Agreement

                            Of Limited Partnership Of

                          Lake Village Apartments, L.P.



















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                                    Agreement
                            Of Limited Partnership Of
                          Lake Village Apartments, L.P.

         This  Agreement Of Limited  Partnership is being entered into effective
as of the date written below by and between Elderly Living Development,  Inc. as
the managing  general partner (the "Managing  General  Partner") and Quad Cities
Redevelopment  Resources,  Inc., as the general partner (the "General Partner"),
WNC Housing Tax Credit Fund VI, L.P., Series 7, a California limited partnership
as the limited  partner  (the  "Limited  Partner");  WNC Housing,  L.P.,  as the
special  limited  partner (the "Special  Limited  Partner");  and Elderly Living
Development,   Inc.  and  John  McChurch   (collectively   referred  to  as  the
"Withdrawing Original Partners").


                                    RECITALS

         WHEREAS, Lake Village Apartments, L.P., an Illinois limited partnership
(the "Partnership") filed a certificate of limited partnership on April 14, 1998
with the Illinois Secretary of State and filed a certificate of amendment to the
certificate of limited partnership with the Illinois Secretary of State on April
14, 1998.

         WHEREAS,  the Partners  desire to enter into this  Agreement to provide
for, among other things, (i) the payment of Capital Contributions by the Limited
Partner and the Special Limited Partner to the Partnership,  (ii) the allocation
of Income,  Losses,  Tax Credits and  distributions  of Net Operating Income and
other cash funds of the  Partnership  among the  Partners  (iii) the  respective
rights,  obligations  and  interests  of the  Partners  to each other and to the
Partnership, and (iv) certain other matters.

         WHEREAS,  the Partners  desire hereby to amend and restate the Original
Partnership Agreement.

         NOW, THEREFORE,  in consideration of their mutual agreements herein set
forth,  the Partners hereby agree to amend and restate the Original  Partnership
Agreement in its entirety to provide as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.1  "Accountant"  shall mean Friduss,  Lukee,  Schiff & Company or
such other firm of independent  certified  public  accountants as may be engaged
for the  Partnership  by the  General  Partner  with the  Consent of the Special
Limited  Partner.  Notwithstanding  any  provision  of  this  Agreement  to  the
contrary,  the Special  Limited Partner shall have the discretion to dismiss the
Accountants  for cause if such  Accountant  fails to  provide,  or  inaccurately
provides, the information required in Section 14.2 and 14.3 of this Agreement.

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     Section  1.2  "Act"  shall  mean the laws of the  State  governing  limited
partnerships, as now in effect and as the same may be amended from time to time.

     Section 1.3 "Actual  Tax  Credit"  shall mean as of any point in time,  the
total amount of the LIHTC actually  allocated by the  Partnership to the Limited
Partner and not  subsequently  recaptured or  disallowed,  representing % of the
LIHTC  actually  received by the  Partnership,  as shown on the  applicable  tax
returns of the Partnership.

     Section 1.4 "Adjusted  Capital Account  Deficit" shall mean with respect to
any Partner,  the deficit balance,  if any, in such Partner's Capital Account as
of the end of the relevant  fiscal period,  after giving effect to the following
adjustments:

         (a) Credit to such  Capital  Account any amounts  which such Partner is
obligated  to restore or is deemed to be  obligated  to restore  pursuant to the
penultimate  sentences  of  Treasury  Regulations  Sections   1.704-2(g)(1)  and
1.704-2(i)(5); and

         (b) Debit to such  Capital  Account  the items  described  in  Sections
1.704-1(b)(2)(ii)(d)(4),  1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Treasury Regulations.

The foregoing  definition  of Adjusted  Capital  Account  Deficit is intended to
comply  with the  provisions  of Section  1.704-1(b)(2)(ii)(d)  of the  Treasury
Regulations and shall be interpreted consistently therewith.

     Section 1.5  "Affiliate"  shall mean (a) any Person  directly or indirectly
controlling, controlled by, or under common control with another Person; (b) any
Person owning or controlling 10% or more of the outstanding voting securities of
such other Person; (c) any officer, director,  trustee, or partner of such other
Person;  and (d) if such  Person is an  officer,  director,  trustee  or general
partner, any other Person for which such Person acts in any such capacity.

     Section  1.6  "Agreement"  or  "Partnership   Agreement"  shall  mean  this
Agreement of Limited Partnership,  as it may be amended from time to time. Words
such as "herein,"  "hereinafter,"  "hereof," "hereto," "hereby" and "hereunder,"
when used with reference to this Agreement, refers to this Agreement as a whole,
unless the context otherwise requires.

     Section  1.7  "Assignee"  shall  mean a Person  who has  acquired  all or a
portion of the Limited  Partner's or the Special  Limited  Partner's  beneficial
interest in the Partnership and who has not been substituted in the stead of the
transferor as a Partner.

     Section  1.8  "Bankruptcy"  or  "Bankrupt"  shall  mean  the  making  of an
assignment for the benefit of creditors,  becoming a party to any liquidation or
dissolution   action  or  proceeding,   the   commencement  of  any  bankruptcy,

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reorganization,  insolvency or other  proceeding  for the relief of  financially
distressed debtors, or the appointment of a receiver,  liquidator,  custodian or
trustee  and,  if any of the  same  occur  involuntarily,  the  same  not  being
dismissed,  stayed or  discharged  within 90 days;  or the entry of an order for
relief  under  Title 11 of the United  States  Code.  A Partner  shall be deemed
Bankrupt  if  the  Bankruptcy  of  such  Partner  shall  have  occurred  and  be
continuing.

     Section  1.9  "Break-even  Operations"  shall  mean  at  such  time  as the
Partnership  has Net  Operating  Income  as  determined  by the  Accountant  and
approved by the Special Limited Partner.

     Section  1.10  "Budget"  shall  mean the  annual  operating  Budget  of the
partnership as more fully described in Section 14.3 of this Agreement.

     Section 1.11 "Capital  Account"  shall mean,  with respect to each Partner,
the account  maintained  for such Partner  comprised of such  Partner's  Capital
Contribution  as increased by allocations to such Partner of Partnership  Income
(or  items  thereof)  and any items in the  nature  of income or gain  which are
specially  allocated  pursuant to Section 10.3 or 10.4 hereof,  and decreased by
the amount of any  Distributions  made to such Partner,  and allocations to such
Partner of Partnership  Losses (or items thereof) and any items in the nature of
expenses or losses  which are  specially  allocated  pursuant to Section 10.3 or
10.4 hereof.

        In the  event of any  transfer  of an  interest  in the  Partnership  in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital  Account of the  transferor to the extent it relates to the  transferred
interest.

        The foregoing  definition  and the other  provisions  of this  Agreement
relating to the  maintenance  of Capital  Accounts  are  intended to comply with
Treasury Regulation Section 1.704-1(b), as amended or any successor thereto, and
shall be  interpreted  and  applied in a manner  consistent  with such  Treasury
Regulation.

     Section 1.12 "Capital  Contribution"  shall mean the total amount of money,
or the Gross Asset Value of property contributed to the Partnership,  if any, by
all the  Partners or any class of Partners or any one Partner as the case may be
(or by a  predecessor-in-interest  of such Partner or Partners),  reduced by any
such capital which shall have been returned  pursuant to Section 7.3, 7.4 or 7.6
of  this  Agreement.  A loan  to  the  Partnership  by a  Partner  shall  not be
considered a Capital Contribution.

     Section  1.13  "Code"  shall mean the  Internal  Revenue  Code of 1986,  as
amended from time to time, or any successor statute.

     Section 1.14  "Completion  of  Construction"  shall mean the  Completion of
Construction  of the  Project  substantially  in  accordance  with  the  Project

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Documents in order to obtain the  required  certificates  of  occupancy  (or the
local  equivalent)  for all  fifty  (50)  apartment  units as  evidenced  by the
issuance of the  certificate  of occupancy  by the  governmental  agency  having
jurisdiction  over the Project or by the issuance of the inspecting  architect's
certification,  in a form  substantially  similar to the form attached hereto as
Exhibit  "E"  and   incorporated   herein  by  this  reference.   Completion  of
Construction  further  means that the  construction  shall be  completed in good
quality,  free and clear of all mechanic,  material or similar liens;  all other
expenses and costs must be paid with respect to the Project through  completion,
including but not limited to costs of financing.

     Section 1.15 "Compliance Period" shall mean the period set forth in Section
42 (i)(1) of the Code, as amended, or any successor statute.

     Section 1.16 "Consent of the Special Limited  Partner" shall mean the prior
written consent or approval of the Special Limited Partner.

     Section 1.17 "Construction  Contract" shall mean the construction  contract
dated  November 15, 2000 in the amount of  $3,725,700,  entered into between the
Partnership  and  the  Contractor   pursuant  to  which  the  Project  is  being
constructed.

     Section 1.18 "Construction Loan" shall mean the loan obtained from Illinois
Housing  Development  Authority in the  principal  amount of  $__________  at an
interest  rate  equal to _____%  per annum for a term of  __________  to provide
funds for the acquisition, renovation and/or construction and development of the
Project.  Where the context admits, the term  "Construction  Loan" shall include
any deed, deed of trust, note, security agreement, assumption agreement or other
instrument  executed by, or on behalf of, the  Partnership or General Partner in
connection with the Construction Loan.

     Section 1.19 "Contractor" shall mean Twin Rivers Construction, which is the
general  construction  contractor  for the Project.  At or before  Completion of
Construction,  the  Contractor  shall  provide the  Partnership  with a closeout
binder,  which shall  include,  but is not limited  to, as built  drawings,  all
operating manuals, and all manufacturing  warranty agreements.  In addition, the
Contractor  shall  provide  the  Partnership  a one year  warranty on all parts,
materials and work quality.

     Section 1.20 "Debt Service  Coverage"  shall mean the ratio between the Net
Operating Income (excluding  Mortgage payments) and the debt service required to
be paid on the Mortgage(s);  as example, a 1.10 Debt Service Coverage means that
for every $1.00 of debt  service  required to be paid there must be $1.10 of Net
Operating  Income  available.  A worksheet for the  calculation  of Debt Service
Coverage is found in the Report of Operations attached hereto as Exhibit "H" and
incorporated herein by this reference.

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     Section 1.21 "Deferred  Management Fee" shall have the meaning set forth in
Section 9.2(d) hereof.

     Section 1.22 "Developer" shall mean Elderly Living Development, Inc.

     Section 1.23  "Development Fee" shall mean the fee payable to the Developer
pursuant  to Section  9.2(a) of this  Agreement  for  services  incident  to the
development  and  construction of the Project in accordance with the Development
Fee Agreement  between the  Partnership  and the  Developer  dated the even date
herewith and incorporated  herein by this reference.  Development  activities do
not include services for the acquisition of land or syndication activities.

     Section 1.24  "Distributions"  shall mean the total amount of money, or the
Gross Asset Value of property  (net of  liabilities  securing  such  distributed
property  that such  Partner is  considered  to assume or take  subject to under
Section  752 of the  Code),  distributed  to  Partners  with  respect  to  their
Interests in the Partnership,  but shall not include any payments to the General
Partner or its  Affiliates  for fees or other  compensation  as provided in this
Agreement or any guaranteed  payment within the meaning of Section 707(c) of the
Code, as amended, or any successor thereto.

     Section 1.25 "Fair Market Value" shall mean,  with respect to any property,
real or  personal,  the price a ready,  willing  and able  buyer  would pay to a
ready,  willing and able  seller of the  property,  provided  that such value is
reasonably  agreed to between the parties in arm's-length  negotiations  and the
parties have sufficiently adverse interests.

     Section  1.26 "First Year  Certificate"  shall mean the  certificate  to be
filed by the General  Partner with the  Secretary of the Treasury as required by
Code Section 42(1)(1), as amended, or any successor thereto.

     Section 1.27 "Force Majeure" shall mean any act of God, strike, lockout, or
other industrial  disturbance,  act of the public enemy, war,  blockage,  public
riot, fire, flood, explosion, governmental action, governmental delay, restraint
or  inaction  and any  other  cause or  event,  whether  of the kind  enumerated
specifically herein, or otherwise, which is not reasonably within the control of
a Partner to this Agreement claiming such suspension.

     Section  1.28  "General  Partner(s)"  shall mean Quad Cities  Redevelopment
Resources,  Inc.,  and such other Persons as are admitted to the  Partnership as
additional or substitute General Partners pursuant to this Agreement.

     Section 1.29 "Gross Asset Value" shall mean with respect to any asset,  the
asset's adjusted basis for federal income tax purposes, except as follows:

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         (a) The initial Gross Asset Value of any asset contributed by a Partner
to the  Partnership  shall be the Fair Market Value of such asset, as determined
by the  contributing  Partner and the General  Partner,  provided  that,  if the
contributing  Partner is a General Partner, the determination of the Fair Market
Value of a contributed asset shall be determined by appraisal;

         (b) The Gross Asset Values of all Partnership  assets shall be adjusted
to equal their  respective  Fair Market  Values,  as  determined  by the General
Partner,  as of the  following  times:  (1)  the  acquisition  of an  additional
Interest in the Partnership by any new or existing  Partner in exchange for more
than a de minimis Capital Contribution;  (2) the distribution by the Partnership
to a  Partner  of more  than a de  minimis  amount of  Partnership  property  as
consideration for an Interest in the Partnership; and (3) the liquidation of the
Partnership    within   the    meaning   of   Treasury    Regulations    Section
1.704-1(b)(2)(ii)(g);  provided,  however,  that  the  adjustments  pursuant  to
clauses  (1) and (2) above  shall be made only with the  Consent of the  Special
Limited Partner and only if the General Partner reasonably  determines that such
adjustments  are  necessary  or  appropriate  to reflect the  relative  economic
interests of the Partners in the Partnership;

         (c) The Gross Asset Value of any Partnership  asset  distributed to any
Partner  shall be adjusted  to equal the Fair Market  Value of such asset on the
date of distribution  as determined by the distributee and the General  partner,
provided that, if the distributee is a General Partner, the determination of the
Fair Market Value of the distributed asset shall be determined by appraisal; and

        (d) The Gross Asset Values of Partnership  assets shall be increased (or
decreased)  to reflect  any  adjustments  to the  adjusted  basis of such assets
pursuant to Code Section 734(b) or Code Section  743(b),  but only to the extent
that such  adjustments  are taken into account in determining  Capital  Accounts
pursuant  to  Treasury  Regulations  Section  1.704-1(b)(2)(iv)(m)  and  Section
10.3(g) hereof;  provided however, that Gross Asset Values shall not be adjusted
pursuant to this Section  1.29(d) to the extent the General  Partner  determines
that  an  adjustment   pursuant  to  Section  1.29(b)  hereof  is  necessary  or
appropriate in connection with a transaction  that would otherwise  result in an
adjustment pursuant to this Section 1.29(d).

         If the Gross  Asset Value of an asset has been  determined  or adjusted
pursuant to Section 1.29(a),  Section 1.29(b),  or Section 1.29(d) hereof,  such
Gross Asset Value shall  thereafter be adjusted by the  depreciation  taken into
account with respect to such asset for purposes of computing Income and Losses.

     Section 1.30  "Hazardous  Substance"  shall mean and include any substance,
material  or  waste,  including  asbestos,   petroleum  and  petroleum  products
(including crude oil), that is or becomes designated, classified or regulated as
"toxic"  or  "hazardous"  or a  "pollutant"  or  that  is or  becomes  similarly

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designated,  classified  or  regulated,  under any federal,  state or local law,
regulation  or  ordinance  including,   without  limitation,   Compensation  and
Liability Act of 1980, as amended,  the Hazardous Materials  Transportation Act,
as amended,  the Resource  Conservation  and Recovery  Act, as amended,  and the
regulations adopted and publications promulgated pursuant thereto.

     Section  1.31  "Improvements"  shall  mean the fifty  (50)  unit  apartment
complex for families,  built in accordance with the Project Documents.  It shall
also include all furnishings, equipment and personal property used in connection
with the operation thereof.

     Section 1.32 "In-Balance"  shall mean, on any occasion,  when the amount of
the undisbursed  Construction loan and the undisbursed Capital  Contributions of
the Limited Partner and Special  Limited Partner  required to be paid in through
and  including  the  issuance  of a  certificate  of  occupancy  (or  the  local
equivalent)  are sufficient in the following sums: (a) all costs of construction
to achieve  Completion of Construction;  (b) all costs of marketing,  ownership,
maintenance and leasing of the Apartment Housing Units; and (c) all interest and
all other sums accruing or payable under the  Construction  Loan  documents.  In
making a  determination  that the financing is In-Balance,  the Special  Limited
Partner will also consider whether the undisbursed Capital  Contributions of the
Limited Partner and Special Limited  Partner,  the Mortgage and other sources of
permanent  financing  (but  not  Cash  Receipts)  are  adequate  to  retire  the
Construction Loan at the earlier of the time of Mortgage closing and funding, or
maturity of the Construction Loan.

     Section 1.33 "Incentive Management Fee" shall have the meaning set forth in
Section 9.2(f) hereof.

     Section 1.34 "Income and Losses" shall mean,  for each fiscal year or other
period,  an amount equal to the  Partnership's  taxable  income or loss for such
year or period,  determined  in  accordance  with Code Section  703(a) (for this
purpose,  all items of income,  gain,  loss or  deduction  required to be stated
separately  pursuant  to Code  Section  703(a)(1)  shall be  included in taxable
income or loss), with the following adjustments:

         (a) any income of the  Partnership  that is exempt from federal  income
tax and not otherwise taken into account in computing  Income or Losses pursuant
to this Section 1.34 shall be added to such taxable income or loss;

         (b) any  expenditures  of the  Partnership  described  in Code  Section
705(a)(2)(B) or treated as Code Section  705(a)(2)(B)  expenditures  pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing  Income and Losses  pursuant to this Section 1.34 shall be  subtracted
from such taxable income or loss;

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         (c) in the event  the Gross  Asset  Value of any  Partnership  asset is
adjusted  pursuant  to  Section  1.29(a)  or (b)  hereof,  the  amount  of  such
adjustment  shall be taken into account as gain or loss from the  disposition of
such asset for purposes of computing Income and Losses;

         (d) gain or loss resulting from any  disposition of Partnership  assets
with respect to which gain or loss is  recognized  for federal  income  purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of,  notwithstanding  that the adjusted tax basis of such property  differs from
its Gross Asset Value;

         (e) in lieu of the depreciation,  amortization, and other cost recovery
deductions  taken into account in computing such taxable  income or loss,  there
shall be taken into account  depreciation  for such fiscal year or other period,
computed as provided below; and

         (f) notwithstanding  any other provision of this definition,  any items
which are specially allocated pursuant to Sections 10.3 or 10.4 hereof shall not
otherwise be taken into account in computing Income or Losses.

         Depreciation  for each fiscal year or other period shall be  calculated
as follows:  an amount equal to the  depreciation,  amortization,  or other cost
recovery  deduction  allowable  with  respect to an asset for such year or other
period for federal income tax purposes,  except that if the Gross Asset Value of
an asset differs from its adjusted  basis for federal income tax purposes at the
beginning of such year or other  period,  depreciation  shall be an amount which
bears the same ratio to such  beginning  Gross Asset Value as the federal income
tax depreciation,  amortization,  or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis;  provided,  however,
if the federal  income tax  depreciation,  amortization,  or other cost recovery
deduction for such year is zero, depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable  method selected by the
General Partner.

     Section  1.35  "Inspecting  Architect"  shall  mean  Koningisor,  Luciano &
Associates,  Inc.,  or any  successor  thereto  with the  Consent of the Special
Limited Partner.  The Inspecting Architect shall make regular inspections of the
construction  site,  to confirm that  construction  of the  Improvements  are in
conformance  with the Plans and  Specifications.  The Inspecting  Architect will
sign-off on all the draw requests made by the Contractor.

     Section 1.36 "Insurance" shall mean:

         (a) during  construction,  the Insurance  shall include  builder's risk
insurance,   liability  insurance  in  the  minimum  amount  of  $1,000,000  per
occurrence with an aggregate of $2,000,000, and worker's compensation;

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         (b) during operations the Insurance shall include business interruption
coverage  covering actual sustained loss for 12 months,  worker's  compensation,
hazard  coverage  (including  but not limited to fire, or other casualty loss to
any  structure  or  building  on the  Project  in an  amount  equal  to the full
replacement  value of the damaged property without  deducting for  depreciation)
and general  liability  coverage  against  liability claims for bodily injury or
property  damage in the  minimum  amount of  $1,000,000  per  occurrence  and an
aggregate of $2,000,000;

         (c) all liability coverage shall include an umbrella liability coverage
in a minimum amount of $4,000,000 per occurrence and an aggregate of $10,000,000
aggregate on all properties;

         (d) all Insurance  polices shall name the  Partnership as the named
insured and the Limited Partner as an additional insured, and WNC & Associates,
Inc. as the certificate holder;

         (e) all Insurance policies shall include a provision to notify the
insured, the Limited Partner and the certificate holder prior to cancellation;

         (f) hazard  coverage  must  include inflation and building or ordinance
endorsements;

         (g) the minimum  builder's risk coverage shall be in an amount equal to
the construction contract amount; and

         (h) the  Contractor  must also provide  evidence of liability  coverage
equal to $1,000,000  per  occurrence  with an aggregate of $2,000,000  and shall
name the  Partnership  as an additional  insured and WNC & Associates,  Inc., as
certificate holder.

     Section 1.37 "Insurance  Company" shall mean any insurance  company engaged
by the  General  Partner  for the  Partnership  with the  Consent of the Special
Limited  Partner  which  Insurance  Company shall have an A rating or better for
financial safety by A.M. Best or Standard & Poor's.

     Section  1.38  "Interest"  shall mean the entire  ownership  interest  of a
Partner in the Partnership at any particular  time,  including the right of such
Partner to any and all benefits to which a Partner may be entitled hereunder and
the obligation of such Partner to comply with the terms of this Agreement.

     Section 1.39  "Involuntary  Withdrawal"  means any Withdrawal caused by the
dissolution or liquidation or incompetence,  or Bankruptcy of a General Partner,
or the removal of a General Partner pursuant to Section 13.2 hereof.

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     Section  1.40 "Land  Acquisition  Fee"  shall  mean the fee  payable to the
General Partner in an amount equal to $4,950 for the General Partner's  services
in locating,  negotiating  and closing on the purchase of the real property upon
which the Improvements are, or will be, erected.

     Section  1.41  "LIHTC"  shall  mean  the  low-income   housing  tax  credit
established  by TRA 1986 and which is provided for in Section 42 of the Code, as
amended, or any successor thereto.

     Section 1.42 "Limited  Partner"  shall mean WNC Housing Tax Credit Fund VI,
L.P., Series 7, a California limited partnership,  and such other Persons as are
admitted  to the  Partnership  as  additional  or  Substitute  Limited  Partners
pursuant to this Agreement.

     Section 1.43 "Management Agent" shall mean the property  management company
which  oversees the property  management  functions for the Project and which is
on-site at the Project.  The initial  Management  Agent shall be Heartland  MGT,
Inc.

     Section 1.44 "Management  Agreement"  shall mean the agreement  between the
Partnership  and the  Management  Agent for property  management  services.  The
management  fee shall equal  5.25% of gross  revenues.  Neither  the  Management
Agreement nor ancillary agreement shall provide for an initial rent-up fee nor a
set-up fee, nor any other similar  pre-management  fee payable to the Management
Agent.

     Section  1.45  "Managing  General  Partner(s)"  shall mean  Elderly  Living
Development,  Inc., and such other Persons as are admitted to the Partnership as
additional or substitute Managing General Partners pursuant to this Agreement.

     Section 1.46 "Minimum  Set-Aside  Test" shall mean the 40-60 set-aside test
pursuant to Section  42(g),  as amended and any successor  thereto,  of the Code
with respect to the percentage of apartment  units in the Project to be occupied
by tenants  whose  incomes are equal to or less than the required  percentage of
the area median gross income. Notwithstanding,  the General Partner has made the
election to rent 20% at 40% of the  apartment  units to tenants with income less
than 30% at 50% of area median  income,  adjusted for family size and 28% at 60%
of the  apartment  units to tenants  with income less than 22% at Market of area
median income.  Notwithstanding  the foregoing the General  Partner has made the
election  to rent 11 units at market  rents,  14 units at 60% of the area median
income,  adjusted  for family  size and 25 units at 50% or below the area median
income, adjusted for family size.

     Section  1.47  "Mortgage"  or  "Mortgage  Loan"  shall  mean the  permanent
nonrecourse  financing  wherein the  Partnership  promises to pay:  (a) Illinois
Housing  Development  Authority  (IHDA),  or  its  successor  or  assignee,  the
principal sum of $1,300,000,  plus interest on the principal not to exceed 8.05%
per annum over a term of 40 years and amortized  over 40 years;  and (b) (IHDA),
or its successor or assignee,  the  principal sum of $750,000,  plus interest on
the principal not to exceed 1% per annum over a term of 30 years and

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amortized  over 30 years  Where  the  context  admits,  the term  "Mortgage"  or
"Mortgage  Loan"  shall  include  any  mortgage,  deed,  deed  of  trust,  note,
regulatory  agreement,   security  agreement,   assumption  agreement  or  other
instrument  executed in  connection  with the  Mortgage  which is binding on the
Partnership;  and in case  any  Mortgage  is  replaced  or  supplemented  by any
subsequent  mortgage  or  mortgages,  the  Mortgage  shall  refer  to  any  such
subsequent  mortgage or mortgages.  Prior to closing the  Mortgage,  the General
Partner  shall  provide to the Special  Limited  Partner a draft of the Mortgage
documents for review and approval. Based on the draft of the Mortgage documents,
if the  terms  of the  Mortgage  are not as  specified  above at the time of the
Mortgage  closing and the Special Limited  Partner  determines in its discretion
that the Debt  Service  Coverage  falls  below  1.10 then at the  request of the
Special  Limited  Partner the General  Partner shall adjust the  principal  loan
amount and close on a Mortgage which will produce a 1.10 Debt Service  Coverage.
The Mortgage  funds shall be used to retire the  Construction  Loan and if there
are any  funds  remaining  the  Mortgage  funds  shall  be used  to  retire  any
outstanding hard construction costs including labor and materials.

     Section 1.48 "Net Operating  Income" shall mean the excess of revenues over
expenses determined as follows: (a) the excess of actual cash received on a cash
basis by the  Partnership  from all revenues of the  Partnership  from  whatever
source derived, including, without limitation, TIF funds, rental income (but not
any  subsidy  thereof  from the General  Partner or an  Affiliate  thereof)  and
laundry  income,  but  excluding  prepayments,  security  deposits  and interest
thereon; (b) over all cash operating  obligations of the Partnership (other than
those covered by Insurance) in accordance with the applicable  budget adopted by
the  Partnership  in  accordance  with Section  14.3(k) of this  Agreement  (the
"Budget"),  including,  without  limitation,  the payment of the  Mortgage,  the
Management  Agent fees (which  shall be deemed to include  that  portion of such
fees which is deferred  and not  currently  paid) and the funding of reserves in
accordance with Article VIII of this  Agreement,  and a reserve for all taxes or
payments  in lieu of taxes  and any  other  expenses  which  may  reasonably  be
expected  to be paid in a  subsequent  period but which on an accrual  basis are
allocable to the period in question,  such as insurance premiums,  audit, tax or
accounting  expenses  (excluding  deductions  for cost  recovery  of  buildings,
improvements  and personal  property and  amortization  of any financing  fees).
Without  limiting the  generality  of the  foregoing,  the  Partnership's  gross
revenues for purposes of this Section shall not include  Capital  Contributions,
borrowings, any lump-sum payment or any other extraordinary receipt of funds.

     Section 1.49  Nonrecourse  Deductions"  shall have the meaning  given it in
Treasury Regulations Section 1.704-2(b)(1).

     Section 1.50  "Nonrecourse  Liability"  shall have the meaning  given it in
Treasury Regulations Section 1.704-2(b)(3).

                                       11
<PAGE>


     Section  1.51  "Operating   Deficit"  shall  mean  at  any  time  when  the
Partnership  does not have Net Operating  Income as determined by the Accountant
and approved by the Special Limited Partner.

     Section 1.52  "Operating  Deficit  Guarantee  Period" shall mean the period
commencing  with the date of this  Agreement and ending thirty months  following
the two consecutive months of Break-Even Operations.

     Section 1.53 "Operating Loans" shall mean loans made by the General Partner
to the Partnership pursuant to Article VI of this Agreement,  which loans do not
bear  interest  and  are  repayable  only  as  provided  in  Article  XI of this
Agreement.

     Section  1.54  "Original   General   Partner"  shall  mean  Elderly  Living
Development, Inc.

     Section 1.55 "Original Limited Partner" shall mean John McChurch.

     Section 1.56 "Partner(s)" shall collectively mean the General Partner,  the
Limited  Partner,  Managing  General  Partner and the Special Limited Partner or
individually may mean any Partner as the context dictates.

     Section 1.57 "Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.

     Section 1.58 "Partner  Nonrecourse Debt Minimum Gain" shall mean an amount,
with respect to each Partner  Nonrecourse Debt, equal to the Partnership Minimum
Gain that  would  result if such  Partner  Nonrecourse  Debt were  treated  as a
Nonrecourse  Liability,  determined in accordance with Section  1.704-2(i)(3) of
the Treasury Regulations.

     Section 1.59 "Partner  Nonrecourse  Deductions"  shall have the meaning set
forth in Sections 1.704-2 (i)(1) and 1.704-2(i)(2) of the Treasury Regulations.

     Section 1.60  "Partnership"  shall mean the limited  partnership  continued
under this Agreement.

     Section 1.61 "Partnership Minimum Gain" shall mean the amount determined in
accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).

     Section 1.62 "Permanent Mortgage Commencement" shall mean the first date on
which all of the following have occurred:  (a) the Construction  Loan shall have
been repaid in full;  (b) the  Mortgage  shall have  closed and funded;  and (c)
amortization of the Mortgage shall have commenced.

                                       12
<PAGE>

     Section   1.63   "Person"   shall    collectively   mean   an   individual,
proprietorship, trust, estate, partnership, joint venture, association, company,
corporation or other entity.

     Section 1.64 "Plans and Specifications"  shall mean the plans,  blueprints,
and  specifications  manual for the construction of the  Improvements  which are
approved by the local city/county building department with jurisdiction over the
construction of the Improvements and which Plans and Specifications are referred
to in the  Construction  Contract.  Any changes to the Plans and  Specifications
after approval by the appropriate  government  building department shall require
the Consent of the Special Limited Partner.

     Section 1.65 "Project" shall mean the property located at 1800 Lake Street,
Kewanee, Henry County, Illinois, as more fully described in Exhibit "A" attached
hereto and incorporated herein by this reference, and the Improvements.

     Section 1.66 "Project  Documents" shall mean all documents  relating to the
Construction  Loan and  Mortgage  Loan.  It shall  also  include  all  documents
required by any  governmental  agency  having  jurisdiction  over the Project in
connection  with the  development,  construction  and  financing of the Project,
including  but not  limited to, the  approved  plans and  specification  for the
development and construction of the Project.

     Section 1.67 "Projected  Annual Tax Credits" shall mean LIHTC in the amount
of $318,588 for 2002, $397,114 per year for each of the years 2003 through 2011,
and $78,526 for 2012,  which the General  Partner has  projected to be the total
amount  of  LIHTC  which  will  be  allocated  to  the  Limited  Partner  by the
Partnership,  constituting 99.98% of the aggregate amount of LIHTC of $3,971,930
to be available to the Partnership;  provided,  however,  that if the Actual Tax
Credit for 2002 is greater (or lesser than)  $318,588 the  Projected  Annual Tax
Credit for the year 2012 shall be reduced  (increased) by an amount equal to the
amount by which the Actual Credit for 2002 exceeds (is less than) $318,588.

     Section  1.68  "Projected  Tax Credits"  shall mean LIHTC in the  aggregate
amount of $3,971,930.

     Section 1.69 "Qualified Tenants" shall mean any tenants who have incomes of
60% or less of the area median gross income,  as adjusted for family size, so as
to make the Project eligible for LIHTC.  Notwithstanding the foregoing 11 of the
units are to be  considered  market  rate  units and as such are not  subject to
median gross income limitation.

     Section  1.70  "Rent  Restriction  Test"  shall mean the test  pursuant  to
Section  42 of the Code  whereby  the  gross  rent  charged  to  tenants  of the
low-income  apartment units in the Project must not exceed 30% of the applicable
income standards.

                                       13
<PAGE>

     Section  1.71  "Reporting  Fee" shall have the meaning set forth in Section
9.2(e) hereof.

     Section 1.72  "Revised  Projected  Tax Credits"  shall have the meaning set
forth in Section 7.4(a) hereof.

     Section 1.73 "Sale or Refinancing" shall mean any of the following items or
transactions:  a  sale,  transfer,  exchange  or  other  disposition  of  all or
substantially  all of  the  assets  of the  Partnership,  a  condemnation  of or
casualty at the Project or any part thereof,  a claim against a title  insurance
company,   the  refinancing  or  any  Mortgage  or  other  indebtedness  of  the
Partnership and any similar item or  transaction;  provided,  however,  that the
payment of Capital  Contributions  by the Partners shall not be included  within
the meaning of the term "Sale or Refinancing."

     Section 1.74 "Sale or Refinancing Proceeds" shall mean all cash receipts of
the  Partnership  arising from a Sale or  Refinancing  (including  principal and
interest received on a debt obligation  received as consideration in whole or in
part, on a Sale or Refinancing) less the amount paid or to be paid in connection
with or as an expense  of such Sale or  Refinancing,  and with  regard to damage
recoveries or insurance or condemnation  proceeds, the amount paid or to be paid
for  repairs,  replacements  or  renewals  resulting  from  damage to or partial
condemnation of the Project.

     Section 1.75  "Special  Limited  Partner"  shall mean WNC Housing,  L.P., a
California  limited  partnership,  and such other Persons as are admitted to the
Partnership as additional or substitute  Special  Limited  Partners  pursuant to
this Agreement.

     Section 1.76 "State" shall mean the State of Illinois.

     Section  1.77  "State Tax  Credit  Agency"  shall mean the state  agency of
Illinois which has the  responsibility and authorization to administer the LIHTC
program in Illinois, specifically the Illinois Housing Development Authority.

     Section  1.78  "Substitute  Limited  Partner"  shall mean any Person who is
admitted to the  Partnership  as a Limited  Partner  pursuant to Section 12.5 or
acquires  the  Interest of the Limited  Partner  pursuant to Section 7.3 of this
Agreement.

     Section  1.79  "Syndication  Fee" shall mean the fee payable to the General
Partner in an amount  equal to $10,000  for the  General  Partner's  services in
forming the  Partnership,  locating and  approving  the Limited  Partner and the
Special  Limited  Partner as the investors in the  Partnership,  negotiating and
finalizing this Partnership  Agreement and for such other services referenced in
Treasury Regulation Section 1.709-2(B).

                                       14
<PAGE>

     Section 1.80 "Tax Credit" shall mean any credit permitted under the Code or
the law of any state  against the federal or a state income tax liability of any
Partner as a result of activities or expenditures of the Partnership  including,
without limitation, LIHTC.

     Section 1.81 "Tax Credit  Compliance Fee" shall mean the fee payable to the
General Partner in accordance with Section 9.2(g) of this Agreement.

     Section 1.82 "Tax Credit  Conditions"  shall mean,  for the duration of the
Compliance  Period,  any and all  restrictions  including,  but not  limited to,
applicable federal,  state and local laws, rules and regulations,  which must be
complied  with in  order  to  qualify  for the  LIHTC  or to  avoid  an event of
recapture in respect of the LIHTC.

     Section  1.83 "Tax  Credit  Period"  shall  mean the ten year  time  period
referenced  in Code Section  42(f)(1)  over which the  Projected Tax Credits are
allocated to the  Partners.  It is the intent of the Partners that the Projected
Tax  Credits  will be  allocated  during the Tax Credit  Period and not a longer
term.

     Section 1.84 "Title Policy" shall mean the policy of insurance covering the
fee simple title to the Apartment Housing from a company approved by the Special
Limited  Partner.  The Title Policy shall be an ALTA owners title policy  naming
the  Partnership  as  insured  and  including  a   non-imputation   and  fairway
endorsement.   The  Title  Policy  shall  also  insure  against   rights-of-way,
easements,  or  claims  of  easements,  not  shown  by  public  records.  During
construction of the  Improvements,  the Title Policy shall be in an amount equal
to the Construction Loan amount and the Limited Partner's Capital  Contribution.
Upon  Permanent  Mortgage  Commencement,  the Title Policy shall be in an amount
equal to the Mortgage amount and the Limited Partner's Capital Contribution.

     Section 1.85 "TRA 1986" shall mean the Tax Reform Act of 1986.

     Section 1.86 "Treasury  Regulations"  shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

     Section  1.87  "Withdrawing"  or  "Withdrawal"  (including  the  verb  form
"Withdraw" and the adjectival forms  "Withdrawing" and "Withdrawn")  shall mean,
as to a General  Partner,  the occurrence of the  dissolution,  liquidation,  or
Bankruptcy of such Partner,  or the  withdrawal,  removal or retirement from the
Partnership  of such  Partner  for  any  reason,  including  any  sale,  pledge,
encumbering,  assignment  or other  transfer  of all or any part of its  General
Partner  Interest  and those  situations  when a General  Partner  may no longer
continue  as a General  Partner by reason of any law or pursuant to any terms of
this Agreement.

                                       15
<PAGE>

                                   ARTICLE II

                                      NAME

     The name of the Partnership shall be "Lake Village Apartments, L.P."

                                   ARTICLE III

                  PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE

     Section 3.1 Principal  Executive Office. The principal  executive office of
the Partnership is located at 400 Main Street, Suite 400, Davenport, IA 52801 or
at such other place or places within the State as the Managing  General  Partner
may hereafter designate.

     Section 3.2 Agent for Service of Process. The name of the agent for service
of process on the  Partnership  is John  McChurch,  whose address is 269 Melrose
Colona, Illinois, 61241-9627.

                                   ARTICLE IV

                                     PURPOSE

     The purpose of the  Partnership is to acquire,  construct,  own and operate
the  Project  in order to  provide,  in part,  Tax  Credits to the  Partners  in
accordance  with  the  provisions  of the  Code  and  the  Treasury  Regulations
applicable to LIHTC and to sell the Project. The Partnership shall not engage in
any  business  or  activity  which is not  incident  to the  attainment  of such
purpose.

                                    ARTICLE V

                                      TERM

     The  Partnership  term  commenced  upon the  filing of the  Certificate  of
Limited  Partnership  in the  office  of,  and on the form  prescribed  by,  the
Secretary  of State of the State,  and shall  continue  until  December 31, 2049
unless terminated earlier in accordance with the provisions of this Agreement or
as otherwise provided by law.

                                   ARTICLE VI

                    GENERAL PARTNER'S CONTRIBUTIONS AND LOANS

         Section  6.1  Capital  Contribution  of  Managing  General  Partner and
General Partner. The Managing General Partner and the General Partner shall make
a Capital Contribution in an amount required by the Mortgage lender.

     Section  6.2  Construction  and  Operating  Obligations;  Managing  General
Partner and General Partner Loans.

                                       16
<PAGE>

         (a) The Managing  General  Partner and the General  Partner shall cause
Completion of Construction in accordance with the Project  Documents,  and shall
equip  the  Project  or cause the same to be  equipped  with all  necessary  and
appropriate fixtures, equipment and articles of personal property, including but
not limited to,  refrigerators  and ranges.  If costs and expenses  necessary to
effect Completion of Construction  exceed the sum of the Capital  Contributions,
the proceeds of the Mortgage and the  Development  Fee then the General  Partner
shall be responsible  for and shall be obligated to pay such  deficiencies.  Any
such advances by the Managing  General Partner and the General Partner shall not
change the Interest of any Partner in the  Partnership and shall be considered a
cost overrun and not be repayable.  In addition, if (1) the Improvements are not
completed  on or before  March 1, 2002  ("Completion  Date")  (which date may be
extended  in the  events of Force  Majeure,  but in no event  longer  than three
months from the  Completion  Date);  or (2) a  foreclosure  action is  commenced
against the  Partnership  and is not  dismissed  within six months,  then at the
Special Limited Partner's  election,  either the General Partner will be removed
from the  Partnership  and the  Special  Limited  Partner  will be  admitted  as
successor  General Partner,  all in accordance with Article XIII hereof,  or the
General  Partner will  repurchase  the Interests of the Limited  Partner and the
Special Limited Partner for an amount equal to the amounts  theretofore  paid by
the Limited Partner and the Special Limited Partner, and the Limited Partner and
the Special Limited Partner shall have no further  Interest in the  Partnership.
If the  Limited  Partner  elects  to have the  General  Partner  repurchase  the
Interest of the Limited  Partner then the repurchase  shall occur within 60 days
after the General Partner receives written demand from the Limited Partner.

         (b) From  Completion of Construction  until two  consecutive  months of
Break-even  Operations,  the General Partner will personally  provide  Operating
Loans  to pay any  Operating  Deficits;  and for the  balance  of the  Operating
Deficit Guarantee Period the General Partner will provide Operating Loans to pay
any Operating  Deficits up to the  aggregate  maximum  amount of $250,000.  Each
Operating Loan shall be nonrecourse to the Partners,  and shall be repayable out
of the  available  Net  Operating  Income  or Sale or  Refinancing  Proceeds  in
accordance with Article XI of this Agreement.

     Section 6.3 Other General Partner Loans.  After expiration of the Operating
Deficit Guarantee Period,  with the Consent of the Special Limited Partner,  the
General Partner may loan to the Partnership any sums required by the Partnership
and not  otherwise  reasonably  available to it. Any such loan shall bear simple
interest (not  compounded) at the rate of 2% per annum above the then prevailing
prime or reference rate charged by Bank of America N.T. & S.A., Main Office, San

                                       17
<PAGE>

Francisco,  California, or, if lesser, the maximum legal rate. The maturity date
and  repayment  schedule  of any such loan shall be as agreed to by the  General
Partner and the  Special  Limited  Partner.  The terms of any such loan shall be
evidenced  by a written  instrument.  The  General  Partner  shall not  charge a
prepayment  penalty on any such loan. Any loan in  contravention of this Section
shall be deemed an advance by the General  Partner and such advance will bear no
interest and will be repaid in accordance with Article XI of this Agreement.

                                   ARTICLE VII

                    CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
                           AND SPECIAL LIMITED PARTNER

     Section 7.1 Original Limited  Partner.  The Original Limited Partner made a
Capital  Contribution of $100.  Effective as of the date of this Agreement,  the
Original Limited Partner's  Interest has been liquidated and the Partnership has
reacquired  the Original  Limited  Partner's  Interest in the  Partnership.  The
Original  Limited Partner  acknowledges  that he has no further  interest in the
Partnership  as a  limited  partner  as of the date of this  Agreement,  and has
released  all  claims,  if  any,  against  the  Partnership  arising  out of its
participation as a limited partner.

     Section 7.2 Capital  Contribution of Limited  Partner.  The Limited Partner
shall  make a  Capital  Contribution  in the  amount  of  $2,978,352,  as may be
adjusted  in  accordance  with  Section  7.4  of  this  Agreement.  The  Capital
Contribution will be paid into an escrow account at First American Title Company
in  accordance  with the Escrow  Agreement  dated  November  15,  2000  ("Escrow
Agreement"). The Limited Partner shall approve the release of the funds from the
escrow account as follows:

         (a)  $2,680,547,  to be  available  to be  disbursed  as  required on a
monthly basis in accordance  with Sections  7.2(d),(e) and (f) of this Agreement
provided the Limited Partner has received and approved the following:

                  (1) a legal opinion in a form substantially  similar to the
form of opinion attached hereto as Exhibit "B" and incorporated herein by this
reference;

                  (2) a fully  executed Certification and  Agreement in the form
attached hereto as Exhibit "C" and incorporated herein by this reference;

                  (3) a copy of a title  commitment,  (in a form  and  substance
satisfactory to the Special Limited  Partner)  constituting an agreement by such
title company to issue the Title Policy within  fifteen  working days. The title
commitment  will show the  Apartment  Housing to be free from  liens  except the
Construction Loan and free from other exceptions not previously  approved by the
Special Limited Partner;

                  (4)  verification  that the Partnership has obtained Insurance
required during construction;

                  (5) a copy of the recorded grant deed (warranty deed);

                                       18
<PAGE>

                  (6) execution of the Construction and Operating Budget
Agreement;

                  (7) the construction  documents  required  pursuant to Section
14.3(a) of this Agreement, if not previously provided to the Limited Partner and
a determination  by the Special Limited Partner that  construction  financing is
In-Balance; and

                  (8) approval of the Limited Partner's acquisition committee.

         (b)      $74,451 upon delivery to the Limited Partner:

                  (1) a certificate of occupancy (or equivalent evidence of
local occupancy approval if a permanent certificate is not available) on all the
apartment units in the Project;

                  (2) if not  previously  provided, a copy of the items provided
in Section 11.3(a);

                  (3) a certification signed by the architect in a form
substantially similar to the form  attached  hereto as  Exhibit  "E" and
incorporated  herein by this reference,  indicating that the  Improvements  have
been completed in accordance with the Project Documents;

                  (4) a letter from the  Contractor  in a form  substantially
similar to the form attached hereto as Exhibit "G" and  incorporated  herein by
this reference, stating that all amounts  payable to the  Contractor  have been
paid in full and that the Partnership is not in violation of the Construction
Contract;

                  (5)  verification  that the Partnership has obtained Insurance
required during operations; and

                  (6) a fully executed  General  Partner  Certification  in the
form attached hereto as Exhibit "D" and incorporated herein by this reference.

     (c)  $223,354 (as adjusted  pursuant to Section  7.4(a) of this  Agreement)
upon delivery to the Limited Partner:

                  (1) a copy of the current rent roll;

                  (2) copies of all initial tenant files  including  completed
applications, completed  questionnaires  or checklist of income and assets,
documentation  of third party  verification of income and assets, and income
certification  forms (LIHTC  specific)  collected  by  the Management  Agent, or
General  Partner, verifying each tenant's eligibility as a Qualified Tenant;

                  (3) copies of the executed lease agreement with the tenants;

                  (4) a fully executed General Partner Certification;


                                       19
<PAGE>

                  (5) copies of all Mortgage documents and Title Insurance in an
amount equal to the Mortgage and the Limited Partner's Capital Contribution;

                  (6) a  copy  of  the  declaration  of  restrictive
covenants/extended  use agreement entered into between the Partnership and the
State Tax Credit Agency;

                  (7) an audited construction cost certification (which includes
an itemized cost breakdown);

                  (8) the Accountant's final tax credit certification in a form
substantially similar to the form attached  hereto as Exhibit "F" and
incorporated  herein by this reference;

                  (9) Internal Revenue Code Form 8609, or any successor form;
and

                  (10) any  documents  previous  not  provided  to the  Limited
Partner  but required pursuant to Sections 14.3(a), (b) and (c) in this
Agreement.

         (d) On the 20th day of each month the Managing  General  Partner  shall
submit  to the  Limited  Partner  a written  itemized  statement,  signed by the
Managing General Partner and the general contractor  ("Application for Payment")
setting forth:

                  (1) a description of the work  performed,  material  supplied
and/or costs incurred or due for which  disbursement  is  requested with respect
to any line item ("Item") shown in the Construction and Operating Budget
Agreement; and

                  (2) the total amount incurred, expended and /or due for each
requested Item less prior disbursements.

                  (3) Each Application for Payment by the Managing General
Partner shall constitute a  representation  and warranty by the Managing General
Partner that the Managing General Partner is in compliance

         (e) On the 20th  day of each  month,  except  if such  date  falls on a
weekend,  the  Limited  Partner's  architect/engineer  will  visit the job site,
review the  construction  progress and approve the  Application  for Payment and
make a recommendation on the disbursement  request.  ("Limited Partner Review").
The Limited  Partner Review shall be completed and authorized by the 23rd day of
each month, barring unforeseen events and/or weekends.

         (f)  Provided  the Limited  Partner  Review  recommends  payment of the
Application  for Payment,  then the Limited Partner will notify the Escrow Agent
that funds can be disbursed to the general  contractor on behalf of the Managing
General  Partner.  Escrow Agent shall  disburse up to 90% of the maximum  amount

                                       20
<PAGE>

allocated for such Item in the Application for Payment less prior disbursements.
The remaining 10% ("Retention")  shall be held for the benefit or account of the
Managing  General Partner upon completion of the Improvements in accordance with
the  Plans  and  Specifications,   governmental  requirements  and  or  evidence
satisfactory to lender of lien free completion.

     Section 7.3 Repurchase of Limited Partner's Interest.  Within 60 days after
the General Partner  receives written demand from the Limited Partner and/or the
Special Limited Partner,  the Partnership shall repurchase the Limited Partner's
Interest  and/or the Special  Limited  Partner's  Interest in the Partnership by
refunding  to it in cash the full amount of the Capital  Contribution  which the
Limited Partner and/or the Special  Limited Partner has theretofore  made in the
event that, for any reason, the Partnership shall fail to:

         (a) cause the Project to be placed in service by March 1, 2002;

         (b) achieve 90% occupancy of the Project by Qualified Tenants by
October 1, 2002;

         (c) obtain Permanent Mortgage Commencement by October 1, 2002;

         (d) meet both the Minimum  Set-Aside Test and the Rent Restriction Test
not later than December 31 of the first year the Partnership elects the LIHTC to
commence in accordance with the Code; and

         (e) obtain a carryover allocation,  within the meaning of Section 42 of
the Code, from the State Tax Credit Agency on or before December 31, 2000; and

         (f) receive the Limited Partner's acquisition committee approval by
December 31, 2000.

     Section 7.4 Reduction of Limited Partner's Capital Contribution.

         (a) If the anticipated  amount of Projected Tax Credits to be allocated
to the Limited  Partner and Special  Limited  Partner as  evidenced  by IRS Form
8609,  Schedule A  thereto,  and the  audited  construction  cost  certification
provided  to the  Limited  Partner  and  Special  Limited  Partner are less than
$3,971,533 (the "Revised  Projected Tax Credits") then the Limited Partner's and
Special Limited Partner's Capital  Contribution  provided for in Section 7.2 and
Section  7.5  respectively  shall be reduced  by the amount  which will make the
total Capital Contribution to be paid by the Limited Partner and Special Limited
Partner to the Partnership  equal to 75% of the Revised Projected Tax Credits so

                                       21
<PAGE>

anticipated to be allocated to the Limited Partner and Special Limited  Partner.
If the Capital  Contribution  reduction  referenced  in this  Section  7.4(a) is
greater  than  the  remaining  Capital  Contribution  to be paid by the  Limited
Partner and the Special  Limited  Partner  then the General  Partner  shall have
ninety days from the date the General  Partner  receives  notice from either the
Limited Partner or the Special Limited Partner to pay the shortfall.

         (b) The General  Partner is required to use its best efforts to rent no
less than 78% of the Project's  apartment units to Qualified Tenants  throughout
the  Compliance  Period.  If at the end of each  calendar  year during the first
three  calendar  years  following  the year in which the first  building  in the
Project is placed in  service,  the  Actual  Tax  Credit for any fiscal  year or
portion thereof is or will be less than the Projected Annual Tax Credit,  or the
Revised Projected Tax Credit  calculated on an annual basis ("Revised  Projected
Annual Tax Credit"), if applicable (the "Annual Credit Shortfall"), then, unless
the Annual Credit  Shortfall  shall have previously been addressed under Section
7.4(a), the next Capital Contribution owed by the Limited Partner or the Special
Limited Partner shall be reduced by the Annual Credit Shortfall amount,  and any
portion of such Annual Credit  Shortfall in excess of such Capital  Contribution
shall be applied  to reduce  succeeding  Capital  Contributions  of the  Limited
Partner or the  Special  Limited  Partner.  If the Annual  Credit  Shortfall  is
greater  than the Limited  Partner's  and Special  Limited  Partner's  remaining
Capital  Contributions then the General Partner shall pay to the Limited Partner
and Special Limited  Partner the excess of the Annual Credit  Shortfall over the
remaining Capital  Contributions.  The General Partner shall have ninety days to
pay the Annual  Credit  Shortfall  from the date the  General  Partner  receives
notice from either the Limited Partner or the Special Limited Partner.

         (c) In the event  that,  for any  reason,  at any time  after the first
three  calendar  years  following  the year in which  the  Project  is placed in
service,  there is an Annual Credit  Shortfall,  then,  unless the Annual Credit
Shortfall  shall have  previously been addressed under Section 7.4(a) or Section
7.4(b),  there  shall  be a  reduction  in the  General  Partner's  share of Net
Operating  Income in an amount  equal to the Annual  Credit  Shortfall  and said
amount instead shall be paid to the Limited Partner.  In the event there are not
sufficient  funds to pay the full Annual Credit Shortfall to the Limited Partner
at the time of the next  Distribution of Net Operating  Income,  then the unpaid
Annual  Credit  Shortfall  shall be repaid in the next year in which  sufficient
monies are available  from the General  Partner's Net Operating  Income.  In the
event a Sale or  Refinancing of the Project occurs prior to repayment in full of
the Annual  Credit  Shortfall  then the excess will be paid in  accordance  with
Section  11.2(b).  Notwithstanding,  the  foregoing  provisions  of this Section
7.4(c) the General  Partner shall not be obligated to pay the Limited Partner or
Special Limited Partner any funds if the recapture of Tax Credits was the result
of an Act of Congress,  a change in the law, or other acts beyond the control of
the General Partner.

         (d)  In the  event  there  is:  (1) a  filing  of a tax  return  by the
Partnership  evidencing a reduction in the qualified  basis or eligible basis of
the Apartment Housing causing a recapture of Tax Credits previously allocated to
the Limited Partner; (2) a reduction in the qualified basis or eligible basis of

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<PAGE>

the Apartment Housing for income tax purposes following an audit by the Internal
Revenue  Service  (IRS)  resulting  in a recapture  or  reduction of Tax Credits
previously claimed;  (3) a decision by the United States Tax Court upholding the
assessment of such deficiency  against the  Partnership  with respect to any Tax
Credit previously claimed in connection with the Apartment  Housing,  unless the
Partnership  shall  timely  appeal  such  decision  and the  collection  of such
assessment  shall be stayed  pending the  disposition  of such appeal;  or (4) a
decision of a court  affirming  such decision upon such appeal then, in addition
to any other payments to which the Limited  Partner  and/or the Special  Limited
Partner are entitled  under the terms of this  Section 7.4, the General  Partner
shall pay to the Limited  Partner and the Special  Limited  Partner within sixty
days of receiving  notice from the Limited  Partner  and/or the Special  Limited
Partner the sum of (A) the amount of the Tax Credit recapture,  (B) any interest
and penalties  imposed on the Limited  Partner or Special  Limited  Partner with
respect to such recapture, and (C) an amount sufficient to pay any tax liability
owed by the  Limited  Partner  or Special  Limited  Partner  resulting  from the
receipt of the amounts  specified in (A) and (B). Partner shall not be obligated
to pay the Limited Partner or Special Limited Partner any funds if the recapture
of Tax  Credits  was the result of an Act of  Congress,  a change in the law, or
other acts beyond the control of the General Partner.

     Section 7.5 Capital  Contribution of Special Limited  Partner.  The Special
Limited  Partner  shall make a Capital  Contribution  of $298 at the time of the
Limited  Partner's Capital  Contribution  payment into escrow in accordance with
the Escrow Agreement.  The Special Limited Partner shall be in a different class
from the Limited  Partner  and,  except as  otherwise  expressly  stated in this
Agreement,  shall not  participate in any rights  allocable to or exercisable by
the Limited Partner under this Agreement.

     Section 7.6 Liability of Limited Partner and Special Limited  Partner.  The
Limited  Partner and Special  Limited Partner shall not be liable for any of the
debts,  liabilities,  contracts or other  obligations  of the  Partnership.  The
Limited Partner and Special Limited Partner shall be liable only to make Capital
Contributions  in the amounts and on the dates  specified in this Agreement and,
except as otherwise expressly required hereunder,  shall not be required to lend
any funds to the Partnership or, after their  respective  Capital  Contributions
have been paid, to make any further Capital Contribution to the Partnership.

                                  ARTICLE VIII

                          WORKING CAPITAL AND RESERVES

     Section 8.1 Operating and  Maintenance  Account.  The General  Partner,  on
behalf of the Partnership,  shall establish an operating and maintenance account
and shall deposit  thereinto an annual amount equal to $200 per residential unit
per year for the  purpose of repairs,  maintenance  and  capital  repairs.  Said
deposit  shall be made  monthly  in equal  installments.  Withdrawals  from such

                                       23
<PAGE>

account shall be made only with the Consent of the Special Limited Partner.  Any
balance  remaining in the account at the time of a sale of the Project  shall be
allocated and  distributed  equally  between the General Partner and the Limited
Partner.

     Section 8.2 Tax and Insurance Account.The General Partner, on behalf of the
Partnership,  shall establish a tax and insurance  account ("T & I Account") for
the purpose of making the  requisite  Insurance  premium  payments  and the real
estate tax  payments.  The annual  deposit to the T & I Account  shall equal the
total  annual  Insurance  payment and the total  annual real estate tax payment.
Said amount shall be deposited monthly in equal  installments.  Withdrawals from
such account shall be made only for its intended purpose.  Any balance remaining
in the  account  at the time of a sale of the  Project  shall be  allocated  and
distributed equally between the General partner and the Limited Partner.

     Section  8.3  Other  Reserves.  The  General  Partner,  on  behalf  of  the
Partnership, shall establish out of funds available to the Partnership a reserve
account  sufficient in its sole  discretion to pay any unforeseen  contingencies
which might arise in connection with the furtherance of the Partnership business
including,  but not limited to, (a) any rent subsidy  required to maintain  rent
levels in compliance with the Tax Credit Conditions; and (b) any debt service or
other payments for which other funds are not provided for hereunder or otherwise
expected to be available to the  Partnership.  The General  Partner shall not be
liable  for any  good-faith  estimate  which it shall  make in  connection  with
establishing  or maintaining  any such reserves nor shall the General Partner be
required to establish or maintain any such reserves if, in its sole  discretion,
such reserves do not appear to be necessary.

                                   ARTICLE IX

                             MANAGEMENT AND CONTROL

     Section 9.1 Power and Authority of General Partner.  Subject to the Consent
of the  Special  Limited  Partner or the consent of the  Limited  Partner  where
required  by  this  Agreement,   and  subject  to  the  other   limitations  and
restrictions included in this Agreement, the Managing General Partner shall have
complete and exclusive  control over the management of the Partnership  business
and affairs,  and shall have the right,  power and  authority,  on behalf of the
Partnership,  and in its  name,  to  exercise  all of  the  rights,  powers  and
authority of a partner of a partnership  without  limited  partners.  No Limited
Partner  or  Special  Limited  Partner  (except  one who may  also be a  General
Partner,  and then only in its capacity as General  Partner  within the scope of
its authority  hereunder) shall have any right to be active in the management of
the Partnership's  business or investments or to exercise any control thereover,

                                       24
<PAGE>

nor have the right to bind the Partnership in any contract,  agreement,  promise
or  undertaking,  or to act in any way whatsoever with respect to the control or
conduct of the business of the  Partnership,  except as  otherwise  specifically
provided in this Agreement.

     Section 9.2 Payments to the General Partners and Others.

         (a) The Partnership shall pay to the Developer a Development Fee in the
amount of $513,418 in accordance with the Development Fee Agreement entered into
by and between the Developer and the  Partnership  on the even date hereof.  The
Development  Fee Agreement  provides,  in part,  that the  Development Fee shall
first be paid from available  proceeds in accordance with Section 9.2(b) of this
Agreement and if not paid in full then the balance of the  Development  Fee will
be paid in accordance with Section 11.1 of this Agreement.

         (b)  The   Partnership   shall   utilize  the proceeds from the Capital
Contributions paid pursuant to Section 7.2 and Section 7.5 of this Agreement for
development costs including, but not limited to, land costs, architectural fees,
Land Acquisition Fee,  Syndication Fee, survey and engineering costs,  financing
costs, loan fees, building materials,  labor and $256,709 of the Development Fee
to be  paid  $128,355  at  the  time  of the  Limited  Partner's  first  Capital
Contribution payment referenced in 7.2(a) of this Agreement; and $128,354 at 50%
Completion  of  Construction  as  evidenced  by the  architect's  certification,
provided if construction overruns are greater than 50% of the contingency amount
referenced in the  construction  budget then the second  Development Fee payment
will be reduced  (and  deferred) in an amount equal to $1.00 for each dollar the
construction  overrun  is  greater  than  50% of  the  contingency  amount.  The
construction budget and contingency amount are specified in the Construction and
Operating Budget Agreement to be entered into between the Partners.

         (c) If any Capital Contribution proceeds are remaining after Completion
of Construction  and  all  construction  costs,   including the above referenced
Development  Fee, are paid in full and the Construction  Loan retired,  then the
remainder  shall:  first be paid to the Developer in payment of the  Development
Fee;  second  be paid to the  General  Partner  as a  reduction  of the  General
Partner's Capital Contribution;  and any remaining Capital Contribution proceeds
shall be paid to the General Partner as a Partnership oversight fee.

         (d) The  Partnership  shall  pay to the  Management  Agent  a  property
management  fee for the  leasing and  management  of the Project in an amount in
accordance with the Management  Agreement.  The term of the Management Agreement
shall not  exceed one year,  and the  execution  or  renewal  of any  Management
Agreement shall be subject to the prior Consent of the Special Limited Partner.

                  (1) The General  Partner shall,  upon receiving any request of
the Mortgage lender requesting such action,  dismiss the Management Agent as the

                                       25
<PAGE>

entity  responsible  for  management  of the  Project  under  the  terms  of the
Management Agreement; or, the General partner shall dismiss the Management Agent
at the request of the Special Limited Partner.

                  (2) The  appointment  of any  successor  Management  Agent  is
subject to the Consent of the Special  Limited  Partner which may only be sought
after the General Partner has provided the Special Limited Partner with accurate
and complete disclosure respecting the proposed Management Agent.

         (e)  The  Partnership  shall  pay to the  Limited  Partner  a fee  (the
"Reporting  Fee")  commencing in 2002 equal to $1,000 for the Limited  Partner's
services in monitoring  the  operations of the  Partnership  and for services in
connection  with the  Partnership's  accounting  matters and assisting  with the
preparation of tax returns and the reports required in Sections 14.2 and 14.3 of
this Agreement. The Reporting Fee shall be payable within seventy-five (75) days
following  each calendar year and shall be payable from Net Operating  Income in
the manner and priority set forth in Section 11.1 of this  Agreement;  provided,
however,  that if in any year Net Operating  Income is  insufficient  to pay the
full  $1,000,  the  unpaid  portion  thereof  shall  accrue  and be payable on a
cumulative  basis in the first year in which there is  sufficient  Net Operating
Income, as provided in Section 11.1, or sufficient Sale or Refinancing Proceeds,
as provided in Section 11.2.

         (f) The  Partnership  shall  pay to the  Managing  General  Partner  an
Incentive  Management  Fee  equal to 35% of the Net  Operating  Income  for each
fiscal year of the Partnership  commencing in 2002 for services  incident to the
administration  of the business and affairs of the  Partnership,  which services
shall  include,  but not  limited to,  maintaining  the books and records of the
Partnership,   selecting  and   supervising   the   Partnership's   Accountants,
bookkeepers  and other Persons  required to prepare and audit the  Partnership's
financial statements and tax returns, and preparing and disseminating reports on
the status of the Project and the Partnership, all as required by Article XIV of
this Agreement.  The Partners  acknowledge that the Incentive  Management Fee is
being paid as an  inducement  to the  Managing  General  Partner to operate  the
Partnership efficiently, to maximize occupancy and to increase the Net Operating
Income. The Incentive  Management Fee shall be payable within  seventy-five (75)
days following each calendar year and shall be payable from Net Operating Income
in the  manner  and  priority  set  forth  in  Section  11.1.  If the  Incentive
Management  Fee is not paid in any year it  shall  not  accrue  for  payment  in
subsequent years.

         (g) The Partnership  shall pay to the Managing  General Partner through
the  Compliance  Period an annual Tax Credit  Compliance Fee equal to 35% of the
Net Operating Income commencing in 2002 for the services of the Managing General
Partner in ensuring compliance by the Partnership and the Apartment Housing with
all Tax Credit rules and  regulations.  The Tax Credit  Compliance  Fee shall be
payable  from Net  Operating  Income in the  manner  and  priority  set forth in

                                       26
<PAGE>

Section 11.1 of this Agreement upon  completion and delivery of the annual audit
pursuant to Section 14.2(a) of this Agreement.  If the Tax Credit Compliance Fee
is not paid in any year it shall not accrue for payment in subsequent years.

     Section 9.3 Specific  Powers of the General  Partner.  Subject to the other
provisions of this Agreement, the Managing General Partner, in the Partnership's
name and on its behalf, may:

         (a)  hold,  sell,  transfer,  lease or  otherwise  deal  with any real,
personal  or  mixed  property,  interest  therein  or  appurtenance  thereto  in
accordance with the purpose of this Agreement as indicated in Article IV hereto;

         (b)  employ,  contract  and  otherwise  deal  with,  from time to time,
Persons  whose  services  are  necessary  or  appropriate  in  connection   with
management  and  operation  of  the  Partnership  business,  including,  without
limitation,  contractors,  agents,  brokers,  Accountants and Management  Agents
(provided that the selection of any Accountant or Management  Agent has received
the Consent of the Special Limited Partner) and attorneys,  on such terms as the
General Partner shall determine;

         (c)  bring or defend, pay, collect,  compromise,  arbitrate,  resort to
legal action or otherwise adjust claims or demands of or against the
Partnership;

         (d)  pay as a  Partnership  expense  any  and all  costs  and  expenses
associated with the formation,  development,  organization  and operation of the
Partnership,  including  the  expense of annual  audits,  tax  returns and LIHTC
compliance;

         (e)  deposit,  withdraw,  invest,  pay,  retain and distribute the
Partnership's  funds in a manner  consistent  with the provisions of this
Agreement;

         (f)  execute the Construction Loan and the Mortgage; and

         (g)  execute, acknowledge and deliver any and all instruments to
effectuate any of the foregoing.

     Section 9.4  Authority  Requirements.  During the  Compliance  Period,  the
following provisions shall apply.

         (a) Each of the provisions of this  Agreement  shall be subject to, and
the  General  Partner  covenants  to act in  accordance  with,  the  Tax  Credit
Conditions and all applicable federal, state and local laws and regulations.

         (b) The Tax Credit  Conditions  and all such laws and  regulations,  as
amended  or  supplemented,  shall  govern  the  rights  and  obligations  of the
Partners,  their heirs,  executors,  administrators,  successor and assigns, and
they shall  control  as to any terms in this  Agreement  which are  inconsistent
therewith,   and  any  such  inconsistent  terms  of  this  Agreement  shall  be
unenforceable by or against any of the Partners.

                                       27
<PAGE>

         (c) Upon any  dissolution  of the  Partnership  or any  transfer of the
Project,  no title or right to the  possession and control of the Project and no
right to collect rent therefrom shall pass to any Person who is not, or does not
become,  bound by the Tax Credit  Conditions in a manner that, in the opinion of
counsel to the Partnership,  would not avoid a recapture  thereof on the part of
the former owners.

         (d) Any  conveyance  or  transfer of title to all or any portion of the
Project  required or  permitted  under this  Agreement  shall in all respects be
subject to the Tax Credit  Conditions  and all  conditions,  approvals  or other
requirements of the rules and regulations of any authority applicable thereto.

         Section 9.5 Limitations on the Managing  General  Partner's and General
Partner's  Power and Authority.  Notwithstanding  the provisions of this Article
IX, the Managing General Partner and the General Partner shall not:

         (a)  except as required by Section 9.4, act in contravention of this
Agreement;

         (b)  act in any manner which would make it impossible to carry on the
ordinary business of the Partnership;

         (c)  confess a judgment against the Partnership;

         (d)  possess Partnership  property,  or assign the Partner's right in
specific  Partnership  property,  for other than the exclusive benefit of the
Partnership;

         (e)  admit a Person as a General Partner or Managing General Partner
except as provided in this Agreement;

         (f)  admit a Person as a Limited Partner except as provided in this
Agreement;

         (g)  violate any provision of the Mortgage;

         (h)  cause the Project apartment units to be rented to anyone other
than Qualified Tenants;

         (i)  violate the Minimum Set-Aside Test or the Rent Restriction Test
for the Project;

         (j)  cause any recapture of the Tax Credits;

         (k) permit any creditor who makes a nonrecourse loan to the Partnership
to have,  or to acquire at any time as a result of making such loan,  any direct
or indirect  interest in the profits,  income,  capital or other property of the
Partnership, other than as a secured creditor;


                                       28
<PAGE>

         (l) commingle funds of the Partnership with the funds of another
Person; or

         (m) take any action which  requires the Consent of the Special  Limited
Partner or the  consent of the  Limited  Partner  unless  the  Managing  General
Partner has received said Consent.

     Section 9.6  Restrictions on Authority of the Managing  General Partner and
the General  Partner.  Without the  Consent of the Special  Limited  Partner the
Managing General Partner and the General Partner shall not:

         (a)  sell, exchange, lease or otherwise dispose of the Project;

         (b)  incur indebtedness  other than the Construction Loan and Mortgage
Loan in the name of the Partnership,  other than in the ordinary course of the
Partnership's business;

         (c)  engage  in any  transaction  not  expressly  contemplated  by this
Agreement in which the General  Partner has an actual or  potential  conflict of
interest with the Limited Partner or the Special Limited Partner;

         (d)  contract away the fiduciary duty owed to the Limited Partner and
the Special Limited Partner at common law;

         (e) take any action  which  would cause the Project to fail to qualify,
or which would cause a termination or discontinuance of the qualification of the
Project,  as a "qualified low income housing  project" under Section 42(g)(1) of
the Code, as amended, or any successor thereto, or which would cause the Limited
Partner to fail to obtain the  Projected  Tax  Credits or which  would cause the
recapture of any LIHTC;

         (f) make any  expenditure  of funds in excess of $10,000,  or commit to
make any such  expenditure,  other than in response to an  emergency,  except as
provided for in the annual budget  approved by the Special Limited  Partner,  as
provided in Section 14.3(i) hereof;

         (g)  cause the merger or other reorganization of the Partnership;

         (h)  dissolve the Partnership, except as provided in this Agreement;

         (i) acquire any real or personal  property  (tangible or intangible) in
addition to the  Apartment  Housing the  aggregate  value of which shall  exceed
$10,000 (other than easement or similar rights  necessary or appropriate for the
operation of the Apartment Housing);

         (j)  become  personally  liable  on or in  respect  of, or  guarantee,
the  Mortgage  or any  other  indebtedness  of the Partnership;

                                       29
<PAGE>

         (k) pay any salary,  fees or other compensation to a General Partner or
any  Affiliate  thereof,  except as  authorized  by Section  9.2 and Section 9.9
hereof or specifically provided for in this Agreement;

         (l) terminate  the services of the  Accountant,  Inspecting  Architect,
Contractor or Management  Agent, or terminate,  amend or modify the Construction
Contract or any other Project Document,  or grant any material waiver or consent
thereunder;

         (m)  cause the Partnership to redeem or repurchase all or any portion
of the Interest of a Partner;

         (n)  cause the Partnership to convert the Apartment Housing to
cooperative or condominium ownership;

         (o)  cause or permit the Partnership to make loans to the General
Partner or any Affiliate;

         (p)  bring or defend, pay, collect,  compromise,  arbitrate,  resort to
legal action or otherwise adjust claims or demands of or against the
Partnership; or

         (q)  agree or consent to any changes in the Plans and  Specifications,
to any change  orders,  or to any of the terms and provisions of the
Construction Contract.

         Section 9.7 Duties of Managing General Partner and the General Partner.
The Managing General Partner and the General Partner agrees that it shall at all
times:

         (a)  diligently and faithfully  devote such of its time to the business
of the Partnership as may be necessary to properly conduct the affairs of the
Partnership;

         (b)  file and publish all certificates, statements or other instruments
required by law for the formation and operation of the Partnership as a limited
partnership in all appropriate jurisdictions;

         (c)  cause the Partnership to carry Insurance from an Insurance Company
as defined in Section 1.34;

         (d) have a fiduciary  responsibility for the safekeeping and use of all
funds and assets of the Partnership,  whether or not in its immediate possession
or control  and not employ or permit  another to employ  such funds or assets in
any manner except for the benefit of the Partnership;

         (e) use its best  efforts so that all  requirements  shall be met which
are reasonably  necessary to obtain or achieve (1)  compliance  with the Minimum
Set-Aside Test, the Rent Restriction Test, and any other requirements  necessary
for the Project to initially qualify, and to continue to qualify, for LIHTC; (2)
issuance of all necessary certificates of occupancy,  including all governmental

                                       30
<PAGE>

approvals  required to permit  occupancy  of all of the  apartment  units in the
Project;  (3) compliance with all provisions of the Project  Documents and (4) a
reservation and allocation of LIHTC from the State Tax Credit Agency;

         (f) use its best efforts to keep the Project in decent,  safe, sanitary
and good  condition,  repair and working  order,  ordinary use and  obsolescence
excepted,  and make or cause to be made from time to time all necessary  repairs
thereto   (including   external  and   structural   repairs)  and  renewals  and
replacements thereof;

         (g) pay, before the same shall become  delinquent and before  penalties
accrue thereon all Partnership taxes, assessments and other governmental charges
against the  Partnership or its  properties,  and all of its other  liabilities,
except to the extent and so long as the same are being  contested  in good faith
by appropriate  proceedings in such manners as not to cause any material adverse
effect  on  the  Partnership's   property,   financial   condition  or  business
operations, with adequate reserves provided for such payments;

         (h)  permit,  and cause the  Management  Agent to permit,  the  Special
Limited Partner and its  representatives:  (1) to have access to the Project and
personnel  employed by the Partnership and by the Management  Agent at all times
during  normal  business  hours  after  reasonable  notice;  (2) to examine  all
agreements, LIHTC compliance data and plans and specifications;  and (3) to make
copies thereof;

         (i) exercise  good faith in all  activities  relating to the conduct of
the  business of the  Partnership,  including  the  development,  operation  and
maintenance  of the  Project,  and shall  take no  action  with  respect  to the
business and property of the Partnership which is not reasonably  related to the
achievement of the purpose of the Partnership;

         (j)  make any Capital Contributions,  advances or loans required to be
made by the General Partner under the terms of this Agreement;

         (k)  establish and maintain all reserves required to be established and
maintained under the terms of this Agreement;

         (l) cause the  Management  Agent to manage the Project in such a manner
that the Project  will be eligible to receive  LIHTC with respect to 100% of the
apartment units in the Project. To that end, the General Partner agrees, without
limitation:  (1) to make all elections  requested by the Special Limited Partner
under Section 42 of the Code to allow the  Partnership  or its Partners to claim
the Tax Credit;  (2) to file Form 8609 with  respect to the Project as required,
for at least the duration of the Compliance  Period;  (3) to operate the Project

                                       31
<PAGE>

and cause the  Management  Agent to manage the  Project so as to comply with the
requirements  of Section 42 of the Code, as amended,  or any successor  thereto,
including,  but not limited to, Section 42(g) and Section  42(i)(3) of the Code,
as amended, or any successors thereto;  (4) to make all certifications  required
by Section 42(l) of the Code, as amended,  or any successor thereto;  and (5) to
operate the Project and cause the  Management  Agent to manage the Project so as
to comply with all other Tax Credit Conditions; and

         (m)  perform such other acts as may be expressly required of it under
the terms of this Agreement.

     Section 9.8 Partnership Expenses.

         (a) All of the  Partnership's  expenses shall be billed directly to and
paid by the Partnership to the extent practicable. Reimbursements to the General
Partner or any of its  Affiliates by the  Partnership  shall be allowed only for
the Partnership's  operating cash expenses and subject to the limitations on the
reimbursement of such expenses set forth herein. As used in this Section 9.8 the
term  "operating  cash expenses"  shall mean, with respect to any fiscal period,
the amount of cash disbursed by the Partnership for Partnership business in that
period in the  ordinary  course of  business  for the  payment of its  operating
expenses,  including, but not limited to expenses for advertising and promotion,
management,    utilities,   repair   and   maintenance,    Insurance,    Partner
communications,  legal, accounting, statistical and bookkeeping services, use of
computing or accounting equipment,  travel and telephone expenses,  salaries and
direct expenses of Partnership  employees while engaged in Partnership business,
and any other operational and administrative  expenses necessary for the prudent
operation of the Partnership.  Without limiting the generality of the foregoing,
"operating  cash  expenses"  shall include fees paid by the  Partnership  to the
General  Partner or any  Affiliate  of the  General  Partner  permitted  by this
Agreement and the actual cost of goods,  materials and  administrative  services
used for or by the  Partnership,  whether  incurred by the General  Partner,  an
Affiliate of the General  Partner or a  nonaffiliated  Person in performing  the
foregoing  functions.  As used in the preceding sentence,  "actual cost of goods
and  materials"  means the actual cost of goods and materials used for or by the
Partnership  and obtained from entities  which are not Affiliates of the General
Partner,  and actual cost of administrative  services means the pro rata cost of
personnel  (as if such persons were  employees  of the  Partnership)  associated
therewith,  but in no event to exceed  the  amount  which  would be  charged  by
nonaffiliated Persons for comparable goods and services.

         (b)  Reimbursement  to  the  Managing  General  Partner  or  any of its
Affiliates of operating cash expenses pursuant to Subsection (a) hereof shall be
subject to the following:

                  (1)  no such  reimbursement  shall be  permitted  for services
for  which  the  General  Partner  or any of its Affiliates is entitled to
compensation by way of a separate fee; and

                  (2) no  such  reimbursement  shall  be made  for  (A)  rent or
depreciation,  utilities,  capital equipment or other such administrative items,
and (B) salaries,  fringe  benefits,  travel  expenses and other  administrative
items incurred or allocated to any  "controlling  person" of the General Partner
or any  Affiliate  of the General  Partner.  The  foregoing  provisions  of this

                                       32
<PAGE>

Section  9.8(b)  shall  not  apply if the  General  Partner  also  serves as the
Management  Agent.  For the  purposes of this  Section  9.8(b)(2),  "controlling
person"  includes,  but is not  limited  to, any  Person,  however  titled,  who
performs  functions  for the  General  Partner or any  Affiliate  of the General
Partner  similar to those of: (i) chairman or member of the board of  directors;
(ii)  executive  management,  such as president,  vice  president or senior vice
president,  corporate secretary or treasurer;  (iii) senior management,  such as
the vice  president of an operating  division who reports  directly to executive
management;  or (iv) those  holding 5% or more equity  interest in such  General
Partner or any such  Affiliate  of the  General  Partner or a person  having the
power to direct or cause  the  direction  of such  General  Partner  or any such
Affiliate  of the  General  Partner,  whether  through the  ownership  of voting
securities, by contract or otherwise.

     Section   9.9  Other   Business  of   Partners.   Any  Partner  may  engage
independently or with others in other business  ventures wholly unrelated to the
Partnership  business  of  every  nature  and  description,  including,  without
limitation, the acquisition, development, construction, operation and management
of real estate projects and developments of every type on their own behalf or on
behalf of other  partnerships,  joint  ventures,  corporations or other business
ventures  formed  by them or in  which  they may  have an  interest,  including,
without  limitation,  business  ventures  similar to, related to or in direct or
indirect  competition with the Project.  Neither the Partnership nor any Partner
shall have any right by virtue of this Agreement or the partnership relationship
created  hereby in or to such other  ventures or  activities or to the income or
proceeds  derived  therefrom.  Conversely,  no Person  shall  have any rights to
Partnership  assets,  incomes or  proceeds  by virtue of such other  ventures or
activities of any Partner.

     Section  9.10  Covenants,  Representations  and  Warranties.  The  Managing
General Partner and the General Partner covenant, represent and warrant that the
following are presently true and will be true during the term of this Agreement,
to the extent then applicable.

         (a) The  Partnership is a duly organized  limited  partnership  validly
existing  under  the  laws  of the  State  and  has  complied  with  all  filing
requirements  necessary  for the  protection  of the  limited  liability  of the
Limited Partner and the Special Limited Partner.

         (b) The  Partnership  Agreement  and the Project  Documents are in full
force and effect and  neither  the  Partnership  nor the  General  Partner is in
breach or violation of any provisions thereof.

         (c) Improvements will be completed in a timely and workerlike manner in
accordance  with all applicable  requirements  of all  appropriate  governmental
entities  and the plans and  specifications  of the  Project,  as such plans and

                                       33
<PAGE>

specifications  may be changed  from time to time with the  approval of Mortgage
lender,  and any  applicable  governmental  entities,  if such approval shall be
required.

         (d) The Project is being  operated in  accordance  with  standards  and
procedures  which are prudent and  customary  for the  operation  of  properties
similar to the Project.

         (e) Additional  Improvements on the Project, if any, shall be completed
substantially  in  conformity  with  plans and  specifications  approved  by the
Special Limited Partner.

         (f) No Partner has or will have any personal  liability with respect to
or has or will have personally guaranteed the payment of the Mortgage.

         (g) The  Partnership  is in compliance  with all  construction  and use
codes  applicable  to  the  Project  and  is not  in  violation  of any  zoning,
environmental or similar regulations applicable to the Project.

         (h) All  appropriate  public  utilities,  including  sanitary and storm
sewers,  water,  gas  and  electricity,  are  currently  available  and  will be
operating  properly for all units in the Project at the time of first  occupancy
and throughout the term of the Partnership.

         (i) All roads  necessary for the full  utilization of the  Improvements
have either been  completed or the necessary  rights of way therefore  have been
acquired by the  appropriate  governmental  authority or have been  dedicated to
public use and accepted by said governmental authority.

         (j) The Partnership has obtained Insurance written by an Insurance
Company.

         (k) The Partnership owns the fee simple interest in the Project.

         (l) The  Construction  Contract  has  been  entered  into  between  the
Partnership and the Contractor;  no other  consideration or fee shall be paid to
the Contractor other than amounts set forth in the Construction Contract.

         (m) To the best of the Managing  General  Partner's  knowledge:  (1) no
Hazardous  Substance  has been disposed of, or released to or from, or otherwise
now exists in,  on,  under or around,  the  Project  and (2) no  aboveground  or
underground  storage  tanks are now or have ever  been  located  on or under the
Project.  The  General  Partner  will not install or allow to be  installed  any
aboveground or  underground  storage tanks on the Project.  The General  Partner
covenants  that the Project shall be kept free of Hazardous  Materials and shall
not be used to generate,  manufacture,  refine, transport, treat, store, handle,
dispose  of,  transfer,  produce  or  process  Hazardous  Materials,  except  in
connection  with the normal  maintenance  and  operation  of any  portion of the

                                       34
<PAGE>

Project. The General Partner shall comply, or cause there to be compliance, with
all applicable Federal, state and local laws, ordinances,  rules and regulations
with respect to Hazardous  Materials  and shall keep,  or cause to be kept,  the
Project free and clear of any liens imposed  pursuant to such laws,  ordinances,
rules and  regulations.  The General  Partner must  promptly  notify the Limited
Partner and the Special  Limited Partner in writing (3) if it knows, or suspects
or believes  there may be any  Hazardous  Substance in or around any part of the
Project, any Improvements  constructed on the Project, or the soil,  groundwater
or soil vapor,  (4) if the General  Partner or the Partnership may be subject to
any threatened or pending  investigation  by any  governmental  agency under any
law, regulation or ordinance pertaining to any Hazardous  Substance,  and (5) of
any claim made or threatened by any Person,  other than a  governmental  agency,
against the  Partnership or General Partner arising out of or resulting from any
Hazardous  Substance  being present or released in, on or around any part of the
Project.

         (n) The  Managing  General  Partner  and the General  Partner  have not
executed and will not execute any agreements with provisions  contradictory  to,
or in opposition to, the provisions of this Agreement.

         (o) The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits,  or the Revised  Projected Tax Credits, if applicable.

         (p) No charges, liens or encumbrances exist with respect to the Project
other than those which are created or  permitted  by the  Project  Documents  or
Mortgage or are noted or excepted in the title policy for the Project.

         (q) The buildings on the Project site constitute or shall  constitute a
"qualified  low-income housing project" as defined in Section 42(g) of the Code,
and as amplified by the Treasury Regulations thereunder. In this connection, not
later than  December 31 of the first year in which the Partners  elect the LIHTC
to commence in  accordance  with the Code,  the Project will satisfy the Minimum
Set-Aside Test.

         (r) All accounts of the Partnership required to be maintained under the
terms of the Project Documents,  including,  without limitation, any reserved in
accordance with Article VIII hereof,  are currently  funded to required  levels,
including levels required by any authority.

         (s) The Managing  General Partner and the General Partner have not lent
or  otherwise  advanced  any funds to the  Partnership  other  than its  Capital
Contribution  and the  Partnership  has no  unsatisfied  obligation  to make any
payments of any kind to the General Partner or any Affiliate thereof,  except as
provided  on  Schedule  One  attached  hereto  and  incorporated  herein by this
reference.

         (t) No event has occurred which constitutes a default under any of the
Project Documents.


                                       35
<PAGE>

         (u) No event has occurred  which has caused,  and the Managing  General
Partner and the General  Partner  have not acted in any manner  which will cause
(1) the  Partnership  to be  treated  for  federal  income  tax  purposes  as an
association taxable as a corporation,  (2) the Partnership to fail to qualify as
a limited partnership under the Act, or (3) the Limited Partner to be liable for
Partnership  obligations;  provided however, the General Partner shall not be in
breach of this  representation if all or a portion of a Limited Partner's agreed
upon Capital Contributions are used to satisfy the Partnership's  obligations to
creditors of the Partnership and such action by the General Partner is otherwise
authorized  under this Agreement and;  provided  further,  however,  the General
Partner shall not be in breach of this  representation if the action causing the
Limited  Partner to be liable for the  Partnership  obligations is undertaken by
the Limited Partner.

         (v) No event or  proceeding,  including,  but not limited to, any legal
actions or  proceedings  before any court,  commission,  administrative  body or
other  governmental  authority,  and acts of any  governmental  authority having
jurisdiction  over the zoning or land use laws  applicable  to the Project,  has
occurred  the  continuing  effect of which  has:  (1)  materially  or  adversely
affected the  operation of the  Partnership  or the Project;  (2)  materially or
adversely affected the ability of the General Partner to perform its obligations
hereunder  or under any other  agreement  with  respect to the  Project;  or (3)
prevented the  Completion of  Construction  of the  Improvements  in substantial
conformity with the Project  Documents,  other than legal proceedings which have
been bonded against (or as to which other adequate  financial  security has been
issued) in a manner as to indemnify  the  Partnership  against  loss;  provided,
however, the foregoing does not apply to matters of general  applicability which
would adversely affect the Partnership,  the General Partner,  Affiliates of the
General  Partner or the Project  only insofar as they or any of them are part of
the general public.

         (w) Neither the  Partnership  nor the Managing  General Partner nor the
General Partner have any  liabilities,  contingent or otherwise,  which have not
been disclosed in writing to the Limited Partner and the Special Limited Partner
and which in the aggregate  affect the ability of the Limited  Partner to obtain
the anticipated benefits of its investment in the Partnership.

         (x) The  Managing  General  Partner has and shall  maintain a net worth
equal to at least  $1,000,000  computed in accordance  with  generally  accepted
accounting principles.

         (y)  Upon  signing  of  the  Construction   Loan  and  receipt  of  the
Construction  Lender's  written start order,  the Managing  General Partner will
cause construction of the Improvements to commence and thereafter will cause the
Contractor to diligently proceed with construction of the Improvements according
to the Plans and Specifications so that the Improvements can be completed by the
Completion Date.

                                       36
<PAGE>

         (z) The  Managing  General  Partner will use its best efforts to ensure
that any architect  retained by the Partnership or Managing General Partner will
have a policy of  professional  liability  insurance  in an amount not less than
five hundred thousand dollars,  which policy should remain in force for a period
of at least two years after the closing and funding of the Mortgage.

         The  General  Partner  shall be liable to the  Limited  Partner for any
costs,  damages,  loss of profits,  diminution in the value of its investment in
the Partnership, or other losses, of every nature and kind whatsoever, direct or
indirect,  realized  or  incurred  by the  Limited  Partner  as a result  of any
material breach of the  representations and warranties set forth in this Section
9.10.

     Section 9.11 Option to Acquire.  After expiration of the Compliance Period,
the General  Partner may give  notice (the "GP  Notice") to the Limited  Partner
that it desires to purchase the entire  Interest of each of the Limited  Partner
and the Special Limited Partner in the Partnership.  Upon receipt by the Limited
Partner and the Special Limited Partner, the following events shall occur:

         (a) The  purchase  price  of the  Interests  shall be  determined.  The
purchase  price  shall be the  greater of (i) the  aggregate  of the Fair Market
Value of the  Interest of the Limited  Partner and the Fair Market  Value of the
Interest of the Special  Limited Partner or (ii) the "Tax Amount" as hereinafter
defined. Notwithstanding the preceding, the purchase price shall be no less than
the principal amount of all outstanding indebtedness secured by the Project.

         (b) The Limited Partner and the Special Limited Partner shall negotiate
with the General Partner for a period of 30 days after the GP Notice is received
to agree upon the Fair Market Value of their respective Interests.  In the event
an agreement is not reached within such 30-day period,  then the General Partner
or the Special  Limited Partner may request that Fair Market Value be determined
in accordance with the process set forth below by sending notice (the "Appraisal
Notice")  of same to the other  party  within 15 days of the  expiration  of the
30-day  period.  If an Appraisal  Notice is not sent by either party within such
15-day period, then the General Partner's option shall expire.

         (c) If the respective Fair Market Value of the Interests of the Limited
Partner and the Special  Limited  Partner are not agreed upon as provided  above
and either the General  Partner or the  Special  Limited  Partner  issues to the
other Person an Appraisal  Notice,  then the Fair Market Value of such Interests
shall be  determined by an  appraisal.  The  appraisal  shall be conducted by an
independent  appraiser  satisfactory  to the  General  Partner  and the  Special
Limited Partner or, in the event that a single  independent  appraiser cannot be
agreed upon  within 30 days  following  the date of the  Appraisal  Notice,  the
General Partner and the Special Limited Partner shall each select an independent

                                       37
<PAGE>

appraiser  and the  appraisers  so  selected  shall  select a third  independent
appraiser.  All  appraisers so designated  shall be  experienced  in accounting,
business or real estate  appraisal.  The appraiser or appraisers shall determine
the Fair Market  Value of the  Interest  of each of the Limited  Partner and the
Special Limited Partner. The decision of the appraisers (if more than one) shall
be made by the majority of such  appraisers.  The appraiser or appraisers  shall
render a written report  setting forth the Fair Market Value of such  Interests,
which decision shall be rendered as  expeditiously  as possible by the appraiser
or appraisers  and which  decision  shall be final and binding upon the parties.
The  reasonable  fees and expenses of the appraiser or appraisers  shall be paid
one-half by the General Partner and one-half by the Limited Partner.

         (d) The "Tax Amount" shall mean the dollar amount computed in the
following fashion:

                  (i) The Limited  Partner and the Special Limited Partner shall
be  deemed  to have  gain in an amount  equal to the  difference  between  their
respective basis in the Project and an amount equal to the total  forgiveness of
debt which  would be realized  by the  Limited  Partner and the Special  Limited
Partner  computed as if the Limited  Partner  and the  Special  Limited  Partner
abandoned their  Interests in the Partnership on the date of the GP Notice.  The
Tax  Amount  shall  equal the deemed  gain as  computed  above by a tax  rate(s)
applied to such gain. The tax rate shall be the highest  individual  rate stated
in the Code applicable to the type of income (and if there is more than one rate
applicable because of more than one type of income, the different rates shall be
applied to the appropriate  portions of such income).  The Limited Partner shall
cooperate to expeditiously determine the Tax Amount.

         (e) Following  determination of the purchase price, the General Partner
shall have 30 days  thereafter  to  determine  whether the General  Partner will
purchase the Interests of the Limited Partner and the Special Limited Partner at
the purchase price so determined.  The General Partner shall exercise such right
by written notice to the Limited  Partner and the Special Limited Partner within
such 30-day  period,  and if such right is not so  exercised,  the option  shall
lapse in its entirety.

         (f) If the General Partner determines to proceed with the purchase, the
purchase price shall be paid in cash, within 90 days following the giving of the
notice required by Section  9.11(e) and, in addition,  interest shall be paid on
the  purchase  price from the date of the GP Notice,  payable  with the purchase
price, and calculated at the rate of interest set forth in Section 6.3 hereof.





                                       38
<PAGE>

                                    ARTICLE X

                    ALLOCATIONS OF INCOME, LOSSES AND CREDITS

     Section 10.1 General.  All items includable in the calculation of Income or
Loss not  arising  from a Sale or  Refinancing,  and all Tax  Credits,  shall be
allocated  99.98% to the Limited  Partner,  .01% to the Special Limited Partner,
 .005% to the General Partner and .005% to the Managing General Partner.

     Section 10.2  Allocations  From Sale or Refinancing.  All Income and Losses
arising from a Sale or  Refinancing  shall be allocated  between the Partners as
follows:

         (a) As to Income:

                  (1) first, an amount of Income equal to the aggregate negative
balances  (if any) in the  Capital  Accounts  of all  Partners  having  negative
Capital  Accounts  (prior to taking into account the Sale or Refinancing and the
Distribution  of the related  Sale or  Refinancing  Proceeds,  but after  giving
effect to  Distributions of Net Operating Income and allocations of other Income
and Losses pursuant to this Article X up to the date of the Sale or Refinancing)
shall be allocated to such  Partners in  proportion  to their  negative  Capital
Account balances until all such Capital Accounts shall have zero balances;

                  (2) second,  an amount of Income  sufficient  to increase  the
Limited Partner's  positive Capital Account balance to its Capital  Contribution
and to increase the Special Limited  Partner's  positive Capital Account balance
to an  amount  equal to its  Capital  Contribution,  shall be  allocated  to the
Limited Partner and the Special Limited Partner, respectively;

                  (3) third, an amount of Income sufficient to increase the
General Partner's  positive Capital Account balance to an amount equal to its
Capital Contribution; and

                  (4) the balance, if any, of such Income shall be allocated 30%
to the  Limited  Partner,  35% to the  Managing  General  Partner and 35% to the
General Partner.

         (b) As to Losses:

                  (1) an  amount  of  Losses  equal  to the  aggregate  positive
balances  (if any) in the  Capital  Accounts  of all  Partners  having  positive
Capital  Accounts  (prior to taking into account the Sale or Refinancing and the
Distribution  of the related  Sale or  Refinancing  Proceeds,  but after  giving
effect to  Distributions  of Net Operating  Income and allocations of Income and
Losses pursuant to Section 10.1 up to the date of the Sale or Refinancing) shall
be allocated to such Partners in proportion to their  positive  Capital  Account
balances until all such Capital Accounts shall have zero balances; and

                                       39
<PAGE>

                  (2) the balance of any such Losses shall be  allocated  99.98%
to the  Limited  Partner,  .01% to the  Special  Limited  Partner,  .005% to the
Managing General Partner and .005% to the General Partner.

         (c)  Notwithstanding  the foregoing  provisions of Section  10.2(a) and
(b), in no event  shall any Losses be  allocated  to the Limited  Partner or the
Special Limited  Partner if and to the extent that such allocation  would create
or increase an Adjusted  Capital  Account Deficit for the Limited Partner or the
Special  Limited  Partner.  In the event an allocation of 99.98% or .01% of each
item  includable in the calculation of Income or Loss not arising from a Sale or
Refinancing,  would create or increase an Adjusted  Capital  Account Deficit for
the Limited Partner or the Special Limited Partner,  respectively,  then so much
of the items of deduction other than projected  depreciation  shall be allocated
to the General  Partner  instead of the Limited  Partner or the Special  Limited
Partner as is  necessary  to allow the Limited  Partner or the  Special  Limited
Partner to be allocated  99.98% and .01%,  respectively,  of the items of Income
and Project  depreciation  without  creating or increasing  an Adjusted  Capital
Account Deficit for the Limited Partner or the Special Limited Partner, it being
the intent of the  parties  that the Limited  Partner  and the  Special  Limited
Partner always shall be allocated 99.98% and .01%, respectively, of the items of
Income not arising from a Sale or Refinancing and 99.98% and .01%, respectively,
of the Project depreciation.

     Section 10.3 Special  Allocations.  The following special allocations shall
be made in the following order.

         (a) Except as otherwise  provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provisions of this Article X, if there is
a net decrease in Partnership  Minimum Gain during any Partnership  fiscal year,
each Partner shall be specially  allocated items of Partnership  income and gain
for such fiscal year (and, if necessary,  subsequent  fiscal years) in an amount
equal to such Person's  share of the net decrease in  Partnership  Minimum Gain,
determined  in  accordance  with  Treasury   Regulations   Section   1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective  amounts required to be allocated to each Partner  pursuant  thereto.
The items to be so allocated  shall be  determined  in  accordance  with Section
1.704-2(f)(6)  and  1.704-2(j)(2)  of the  Treasury  Regulations.  This  Section
10.3(a) is intended to comply with the minimum gain  chargeback  requirement  in
Section  1.704-2(f)  of  the  Treasury  Regulations  and  shall  be  interpreted
consistently therewith.

         (b)  Except as  otherwise  provided  in  Section  1.704-2(i)(4)  of the
Treasury Regulations,  notwithstanding any other provision of this Article X, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to
a Partner  Nonrecourse Debt during any Partnership  fiscal year, each Person who
has a share of the Partner  Nonrecourse  Debt Minimum Gain  attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of

                                       40
<PAGE>

the Treasury  Regulations,  shall be specially  allocated  items of  Partnership
income and gain for such  fiscal  year (and,  if  necessary,  subsequent  fiscal
years) in an amount equal to such Person's  share of the net decrease in Partner
Nonrecourse  Debt Minimum Gain  attributable to such Partner  Nonrecourse  Debt,
determined  in  accordance  with  Treasury  Regulations  Section  1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective  amounts required to be allocated to each Partner  pursuant  thereto.
The items to be so allocated  shall be determined  in  accordance  with Sections
1.704-2(i)(4)  and  1.704-2(j)(2)  of the  Treasury  Regulations.  This  Section
10.3(b) is intended to comply with the minimum gain  chargeback  requirement  in
Section  1.704-2(i)(4)  of the  Treasury  Regulations  and shall be  interpreted
consistently therewith.

         (c) In the event any Partner  unexpectedly  receives  any  adjustments,
allocations,   or  distributions   described  in  Treasury  Regulations  Section
1.704-1(b)(2)(ii)(d)(4),    Section    1.704-1(b)(2)(ii)(d)(5),    or    Section
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner  sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Capital Account
Deficit of such  Partner as quickly as  possible,  provided  that an  allocation
pursuant to this  Section  10.3(c)  shall be made if and only to the extent that
such Partner  would have an Adjusted  Capital  Account  Deficit  after all other
allocations  provided for in this Section 10.3 have been  tentatively made as if
this Section 10.3(c) were not in the Agreement.

         (d) In the event any Partner has a deficit  Capital  Account at the end
of any  Partnership  fiscal year which is in excess of the sum of (i) the amount
such Partner is obligated to restore, and (ii) the amount such Partner is deemed
to be obligated  to restore  pursuant to the  penultimate  sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially  allocated items of Partnership  income and gain in the amount of such
excess as quickly as  possible,  provided  that an  allocation  pursuant to this
Section  10.3(d) shall be made if and only to the extent that such Partner would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 10.3 have been  tentatively made as if this Section
10.3(d) and Section 10.3(c) hereof were not in the Agreement.

         (e)  Nonrecourse  Deductions  for any fiscal  year  shall be  specially
allocated  99.98% to the Limited  Partner,  .01% to the Special Limited Partner,
 .005% to the Managing General Partner and .005% to the General Partner.

         (f) Any  Partner  Nonrecourse  Deductions  for any fiscal year shall be
specially  allocated  to the  Partner who bears the  economic  risk of loss with
respect  to the  Partner  Nonrecourse  Debt to which  such  Partner  Nonrecourse
Deductions are  attributable  in accordance  with Treasury  Regulations  Section
1.704-2(i)(1).

                                       41
<PAGE>

         (g) To the  extent  an  adjustment  to the  adjusted  tax  basis of any
Partnership  asset  pursuant to Code Section  734(b) or Code  Section  743(b) is
required,  pursuant to Treasury Regulations Section  1.704-1(b)(2)(iv)(m)(2)  or
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
his interest in the  Partnership,  the amount of such  adjustment to the Capital
Accounts  shall be treated as an item of gain (if the  adjustment  increases the
basis of the asset) or loss (if the  adjustment  decreases  such basis) and such
gain or loss shall be specially  allocated to the  Partners in  accordance  with
their  interests  in the  Partnership  in the event  that  Treasury  Regulations
Section  1.704-1  (b)(2)(iv)(m)(2)  applies,  or to the  Partner  to  whom  such
distribution   was  made  in  the  event  that  Treasury   Regulations   Section
1.704-1(b)(2)(iv)(m)(4) applies.

         (h) To the extent the  Partnership  has  taxable  interest  income with
respect to any  promissory  note pursuant to Section 483 or Section 1271 through
1288 of the Code:

                  (1) such  interest  income shall be specially allocated to the
Limited  Partner to whom such  promissory  note relates; and

                  (2) the amount of such interest  income shall be excluded from
the  Capital  Contributions  credited  to  such  Partner's  Capital  Account  in
connection with payments of principal with respect to such promissory note.

         (i) To the extent the  Partnership  has  taxable  interest  income with
respect to deposits of Capital Contribution payments, such interest income shall
be specially allocated to the General Partner.

         (j) In the event the  adjusted tax basis of any  investment  tax credit
property  that has been  placed  in  service  by the  Partnership  is  increased
pursuant to Code Section 50(c), such increase shall be specially allocated among
the  Partners  (as an  item  in the  nature  of  income  or  gain)  in the  same
proportions as the investment tax credit that is recaptured with respect to such
property is shared among the Partners.

         (k) Any  reduction in the  adjusted tax basis (or cost) of  Partnership
investment tax credit property pursuant to Code Section 50(c) shall be specially
allocated among the Partners (as an item in the nature of expenses or losses) in
the same  proportions  as the  basis  (or cost) of such  property  is  allocated
pursuant to Treasury Regulations Section 1.46-3(f)(2)(i).

         (l) Any  income,  gain,  loss or  deduction  realized  as a  direct  or
indirect  result  of the  issuance  of an  interest  in the  Partnership  by the
Partnership  to a Partner (the  "Issuance  Items") shall be allocated  among the
Partners so that, to the extent possible, the net amount of such Issuance Items,
together with all other allocations under this Agreement to each Partner,  shall

                                       42
<PAGE>

be equal to the net amount that would have been  allocated  to each such Partner
if the Issuance Items had not been realized.

         (m)  If any  Partnership  expenditure  treated  as a  deduction  on its
federal  income  tax  return is  disallowed  as a  deduction  and  treated  as a
distribution  pursuant to Section  731(a) of the Code,  there shall be a special
allocation  of  gross  income  to the  Partner  deemed  to  have  received  such
distribution equal to the amount of such distribution.

         (n)  Interest deduction on the Partnership  indebtedness referred to in
Section 6.3 shall be allocated 100% to the General Partner.

     Section 10.4 Curative  Allocations.  The  allocations set forth in Sections
10.2(c),  10.3(a),  10.3(b),  10.3(c),  10.3(d),  10.3(e),  10.3(f), and 10.3(g)
hereof (the  "Regulatory  Allocations")  are  intended  to comply  with  certain
requirements of the Treasury Regulations. It is the intent of the Partners that,
to the extent possible,  all Regulatory  Allocations shall be offset either with
other  Regulatory  Allocations  or with  special  allocations  of other items of
Partnership  income,  gain,  loss,  or deduction  pursuant to this Section 10.4.
Therefore, notwithstanding any other provision of this Article X (other than the
Regulatory  Allocations),  with the Consent of the Special Limited Partner,  the
General  Partner shall make such offsetting  special  allocations of Partnership
income,  gain, loss, or deduction in whatever manner the General  Partner,  with
the Consent of the Special  Limited  Partner,  determines  appropriate  so that,
after such  offsetting  allocations  are made,  each Partner's  Capital  Account
balance is, to the extent  possible,  equal to the Capital  Account balance such
Partner  would  have  had if the  Regulatory  Allocations  were  not part of the
Agreement and all  Partnership  items were allocated  pursuant to Sections 10.1,
10.2(a),  10.2(b), 10.3(h), 10.3(i), 10.3(j), 10.3(k), 10.3(l), 10.3(m), 10.3(n)
and 10.5. In  exercising  its  authority  under this Section  10.4,  the General
Partner  shall take into account  future  Regulatory  Allocations  under Section
10.3(a) and 10.3(b)  that,  although  not yet made,  are likely to offset  other
Regulatory Allocations previously made under Sections 10.3(e) and 10.3(f).

     Section 10.5 Other Allocation Rules.

         (a) The  basis  (or  cost) of any  Partnership  investment  tax  credit
property  shall be allocated  among the  Partners in  accordance  with  Treasury
Regulations Section 1.46-3(f)(2)(i).  All Tax Credits (other than the investment
tax credit) shall be allocated  among the Partners in accordance with applicable
law.  Consistent  with the  foregoing,  the  Partners  intend that LIHTC will be
allocated  99.98% to the Limited  Partner,  .01% to the Special Limited Partner,
 .005% to the Managing General Partner and .005% to the General Partner.

         (b) In the event Partnership investment tax credit property is disposed
of during any taxable  year,  profits for such taxable year (and,  to the extent
such  profits are  insufficient,  profits for  subsequent  taxable  years) in an

                                       43
<PAGE>

amount  equal to the excess,  if any, of (1) the  reduction  in the adjusted tax
basis (or cost) of such property  pursuant to Code Section  50(c),  over (2) any
increase in the  adjusted  tax basis of such  property  pursuant to Code Section
50(c) caused by the  disposition  of such  property,  shall be excluded from the
profits allocated  pursuant to Section 10.1 and Section 10.2(a) hereof and shall
instead be allocated among the Partners in proportion to their respective shares
of such excess,  determined  pursuant to Section 10.3(i) and 10.3(j) hereof.  In
the event more than one item of such property is disposed of by the Partnership,
the foregoing  sentence shall apply to such items in the order in which they are
disposed of by the  Partnership,  so the profits  equal to the entire  amount of
such  excess  with  respect  to the first  such  property  disposed  of shall be
allocated  prior to any  allocations  with  respect to the second such  property
disposed of, and so forth.

         (c) For purposes of determining the Income,  Losses, or any other items
allocable  to any  period,  Income,  Losses,  and any such other  items shall be
determined  on a daily,  monthly,  or other basis,  as determined by the General
Partner with the Consent of the Special Limited  Partner,  using any permissible
method under Code Section 706 and the Treasury Regulations thereunder.

         (d) Solely for purposes of determining a Partner's  proportionate share
of the "excess nonrecourse liabilities" of the Partnership within the meaning of
Treasury   Regulations  Section   1.752-3(a)(3),   the  Partners'  interests  in
Partnership  profits are as follows:  Limited Partner:  99.98%;  Special Limited
Partner: .01%; Managing General Partner .005%; General Partner: .005%.

         (e) To the extent  permitted by Section  1.704-2(h)(3)  of the Treasury
Regulations, the General Partner shall endeavor to treat Distributions as having
been made from the proceeds of a Nonrecourse  Liability or a Partner Nonrecourse
Debt only to the extent  that such  Distributions  would  cause or  increase  an
Adjusted Capital Account Deficit for any Partner who is not a General Partner.

     Section 10.6 Tax Allocations:  Code Section 704(c). In accordance with Code
Section 704(c) and the Treasury Regulations thereunder,  income, gain, loss, and
deduction  with  respect  to any  property  contributed  to the  capital  of the
Partnership shall,  solely for tax purposes,  be allocated among the Partners so
as to take account of any variation  between the adjusted basis of such property
to the  Partnership  for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with Section 1.28(a) hereof).

         In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section  1.29(b)  hereof,  subsequent  allocations of income,  gain,
loss,  and  deduction  with  respect  to such asset  shall  take  account of any
variation  between  the  adjusted  basis of such  asset for  federal  income tax
purposes  and its Gross  Asset  Value in the same  manner as under Code  Section
704(c) and the Treasury Regulations thereunder.

                                       44
<PAGE>


         Any elections or other decisions  relating to such allocations shall be
made by the General  Partner with the Consent of the Special  Limited Partner in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations  pursuant to this  Section  10.6 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing,  any Person's  Capital Account or share of Income,  Losses,  other
items, or distributions pursuant to any provision of this Agreement.

     Section  10.7  Allocation  Among  Limited  Partners.  In the event that the
Interest of the Limited  Partner  hereunder is at any time held by more than one
Limited  Partner  all items  which are  specifically  allocated  to the  Limited
Partner for any month pursuant to this Article X shall be apportioned among such
Persons according to the ratio of their respective  profit-sharing  interests in
the Partnership at the last day of such month.

     Section  10.8  Allocation  Among  General  Partners.  In the event that the
Interest of the General  Partner  hereunder is at any time held by more than one
General  Partner  all items  which are  specifically  allocated  to the  General
Partner for any month pursuant to this Article X shall be apportioned among such
Persons in such  percentages as may from time to time be determined by agreement
among them without amendment to this Agreement or consent of the Limited Partner
or Consent of the Special Limited Partner.

     Section 10.9 Modification of Allocations.  The provisions of Articles X and
XI and other  provisions of this  Agreement are intended to comply with Treasury
Regulations  Section  1.704 and shall be  interpreted  and  applied  in a manner
consistent with such section of the Treasury Regulations.  In the event that the
General Partner determines, in its sole discretion, that it is prudent to modify
the manner in which the Capital Accounts of the Partners, or any debit or credit
thereto,  are  computed  in order to comply  with such  section of the  Treasury
Regulations,  the General Partner may make such modification,  but only with the
Consent of the Special  Limited  Partner,  to the minimum extent  necessary,  to
effect the plan of allocations and Distributions  provided for elsewhere in this
Agreement.   Further,   the   General   Partner   shall  make  any   appropriate
modifications,  but only with the Consent of the Special Limited Partner, in the
event it appears that unanticipated events (e.g., the existence of a Partnership
election  pursuant to Code Section 754) might otherwise cause this Agreement not
to comply with Treasury Regulation Section 1.704.

                                   ARTICLE XI

                                  DISTRIBUTION

         Section 11.1 Distribution of Net Operating Income. Net Operating Income
for each  fiscal  year  shall  be  distributed  within  seventy-five  (75)  days

                                       45
<PAGE>

following  each  calendar  year and shall be applied in the  following  order of
priority:

         (a) to pay the current  Reporting  Fee and then to pay any accrued
Reporting  Fees which have not been paid in full from previous years;

         (b) to pay the Development Fee;

         (c) to pay the Operating Loans, if any, as referenced in Section 6.2(b)
of this Agreement,  from the Net Operating  Income remaining after reduction for
the payments made pursuant to subsections (a) and (b) of this Section 11.1;

         (d) to pay the Incentive Management Fee;

         (d) to pay the Tax Credit Compliance Fee; and

         (e) to the Limited  Partner in an amount equal to 30% of the  remaining
Net Operating  Income, to the Managing General Partner in an amount equal to 65%
of the remaining Net Operating  Income,  and to the General Partner in an amount
equal to 5% of the remaining Net Operating Income

     Section  11.2  Distribution  of  Sale  or  Refinancing  Proceeds.  Sale  or
Refinancing Proceeds shall be distributed in the following order:

         (a)  to the  payment  of the  Mortgage  and  other  matured  debts  and
liabilities  of the  Partnership,  other than accrued  payments,  debts or other
liabilities owing to Partners or former Partners;

         (b) to any accrued  payments,  debts or other  liabilities owing to the
Partners or former Partners,  including,  but not limited to, accrued  Reporting
Fees and Operating Loans, to be paid prorata if necessary;

         (c) to the  establishment  of any reserves  which the General  Partner
shall deem  reasonably  necessary for  contingent, unmatured or unforeseen
liabilities or obligations of the Partnership; and

         (d) thereafter, 30% to the Limited Partner, 35% to the Managing General
Partner and 35% to the General Partner.

                                   ARTICLE XII

                              TRANSFERS OF LIMITED
                      PARTNER'S INTEREST IN THE PARTNERSHIP

     Section 12.1  Assignment of Interest.  The Limited  Partner and the Special
Limited  Partner  shall not have the  right to  assign  all or any part of their
respective Interests to any other Person, whether or not a Partner,  except upon
satisfaction of the following:

                                       46
<PAGE>

         (a) by a written  instrument in form and substance  satisfactory to the
General  Partner  and its  counsel,  setting  forth the name and  address of the
proposed transferee,  the nature and extent of the Interest which is proposed to
be transferred  and the terms and conditions upon which the transfer is proposed
to be made,  stating that the Assignee  accepts and agrees to be bound by all of
the terms and provisions of this Agreement, and providing for the payment of all
reasonable  expenses  incurred  by  the  Partnership  in  connection  with  such
assignment,  including  but not limited to the cost of preparing  any  necessary
amendment to this Agreement;

         (b) upon consent of the General Partner to such assignment, which shall
not be unreasonably withheld; and

         (c) upon  receipt  by the  General  Partner of the  Assignee's  written
representation  that the Partnership  Interest is to be acquired by the Assignee
for the  Assignee's  own account for  long-term  investment  and not with a view
toward resale, fractionalization, division or distribution thereof.

         (d) Notwithstanding any provision to the contrary,  the Limited Partner
may assign its  Interest to an Affiliate or assign its Interest to Usbank or its
successors  as  collateral  to  secure  a  capital   contribution  loan  without
satisfying the conditions of Section 12.1(a) and (b) above.

         THE LIMITED  PARTNERSHIP  INTEREST AND THE SPECIAL LIMITED  PARTNERSHIP
INTEREST  DESCRIBED  HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AS AMENDED OR UNDER ANY STATE  SECURITIES  LAW. THESE  INTERESTS MAY NOT BE
SOLD OR OTHERWISE  TRANSFERRED  UNLESS  REGISTERED UNDER APPLICABLE  FEDERAL AND
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

     Section  12.2  Effective  Date of  Transfer.  Any  assignment  of a Limited
Partner's  Interest or Special Limited  Partner's  Interest  pursuant to Section
12.1 shall become  effective  as of the last day of the calendar  month in which
the last of the conditions to such assignment are satisfied.

     Section 12.3 Invalid Assignment. Any purported assignment of an Interest of
a Limited Partner or Special  Limited Partner  otherwise than in accordance with
Section  12.1 or Section  12.6 shall be of no effect as between the  Partnership
and the purported  assignee and shall be disregarded  by the General  Partner in
making allocations and Distributions hereunder.

     Section  12.4  Assignee's  Rights  to  Allocations  and  Distributions.  An
Assignee shall be entitled to receive  allocations  and  Distributions  from the
Partnership  attributable  to the Interest  acquired by reason of any  permitted
assignment  from and after the first day of the  calendar  month  following  the

                                       47
<PAGE>

month which ends with the  effective  date of the  transfer of such  Interest as
provided in Section  12.2.  The  Partnership  and the General  Partner  shall be
entitled to treat the  assignor  of such  Partnership  Interest as the  absolute
owner thereof in all respects,  and shall incur no liability for allocations and
Distributions  made in good  faith  to such  assignor,  until  such  time as the
written instrument of assignment has been received by the Partnership.

     Section 12.5 Substitution of Assignee as Limited Partner or Special Limited
Partner.

         (a) An Assignee shall not have the right to become a Substitute Limited
Partner or substitute  Special  Limited  Partner in place of his assignor unless
the written consent of the General Partner to such substitution  shall have been
obtained,  which consent, in the General Partner's absolute  discretion,  may be
withheld;  except that an Assignee which is an Affiliate of the Limited  Partner
or Special Limited Partner, or Usbank or its successors, may become a Substitute
Limited Partner or Substitute Special Limited Partner without the consent of the
General Partner.

         (b) A nonadmitted transferee of a Limited Partner's Interest or Special
Limited Partner's  Interest in the Partnership shall only be entitled to receive
that share of allocations,  Distributions and the return of Capital Contribution
to which its transferor  would  otherwise have been entitled with respect to the
Interest  transferred,  and shall  have no right to obtain  any  information  on
account of the Partnership's  transactions,  to inspect the Partnership's  books
and records or have any other of the rights and privileges of a Limited  Partner
or Special Limited Partner, provided,  however, that the Partnership shall, if a
transferee  and transferor  jointly  advise the General  Partner in writing of a
transfer  of an  Interest  in  the  Partnership,  furnish  the  transferee  with
pertinent tax information at the end of each fiscal year of the Partnership.

         (c)  The  General  Partner  may  elect  to  treat  a  transferee  of  a
Partnership  Interest  who  has not  become  a  Substitute  Limited  Partner  or
substitute Special Limited Partner as a Substitute Limited Partner or substitute
Special  Limited  Partner,  as the case may be, in the  place of its  transferor
should the  General  partner  determine  in its  absolute  discretion  that such
treatment is in the best interest of the Partnership.

                                  ARTICLE XIII

                     WITHDRAWAL, REMOVAL AND REPLACEMENT OF
                                 GENERAL PARTNER

     Section 13.1 Withdrawal of General Partner.

         (a) The General  Partner may not Withdraw (other than as a result of an
Involuntary Withdrawal) without the Consent of the Special Limited Partner, and,
to the extent  required,  of Mortgage  lender,  and the State Tax Credit Agency.
Withdrawal  shall be  conditioned  upon the  agreement  of the  Special  Limited

                                       48
<PAGE>

Partner to be admitted as a successor General Partner, or if the Special Limited
Partner  declines  to be admitted as a  successor  General  Partner  then on the
agreement of one or more Persons who satisfy the requirements of Section 13.5 of
this Agreement to be admitted as successor General Partner(s).

         (b)  Each  General  Partner  shall  indemnify  and  hold  harmless  the
Partnership and all Partners from its Withdrawal in violation of Section 13.1(a)
hereof.  Each  General  Partner  shall be liable for damages to the  Partnership
resulting from its Withdrawal in violation of Section 13.1(a).

     Section 13.2 Removal of General Partner.

         (a) The  Special  Limited  Partner or the Limited  Partner,  or both of
them, may remove the General Partner for cause if such General Partner is:

                  (1) subject to Bankruptcy in accordance with this Agreement;

                  (2) committing any fraud, willful misconduct,  material breach
of fiduciary duty or other  negligent  conduct in the  performance of its duties
under this Agreement;

                  (3) convicted of, or entered into a plea of guilty to, a
felony related to the purpose of this Agreement;

                  (4) making personal use of Partnership funds or properties;

                  (5)  violating  the terms of the Mortgage  and such  violation
prompts Illinois  Housing  Development  Authority,  to issue a default letter or
acceleration notice to the Partnership or General Partner and such violation has
not been cured  within 30 days of such letter or notice or the cure period under
the appropriate Mortgage document if longer;

                  (6) failing to provide any loan, advance, Capital Contribution
or any other payment to the Partnership required under this Agreement;

                  (7)  failing to obtain  the  Consent  of the  Special  Limited
Partner prior to any decision,  act or omission under  circumstances  where this
Agreement requires that such consent be obtained;

                  (8)  breaching  any  material   representation,   warranty  or
covenant  contained in this Agreement,  or failing to perform any other material
action which may be required by this Agreement;

                  (9) violating any federal or state tax law which causes a
recapture of LIHTC; or

                                       49
<PAGE>

                  (10) failing during any six-month period during the Compliance
Period to cause at least  66% of the total  apartment  units in the  Project  to
qualify for LIHTC,  unless such failure is the result of Force Majeure or unless
such failure is cured within 120 days after the end of the six-month period.

         (b) Written  notice of the  removal  for cause of the  General  Partner
shall be served by the Special Limited Partner or the Limited  Partner,  or both
of them,  upon the General  Partner  either by certified or by registered  mail,
return receipt  requested,  or by personal service.  Such notice shall set forth
the reasons for the  removal,  if any, and the date upon which the removal is to
become effective.

         (c) Upon  receipt of such  notice of removal  for  cause,  the  General
Partner shall cause an accounting to be prepared  covering the  transactions  of
the  Partnership  from the end of the  previous  fiscal year through the date of
receipt  of such  notice,  and  thereafter  it  shall  not  sell or  dispose  of
Partnership assets under any circumstances. The accounting shall be completed by
the  effective  date  of the  removal  and  shall  be in  sufficient  detail  to
accurately  and fully  reflect  the  earnings  or losses  for the period and the
financial  condition of the  Partnership.  If the General Partner fails to cause
the accounting to be prepared within 30 days of receipt of the notice of removal
for cause then the Limited Partner may cause the accounting to be prepared.  The
expenses of the accounting shall be borne by the General Partner.

     Section 13.3 Effects of a  Withdrawal.  In the event of a  Withdrawal,  the
entire  Interest  of the  Withdrawing  General  Partner  shall  immediately  and
automatically  terminate  on the  effective  date of such  Withdrawal,  and such
General Partner shall immediately  cease to be a General Partner,  shall have no
further right to participate  in the management or operation of the  Partnership
or  the  Project  or to  receive  any  allocations  or  Distributions  from  the
Partnership  or any  other  funds  or  assets  of  the  Partnership,  except  as
specifically set forth below. In the event of a Withdrawal, any or all executory
contracts,  including but not limited to the Management  Agreement,  between the
Partnership  and  the  Withdrawing  General  Partner  or its  Affiliates  may be
terminated by the Partnership,  with the Consent of the Special Limited Partner,
upon written notice to the party so terminated.

         Furthermore,  notwithstanding such Withdrawal,  the Withdrawing General
Partner  shall  be and  shall  remain,  liable  as a  General  Partner  for  all
liabilities  and  obligations  incurred  by the  Partnership  or by the  General
Partner prior to the effective date of the  Withdrawal,  or which may arise upon
such Withdrawal.  Any remaining Partner shall have all other rights and remedies
against  the  Withdrawing  General  Partner  as  provided  by law or under  this
Agreement.  Notwithstanding,  the  Withdrawing  General  Partner  shall  not  be
responsible for any obligations  which may arise following the effective date of
the Withdrawal, including without limitation any continuing guarantees for which
the General Partner and any affiliates may be responsible.

                                       50
<PAGE>

         The  following  additional  provisions  shall  apply in the  event of a
Withdrawal.

         (a)  In  the  event  of  a  Withdrawal  which  is  not  an  Involuntary
Withdrawal,  the  Withdrawing  General  Partner  shall have no further  right to
receive any future  allocations  or  Distributions  from the  Partnership or any
other funds or assets of the Partnership, nor shall it be entitled to receive or
to be paid by the Partnership any further payments of fees (including fees which
have been  earned but are  unpaid) or to be repaid any  outstanding  advances or
loans  made by it to the  Partnership  or to be paid any  amount  for its former
Interest unless such forfeiture creates an unreasonable financial benefit to the
Partnership  or  Limited  Partner.  From and  after the  effective  date of such
Withdrawal,  the former rights of the Withdrawing  General Partner to receive or
to be paid such allocations,  Distributions,  funds,  assets, fees or repayments
shall be assigned to the other General  Partner or General  Partners  (which may
include the Special Limited Partner), or if there is no other general partner of
the Partnership at that time, to the Special Limited Partner.

         (b) In the event of an  Involuntary  Withdrawal,  except as provided in
Section 13.3(b)(3) below, the Withdrawing  General Partner shall have no further
right to receive any future allocations or Distributions from the Partnership or
any other funds or assets of the Partnership,  provided that accrued and payable
fees  (i.e.,  fees earned but unpaid as of the date of  Withdrawal)  owed to the
Withdrawing  General  Partner,  and any  outstanding  loans  of the  Withdrawing
General Partner to the  Partnership,  shall be paid to the  Withdrawing  General
Partner in the manner and at the times such fees and loans  would have been paid
had the Withdrawing  General Partner not Withdrawn.  The Interest of the General
Partner shall be purchased as follows.

                  (1)  Notwithstanding the provisions of Section 13.3(b), if the
Involuntary  Withdrawal  arises  from  removal for cause as set forth in Section
13.2(a)  hereof,  the Withdrawn  General  Partner shall have no further right to
receive any future  allocations  or  Distributions  from the  Partnership or any
other  funds or assets of the  Partnership,  nor shall it be entitled to receive
any payment for its Interest,  nor shall it be entitled to receive or to be paid
by the Partnership or any Partners or successor  partners,  any further payments
of fees  (including  fees  which have been  earned  but remain  unpaid) or to be
repaid any outstanding advances or loans made by it to the Partnership.

                  (2) If the Involuntary  Withdrawal does not arise from removal
for  cause  under  Section  13.2(a)  hereof,  and  if the  Partnership  is to be
continued  with one or more  remaining  or  successor  General  Partner(s),  the
Partnership,  with the Consent of the Special Limited  Partner,  may, but is not
obligated  to,  purchase  the  Interest of the  Withdrawing  General  Partner in
Partnership  allocations,  Distributions and capital. The purchase price of such
Interest  shall be its Fair Market Value as determined by agreement  between the
Withdrawing General Partner and the Special Limited Partner.  The purchase price
shall be paid by the  Partnership  by delivering  to the General  Partner or its

                                       51
<PAGE>

representative the Partnership's  non-interest bearing unsecured promissory note
payable,  if at all, upon  liquidation  of the  Partnership  in accordance  with
Section 11.2(b). The note shall also provide that the Partnership may prepay all
or any part thereof without penalty.

                  (3) If the Involuntary  Withdrawal does not arise from removal
for  cause  under  Section  13.2(a)  hereof,  and  if the  Partnership  is to be
continued with one or more remaining or successor General Partner(s), and if the
Partnership does not purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital, then the Withdrawing General
Partner shall retain its Interest in such items, but such Interest shall be held
as a special limited partner.

     Section 13.4  Successor  General  Partner.  Upon the occurrence of an event
giving rise to a Withdrawal of a General Partner, any remaining General Partner,
or, if there be no remaining General Partner, the Withdrawing General Partner or
its legal  representative,  shall promptly notify the Special Limited Partner of
such Withdrawal (the "Withdrawal Notice").  Whether or not the Withdrawal Notice
shall have been sent as provided herein,  the Special Limited Partner shall have
the right to become a successor  General  Partner  (and to become the  successor
managing  General Partner if the Withdrawing  General Partner was previously the
managing General Partner). In order to effectuate the provisions of this Section
13.4 and the continuance of the Partnership, the Withdrawal of a General Partner
shall not be effective  until the  expiration of 120 days from the date on which
occurred the event  giving rise to the  Withdrawal,  unless the Special  Limited
Partner  shall have  elected to become a successor  General  Partner as provided
herein prior to expiration of such 60-day  period,  whereupon the  Withdrawal of
the General Partner shall be deemed  effective upon the  notification of all the
other Partners by the Special Limited Partner of such election.

     Section 13.5  Admission of  Additional  or Successor  General  Partner.  No
Person shall be admitted as an additional or successor  General  Partner  unless
(a) such  Person  shall  have  agreed to become a General  Partner  by a written
instrument  which shall include the acceptance  and adoption of this  Agreement;
(b) the Consent of the Special  Limited  Partner to the admission of such Person
as a substitute General Partner, which consent may be withheld in the discretion
of the Special Limited Partner, shall have been given; and (c) such Person shall
have executed and acknowledged any other  instruments  which the Special Limited
Partner shall  reasonably  deem necessary or appropriate to affect the admission
of such Person as a substitute General Partner. If the foregoing  conditions are
satisfied,  this Agreement shall be amended in accordance with the provisions of
the Act,  and all other steps shall be taken which are  reasonably  necessary to
effect the Withdrawal of the Withdrawing General Partner and the substitution of
the successor General Partner. Nothing contained herein shall reduce the Limited
Partner's Interest or the Special Limited Partner's Interest in the Partnership.


                                       52
<PAGE>

     Section 13.6 Transfer of Interest. Except as otherwise provided herein, the
General  Partner  may not  Withdraw  from the  Partnership,  or  enter  into any
agreement  as the  result of which any Person  shall  become  interested  in the
Partnership,  without the Consent of the Special  Limited  Partner which consent
shall not be unreasonably withheld.

                                   ARTICLE XIV

                          BOOKS AND ACCOUNTS, REPORTS,
                      TAX RETURNS, FISCAL YEAR AND BANKING

     Section 14.1 Books and Accounts.

         (a) The  General  Partner  shall  cause  the  Partnership  to keep  and
maintain at its principal  executive  office full and complete books and records
which shall include each of the following:

                  (1) a current list of the full name and last known business or
residence address of each Partner set forth in alphabetical  order together with
the Capital Contribution and the share in Income and Losses of each Partner;

                  (2) a copy of the  Certificate of Limited  Partnership and all
certificates of amendment  thereto,  together with executed copies of any powers
of attorney pursuant to which any certificate has been executed;

                  (3) copies of the Partnership's  federal,  state and local
income tax information  returns and reports,  if any, for the six most recent
taxable years;

                  (4) copies of the original of this Agreement and all
amendments thereto;

                  (5) financial statements of the Partnership for the six most
recent fiscal years; and

                  (6) the Partnership's books and records for at least the
current and past three fiscal years.

                  (7) in regard to the first  tenants  to occupy  the  apartment
units in the Apartment Housing,  copies of all tenant files including  completed
applications,  completed  questionnaires  or  checklist  of income  and  assets,
documentation  of third  party  verification  of income and  assets,  and income
certification forms (LIHTC specific).

         (b) Upon the request of the Limited Partner,  the General Partner shall
promptly  deliver to the Limited Partner,  at the expense of the Partnership,  a
copy of the information set forth in Section 14.1(a) above.  The Limited Partner
shall have the right upon reasonable request and during normal business hours to

                                       53
<PAGE>

inspect and copy any of the foregoing,  or any of the other books and records of
the Partnership or the Project at its own expense.

     Section 14.2 Accounting Reports.

         (a) By February 20 of each  calendar  year the  General  Partner  shall
provide  to the  Limited  Partner  and  the  Special  Limited  Partner  all  tax
information  necessary for the preparation of their federal and state income tax
returns and other tax returns  with regard to the  jurisdiction(s)  in which the
Partnership is formed and in which the Project is located.

         (b) By March 1 of each calendar year the General  Partner shall send to
the Limited Partner and the Special Limited  Partner:  (1) a balance sheet as of
the end of such  fiscal  year and  statements  of income,  Partners'  equity and
changes in cash flow for such fiscal year prepared in accordance  with generally
accepted accounting principles and accompanied by an auditor's report containing
an opinion of the  Partnership's  Accountants;  (2) a report  (which need not be
audited)  of any  Distributions  made  at  any  time  during  the  fiscal  year,
separately  identifying  Distributions  from Net Operating Income for the fiscal
year, Net Operating Income for prior years,  Sale or Refinancing  Proceeds,  and
reserves;  and (3) a report  setting  forth  the  amount  of all fees and  other
compensation and Distributions  and reimbursed  expenses paid by the Partnership
for the fiscal year to the General  Partner or Affiliates of the General Partner
and the services  performed  in  consideration  therefor,  which report shall be
verified by the  Partnership's  Accountants,  with the method of verification to
include, at a minimum, a review of the time records of individual employees, the
costs of whose services were reimbursed,  and a review of the specific nature of
the work  performed by each such  employee,  all in  accordance  with  generally
accepted  auditing  standards  and,  accordingly,  including  such  tests of the
accounting  records  and  such  other  auditing  procedures  as the  Accountants
consider appropriate in the circumstances.

         (c) Within 60 days after the end of each fiscal quarter in which a Sale
or  Refinancing  of the Project  occurs,  the General  Partner shall send to the
Limited Partner and the Special Limited Partner a report as to the nature of the
Sale or  Refinancing  and as to the  Income  and  Losses  for tax  purposes  and
proceeds arising from the Sale or Refinancing.

     Section  14.3 Other  Reports.  The  General  Partner  shall  provide to the
Limited Partner and the Special Limited Partner the following reports.

         (a) during construction,  on a regular basis, but in no event less than
once a month, a copy of the Inspecting Architect's report and other construction
reports  including,  but not limited to, (1) the name of each person  performing
work on the Improvements or providing  materials for the Improvements,  the work
performed or materials supplied by said person and the code number corresponding
to the line item in the  Construction  Budget which the person will be paid, (2)
an original AIA Document G702, or similar form acceptable to the Special Limited

                                       54
<PAGE>

Partner,  (3) if not included in the  Inspecting  Architect's  report or the AIA
Document G702, a line item  break-down of the  Construction  Budget (which shall
include,  description of work to be performed or materials to be supplied; total
dollar  amount  of the  work or  materials;  dollar  amount  of work  previously
completed  and paid or  materials  supplied and paid;  dollar  amount of work or
materials  to be paid per the current  disbursement  request;  dollar  amount of
materials  stored;  total dollar  amount of work  completed and stored as of the
current  disbursement date;  percentage of completion;  dollar amount of work or
materials needed to complete the line item; and retainage), (4) a reconciliation
of the sources and uses to determine that the Construction  Budget is in balance
and there are sufficient funds to complete the construction of the Improvements,
and (5)  copies  of lien  releases,  or  waivers,  from the  Contractor  and all
sub-contractors or material suppliers who were paid the previous month;

         (b) During the rent-up phase, and continuing until the end of the first
six-month  period  during which the Project has a sustained  occupancy of 95% or
better,  by the  twentieth  day of each month  within  such period a copy of the
previous  month's  rent roll  (through  the last day of the  month) and a tenant
LIHTC compliance  worksheet similar to the monthly initial tenant  certification
worksheet  included in Exhibit "H" attached  hereto and  incorporated  herein by
this reference.

         (c) A quarterly tax credit  compliance  report similar to the worksheet
included  in  Exhibit  "H" due on or before  April 30 of each year for the first
quarter,  July 31 of each year for the second  quarter,  October 31 of each year
for the third  quarter  and January 31 of each year for the fourth  quarter.  In
order to  verify  the  reliability  of the  information  being  provided  on the
compliance  report the Limited  Partner  may request a small  sampling of tenant
files to be provided.  The sampling will include,  but not be limited to, copies
of tenant  applications,  certifications  and third party  verifications used to
qualify  tenants.  If any  inaccuracies  are  found to  exist on the tax  credit
compliance report or any items of noncompliance are discovered then the sampling
will be expanded as determined by the Limited Partner.

         (d) By September 15 of each year, an estimate of LIHTC for that year.

         (e) If the Project receives a reservation of LIHTC in one year but will
not  complete  the  construction  and rent-up  until a later  year,  the General
Partner  will  provide to the Limited  Partner by December 31 of the year during
which the  reservation is received an audited cost  certification  together with
the  Accountant's  work papers  verifying that the  Partnership has expended the

                                       55
<PAGE>

requisite 10% of the  reasonably  expected cost basis to meet the carryover test
provisions of Section 42 of the Code. Furthermore, if materials and supplies are
purchased to meet the 10% requirement  then the General Partner shall provide to
the  Limited  Partner  an opinion of  counsel  that title to the  materials  and
supplies pass to the Partnership and that the Partnership bears the risk of loss
of the materials and supplies.

         (f)  During  the  Compliance  Period,  no  later  than the day any such
certification is filed, copies of any certifications  which the Partnership must
furnish to  federal  or state  governmental  authorities  administering  the Tax
Credit  program  including,  but not  limited  to,  copies of all annual  tenant
recertifications required under Section 42 of the Code.

         (g) A quarterly  report on operations,  in the form attached  hereto as
Exhibit  "H",  due on or before  April 30 of each year for the first  quarter of
operations,  July 31 of each year for the second quarter of operations,  October
31 of each year for the third quarter of operations  and January 31 of each year
for the fourth quarter of operations which shall include, but is not limited to,
an  unaudited  income  statement  showing all  activity in the reserve  accounts
required to be maintained pursuant to Section VIII of this Agreement,  statement
of income and expenses,  balance sheet, rent roll as of the end of each calendar
quarter of each year, and third party verification of current utility allowance.

         (h) By the  annual  renewal  date  each and  every  year,  an  executed
original or certified  copy of each and every  Insurance  policy or  certificate
required by the terms of this Agreement.

         (i) By the payment date of the real estate  property taxes each and
every year  verification  that the same has been paid in full.

         (j) On or  before  March  15th  of  each  calendar  year,  the  General
Partner's updated financial statement as of December 31 of the previous year.

         (k) On or  before  November  1 of  each  calendar  year,  a copy of the
following year's proposed  operating  budget.  Each such budget shall contain an
amount required for reserves in accordance with Article VIII and for the payment
of real estate taxes,  insurance,  debt service and other payments.  Such budget
shall only be adopted with the Consent of the Special Limited Partner.

         (l) Notice of the  occurrence,  or of the likelihood of occurrence,  of
any event  which has had a  material  adverse  effect  upon the  Project  or the
Partnership,   including,  but  not  limited  to,  any  breach  of  any  of  the
representations and warranties set forth in Section 9.10 of this Agreement,  and
any inability of the  Partnership  to meet its cash  obligations  as they become
payable, within ten days after the occurrence of such event.

     Section  14.4 Late  Reports.  If the General  Partner  does not fulfill its
obligations  under  Section 14.2 after notice by the Limited  Partner or Special
Limited Partner, the General Partner,  using its own funds, shall pay as damages
the sum of $25 per day (plus interest at the rate  established by Section 6.3 of
this  Agreement) to the Limited Partner until such  obligations  shall have been
fulfilled. If the General Partner does not fulfill its obligations under Section

                                       56
<PAGE>

14.3 within the time periods set forth therein,  the General Partner,  using its
own funds,  shall pay as damages the sum of $100.00  per week (plus  interest at
the rate  established by Section 6.3 of this  Agreement) to the Limited  Partner
until such obligations  shall have been fulfilled.  If the General Partner shall
so fail to pay, the General Partner and its Affiliates  shall forthwith cease to
be entitled to any fees hereunder (other than the Development Fee) and/or to the
payment of any Net Operating Income or Sale or Refinancing Proceeds to which the
General  Partner  may  otherwise  be  entitled  hereunder.  Payments of fees and
Distributions shall be restored only upon payment of such damages in full.

     Section 14.5 Annual Site Visits. On an annual basis a representative of the
Limited Partner,  at the Limited  Partner's  expense,  will conduct a site visit
which will include,  in part,  an  inspection  of the property,  a review of the
office and tenant files and an interview with the property manager.  The Limited
Partner may, in its sole  discretion,  cancel all or any part of the annual site
visit.

     Section  14.6 Tax  Returns.  The General  Partner  shall  cause  income tax
returns for the Partnership to be prepared and timely filed with the appropriate
federal, state and local taxing authorities.

     Section 14.7 Fiscal Year. The fiscal year of the  Partnership  shall be the
calendar  year or such other period as may be approved by the  Internal  Revenue
Service for federal income tax purposes.

     Section 14.8 Banking.  All funds of the Partnership shall be deposited in a
separate bank account or accounts as shall be determined by the General  Partner
with notice to the Special Limited Partner.  All withdrawals  therefrom shall be
made upon checks signed by the General Partner or by any person authorized to do
so by the General Partner.  The General Partner shall provide to any Partner who
requests  same the name and address of the  financial  institution,  the account
number and other relevant information regarding any Partnership bank account.

     Section 14.9 Certificates and Elections.

         (a) The General Partner shall file the First Year Certificate within 90
days  following  the  close of the  taxable  year  during  which  Completion  of
Construction  occurs and thereafter shall timely file any certificates which the
Partnership   must  furnish  to  federal  or  state   governmental   authorities
administering the Tax Credit programs under Section 42 of the Code.

         (b) The  General  Partner,  with the  Consent  of the  Special  Limited
Partner,  may, but is not required to, cause the  Partnership  to make or revoke
the election referred to in Section 754 of the Code, as amended,  or any similar
provisions enacted in lieu thereof.

                                       57
<PAGE>

                                   ARTICLE XV

                      DISSOLUTION, WINDING UP, TERMINATION
                       AND LIQUIDATION OF THE PARTNERSHIP

     Section 15.1 Dissolution of Partnership. The Partnership shall be dissolved
upon  the  expiration  of its  term  or  the  earlier  occurrence  of any of the
following events.

         (a) The  effective  date of the  Withdrawal  or removal of the  General
Partner,  unless  (1) at the time  there is at least one other  General  Partner
(which may be the  Special  Limited  Partner if it elects to serve as  successor
General Partner under Section 13.4 hereof) who will continue as General Partner,
or (2)  within  120 days  after the  occurrence  of any such  event the  Limited
Partner elects to continue the business of the Partnership.

         (b) The sale of the Project and the receipt in cash of the full amount
of the proceeds of such sale.

         Notwithstanding   the  foregoing,   however,  in  no  event  shall  the
Partnership  terminate  prior to the expiration of its term if such  termination
would result in a violation of the Mortgage or any other  agreement with or rule
or regulation of Mortgage lenders, to which the Partnership is subject.

     Section 15.2 Return of Capital  Contribution  upon  Dissolution.  Except as
provided  in  Sections  7.3 and  7.4 of  this  Agreement,  which  provide  for a
reduction or refund of the Limited Partner's Capital  Contribution under certain
circumstances,  and which shall represent the personal obligation of the General
Partner,  as well as the obligation of the Partnership,  each Partner shall look
solely to the assets of the  Partnership for all  Distributions  with respect to
the  Partnership  (including the return of its Capital  Contribution)  and shall
have no recourse  therefor (upon  dissolution or otherwise)  against any General
Partner.  No Partner  shall have any right to demand  property  other than money
upon  dissolution  and  termination of the  Partnership,  and the Partnership is
prohibited  from such a  distribution  of  property  absent  the  Consent of the
Special Limited Partner.

     Section  15.3   Distributions   of  Assets.   Upon  a  dissolution  of  the
Partnership,  the  General  Partner  (or,  if there is no General  Partner  then
remaining,  such other Person(s) designated as the liquidator of the Partnership
by the Special Limited Partner or by the court in a judicial  dissolution) shall
take full account of the Partnership  assets and liabilities and shall liquidate
the assets as promptly as is consistent with obtaining the fair value thereof.

         (a) Upon  dissolution  and  termination,  after payment of, or adequate
provision for, the debts and obligations of the Partnership  pursuant to Section
11.2(a) through and including  11.2(c),  the remaining assets of the Partnership

                                       58
<PAGE>

shall be  distributed  to the Partners in accordance  with Section  11.2,  after
taking into account all allocations under Article X hereof.

         (b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise:

                  (1) unrealized  appreciation or unrealized depreciation in the
values of such  assets  shall be deemed to be Income and Losses  realized by the
Partnership  immediately prior to the liquidation or other  Distribution  event;
and

                  (2) such Income and Losses  shall be allocated to the Partners
in accordance with Section 10.2 hereof, and any property so distributed shall be
treated as a Distribution  of an amount in cash equal to the excess of such Fair
Market Value over the outstanding  principal  balance of and accrued interest on
any debt by which the property is encumbered.

         (c) For the purposes of Section 15.3(b),  "unrealized  appreciation" or
"unrealized  depreciation"  shall mean the  difference  between  the Fair Market
Value  of such  assets,  taking  into  account  the  Fair  Market  Value  of the
associated  financing  but  subject  to  Section  7701(g)  of the Code,  and the
Partnership's  adjusted basis in such assets for book purposes.  Section 15.3(b)
is merely intended to provide a rule for allocating unrealized Income and Losses
upon liquidation or other  Distribution  event, and nothing contained in Section
15.3(b)  or  elsewhere  in this  Agreement  is  intended  to treat or cause such
Distributions  to be treated as sales for value.  The Fair Market  Value of such
assets shall be  determined  by an  independent  appraiser to be selected by the
General Partner with the Consent of the Special Limited Partner.

     Section 15.4 Deferral of  Liquidation.  If at the time of  liquidation  the
General  Partner or other  liquidator  shall determine that an immediate sale of
part or all of the  Partnership  assets could cause undue loss to the  Partners,
the  liquidator  may, in order to avoid  loss,  but only with the Consent of the
Special Limited Partner, either defer liquidation and retain all or a portion of
the assets or distribute all or a portion of the assets to the Partners in kind.
In the event that the liquidator  elects to distribute  such assets in kind, the
assets  shall  first  be  assigned  a  value  (by  appraisal  by an  independent
appraiser)  and the  unrealized  appreciation  or  depreciation  in value of the
assets shall be allocated to the Partners' Capital  Accounts,  as if such assets
had been sold, in the manner  described in Section  10.2,  and such assets shall
then be  distributed  to the  Partners  as  provided  herein.  In  applying  the
preceding  sentence,  the  Project  shall not be  assigned a value less than the
unamortized principal balance of any loan secured thereby.

     Section 15.5 Liquidation Statement. Each of the Partners shall be furnished
with a statement  prepared  or caused to be  prepared by the General  Partner or
other  liquidator,  which  shall set forth the  assets  and  liabilities  of the

                                       59
<PAGE>

Partnership as of the date of complete  liquidation.  Upon  compliance  with the
distribution plan as outlined in Sections 15.3 and 15.4, the Limited Partner and
Special  Limited  Partner  shall cease to be such and the General  Partner shall
execute,  acknowledge  and cause to be filed those  certificates  referenced  in
Section 15.6.

     Section 15.6  Certificates of  Dissolution;  Certificate of Cancellation of
Certificate of Limited Partnership.

         (a) Upon the  dissolution  of the  Partnership,  the  Managing  General
Partner  shall cause to be filed in the office of, and on a form  prescribed  by
the  Secretary  of  State  of the  State,  a  certificate  of  dissolution.  The
certificate of dissolution shall set forth the Partnership's name, the Secretary
of State's file number for the Partnership,  the event causing the Partnership's
dissolution and the date of the dissolution.

         (b) Upon the completion of the winding up of the Partnership's affairs,
the Managing  General Partner shall cause to be filed in the office of, and on a
form  prescribed  by, the  Secretary  of State of the State,  a  certificate  of
cancellation  of the  Certificate  of Limited  Partnership.  The  certificate of
cancellation  of the  Certificate  of  Limited  Partnership  shall set forth the
Partnership's  name,  the Secretary of State's file number for the  Partnership,
and any other  information  which the Managing  General  Partner  determines  to
include therein.

                                   ARTICLE XVI

                                   AMENDMENTS

         This Agreement may be amended at any time by the Limited Partner.  This
Agreement  may not be amended by the General  Partner  absent the Consent of the
Special Limited Partner. Notwithstanding the foregoing, the Limited Partner will
not  initiate an  amendment to the  Partnership,  no amendment  shall change the
Partnership to a general partnership;  extend the term of the Partnership beyond
the date  provided for in this  Agreement;  modify the limited  liability of the
Limited  Partner and the Special Limited  Partner;  allow the Limited Partner to
take control of the Partnership's business within the meaning of the Act; reduce
or  defer  the   realization   of  any   Partner's   interest  in   allocations,
Distributions,  capital or  compensation  hereunder,  or increase any  Partner's
obligations hereunder, without the consent of the Partner so affected; or change
the provisions of this Article XVI.






                                       60
<PAGE>

                                  ARTICLE XVII

                                  MISCELLANEOUS


     Section 17.1 Voting Rights.

         (a) The  Limited  Partner  shall have no right to vote upon any matters
affecting the Partnership, except as provided in this Agreement. Notwithstanding
the foregoing,  the Limited Partner may,  without the concurrence of the General
Partner:

                  (1) approve or disapprove, but not initiate, the Sale or
Refinancing of the Project;

                  (2) remove the General Partner and elect a substitute General
Partner as provided in this Agreement;

                  (3) elect a successor General Partner upon the Withdrawal of
the General Partner;

                  (4) approve or disapprove, but not initiate, the dissolution
of the Partnership; or

                  (5) subject to the provisions of Article XVI hereof, amend
this Agreement.

         (b) On any  matter  where the  Limited  Partner  has the right to vote,
votes may only be cast at a duly called  meeting of the  Partnership  or through
written action without a meeting.

     Section 17.2 Meeting of  Partnership.  Meetings of the  Partnership  may be
called  either (a) at any time by the General  Partner;  or (b) upon the General
Partner's  receipt of a written or facsimile  request  from the Limited  Partner
setting forth the purpose of such meeting.  Within ten days after receipt of the
Limited  Partner's  written or  facsimile  request  for a meeting,  the  General
Partner  shall provide all Partners  with written  notice of the meeting  (which
shall be by telephone  conference,  or at the principal place of business of the
Partnership or such other location referenced in the notice) to be held not less
than 15 days nor more than 30 days after  receipt of such  written or  facsimile
request from the Limited Partner,  which notice shall specify the time and place
of such  meeting  and the purpose or purposes  thereof.  If the General  Partner
fails to provide the written notice of the meeting within ten days after receipt
of the Limited Partner's request to hold a meeting, then the Limited Partner may
provide the  written  notice of the meeting to all the  Partners,  which  notice
shall  specify  the time and place of such  meeting  and the purpose or purposes
thereof.  All meetings and actions of the Limited  Partner  shall be governed in
all  respects,  including  matters  relating  to  notice,  quorum,  adjournment,
proxies,  record  dates  and  actions  without  a  meeting,  by  the  applicable
provisions of the Act, as it shall be amended from time to time.


                                       61
<PAGE>

     Section 17.3 Notices.  Any notice given  pursuant to this  Agreement may be
served personally on the Partner to be notified,  or may be mailed,  first class
postage prepaid,  to the following address,  or to such other address as a party
may from time to time designate in writing:

     To the Managing
     General Partner:             Elderly Living Development, Inc.
                                  400 Main Street, Suite 400
                                  Davenport, IA 52801

     To the General Partner:      Quad Cities Redevelopment Resources, Inc.
                                  4550 Kennedy Drive, Suite 2
                                  East Moline, Illinois 61244

     With a copy to:              Duane Morris, LLP
                                  227 West Monroe St., Suite 3400
                                  Chicago, IL 60606

     To the Limited Partner:      WNC Housing Tax Credit Fund VI, L.P., Series 7
                                  c/o WNC & Associates, Inc.
                                  3158 Redhill Ave., Suite 120
                                   Costa Mesa, CA 92626-3416

     To the Special
     Limited Partner:             WNC HOUSING, L.P.
                                  3158 Redhill Ave., Suite 120
                                  Costa Mesa, CA 92626-3416

     Section 17.4  Successors and Assigns.  All the terms and conditions of this
Agreement  shall be binding upon and inure to the benefit of the  successors and
assigns of the Partners.

     Section  17.5  Recording  of  Certificate  of Limited  Partnership.  If the
General Partner should deem it advisable to do so, the Partnership  shall record
in the office of the County  Recorder of the county in which the principal place
of business of the Partnership is located a certified copy of the Certificate of
Limited  Partnership,  or any  amendment  thereto,  after  such  Certificate  or
amendment has been filed with the Secretary of State of the State.

     Section 17.6 Amendment of Certificate of Limited Partnership.

         (a) The General  Partner shall cause to be filed,  within 30 days after
the happening of any of the following events, an amendment to the Certificate of
Limited Partnership reflecting the occurrence of any of the following.

                  (1) A change in the name of the Partnership.


                                       62
<PAGE>

                  (2) A change in the street address of the Partnership's
principal executive office.

                  (3) A change in the address,  or the Withdrawal,  of a General
Partner,  or a change in the  address of the agent for  service of  process,  or
appointment of a new agent for service of process.

                  (4) The admission of a General Partner and that Partner's
address.

                  (5) The  discovery  by the  General  Partner  of any  false or
erroneous material statement contained in the Certificate of Limited Partnership
or any amendment thereto.

         (b) The  Certificate  of  Limited  Partnership  may also be  amended in
conformity with this Agreement at any time in any other respect that the General
Partner determines.

         (c)  The  General  Partner  shall  cause  the  Certificate  of  Limited
Partnership to be amended, when required or permitted as aforesaid,  by filing a
certificate of amendment  thereto in the office of, and on a form prescribed by,
the  Secretary of State of the State.  The  certificate  of amendment  shall set
forth the  Partnership's  name,  the  Secretary  of State's  file number for the
Partnership and the text of the amendment.

     Section 17.7  Counterparts.  This  Agreement may be executed in one or more
counterparts,  each of which shall be deemed an original,  and said counterparts
shall  constitute  but one and the same  instrument  which may  sufficiently  be
evidenced by one counterpart.

     Section 17.8 Captions.  Captions to and headings of the Articles,  Sections
and  subsections  of this  Agreement  are  solely  for the  conveniences  of the
Partners,  are not a part of  this  Agreement,  and  shall  not be used  for the
interpretation  or  determination  of the  validity  of  this  Agreement  or any
provision hereof.

     Section 17.9 Saving  Clause.  If any  provision of this  Agreement,  or the
application  of such  provision  to any  Person or  circumstance,  shall be held
invalid,  the remainder of this Agreement,  or the application of such provision
to Persons  or  circumstances  other than those as to which it is held  invalid,
shall not be affected thereby.

     Section 17.10 Tax Matters Partners.  All the Partners hereby agree that the
General Partner shall be the "Tax Matters  Partner"  pursuant to the Code and in
connection with any audit of the federal income tax returns of the Partnership.

         (a) The Tax Matters  Partner shall  furnish to each Partner  notice and
information with respect to the following:  closing conference with an examining
agent;  proposed  adjustments,  rights of appeal,  and requirements for filing a
protest;  time and place of any appeals  conference;  acceptance by the Internal
Revenue Service of any settlement offer;  consent to the extension of the period

                                       63
<PAGE>

of  limitation   with  respect  to  all  Partners;   filing  of  a  request  for
administrative  adjustment  on  behalf  of the  Partnership;  filing  by the Tax
Matters Partner or any other Partner of any petition for judicial review; filing
of any appeal with respect to any judicial  determination;  and a final judicial
redetermination.

         (b)  The  Tax  Matters   Partner   shall   determine  to  litigate  any
administrative  determination  relating to federal income tax matters,  then the
Tax Matters  Partner shall litigate such matter in such court as the Tax Matters
Partner shall decide in its sole discretion.

         (c) In  discharging  its duties and  responsibilities,  the Tax Matters
Partner shall act as a fiduciary (1) to the Limited Partner (to the exclusion of
the other  Partners)  insofar  as tax  matters  related to the Tax  Credits  are
concerned, and (2) to all of the Partners in other respects.

         (d) The Partners consent and agree that in connection with any audit of
Partnership, or if the Tax Matters Partner withdraws from the Partnership or the
Tax Matters  Partner  becomes  Bankrupt,  then the Special  Limited  Partner may
become,  in its sole discretion,  a special general partner,  and become the Tax
Matters Partner.  The Limited Partner will make no claim against the Partnership
in respect of any action or omission by the Tax Matters Partner during such time
as the Special Limited Partner acts as the Tax Matters Partner.

         (e)  Nothing  herein  shall be  construed  as a waiver  by the  Limited
Partner of any of its rights under Chapter 631 of the Code. The General  Partner
shall not enter into any  settlement  agreement  purporting  to bind the Limited
Partner without the Limited Partner's consent.

     Section 17.11 Expiration of Compliance Period.

         (a)  Notwithstanding  any provision  hereof to the contrary (other than
this Section  17.11),  the Special  Limited  Partner shall have the right at any
time after the beginning of the last year of the  Compliance  Period to require,
by written  notice to the General  Partner,  that the General  Partner  promptly
submit a written  request to the applicable  State Tax Credit Agency pursuant to
Section 42(h) of the Code (or any successor provision) that such agency endeavor
to locate within one year from the date of such written  request a purchaser for
the Project who will  continue to operate the Project as a qualified  low income
property, at a purchase price that is not less than the minimum amount set forth
in Section 42(h)(6) of the Code (or any successor provision).  In the event that
the State Tax Credit Agency  obtains an offer  satisfying  the conditions of the
preceding  sentence,  the  General  Partner  shall  promptly  notify the Special
Limited  Partner in writing  with  respect to the terms and  conditions  of such
offer,  and, if the Special  Limited  Partner  notifies the General Partner that

                                       64
<PAGE>

such offer should be accepted,  the General  Partner shall cause the Partnership
promptly  to accept  such offer and to proceed to sell the  Project  pursuant to
such offer.

         (b) A sale of the Project prior to the end of the Compliance Period may
only  take  place if the  conditions  of  Section  42(j)(6)  of the Code (or any
successor provision) will be satisfied upon such sale by having the purchaser of
the Project post the required bond on behalf of the Partnership.

     Section 17.12 Number and Gender.  All pronouns and any  variations  thereof
shall be deemed to refer to the masculine,  feminine, neuter, singular or plural
as the identity of the Person or Persons may require.

     Section  17.13 Entire  Agreement.  This  Agreement  constitutes  the entire
understanding  between the parties with respect to the subject matter hereof and
all prior  understandings and agreements  between the parties,  written or oral,
respecting this transaction are merged in this Agreement.

     Section 17.14  Governing Law. This Agreement and its  application  shall be
governed by the laws of the State.

     Section  17.15  Attorney's  Fees.  If a suit or  action  is  instituted  in
connection  with an  alleged  breach of any  provision  of this  Agreement,  the
prevailing party shall be entitled to recover,  in addition to costs,  such sums
as the court may adjudge  reasonable as attorney's  fees,  including fees on any
appeal.

     Section  17.16  Receipt  of  Correspondence.  The  Partners  agree that the
General  Partner  shall send to the  Limited  Partner  and the  Special  Limited
Partner a copy of any  correspondence  relative to the  Project's  noncompliance
with the Mortgage,  relative to the acceleration of the Mortgage and/or relative
to the disposition of the Project.

     Section 17.17 Security  Interest and Right of Set-Off.  As security for the
performance  of the  respective  obligations to which any Partner may be subject
under this Agreement, the Partnership shall have (and each Partner hereby grants
to the  Partnership)  a security  interest  in all funds  distributable  to said
Partner to the extent of the amount of such obligation.




              Remaining of this page was intentionally left blank.




                                       65



<PAGE>

         IN WITNESS  WHEREOF,  this  Agreement  of Limited  Partnership  of Lake
Village Apartments,  L.P., an Illinois limited partnership,  is made and entered
into as of the 18th day of December, 2000.


                           MANAGING GENERAL PARTNER

                           Elderly Living Development, Inc.

                           By:      /s/ MARGARET MCCHURCH
                                    Margaret McChurch
                                    President

                           GENERAL PARTNER

                           Quad Cities Redevelopment Resources, Inc.,

                           By:      /s/ PAUL K. ELGATIAN
                                    Name: Paul K. Elgatian
                                    Title: President


                           LIMITED PARTNER

                           WNC Housing Tax Credit Fund VI, L.P., Series 7

                           By:      WNC & Associates, Inc.,
                                    General Partner

                                    By:     /s/ DAVID N. SHAFER
                                            David N. Shafer,
                                            Executive Vice President


                           WITHDRAWING ORIGINAL LIMITED PARTNER

                           Elderly Living Development, Inc.

                           By:      /s/ MARGARET MCCHURCH
                                    Margaret McChurch,
                                    President




Signatures continued on next page...

                                       66
<PAGE>





                           SPECIAL LIMITED PARTNER

                           WNC HOUSING, L.P.

                           By:      WNC & Associates, Inc.,
                                    General Partner

                                    By:     /s/ DAVID N. SHAFER
                                            David N. Shafer,
                                            Executive Vice President



















                                       67
<PAGE>


                       EXHIBIT A TO PARTNERSHIP AGREEMENT

                                LEGAL DESCRIPTION

A TRACT OF  LAND  LOCATED IN  A PARTY  OF  THE  SOUTHEAST  QUARTER  (SE-1/4)  OF
SECTION  TWENTY-SEVEN  (27),  TOWNSHIP  15 NORTH,  RANGE 5 EAST OF THE 4TH P.M.,
HENRY COUNTY,  ILLINOIS.  MORE PARTICULARLY BOUNDED AND DESCRIBED AS FOLLOWS AND
BEARINGS ARE FOR THE PURPOSE OF DESCRIPTION  ONLY:  COMMENCING AT AN IRON ROD AT
THE  SOUTHEAST  CORNER  OF  THE  SOUTHEAST  QUARTER  (SE-1/4)  OF  SAID  SECTION
TWENTY-SEVEN  (27);  THENCE S  89(Degree)  24'00" W, ALONG THE SOUTH LINE OF THE
SOUTHEAST  QUARTER  (SE-1/4 ) OF SAID SECTION  TWENTY-SEVEN  (27), A DISTANCE OF
413.70 FEET TO THE SOUTHEAST  CORNER OF  CANDLELIGHT  PARK  SUBDIVISION  AND THE
PLACE OF BEGINNING;  THENCE  CONTINUING S 89(Degree)  24'00" W, ALONG THE SOUTHE
LINE OF THE  SOUTHEAST  QUARTER  (SE-1/4) OF SAID SECTION  TWENTY-SEVEN  (27), A
DISTANCE  OF 557.00  FEET TO THE  SOUTHEAST  CORNER OF  KEWANEE  LAND TRUST #101
SUBDIVISION  #1;  THENCE N  00(Degree)  11' 00" E,  ALONG  THE EAST LINE OF SAID
SUBDIVISION AND SAID EAST LINE EXTENDED 550.00 FEET;  THENCE N 89(Degree) 24"00'
E 150.00 FEET;  THENCE S 00(Degree)  11'00" W, 200.00 FEET;  THENCE S 55(Degree)
58'03" E, 193.50  FEET;  THENCE N  89(Degree)  24'00"  EAST,  246.00 FEET TO THE
NORTHERLY  EXTENSION  OF THE WEST  LINE OF SAID  CANDLELIGHT  PARK  SUBDIVISION;
THENCE S 00(Degree)  07'00" W, ALONG SAID  NORTHERLY  EXTENSION  AND  CONTINUING
ALONG THE WEST LINE OF SAID  CANDLELIGHT  PARK  SUBDIVISION,  240.02 FEET TO THE
PLACE  OF  BEGINNING  AND  CONTAINING  4.338  ACRES,  MORE OR LESS.  SUBJECT  TO
RIGHT-OF-WAY  OF A PUBLIC ROAD ALONG THE SOUTH SIDE OF THE ABOVE DESCRIBED TRACT
AND ALSO SUBJECT TO ALL EASEMENTS OF RECORD.















                                      A-1
<PAGE>






                       EXHIBIT B TO PARTNERSHIP AGREEMENT

                              FORM OF LEGAL OPINION



WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California  92626

RE:      Lake Village Apartments, L.P.

Ladies and Gentlemen:

         You have  requested  our  opinion  with  respect to certain  matters in
connection  with the investment by WNC Housing Tax Credit Fund VI, L.P.,  Series
7, a California  limited  partnership  (the  "Limited  Partner") in Lake Village
Apartments, L.P. (the "Partnership"),  an Illinois limited partnership formed to
own, develop, (construct/-rehabilitate) finance and operate an apartment complex
for  low-income  persons (the  "Apartment  Complex") in Kewanee,  Henry  County,
Illinois.  The general  partner(s) of the  Partnership  (is/are)  Elderly Living
Development, Inc. (the "Managing General Partner") and Quad Cities Redevelopment
Resources, Inc. (the "General Partner").

         In rendering  the opinions  stated  below,  we have examined and relied
upon the following:

         (i)     [Certificate of Limited Partnership];

         (ii)    [Agreement of Limited Partnership] (the "Partnership
                 Agreement");

         (iii)   A   preliminary   reservation   letter   from  [State
                 Allocating   Agency]  (the  "State   Agency")   dated
                 _________,      200___     conditionally     awarding
                 $_______________  in Federal tax credits annually for
                 each of ten years and  $_______________  in  Illinois
                 tax credits  annually  for each of four years for the
                 Apartment Complex; and

         (iv)    Such other  documents,  records and instruments as we
                 have deemed necessary in order to enable us to render
                 the opinions referred to in this letter.

         For  purposes of rendering  the  opinions  stated below we have assumed
that,  in  those  cases in which  we have  not  been  involved  directly  in the
preparation,  execution  or the  filing  of a  document,  that (a) the  document
reviewed  by us is an  original  document,  or a true and  accurate  copy of the
original document,  and has not been subsequently amended, (b) the signatures on
each original document are genuine, and (c) each party who executed the document
had proper authority and capacity.

                                      B-1
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
_______________, 200__
Page 2



Based on the foregoing we are of the opinion that:

         (a)  ________________________,  one  of  the  General  Partners,  is  a
[corporation/partnership] duly formed and validly existing under the laws of the
State of  _____________________  and has full power and  authority to enter into
and    perform    its    obligations    under   the    Partnership    Agreement.
_____________________,    one   of   the   other   General   Partners,    is   a
[corporation/partnership] duly formed and validly existing under the laws of the
State of  __________________  and has full power and authority to enter into and
perform its obligations under the Partnership Agreement.

         (b) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Illinois.

         (c) The  Partnership is validly  existing under and subject to the laws
of IL with full power and authority to own,  develop,  [construct/rehabilitate],
finance and operate the  Apartment  Complex and to  otherwise  conduct  business
under the Partnership Agreement.

         (d) Execution of the  Partnership  Agreement by the General  Partner(s)
has been duly and validly  authorized by or on behalf of the General  Partner(s)
and,  having been  executed and  delivered  in  accordance  with its terms,  the
Partnership Agreement constitutes the valid and binding agreement of the General
Partner(s), enforceable in accordance with its terms.

         (e) The  execution  and  delivery of the  Partnership  Agreement by the
General Partner(s) does not conflict with and will not result in a breach of any
of the terms,  provisions or conditions of any agreement or instrument  known to
counsel to which any of the General  Partner(s) or the Partnership is a party or
by which any of them may be bound,  or any  order,  rule,  or  regulation  to be
applicable  to any of  such  parties  of  any  court  or  governmental  body  or
administrative  agency having  jurisdiction over any of such parties or over the
property.

         (f) To the best of counsel's knowledge,  after due inquiry, there is no
litigation  or  governmental   proceeding  pending  or  threatened  against,  or
involving the Apartment  Complex,  the  Partnership or any General Partner which
would  materially  adversely  affect the  condition  (financial or otherwise) or
business of the Apartment Complex, the Partnership or any of the Partners of the
Partnership.

         (g) The  Limited  Partner  and the Special  Limited  Partner  have been
admitted  to the  Partnership  as  limited  partners  of the  Partnership  under
__________  law and are entitled to all of the rights of limited  partners under
the Partnership Agreement.  Except as described in the Partnership Agreement, no

                                      B-2
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
_______________, 200__
Page 3


person  is a  partner  of  or  has  any  legal  or  equitable  interest  in  the
Partnership,  and all former partners of record or known to counsel have validly
withdrawn  from the  Partnership  and  have  released  any  claims  against  the
Partnership arising out of their participation as partners therein.

         (h) Liability of the Limited Partner for obligations of the Partnership
is limited to the amount of the Limited Partner's capital contributions required
by the Partnership Agreement.

         (i) Neither the General  Partner(s) of the  Partnership nor the Limited
Partner nor the Special Limited Partner will have any liability for the Mortgage
represented  thereby (as those terms are defined in the  Partnership  Agreement,
and the  lender of the  Mortgage  Loan will  look  only to its  security  in the
Apartment Complex for repayment of the Mortgage Loan.

         (j) The Partnership owns a fee simple interest in the Apartment
Complex.

         (k) To the best of our actual knowledge and belief,  after due inquiry,
the Partnership has obtained all consents, permissions,  licenses, approvals, or
orders required by all applicable  governmental  or regulatory  agencies for the
development,   [construction/rehabilitation]  and  operation  of  the  Apartment
Complex, and the Apartment Complex conforms to all applicable Federal, state and
local land use, zoning, health, building and safety laws, ordinances,  rules and
regulations.

         (l) The Apartment Complex has obtained a preliminary reservation of low
income housing tax credits ("LIHTC") from the State Agency. The final allocation
of the LIHTC and ultimately  eligibility of the Apartment Complex for such final
allocation are subject to a series of requirements  which must be met, performed
or achieved at various times prior to and after such final allocation.  Assuming
all  such  requirements  are met,  performed  or  achieved  at the time or times
provided by applicable laws and regulations,  the Apartment Complex will qualify
for LIHTC.

         All of the  opinions  set forth above are  qualified to the extent that
the validity of any  provision of any agreement may be subject to or affected by
applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting the rights of creditors generally. We do not express any opinion as to
the  availability  of any equitable or specific remedy upon any breach of any of
the covenants,  warranties or other  provisions  contained in any agreement.  We

                                      B-3
<PAGE>

WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
_______________, 200__
Page 4


have not examined,  and we express no opinion with respect to, the applicability
of, or liability under, any Federal, state or local law, ordinance or regulation
governing or  pertaining  to  environmental  matters,  hazardous  wastes,  toxic
substances or the like.

         We express no opinion as to any matter  except  those set forth  above.
These opinions are rendered for use by the Limited Partner and its legal counsel
which will rely on this opinion in connection  with federal  income tax opinions
to be rendered by that firm. This opinion may not be delivered to or relied upon
by any other person or entity without our express written consent.

Sincerely,




--------------------




















                                      B-4
<PAGE>


                       EXHIBIT C TO PARTNERSHIP AGREEMENT

                           CERTIFICATION AND AGREEMENT


         CERTIFICATION  AND  AGREEMENT made as of the date written below by Lake
Village Apartments,  L.P., an Illinois limited partnership (the  "Partnership");
Elderly  Living  Development,  Inc. (the  "Managing  General  Partner") and Quad
Cities Redevelopment  Resources,  Inc., (the "General Partner"), for the benefit
of WNC  Housing  Tax  Credit  Fund VI,  L.P.,  Series  7, a  California  limited
partnership (the "Investment Partnership"), and WNC & Associates, Inc. ("WNC").

         WHEREAS, the Partnership  proposes to admit the Investment  Partnership
as a limited partner thereof pursuant to an Agreement of Limited  Partnership of
the  Partnership  (the  "Partnership  Agreement"),  in accordance with which the
Investment  Partnership  will  make  substantial  capital  contributions  to the
Partnership; and

         WHEREAS,  the Investment  Partnership  and WNC have relied upon certain
information  and  representations  described  herein in evaluating the merits of
investment by the Investment Partnership in the Partnership;

         NOW, THEREFORE,  to induce the Investment Partnership to enter into the
Partnership  Agreement and become a limited partner of the Partnership,  and for
$1.00 and other good and  valuable  consideration,  the receipt and  adequacy of
which are hereby  acknowledged,  the  Partnership and the General Partner hereby
agree as follows for the benefit of the Investment Partnership and WNC.

     1.  Representations,  Warranties and Covenants of the  Partnership  and the
         General Partner

         The   Partnership   and  the  General  Partner  jointly  and  severally
represent,  warrant and certify to the Investment Partnership and WNC that, with
respect to the Partnership, as of the date hereof:

                  1.1 The  Partnership is duly organized and in good standing as
a limited  partnership  pursuant to the laws of the state of its formation  with
full power and authority to own its apartment complex (the "Apartment  Complex")
and conduct its business; the Partnership and the General Partner have the power
and authority to enter into and perform this  Certification  and Agreement;  the
execution and delivery of this  Certification  and Agreement by the  Partnership
and the General  Partner have been duly and validly  authorized by all necessary
action;  the execution and delivery of this  Certification  and  Agreement,  the
fulfillment  of its  terms and  consummation  of the  transactions  contemplated
hereunder do not and will not conflict with or result in a violation,  breach or

                                      C-1
<PAGE>

termination  of or  constitute  a default  under (or would not  result in such a
conflict, violation, breach, termination or default with the giving of notice or
passage of time or both) any other  agreement,  indenture or instrument by which
the  Partnership  or any  General  Partner  is  bound  or any  law,  regulation,
judgment,  decree or order  applicable to the Partnership or any General Partner
or  any  of  their  respective  properties;  this  Certification  and  Agreement
constitutes  the valid and binding  agreement of the Partnership and the General
Partner, enforceable against each of them in accordance with its terms.

                  1.2  The  General  Partner  has  delivered  to the  Investment
Partnership,  WNC or their affiliates all documents and information  which would
be  material  to a  prudent  investor  in  deciding  whether  to  invest  in the
Partnership. All factual information provided to the Investment Partnership, WNC
or their affiliates either in writing or orally, did not, at the time given, and
does not, on the date hereof, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances  under which
they are made.

                  1.3  Each of the  representations  and warranties contained in
the  Partnership  Agreement is true and correct as of the date hereof.

                  1.4 Each of the  covenants and  agreements of the  Partnership
and the General  Partner  contained in the  Partnership  Agreement has been duly
performed  to the extent  that  performance  of any  covenant  or  agreement  is
required on or prior to the date hereof.

                  1.5 All conditions to admission of the Investment  Partnership
as  the  investment  limited  partner  of  the  Partnership   contained  in  the
Partnership Agreement have been satisfied.

                  1.6 No  default  has  occurred  and is  continuing  under  the
Partnership  Agreement or any of the Project  Documents (as such term is defined
in the Partnership Agreement) for the Partnership.

                  1.7  The  Partnership  will  allocate to the Limited  Partner
the Projected  Annual Tax Credits,  or the Revised Projected Tax Credits, if
applicable.

                  1.8 The General  Partner agrees to take all actions  necessary
to claim the Projected Tax Credit, including,  without limitation, the filing of
Form(s) 8609 with the Internal Revenue Service.

                  1.9 No person or entity other than the Partnership holds any
equity interest in the Apartment Complex.


                                      C-2
<PAGE>

                  1.10 The  Partnership has the sole  responsibility  to pay all
maintenance  and operating  costs,  including all taxes levied and all insurance
costs, attributable to the Apartment Complex.

                  1.11 The Partnership,  except to the extent it is protected by
insurance and  excluding any risk borne by lenders,  bears the sole risk of loss
if the  Apartment  Complex is destroyed or condemned or there is a diminution in
the value of the Apartment Complex.

                  1.12 No person or entity except the  Partnership has the right
to any proceeds, after payment of all indebtedness,  from the sale, refinancing,
or leasing of the Apartment Complex.

                  1.13 No  General  Partner  is  related  in any  manner  to the
Investment  Partnership,  nor is any General  Partner  acting as an agent of the
Investment Partnership.

     2. Miscellaneous

                  2.1 This  Certification  and  Agreement is made solely for the
benefit of the Investment  Partnership and WNC, and their respective  successors
and  assignees,  and no other person shall acquire or have any right under or by
virtue of this Agreement.

                  2.2  This  Certification  and  Agreement  may be  executed  in
several  counterparts,  each of which shall be deemed to be an original,  all of
which together shall constitute one and the same instrument.

                  2.3   Capitalized   terms   used  but  not   defined  in  this
Certification Agreement shall have the meanings given to them in the Partnership
Agreement.

         IN WITNESS WHEREOF,  this Certificate and Agreement is made and entered
into as of the day of ____________, 2000.

PARTNERSHIP

Lake Village Apartments, L.P.

By:      Elderly Living Development, Inc.
         Managing General Partner

         By:      ____________________________
                  Margaret McChurch
                  President



                                      C-3
<PAGE>


MANAGING GENERAL PARTNER

Elderly Living Development, Inc.

By:      ____________________________
         Margaret McChurch
         President


























                                      C-4
<PAGE>


                     EXHIBIT D TO THE PARTNERSHIP AGREEMENT

           MANAGING GENERAL PARTNER AND GENERAL PARTNER CERTIFICATION

          This Managing  General Partner and  General Partner  Certification  is
being  issued to WNC Housing Tax  Credit  Fund  VI,  L.P.,  Series  7  ("Limited
Partner")  by  Elderly  Living   Development,   Inc.  (the   "Managing   General
Partner(s)")  and Quad  Cities  Redevelopment  Resources,  Inc.,  (the  "General
Partner") of Lake Village  Apartments,  L.P.,  an Illinois  limited  partnership
("Partnership")  in  accordance  with  Section 7.2 of the  Agreement  of Limited
Partnership of the Partnership ("Partnership Agreement").

         Capitalized terms used but not defined in this Managing General Partner
and General Partner  Certification  shall have the meanings given to them in the
Partnership Agreement.

         WHEREAS, the  Limited   Partner   is   scheduled   to  make  a  Capital
Contribution to the Partnership;

         WHEREAS,  the  Partnership  Agreement  requires  the  Managing  General
Partner and  General  Partner to issue this  Certification  prior to the Limited
Partner's payment; and

         WHEREAS,  the  Limited  Partner  shall  rely on this  Certification  in
evaluating the continued merits of its investment in the Partnership;

         NOW,  THEREFORE,  to induce the Limited  Partner to make its  scheduled
Capital  Contribution to the  Partnership,  the Managing General Partner and the
General  Partner  represents  and  warrants  to the  Limited  Partner  that  the
following are true and correct as of the date written below.

         (a) The  Partnership is a duly organized  limited  partnership  validly
existing  under  the  laws  of the  State  and  has  complied  with  all  filing
requirements  necessary  for the  protection  of the  limited  liability  of the
Limited Partner and the Special Limited Partner.

         (b) The  Partnership  Agreement  and the Project  Documents are in full
force and effect and neither the  Partnership  nor the Managing  General Partner
nor the General Partner is in breach or violation of any provisions thereof.

         (c) Improvements will be completed in a timely and workerlike manner in
accordance  with all applicable  requirements  of all  appropriate  governmental
entities  and the plans and  specifications  of the  Project,  as such plans and
specifications  may be changed  from time to time with the  approval of Mortgage
lender,  and any  applicable  governmental  entities,  if such approval shall be
required.

                                      D-1
<PAGE>

         (d) The Project is being  operated in  accordance  with  standards  and
procedures  which are prudent and  customary  for the  operation  of  properties
similar to the Project.

         (e) Additional  Improvements on the Project, if any, shall be completed
substantially  in  conformity  with  plans and  specifications  approved  by the
Special Limited Partner.

         (f) No Partner has or will have any personal liability with respect to,
or has or will have personally guaranteed the payment of, the Mortgage.

         (g) The  Partnership  is in compliance  with all  construction  and use
codes  applicable  to  the  Project  and  is not  in  violation  of any  zoning,
environmental or similar regulations applicable to the Project.

         (h) All  appropriate  public  utilities,  including  sanitary and storm
sewers,  water,  gas  and  electricity,  are  currently  available  and  will be
operating  properly for all units in the Project at the time of first  occupancy
and throughout the term of the Partnership.

         (i) The Partnership has obtained Insurance written by an Insurance
Company.

         (j) The Partnership owns the fee simple interest in the Project.

         (k) The  Construction  Contract  has  been  entered  into  between  the
Partnership and the Contractor;  no other  consideration or fee shall be paid to
the Contractor other than amounts set forth in the Construction Contract.

         (l) The Partnership will require the Accountant to depreciate the
Improvements in accordance with Exhibit "I".

         (m) To the best of the Managing General Partner's and General Partner's
knowledge:  (1) no Hazardous  Substance  has been disposed of, or released to or
from,  or otherwise  now exists in, on, under or around,  the Project and (2) no
aboveground or underground storage tanks are now or have ever been located on or
under the Project. The General Partner will not install or allow to be installed
any  aboveground  or  underground  storage  tanks on the  Project.  The Managing
General  Partner and General  Partner  covenants  that the Project shall be kept
free of  Hazardous  Materials  and shall not be used to  generate,  manufacture,
refine,  transport,  treat,  store,  handle,  dispose of,  transfer,  produce or
process Hazardous  Materials,  except in connection with the normal  maintenance
and operation of any portion of the project.  The Managing  General  Partner and
the General  Partner shall  comply,  or cause there to be  compliance,  with all

                                      D-2
<PAGE>

applicable Federal, state and local laws, ordinances, rules and regulations with
respect to Hazardous  Materials and shall keep, or cause to be kept, the Project
free and clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations.  The Managing General Partner and the General Partner must promptly
notify the Special  Limited  Partner in writing (3) if it knows,  or suspects or
believes  there may be any  Hazardous  Substance  in or  around  any part of the
Project, any Improvements  constructed on the Project, or the soil,  groundwater
or soil vapor,  (4) if the Managing  General  Partner and the General Partner or
the Partnership may be subject to any threatened or pending investigation by any
governmental  agency under any law,  regulation  or ordinance  pertaining to any
Hazardous  Substance,  and (5) of any claim made or  threatened  by any  Person,
other than a governmental  agency,  against the  Partnership,  Managing  General
Partner  or General  Partner  arising  out of or  resulting  from any  Hazardous
Substance being present or released in, on or around any part of the Project.

         (n) The  Managing  General  Partner  and the General  Partner  have not
executed and will not execute any agreements with provisions  contradictory  to,
or in opposition to, the provisions of the Partnership Agreement.

         (o) The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits,  or the Revised  Projected Tax Credits, if applicable.

         (p) No charges or encumbrances  exist with respect to the Project other
than those which are created or permitted by the Project  Documents or are noted
or excepted in the title policy for the Project.

         (q) The buildings on the Project site constitute or shall  constitute a
"qualified  low-income housing project" as defined in Section 42(g) of the Code,
and as amplified by the Treasury Regulations thereunder. In this connection, not
later than  December 31 of the first year in which the Partners  elect the LIHTC
to  commence  in  accordance  the Code,  the  Project  will  satisfy the Minimum
Set-Aside Test.

         (r) All accounts of the Partnership required to be maintained under the
terms of the Project Documents,  including,  without limitation, any reserves in
accordance with Article VIII hereof,  are currently  funded to required  levels,
including levels required by any authority.

         (s) The Managing  General Partner and the General Partner have not lent
or  otherwise  advanced  any funds to the  Partnership  other  than its  Capital
Contribution  and the  Partnership  has no  unsatisfied  obligation  to make any
payments of any kind to the Managing  General Partner and to the General Partner
or any Affiliate thereof, except as provided on Schedule One attached hereto and
incorporated herein by this reference.

         (t) No event has occurred which constitutes a material default under
any of the Project Documents.

                                      D-3
<PAGE>

         (u) No event has occurred  which has caused,  and the Managing  General
Partner and the General  Partner  have not acted in any manner  which will cause
(1) the  Partnership  to be  treated  for  federal  income  tax  purposes  as an
association taxable as a corporation,  (2) the Partnership to fail to qualify as
a limited partnership under the Act, or (3) the Limited Partner to be liable for
Partnership obligations;  provided however, the Managing General Partner and the
General  Partner  shall  not be in  breach  of this  representation  if all or a
portion of a Limited  Partner's  agreed upon Capital  Contributions  are used to
satisfy the  Partnership's  obligations to creditors of the Partnership and such
action by the Managing  General  Partner and the General  Partner are  otherwise
authorized under this Agreement and;  provided  further,  however,  the Managing
General  Partner  and  the  General  Partner  shall  not be in  breach  of  this
representation  if the action  causing the Limited  Partner to be liable for the
Partnership obligations is undertaken by the Limited Partner.

         (v) No event or  proceeding,  including,  but not limited to, any legal
actions or  proceedings  before any court,  commission,  administrative  body or
other  governmental  authority,  and acts of any  governmental  authority having
jurisdiction  over the zoning or land use laws  applicable  to the Project,  has
occurred  the  continuing  effect of which  has:  (1)  materially  or  adversely
affected the  operation of the  Partnership  or the Project;  (2)  materially or
adversely  affected the ability of the Managing  General Partner and the General
Partner to perform its  obligations  hereunder or under any other agreement with
respect to the Project;  or (3) prevented the Completion of  Construction of the
Improvements in substantial  conformity with the Project  Documents,  other than
legal  proceedings which have been bonded against (or as to which other adequate
financial  security has been issued) in a manner as to indemnify the Partnership
against loss;  provided,  however,  the  foregoing  does not apply to matters of
general applicability which would adversely affect the Partnership, the Managing
General Partner, the General Partner, Affiliates of the Managing General Partner
and the General  Partner or the Project  only insofar as they or any of them are
part of the general public.

         (w) Neither the  Partnership  nor the Managing  General Partner nor the
General  Partner has any  liabilities,  contingent or otherwise,  which have not
been disclosed in writing to the Limited Partner and the Special Limited Partner
and which in the aggregate  affect the ability of the Limited  Partner to obtain
the anticipated benefits of its investment in the Partnership.






                                      D-4
<PAGE>

         (x) The Managing  General Partner and the General Partner  collectively
have and shall  maintain a net worth  equal to at least  $1,000,000  computed in
accordance with generally accepted accounting principles.

         IN  WITNESS  WHEREOF,  the  undersigned  have set  their  hands to this
Managing  General  Partner and  General  Partner  Certification  this ___ day of
_________________, 2000.

Elderly Living Development, Inc.
Managing General Partner


By:      ____________________________
         Margaret McChurch
         President











                                      D-5
<PAGE>


                       EXHIBIT E TO PARTNERSHIP AGREEMENT

                         FORM OF COMPLETION CERTIFICATE

            (to be used when construction [rehabilitation] completed)


                             COMPLETION CERTIFICATE


The  undersigned,  an architect  duly  licensed and  registered  in the State of
Illinois, has prepared final working plans and detailed  specifications for Lake
Village Apartments,  L.P., an Illinois limited partnership (the  "Partnership"),
between WNC Housing Tax Credit Fund VI,  L.P.,  Series 7, a  California  limited
partnership  ("Limited  Partner") and the  Partnership  in  connection  with the
construction  [rehabilitation]  of improvements on certain real property located
in Kewanee, Henry County, Illinois (the "Improvements").

The undersigned  hereby certifies (i) that the Improvements  have been completed
in accordance with the aforesaid plans and specifications, (ii) that a permanent
certificate  of occupancy and all other  permits  required for the continued use
and occupancy of the  Improvements  have been issued with respect thereto by the
governmental agencies having jurisdiction  thereof,  (iii) that the Improvements
are in compliance with all  requirements  and  restrictions of all  governmental
authorities  having  jurisdiction  over  the  Improvements,  including,  without
limitation,  all applicable zoning,  building,  environmental,  fire, and health
ordinances, rules and regulations and (iv) that all contractors,  subcontractors
and  workmen  who worked on the  Improvements  have been paid in full except for
normal retainages and amounts in dispute.


-----------------------------------
Project Architect

Date:  ____________________________


Confirmed by:


-----------------------------------
Managing General Partner

Date:  ____________________________






                                      E-1
<PAGE>


                          EXHIBIT F TO THE PARTNERSHIP

                           [ACCOUNTANT'S CERTIFICATE]
                            [Accountant's Letterhead]



_______________, 2000


WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
3158 Redhill Ave., Suite 120
Costa Mesa, California 92626

RE:  Partnership
     Certification as to Amount
     of Eligible Tax Credit Base

Gentlemen:

In  connection  with the  acquisition  by WNC Housing Tax Credit Fund VI,  L.P.,
Series 7 (the  "Limited  Partner")  of a limited  partnership  interest  in Lake
Village  Apartments,  L.P., an Illinois limited  partnership (the "Partnership")
which owns a certain parcel of land located in Kewanee,  Henry County,  Illinois
and improvements thereon (the "Project"),  the Limited Partner has requested our
certification as to the amount of low-income housing tax credits ("Tax Credits")
available  with respect to the Project under Section 42 of the Internal  Revenue
Code of 1986, as amended (the "Code").  Based upon our review of [the  financial
information provided by the Partnership] of the Partnership,  we are prepared to
file the Federal  information tax return of the Partnership  claiming annual Tax
Credits in the amount of $_______________,  which amount is based on an eligible
basis  (as   defined  in  Section   42(d)  of  the  Code)  of  the   Project  of
$________________,  a qualified  basis (as defined in Section 42(c) of the Code)
of the Project of $_________________ and an applicable percentage (as defined in
Section 42(b) of the Code) of _____%.

Sincerely,


-------------------------







                                      F-1
<PAGE>


                     EXHIBIT G TO THE PARTNERSHIP AGREEMENT

                           [CONTRACTOR'S CERTIFICATE]
                            [Contractor's Letterhead]

_______________, 2000

WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
3158 Redhill Avenue
Suite 120
Costa Mesa, California 92626

Re: Lake Village Apartments, L.P.

Dear Ladies and Gentlemen:

The  undersigned,   Twin  Rivers  Construction,   (hereinafter  referred  to  as
"Contractor"), has furnished or has contracted to furnish labor, services and/or
materials  (hereinafter  collectively  referred to as the "Work") in  connection
with the  improvement  of  certain  real  property  known as  __________________
located in Kewanee, Henry County, Illinois (hereinafter known as the "Project").

Contractor makes the following  representations and warranties regarding Work at
the Project.

o Work on said Project has been  performed and completed in accordance  with the
plans and specifications for the Project.

o Contractor acknowledges that all amounts owed pursuant to the contract for
Work performed for Lake Village Apartments, L.P. is paid in full.

o Contractor acknowledges that Lake Village Apartments, L.P. is not in violation
with  terms and conditions of the contractual documents related to the Project.

o Contractor warrants that all parties who have supplied Work for improvement of
the Project have been paid in full.

o Contractor  acknowledges the contract to be paid in full and releases any lien
or right to lien against the above property.

The  undersigned  has  personal  knowledge of the matters  stated  herein and is
authorized  and  fully  qualified  to  execute  this  document  on behalf of the
Contractor.


                         Twin Rivers Construction

                         By:_________________________________________

                         Title:________________________________________








                                      G-1
<PAGE>

                          EXHIBIT H TO THE PARTNERSHIP
                              REPORT OF OPERATIONS
                 QUARTER ENDED:____________________________,200X

-------------------------------------       -----------------------------------
LOCAL PARTNERSHIP:
-------------------------------------       -----------------------------------

-------------------------------------       -----------------------------------
GENERAL PARTNER:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
FIRM NAME:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
ADDRESS:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
CITY, STATE, ZIP:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
PHONE:
-------------------------------------       -----------------------------------

-------------------------------------       -----------------------------------
PROPERTY NAME:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
ADDRESS:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
CITY, STATE, ZIP:
                                            -----------------------------------
-------------------------------------       -----------------------------------
RESIDENT MANAGER:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
PHONE:
-------------------------------------       -----------------------------------

-------------------------------------       -----------------------------------
ACCOUNTANT:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
FIRM:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
ADDRESS:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
CITY, STATE, ZIP:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
PHONE:
-------------------------------------       -----------------------------------

------------------------------------       -----------------------------------
MANAGEMENT COMPANY
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
ADDRESS:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
CITY, STATE, ZIP:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
PHONE:
-------------------------------------       -----------------------------------
-------------------------------------       -----------------------------------
CONTACT:
-------------------------------------       -----------------------------------

-------------------------------------------------------------------------------

                              OCCUPANCY INFORMATION

A. Number of Units_____ Number of RA Units_____ Number of Section 8 Tenants ____


B. Occupancy for the Quarter has: Increased ____ Decreased_____
                                  Remained the Same _____
<PAGE>


C. Number of:  Move-Ins ______   Move-Outs __________   % of Occupancy ______


D. Average length of tenant residency:   1-6 months ______   6-12 months ______

                                         1-3 years  ______   Over 4 years_____

E. Number of Basic rent qualified applicants on waiting list:  ________

F. If the  apartments  are less than 90% occupied,  please  explain why and
describe what efforts are being made to lease-up remaining units.

 ___________________________________________________________________________

G. On site manager:   Full Time__________  Part Time____________.

   If part-time, the number of hours per week_____________.



                                      H-1
<PAGE>


                             OPERATIONAL INFORMATION

                Rent Schedule and Increases from Previous Quarter


                       Number     Monthly Rent         Rent Increases  Effective
                       of Units   Basic / Market    Amount    Percent    Date


1 Bedroom              ________   ______________    _________________  ________

2 Bedroom              ________   ______________    _________________  ________

3 Bedroom              ________   ______________    _________________  ________


                              PROPOSED MAINTENANCE


                                       Completed        Funded by
   Type                Description        or            Operations or    Amount
                                        Planned         Reserves
------------------------------------------------------------------------------
Interior Painting
------------------------------------------------------------------------------
Exterior Painting
------------------------------------------------------------------------------
Siding
------------------------------------------------------------------------------
Roofing
------------------------------------------------------------------------------
Drainage
------------------------------------------------------------------------------
Paving
------------------------------------------------------------------------------
Landscaping
------------------------------------------------------------------------------
Playground
------------------------------------------------------------------------------
Community Room
------------------------------------------------------------------------------
Laundry Room
------------------------------------------------------------------------------
Common Areas
------------------------------------------------------------------------------
Carpet
------------------------------------------------------------------------------
Appliances
------------------------------------------------------------------------------
Lighting
------------------------------------------------------------------------------
Other
------------------------------------------------------------------------------

------------------------------------------------------------------------------

Please describe in detail any major repairs:

------------------------------------------------------------------------------

------------------------------------------------------------------------------

------------------------------------------------------------------------------




                                      H-2
<PAGE>

                              CONDITION OF PROPERTY

THE OVERALL APPEARANCE OF THE BUILDING(S) IS:

Excellent                  Good                     Fair                Bad


THE OVERALL APPEARANCE OF THE GROUNDS IS:

Excellent                  Good                     Fair                 Bad


EXTERIOR CONDITION (Please Check Appropriate Box)
------------------------------------------------------------------------------
Type of Condition        Excellent       Good          Fair    Problems/Comments
------------------------------------------------------------------------------
Signage
-------------------------------------------------------------------------------
Parking Lots
-------------------------------------------------------------------------------
Office/Storage
-------------------------------------------------------------------------------
Equipment
-------------------------------------------------------------------------------
Community Building
-------------------------------------------------------------------------------
Laundry Room
-------------------------------------------------------------------------------
Benches/Playground
-------------------------------------------------------------------------------
Lawns, Plantings
-------------------------------------------------------------------------------
Drainage, Erosion
-------------------------------------------------------------------------------
Carports
-------------------------------------------------------------------------------
Fences
-------------------------------------------------------------------------------
Walks/Steps/Guardrails
-------------------------------------------------------------------------------
Lighting
-------------------------------------------------------------------------------
Painting
-------------------------------------------------------------------------------
Walls/Foundation
-------------------------------------------------------------------------------
Roof/Flashing/Vents
-------------------------------------------------------------------------------
Gutters/Splashblocks
-------------------------------------------------------------------------------
Balconies/Patios
-------------------------------------------------------------------------------
Doors Windows/Screens
-------------------------------------------------------------------------------
Elevators
-------------------------------------------------------------------------------


INTERIOR CONDITION
-------------------------------------------------------------------------------
Stairs
-------------------------------------------------------------------------------
Flooring
-------------------------------------------------------------------------------
Doors/Cabinets/Hardware
-------------------------------------------------------------------------------
Drapes/Blinds
-------------------------------------------------------------------------------
Interior Painting
-------------------------------------------------------------------------------
Refrig/Stoves/Sinks
-------------------------------------------------------------------------------
Bathroom/Tubs/Showers
    Toilets
-------------------------------------------------------------------------------

                                      H-3
<PAGE>




                                FINANCIAL STATUS

A.     Replacement Reserve is:   Fully-funded     Under-funded      Amount
       (complete attached schedule)
       Tax/Insurance Escrow is:  Fully-funded     Under-funded      Amount
       (complete attached schedule)
       Property is operating at a:    Surplus      Deficit          Amount

       If deficit, General Partner funding?        Yes     No       Amount

       Mortgage Payments are:   On Schedule        Delinquent       Amount

       Are the taxes current?          Yes         No
       (please provide copy of paid tax bill)
       Is the insurance current?       Yes         No        Renewal Date
       (please provide copy of yearly renewal)

B.     Please note and explain any significant changes in the following:

       Administrative Expense   Increase        Decrease            Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

       Repairs/Maintenance Expense      Increase    Decrease         Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

       Utility Expense        Increase          Decrease             Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

       Taxes/Insurance Expense    Increase       Decrease            Amount

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------


C.     Do you anticipate making a return to owner distribution?   Yes      No


       Explanation:
       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

D.     Please explain in detail any change in the financial condition:

       ------------------------------------------------------------------------

       ------------------------------------------------------------------------
E.     Any insurance claims files?  Yes______   No______
       If yes, please explain:
       ------------------------------------------------------------------------

       ------------------------------------------------------------------------

                                      H-4
<PAGE>

                              SCHEDULE OF RESERVES

                            Replacement    Tax & Insurance    Other      Total

Beginning Balance:

Deposits:

       ----------         -----------       ----------       -------    -------

       ----------         -----------       ----------       -------    -------

       ----------         -----------       ----------       -------    -------

Total Deposits
                          -----------       ----------       -------    -------
Authorized Disbursements:
       Description:

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

       ---------         -----------        ----------       -------    -------

Total Disbursements:     -----------        ----------       --------    ------

Ending Balance: (1)      -----------        ----------       --------    ------

Required Balance:        -----------        ----------       --------    ------

Over/under funding:      -----------        ----------       --------    ------

(1) Must agree with amount shown on the balance sheet.



Prepared By:                                                Date:
-------------------------------------------------------------------------------
Firm:                                                       Telephone:
-------------------------------------------------------------------------------

Reminder: Please include the following documents:

              1. Completed Report of Operations
              2. Balance Sheet
              3. Statement of Income & Expenses
              4. Rent roll for quarter ending
              5. Tax Credit Compliance Report



                                      H-5
<PAGE>


                          INITIAL TENANT CERTIFICATIONS
                                 PARTNERSHIP NAME

Fund:            Tax Credit Set-Asides Information:  Loan/Regulatory Set-Asides:
Property Name:   [ ] 20/50 or [  ] 40/60 Election
Address:         Does the 51% average apply?
                 [  ] Y [  ] N
                 Deeper Set-Aside __% @ 50% AMI

County:
                                                    Management Company

[ ] Multi-Family                                    Contact Person:
[ ] Elderly

  24 Number of Units                                Phone #

     Number of Exempt
     Units
LIHTC Project#

-----------------------------------------------------------------------------
                                                                Gross   Move-In
Unit  First Time   Move-In  No. of                      No. in Income   Income
No.   Tenant Name  Date     Bdrms  Sq. Ft.   Set-Aside  Unit   Move-In  Limits
-------------------------------------------------------------------------------
      BIN #        Certificate of Occupancy Date:
-----------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

     BIN #          Certificate of Occupancy Date:
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
     BIN #           Certificate of Occupancy Date:
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------


<PAGE>



                          INITIAL TENANT CERTIFICATIONS
                                PARTNERSHIP NAME
(CONTINUED)

Tenant                                                            Tenant
Income       Income         Asset      Unit   Rent      Tenant    Utility
Qualified Verification  Verification   Rent   Subsidy   Payment   Allowance

-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------

<PAGE>


                          INITIAL TENANT CERTIFICATIONS
                                PARTNERSHIP NAME
(CONTINUED)

     Tenant                   Tenant            Overall
Gross     Maximum             Rent              Tenant
Rent      Rent                Qualified         Eligible

-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------
                              YES               YES
-------------------------------------------------------------------------------


                                       H-6
<PAGE>

                     QUARTERLY TAX CREDIT COMPLIANCE REPORT
                                  PROPERTY NAME


Quarter Ending: Tax Credit Set-Asides Information:  Loan/Regulatory Set-Asides:
                [  ] 20/50 or [  ] 40/60 Election
                Does the 51% average apply? [  ] Y [  ] N
                Deeper Set-Aside : ( List Details)



County:    Allocation:                                 Management Company:

           Pre-1990 (Rent based on number of persons)  Contact Person:
           Elected to change No. Bedrm
           Post-1989 (Based on number of Bedroom)

[  ] Multi-Family  [  ] Elderly                         Phone No.

      Number of Units
      Number of Exempt Units                            Fax No.
                                                        Prepared by:

LIHTC Project#
-----------------------------------------------------------------------------
                                                          Gross    Annual
Unit   Tenant    Move-In   No. Of   Inc.   Set-  No. In   Annual   Income
No.    Name      Date      Bdrms    Pct.  Aside  Unit     Income   Limits
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------


<PAGE>




                     QUARTERLY TAX CREDIT COMPLIANCE REPORT
                                  PROPERTY NAME
(CONTINUED)


Annual  Tenant                                   Less
Recert.  Income      Income     Assets   Unit    Rent     Tenant
Date   Qualified   Verified   Verified   Rent  Subsidy   Payment

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

        Tenant              Tenant     Overall
Utility   Gross   Maximum    Rent       Tenat
Allow.    Rent    Rent    Qualified    Eligible

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                                  H-7
<PAGE>



                       Tenant Tax Credit Compliance Audit
                         Document Transmittal Checklist

Unit Number          Property Name                                   Date


Tenant Name                                               Completed By:


Initial  _________        Annual________
  Check Box for Type of Certification         Management Company
                                                 This Section For WNC Use Only
Check Documents Being Sent
                                                          Received.  Reviewed
___Internal Checklist or worksheet
___Initial - Rental Application/Rental Agreement
___Initial - Questionnaire of Income/Assets
___Recertification - Questionnaire of Income/Assets
___Recertification - Addendum to Lease
___Employment Verification
___Employment Termination Verification
___Military  Verification
___Verification of Welfare Benefits
___Verification of Social Security Benefits
___Verification of Disability Benefits
___Unemployment Verification
___Verification of Unemployment Compensation
___Verification Worksmen Compensation
___Retirement/Annuities Verification
___Verification of Veterans Pension
___Verification of Child Support
___Verification of Alimony Support
___Disposed of Assets Last 2 yrs.
___Real Estate
___Investment
___Assets Verifications (savings, stocks etc.)
___Trusts/with Current Tax Return
___Lump Sum Settlements
___Notarized Affidavit of Support
___Certification of Handicap
___Notarized Self-Employed-Tax Return
___Notarized statement of no income
___Tenant Certification
------------------------------------------------------------------------------
                          This Section For WNC Use Only

         YES  NO
                     Are all required forms completed?
                     Are all required forms dated?
                     Did the Manager and Tenant sign all documents?
                     Third party verification of income completed?
                     Third party verification of assets completed?
                     Are verifications completed for all members 18 yrs. and
                     over?
                     Did all the members of the household 18 yrs. and
                     over sign all documents?
                     Is lease completed with a minimum of six months/ SRO
                     monthly?
                     Addendum completed?
                     Tenant Certification completed?
                     Are all members of the household full-time students?
                     Is utility allowance correct?
                     Is correct income limit being used?
                     Is correct rent limit being used?

                       For tenants with no income

                     Was notarized statement of no income obtained with tax
                     return?
                     or Were all sources verified (AFDC, Unemployment,
                        Soc. Sec., Disability)?



                                      H-8

<PAGE>


                        TAX CREDIT COMPLIANCE MONITORING:
                              ANNUAL CERTIFICATION

     As General Partner of Lake Village Apartments, L.P., I hereby certify as to
the following:

     1. Lake Village  Apartments,  L.P.  owns a 50 unit project  ("Project")  in
Kewanee, Henry County, Illinois.

     2. An annual income certification (including supporting  documentation) has
been  received  from each tenant.  The income  certification  reflects  that the
tenant's income meets the income  limitation  applicable to the Project pursuant
to Section 42(g)(1) of the Internal Revenue Code ("Code").

     3. The Project  satisfies the  requirements  of the applicable  minimum set
aside test as defined in Section 42(g)(1) of the Code.

     4. Each unit  within the Project is rent  restricted  as defined in Section
42(g)(2)of the Code.

     5. Each unit in the Project is available for use by the general  public and
not for use on a transient basis.

     6. Each  building in the Project is suitable for  occupancy  in  accordance
with local health, safety, and building codes.

     7.  During the  preceding  calendar  year,  there had been no change in the
eligible  basis,  as defined in Section 42(d)of the Code, of any building within
the Project.

     8.  All  common  area  facilities  included  in the  eligible  basis of the
Apartment  Complex are provided to the tenants on a comparable  basis  without a
separate fee to any tenant in the Project.

     9. During the  preceding  calendar  year when a unit in the Project  became
vacant reasonable  attempts were made to rent that unit to tenants whose incomes
met the income limitation applicable to the Project pursuant to Section 42(g)(1)
of the Code and while  that unit was  vacant no units of  comparable  or smaller
size were  rented to tenants  whose  income  did not meet the income  limitation
applicable to the Project pursuant to Section 42(g)(1) of the Code.

     10. If the income of a tenant in a unit  increased  above the limit allowed
in Section 42  (g)(2)(D)(ii),  then the next  available  unit of  comparable  or
smaller  size was  rented to tenants  whose  incomes  met the income  limitation
applicable to the Project pursuant to Section 42(g)(1) of the Code.

IN  VERIFICATION  OF THE  FOREGOING  ENCLOSED  HEREWITH  IS A COPY OF THE ANNUAL
INCOME  CERTIFICATION  RECEIVED FROM EACH TENANT IN THE PROJECT.  UPON REQUEST I
WILL PROVIDE  COPIES OF ALL  DOCUMENTATION  RECEIVED  FROM THE TENANT TO SUPPORT
THAT CERTIFICATION.

     I declare  under  penalty of perjury under the law of the State of Illinois
that the foregoing is true and correct.


     Executed this ----- day of ---------at -------------, -----------------.



------------------------------------






                                      H-9
<PAGE>



                      Calculation of Debt Service Coverage


                                      Month 1        Month 2       Month 3
                                    ------------   ------------  ------------

           INCOME

  Gross Potential Rent
  Other Income
  Vacancy     Loss
                                    ------------   ------------  ------------
  Adjusted Gross Income
                                    ------------   ------------  ------------

          OPERATING EXPENSES

  Utilities
  Maintenance
  Management Fee
  Administration
  Insurance
  Real Estate Taxes
  Other Expenses
                                    ------------   ------------  ------------
  Total Operating Expenses
                                    ------------   ------------  ------------

  Net Operating Income (1)
  Accrual adjustments for:
              R/E Taxes
              Insurance
              Tax/ Accounting
              Other
  Replacement Reserves

                                    ------------   ------------  ------------
  Income for DSC Calculation
                                    ============   ============  ============

                                    ------------   ------------  ------------
  Stabilized Debt Service
                                    ------------   ------------  ------------

                                    ------------   ------------  ------------
  Debt Service Coverage (2)
                                    ------------   ------------  ------------

Please submit this form along with the following supporting documentation:

Monthly Financial Reports (income statement, balance sheet, general ledger and
rent rolls)
Operating Budget
Copies of bank statements.

(1)  This  number should reconcile easily with the  monthly financial statements

(2) The ratio  between  the  Income for  DSC  calculation  and  Stabilized  Debt
Service.  As example,  a 1.15 DSC means that for every $1.00 of Stabilized  Debt
Service  required  to be  paid  there  must be  $1.15  of Net  Operating  Income
available.




                                      H-10
<PAGE>


                            DEVELOPMENT FEE AGREEMENT


         This DEVELOPMENT FEE AGREEMENT ("Agreement"), is entered into as of the
date written below by and between Elderly Living Development, Inc. ("Developer")
and Lake Village Apartments,  L.P., an Illinois limited  partnership  ("Owner").
Developer  and  Owner  collectively  may  be  referred  to as the  "Parties"  or
individually may be referred to as a "Party".

                                    RECITALS

         A. Owner has  acquired  the real  property  located in  Kewanee,  Henry
County,  Illinois,  as more particularly  described in Exhibit A attached hereto
and incorporated herein (the "Real Property").

         B. Owner  intends to  develop  on the Real  Property a unit  low-income
rental  housing  complex and other  related  improvements,  which is intended to
qualify for federal low-income housing tax credits (the "Project").

         C.  Prior  to the  date  of  this  Agreement  Developer  has  performed
substantial  development  services  with  respect to the Project as specified in
Section  2.3 of this  Agreement.  Developer  has  also  agreed  to  oversee  the
development  of the Project  until all  construction  work is  completed  and to
provide certain services relating thereto. The Parties recognize and acknowledge
that the Developer is, and has been, an  independent  contractor in all services
rendered to, and to be rendered to, the Owner pursuant to this  Development  Fee
Agreement.

         D. Owner  desires to commit its  existing  development  agreement  with
Developer into writing  through this  Development  Fee Agreement for Developer's
services to manage, oversee, and complete development of the Project.  Developer
desires to commit its  existing  development  agreement  with Owner into writing
through this  Development  Fee  Agreement and Developer is willing to assign all
development  rights to the Project to Owner,  to undertake  performance  of such
development services,  and to fulfill all obligations of the Developer set forth
in this  Agreement,  in  consideration  of  Owner's  restated  promise to pay to
Developer the fee specified in this Agreement.

         NOW  THEREFORE,  in  consideration  of the  foregoing  recitals and the
mutual  promises  and  undertakings  in this  Agreement,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Owner and Developer agree as follows.

                                       1
<PAGE>

                                    SECTION I
                               CERTAIN DEFINITIONS

         As used in this Agreement, the following terms shall, when capitalized,
have the following meanings:

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Construction Documents" means the contract documents between the Owner
and the Construction Lender pertaining to construction of the Project.

         "Construction  Lender" means Illinois  Housing  Development  Authority,
which has committed to make a loan to finance construction of the Project.

         "Construction  Loan"  means  the loan to  finance  construction  of the
Project, made to Owner by the Construction Lender.

         "Contractor" means Twin Rivers Construction.

         "Department"  means the Illinois agency responsible for the reservation
and allocation of Tax Credits.

         "Development Fee" means the fee for development  services  described in
Section 2 of this Agreement.

         "Partnership Agreement" shall mean the Agreement of Limited Partnership
of Lake  Village  Apartments,  L.P.,  an  Illinois  limited  partnership,  which
Partnership  Agreement  is  incorporated  herein  by this  reference.  Any terms
capitalized  but not  defined  herein  shall have the  meaning  ascribed  in the
Partnership Agreement.

         "Tax Credits" means the low-income housing tax credits found in Section
42 of  the  Code,  and  all  rules,  regulations,  rulings,  notices  and  other
promulgations thereunder.

                                    SECTION 2
                     ENGAGEMENT OF DEVELOPER; FEE; SERVICES

         2.1 Engagement; Term. Owner hereby confirms the engagement of Developer
to act as  developer of the Project,  and to perform the various  covenants  and
obligations of the Developer under this Agreement. Developer hereby confirms and
accepts such  engagement  and agrees to perform  fully and timely each and every
one of its obligations  under this Agreement.  The term of such engagement shall
commence on the date hereof and subject to the pre-payment provisions of Section
3 shall expire on December 31, 2009.

         2.2 Development Fee. In  consideration of Developer's  prior activities
and  Developer's  agreement to provide  development  services during the term of
this  Agreement,  Owner  agrees to pay the  Developer a  Development  Fee in the
amount of $513,418.  The  Development  Fee shall be payable in  accordance  with
Section 3 of this Agreement.

                                       2
<PAGE>

         2.3      Development Services.

         (a) Prior Services. Owner acknowledges that Developer has, prior to the
date hereof, performed substantial development services relating to the Project.
Such services (the "Prior Services") have included the following.

               (1) Services Rendered Prior to December 31, 2000.

                    (A)  Developer  has  negotiated  and  conferred  with  the
Contractor  and  recommended  to the  Owner  to enter  into a  construction
contract with the Contractor for the building of the Apartment Housing.

                    (B) Developer  has:  estimated  the cost of  construction;
determined   the   construction   period;   prepared  a   monthly-estimated
construction chart reflecting the construction services required each month; and
prepared a preliminary construction budget.

                    (C) Developer has reviewed the plans and specifications for
compliance with design criteria and construction contracts.

                    (D) Developer has negotiated and conferred with public
authorities  relating to traffic  control,  flood control and other matters
affecting the development of the Apartment Housing.

                    (E) Developer has  negotiated,  conferred with an architect
and recommended to the Owner to execute an  architectural  contract for the
planning and design of the Apartment Housing.

                    (F)  Developer  has placed its own capital at risk in
anticipation  of the Apartment  Housing being  constructed,  leased and Tax
Credits awarded.

     (2) Other Prior Services.

                   (A) Developer has created, refined and analyzed the financial
projections for the Apartment Housing.

                   (B) Developer has negotiated,  conferred, and worked with the
Apartment   Housing   architects,   engineers  and  Contractor  with  regard  to
preparation,  refinement,  and finalization of the plans and  specifications for
the Apartment Housing, and projected construction schedules and costs.

                   (C)  Developer  has   negotiated   and  conferred   with  the
Construction Lender to obtain the Construction Loan.

                                       3
<PAGE>

                  (D) Developer has  negotiated  and conferred with an insurance
carrier to provide a builder's risk policy during construction.

     (b) Future  Services.  Developer  hereby  agrees to perform  the  following
development services for and as an agent of Owner.

                  (1)  Construction  and  Development  Matters.  Developer shall
oversee  construction  of the  Project on Owner's  behalf,  as  provided in this
Section 2.3(b)(1). Owner shall allow Developer full access to the Project during
the construction  period.  Developer and Developer's  agents shall perform their
work in a manner that minimizes  interference  with the management and operation
of the Project.

                         (A)  Developer  shall exert its best efforts to ensure
that  the  Contractor  performs  its  obligations  under  the  Construction
Documents in a diligent and timely manner.

                         (B) Developer  shall  participate in and provide
assistance with regard to pre-construction conferences and pre-construction
documents, including drawings, specifications, contracts, and schedules.

                         (C)   Developer   shall  review  all   Construction
Documents,  identify  construction issues and participate in the resolution
of such issues.

                         (D) Developer shall attend  construction  progress
meetings at the Project  site to monitor  construction  progress and advise
Owner and the Contractor with respect to the resolution of construction issues.

                         (E) Developer shall review the Contractor's monthly pay
applications.

                         (F) Developer shall monitor the  Contractor's  progress
with respect to the approved  Project  schedule and keep the Owner informed
of all pertinent Project issues and construction progress.

                         (G) Developer  shall advise Owner with respect to
relations with engineers, architects, and other construction professionals.

                         (H)  Developer  shall be  available  for  immediate
response in critical  situations  arising  during the  construction  of the
Project.

                         (I) Developer shall coordinate  relations with the City
of Carbon Cliff and other governmental authorities having jurisdiction over
development of the Project.

                                       4
<PAGE>

         (c) Assignment of Development Rights. Developer hereby assigns to Owner
all rights to the development of the Project,  including but not limited to, all
tangible  and  intangible  rights  arising with respect to the name Lake Village
Apartments,  L.P., the design of the Project,  the plans and  specifications for
the Project and all rights arising under the agreements with Project architects,
engineers and other Project design and construction professionals.

                                    SECTION 3
                            DEVELOPMENT FEE PAYMENTS

The  Development  Fee shall be paid to the Developer  from Capital  Contribution
payments  received  by the  Owner  in  accordance  with  Section  9.2(b)  of the
Partnership Agreement.  If the Development Fee is not paid in full in accordance
with  Section  9.2(b)  of the  Partnership  Agreement  then the  balance  of the
Development Fee shall be paid from available Net Operating  Income in accordance
with the terms of Section  11.1 of the  Partnership  Agreement,  but in no event
later than December 21, 2009.  Also, if the  Development Fee is not paid in full
in accordance with Section 9.2(b) of the  Partnership  Agreement then the unpaid
portion shall accrue  interest at a rate equal to the 5-year Treasury money rate
in effect as of the date of the last Capital  Contribution payment referenced in
Section 7.2(b) of this Agreement.

                                    SECTION 4
                                   TERMINATION

         Neither Party to this Agreement  shall have the right to terminate this
Agreement prior to the expiration of the term without cause. Owner may terminate
this Agreement without further liability, for cause, which shall mean any one of
the following:

         (a) a  material  breach by  Developer  of its  obligations  under  this
Agreement that is not cured within thirty (30) days after notice thereof (or, as
to any non-monetary obligations that is not reasonably capable of cure within 30
days,  and  provided  that  cure is  commenced  within  10 days  of  notice  and
diligently pursued thereafter to completion,  within such time as may reasonably
be necessary to complete such cure);

         (b) a fraudulent or intentionally incorrect report by Developer to
Owner with respect to the Project; or

         (c) any intentional misconduct or gross negligence by Developer with
respect to its duties under this Contract.

         Upon proper  termination  of this  Agreement by Owner  pursuant to this
Section 4, all rights of Developer to receive unearned Development Fees pursuant
to this  Agreement with respect to services not yet performed  shall  terminate.
Developer  shall receive the full  Development  Fee for Prior Services and shall
receive  a portion  of the  Development  Fee for  Future  Services  based on the

                                       5
<PAGE>

percentage  of  Completion  of  Construction  of  the  Project  at the  time  of
termination.  Nothing in this  Section 4 shall be deemed to  prevent  Owner from
bringing an action against Developer to recover fully all damages resulting from
any of the causes set forth in paragraphs  (a), (b) or (c) above,  or to prevent
Owner from  contending in any action or proceeding that the Future Services were
not earned by Developer.

                                    SECTION 5
                               GENERAL PROVISIONS

         5.1  Notices.  Notices  required  or  permitted  to be given under this
Agreement  shall be in writing sent by  registered  or certified  mail,  postage
prepaid, return receipt requested, to the Parties at the following addresses, or
such other  address  as is  designated  in  writing  by the  Party,  the date of
registry thereof, or the date of certification receipt therefor being deemed the
date  of  such  notice;  provided,   however,  that  any  written  communication
containing such information  sent to a Party actually  received by a Party shall
constitute notice for all purposes of this Agreement.

If to Developer:          Elderly Living Development, Inc.
                          400 Main Street, Suite 400
                          Davenport, Iowa 52801

If to Owner:              Lake Village Apartments, L.P.
                          400 Main Street, Suite 400
                          Davenport, Iowa 52801

         5.2  Interpretation.

         (a) Headings.  The section  headings in this Agreement are included for
convenience  only;  they do not give full  notice of the terms of any portion of
this  Agreement and are not relevant to the  interpretation  of any provision of
this Agreement.

         (b)  Relationship of the Parties.  Neither Party hereto shall be deemed
an agent,  partner,  joint venturer, or related entity of the other by reason of
this  Agreement and as such neither Party may enter into contracts or agreements
which bind the other Party.

         (c)  Governing  Law. The Parties  intend that this  Agreement  shall be
governed  by and  construed  in  accordance  with  the  laws of the  state of IL
applicable to contracts made and wholly performed within IL by persons domiciled
in IL.

         (d)  Severability.  Any  provision  of this  Agreement  that is  deemed
invalid or  unenforceable  shall be ineffective to the extent of such invalidity
or  unenforceability,  without  rendering invalid or unenforceable the remaining
provisions of this Agreement.

         5.3  Integration;  Amendment.  This  Agreement  constitutes  the entire
agreement of the Parties  relating to the subject  matter  hereof.  There are no
promises,  terms,  conditions,  obligations,  or  warranties  other  than  those
contained   herein.   This  Agreement   supersedes  all  prior   communications,
representations, or agreements, verbal or written, among the Parties relating to
the subject matter hereof. This Agreement may not be amended except in writing.

                                       6
<PAGE>

         5.4 Attorney'  Fees. If any suit or action arising out of or related to
this  Agreement  is brought by any Party to any such  document,  the  prevailing
Party  shall be  entitled  to  recover  the  costs and fees  (including  without
limitation  reasonable  attorneys'  fees and costs of experts  and  consultants,
copying, courier and telecommunication costs, and deposition costs and all other
costs of  discovery)  incurred  by such Party in such suit or action,  including
without limitation to any post-trial or appellate proceeding.

         5.5 Binding Effect.  This Agreement shall bind and inure to the benefit
of, and be  enforceable  by, the Parties hereto and their respective successors,
heirs, and permitted assigns.

         5.6  Assignment.  Neither Party may assign this  Agreement  without the
consent of the other Party.  No assignment  shall relieve any Party of liability
under this Agreement unless agreed in writing to the contrary.

         5.7  Third-Party  Beneficiary  Rights.  No  person  not a Party to this
Agreement  is an intended  beneficiary  of this  Agreement,  and no person not a
Party to this  Agreement  shall  have  any  right  to  enforce  any term of this
Agreement.

         5.8  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts, all of which taken together shall constitute one agreement binding
on all the Parties,  notwithstanding that all Parties are not signatories to the
same counterpart.

         5.9 Further Assurances.  Each Party agrees, at the request of the other
Party,  at any time and from time to time after the date hereof,  to execute and
deliver  all  such  further  documents,  and to take and  forbear  from all such
action, as may be reasonably  necessary or appropriate in order more effectively
to perfect the transfers or rights  contemplated  herein or otherwise to confirm
or carry out the provisions of this Agreement.

         IN WITNESS  WHEREOF,  the  Parties  have caused  this  Development  Fee
Agreement to be executed as of ___________________, 2000.


DEVELOPER:          Elderly Living Development, Inc.

                    By:     ____________________________
                            Margaret McChurch
                            President

                                       7
<PAGE>


OWNER:             Lake Village Apartments, L.P.

                    By:     Elderly Living Development, Inc.,
                            Managing General Partner

                            By:      ____________________________
                                     Margaret McChurch
                                     President


























                                       8
<PAGE>


                                    EXHIBIT A

                                LEGAL DESCRIPTION


A TRACT OF LAND LOCATED IN A PARTY OF THE SOUTHEAST  QUARTER (SE-1/4) OF SECTION
TWENTY-SEVEN  (27),  TOWNSHIP  15  NORTH,  RANGE 5 EAST OF THE 4TH  P.M.,  HENRY
COUNTY,  ILLINOIS.  MORE  PARTICULARLY  BOUNDED  AND  DESCRIBED  AS FOLLOWS  AND
BEARINGS ARE FOR THE PURPOSE OF DESCRIPTION ONLY:
COMMENCING  AT AN IRON ROD AT THE  SOUTHEAST  CORNER  OF THE  SOUTHEAST  QUARTER
(SE-1/4) OF SAID SECTION  TWENTY-SEVEN (27); THENCE S 89(Degree) 24'00" W, ALONG
THE SOUTH LINE OF THE SOUTHEAST  QUARTER (SE-1/4 ) OF SAID SECTION  TWENTY-SEVEN
(27),  A DISTANCE OF 413.70 FEET TO THE  SOUTHEAST  CORNER OF  CANDLELIGHT  PARK
SUBDIVISION AND THE PLACE OF BEGINNING; THENCE CONTINUING S 89(Degree) 24'00" W,
ALONG  THE  SOUTHE  LINE OF THE  SOUTHEAST  QUARTER  (SE-1/4)  OF  SAID  SECTION
TWENTY-SEVEN  (27), A DISTANCE OF 557.00 FEET TO THE SOUTHEAST CORNER OF KEWANEE
LAND TRUST #101  SUBDIVISION  #1; THENCE N 00(Degree)  11' 00" E, ALONG THE EAST
LINE OF SAID  SUBDIVISION  AND SAID EAST LINE  EXTENDED  550.00  FEET;  THENCE N
89(Degree)  24"00' E 150.00  FEET;  THENCE S  00(Degree)  11'00" W, 200.00 FEET;
THENCE S  55(Degree)  58'03" E, 193.50 FEET;  THENCE N  89(Degree)  24'00" EAST,
246.00 FEET TO THE NORTHERLY EXTENSION OF THE WEST LINE OF SAID CANDLELIGHT PARK
SUBDIVISION;  THENCE S 00(Degree)  07'00" W, ALONG SAID NORTHERLY  EXTENSION AND
CONTINUING ALONG THE WEST LINE OF SAID CANDLELIGHT PARK SUBDIVISION, 240.02 FEET
TO THE PLACE OF BEGINNING AND CONTAINING 4.338 ACRES,  MORE OR LESS.  SUBJECT TO
RIGHT-OF-WAY  OF A PUBLIC ROAD ALONG THE SOUTH SIDE OF THE ABOVE DESCRIBED TRACT
AND ALSO SUBJECT TO ALL EASEMENTS OF RECORD.










                                       A
<PAGE>


                               GUARANTY AGREEMENT


         FOR VALUE  RECEIVED,  the  receipt and  sufficiency  of which is hereby
acknowledged,   and  in   consideration  of  the  agreement  of  Elderly  Living
Development  Inc. (the  "Developer") to permit deferral of the $513,418 due from
Lake Village Apartments,  L.P. an Illinois limited partnership ("Debtor") to the
Developer,  the undersigned  Guarantor(s),  hereby unconditionally  guaranty the
full and prompt payment when due,  whether by  acceleration or otherwise of that
certain Developer Fee from Debtor to the Developer, evidenced by the Development
Fee Agreement  dated the even date  herewith,  and  incorporated  herein by this
reference.  The  foregoing  described  debt is  referred to  hereinafter  as the
"Liabilities" or "Liability."

         The  undersigned  further agree to pay all expenses paid or incurred by
the Developer in  endeavoring to collect the  Liabilities,  or any part thereof,
and  in  enforcing  the  Liabilities  or  this  Guaranty  Agreement   (including
reasonable  attorneys'  fees if  collected  or  enforced  by law or  through  an
attorney-at-law).   The  undersigned  hereby  represent  and  warrant  that  the
extension of credit or other financial accommodations by the Developer to Debtor
will be to the interest and advantage of the  undersigned,  and acknowledge that
this Guaranty  Agreement is a substantial  inducement to the Developer to extend
credit to Debtor and that the  Developer  would not  otherwise  extend credit to
Debtor.

         The Developer  may, from time to time,  without notice to or consent of
the  undersigned,  (a) retain or obtain a security  interest in any  property to
secure any of the Liabilities or any obligation hereunder,  (b) retain or obtain
the primary or secondary  liability of any party or parties,  in addition to the
undersigned, with respect to any of the Liabilities, (c) extend or renew for any
period  (whether  or not longer  than the  original  period) or alter any of the
Liabilities,  (d)  release  or  compromise  any  Liability  of  the  undersigned
hereunder  or  any  Liability  of  any  other  party  or  parties  primarily  or
secondarily  liable  on any of  the  Liabilities,  (e)  release,  compromise  or
subordinate its title or security interest,  or any part thereof, if any, in all
or any  property  now or  hereafter  securing  any  of  the  Liabilities  or any
obligation  hereunder,  and permit any  substitution  or  exchange  for any such
property,  and  (f)  resort  to  the  undersigned  for  payment  of  any  of the
Liabilities,  whether or not the  Developer  shall have resorted to any property
securing  any of the  Liabilities  or any  obligation  hereunder  or shall  have
preceded  against any other party primarily or secondarily  liable on any of the
Liabilities.

         The undersigned  hereby expressly waive: (a) notice of the existence or
creation  of all or any of the  Liabilities,  (b)  notice  of any  amendment  or
modification of any of the  instruments or documents  evidencing or securing the
Liabilities,  (c) presentment,  demand,  notice of dishonor and protest, (d) all
diligence in collection or protection of or realization  upon the Liabilities or

                                       1
<PAGE>

any thereof, any obligation hereunder, or any security for any of the foregoing,
and (e) the right to require the Developer to proceed  against  Debtor on any of
the Liabilities.

         In the  event  any  payment  of  Debtor  to the  Developer  is  held to
constitute a preference  under the  bankruptcy  laws, or if for any other reason
the  Developer is required to refund such  payment or pay the amount  thereof to
any other party,  such payment by Debtor to the Developer shall not constitute a
release of Guarantor from any Liability  hereunder,  but Guarantor agrees to pay
such amount to the Developer  upon demand and this Guaranty shall continue to be
effective or shall be reinstated,  as the case may be, to the extent of any such
payment or payments.

         No delay or failure on the part of the Developer in the exercise of any
right or remedy  shall  operate  as a waiver  thereof,  and no single or partial
exercise by the Developer of any right or remedy shall  preclude other or future
exercise thereof or the exercise of any other right or remedy.  No action of the
Developer  permitted  hereunder  shall in any way impair or affect this Guaranty
Agreement. For the purpose of this Guaranty Agreement, the Liabilities of Debtor
to the Developer are guaranteed  notwithstanding any right or power of Debtor or
anyone  else  to  assert  any  claim  or  defense  as  to  the   invalidity   or
unenforceability  of any such  obligation,  and no such claim or  defense  shall
impair or affect the obligations of the undersigned hereunder.

         Any payment from  Guarantor  directly to Developer in  accordance  with
this Agreement shall be classified and booked as a  non-refundable  cost overrun
payment from Guarantor to Debtor in consideration of this Guaranty Agreement and
then a payment by Debtor to Developer in  consideration  of the  Development Fee
Agreement.

         This Guaranty Agreement shall be binding upon the undersigned, and upon
the legal representatives, heirs, successors and assigns of the undersigned.

         This Guaranty  Agreement has been made and delivered in the state of IL
and shall be construed and governed under Illinois law.

         Whenever  possible,  each provision of the Guaranty  Agreement shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision  of this  Guaranty  Agreement  shall be  prohibited  by or
invalid under such law, such  provision  shall be  ineffective  to the extent of
such  prohibition  of  invalidity,  without  invalidating  the remainder of such
provision or the remaining provisions of this Guaranty Agreement.

         Whenever the singular or plural number, masculine or feminine or neuter
is used herein,  it shall  equally  include the other where  applicable.  In the
event this  Guaranty  Agreement  is  executed by more than one  guarantor,  this
Guaranty  Agreement  and the  obligations  hereunder  are the joint and  several
obligation of the undersigned.

                                       2
<PAGE>

         Guarantor  consents to the  jurisdiction  of the courts in the State of
Illinois  and/or to the  jurisdiction  and venue of any United  States  District
Court in the State of Illinois having  jurisdiction  over any action or judicial
proceeding  brought to enforce,  construe or interpret this Guaranty.  Guarantor
agrees  to  stipulate  in  any  such  proceeding  that  this  Guaranty  is to be
considered  for all  purposes to have been  executed  and  delivered  within the
geographical  boundaries  of the  State of  Illinois,  even if it was,  in fact,
executed and delivered elsewhere.


     IN WITNESS  WHEREOF,  the  undersigned  have hereunto  caused this Guaranty
Agreement to be executed as of _______________________, 2000.

Signed, sealed and delivered               GUARANTOR:
                                           ---------
in the presence of:

----------------------------
Witness
                                            --------------------------
____________________________               John McChurch


                                           --------------------------
                                            Margaret McChurch


Notary Public
My Commission Expires:
                                           Address for Guarantor:
                                           ---------------------
____________________________               400 Main Street, Suite 400,
(NOTARY SEAL)                              Davenport, IA 52801


















                                       3
<PAGE>

                        CONSTRUCTION AND OPERATING BUDGET
                                    AGREEMENT


         This  Construction  and Operating  Budget  Agreement  ("Agreement")  is
entered  into  as of  the  date  written  below  by  and  between  Lake  Village
Apartments,  L.P., an Illinois  limited  Partnership  ("Owner"),  Elderly Living
Development,  Inc.  ("Managing  General Partner") and Quad Cities  Redevelopment
Resources,  Inc.,  ("General  Partner"),  WNC Housing Tax Credit Fund VI,  L.P.,
Series 7, a California limited Partnership  ("Limited Partner") and WNC Housing,
L.P., a California  limited  Partnership  ("Special  Limited  Partner").  Owner,
General Partner, Limited Partner and Special Limited Partner collectively may be
referred to as the "Parties" or individually may be referred to as a "Party".

                                    RECITALS

         A. Owner has acquired the property site at Kewanee, Henry County,
Illinois (the "Real Property").

         B. Owner  intends  to  develop  on the Real  Property a fifty (50) unit
low-income  rental housing complex and other related  improvements  for elderly,
which is intended to qualify for  federal  low-income  housing tax credits  (the
"Project").

         C. On the even date herewith a  Partnership  agreement for Lake Village
Apartments,  L.P.  ("Partnership  Agreement")  was  entered  into by and between
Elderly Living Development, Inc., as the managing general partner (the "Managing
General Partner") and Quad Cities  Redevelopment  Resources,  Inc.,(the "General
Partner"), WNC Housing Tax Credit Fund VI, L.P., Series 7 as the limited partner
and WNC Housing,  L.P. as the special limited partner (the Partnership Agreement
is incorporated  herein by this reference as if the same were reproduced in full
and any  capitalized  terms not defined in this Agreement shall have the meaning
as defined in the Partnership Agreement).

         D. In determining  whether to be admitted into Lake Village Apartments,
L.P. and contribute funds to the development of the Project, the Limited Partner
and Special Limited Partner  performed a due diligence  review.  Part of the due
diligence  review  included  an analysis  of the  available  sources of funds to
develop  the  Project,  the  cost  of  construction,  the  anticipated  revenues
associated  with the  rental of the  Project  apartment  units and the  expenses
required to operate the Project.

         E. The  Parties  recognize  and acknowledge that the final construction
cost  determination  involves substantial negotiations with lenders, contractors
and governmental authorities.

                                       1
<PAGE>

         F. The Parties  recognize and acknowledge that a final operating budget
involves  substantial  negotiations with lenders and governmental authorities.

         G. Limited Partner's and Special Limited Partner's  decision to execute
the Partnership  Agreement is based, in part, on their acceptance of the sources
of funds available to develop the Project, the cost of construction to build the
Project and the  operating  budget  necessary to provide a positive Debt Service
Coverage.

         Now  Therefore,  in  consideration  of the  foregoing  recitals and the
mutual  promises  and  undertakings  in this  Agreement,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Owner and Developer agree as follows.

         1. Source of Funds.  Attached  hereto as Exhibit  "A" and  incorporated
herein by this  reference  is the Project  Source of Funds.  The Source of Funds
have been specified in the Partnership  Agreement as the Construction  Loan, the
Mortgage,   the  Capital  Contribution  of  the  General  Partner,  the  Capital
Contribution of the Limited Partner and the Capital  Contribution of the Special
Limited  Partner.  Unless  expressly  permitted  in the  Partnership  Agreement,
Consent of the Special  Limited Partner is required for any change to the Source
of Funds.

         2. Construction  Proforma.  Attached   hereto   as   Exhibit   "B"  and
incorporated herein by this reference  is  the  Construction  Proforma.  If  the
construction costs exceed the sum of the Capital Contributions,  the proceeds of
the  Mortgage  and the  Development  Fee  then  the  General  Partner  shall  be
responsible for and shall be obligated to pay such deficiencies.

         3. Operating Proforma.  Attached hereto as Exhibit "C" and incorporated
herein by this reference is the Operating Proforma.  The Limited Partner and the
Special  Limited  Partner  underwrote  the  subject  transaction  at a 1.10 Debt
Service  Coverage.  Notwithstanding,  in the event the Net Operating Income does
not produce a 1.10 Debt Service  Coverage as determined  by the Special  Limited
Partner then at the request of the Special  Limited  Partner the General Partner
shall reduce  and/or  refinance  the  principal of the Mortgage to an amount the
Special  Limited  Partner  determines is adequate to produce a 1.10 Debt Service
Coverage.

         4. Notices.  Any notice given  pursuant to this Agreement may be served
personally on the Party to be notified,  or may be mailed,  first class postage
prepaid,  to the following address, or to such other address as a party may from
time to time designate in writing:

     To the Managing
     General Partner:           Elderly Living Development, Inc.
                                400 Main Street, Suite 400
                                Davenport, IA 52801


                                       2
<PAGE>

     To the General Partner:    Quad Cities Redevelopment Resources, Inc.
                                4550 Kennedy Drive, Suite 2
                                East Moline, Illinois 61244

     To the Limited Partner:    WNC Housing Tax Credit Fund VI, L.P., Series 7
                                c/o WNC & Associates, Inc.
                                3158 Redhill Ave., Suite 120
                                Costa Mesa, CA 92626-3416
     To the Special
     Limited Partner:           WNC HOUSING, L.P.
                                3158 Redhill Ave., Suite 120
                                Costa Mesa, CA 92626-3416

         5.  Successors and Assigns.  All the terms and conditions of this
Agreement  shall be binding upon and inure to the benefit of the successors
and assigns of the Parties.

         6.   Counterparts.   This   Agreement  may be executed in one or  more
counterparts,  each of which shall be deemed an original,  and said counterparts
shall  constitute  but one and the same  instrument  which may  sufficiently  be
evidenced by one counterpart.

         7. Captions. Captions to and headings of the Sections of this Agreement
are  solely for the  conveniences  of the  Parties,  are not a part of this
Agreement,  and shall not be used for the interpretation or determination of the
validity of this Agreement or any provision hereof.

         8.  Saving Clause.  If  any  provision  of  this  Agreement,   or  the
application  of such  provision  to any  Person or  circumstance,  shall be held
invalid,  the remainder of this Agreement,  or the application of such provision
to Persons  or  circumstances  other than those as to which it is held  invalid,
shall not be affected thereby.

         9. Governing Law. This Agreement and its  application shall be governed
by the laws of Illinois.

         10.  Attorney's  Fees.  If a suit or action is instituted in connection
with an alleged breach of any provision of this Agreement,  the prevailing party
shall be entitled to recover,  in addition to costs,  such sums as the court may
adjudge reasonable as attorney's fees, including fees on any appeal.

         In Witness Whereof, this Construction and Operating Budget Agreement is
made and entered into as of ________________, 2000.

                           MANAGING GENERAL PARTNER

                           Elderly Living Development, Inc.

                           By:      ____________________________
                                    Margaret McChurch
                                    President

Signatures continued on next page...


                                       3
<PAGE>


                           LIMITED PARTNER

                           WNC Housing Tax Credit Fund VI, L.P., Series 7

                           By:      WNC & Associates, Inc.,
                                    General Partner

                                    By:     _________________________
                                            David N. Shafer,
                                            Executive Vice President


                           SPECIAL LIMITED PARTNER

                           WNC Housing, L.P.

                           By:      WNC & Associates, Inc.,
                                    General Partner

                                    By:     _______________________________
                                            David N. Shafer,
                                            Executive Vice President




















                                       4
<PAGE>




                                    EXHIBIT A

                 TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                                 SOURCE OF FUNDS





















                                       A
<PAGE>



                                    EXHIBIT B

                 TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                              CONSTRUCTION PROFORMA























                                       B
<PAGE>


                                    EXHIBIT C

                 TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT

                               OPERATING PROFORMA

























                                       C