UNITED STATES OF AMERICA
                               STATE OF MINNESOTA
                                COUNTY OF RAMSEY
                               CITY OF SAINT PAUL
                       HOUSING AND REDEVELOPMENT AUTHORITY
                            OF THE CITY OF SAINT PAUL


Number:  R-___                                                       $15,000,000


                        MULTIFAMILY HOUSING REVENUE BOND,
                                   SERIES 1987
                            (HIGHLAND RIDGE PROJECT)

 Interest               Maturity              Date of               Amendment
   Rate                   Date             Original Issue             Date
   ----                   ----             --------------             ----

See below            June 30, 2018        February 2, 1987       January 1, 1998


     KNOW ALL PERSONS BY THESE PRESENTS that the Housing and Redevelopment
Authority of the City of Saint Paul, Minnesota in the County of Ramsey and the
State of Minnesota (the "Issuer"), for value received, promises to pay to
Charter Municipal Mortgage Acceptance Company (the "Fund") or registered
assigns, but only from the Multifamily Housing Revenue Bond Fund (Highland Ridge
Project) (the "Bond Fund") and solely from the sources and in the manner
hereinafter provided and upon presentation and surrender hereof at the principal
corporate trust office of the Trustee named below, the principal sum of

                               $15,000,000 DOLLARS

on the maturity date specified above, or, if this Bond is prepayable as stated
below, on a prior date on which it shall have been duly called for redemption or
purchase. Interest on said principal sum shall be paid to the Record Date Holder
hereof, as defined below, solely from the Bond Fund, until the principal sum is
paid or discharged, at the interest rates stated below and on the Interest
Payment Dates stated below and shall accrue from the dated date specified above,
or (in the case of transfer or exchange) as to interest of a particular type
from the most recent Interest Payment Date to which interest of such type has
been paid or provided for. The "Record Date Holder" is the person in whose name
this Bond is registered in the Bond Register maintained by the Trustee named
below or its 


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successor in trust (the "Registered Holder" or "Holder" hereof) either (i) at
the close of business on the 15th 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 the Issuer shall be in default
in payment of interest due on such Interest 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
preceding the Special Record Date, to the Registered Holder at the close of
business on the 5th day preceding the date of mailing. By the close of business
of the last Business Day prior to any Interest Payment Date interest shall be
payable by check or draft mailed to the Registered Holder at his address as it
appears on the Bond Register on the Record Date or the Special Record Date, as
the case may be. The principal of and interest and premium, if any, on this Bond
are payable in lawful money of the United States of America.

     This Bond is one of a duly authorized issue and series in the original
aggregate principal amount of $15,000,000 designated as "Multifamily Housing
Revenue Bonds, Series 1987 (Highland Ridge Project)" (herein called the
"Bonds"), issued under and all equally and ratable secured under an Indenture of
Trust, dated as of February 1, 1987 (the "Indenture of Trust"), as amended and
supplemented by a First Supplemental Indenture dated as of January 1, 1998 (the
"Supplemental Indenture") (the Indenture of Trust and the Supplemental Indenture
being herein referred to as the "Indenture"), duly executed and delivered by the
Issuer to National City Bank of Minneapolis in Minneapolis, Minnesota (the
"Trustee"), as successor in trust to First Trust National Association (formerly
known as First Trust Company, Inc.) (the "1987 Trustee"), setting forth the
terms upon which such Bonds are issued and are to be authenticated and
delivered. Any capitalized terms used but not defined herein shall have the
meaning given them in the Indenture.

     The Bonds are issued by the Issuer in the aggregate principal sum of
$15,000,000 for the purpose of refunding, redeeming and prepaying, in part, a
like principal amount of the Issuer's $25,000,000 Variable Rate Demand Purchase
Multifamily Housing Revenue Bonds, Series 1985 (Shepard Park Project) (the
"Prior Bonds") issued on December 31, 1985 for the purpose of financing the
acquisition, construction and installation of the Project referred to below.
$10,000,000 of the Prior Bonds were redeemed and prepaid from the Escrowed
Proceeds of the Prior Bonds on the Closing Date of the Bonds. Upon issuance of
the Bonds, the remaining proceeds of the Prior Bonds, together with the
investment earnings on all Prior Bonds proceeds, were transferred (the
"Transferred Proceeds") to the Construction Fund established for the purpose of
making a loan (the "Loan") to Highland Ridge Limited Partnership, a Minnesota


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limited partnership (the "Company") under the provisions of a Loan Agreement
dated as of February 1, 1987 by and between the Issuer and the Company (the
"1987 Loan Agreement") as amended by the First Amendment to Loan Documents dated
as of January 1, 1998 (the "Amendment") (the 1987 Loan Agreement as amended by
the Amendment being herein referred to as the "Loan Agreement"), to finance the
construction and acquisition of a multifamily housing development located in
Saint Paul, Minnesota. The Company has agreed under the Loan Agreement to repay
the Loan, together with interest thereon, 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 (the "Basic Payments"). The Loan will be a
"non-recourse" obligation of the Company. The purpose of the Loan was to finance
a certain multifamily rental housing development (herein called the "Project").
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, the Basic
Payments due under said Loan Agreement. Payment of the principal of and interest
on the Bonds is further secured by a Building Loan Mortgage and Security
Agreement dated as of February 1, 1987 (the "Mortgage") from the Company, as
mortgagor, to the 1987 Trustee, as mortgagee, an Assignment of Leases, Rents and
Other Income dated as of February 1, 1987 (the "Assignment of Leases") between
the Company and the 1987 Trustee, each as amended by the Amendment. The Company,
1987 Trustee and Issuer have entered into a Regulatory Agreement (the
"Regulatory Agreement") dated as of February 1, 1987, also amended by the
Amendment, requiring compliance with certain requirements of Federal and State
law relating to the operation and maintenance of the Project as a multifamily
housing development and as residential rental property. The Company had further
executed and caused to be recorded a Certificate of Amendment dated as of
February 1, 1987 to the Declaration of Restrictive Covenants (the "Declaration")
dated as of December 1, 1985, constituting, as further amended by the Amendment,
a covenant running with the land and requiring compliance with Federal and State
requirements similar to those contained in the Regulatory Agreement. Reference
is hereby made to the Loan Agreement, Mortgage, Assignment of Leases Regulatory
Agreement, Declaration (each as amended by the Amendment) and Indenture
(including the Supplemental Indenture and all other indentures supplemental
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 Company,
the Trustee and the Holders of the Bonds and the terms upon which the Bonds are
issued and secured.

     Interest on the Bonds.

     The Bonds shall bear interest as provided below:


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     (a)  Base Interest. From Bond Closing until the Conversion Date, the Bonds
shall bear interest calculated and payable as follows (which shall be referred
to herein as "Base Interest"):

          (i) During the Initial Period, the Bonds shall bear Base Interest at a
     rate equal to 9.0% per annum payable on each payment date specified in
     paragraph (d)(1) below.

          (ii) During the Second Period, the Bonds shall bear Base Interest at a
     rate equal to 9.0% per annum for the first six months thereof; 8.0% per
     annum from and after the first day of the seventh month thereof to (but not
     including) the Amendment Date; and 7.25% per annum thereafter, payable on
     each payment date specified in paragraph (d)(1) below. Base Interest shall
     be calculated on the basis of a year of 365 days, actual days elapsed.

          (iii) In addition to the Base Interest which accrues as described in
     (a)(i) and (ii) above, additional Base Interest shall accrue on the Bonds
     from February 2, 1987 through March 14, 1987 in the amount of $560,000,
     which additional Base Interest shall be payable in full on the first
     Interest Payment Date for Base Interest.

          (iv) Accrued and unpaid Base Interest in the amount of $309,399 as of
     the Amendment Date (which amount is referred to as the "Base Deferred
     Interest Amount") shall be deferred without interest until paid. The Base
     Deferred Interest Amount shall be payable subsequent to the Amendment Date
     on the earliest possible payment dates specified in paragraph (d)(3) below
     on the basis and to the extent of 100% of Net Sale or Refinancing Proceeds,
     after the payment of accrued and unpaid Base Interest (and interest
     thereon) other than the Base Deferred Interest Amount, and prior to the
     payment of Deferred Interest and Contingent Interest.

     Notwithstanding that the Base Deferred Interest Amount shall be deferred
     without interest until paid as provided in this paragraph (a)(iv), any Base
     Interest due and payable from and after the Amendment Date which remains
     unpaid from time to time (specifically excluding the Base Deferred Interest
     Amount) shall accrue interest thereon at the rate of 12.00% per annum
     (compounded annually) until paid, and the payment so in default shall
     continue as an obligation of the Company as provided in Section 4.02(2) of
     the Loan Agreement.

          (v) In addition to the Base Interest which accrues as described above
     in paragraphs (a)(i), (ii), (iii) and (iv), additional Base Interest shall


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     accrue on the Bonds from the Amendment Date to December 31, 1999 in the
     amount of $75,000, payable at the rate of $3,125 monthly commencing on the
     first Interest Payment Date for Base Interest in January, 1998 and
     continuing through the first Interest Payment Date for Base Interest in
     December, 1999.

     (b)  Contingent Interest. After the Initial Period and through the
Conversion Date, the Bonds also shall bear interest calculated and payable as
follows:

          (1) Primary Contingent Interest. During each year or part thereof of
     the Second Period, to (but not including) the Amendment Date, the Bonds
     shall bear Contingent Interest at an annual rate equal to the Primary
     Contingent Interest Rate payable on the basis and to the extent of 100% of
     Net Cash Flow for each such year or part thereof, or, to the extent not
     fully paid on or before the Amendment Date because 100% of Net Cash Flow is
     insufficient, on the basis and to the extent of 100% of Net Sale or
     Refinancing Proceeds (after the payment of Base Interest including the Base
     Deferred Interest Amount), all as provided below.

     Contingent Interest equal to Maximum Primary Contingent Interest shall be
     payable on the Bonds on each payment date prior to the Amendment Date
     specified in paragraph (d)(2) below on the basis and to the extent of 100%
     of Net Cash Flow, measured for purposes of such payment and subject to the
     adjustments and reconciliation as specified in paragraph (e) below. If 100%
     of Net Cash Flow is insufficient to pay the Maximum Primary Contingent
     Interest, then there shall be payable the maximum amount possible to the
     extent of 100% of Net Cash Flow (which amount is referred to as the
     "Primary Contingent Interest").

     The difference between the Maximum Primary Contingent Interest and the
     Primary Contingent Interest shall be deferred with interest thereon at 9.0%
     per annum, compounded annually, until the Amendment Date (such difference
     together with the compounded interest thereon is referred to collectively
     with all such amounts previously deferred and unpaid as "Primary Deferred
     Interest"). Primary Deferred Interest in the amount of $1,412,863 which
     remains accrued and unpaid as of the Amendment Date (which amount is
     referred to as the "Primary Deferred Interest Amount") shall be deferred
     without interest until paid, and shall be payable subsequent to the
     Amendment Date on the earliest possible payment dates specified in
     paragraph (d)(3) below on the basis and to the extent of 100% of Net Sale
     or Refinancing Proceeds, after the payment of accrued Base Interest (and
     interest thereon) and the Base Deferred Interest Amount, and prior to the
     payment of Supplemental Deferred Interest and 


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     Supplemental Contingent Interest payable from Net Sale or Refinancing
     Proceeds.

     From and after the Amendment Date, no further Maximum Primary Contingent
     Interest (other than the Primary Deferred Interest Amount) shall be due or
     payable.

          (2) Supplemental Contingent Interest. During each year or part thereof
     of the Second Period, the Bonds shall also bear Contingent Interest at an
     annual rate equal to the Supplemental Contingent Interest Rate payable on
     the basis and to the extent of 15% of so much of Net Cash Flow for each
     such year or part thereof as remains after reducing Net Cash Flow by the
     amount of any payments on the basis of Net Cash Flow specified above in
     paragraph (b)(1) or, to the extent not fully paid because 15% of Net Cash
     Flow remaining after reducing Net Cash Flow by the amount of such payments
     is insufficient, on the basis and to the extent of 15% of so much of Net
     Cash Flow as remains after reducing Net Cash Flow by the amount of any
     payments on the basis of Net Cash Flow specified above in paragraph (b)(1),
     and 15% of so much of Net Sale or Refinancing Proceeds as remains after
     reducing Net Sale or Refinancing Proceeds by the amount of any payments on
     the basis of Net Sale or Refinancing Proceeds specified above in paragraphs
     (a)(iv) and (b)(1), all as provided below.

     Contingent Interest equal to Maximum Supplemental Contingent Interest shall
     be payable on the Bonds on each payment date specified in paragraph (d)(2)
     below on the basis and to the extent of 15% of so much of Net Cash Flow as
     remains after reducing Net Cash Flow by the amount of any payments on the
     basis of Net Cash Flow specified above in paragraph (b)(1), measured for
     purposes of such payment and subject to the adjustments and reconciliation
     as specified in paragraph (e) below. If 15% of Net Cash Flow after such
     payments is insufficient to pay the Maximum Supplemental Contingent
     Interest payable on any payment date specified in paragraph (d)(2) below,
     then there shall be payable the maximum amount possible on the basis and to
     the extent of 15% of Net Cash Flow after such payments (which amount is
     referred to as the "Supplemental Contingent Interest").

     The difference between the Maximum Supplemental Contingent Interest and the
     Supplemental Contingent Interest shall be deferred without interest (such
     difference is referred to collectively with all such amounts previously
     deferred as "Supplemental Deferred Interest") and shall thereafter be
     payable on the earliest possible payment dates specified in paragraph
     (d)(2)below on the basis and to the extent of 15% of so much of Net Cash
     Flow as remains after reducing Net Cash Flow by the amount of 


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     any such payments on the basis of Net Cash Flow specified above in
     paragraph (b)(1), measured for purposes of such payment and subject to the
     adjustments and reconciliation as specified in paragraph (e) below.
     Supplemental Deferred Interest shall be paid on the basis and to the extent
     of 15% of Net Cash Flow remaining after reducing Net Cash Flow by the
     amount of such payments specified in paragraph (b)(1), before any
     Supplemental Contingent Interest is paid on such basis.

     To the extent that Maximum Supplemental Contingent Interest and all
     Supplemental Deferred Interest are not fully paid on the basis and to the
     extent of 15% of Net Cash Flow remaining after reducing Net Cash Flow by
     the amount of such payments on payment dates specified in paragraph (d)(2)
     below, they shall be payable on the basis and to the extent of 15% of so
     much of Net Sale or Refinancing Proceeds as remains after deducting any
     payments on the basis of Net Sale or Refinancing Proceeds specified above
     in paragraphs (a)(iv) and (b)(1) on the earliest possible payment dates
     specified in paragraph (d)(3) below.

     All payments of additional Base Interest pursuant to (a)(v) above shall be
     credited to the payment of Supplemental Deferred Interest and Supplemental
     Contingent Interest otherwise due and payable from Net Cash Flow pursuant
     to this paragraph (b)(2), for the period commencing from and after the
     Amendment Date to and through December 31, 1999.

     (c)  Reserved.

     (d)  Payment Dates for Interest. The Interest payable on the Bonds to the
Conversion Date as provided above shall be payable on the following dates:

          (1) Base Interest shall be payable (i) on each Interest Payment Date
     for Base Interest, (ii) on each redemption date before the Conversion Date
     (but only with respect to the Bonds redeemed), and (iii) on the Conversion
     Date.

          (2) Contingent Interest and Deferred Interest that is payable on the
     basis of Net Cash Flow shall be payable (i) on each Interest Payment Date
     for Contingent Interest and Deferred Interest to and including the
     Conversion Date, (ii) on each redemption date during the Second Period (but
     only with respect to the Bonds redeemed), (iii) on each date on which
     Contingent Interest and Deferred Interest is payable from Net Sale or
     Refinancing Proceeds (as provided in paragraph (d)(3) below), and (iv) on
     the Conversion Date.


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          (3) The Base Deferred Interest Amount, the Primary Deferred Interest
     Amount, Contingent Interest and Deferred Interest that is payable on the
     basis of Net Sale or Refinancing Proceeds shall be payable on the next
     Interest Payment Date for any interest succeeding by at least thirty (30)
     days the date of the Event of Sale or Refinancing relating to the Sale of
     the Project or Refinancing of the Project, except in the case of (x) a
     Refinancing of the Project described in clause (i) or (iv) of the
     definition thereof, in which case it shall be payable on the redemption
     date or payment date, as the case may be, (y) a Sale of the Project
     described in clause (i) of the definition thereof resulting in a call of
     the Bonds for redemption pursuant to Section 3-1(1)(e) of the Indenture, in
     which case it shall be payable on the redemption date, or (z) a Refinancing
     of the Project described in clause (ii) of the definition thereof, in which
     case it shall be payable on the Initial Remarketing Date.

     (e)  Calculation of Net Cash Flow.

          (1)  (i)  No later than thirty (30) days before each payment date for
     Contingent Interest and Deferred Interest specified in paragraph (d) (2)
     above (or such lesser number of days as shall be the maximum number of days
     possible if the payment date was not known until less than forty (40) days
     before the payment date), the Company shall calculate Net Cash Flow for the
     three-month period ending on the last day of the third preceding month
     before such payment date and shall provide the Trustee (but only after the
     Trustee has accepted the duty to calculate interest pursuant to the
     Indenture) and the Holders (if fewer than three) (i) the analysis of such
     Net Cash Flow, (ii) unaudited financial statements of the Project for such
     three-month period and (iii) a calculation of the amount of Contingent
     Interest and Deferred Interest then payable.

               (ii) Notwithstanding the foregoing in clause (i), (A) except as
     may result from adjustments and reconciliation provided below in this
     paragraph (e), the period of time for which Net Cash Flow is measured for
     purposes of a payment date for Contingent Interest and Deferred Interest on
     any Bonds specified in paragraph (d)(2) hereof shall not include any time
     for which Net Cash Flow has been measured for purposes of a previous
     payment date for Contingent Interest and Deferred Interest on such Bonds
     specified in paragraph (d)(2) hereof, and (B) the calculation of Net Cash
     Flow and the amount of Contingent Interest and Deferred Interest payable
     therefrom on the Conversion Date shall be reconciled and adjusted to give
     effect to the actual amount of Net Cash Flow for the current calendar year
     (and the preceding calendar year if the Conversion Date falls before
     delivery of the audit referred to in paragraph (e)(2) hereof in the current
     calendar year) up to but not including the


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     Conversion Date (such actual amount of Net Cash Flow being measured by the
     actual amount known as of the most recent possible date and an amount
     reasonably estimated to be earned between such date and the Conversion
     Date) and all Contingent Interest and Deferred Interest paid during the
     current calendar year (and the preceding calendar year if the Conversion
     Date falls before delivery of the audit referred to in paragraph (e)(2)
     hereof in the current calendar year) in the manner described in paragraph
     (e)(3) below, except that any underpayments or overpayments of Contingent
     Interest and Deferred Interest shall be paid or refunded, as the case may
     be, on the Conversion Date.

               (iii) The amount of Net Cash Flow reflected in the analysis
     described above, as adjusted in the case of the analysis in connection with
     the Conversion Date, shall provide the basis for the calculation of
     Contingent Interest and Deferred Interest payable on the basis of Net Cash
     Flow on each payment date therefor specified in paragraph (d)(2) hereof,
     except as provided below. The Trustee, upon direction of the owners of a
     majority in principal amount of the Bonds (if it has accepted the duty to
     calculate interest thereon pursuant to the Indenture), or the Holders of a
     majority in principal amount of Bonds themselves, may request further
     substantiation of the Company's calculation of Net Cash Flow and may verify
     and correct as necessary the calculations thereof. If the Trustee or the
     Holders of a majority in principal amount of the Bonds do so reasonably
     modify such calculation, the Trustee or such Holders shall notify the
     Company of such modified calculation no later than ten (10) Business Days
     before such payment date (or such lesser number of days as shall be the
     maximum number of days practicable if the Trustee or such Holders received
     the calculation of Net Cash Flow less than thirty (30) days before the
     payment date) and such modified calculation shall be the basis for the
     calculation of Contingent Interest and Deferred Interest payable on the
     basis of Net Cash Flow on the payment date. Except to the extent provided
     in this paragraph (e)(1) with respect to the Conversion Date, the analysis
     and payment on the basis of Net Cash Flow described in this paragraph
     (e)(1) is intended to provide a preliminary payment of Contingent Interest
     and Deferred Interest on the basis of Net Cash Flow prior and subject to
     the adjustment and reconciliation process described in paragraphs (e)(2)
     and (e)(3) hereof.

          (2) No later than March 15 of each calendar year (up to and, unless
     the Conversion Date falls before delivery of the audit, including the
     calendar year in which the Conversion Date occurs) the Company shall
     provide to the Issuer, the Trustee and the Holders of the Bonds (if fewer
     than three) an audit of the operations of the Project for the preceding
     calendar year prepared and certified by an Accountant acceptable to the


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     Trustee (if it has accepted the duty to calculate interest pursuant to the
     Indenture), Company and the Holders (if fewer than three) in accordance
     with generally accepted auditing standards. The audit shall state the
     actual amount of Net Cash Flow for that calendar year and shall calculate
     all Contingent Interest and Deferred Interest paid and payable from Net
     Cash Flow during such calendar year pursuant hereto.

          (3)  The audit prepared in accordance with paragraph (e)(2) shall
     state the amount of Contingent Interest and Deferred Interest payable and
     paid during the subject calendar year. If the amounts of Contingent
     Interest and Deferred Interest payable on the basis of Net Cash Flow
     (measured on the basis of actual Net Cash Flow for such calendar year
     according to the audit) exceeded the amount paid, then there shall be
     payable to the Holders of the Bonds any such payable and unpaid amounts on
     the payment date for Contingent Interest and Deferred Interest specified in
     paragraph (d)(2) hereof immediately following the receipt by the Trustee
     and the said Holders of the audit. If the amount of Contingent Interest and
     Deferred Interest payable on the basis of Net Cash Flow (measured on the
     basis of actual Net Cash Flow for such calendar year according to the
     audit) is less than the amount actually paid, such overpaid amount shall be
     credited against any other interest payments (whether Base Interest or
     Contingent Interest and Deferred Interest) or other payments due from the
     Issuer to the Holders of the Bonds on the Payment Date (or Payment Dates)
     immediately following the receipt by the Trustee and the said Holders of
     the audit and the Holders shall not be required to refund any such amount
     unless the crediting does not exhaust the overpayment, in which case the
     balance of the overpayment will be refunded by the Holders on the
     Conversion Date.

     (f)  Fair Market Value of the Project for Purposes of Determining
Refinancing Proceeds.

          (1)  In order to calculate the fair market value of the Project for
     purposes of determining Sale or Refinancing Proceeds in the event of a
     Refinancing of the Project (other than a Refinancing of the Project
     described in clause (iii) of the definition thereof) the fair market value
     of the Project is required to be determined as set forth below, such
     determination to be completed no later than fifteen (15) days before the
     date on which Contingent Interest and Deferred Interest are payable on the
     basis and to the extent of Net Sale or Refinancing Proceeds or as soon
     thereafter as possible (but not after the said payment date if the notice
     described in the following sentence cannot be given at the time specified).
     The Company shall give notice to the Trustee and to the Holders of the
     Bonds of the impending Refinancing of the Project at least ninety (90) days


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     before the expected date of Refinancing of the Project or as much notice as
     is possible, promptly upon learning of the impending Refinancing of the
     Project. The Holders of all of the Bonds and the Company may jointly
     determine and agree upon the fair market value of the Project but must do
     so at least sixty (60) days before the proposed date of the Refinancing of
     the Project; failing such agreement the Holders of a majority in principal
     amount of the Bonds shall select an independent M.A.I. appraiser and the
     Company shall select an independent M.A.I. appraiser. The appraisers shall
     jointly determine and agree upon the fair market value of the Project. If
     the two appraisers are unable to agree upon the fair market value of the
     Project at least thirty (30) days before the proposed date of the
     Refinancing of the Project, the Holders and the Company shall select a
     third independent M.A.I. appraiser. If such Holders and the Company are
     unable to agree upon a third appraiser by such date, the two appraisers
     shall select the third appraiser. If the two appraisers are unable to agree
     upon the third appraiser at least twenty-five (25) days before the proposed
     date of the Refinancing of the Project, such Holders or Company may
     petition any court of competent jurisdiction for the appointment of the
     third independent appraiser. As early as practicable, but prior to the
     expected date of the Refinancing of the Project, the third appraiser shall
     select from between the two appraisals the one which the third appraiser
     believes to assess more accurately the fair market value of the Project and
     the appraisal so selected shall be the fair market value of the Project,
     shall provide the basis for the calculation of Contingent Interest and
     Deferred Interest payable on the basis of Net Sale or Refinancing Proceeds
     in the event of a Refinancing of the Project (other than a Refinancing of
     the Project described in clause (iii) of the definition thereof) on each
     payment date therefor specified in paragraph (d)(3) hereof and shall be
     binding upon the Company and the Holders of the Bonds. The fees and
     expenses of the appraiser selected by each party shall be borne by the
     party selecting the appraiser and the cost of the third appraiser shall be
     borne equally by the Company and the Holders of the Bonds.

          (2)  The fair market value of the Project for purposes of this
     paragraph (f) shall reflect the amount each appraiser believes an informed
     and willing purchaser under no compulsion to purchase the Project would pay
     to an informed and willing seller under no compulsion to sell the Project,
     less those costs of a sale appropriate to the marketplace within which the
     Project would be sold. Such determination shall take into consideration
     such factors as the appraisers may deem relevant. Except as provided below,
     the fair market value of the Project set forth in an appraisal shall be
     determined as of the date of such appraisal.


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<PAGE>


          (3)  If the Refinancing of the Project is based upon a redemption of
     Bonds pursuant to Section 3-1(1)(b) or (h) of the Indenture, the fair
     market value of the Project shall be determined as of the day before the
     occurrence of any events requiring the payment of Insurance Proceeds or a
     Condemnation Award, as if such events had not occurred and were not
     anticipated.

     (g)  Interest After Initial Remarketing Date. From and after the Initial
Remarketing Date, if all of the Bonds have been remarketed pursuant to the
Indenture, the Bonds shall bear interest at the Reset Rate as determined
pursuant to Section 2-13 of the Indenture.

          (h)  Interest Limitation. Notwithstanding anything elsewhere contained
in this Bond or in the Indenture, (a) total interest on the Bonds, cumulative
from the date of issuance hereof until the Conversion Date, shall not exceed the
sum of 14.5% per annum, simple and noncompounded for each year from such date of
issuance to the date of calculation; and (b) if the interest rate on the Bonds
shall at any time be deemed to be in excess of the maximum rate permitted by
law, then the Bonds shall instead bear interest at the maximum rate permitted by
such law. Any excess payment of interest shall be deemed to be a credit against
the unpaid principal amount of the Bonds and the principal amount of the Bonds
shall be reduced prorata by such amount and interest shall no longer accrue on
such credit amount.

     The Bonds are subject to prepayment and redemption (or purchase) prior to
maturity in whole or in part at such time or times, under such circumstances at
such redemption price and in such manner as is set forth in the Indenture. Upon
an election by the Holder of a redemption in whole of the Bonds pursuant to
Section 3-1(1)(f) of the Indenture, at the direction of the Company given not
less than 60 days in advance, either (i) the Bonds shall be redeemed on the date
specified in the notice to the Issuer, the Trustee, and the Company from the
Holder described in Section 3-1(1)(f) of the Indenture or (ii) the Bonds will be
deemed tendered for purchase and remarketed as provided in the Indenture on the
date specified in the notice to the Issuer, the Trustee, and the Company from
the Holder described in said Section 3-1(1)(f), or on such earlier Interest
Payment Date selected by the Company in its direction to remarket the Bonds but
in no event before the Interest Payment Date following the Reference Month in
2003. The Bonds may only be remarketed if the conditions specified in the
Indenture are met which conditions include requirements that either the Bonds be
rated and that certain disclosures be made in connection with such remarketing
or that the remarketing be limited to certain institutional investors who shall
agree to restrictions on the transfer thereof.


                                       12
<PAGE>


     The purchase price of the Bonds so remarketed in lieu of redemption shall
be the principal amount thereof plus accrued interest including all Base
Interest, the Base Deferred Interest Amount, Contingent Interest and Deferred
Interest (including the Primary Deferred Interest Amount) to the Initial
Remarketing Date and shall be payable on the Initial Remarketing Date. If the
conditions to remarketing of the Bonds set forth in the Indenture are not
satisfied, or if the Bonds are not successfully remarketed, or if the full
purchase price thereof is not paid or available for payment on the Initial
Remarketing Date, or if all Interest (including Contingent Interest and Deferred
Interest) and principal payable on the Bonds up to and including the Initial
Remarketing Date has not been fully paid, then all Bonds tendered shall be
redeemed and not remarketed pursuant to Section 3-1(1)(d) of the Indenture.

     In the event of either optional or mandatory redemption by lot, the Trustee
shall assign to each Bond then Outstanding (as defined in the Indenture) 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 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 as shall equal $5,000 for each number for each number assigned to it
and so selected. If a Bond may be redeemed 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 attorney duly authorized in writing) and
the Issuer shall execute and the Trustee 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 of any authorized
denomination in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Bond so surrendered.

     In addition to the foregoing, if under certain circumstances an Event of
Default, as defined in the Indenture shall occur, the principal of all Bonds and
all interest accrued thereon (including all unpaid Base Interest, Contingent
Interest and Deferred Interest) shall be declared due and payable in the manner
and with the effect provided in the Loan Agreement and Indenture.

     If the date for payment of the principal of, premium, if any, or Interest
on this Bond shall be a Saturday, Sunday, legal holiday or a day on which
banking institutions in the city where the principal corporate trust office of
the Trustee or Bank is located are authorized by law or executive order to
close, then the date 


                                       13
<PAGE>


for such payment shall be the next succeeding day which is not a Saturday,
Sunday, legal holiday or a day on which such banking institutions are authorized
to close.

     Notice of redemption or purchase shall be published (if required by law) at
least once before the redemption date in daily or weekly financial journals or
newspapers of general circulation in Saint Paul or Minneapolis, Minnesota and
New York, New York, and shall be mailed to each Registered Holder of a Bond to
be redeemed but, if published notice is given, no defect in or failure to give
such mailed notice of redemption shall affect the validity of the proceedings
for redemption of any Bond. All Bonds so called for redemption, provided funds
for their redemption have been duly deposited as set forth in the Indenture,
will cease to bear interest on the specified redemption date and (except for the
purpose of payment) shall no longer be protected by the Indenture and shall not
be deemed Outstanding under the Indenture, and shall thereafter be payable
solely from the funds provided for payment.

     This Bond and the series of which it forms a part were issued pursuant to
and in full compliance with the Constitution and laws of the State of Minnesota,
particularly Minnesota Statutes, Chapter 462C, and pursuant to resolutions
adopted and approved by the City and the Issuer, which resolutions authorized
the Project and the execution and delivery of the Indenture, and the issuance of
the Bonds as special, limited obligations payable solely from revenues derived
from the Loan Agreement except that under certain circumstances the Bonds may be
payable from Bond proceeds, insurance proceeds, Condemnation proceeds, and the
proceeds of any other security given for the Loan. The Loan repayments under the
Loan Agreement are scheduled to be sufficient to pay the principal of, premium,
if any, and interest on the Bonds as the same become due and payable and are to
be paid to the Trustee for the account of the Issuer and credited to the Bond
Fund as a special trust fund account created by the Issuer and have been and are
hereby pledged for that purpose. The Bonds and the interest due thereon are
issued without moral obligation on the part of the Issuer, the City, the State
of Minnesota or any of its political subdivisions, and do not and shall never
constitute a general indebtedness of the Issuer or the City within the meaning
of any state constitutional or statutory provision and do not and shall not
constitute or give rise to a pecuniary liability or moral obligation of the
Issuer or the City or a charge against their general credit or taxing powers, or
to the extent permitted by law, any pecuniary liability of any officer, employee
or agent of the Issuer or the City.

     The Registered Holder of the 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 


                                       14
<PAGE>


thereto, except as provided in the Indenture. Modifications or alterations of
the Indenture, or of any indenture supplemental thereto, may be made only to the
extent and in the circumstances permitted by the Indenture.

     Except where prohibited, to the extent permitted by and as provided in the
Indenture, certain amendments or modifications can be made to the Indenture, the
Loan Agreement and the Mortgage without Bondholder consent. Except as
specifically provided, the terms and provisions of the Indenture, the Loan
Agreement, or of any instrument supplemental thereto, may not be modified or
altered except with the consent of the Registered Holders of at least 51% in
aggregate principal amount of the Bonds then Outstanding thereunder, and with
the consent of the City, the Issuer, the Company and the Trustee, as
appropriate.

     The Indenture also contains provisions permitting Holders of a majority in
aggregate principal amount of the Bonds at the time 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. Any such consent or waiver by the Registered Holder of this
Bond shall be conclusive and binding upon such Registered Holder and on all
future Registered Holders of this Bond and of any Bond issued in lieu hereof
whether or not notation of such consent or waiver is made upon this Bond.

     The Bonds are issued as fully registered Bonds without coupons in the
denomination of $5,000 or any whole multiple thereof. The Bonds are
interchangeable for one or more Bonds in authorized denominations and of the
same series, aggregate principal amount, interest rate and maturity date, upon
surrender thereof by the Holder at the principal office of the Trustee, in the
manner and subject to the limitations provided in the Indenture. The Issuer, the
Trustee and any additional paying agents may deem and treat the Registered
Holder hereof as the absolute owner hereof (whether or not this Bond shall be
overdue) for the purpose of receiving payment of or on account of principal
hereof and Interest (except as otherwise hereinabove provided with respect to
the Record Date and Special Record Date) due hereon and for all other purposes,
and the City, the Trustee and any additional paying agents shall not be affected
by any notice to the contrary.

     This Bond is transferable by the registered owner hereof in person or by
his attorney duly authorized in writing at the office of the Trustee as
registrar, but only in the manner, subject to the limitations and upon payment
of the charges provided in the Indenture, and upon surrender and cancellation of
this Bond. Upon such transfer a new registered Bond or Bonds, of any authorized
denomination or denominations, of the same maturity and for the same aggregate
principal amount will be issued to the transferee in exchange herefor.


                                       15
<PAGE>


     Prior to the Initial Remarketing Date, a Bond may only be transferred (i)
to any affiliate of the Fund, an affiliate of one of the general partners of the
Fund, any entity arising out of any merger or consolidation of the Fund, by
operation of law, or to a trustee in bankruptcy of the Fund; (ii) by an
assignment to a bank or other financial institution issuing a letter of credit
or like instrument in connection with the Loan; or (iii) to one or more
Institutional Investors if, in each instance, the Issuer and the Trustee receive
from the transferee (A) its agreement to the transfer restrictions set forth in
this paragraph in connection with subsequent transfers of the Bond and (B)
evidence of the Assignment by the transferor to the transferee (or, if there is
to be thereafter more than one Holder of the Bonds, evidence of the appointment
and acceptance of a Trustee and assignment to the Trustee) of the transferor's
rights in and to the Loan and the other rights and interest as theretofore
conveyed to it by the Assignment, or an assignment of the Assignment. Subject to
the limitations provided in the Indenture, this Bond is transferable by the
Registered Holder hereof upon surrender of this Bond for transfer at the
principal corporate trust office of the Trustee, 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 Trustee and executed and with guaranty of
signature of the Registered Holder hereof or his attorney duly authorized in
writing, containing written instructions as to the details of the transfer of
the Bond. Thereupon the Issuer shall execute (if necessary) and the Trustee
shall authenticate and deliver, in exchange for this Bond, one or more new Bonds
in the name of the transferee, of an authorized denomination, in aggregate
principal amount equal to the principal amount of this Bond, of the same
maturity, and bearing interest at the same rate.

     No service charge shall be made to the Registered Holder for any
registration, transfer or exchange hereinbefore referred to, but the Trustee 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 Bondholders.

     IT IS HEREBY CERFIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, to happen and to 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, and that the issuance of this Bond and the series of which it forms a
part, together with all other obligations of the Issuer, does not exceed or
violate any constitutional or statutory limitation.


                                       16
<PAGE>


     This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture unless the Certificate
of Authentication hereon shall have been executed by the Trustee.


                                       17
<PAGE>


     IN WITNESS WHEREOF, the Housing and Redevelopment Authority of the City of
Saint Paul, Ramsey County, has caused this Bond to be executed in its name by
the facsimile signatures of its Chairman, countersigned by its Director of
Finance and Management Services and attested by its Secretary, and by the manual
signature of a Responsible Agent of the Trustee acting as authenticating agent,
and has caused this Bond to be sealed with a facsimile of its official seal
printed hereon.

Date of Registration:               Registrable by:                             
April 20, 1998                                     -----------------------------
----------------------              Payable at:
                                               ---------------------------------
                                    
                                               ---------------------------------
                                    
                                               ---------------------------------
                                    
                                               ---------------------------------



                                    HOUSING AND REDEVELOPMENT           
                                    AUTHORITY OF THE CITY OF
                                    SAINT PAUL, RAMSEY COUNTY,
                                    MINNESOTA
                                    /s/ D.B. Bostrom
                                    --------------------------------------------
                                    Chairman                                    
                                                                                
                                    Countersigned:                              
                                    /s/ Joseph M. Reid
                                    --------------------------------------------
                                    Director of Finance and Management          
                                                                                
                                    Attest:                                     
                                    /s/ J. Benanav
                                    --------------------------------------------
                                    Secretary    


TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This Bond is one of the Bonds
described in the within mentioned Indenture.

National City Bank of Minneapolis,
Trustee

By: /s/ Timothy M. Murphy
   -------------------------------
       Authorized Officer


<PAGE>


                                   ASSIGNMENT


         For value received, the undersigned hereby sells, assigns and transfers
unto ______________________________________________________________the within
Bond and does hereby irrevocable constitute and appoint ________________________
attorney to transfer the Bond on the books kept for the registration thereof,
with full power of substitution in the premises.

Dated: ____________________________  ___________________________________________

         Notice:  The assignor's signature to this assignment must
                  correspond with the name as it appears upon the face of
                  the within Bond in every particular, without alteration or
                  any change whatever.

Signature Guaranteed:

_______________________________

Signature's must be guaranteed by a national bank or trust company or by a
brokerage firm having a membership in one of the major stock exchanges.

         The Trustee will not effect transfer of this Bond unless the
information concerning the transferee requested below is provided.

Name and Address:  _____________________________________________________________
                                                                                
                   _____________________________________________________________
                                                                                
                   _____________________________________________________________
                   (Include information for all joint owners                   
                   if the Bond is held by a joint account)


<PAGE>


                              DEFINITIONAL APPENDIX
                              ---------------------

     Amendment Date: means January 1, 1998.

     Interest: means all Base Interest (including the Base Deferred Interest
Amount), Contingent Interest, Deferred Interest (including the Primary Deferred
Interest Amount), any interest thereon, and, subject to paragraph (h) of the
Bonds, any and all amounts paid other than principal of and premium with respect
to the Bonds.

     Maximum Primary Contingent Interest: means, on any payment date for
Contingent Interest and Deferred Interest specified in paragraph (d) hereof, 0%
for the first six months of the Second Period, and 1.0% for that portion of the
Second Period commencing on the first day of the seventh month thereof and
continuing to (but not including) the Amendment Date, of the aggregate principal
amount of the Bonds on which Contingent Interest and Deferred Interest are then
payable, times a fraction, the numerator of which is the number of days since
the last date of calculation during the Second Period of Contingent Interest and
Deferred Interest payable on such Bonds (or the first date of the Second Period
if there is no previous date of such calculation and, in the case of the first
date of such calculation after the date which is 549 days after the end of the
Initial Period, the date that is 549 days after the end of the Initial Period)
and the denominator of which is 365 . The Maximum Primary Contingent Interest
shall be 0%, and no Maximum Primary Contingent Interest (other than the Primary
Deferred Interest Amount) shall accrue or be payable, from and after the
Amendment Date.

     Maximum Supplemental Contingent Interest: means, on any payment date for
Contingent Interest and Deferred Interest specified in paragraph (d) hereof,
seven percent (7%) of the aggregate principal amount of the Bonds on which
Contingent and Deferred Interest are then payable, times a fraction, the
numerator of which is the number of days since the last date of calculation
during the Second period of Contingent Interest and Deferred Interest payable on
such Bonds (or the first date of the Second Period if there is no previous date
of such calculation) and the denominator of which is 365.

     Primary Contingent Interest Rate: means an interest rate of 0% per annum
for the first six months of the Second Period, and 1.0% per annum for that
portion of the Second Period commencing on the first day of the seventh month
thereof and continuing to (but not including) the Amendment Date.

     Supplemental Contingent Interest Rate: means an interest rate of 7.0% per
annum.