AMENDED AND RESTATED DEVELOPMENT AGREEMENT
                   ------------------------------------------

         This AMENDED AND RESTATED  DEVELOPMENT  AGREEMENT  (this  "Agreement"),
dated as of August 24, 1999,  is made and entered into by and between AH Battery
Park Owner,  LLC, an Ohio limited  liability  company  ("Owner"),  and Brookdale
Living Communities of New York-BPC, Inc., a Delaware corporation ("Developer").

                                    RECITALS
                                    --------

         WHEREAS, Owner is the ground lessee of certain real property located at
455 North End Avenue,  Battery Park City, New York (the  "Project")  pursuant to
that certain  Ground  Lease dated as of August 24, 1999 (the "Ground  Lease") by
and between Owner,  as lessee,  and the Battery Park City  Authority,  as lessor
(the "Lessor");

         WHEREAS,  Owner  desires to  develop  the  Project  for use as a senior
congregate and non-licensed assisted living facility;

         WHEREAS,  Developer  is  experienced  and  qualified in the business of
developing facilities such as the Project, and Owner desires to engage Developer
to perform  development  services in  connection  with the  construction  of the
Project;

         WHEREAS,  Developer  has commenced  development  of the Project and has
entered  into  or  plans  to  enter  into  several  contracts  related  thereto,
including,  without  limitation,  (i) a  construction  contract  with a  general
contractor,  (ii) an  architectural  contract  with an architect and (iii) other
contracts related thereto,  and hereafter shall enter into additional  contracts
and amendments,  change orders, modifications or supplements of or to any of the
foregoing (collectively, the "Construction Contracts");

         WHEREAS, Owner desires to retain Developer to, and Developer is willing
to,  perform  development  services  in  connection  with  the  development  and
construction of the Project on the terms and subject to the conditions set forth
in this Agreement; and

         WHEREAS, Owner and Developer have entered into that certain Development
Agreement dated as of September 28, 1998 (the "Prior Development Agreement") and
have agreed to terminate the Prior Development  Agreement pursuant to Section 21
hereof, and have agreed to enter into this Agreement,  in each case effective as
of the date hereof.


                                   AGREEMENTS
                                   ----------

         NOW,  THEREFORE,  in  consideration  of the  recitals  and  the  mutual
promises  and  covenants  herein  contained  and for  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

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<PAGE>

1.       Responsibilities  of  Developer.  Owner  hereby  engages  Developer  to
         perform  the  services  in   connection   with  the   development   and
         construction  of the Project  normally and  customarily  performed by a
         developer of a commercial  real estate  project  similar to the Project
         and as further  described  herein,  and Developer  hereby  accepts such
         engagement and,  subject to the conditions set forth in this Agreement,
         agrees to provide such services, at Owner's expense. During the term of
         this  Agreement,  subject  to the terms and  conditions  of the  Ground
         Lease, Developer shall have full authority to develop and construct the
         Project or cause the Project to be constructed  as a senior  congregate
         and  non-licensed  assisted  living  facility,  and shall have full and
         complete  control  and reign  over,  and use of,  the  entire  Project,
         including  its common  areas.  Without  limiting the  generality of the
         foregoing,  Developer shall, at Owner's expense, have full authority as
         follows, subject in all cases to the terms of the Ground Lease:

                a.       Regulatory  Compliance.  Developer shall use reasonable
                         efforts to obtain and maintain all  licenses,  permits,
                         qualifications   and  approvals   from  any  applicable
                         governmental or regulatory  authority  required for the
                         construction  of the Project.  In  addition,  Developer
                         shall  supervise and  coordinate  the  preparation  and
                         filing  of  (and,   where   required  to  do  so  under
                         applicable  law or  regulations,  file) all  reports or
                         other  information  required  by  all  state  or  other
                         governmental  agencies  having  jurisdiction  over  the
                         Project and shall  deliver  copies of all such  reports
                         and  information  to  Owner  simultaneously  with  such
                         filings.  Developer shall  cooperate with  governmental
                         inspection and enforcement activities.

                b.       Equipment and Improvements.  Developer shall, on behalf
                         of  Owner,   acquire  or  effect  the   acquisition  of
                         equipment and improvements, which are needed to operate
                         the Project or its services.

                c.       Reports.  Developer  shall supervise and coordinate the
                         preparation of any  construction  information if and to
                         the  extent   needed  to  comply  with  any   reporting
                         obligations  imposed  on the  Owner by any  Lender  (as
                         hereinafter  defined),  mortgagees  or  lessors  of the
                         Project except for those  reporting  obligations  which
                         relate  to  matters  which  are  within  the  exclusive
                         control of the Owner or its affiliates. Developer shall
                         prepare or cause to be  prepared,  at Owner's  expense,
                         the tax returns of Owner (but not  Owner's  partners or
                         affiliates) for Owner's signature. All originals of the
                         books,  forms and records  generated  by  Developer  in
                         connection  with the  construction of the Project shall
                         be Developer's property.

                d.       Contracts.   Developer   shall   have  the   right  and
                         authority,  at the  Owner's  expense,  to  enter  into,
                         perform,  and modify its  obligations  and duties under
                         the Construction Contracts and any and all construction
                         contracts,    architectural   contracts,    engineering
                         contracts and all other contracts and agreements now or
                         hereafter  in force  relating  to the  development  and
                         construction  of the  Project  and to  deal  with,  and
                         enforce the obligations of, all parties thereto.

                e.       Legal  Proceedings.  Developer shall have the right and
                         authority,  on its own behalf or through  legal counsel
                         designated  by  Developer,  to direct all legal matters
                         and   proceedings   that  are   within   the  scope  of
                         Developer's   authority

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<PAGE>

                         pursuant  to  this  Agreement.   Without  limiting  the
                         generality  of the  foregoing,  Developer is authorized
                         (without  the prior  written  consent  of Owner) to (i)
                         settle,  in the name and on behalf of Owner and on such
                         terms and conditions as Developer may deem to be in the
                         best  interests of the  Project,  any and all claims or
                         demands  arising  out of, or in  connection  with,  the
                         operation of the  Project,  whether or not legal action
                         has been instituted and (ii) enter into such agreements
                         with any governmental agencies having jurisdiction over
                         the Project deemed  necessary or desirable by Developer
                         in its sole and  absolute  judgment.  All such  amounts
                         paid in respect of any such  settlements and agreements
                         shall be  expenses  of the Project and be paid by Owner
                         in  addition  to the  Fees  (as  hereinafter  defined).
                         Developer  will give  notice  promptly  to Owner of all
                         demands  and  claims  and  all  settlements  and  legal
                         actions,  but the failure to give such notice shall not
                         affect the preceding provisions of this paragraph.

                f.       Loan  Documents.  Developer  shall,  on its own  behalf
                         and/or on Owner's behalf, be permitted to deal with the
                         providers  of  financing  for  the  Project  including,
                         without limitation,  (A) the senior mortgage loans (the
                         "Mortgage Loan") made by Key Corporate  Capital,  Inc.,
                         Fleet   National   Bank  and  European   American  Bank
                         (collectively,  "Senior  Lender")  secured  by  Owner's
                         interest  in the  Project  and (B) any other  equity or
                         mezzanine  loans made to Owner or its member  either as
                         of  the  date   hereof   or  after  the  date  of  this
                         Agreement(the   "Equity   Loan")   made  by  a   lender
                         acceptable  to Owner and Developer  ("Equity  Lender").
                         Senior  Lender and Equity  Lender  shall be referred to
                         individually  as a  "Lender,"  and the  loan  documents
                         evidencing  and/or  securing the Mortgage  Loan and the
                         Equity Loan are referred to collectively  herein as the
                         "Loan  Documents."  The Loan  Documents  which evidence
                         and/or   secure  the  Mortgage  Loan  are  referred  to
                         collectively  herein as the "Mortgage Loan  Documents."
                         Developer  shall be responsible  for complying with the
                         terms of the Loan  Documents,  at Owner's sole cost and
                         expense,  with the  exception of those  provisions  (i)
                         which are within the exclusive control of Owner and its
                         affiliates,  e.g.  filing of  income  tax  returns  and
                         certificates  and notices  relating to Owner's (and its
                         affiliates')  organizational documents,  etc., and (ii)
                         which relate to the repayment of the debt evidenced and
                         secured by the Loan Documents except to the extent that
                         Developer is administering the Mortgage Loan and Equity
                         Loan  pursuant  hereto  and  pursuant  to that  certain
                         Management  Agreement (the  "Management  Agreement") of
                         even date herewith by and between Owner and  Developer,
                         as manager.  Owner (and its affiliates) shall not amend
                         or waive  any  provision  of any of the Loan  Documents
                         without the prior written consent of Developer.

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<PAGE>

                g.       Ground  Lease.  Developer  shall  have  the  right  and
                         authority,  at the  Owner's  expense,  to  enter  into,
                         perform,  and modify its  obligations  and duties under
                         the Ground  Lease.  Owner  shall not amend or waive any
                         provision  of any of the  Loan  Documents  without  the
                         prior  written  consent  of  Developer,  which  may  be
                         withheld  in  Developer's  sole  discretion.  Developer
                         shall  be  responsible  for   performing,   at  Owner's
                         expense,  all of Owner's  obligations  under the Ground
                         Lease,  including without limitation,  the construction
                         and development  obligations  specifically set forth in
                         the Ground Lease,  including the Substantial Completion
                         of Buildings  and the Civic  Facilities  on or prior to
                         the  Scheduled  Completion  Date  (as  such  terms  are
                         defined  in  the  Ground  Lease)  and  all   provisions
                         relating  to  regulatory  compliance,  e.g.,  obtaining
                         licenses and permits.

                h.       Other Matters.  Developer  shall, on its own behalf or,
                         if necessary,  on Owner's behalf, be permitted to enter
                         into such other agreements, contracts, easements and to
                         perform such other acts as are  necessary or desirable,
                         in Developer's  sole and absolute  discretion,  for the
                         completion and operation of the Project.

2.       Responsibilities  of Owner. Owner shall not interfere with Developer in
         connection  with the  development  and  construction  of the Project in
         accordance with the terms of this  Agreement.  Owner  acknowledges  and
         agrees that the development  and  construction of the Project is within
         the exclusive  control of Developer,  and Owner hereby grants Developer
         sole and exclusive possession and control over the Project.

3.       Exclusive Representative/Attorney-in-Fact.  It is understood and agreed
         that,  during  the  term  of this  Agreement,  Developer  shall  be the
         exclusive  representative  of Owner for the purposes  described in this
         Agreement,  including,  without  limitation,  all acts,  functions  and
         activities  which would  normally  and  customarily  be  performed by a
         developer of real estate in connection with the construction of a major
         commercial  project.   Any  communications  with  Lessor,  any  Lender,
         regulatory authorities, governmental agencies, contractors, materialmen
         suppliers,   employees  of  the  Project  shall  be  directed   through
         Developer.  Any and all  notices  received  by  Owner  relating  to the
         Project, the Ground Lease, the Loan Documents,  the Owner or the direct
         or indirect owners of interests in Owner shall immediately be forwarded
         by Owner to Developer.  During the term of this Agreement, Owner hereby
         appoints Developer as its  attorney-in-fact  throughout the term of the
         Agreement to take any action and execute any  instruments or agreements
         that Owner is obligated  under, or that Owner has covenanted and agreed
         hereunder,  under the Ground Lease, or under the Loan Documents to take
         or execute,  or which Developer  determines is necessary or appropriate
         for  Developer  to  perform  its  duties  or  satisfy  its  obligations
         hereunder  or to develop  the  Project as  contemplated  hereby,  which
         appointment  as  attorney-in-fact  is  irrevocable  and coupled with an
         interest.

4.       Insurance.  Developer  shall arrange for and maintain all necessary and
         proper hazard insurance covering the Project,  including the furniture,
         fixtures and  equipment  situated  thereon,  and as otherwise  required
         pursuant to the  Mortgage  Loan  Documents  and the Ground  Lease,  all
         necessary and proper public  liability  insurance for the protection of
         Developer, Owner and, to the extent required under the Ground Lease and
         the Loan Documents, the Lessor or any Lender,  respectively.  Developer
         shall also arrange for and  maintain  all employee  health and

                                       4

<PAGE>

         worker's compensation insurance for the Project's personnel.  Developer
         shall  maintain  such  other  insurance  as  required  pursuant  to the
         Mortgage Loan  Documents and the Ground Lease.  Any insurance  provided
         pursuant to this paragraph  shall be an expense of the Project  payable
         by Owner.

5.       Proprietary  Interest.  The systems,  methods,  procedures and controls
         employed by Developer and any written materials or brochures  developed
         by  Developer  to  document  the same are to  remain  the  property  of
         Developer  and are not,  at any time  during  or after the term of this
         Agreement, to be utilized, distributed, copied or otherwise employed or
         acquired by Owner, except as authorized by Developer.

6.       Term of  Agreement.  Unless  this  Agreement  is sooner  terminated  as
         hereinafter  expressly  provided in Section 7 or as otherwise agreed in
         writing by both parties,  the term of this Agreement  shall commence on
         the date  hereof  and  shall  end upon  Substantial  Completion  of the
         Buildings  and the Civic  Facilities  (as such terms are defined in the
         Ground Lease), except with respect to the Owner's obligation to pay the
         Fees and all other  costs and  expenses  which are due and  payable  to
         Developer under this Agreement,  including without limitation the costs
         and expenses  described in Section 10 below,  which shall survive until
         the discharge in full of such obligations.

7.       Events of Default and Remedies.

                a.       Event of Default.  At the option of the  non-defaulting
                         party, each of the following shall constitute an "Event
                         of Default" hereunder:

                         i.      if Owner shall fail to pay or allow  payment of
                                 any installment of the Fees due to Developer in
                                 accordance  with Section 10 hereof or any other
                                 amounts due to Developer  under this  Agreement
                                 for a period  of five (5)  days  after  written
                                 notice of such failure from Developer to Owner;

                         ii.     if  Owner  fails  to  perform  in any  material
                                 respect  any term,  provision,  or  covenant of
                                 this  Agreement  (other  than as set  forth  in
                                 Section 7(a)(i)) and (A) such failure continues
                                 for ten (10) days  after  written  notice  from
                                 Developer to Owner  specifying  such failure to
                                 perform (unless such failure cannot be cured by
                                 the payment of money and cannot  reasonably  be
                                 cured  within  such  10-day  period,  in  which
                                 event,  Owner shall have an additional  period,
                                 not to exceed an  additional  thirty (30) days,
                                 in  which  to cure the  default)  or (B)  Owner
                                 fails to endeavor  diligently and  continuously
                                 to  cure  such   default  as   promptly  as  is
                                 practicable;

                         iii.    if  Developer  fails to perform in any material
                                 respect  any term,  provision,  or  covenant of
                                 this  Agreement  and (A)  subject  to Section 8
                                 below,  such failure  continues for thirty (30)
                                 days after written notice from Owner specifying
                                 such  failure to perform  (unless  such failure
                                 cannot  reasonably  be cured within such 30-day
                                 period, in which event, Developer shall have an
                                 additional  period as

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<PAGE>

                                 is  necessary  to  cure  the  default)  or  (B)
                                 Developer  fails  to  endeavor  diligently  and
                                 continuously  to cure such  default as promptly
                                 as is practicable;

                         iv.     if either Owner, on the one hand, or Developer,
                                 on  the  other,  is  dissolved  or  liquidated,
                                 applies for or consents to the appointment of a
                                 receiver,  trustee  or  liquidator  of all or a
                                 substantial   part  of  its  assets,   files  a
                                 voluntary  petition  in  bankruptcy  or is  the
                                 subject of an  involuntary  bankruptcy  filing,
                                 makes a general  assignment  for the benefit of
                                 creditors,  or files a  petition  or an  answer
                                 seeking   reorganization  or  arrangement  with
                                 creditors   or  to   take   advantage   of  any
                                 insolvency  law,  or if an order,  judgment  or
                                 decree   shall  be  entered  by  any  court  of
                                 competent jurisdiction, on the application of a
                                 creditor,   adjudicating   Owner  or  Developer
                                 bankrupt or  insolvent  or approving a petition
                                 seeking reorganization of Owner or Developer or
                                 appointing  a receiver,  trustee or  liquidator
                                 for such party of all or a substantial  part of
                                 its assets, and such order,  judgment or decree
                                 shall  continue  unstayed and in effect for any
                                 period of sixty (60) consecutive days; or

                         v.      if Owner or any affiliate of Owner is in breach
                                 or default of any of its obligations under that
                                 certain  Equity  Option  Agreement of even date
                                 herewith  with  Developer or under that certain
                                 Property Option Agreement of even date herewith
                                 with Developer.

                b.       Remedies.  At any time after the  occurrence and during
                         the  continuance  of any  Event of  Default  caused  by
                         Owner,  Developer may, at its option, do one or more of
                         the  following:  (i) terminate this Agreement by giving
                         written notice to Owner and/or (ii) exercise all rights
                         and remedies available at law or in equity. At any time
                         after the occurrence  and during the  continuance of an
                         Event of Default caused by Developer, Owner may, as its
                         sole option,  terminate  this  Agreement in  accordance
                         with the terms hereof and Developer shall have no other
                         liability to Owner hereunder.

8.       Force  Majeure.  The parties  will not be deemed to be in  violation or
         breach  of  their  respective   non-monetary   obligations  under  this
         Agreement if they are prevented from performing any of their respective
         obligations  hereunder for any reason beyond their control,  including,
         without  limitation,  strikes,  shortages,  war,  acts of  God,  or any
         applicable  statute,  regulation  or rule of  federal,  state  or local
         government or agency  thereof having  jurisdiction  over the Project or
         the operations thereof.

9.       Withdrawal of Funds by Developer.

                a.       Owner and  Developer  acknowledge  and  agree  that the
                         efficient   operation  of  the  Project  requires  that
                         Developer  have  ready  access  to the  funds  required
                         therefor, including without limitation, the proceeds of
                         the Mortgage  Loan and Equity Loan  (collectively,  the
                         "Loan  Proceeds")  plus the capital  contribution  from
                         Owner's    members   (the   "Capital    Contribution").
                         Accordingly,  during the term of this Agreement,  Owner
                         (i)  irrevocably  grants  Developer  the  authority  on
                         Owner's  behalf  to make  draw  requests  for the  Loan
                         Proceeds  in   accordance   with  the   Mortgage   Loan

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<PAGE>

                         Documents,  (ii) irrevocably  authorizes each Lender to
                         disburse  its Loan  Proceeds  directly to  Developer in
                         accordance   with  such  draw  requests  and  the  Loan
                         Documents,  (including  those  provisions  relating  to
                         compliance  with the Lien Law of the State of New York)
                         (iii)  shall not be entitled to any portion of the Loan
                         Proceeds under the Loan Documents, and (iv) irrevocably
                         grants   Developer   the  authority  to  establish  and
                         maintain bank  account(s) on Owner's  behalf to deposit
                         and withdraw  (without Owner's consent or approval) the
                         Loan  Proceeds  subject  to  compliance  with  the Loan
                         Documents and the Lien Law of the State of New York and
                         all funds necessary for the  development,  construction
                         and use of the Project. Concurrently with the execution
                         of this  Agreement,  Owner shall remit to  Developer an
                         amount equal to the Capital  Contribution to be used as
                         an advance payment on a portion of Developer's expected
                         construction costs.

                b.       Owner  hereby  assumes  and  agrees  to  pay  with  the
                         available  Loan  Proceeds and the Capital  Contribution
                         (to the extent not  previously  disbursed to Developer)
                         as and when due (i) all costs, expenses and obligations
                         incurred by Developer through and including the date of
                         this Agreement in connection  with the  development and
                         construction of the Project which have not been paid as
                         of the date of this  Agreement,  which costs,  expenses
                         and  obligations   include,  but  are  not  necessarily
                         limited  to  retainage   held  back  from  the  general
                         contractor of the Project and accrued  development fees
                         payable  by  Developer   to  its  parent   corporation,
                         Brookdale Living Communities,  Inc. ("Brookdale"),  and
                         (ii) all costs,  expenses and  obligations  incurred by
                         Developer  in  connection   with  the  development  and
                         construction of the Project.

                c.       Owner  acknowledges  and agrees that the Loan  Proceeds
                         and  the   Capital   Contribution   shall  be  used  by
                         Developer,  at its sole  and  absolute  discretion  but
                         subject to compliance  with the Loan  Documents and the
                         Lien Law of the State of New York, to pay all costs and
                         expenses  incurred or to be incurred in connection with
                         the  development  and   construction  of  the  Project,
                         including,  without limitation, to reimburse Developer,
                         Brookdale  and their  affiliates  for any and all costs
                         and/or   expenses   paid  or  incurred  by   Developer,
                         Brookdale or their  affiliates in  connection  with the
                         Ground Lease, any of the Loan Documents or the Project,
                         including, without limitation, ground rent, real estate
                         taxes,  hard costs,  soft costs,  commitment  fees, due
                         diligence  deposits,  draw  fees,  servicing  fees  and
                         extension  fees or any other fees or expenses  incurred
                         in  connection  with any of the Loan  Documents  or the
                         Ground Lease.

10.      Fees. During the term of this Agreement,  in addition to all other sums
         owed by Owner to Developer  under this  Agreement,  Developer  shall be
         entitled to receive  development  fees equal to the  aggregate  of Five
         Million Dollars ($5,000,000) (collectively, the "Fees"), which shall be
         payable by Owner as follows:

                a.       reimbursement  to Developer of all  corporate  overhead
                         and administration  costs,  capitalized  interest costs
                         and all  other  costs  incurred  by  Developer  (or its
                         affiliates) in connection  with performing the services
                         under this  Agreement up to an aggregate

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<PAGE>

                         amount of One Million Five  Hundred and NO/100  Dollars
                         ($1,500,000.00),  which  shall  be due and  payable  by
                         Owner to  Developer  from time to time  within ten (10)
                         days following invoice by Developer to Owner; Developer
                         acknowledges receipt of $1,500,411.42 on account of the
                         Fees owed pursuant to this Section 10(a);

                b.       an additional  amount equal to One Million Five Hundred
                         Thousand and NO/100  Dollars  ($1,500,000.00)  less the
                         aggregate  amount of all sums paid  and/or  owed  under
                         Section  10(a)  above,  which  amount  shall be  deemed
                         earned   proportionately   on  the  same  date(s)  that
                         Developer submits its invoice(s) to Owner under Section
                         10(a)  above,  but shall be due and payable by Owner to
                         Developer  in  the  following  manner:  i)  $750,000.00
                         during the second  month  following  completion  of the
                         Project  and,  ii)  $750,000.00  during the sixth month
                         following completion of the Project; and

                c.       an  additional  amount  equal  to Two  Million  Dollars
                         ($2,000,000.00), which amount shall be deemed earned in
                         an equal  amount  and on the same  date(s)  as the sums
                         described  to Section  10(a) and (b),  but shall be due
                         and payable by Owner to Developer upon the repayment of
                         the Mortgage Loan.

         In addition to the Fees,  Owner agrees that Developer shall be entitled
         to any "cost savings"  realized by Developer.  For the purposes of this
         Agreement,  "cost  savings"  shall  mean  any  sums  remaining  in  the
         construction  budget (the  "Budget")  referenced  in the Mortgage  Loan
         Documents. Developer acknowledges that its right to receive any Fees or
         other sums due and owing hereunder shall be subject and unconditionally
         subordinate  to (i) the payment by Owner to Ground Lessor of all Rental
         (as  defined in the Ground  Lease) and (ii) the payment by Owner or its
         sole member to any Lender of any sums due under any Loan Documents.

11.      Assignment.   This  Agreement  shall  not  be  assigned  (including  by
         operation  of law,  whether  by merger or  consolidation  (excluding  a
         merger effected solely for the purpose of changing Owner's jurisdiction
         of incorporation that does not affect the ownership  interests of Owner
         in any material respect) or otherwise) by Owner, on the one hand, or by
         Developer, on the other, without the prior written consent of the other
         party;  provided,  however,  that to the extent permitted by applicable
         law  and  regulations,  and  subject  to the  receipt  of all  required
         licenses,   permits,   approvals  and   authorizations   of  applicable
         governmental  agencies,  this  Agreement  may be assigned by  Developer
         (with  Lessor's and Lender's  consent) to one or more  corporations  or
         other legal entities  which control,  or are controlled by or are under
         common control with, directly or indirectly, Developer or Brookdale and
         may be  assigned  by Owner  pursuant to the  Collateral  Assignment  of
         Contracts,  Permits,  Licenses and Approvals to be made by Owner to the
         Senior Lender.

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<PAGE>



12.      Notices.  Any notices  required or permitted to be sent hereunder shall
         be delivered personally or by facsimile (with answer back acknowledged)
         or mailed,  certified mail, return receipt  requested,  or delivered by
         overnight  courier  service to the following  addresses,  or such other
         addresses as shall be given by notice delivered hereunder, and shall be
         deemed to have been given upon delivery, if delivered personally,  upon
         receipt with answer back acknowledged, if delivered by facsimile, three
         (3) business days after mailing,  if mailed,  or one business day after
         delivery to the courier, if delivery by overnight courier service:

         If to Owner, to:

                           AH Battery Park Owner, LLC
                           723 Electronic Drive, Suite 300
                           Horsham, Pennsylvania 19044
                           Attn: David Fenkell
                           Facsimile: 215-706-0877

         With a copy to:

                           Squire, Sanders, & Dempsey, LLP
                           1300 Huntington Center, 41 South High Street
                           Columbus, Ohio 43215
                           Attn: David Cooper, Jr.
                           Facsimile: 614-365-2499

         If to Developer, to:

                           Brookdale Living Communities of New York-BPC, Inc.
                           c/o Brookdale Living Communities, Inc.
                           77 West Wacker Drive
                           Suite 4400
                           Chicago, Illinois 60601
                           Attn:  Darryl W. Copeland, Jr.
                           Facsimile: (312) 977-3699

         With a copy to:

                           c/o Brookdale Living Communities, Inc.
                           77 West Wacker Drive
                           Suite 4400
                           Chicago, Illinois 60601
                           Attn: Robert J. Rudnik
                           Facsimile: (312) 977-3769

13.      Relationship of the Parties.  The relationship of Developer to Owner in
         connection  with  this  Agreement  shall  be  that  of  an  independent
         contractor,  and all acts performed by Developer

                                       9

<PAGE>

         during the term hereof shall be deemed to be  performed in  Developer's
         capacity  as an  independent  contractor.  Nothing  contained  in  this
         Agreement  is  intended  to or shall be  construed  to give  rise to or
         create a  partnership  or joint  venture or lease  between  Owner,  its
         successors and assigns, on the one hand, and Developer,  its successors
         and assigns, on the other hand.

14.      Entire  Agreement.   This  Agreement  and  any  documents  executed  in
         connection herewith contain the entire agreement among the parties with
         respect to the subject matter hereof and,  subject to the  restrictions
         contained in Section 11 above,  shall be binding upon their  respective
         successors and assigns,  and shall be construed in accordance  with the
         laws of the state where the Project is located.  This Agreement may not
         be  modified  or  amended  except by written  instrument  signed by the
         parties hereto.

15.      Contract Modifications for Certain Legal Events. In the event any state
         or federal  laws or  regulations,  whether  now  existing or enacted or
         promulgated after the effective date of this Agreement, are interpreted
         by judicial  decision,  a  regulatory  agency or legal  counsel of both
         parties  in such a manner as to  indicate  that the  structure  of this
         Agreement  may be in violation of such laws or  regulations,  Owner and
         Developer agree to cooperate in  restructuring  their  relationship and
         this  Agreement  to  eliminate  such  violation  or to reduce  the risk
         thereof to the  extent  such  restructuring  can be  accomplished  upon
         commercially  reasonable terms;  provided,  that any such restructuring
         shall, to the maximum extent possible, preserve the underlying economic
         and financial  arrangements  between Owner and  Developer.  The parties
         agree that such  amendment may require either or both parties to obtain
         appropriate regulatory licenses and approvals.

16.      Captions.  The captions  used herein are for  convenience  of reference
         only and shall not be construed in any manner to limit or modify any of
         the terms hereof.

17.      Severability.  In the event one or more of the provisions  contained in
         this Agreement is deemed to be invalid, illegal or unenforceable in any
         respect under applicable law, the validity, legality and enforceability
         of the  remaining  provisions  hereof  shall not in any way be impaired
         thereby.

18.      Counterparts.   This  Agreement  may  be  executed  in  any  number  of
         counterparts,  each of  which  shall  be an  original,  and  each  such
         counterpart shall together constitute but one and the same Agreement.

19.      Limitation of Personal  Liability.  Notwithstanding any other provision
         of this  Agreement  to the  contrary,  in no event  shall any  officer,
         director, member, partner, manager, shareholder,  incorporator or agent
         of Owner or Developer (or their  affiliates)  be personally  liable for
         any of Owner's or  Developer's,  respectively,  obligations  under this
         Agreement.

20.      Confidentiality.   Owner   acknowledges   that   Developer  may  suffer
         irreparable harm if the information  provided to Owner pursuant to this
         Agreement  or  this  Agreement  was  disclosed  to any  third  parties.
         Accordingly,  Owner shall keep this Agreement and all such  information
         confidential and shall not disclose any of such information not already
         known to the public

                                       10

<PAGE>

         to any party except Owner's lenders,  attorneys,  accountants and other
         professional advisors in connection with the transactions  contemplated
         by this Agreement or as otherwise required by law or court order. Owner
         shall  endeavor  to  minimize  the number of persons who have copies of
         this   Agreement   and  shall  inform  each  of  such  persons  of  the
         confidential  nature  thereof.  The provisions of this Section 20 shall
         not prohibit any affiliate of Owner from participating in other similar
         transactions  with  parties  other than  Brookdale,  Developer or their
         affiliates.

21.      Termination of Prior  Development  Agreement.  Effective as of the date
         hereof,  the Prior  Development  Agreement is hereby  superceded in its
         entirety by this Agreement.

22.      Telecopy.  This Agreement and the signatures thereto may be transmitted
         via telecopy.

23.      Agreement  not to  Terminate.  Notwithstanding  any contrary  provision
         contained herein, prior to the Substantial  Completion of the Buildings
         (as  defined  in the  Ground  Lease),  Owner  and  Developer  shall not
         terminate this Agreement or modify  Developer's  obligations under this
         Agreement  without  Lessor's consent except as required by Lender under
         the Loan Documents.

24.      Third  Party   Beneficiaries.   Lessor  and  Lender   shall  be  deemed
         third-party beneficiaries of this Agreement.

25.      Subordination   to  Ground  Lease  and  the  Mortgage  Loan  Documents.
         Notwithstanding   anything  contained  herein  to  the  contrary,  this
         Agreement  shall not be binding  upon Lessor if the Project  reverts to
         Lessor  pursuant to the express  provisions  of the Ground Lease or the
         Senior Lender in the event of a foreclosure or a conveyance by power of
         sale or in lieu of foreclosure.

26.      Agreement  Not to File  Liens.  Developer  agrees not to file any liens
         against the Project for any unpaid Fees.

27.      Agreement  Not to Record.  Developer and Owner agree not to record this
         Agreement or a memorandum thereof.

28.      Notice of Changes.  Developer and Owner agree to provide Lessor written
         notice of any changes to this Agreement required by any Lender.

                                       11


                                       1
<PAGE>

29.      Conflict with Ground Lease or Mortgage Loan Documents.  In the event of
         a conflict  between the obligations of the Developer  hereunder and the
         obligations  of the Owner under the Ground Lease or the  Mortgage  Loan
         Documents  relating to the completion of the Project (and  specifically
         excluding any payment obligations under the Ground Lease), the terms of
         the Ground Lease or the  Mortgage  Loan  Documents,  as the case may be
         shall control in all cases.

30.      Requirements of Ground Lease.  Initially  capitalized terms not defined
         below  shall  have the same  meanings  ascribed  to them in the  Ground
         Lease.

                (a) Developer  shall  not  discriminate   against  employees  or
                applicants  for  employment  because  of  race,  creed,   color,
                religion,  national origin,  ancestry,  sex, age,  disability or
                marital status, shall comply with all applicable Federal,  State
                and local laws,  ordinances,  rules and regulations from time to
                time  in  effect  and  the   provisions   of  the  Master  Lease
                prohibiting   such   discrimination   or   pertaining  to  equal
                employment   opportunities  and  shall  undertake   programs  of
                affirmative  action to ensure that  employees and applicants for
                employment are afforded equal employment  opportunities  without
                discrimination.  Such action shall be taken with  reference  to,
                but not limited to,  recruitment,  employment,  job  assignment,
                promotion, upgrading, demotion, transfer, layoff or termination,
                rates of pay or other forms of  compensation,  and selection for
                training or retraining,  including apprenticeship and on-the-job
                training.

                (b) Developer shall request each employment agency,  labor union
                and  authorized  representative  of workers  with which it has a
                collective  bargaining or other agreement or  understanding,  to
                furnish it with a written statement that such employment agency,
                labor union or representative  will not discriminate  because of
                race, creed, color, religion,  national origin,  ancestry,  sex,
                age, disability or marital status and that such agency, union or
                representative   will   cooperate  in  the   implementation   of
                Developer's obligations hereunder.

                (c) Developer shall state in all solicitations or advertisements
                for  employees  placed by or on behalf  of  contractor  that all
                qualified   applicants   shall  be  afforded  equal   employment
                opportunities  without  discrimination  because of race,  creed,
                color, religion, national origin, ancestry, sex, age, disability
                or marital status.

                (d) Developer  shall  comply with all of the  provisions  of the
                Civil Rights Law of the State of New York and  Sections  291-299
                of the  Executive  Law of the  State  of New  York,  shall  upon
                reasonable  notice  furnish all  information  and reports deemed
                reasonably  necessary by Landlord and shall permit access to its
                relevant  books,   records  and  accounts  for  the  purpose  of
                monitoring  compliance  with  the  Civil  Rights  Law  and  such
                sections of the Executive Law.

                                       12


<PAGE>

31.      Further Ground Lease Requirements.  Developer agrees hereby agrees that
         immediately upon the purchase by Developer of any building materials to
         be incorporated in the Buildings (as said term is defined in the Ground
         Lease), or of any building materials to be incorporated in improvements
         made thereto,  such materials  shall become the sole property of Ground
         Lessor,  notwithstanding that such materials have not been incorporated
         in, or made a part of,  such  Buildings  at the time of such  purchase;
         provided,  however, Ground Lessor shall not be liable in any manner for
         payment or otherwise to  Developer in  connection  with the purchase of
         any such  materials  and Ground  Lessor shall have no obligation to pay
         any compensation to Developer by reason of such materials  becoming the
         sole property of Ground Lessor.

32.      Senior  Lender's  Right to Terminate.  Notwithstanding  anything to the
         contrary  contained  herein,  upon a default  under any  Mortgage  Loan
         Document and Senior Lender's  acquisition  and/or obtaining  control of
         the Project through  foreclosure,  sale or other means,  this Agreement
         shall  terminate  upon  Lender's  written  request at no cost to Senior
         Lender.





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                                       13

<PAGE>


         IN WITNESS  WHEREOF,  the parties  hereto have caused this  Development
Agreement to be executed and  delivered in their names and on their behalf as of
the date first set forth above.


                                  OWNER:

                                   AH Battery Park Owner, LLC

                                   By:  AH Battery Park Member, LLC,
                                        its sole member

                                        By:  Alliance  Holdings,  Inc.,
                                             its sole manager and member


                                             By:  /s/ David B. Fenkell
                                                  ------------------------------
                                                  Name:     David B. Fenkell
                                                  Title:    President

                                   DEVELOPER:

                                   Brookdale Living Communities of
                                   New York-BPC, Inc.


                                   By:  /s/ Mark J. Schulte
                                        -----------------------------------
                                        Name:     Mark J. Schulte
                                        Title:    President

<PAGE>



STATE OF PENNSYLVANIA  )
                       )  SS.
COUNTY OF MONTGOMERY   )


         The foregoing  instrument was  acknowledged  before me this 18th day of
August, 1999, by David B. Fenkell, the President of Alliance Holdings,  Inc., as
member and manager of AH Battery Park Member,  LLC,  which is the sole member of
AH Battery Park Owner, LLC.

NOTARY SEAL

                                          /s/ Jospeh Hiltwine
                                      ------------------------------
                                              NOTARY PUBLIC
                                     Montgomery County, Pennsylvania



STATE OF ILLINOIS       )
                        ) SS.
COUNTY OF COOK          )


         The foregoing  instrument was  acknowledged  before me this 16th day of
August,  1999, by Mark J. Schulte, the President of Brookdale Living Communities
of New York-BPC, Inc., on behalf of said corporation.

NOTARY SEAL

                                          /s/ Donna Jean Elrod
                                       ------------------------------
                                              NOTARY PUBLIC
                                          Cook County, Illinois