interest to be granted to 
the Lender in and to the Illinois Mortgaged Property, including, without 
limitation, the Illinois Security Deed.

     (4) The Borrower will not direct the Trustee, or allow the Trustee, to 
take any action which is in violation of, or not in accordance with, the terms 
and provisions hereof.

     (5) For the purposes of each and every representation, warranty and 
covenant contained herein and in any other Loan Document, the Illinois 
Mortgaged Property shall be deemed to be an asset of the Borrower.

     (6) The Land Trustee is merely the nominal holder of the legal ownership 
of the Illinois Mortgaged Property.  Any and all agreements, contracts, 
licenses, permits and approvals relative to the use, ownership or operation of 
the Illinois Mortgaged Premises, including, without limitation, all Leases and 
Project Approvals, and any Management Contract, have been obtained or entered 
into, and will be obtained or entered into, in the name of the Borrower.

     7. AFFIRMATIVE COVENANTS OF THE BORROWER.  The Borrower covenants and 
agrees that, so long as the Loan is outstanding: 

     7.1 Punctual Payment.  The Borrower will duly and punc-tu-ally pay or 
cause to be paid the principal and interest on the Loan and all other amounts 
provided for in the Note, this Agree-ment and the other Loan Documents to 
which the Borrower is a party, all in accordance with the terms of the Note, 
this Agree-ment and such other Loan Documents. 

     7.2 Records and Accounts.  The Borrower will (a) keep  true and accurate 
records and books of account in which full, true and correct entries will be 
made in accordance with generally accepted accounting principles and (b) 
maintain adequate accounts and provide for all taxes (including income taxes), 
depreciation and amortization of its properties, and properly disclose all 
contingencies in its financial statements. 


<PAGE>                              - 14 -
     7.3 Financial Statements, Certificates and Information. 

     (1) The Borrower will deliver, or cause to be delivered, to the Lender: 

          (1)   as soon as practicable, but in any event not later than ninety 
     (90) days after the end of each calendar year of the Borrower, the 
     audited balance sheet of the Borrower at the end of such year, and the 
     related audited statement of income, statement of retained earnings, 
     changes in capital, and statement of cash flows for such year, each 
     setting forth in comparative form the figures for the previous calendar 
     year and all such statements to be in reasonable detail, prepared in 
     accordance with generally accepted accounting principles, and accompanied 
     by an auditor's report prepared without qualification by Coopers & 
     Lybrand or by another independent certified public accountant accept-able 
     to the Lender, together with a written statement from such accountants to 
     the effect that they have read a copy of this Agreement, and that, in 
     making the examination neces-sary to said certification, they have 
     obtained no knowledge of any Default or Event of Default under this 
     Agreement, or, if such accountants shall have obtained knowledge of any 
     then existing Default or Event of Default they shall dis-close in such 
     statement any such Default or Event of De-fault; provided that such 
     accountants shall not be liable to the Lender for failure to obtain 
     knowledge of any Default of Event of Default;

          (2)   as soon as practicable, but in any event not later than 
     forty-five (45) days after the end of each of the first three (3) 
     calendar quarters of the Borrower, copies of the un-audited property 
     statements for each Mortgaged Property as at the end of such quarter, and 
     the related unaudited statement of income, in reasonable detail and 
     prepared in accordance with gener-ally accepted accounting principles, 
     together with a certifica-tion by the principal financial or accounting 
     officer or general partner of the Borrower that the information contained 
     in such property state-ments fairly presents the financial position of 
     each Mortgaged Property (subject to year-end adjustments) and that, in 
     making the examination neces-sary to said certification, such Person has 
     obtained no knowledge of any Default or Event of Default under this 
     Agreement;

          (3)   contemporaneously with the delivery of the financial 
     statements referred to in clause (a), above, a statement of all 
     contingent liabilities of the Borrower which are not reflected in such 
     financial statements or referred to in the notes thereto, all in 
     reasonable detail and certified by the principal financial or accounting 
     officer of the Borrower; 

          (4)   simultaneously with the delivery of the financial statements 
     referred to in clauses (i) and (ii) above, a statement in the form of 
     Exhibit B, attached hereto, signed by the principal financial or 
     accounting officer or general partner of the Borrower and setting forth 
     in reasonable detail computations evi-dencing compliance with the 
     covenants contained in Section 8.9;

          (5)   within thirty (30) days after the end of each calendar quarter 
     of the Borrower, a current rent roll and lease receivable aging as of the 
     end of such month; 

          (6)   contemporaneously with the filing or mailing thereof, copies 
     of all material of a financial nature filed with the Securities and 
     Exchange Commission or sent to the partners of the applicable Obligor, 
     including, without limitation, the 10K and 10Q;

          (7)   no later than thirty (30) days before the commencement of each 
     calendar year of the Borrower, a business plan for the subject calendar 
     year setting forth in reasonable detail a statement of projected cash 
     flows of the Borrower for the said calendar year, and

          (8)   from time to time such other financial data and information 
     (including accountants' management letters) as the Lender may reasonably 
     request. 

     (2) All of the financial information required hereunder shall, if 
requested by the Lender, be submitted on a Consolidated basis with all of the 
Borrower's Subsidiaries.



<PAGE>                              - 15 -
     7.4 Insurance.

     (1) The Borrower will obtain and maintain insurance with respect to the 
Collateral and the operations of the Borrower as required by the Security Deed.

     (2) The Borrower will provide the Lender with cer-tificates evidencing 
such insurance upon the request of the Lender.  

     7.5 Liens and Other Charges.  The Borrower and each Subsidiary of the 
Borrower will duly pay and discharge, or cause to be paid and discharged, 
before the same shall become overdue all claims for labor, materials, or 
supplies that if unpaid might by law become a lien or charge upon any of its 
property; provided that any such claim with respect to properties other than 
the Collateral need not be paid if the validity or amount thereof shall 
currently be contested in good faith by appropriate proceedings and if the 
Borrower or such Subsidiary shall have set aside on its books adequate 
reserves with respect thereto; and provided further, that the Borrower or such 
Subsidiary will pay all such liens and charges forthwith upon the commencement 
of proceedings to foreclose any lien that may have attached as security 
therefor.

     7.6 Inspection of Collateral, Other Properties and Books, Appraisals. 

     (1) The Borrower shall permit the Lender, at the Lender's expense, to 
visit and inspect the Collateral and  will cooperate with the Lender during 
such inspections.

     (2) The Borrower shall permit, or cause to permit, the Lender at the 
Lender's expense to visit and inspect the Collateral and any of the other 
proper-ties of the Borrower, any other Obligor, or any Subsidiary thereof to 
examine the books of account of such Person -(and to make copies thereof and 
extracts therefrom) and to discuss the affairs, finances and accounts of such 
Person with, and to be advised as to the same by, its officers, partners, or 
trustees, all at such reasonable times and intervals as the Lender may 
reasonably request.

     (3) The Lender shall have the right to obtain from time to time, at the 
Lender's cost and expense, updated Appraisals of the Mortgaged Property.

     (4) Notwithstanding the above, after and during the continuance of an 
Event of Default, the Borrower shall be obligated to pay the expenses 
associated with any subsequent investi-gation of the books of account of each 
Obligor and the costs and expenses incurred by the Lender in obtaining such 
Appraisals.

     7.7 Compliance with Laws, Contracts, Licenses, and Permits.  The Borrower 
will, or will cause each Obligor and each Subsidiary thereof to, comply with 
(a) the applicable laws and regulations wherever its business is conducted, 
including all Environmental Laws and, in the case of the Borrower, all 
Re-quirements, (b) the provisions of its Organizational Documents, (c) all 
agreements and instruments by which it or any of its properties may be bound, 
including, in the case of the Borrower,  the Management Contract, all 
restrictions, covenants and easements affecting the Mortgaged Property, (d) 
all applicable decrees, orders and judgments, and (e) all li-censes and 
permits required by applicable laws and regulations for the conduct of its 
business or the ownership, use or opera-tion of its properties, including, in 
the case of the Borrower, all Project Approvals. 

     7.8 Leases.  The Borrower will take or cause to be taken all steps within 
the reasonable power of the Borrower to market and lease the leasable area of 
the Mortgaged Property to such tenants and using a standard form lease 
reasonably approved by the Lender. Further, the Borrower will comply with the 
terms and conditions of the Security Documents relating to any and all Leases.

     7.9 Further Assurance of Title.  If at any time the Lender or the 
Lender's counsel has reason to believe that any Advance is not secured or will 
or may not be secured by the Security Deed as a first lien or security 
interest on the Collateral, then the Borrower shall, within ten (10) days 
after written notice from the Lender, do all things and matters necessary, to 
assure to the satisfaction of the Lender and the Lender's counsel that any 
Advance previously made hereunder or to be made hereunder is secured or will 
be secured by the Security Deed as a first lien or security interest on the 
Collateral, and the Lender, at its option, may decline to make Advances 
hereunder until the Lender has received such assurance, but nothing in this 
Section shall limit the Lender's right to require endorsements extending the 
effective date of the Title Policy as herein set forth. 
<PAGE>                              - 16 -
     7.10 Publicity.  The Borrower will permit the Lender to obtain publicity 
in connection with the financing of the Collateral through press releases and 
participation in such events as opening ceremonies. 

     7.11 Further Assurances. 

     (1) Regarding Preservation of Collateral.  The Bor-rower will execute and 
deliver to the Lender such further docu-ments, instruments, assignments and 
other writings, and will do such other acts necessary or desirable, to 
preserve and protect the Collateral at any time securing or intended to secure 
the Obligations, as the Lender may reasonably require. 

     (2) Regarding this Agreement.  The Borrower will cooperate with, and will 
do such further acts and execute such further instruments and documents as the 
Lender shall reasonably request to carry out to its satisfaction the 
transactions con-templated by this Agreement and the other Loan Documents.

     7.12 Notices.  The Borrower will promptly notify the Lender in writing of 
(i) the occurrence of any Default of which the Borrower has knowledge or Event 
of Default; (ii) the occurrence of any other event which may have a material 
adverse effect on the Collateral or the business or financial condition of any 
Obligor; and (iii) the receipt by the Borrower of any notice of default or 
notice of termination with respect to any contract or agreement relating to 
the ownership, operation, or use of the Collateral, including, without 
limitation, the - Management Contract.

     7.13 Management Contract.

     (1) The Borrower has entered into a Management Contract, which Management 
Contract shall be in form and substance reasonably satisfactory to the 
Lender.  The Borrower acknowledges that the Lender will rely on the Management 
Company's experience in operating properties such as the Mortgaged Property as 
a means of maintaining the value of the Collateral.  In connection with the 
approval of the Management Company, or any replacement Management Company: 

          (1)   the Management Company or holder of the stock or partnership 
     interest therein, shall be either (x) America First Properties 
     Management, LLC or (y) another  Person whose character, financial 
     strength, stability and experience is reasonably acceptable to the Lender 
     and who shall have experience managing complexes of a type and size 
     reasonably similar to the Mortgaged Property;

          (2)   the Management Company shall deliver all organizational 
     documentation and other materials evidencing its experience reasonably 
     acceptable to Lender;

          (3)   the Borrower shall pay a reasonable fee to Lender, together 
     with the reasonable fees, costs and expenses of Lender and Lender's 
     counsel incurred in connection with the review and approval of any such 
     Management Company; and

          (4)   the terms of any Management Contract affecting the Collateral 
     must be acceptable to Lender in all reasonable respects.

     (2) The Borrower shall, from time to time, use its best efforts to obtain 
from the Management Company under the Management Contract such certificates of 
estoppel with respect to compliance by Borrower with the terms of the 
Management Contract as may be reasonably requested by Lender.


     8. NEGATIVE COVENANTS OF THE BORROWER.  The Borrower covenants and agrees 
that, so long as the Loan is outstanding : 

     8.1 Restrictions on Easements, Covenants and Restric-tions.  The Borrower 
will not create or suffer to be created or to exist any easement, right of 
way, restriction, covenant, condition, license or other right in favor of any 
Person which affects or might affect title to the Collateral or the use and 
occupancy of the Mortgaged Property or any part thereof without obtaining the 
prior approval of the Lender, which consent shall not be unreasonably 
withheld. 

     8.2 No Amendments, Terminations or Waivers. 

     (1) The Borrower will not amend, supplement or other-wise modify, whether 
by change order or otherwise, any of the terms and conditions of the 
Management Contract, without in each case the prior approval of the Lender. 
<PAGE>                              - 17 -
     (2) The Borrower will not, directly or indirectly, terminate or cancel, 
or cause or permit to exist any condition which would result in the 
termination or cancellation of, or which would relieve the performance of any 
obligations of any other party under the Management Contract.

     (3) The Borrower will not, directly or indirectly, waive or agree or 
consent to the waiver of, the performance of any obligations or any other 
party under the Management Contract. 

     (4) The Borrower will not, directly or indirectly, amend, or allow the 
amendment of, any of the Organizational Documents of the Borrower.

     8.3 Restrictions on Indebtedness.  The Borrower and any Subsidiary 
thereof will not create, incur, assume, guarantee or be or remain liable, 
contingently or other-wise, with respect to any Indebtedness other than:

     (1) Indebtedness to the Lender arising under any of the Loan Documents;

     (2) current liabilities of the Borrower or such Subsidiary incurred in 
the ordinary course of business but not incurred through (i) the borrowing of 
money, or (ii) the obtaining of credit except for credit on an open account 
basis customarily extended and in fact extended in connec-tion with normal 
purchases of goods and services;

     (3) Indebtedness in respect of taxes, assessments, governmental charges 
or levies and claims for labor, mate-rials and supplies to the extent that 
payment therefor shall not at the time be required to be made in accordance 
with the provisions of Section 6.9 and Section 7.5 ;

     (4) Indebtedness in respect of judgments or awards that have been in 
force for less than the applicable period for taking an appeal so long as 
execution is not levied thereunder or in respect of which the Borrower or such 
Subsidiary shall at the time in good faith be prosecuting an appeal or 
proceedings for review and in respect of which a stay of execution shall have 
been obtained pending such appeal or review;  (5) non-recourse Indebtedness 
(with customary indemnification exceptions and customary exceptions based upon 
the willful misconduct or bad faith of the Borrower and such other customary 
exceptions as may be reasonably acceptable to the Lender); and

     (6) Indebtedness existing on the date of this Agree-ment and listed and 
described on Schedule 8.3  hereto, including any refinancing of any debt 
listed on Schedule 8.3  hereto, so long as such refinancing is not for an 
amount in excess of 100% of the fair market value of the asset being 
refinanced.

     8.4 Restrictions on Liens, Etc.  The Borrower and any Subsidiary thereof 
will not  (a) create or incur or suffer to be created or incurred or to exist 
any lien, encumbrance, mortgage, pledge, charge, restriction or other security 
interest of any kind upon any of its property or assets of any character 
whether now owned or hereafter acquired, or upon the income or profits 
therefrom; (b) transfer any of its property or assets or the income or profits 
therefrom for the purpose of subjecting the same to the payment of 
Indebtedness or performance of any other obligation in priority to payment of 
its general creditors; (c) acquire, or agree or have an option to acquire, any 
property or assets upon conditional sale or other title retention or purchase 
money security agreement, device or ar-rangement; (d) suffer to exist for a 
period of more than thirty (30) days after the same shall have been incurred 
any Indebted-ness or claim or demand against it that if unpaid might by law or 
upon bankruptcy or insolvency, or otherwise, be given any prior-ity whatsoever 
over its general creditors; or (e) sell, assign, pledge or otherwise transfer 
any accounts, contract rights, general intangibles, chattel paper or 
instruments, with or without recourse; provided that the Borrower -may create 
or incur or suffer to be created or incurred or to exist:

     (1) statutory liens to secure taxes, assessments and other governmental 
charges or claims for labor, material or supplies in respect of obligations 
not overdue; 

     (2) liens in favor of the Lender under the Loan Documents or to secure 
any Obligations; 

     (3) presently outstanding liens on properties other than the Collateral 
listed on Schedule 8.4, hereto; 



<PAGE>                              - 18 -
     (4) other liens on the Collateral consisting of ease-ments, rights of 
way, covenants and restrictions if and to the extent the same are disclosed on 
the Title Policy and have been approved by the Lender;

     (5) the liens now on the Illinois Mortgaged Property in favor of the 
Borrower or any Subsidiary of the Borrower relating to the tax-exempt bonds 
previously issued with respect to the Illinois Mortgaged Premises, as shown on 
Schedule 8.4, each of which liens shall be subordinate in all respects to any 
lien in favor of the Lender,

     (6) any mortgage or similar lien on an Acquired Property, subject to the 
terms and provisions of Section 3.6, hereof, and

     (7) if no Event of Default is occurring, any other voluntary encumbrance; 
provided, however, (i) the assets so encumbered do not include any Collateral, 
(ii) the Indebtedness secured by the line on the Collateral is permitted under 
Section 8.3, above, and (ii) the Borrower shall notify the Lender prior to the 
granting of such encumbrance, which notification shall include a certification 
signed by the principal financial or accounting officer or general partner  
the Borrower and setting forth in reasonable detail computations evi-dencing 
compliance with the covenants contained in Section 8.9.

     8.5 Restrictions on Loans and Investments.  The Borrower or any 
Subsidiary thereof will not make or permit to exist or to remain outstanding 
any loan by the Borrower or such Subsidiary to any Person or any Investment 
except Investments in:

     (1) marketable direct or guaranteed obligations of the United States of 
America that mature within one (1) year from the date of purchase by the 
Borrower; 

     (2) demand deposits and bankers acceptances of United States banks having 
total assets in excess of $1,000,000,000; 

     (3) certificates of deposit and time deposits of United States banks 
having total assets in excess of $1,000,000,000 that mature within one (1) 
year from the date of purchase by the Borrower;

     (4) securities commonly known as "commercial paper" issued by a 
corporation organized and existing under the laws of the United States of 
America or any state thereof that at the time of purchase have been rated and 
the ratings for which are not less than "P 1" if rated by Moody's Investors 
Services, Inc., and not less than "A 1" if rated by Standard and Poor's;

     (5) Investments in a manner consistent with the business plan delivered 
to the Lender in accordance with Section 7.4, herein; and  (6) Investments 
existing on the date hereof and listed on Schedule 8.5 hereto.

     8.6 Merger, Consolidation, Conversion, and Disposition of Assets.  

     (1) The Borrower or any Subsidiary thereof will not become a party to any 
merger or consolidation, or agree to or effect any asset acquisition or stock 
acquisition (other than in the ordinary course of business consistent with the 
business plan delivered to the Lender in accordance with Section 7.4, herein). 

     (2) The Borrower or any Subsidiary thereof will not become a party to or 
agree to or effect any disposition of the Collateral or any part thereof. 

     (3) The Borrower or any Subsidiary thereof will not become a party to or 
agree to effect any disposition of assets, other than the disposition of 
assets not included in the Collateral in the ordinary course of business, 
consistent with past practices consistent with the business plan delivered to 
the Lender in accordance with Section 7.4, herein.

     (4) The Borrower will not convert into any other type of entity, 
including, without limitation, a limited liability company.  

     8.7 Sale and Leaseback.  The Borrower or any Subsidiary thereof will not 
enter into any arrange-ment, directly or indirectly, whereby the Borrower or 
such Subsidiary shall sell or transfer any property owned by it in order then 
or thereafter to lease such property or lease other property that the Borrower 
or such Subsidiary intends to use for substantially the same purpose as the 
property being sold or transferred.



<PAGE>                              - 19 -
     8.8 Distributions.  The Borrower will not make any Distributions (i) in 
excess in any calendar year of the Borrower's funds from operations for such 
calendar year, determined in accordance with generally accepted accounting 
principals or (ii) after the occurrence of a Default or an Event of Default.

     8.9 Financial Covenants.  The Borrower covenants and agrees that, so long 
as the Loan is outstanding:

     (1) Liabilities to Worth Ratio.  The Borrower will not permit, at the end 
of any calendar quarter, Total Liabilities to exceed 50% of Total Tangible 
Assets.

     (2) Ratio of Operating Cash Flow to Debt Service Charges.  The Borrower 
will not, at the end of any calendar quarter, permit Operating Cash Flow to be 
less than 1.75 times Debt Service Charges for the prior four (4) calendar 
quarters..

     (3) Ratio of EBITDA to Consolidated Interest. The Borrower will not, at 
the end of any calendar quarter, permit EBITDA for the prior four (4) calendar 
quarters to be less than 2.25 times Consolidated Interest.

     (4) Consolidated Basis.  The Lender may elect to require the compliance 
with the above described financial covenants to be determined by the Borrower 
on a Consolidated basis.

     (5) Cure of Financial Covenants.  In the event that the Borrower fails to 
maintain the ratio provided in subparagraphs (a), (b) or (c), above, at any 
time, such failure shall not be an Event of Default hereunder if, within five 
(5) days of written notice from the Bank of such failure, the Borrower causes 
a principal payment to be made on the Loan in an amount such that if the said 
principal reduction had been made prior to calculation of said ratio, the 
ratio would have been in compliance with the requirements hereof

     9. CONDITIONS TO CLOSING AND ADVANCE OF LOAN PROCEEDS.  The obligation of 
the Lender to make any Advance shall be subject to the satisfaction of the 
following conditions precedent: 

     9.1 Loan Documents.  Each of the Loan Documents shall have been duly 
executed and delivered by the respective parties thereto, shall be in full 
force and effect and shall be in form and substance satisfactory to the Lender.

     9.2 Contracts.  The Borrower shall have delivered to the Lender correct 
and complete photocopies of the Management Contract and all other executed 
management, brokerage, sales, leasing or other agreements for the Collateral.  
With respect to the Management Contract, the Management Company shall have 
duly executed and delivered a Consent in form and substance satisfactory to 
the Lender, and the Lender shall have received a fully executed copy of such 
Consent.  The Consent shall provide, without limitation, for (i) the 
recognition of the Lender or any successor in the event of the exercise by the 
Lender of the Lender's rights upon the occurrence of an Event of Default and 
(ii) the right of the Lender to terminate the Management Contract upon thirty 
(30) days notice upon the occurrence of an Event of Default.

     9.3 Leases. With respect to each lease with a tenant using the Mortgaged 
Property for commercial purposes, if requested by the Lender, the Borrower and 
the tenant shall have duly executed and delivered a Non-Disturbance, 
Attornment and Subordination Agreement in form and substance satisfactory to 
the Lender, and the Lender shall have received a fully executed copy of each 
such document.

     9.4 Certified Copies of Organization Documents.  The Lender shall have 
received from each of the Obligors a certified copy of its Organization 
Documents as in effect on such date of certification, such Organizational 
Documents to be in form and substance satisfactory to the Lender. 

     9.5 Resolutions.  All action necessary for the valid execution, delivery 
and performance by each Obligor of this Agreement and the other Loan Documents 
to which it is or is to become a party shall have been duly and effectively 
taken, and evidence thereof satisfactory to the Lender shall have been 
provided to the Lender.  The Lender shall have received from each such Person 
true copies of the resolutions authorizing the transactions described herein, 
each certified as of a recent date to be true and com-plete. 




<PAGE>                              - 20 -
     9.6 Incumbency Certificate; Authorized Signers.  The Lender shall have 
received from each Obligor an incumbency certificate, dated as of the Closing 
Date, giving the name and bearing a specimen signature of each indi-vidual who 
shall be authorized:  (a) to sign, in the name and on behalf of such Person 
each of the Loan Documents to which such Person is or is to become a party; 
(b) in the case of the Borrower, to make Draw Requests; and (c) to give 
notices and to take other action on its behalf under the Loan Documents. 

     9.7 Validity of Liens.  The Security Documents shall be effective to 
create in favor of the Lender a legal, valid and enforceable first lien and 
security interest in the Collateral.  All filings, recordings, deliveries of 
instruments and other actions reasonably necessary or desirable in the opinion 
of the Lender to protect and preserve such lien and security interest shall 
have been duly effected.  The Lender shall have received evidence thereof in 
form and substance satisfactory to the Lender. 

     9.8 Deliveries.  The following items or documents shall have been 
delivered to the Lender by the Borrower and shall be in form and substance 
reasonably satisfactory to the Lender: 

     (1) Title Policy.  The Title Policy, together with proof of payment of 
all fees and premiums for such policy and true and accurate copies of all 
documents listed as exceptions under such policy. 

     (2) Other Insurance.  Duplicate originals or certified copies of all 
policies of insurance required by the Security Deed or hereunder to be 
obtained and maintained. 

     (3) Evidence of Access, Availability of Utilities, Project Approvals.  
Evidence as to:

          (1)   the methods of access to and egress from the Mortgaged 
     Property, and nearby or adjoining public ways, meeting the reasonable 
     requirements of the Mortgaged Property;

          (2)   the availability of water supply and storm and sanitary sewer 
     facilities meeting the reasonable requirements of the Mortgaged Property;

          (3)   the availability of all other required utilities, in location 
     and capacity sufficient to meet the reasonable needs of the Mortgaged 
     Property; and 

          (4)   the obtaining of all Project Approvals which are required, 
     necessary or desirable for the -use and operation of the Mortgaged 
     Property and the access thereto, together with copies of all such Project 
     Approvals.

     (4) Environmental Report.  For each Mortgaged Property, an environmental 
site assessment report or reports of one or more qualified environmental 
engineering or similar inspection firms approved by the Lender, which report 
or reports shall indicate the environmental condition of the Mortgaged 
Property and any existing improve-ments thereon in all respects satisfactory 
to the Lender in its sole discretion and upon which report or reports the 
Lender is expressly entitled to rely. 

     (5) Survey and Taxes.  For each Mortgaged Property, a Survey of the 
Mortgaged Property (and any existing improvements thereon) and Surveyor's 
Certificate, and evidence of payment of all real estate taxes and munic-ipal 
charges on the Mortgaged Property (and any existing improvements thereon) 
which were not yet delinquent prior to the Closing Date.

     (6) Form Lease.  The standard form of residential Lease to be used by the 
Borrower in connection with the Mortgaged Property. 

     (7) Rent Roll. For each Mortgaged Property, a Rent Roll certified by the 
General Partner.  (8) Subordination.  A Subordination Agreement executed by 
the Borrower and any Subsidiary thereof relative to any lien or liens on the 
Illinois Mortgaged Property, as set forth in Schedule 8.4.








<PAGE>                              - 21 -
     9.9 Legal Opinions.  The Lender shall have received favorable opinions in 
form and substance reasonably satisfactory to the Lender and the Lender's 
counsel, addressed to the Lender and dated as of the Closing Date, from 
counsel to the Borrower and the General Partner acceptable to the Lender, as 
to the matters as the Lender shall reasonably request, including, without 
limitation, the due authorization, legality, validity and binding effect of 
the Loan Documents and the method of perfection of the liens of the Security 
Documents. 

     9.10 Lien Search.  The Lender shall have received a certification from 
Title Insurance Company or counsel satisfac-tory to the Lender (which shall be 
updated from time to time at the Borrower's expense upon request by the 
Lender) that a search of the public records disclosed no conditional sales 
contracts, security agreements, chattel mortgages, leases of personalty, 
financing statements or title retention agreements which affect the 
Collateral. 

     9.11 Appraisal.  The Lender shall have received an Appraisal, in form and 
substance satisfactory to the Lender, stating that the Mortgaged Property has 
a market value of at least $21,500,000.00.

     9.12 Commitment Fee.  The Borrower shall have paid to the Lender the 
commitment fee pursuant to Section 4.1.

     9.13 Performance; No Default.  The Borrower shall have performed and 
complied with all terms and conditions herein required to be performed or 
complied with by it on or prior to the Advance of the proceeds of the Loan, 
and there shall exist no Default of which the Borrower has knowledge or Event 
of Default. 

     9.14 Representations and Warranties.  The representa-tions of warranties 
made by the Obligors in the Loan Documents or otherwise made by or on behalf 
of the Obligors in connection therewith shall have been true and correct in 
all material respects when made and shall be true and correct in all material 
respects on the date of any Advances. 

     9.15 Proceedings and Documents.  All proceedings in connection with the 
transactions contemplated by this Agreement and the other Loan Documents shall 
be satisfactory to the Lender and the Lender's counsel in form and substance, 
and the Lender shall have received all information and such counterpart 
origi-nals or certified copies of such documents and such other cer-tificates, 
opinions or documents as the Lender and the Lender's counsel may reasonably 
require. 

     9.16 Waiver.  Any waiver by the Lender of any of the conditions precedent 
contained herein for the Closing and any Advance shall not be deemed to be a 
waiver by the Lender of such conditions precedent for any subsequent Advance, 
if any, or any other obligation of the Lender hereunder. 

     10. EVENTS OF DEFAULT AND REMEDIES.

     10.1 Events of Default.  The occurrence of any one or more of the 
following conditions or events shall constitute an "Event of Default":

     (1) any failure by the Borrower to pay, within five (5) Business Days of 
the due date, any interest on or principal of or other sum payable under the 
Note; or 

     (2) any failure by the Borrower to pay as and when due and payable any 
other sums to be paid by the Borrower to the Lender under this Agreement and 
the continuance of such failure for a period of five (5) Business Days after 
notice thereof from the Lender; or

     (3) title to the Collateral is or becomes unsatisfac-tory to the Lender 
by reason of any lien, charge, encum-brance, title condition or exception 
(including without limitation, any mechanic's, materialman's or similar 
statu-tory or common law lien or notice thereof) which (i) if for a dollar 
amount, is for an amount in excess of $20,000.00 and (ii) in any event, would 
have a material adverse effect on the Borrower, the Collateral or the lien 
held by the Lender in the Collateral, if resolved against the Borrower, and 
such matter causing title to be or become unsatisfactory is not cured or 
removed (including by bonding) within twenty (20) days after notice thereof 
from the Lender to the Borrower; or 



<PAGE>                              - 22 -
     (4) the Mortgaged Property or any material part thereof is injured by any 
uninsured fire, explosion, accident, flood or other casualty and any damage 
caused thereby is not repaired or replaced within sixty (60) days of such 
fire, explosion, accident, flood or other casualty; or

     (5) the Mortgaged Property or any material part thereof is subject to a 
Taking; or 

     (6) any failure by the Borrower to duly observe or perform any term, 
covenant, condition or agreement contained in Section 7.4, or Section 8.9 
hereof; or  (7) the General Partner denies that the General Partner has any 
liability or obligations under the Guaranty or the Indemnity Agreement, or 
shall notify the Lender of the General Partner's intention to attempt to 
cancel or terminate the Guaranty or the Indemnity Agreement, or shall fail to 
observe or comply with any term, covenant, condition and agreement under the 
Guaranty or the Indemnity Agreement; or

     (8) any representation or warranty made or deemed to be made by or on 
behalf of any Obligor in this Agreement or in any of the other Loan Documents, 
or in any report, certificate, financial statement, document or other 
instrument delivered pursuant to or in connection with this Agreement, any 
Advance or any of the other Loan Documents, shall prove to have been false or 
incorrect in any material respect upon the date when made or deemed to be made 
or repeated; or 

     (9) any dissolution, termination, partial or complete liquidation, merger 
or consolidation of any Obligor, or any sale, transfer or other disposition of 
all or substantially all of the assets of any Obligor, other than as permitted 
under the terms of this Agreement or the Guaranty; or 

     (10) any suit or proceeding shall be filed against any Obligor or the 
Collateral which, if adversely determined, would have a materially adverse 
affect on the ability of any Obligor to perform each and every one of their 
respective obligations under and by virtue of the Loan Documents; or

     (11) any failure by the Borrower to obtain any Project Approvals, or the 
revocation or other invalidation of any Project Approvals previously obtained; 
or 

     (12) any change in the legal or beneficial ownership of any Obligor not 
otherwise permitted in the Loan Documents; or 

     (13) any change in the control of the management of any Obligor, or the 
giving up or relinquishment of such control by the Person(s) who is(are) 
charged with the exercise of such responsibilities on the date hereof; or

     (14) as to an Indebtedness in excess of $1,000,000.00, any failure by any 
Obligor to pay at maturity, or within any applicable period of grace, any 
obligation for borrowed money or credit received, including, without 
limitation, any Borrower Obligations, or any failure to observe or perform any 
material term, covenant or agreement contained in any agreement by which it is 
bound, evidencing or securing borrowed money or credit received, for such 
period of time as would permit (assuming the giving of appropriate notice if 
required) the holder or holders thereof or of any obligations issued 
thereunder to acceler-ate the maturity thereof; or

     (15) any Obligor or Subsidiary thereof shall file a voluntary petition in 
bankruptcy under Title 11 of the United States Code, or an order for relief 
shall be issued against any such Person in any involuntary petition in 
bankruptcy under Title 11 of the United States Code, or  any such Person shall 
file any petition or answer seeking or acquiescing in any reor-ganization, 
arrangement, composition, readjustment, liquidation, dissolution or similar 
relief for itself under any present or future federal, state or other law or 
regu-lation relating to bankruptcy, insolvency or other relief of debtors, or 
such Person shall seek or consent to or acquiesce in the appointment of any 
custodian, trustee, receiver, conservator or liquidator of such Person, or of 
all or any substantial part of its respective property, or such Person shall 
make an assignment for the benefit of creditors, or such Person shall give 
notice to any governmental authority or body of insolvency or pending 
insol-vency or suspension of operation; or

     (16) an involuntary petition in bankruptcy under Title 11 of the United 
States Code shall be filed against any Obligor or Subsidiary thereof and such 
petition shall not be dismissed within sixty (60) days of the filing thereof; 
or

<PAGE>                              - 23 -
     (17) a court of competent jurisdiction shall enter any order, judgment or 
decree approving a petition filed against any Obligor or any Subsidiary 
thereof seeking any reorganization, arrangement, composition, readjustment, 
liquidation or similar relief under any present or future federal, state or 
other law or regulation relating to bankruptcy, insolvency or other relief for 
debtors, or appointing any custodian, trustee, receiver, conservator or 
liquidator of all or any substantial part of its property; or

     (18) any uninsured final judgment having a material adverse effect on any 
Obligor shall be rendered against any such Obligor and shall remain in force, 
undischarged, unsatis-fied and unstayed, for more than thirty (30) days, 
whether or not consecutive; or

     (19) any of the Loan Documents shall be cancelled, terminated, revoked or 
rescinded otherwise than in accor-dance with the terms thereof or with the 
express prior approval of the Lender, or any action at law, suit in equity or 
other legal proceeding to cancel, revoke or rescind any of the Loan Documents 
shall be commenced by or on behalf of the Borrower or any Obligor which is a 
party thereto or any of their respective stockholders, partners or 
benefi-ciaries, or any court or any other governmental or regula-tory 
authority or agency of competent jurisdiction shall make a determination that, 
or issue a judgment, order, decree or ruling to the effect that, any one or 
more of the Loan Documents is illegal, invalid or unenforceable in accordance 
with the terms thereof; or

     (20) any Obligor or any Subsidiary thereof shall be indicted for a 
federal crime, a punishment for which could include the forfeiture of any of 
its assets; or

     (21) any failure by any Obligor to duly observe or perform any other 
term, covenant, condition or agreement under this Agreement and continuance of 
such failure for a period of thirty (30) days after notice thereof from the 
Lender or if such failure cannot be reasonably cured within such thirty (30) 
day period but the Borrower commences such cure within such thirty (30 ) day 
period and diligently prosecutes such cure to completion, the expiration of an 
additional thirty (30) days without the cure thereof; or

     (22) any "Event of Default", as defined in any of the other Loan 
Documents, shall occur.

     10.2 Termination of Advances and Acceleration.  If any one or more of the 
Events of Default shall occur and be continuing, the Lender may by notice to 
the Borrower declare its obligations to make Ad-vances hereunder to be 
terminated, whereupon the same shall terminate and the Lender shall be 
relieved of all obligations to make Advances to the Borrower, and/or declare 
all unpaid princi-pal of and accrued interest on the Note, together with all 
other amounts owing under the Loan Documents, to be immediately due and 
payable, whereupon same shall become and be immediately due and payable, 
anything in the Loan Documents to the contrary notwith-standing, and without 
presentment, protest, demand or other notice of any kind, all of which are 
hereby expressly waived by the Borrower; provided that if any one or more of 
the Events of Default specified in Section 10.1(o), Section 10.1(p), or 
Section 10.1(q), above, shall occur with respect to any Obligor, the Lender's 
obligations to make Advances hereunder automatically shall so terminate and 
all unpaid principal of and accrued interest on the Note, together with all 
other amounts owing under the Loan Documents, automatically shall become and 
be immediately so due and payable, without any declaration or other act on the 
part of the Lender.

     10.3 Remedies.  If any one or more of the Events of Default shall have 
occurred and be continuing, and whether or not the Lender shall have 
terminated its obligations to make Advances or accelerated the maturity of the 
Loan pursuant to Section 10.2, the Lender may proceed to protect and enforce 
its rights and remedies under this Agreement, the Note or any of the other 
Loan Documents by suit in equity, action at law or other appropriate 
proceeding, whether for the specific performance of any covenant or agreement 
con-tained in this Agreement and the other Loan Documents or any instrument 
pursuant to which the Obligations are evidenced, including as permitted by 
applicable law the obtaining of the ex parte appointment of a receiver, and, 
if any amount owed to the Lender shall have become due, by declaration or 
otherwise, proceed to enforce the payment thereof or any other legal or 
equitable right of the Lender.  No remedy conferred upon the Lender or the 
holder of the Note in this Agreement or in any of the other Loan Documents is 



<PAGE>                              - 24 -
intended to be exclusive of any other remedy and each and every remedy shall 
be cumulative and shall be in addition to every other remedy given hereunder 
or thereunder or now or here- after existing at law or in equity or by statute 
or any other provision of law.

     10.4 Distribution of Collateral Proceeds.  In the event that, following 
the occurrence or during the continuance of any Default or Event of Default, 
the Lender receives any monies in connection with the enforcement of any the 
Security Documents, or otherwise with respect to the realization upon any of 
the Col-lateral, such monies shall be distributed for application as follows:

     (1) First, to the payment of, or (as the case may be) the reimbursement 
of the Lender for or in respect of all reasonable costs, expenses, 
disbursements and losses which shall have been incurred or sustained by the 
Lender in connection with the collection of such monies by the Lender, for the 
exercise, protection or enforcement by the Lender of all or any of the rights, 
remedies, powers and privileges of the Lender under this Agreement or any of 
the other Loan Documents or in respect of the Collateral or in support of any 
provision of adequate indemnity to the Lender against any taxes or liens which 
by law shall have, or may have, priority over the rights of the Lender to such 
monies;

     (2) Second, to all other Obligations in such order or preference as the 
Lender may determine; provided, however, that the Lender may in its discretion 
make proper allowance to take into account any Obligations not then due and 
payable;

     (3) Third, upon payment and satisfaction in full or other provisions for 
payment in full satisfactory to the Lender of all of the Obligations, to the 
payment of any obligations required to be paid pursuant to Section 9-504(1)(c) 
of the Uniform Commercial Code of the Commonwealth of Massa-chusetts; and 

     (4) Fourth, the excess, if any, shall be returned to the Borrower or to 
such other Persons as are entitled thereto.

     10.5 Power of Attorney.  For the purposes of carrying out the provisions 
and exercising the rights, remedies, powers and privileges granted by or 
referred to in this Article, the Borrower hereby irrevocably constitutes and 
appoints the Lender, upon the occurrence of an Event of Default and during the 
continuance thereof, its true and lawful attorney-in-fact, with full power of 
substitution, to execute, acknowledge and deliver any instruments and do and 
perform any acts which are referred to in this Article, in the name and on 
behalf of the Borrower.  The power vested in such attor-ney-in-fact is, and 
shall be deemed to be, coupled with an interest and irrevocable.

     10.6 Waivers.  The Borrower hereby waives to the extent not prohibited by 
applicable law (a) all presentments, demands for performance, notices of 
nonperformance (except to the extent required by the provisions hereof or of 
any of the other Loan Documents), protests and notices of dishonor, (b) any 
requirement of diligence or promptness on the Lender's part in the 
enforce-ment of its rights (but not fulfillment of its obligations) under the 
provisions of this Agreement or any of the other Loan Docu-ments, and (c) any 
and all notices of every kind and description which may be required to be 
given by any statute or rule of law and any defense of any kind which the 
Borrower may now or here-after have with respect to its liability under this 
Agreement or under any of the other Loan Documents.

     11. SETOFF.  Regardless of the adequacy of any collateral, during the 
continuance of any Event of Default, any deposits (general or specific, time 
or demand, provisional or final, regardless of currency, maturity, or the 
branch of the Lender where such deposits are held) or other sums credited by 
or due from the Lender to the Borrower and any securities or other property of 
the Borrower in the possession of the Lender may be applied to or set off 
against the payment of the Obligations and any and all other Obligations.












<PAGE>                              - 25 -
     12. EXPENSES.  Except as provided below, the Borrower agrees to pay (a) 
any taxes (including any interest and penalties in respect thereto) payable by 
the Lender (other than taxes based upon the Lender's net income), including 
any recording, mortgage or intangibles taxes in connection with the Security 
Deed, or other taxes payable on or with respect to the transactions 
contemplated by this Agreement, including any taxes payable by the Lender 
after the Closing Date (the Borrower hereby agreeing to indemnify the Lender 
with respect thereto), (b) all title insurance premiums, and except as 
specifically provided below, the reasonable fees, expenses and dis-bursements 
of the Lender's counsel or any local counsel to the Lender incurred in 
connection with the administra-tion or interpretation of the Loan and the Loan 
Documents and other instru-ments mentioned herein, the making of each Advance 
hereunder, and amendments, modifications, approvals, consents or waivers 
hereto or hereunder, (c) except as specifically provided below, the fees, 
expenses and disbursements of the Lender incurred in connection with the 
administra-tion or interpretation of the Loan and the Loan Documents and other 
instru-ments mentioned herein, and the making of each Advance hereunder 
(including all fees paid to the Appraisal fees, and surveyor fees) (d) all 
reasonable out-of-pocket ex-penses (including reasonable attorneys' fees and 
costs, but, with respect to attorneys who may be employees of the Lender, only 
to the extent incurred after the occurrence and during the continuance of an 
Event of Default) and the fees and costs of consultants, accountants, 
auctioneers, receivers, brokers, property managers, appraisers, investment 
bankers or other experts retained by the Lender in connection with (i) the 
en-forcement of or preservation of rights under any of the Loan Documents 
against the Borrower or any Obligor or the adminis-tration thereof after the 
occurrence of a Default or Event of Default and (ii) any litigation, 
proceeding or dispute whether arising hereunder or otherwise, in any way 
related to the Lend-er's relationship with the Borrower or any Obligor, 
however, excluding from the cost to be paid under this subparagraph (d) any 
such costs incurred in any legal action between the Lender and the Borrower 
and/or the Guarantor in which final judgement is entered against the Lender, 
and (e) all reasonable fees, expenses and disbursements of the Lender 
in-curred in connection with UCC searches, UCC filings, title rundowns, title 
searches or mortgage recordings.  Notwithstanding the above, the Lender shall 
pay for the fees of Lender's counsel (including internal costs and expenses of 
such counsel, but exclusive of third party costs and expenses such as filing 
fees) in connection with the initial documentation of the Loan. The covenants 
of this Section shall survive payment or satisfaction of payment of all 
amounts owing with respect to the Note. 

     13. INDEMNIFICATION.  Except for any claims, actions or suits (i) as a 
result of the Lender's gross negligence and wilful misconduct and (ii) brought 
by the Borrower and/or the Guarantor as to which final judgement is entered 
against the Lender, the Borrower agrees to indemnify and hold harmless the 
Lender from and against any and all claims, actions and suits, whether 
groundless or otherwise, and from and against any and all liabilities, losses, 
damages and expenses of every nature and character arising out of this 
Agreement or any of the other Loan Documents or the transactions contemplated 
hereby and thereby including, without limitations, (a) any brokerage, leasing, 
finders or similar fees, (b) any disbursement of the proceeds of any of the 
Advances, (c) any condition of the Mortgaged Property whether related to the 
quality of construction or other-wise, (d) any actual or proposed use by the 
Borrower of the proceeds of any of the Advances, (e) any actual or alleged 
violation of any Requirements or Project Approvals, or (f) the Borrower or any 
Obligor entering into or performing this Agreement or any of the other Loan 
Documents, in each case including, without limita-tion, the reasonable fees 
and disbursements of counsel and allocated costs of internal counsel incurred 
in connection with any such investigation, litigation or other proceeding.  In 
litigation, or the preparation therefor, the Lender shall be entitled to 
select its own counsel and, in addition to the foregoing indemnity, the 
Borrower agrees to pay promptly the reasonable fees and expenses of such 
counsel.  The obligations of the Borrower under this Section shall survive the 
repayment of the Loan and shall continue in full force and effect so long as 
the possibility of such claim, action or suit exists.  If, and to the extent 
that the obligations of the Borrower under this Section are unenforceable for 
any reason, the Borrower hereby agrees to make the maximum contribution to the 
payment in satisfaction of such obligations which is permissible under 
applicable law.







<PAGE>                              - 26 -
     14. LIABILITY OF THE LENDER.  The liability of the Lender to the Borrower 
for any breach of the terms of this Agreement by the Lender shall not exceed a 
sum equal to the amount which the Lender shall be determined to have failed to 
advance in consequence of a breach by the Lender of its obligations under this 
Agreement, together with interest thereon at the rate payable by the Borrower 
under the terms of the Note for Advances which the Borrower is to receive 
hereunder, computed from the date when the Advance should have been made by 
the Lender to the date when the Advance is, in fact, made by the Lender, and, 
upon the making of any such payment by the Lender to the Borrower, the same 
shall be treated as an Advance under this Agreement, in the same fashion as 
any other Advance under the terms of this Agreement.  In no event shall the 
Lender be liable to the Borrower, or anyone claiming by, under or through the 
Borrower, for any special, exemplary, punitive or consequential damages, 
whatever the nature of the breach of the terms of this Agreement by the 
Lender, such damages and claims therefor being expressly waived by the 
Borrower.

     15. RIGHTS OF THIRD PARTIES.  All conditions to the per-formance of the 
obligations of the Lender under this Agreement, including the obligation to 
make Advances, are imposed solely and exclusively for the benefit of the 
Lender and no other Person shall have standing to require satisfaction of such 
conditions in accordance with their terms or be entitled to assume that the 
Lender will refuse to make Advances in the absence of strict compliance with 
any or all thereof and no other Person shall, under any circumstances, be 
deemed to be a beneficiary of such conditions, any and all of which may be 
freely waived in whole or in part by the Lender at any time if in its sole 
discretion it deems it desirable to do so.  In particular, the Lender makes no 
representations and assumes no obligations as to third parties concerning the 
quality of the construction by the Borrower of the Mortgaged Property or the 
absence therefrom of defects.

     16. SURVIVAL OF COVENANTS, ETC.  All covenants, agreements, 
representations and warranties made herein, in the Note, in any of the other 
Loan Documents or in any documents or other papers delivered by or on behalf 
of the Borrower or any Obligor pursu-ant hereto and thereto shall be deemed to 
have been relied upon by the Lender, notwithstanding any investigation 
heretofore or hereafter made by it, and shall survive the making by the Lender 
of the Advances, as herein contemplated, and shall continue in full force and 
effect either (i) so long as any amount due under this Agreement or the Note 
or any of the other Loan Documents remains outstanding or the Lender has any 
obligation to make any Advanc-es or (ii) for such longer period as may be 
provided for herein or in any other Loan Document.  All statements contained 
in any certificate or other paper delivered to the Lender at any time by or on 
behalf of any Obligor or any Subsidiary thereof pursuant hereto or in 
connection with the transactions contemplated hereby shall constitute 
represen-tations and warranties by such Person.

     17. ASSIGNMENT AND PARTICIPATION.

     17.1 Conditions to Assignment by Lender.  Except as provided herein, the 
Lender may assign to one or more banks or other entities all or a portion of 
its interests, rights and obliga-tions under this Agreement.  From and after 
the effective date of any such assignment, (i) the assignee thereunder shall 
be deemed to be a party hereto and, to the extent agreed to by the Lender, 
have the rights and obligations of a Lender hereunder, and (ii) the Lender 
shall, to the extent of its interest assigned as provided herein, be released 
from its obligations under this Agreement.

     17.2 New Notes, Agreement.  Upon any such assignment by the Lender, the 
Borrower shall execute and deliver to the Lender (a) in exchange for the- 
Note, a new Note to the order of such assignee in an amount equal to the 
amount assumed by such assignee and, if the Lender has retained some portion 
of its obligations hereunder, a new Note to the order of the Lender in an 
amount equal to the amount retained by it hereunder and (b) an amendment to 
this Agreement and any other Loan Documents, as may be reasonably requested by 
the Lender, to evidence the assignment, provide for the rights and interest of 
the assignee, and establish the rights, responsibilities and obligations of 
the Lender as agent for itself and any such assignee.  Such new Notes shall 
provide that they are replacements for the surrendered Notes, shall be in an 
aggregate principal amount equal to the aggregate principal amount of the 
surrendered Notes, shall be dated the effective date of such assignment and 
shall otherwise be in substantially the form of the assigned Notes. The 
surrendered Notes shall be cancelled and returned to the Borrower.  The Lender 
shall reimburse the Borrower for all reasonable attorneys' fees incurred by 
the Borrower pursuant to this Section, but not any other out of pockets costs 
and expenses.
<PAGE>                              - 27 -
     17.3 Participations.  The Lender may sell participations to one or more 
banks or other entities in all or a portion of the Lender's rights and 
obligations under this Agreement and the other Loan Documents; provided that 
(a) any such sale of partic-ipations shall not affect the rights and duties of 
the Lender hereunder to the Borrower and (b) the only rights granted to the 
participant pursuant to such participation arrangements with respect to 
waivers, amendments or modifications of the Loan Documents shall be the right 
to approve waivers, amendments or modifications that would reduce the 
principal of or the interest rate on the Loan, extend the term or increase the 
amount of the Loan or extend any regularly scheduled payment date for 
principal or interest.

     17.4 Pledge by the Lender.  The Lender may at any time pledge all or any 
portion of its interest and rights under this Agreement (including all or any 
portion of the Note) to any of the twelve Federal Reserve Banks organized 
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such 
pledge or the enforcement thereof shall release the Lender from its 
obligations hereunder or under any of the other Loan Documents.

     17.5 No Assignment by the Borrower.  The Borrower shall not assign or 
transfer any of its rights or obligations under any of the Loan Documents 
without the prior approval of the Lender.

     18. RELATIONSHIP.  The relationship between the Lender and the Borrower 
is solely that of a lender and borrower, and nothing contained herein or in 
any of the other Loan Documents shall in any manner be construed as making the 
parties hereto partners, joint venturers or any other relationship other than 
lender and borrower.

     19. NOTICES.  Except as otherwise provided herein or in any other Loan 
Document, each notice, demand, election or request provided for or permitted 
to be given pursuant to this Agreement or any other Loan Document (hereinafter 
in this Section referred to as "Notice") must be in writing and shall be 
deemed to have been properly given or served by personal delivery or by 
sending same by overnight courier or by depositing same in the United States 
Mail, postpaid and registered or certified, return receipt requested, and 
addressed as follows:  If to the Lender;

     The First National Bank of Boston
     100 Federal Street
     Boston, Massachusetts 02110
     Attn: Real Estate Division

     With a copy to:

     Riemer & Braunstein
     Three Center Plaza
     Boston, Massachusetts 02108
     Attn:  Steven J. Weinstein, Esquire

     If to the Borrower:

     America First Apartment Investors, L.P.
     1004 Farnam Street
     Omaha, Nebraska 68102
     Attn: Mr. Gary Thompson

     With a copy to:

     Kutak Rock
     Suite 1600
     3300 North Central Avenue
     Phoenix, Arizona 85012 
     Attn: Mark R. Nethers, Esquire












<PAGE>                              - 28 -
     Each Notice shall be effective upon being personally delivered or upon 
being sent by overnight courier or upon being deposited in the United States 
Mail as aforesaid.  The time period in which a response to such Notice must be 
given or any action taken with respect thereto (if any), however, shall 
commence to run from the date of receipt if personally delivered or sent by 
overnight courier, or if so deposited in the United States Mail, the earlier 
of three (3) Business Days following such deposit or the date of receipt as 
disclosed on the return receipt.  Rejection or other refusal to accept or the 
inability to deliver because of changed address for which no Notice was given 
shall be deemed to be receipt of the Notice sent.  By giving at least thirty 
(30) days prior Notice thereof, the Borrower or the Lender shall have the 
right from time to time and at any time during the term of this Agreement to 
change their respective addresses and each shall have the right to specify as 
its address any other address within the United States of America.

     20. GOVERNING LAW.  This Agreement and each of the other Loan Documents, 
except as otherwise specifically provided there-in, are contracts under the 
laws of the Commonwealth of Massa-chusetts and shall for all purposes be 
construed in accordance with and governed by the laws of said Commonwealth 
(excluding the laws applicable to conflicts or choice of law).

     21. CONSENT TO JURISDICTION; WAIVERS.  THE BORROWER, THE LENDER, AND EACH 
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO PERSONAL 
JURIS-DICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT, ACTION OR 
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER 
LOAN DOCUMENTS, AND (B) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF 
ANY STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, (II) TO OBJECT TO 
JURISDICTION WITHIN THE COMMON-WEALTH OF MASSACHUSETTS OR VENUE IN ANY 
PARTICULAR FORUM WITHIN THE COMMONWEALTH OF MASSACHUSETTS, AND (III) TO THE 
RIGHT, IF ANY, TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR 
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN ACTUAL DAMAGES.  THE BORROWER 
AND EACH PARTY AGREES THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS 
PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, 
ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN 
RECEIPT REQUESTED DIRECTED TO THE BORROWER AT THE ADDRESS SET FORTH IN SECTION 
19 ABOVE, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME 
SHALL BE SO MAILED.  NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE 
LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS 
AGAINST ANY COLLATERAL AND AGAINST THE BORROWER, AND AGAINST ANY PROPERTY OF 
THE BORROWER, IN ANY OTHER STATE.  INITIATING SUCH SUIT, ACTION OR PROCEEDING 
OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF 
THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE COMMONWEALTH OF 
MASSACHUSETTS SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER, EACH 
PARTY, AND THE LENDER HEREUNDER OR THE SUBMISSION HEREIN BY THE BORROWER AND 
EACH PARTY TO PERSONAL JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS.

     22. HEADINGS.  The captions in this Agreement are for convenience of 
reference only and shall not define or limit the provisions hereof.  

     23. COUNTERPARTS.  This Agreement and any amendment hereof may be 
executed in several counterparts and by each party on a separate counterpart, 
each of which when so executed and deliv-ered shall be an original, and all of 
which together shall constitute one instrument.  In proving this Agreement it 
shall not be necessary to produce or account for more than one such 
counterpart signed by the party against whom enforcement is sought.





















<PAGE>                              - 29 -
     24. ENTIRE AGREEMENT, ETC.  The Loan Documents and any other documents 
executed in connection herewith or therewith express the entire understanding 
of the parties with respect to the transactions contemplated hereby.  Neither 
this Agreement nor any term hereof may be changed, waived, discharged or 
terminated, except as provided in Article 25.   25. CONSENTS, AMENDMENTS, 
WAIVERS, ETC.  Except as other-wise expressly set forth in any particular 
provision of this Agreement, any consent or approval required or permitted by 
this Agreement to be given by the Lender may be given, and any term of this 
Agreement or of any other instrument related hereto or mentioned herein may be 
amended, and the performance or obser-vance by the Borrower of any terms of 
this Agreement or such other instrument or the continuance of any Default or 
Event of Default may be waived (either generally or in a particular instance 
and either retroactively or prospectively) with, but only with, the written 
consent of the Lender.  No waiver shall extend to or affect any obligation not 
expressly waived or impair any right consequent thereon.  No course of dealing 
or delay or omission on the part of the Lender in exercising any right shall 
operate as a waiver thereof or otherwise be prejudicial thereto.  No Advance 
made by the lender hereunder during the continuance of any Default or Event of 
Default shall constitute a waiver there-of.  No notice to or demand upon the 
Borrower shall entitle the Borrower to other or further notice or demand in 
similar or other circumstances.

     26. TIME OF THE ESSENCE.  Time is of the essence with respect to each and 
every covenant, agreement and obligation of the Borrower under this Agreement 
and the other Loan Documents.

     27. SEVERABILITY.  The provisions of this Agreement are severable, and if 
any one clause or provision hereof shall be held invalid or unenforceable in 
whole or in part in any juris-diction, then such invalidity or 
unenforceability shall affect only such clause or provision, or part thereof, 
in such juris-diction, and shall not in any manner affect such clause or 
provision in any other jurisdiction, or any other clause or provision of this 
Agreement in any jurisdiction.

     28. LIMITED RECOURSE.  The Borrower and the General Partner shall be 
fully liable for the Obligations.  However, the Obligations shall be on a 
non-recourse basis to any limited partner of the Borrower and any partner 
(whether limited or general) of the General Partner.  In no event shall the 
Lender make any claims or demand against any limited partner and /or general 
partner of the General Partner or any shareholder, equity holder, officer, 
employee or director of any such limited and/or general partner.  The Lender 
shall look solely to the assets of the Borrower and the General Partner to 
satisfy the Obligations.  IN WITNESS WHEREOF, the undersigned have duly 
executed this Agreement as a sealed instrument as of the date first set forth 
above.

                                  AMERICA FIRST APARTMENT INVESTORS, L.P.

                                  By: America First Capital Associates Limited 
                                      Partnership Four, a Delaware limited 
                                      partnership, its general partner

                                  By: America First Companies L.L.C., a 
                                      Delaware limited liability company, its 
                                      general partner	


                                  By: /s/ Michael Thesing
                                Name: Michael Thesing
                               Title: Vice President


                                  THE FIRST NATIONAL BANK OF BOSTON


                                  By: /s/ Kathleen M. Ahern
                                Name: Kathleen M. Ahern
                               Title: Vice President








<PAGE>                              - 30 -
                                  Exhibit A

                       	Interest Terms and Provisions

                                 	Exhibit B

               	Covenant Compliance Worksheet and Certificate

                                  Exhibit C

                             Notice of Borrowing

	































































<PAGE>                              - 31 -
                                  EXHIBIT A
                                Domestic Rate

     This Exhibit A provides for certain of the substantive terms and 
provisions regarding, among other thins, the interest rate and interest 
repayment for the Loan established pursuant to the Loan Agreement to which 
this document is attached as an Exhibit (the "Loan Agreement").  The terms and 
provisions of this Exhibit A are specifically incorporated by reference into 
the Loan Agreement.

1.   The following terms as used in this Exhibit D and the Loan Agreement shall 
     have the meanings set forth below:

     Base Rate.  The higher of (a) the annual rate of interest announced from 
time to time by the Lender at its head office in Boston, Massachusetts as its 
"base rate" and (b) one half of one percent (1/2%) above the overnight 
federal funds effective rate as published by the Board of Governors of the 
Federal Reserve System, as in effect from time to time.

     Business Day.  Any day on which the Lender is open for the transaction of 
banking business in Boston, Massachusetts.

     Domestic Rate.  Floating at the per annum rate equal to the sum of (i) 
the Base Rate plus (ii) one-half percent (0.50%).  The Domestic Rate shall be 
adjusted automatically on any change in the Base Rate, such that any change in 
the Domestic Rate resulting therefrom shall become effective as of the opening 
of business on the day on which such change in the Base Rate became effective.

     Interest Payment Date.  As to any Loan, the first day of the each calendar 
month commencing with the calendar month which includes the date of the 
Advance of such Loan.

2.   Any and all terms which are defined in the Loan Agreement shall when used 
     herein have the meaning set forth in the Loan Agreement, unless otherwise 
     defined herein.

3.   The Loan shall bear interest at the floating rate equal to the Domestic 
     Rate.

4.   The Borrower promises to pay interest on the Loan in arrears on each 
     Interest Payment Date.

5.   Each determination of an interest rate by the Lender pursuant hereto 
     shall be conclusive and binding upon the Borrower in the absence of 
     manifest error.

6.   All computations of interest on the Loans and of other fees to the extent 
     applicable shall be based on a 360-day year and paid for the actual 
     number of days elapsed.  Whenever a payment hereunder or under any of the 
     other Loan Documents becomes due on a day that is not a Business Day, the 
     due date for such payment shall be extended to the next succeeding 
     Business Day, and interest shall accrue during such extension.
























<PAGE>                              - 1 -
                               	Schedule 6.12

                            Insider Transactions

                                Schedule 6.13

                                 Subsidiaries

                                Schedule 6.14

                                   Partners

                                Schedule 6.20

                             	Project Approvals

	                               Schedule 8.3

                          	Existing Indebtedness

                                Schedule 8.4 

                               Existing Liens

	                               Schedule 8.5

                           	Existing Investments

















































<PAGE>                              - 32 -
























                                  EXHIBIT 24


                               POWER OF ATTORNEY
















































<PAGE>                               - 41 -
                               POWER OF ATTORNEY


     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1997, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

    	America First Tax-Exempt Mortgage Fund Limited Partnership 
    	America First Apartment Investors, L.P.
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
    	America First PREP Fund 2 Limited Partnership
    	America First PREP Fund 2 Pension Series Limited Partnership
    	Capital Source L.P.
    	Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 1st day of February, 1998.


                                                							  /s/ Michael B. Yanney
                                                 							Michael B. Yanney




















































<PAGE>                               - 42 -
                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1997, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 1st day of February, 1998.


                                                					  /s/ Gail Walling Yanney
                                               							Gail Walling Yanney





















































<PAGE>                               - 43 -
                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1997, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 1st day of February, 1998.


                                                					  /s/ George Kubat
                                               							George Kubat





















































<PAGE>                               - 44-
                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1997, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

     America First Tax-Exempt Mortgage Fund Limited Partnership 
    	America First Apartment Investors, L.P.
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
    	America First PREP Fund 2 Limited Partnership
    	America First PREP Fund 2 Pension Series Limited Partnership
    	Capital Source L.P.
    	Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 1st day of February, 1998.


                                                				 /s/  Martin A. Massengale
                                                				Martin A. Massengale





















































<PAGE>                               - 45 -
                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1997, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 1st day of February, 1998.


                                                  							        /s/ Alan Baer
                                                         							Alan Baer





















































<PAGE>                               - 46 -
                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1997, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 1st day of February, 1998.


                                                  			/s/ Mariann Byerwalter
                                                    Mariann Byerwalter





















































<PAGE>                              - 47 -
                               POWER OF ATTORNEY

     The undersigned hereby appoints Michael Thesing as his agent and 
attorney-in-fact for the purpose of executing and filing all reports on Form 
10-K relating to the year ending December 31, 1997, and any amendments 
thereto, required to be filed with the Securities and Exchange Commission by 
the following persons:

		   America First Tax-Exempt Mortgage Fund Limited Partnership 
     America First Apartment Investors, L.P. 
     America First Participating/Preferred Equity Mortgage Fund and America 
       First Participating/Preferred Equity Mortgage Fund Limited Partnership
     America First PREP Fund 2 Limited Partnership
     America First PREP Fund 2 Pension Series Limited Partnership
     Capital Source L.P.
     Capital Source II L.P.-A

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney 
on the 1st day of February, 1998.


                                               			/s/ William S. Carter, M.D.
                                                    William S. Carter, M.D.





















































<PAGE>                              - 48 -