EX 99.1 LIMITED PARTNERSHIP AGREEMENT

Limited Partnership Agreement

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WNC HOUSING TAX CREDIT FUND VI LP SERIES 12

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Title: EX 99.1 LIMITED PARTNERSHIP AGREEMENT
Governing Law: Texas Date: 10/7/2005

EX 99.1 LIMITED PARTNERSHIP AGREEMENT, Parties: wnc housing tax credit fund vi lp series 12

SECOND AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP OF

SALTGRASS LANDING APARTMENTS, LTD.

DATED AS OF AUGUST 24, 2005

<PAGE>

SECOND AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP OF

SALTGRASS LANDING APARTMENTS, LTD.

This Second Amended and Restated Agreement Of Limited Partnership is

being entered into effective as of the date written below by and between Gary L.

Kersch and Doublekaye Corp. as the general partner (collectively the "General

Partner"), WNC Housing Tax Credit Fund VI Series 12, L.P., a California limited

partnership as the limited partner (the "Limited Partner"), and WNC Housing,

L.P., as the special limited partner (the "Special Limited Partner").

RECITALS

WHEREAS, Saltgrass Landing Apartments, Ltd., a Texas limited

partnership (the "Partnership") recorded a certificate of limited partnership

with the Texas Secretary of State on November 24, 2004. A partnership agreement

dated December 1, 2004 was entered into by and between the General Partner and

Doublekaye Corp. as the original limited partner ("Original Limited Partner")

(the "Original Partnership Agreement").

WHEREAS, on May 6, 2005 the Original Partnership Agreement was amended

and restated for the withdrawal of Doublekaye Corp. as the Original Limited

Partner and for the admission of the Limited Partner (the "Amended and Restated

Agreement").

WHEREAS, the Partners desire to enter into this Agreement to provide

for, among other things, (i) the continuation of the Partnership, (ii) the

admission of the Special Limited Partner as partner of the Partnership, (iii)

the payment of Capital Contributions by the Limited Partner and the Special

Limited Partner to the Partnership, (iv) the allocation of Income, Losses, Tax

Credits and distributions of Net Operating Income and other cash funds of the

Partnership among the Partners, (v) the determination of the respective rights,

obligations and interests of the Partners to each other and to the Partnership,

and (vi) certain other matters.

WHEREAS, the Partners desire hereby to amend and restate the Amended

and Restated Agreement.

NOW, THEREFORE, in consideration of their mutual agreements herein set

forth, the Partners hereby agree to amend and restate the Amended and Restated

agreement in its entirety to provide as follows:

<PAGE>

ARTICLE I

DEFINITIONS

"Accountant" shall mean Timothy W. Hald, 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 Accountant for cause if

such Accountant fails to provide, or untimely provides, or inaccurately

provides, the information required in Section 14.2 or 14.3 of this Agreement.

"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.

"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 99.98% of the LIHTC

actually received by the Partnership, as shown on the applicable tax returns of

the Partnership.

"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.

"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.

"Agreement" or "Partnership Agreement" shall mean this Second Amended

and Restated 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.

"Apartment Housing" shall mean the Saltgrass Apartments located on

approximately 3.0 acres of land at Golf Course Road in Rockport, Aransas County,

Texas 78382, as more fully described in Exhibit "A" attached hereto and

incorporated herein by this reference, and the Improvements.

<PAGE>

"Architect of Record" shall mean Barbutti & Associations. The General

Partner, on behalf of the Partnership, shall enter into a contract with the

Architect of Record to perform certain duties and responsibilities including,

but are not limited to: designing the Improvements; preparing the construction

blueprints; preparing the property specifications manual; contract

administrative services; completing the close-out procedures; inspecting for and

overseeing resolution of the Contractor's final punch list; receive and approve

operations and maintenance manuals; and collect, review, approve and forward to

the Partnership all product, material and construction warranties.

"Asset Management Fee" shall have the meaning set forth in Section

9.2(d) hereof and the Minimum Amount shall be paid monthly to the Limited

Partner.

"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.

"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 other than as a creditor; the commencement of any

bankruptcy, reorganization, insolvency or other proceeding for the relief of

financially distressed debtors; or the appointment of a receiver, liquidator,

custodian or trustee; or the discounted settlement of substantially all the

debts and obligations of a debtor; and, if any of 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 any of

the above has occurred to that Partner.

"Break-even Operations" shall mean at such time as the Partnership has

Cash Receipts in excess of Cash Expenses, as determined by the Accountant and

approved by the Special Limited Partner. For purpose of this definition: (a) any

one-time up-front fee paid to the Partnership from any source shall not be

included in Cash Receipts to calculate Break-even Operations; (b) Cash Expenses

shall include the amount of any outstanding Partnership obligations and any

management fee or portion thereof, which is currently deferred and not paid; and

in accordance with Article VIII that is currently deferred and not paid. In

addition, Break-even Operations shall not occur until the Partnership has: (a)

sufficiently funded the tax and insurance reserve in an amount equal to one

year's property insurance premium and the next full installment of real estate

taxes based upon improved land; and (b) deposited into the Operating Deficit

Account an amount equal to one month's mandatory debt service payment and one

month's operating expenses.

"Budget" shall mean the annual operating budget of the Partnership as

more fully described in Section 14.3 of this Agreement.

"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 Section 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

Section 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

<PAGE>

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.

"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, Section 7.4 or

Section 7.6 of this Agreement. A loan to the Partnership by a Partner shall not

be considered a Capital Contribution.

"Cash Expenses" shall mean all operating obligations of the Partnership

(other than those covered by Insurance) including without limitation, the

payment of the monthly Mortgage payments, the Management Agent fees, the Asset

Management Fee, the funding of reserves in accordance with Article VIII of this

Agreement, advertising costs, utilities, maintenance, repairs, Partner

communications, legal, telephone, any other expenses which may reasonably be

expected to be paid in a subsequent period but which on an accrual basis shall

be allocable equally per month over the calendar year, such as, but not limited

to, Insurance, Real Estate Taxes, Mortgage payments paid other than monthly,

audit, tax or accounting expenses (excluding deductions for cost recovery of

buildings; improvements and personal property and amortization of any financing

fees) and any seasonal expenses (such as snow removal, the use of air

conditioners in the middle of the summer, or heaters in the middle of the

winter) which may reasonably be expected to be paid in a subsequent period. Cash

Expenses payable to Partners or Affiliates of Partners shall be paid after Cash

Expenses payable to third parties. Development costs of any nature whatsoever

are not Cash Expenses and shall not be paid from Cash Receipts. The provisions

of Section 6.2 govern the payment of development costs and construction

interest.

"Cash Receipts" shall mean actual cash received on a cash basis by the

Partnership from operating revenues of the Partnership, including without

limitation rental income (but not any subsidy thereof from the General Partner

or an Affiliate thereof), tenant security deposits that have been forfeited by

tenants pursuant to the laws of the State, laundry income paid to the

Partnership, telephone hook-up or service income, cable fees or hook-up costs,

telecommunications or satellite fees or hook-up costs, but excluding

prepayments, security deposits, Capital Contributions, borrowings, the Mortgage

Loan, lump-sum payments, any extraordinary receipt of funds, and any income

earned on investment of its funds. Neither the General Partner nor its

Affiliates shall be entitled to payment of any Cash Receipts for any reason,

including but not limited to a separate contract, agreement, obligation or the

like.

"Code" shall mean the Internal Revenue Code of 1986, as amended from

time to time, or any successor statute.

"Completion of Construction" shall mean the date the Partnership

receives the required certificate of occupancy (or the local equivalent) for all

56 apartment units, and by the issuance of the Construction Inspector's

certification, in a form substantially similar to the form attached hereto as

Exhibit D and incorporated herein by this reference, with respect to completion

of all the apartment units in the Apartment Housing. Completion of Construction

further means that the construction shall be completed in good quality, and free

and clear of all mechanic, material and similar liens. In addition to the above,

<PAGE>

Completion of Construction shall occur only when the statutory time period for

the filing of any liens by the Contractor, subcontractors, material suppliers or

any one else entitled to file a lien against the property has lapsed unless such

filed liens, other than the Construction Loan, or Mortgage Loan, have been

bonded over and have been approved by the Special Limited Partner; and the

Special Limited Partner has approved the Completion of Construction.

"Compliance Period" shall mean the period set forth in Section 42

(i)(1) of the Code, as amended, or any successor statute.

"Consent of the Special Limited Partner" shall mean the prior written

consent of the Special Limited Partner.

"Construction Completion, Operating Deficit and Tax Credit Guarantee

Agreement" shall mean that agreement entered into the even date hereof by and

between the Partnership, the Guarantor and the Limited Partner and incorporated

herein by this reference.

"Construction Contract" shall mean the construction contract dated ,

200 in the amount of $547,699, entered into between the Partnership and the

Contractor pursuant to which the Improvements are being constructed in

accordance with the Plans and Specifications. The Construction Contract shall be

a fixed price agreement (includes materials and labor) at a cost consistent with

the Development Budget. Any modifications to the Construction Contract requires

the Consent of the Special Limited Partner.

"Construction Draw Documents" shall mean those documents as set forth

in Section 14.3(a) of this Agreement.

"Contractor" shall mean Criscourt Construction, Inc. Any substitution

of Contractor requires the Consent of the Special Limited Partner.

"Debt Service Coverage" shall mean for the applicable period the ratio

between the Net Operating Income (excluding Mortgage payments and Asset

Management Fee) 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. For purposes of this definition: (a) any one-time up-front fee paid

to the Partnership from any source shall not be included in Cash Receipts to

calculate Debt Service Coverage; (b) Cash Expenses shall include the amount of

any Management Fee, or portion thereof, which is currently deferred and not

paid; and (c) Cash Expenses shall include the amount of any reserve required to

be funded in accordance with Article VIII that is currently deferred and not

paid.

"Deferred Management Fee" shall have the meaning set forth in Section

9.2(c) hereof.

"Developer" shall mean Doublekaye Corp.

"Development Budget" shall mean the agreed upon cost of developing the

Apartment Housing and Improvements, including all construction costs based on

the Construction Contract, the Plans and Specifications, land and soft costs

(which includes, but is not limited to, financing charges, market study,

Development Fee, architect fees, etc.). The final Development Budget is

<PAGE>

referenced in the Development, Construction and Operating Budget Agreement

entered into by and between the Partners on even date herewith, and incorporated

herein by this reference.

"Development Fee" shall mean the fee payable to the Developer for

services incident to the development and construction of the Apartment Housing

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, or negotiations for permanent financing.

"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.

"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.

"Financial Interest" shall mean the General Partner's capital interest

in the Partnership to be contributed and maintained pursuant to the requirements

of RD Instruction 1944-E, Section 1944.211(a)(13)(ii) or any amendments thereto.

Such Financial Interest shall not affect the Partners' allocable share of the

Profits, Losses, Tax Credits or Cash Flow From Operations as set forth in this

Agreement.

"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.

"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 or restraint.

"General Partner(s)" shall mean Gary L. Kersch and Doublekaye Corp. and

such other Persons as are admitted to the Partnership as additional or

substitute General Partners pursuant to this Agreement. If there is more than

one General Partner of the Partnership, the term "General Partner" shall be

deemed to collectively refer to such General Partners or individually may mean

any General Partner as the context dictates.

"Gross Asset Value" shall mean with respect to any asset, the asset's

adjusted basis for federal income tax purposes, except as follows:

(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;

<PAGE>

(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;

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 1.40(d) to the extent the General Partner determines

that an adjustment pursuant to Section 1.40(b) hereof is necessary or

appropriate in connection with a transaction that would otherwise result in an

adjustment pursuant to this Section 1.40(d).

If the Gross Asset Value of an asset has been determined or adjusted

pursuant to Section 1.40(a), Section 1.40(b), or Section 1.40(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.

"Guarantor" shall mean Gary L. Kersch.

"Hazardous Substance" shall mean and include any substance, material or

waste, including, but not limited to, 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

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.

<PAGE>

"Improvements" shall mean the new construction or substantial

rehabilitation of six buildings containing 56 apartment units and ancillary and

appurtenant facilities (including those intended for commercial use, if any,)

for family use and built in accordance with the Project Documents. It shall also

include all furnishings, equipment and personal property used in connection with

the operation thereof. The total number of apartment units equals 55 LIHTC units

and one manager's unit.

"In-Balance" shall mean, at any time when calculated, when the

cumulative amount of the undisbursed Capital Contributions of the Limited

Partner and Special Limited Partner required to be paid-in through and including

the Completion of Construction are sufficient in the Special Limited Partner's

reasonable judgment to pay all of the following sums: (a) all costs of

construction to achieve Completion of Construction; and (b) all soft costs in

the development of the Apartment Housing and Improvements, including but not

limited to, architect fees, land acquisition, impact fees and costs of

marketing, maintenance and leasing of the Apartment Housing units. 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 at the earlier of the time of

Mortgage closing and funding.

"Incentive Management Fee" shall have the meaning set forth in Section

9.2(e) hereof.

"Income and Loss(es)" 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 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

Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into

account in computing Income and Losses shall be subtracted from such taxable

income or loss;

adjusted pursuant to the provisions of the definition thereof, 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 tax 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

<PAGE>

(f) notwithstanding any other provision of this definition, any items

which are specially allocated pursuant to Sections 10.3 or Section 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.

For purposes of this Agreement, the term Income when used alone shall

include all items of income or revenue contemplated in this Section and the term

Losses when used alone shall include all items of loss or deductions

contemplated in this Section.

"Insurance" shall mean:

(a) during construction, the Partnership will provide and maintain, or

cause the Partnership to provide and maintain, property insurance in an amount

equal to 100% of the value of the Apartment Housing at the date of completion;

property damage coverage of not less than $1,000,000 per occurrence and

comprehensive general liability insurance with limits against bodily injury of

not less than $1,000,000 per occurrence both with aggregated coverage of

$2,000,000; and worker's compensation insurance within the State statutory

guidelines;

(b) during operations the Partnership will provide and maintain 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 Apartment Housing in an amount

equal to the full replacement value of the damaged property without deducting

for depreciation); and comprehensive 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;

in a minimum amount of $4,000,000 per occurrence and an aggregate of $4,000,000;

(d) all Insurance polices shall name the Partnership as the named

insured, 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 Insurance Policy or policies shall not have a deductible

provision in excess of $5,000; and

<PAGE>

(h) the term "Insurance" specifically excludes co-insurance or

self-insurance.

"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. Any substitution of Insurance Company

during the term of this Agreement requires the Consent of the Special Limited

Partner.

"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.

"Involuntary Withdrawal" shall mean any Withdrawal of a General Partner

caused by death, adjudication of insanity or incompetence, Bankruptcy, or the

removal of a General Partner pursuant to Section 13.2 hereof.

"Land Acquisition Fee" shall mean the fee payable to the General

Partner in an amount equal to $2,290 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 or rehabilitated.

"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.

"Limited Partner" shall mean WNC Housing Tax Credit Fund VI Series 12,

L.P., a California limited partnership, and such other Persons as are admitted

to the Partnership as additional or Substitute Limited Partners pursuant to this

Agreement.

"Management Agent" shall mean the property management company which

oversees the property management functions for the Apartment Housing and which

is on-site at the Apartment Housing. The initial Management Agent shall be Town

& Country Management Company. Any substitution of the Management Agent requires

the Consent of the Special Limited Partner which consent will not be withheld

without good cause.

"Management Agreement" shall mean the agreement between the Partnership

and the Management Agent for property management services. The management fee

shall equal an agreed amount per occupied unit as approved by USDA-RD. The

General Partner, on behalf of the Partnership, shall insure that neither the

Management Agreement nor any ancillary agreement shall provide for an initial

rent-up fee, a set-up fee, any other similar pre-management fee or recurring fee

for compliance monitoring or the like payable to the Management Agent. The

Management Agreement shall provide that it will be terminable at will by the

Partnership at anytime following the Withdrawal or removal of the General

Partner and, in any event, on any anniversary of the date of execution of the

Management Agreement, without payment or penalty for failure to renew the same.

"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 Apartment Housing to be occupied by

tenants whose incomes are equal to or less than the required percentage of the

area median gross income. More specifically, the General Partner has agreed that

there will be 24 one-bedroom units with 645 square feet at 60% or less of the

<PAGE>

area median income, as adjusted for family size; 31 two-bedroom units with 779

square feet at 60% or less of the area median income, as adjusted for family

size; and 1 two-bedroom unit with 779 square feet which is the managers unit.

"Mortgage" or "Mortgage Loan" shall mean the permanent nonrecourse

financing wherein the Partnership promises to pay: (a) United States Department

Agriculture ("USDA"), or its successor or assignee, the principal sum of

$1,276,146, plus interest on the principal at 11.875% per annum over a term of

30 years and amortized over 360 months; and (b) USDA, or its successor or

assignee, the principal sum of $442,100, plus interest on the principal at 5%

per annum over a term of 30 years and amortized over 360 months. 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 provided the

substitution or change has received the Consent of the Special Limited Partner.

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 and

the income and expense statement for the Partnership showing Cash Receipts and

Cash Expenses for each and every month since issuance of the certificate of

occupancy. Based on the draft Mortgage documents and the income and expense

statements, if the terms of the Mortgage are not as specified above, or the

Special Limited Partner determines that the Debt Service Coverage of the

Mortgage Loan(s) requiring an amortized monthly principal and interest payment

falls below 1.10 based on the operating proforma in the Development,

Construction and Operating Budget Agreement and the current Cash Expenses and

Cash Receipts, then the General Partner shall adjust the principal loan amount

and close on a Mortgage which will produce a 1.10 Debt Service Coverage or

greater. The Mortgage funds shall be used to retire any outstanding hard

construction costs including labor and materials. Notwithstanding, if the

interest rate at the time of closing the Mortgage is less than the amount

stated, the General Partner shall not increase the principal amount of the

Mortgage without the Special Limited Partner's approval even if the Dept Service

Coverage remains at or above 1.10.

"Net Operating Income" shall mean the cash available for Distribution

on an annual basis, when Cash Receipts exceed Cash Expenses.

"Nonrecourse Deductions" shall have the meaning given it in Treasury

Regulations Section 1.704-2(b)(1).

"Nonrecourse Liability" shall have the meaning given it in Treasury

Regulations Section 1.704-2(b)(3).

"Operating Deficit" shall mean, for the applicable period, insufficient

funds to pay Partnership operating costs when Cash Expenses exceed Cash

Receipts, as determined by the Accountant and approved by the Special Limited

Partner.

<PAGE>

"Operating Deficit Guarantee Period" shall mean the period commencing

the date the first apartment unit in the Apartment Housing is available for its

intended use (for properties being rehabilitated with tenants in residence, the

period commences with the signing of this Agreement). The period ends three

years following the achievement of three consecutive months of Breakeven

Operations (for properties being rehabilitated with tenants in residence, the

Operating Deficit Guarantee Period ends following three consecutive months of

Breakeven Operations after completion of all the rehabilitation as approved in

the Plans and Specifications or scope of work). The Operating Deficit Guarantee

Period will not expire unless the Partnership has achieved Completion of

Construction of the Apartment Housing.

"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.

"Original Limited Partner" shall mean Doublekaye Corp.

"Partner(s)" shall collectively mean the General Partner, the Limited

Partner and the Special Limited Partner or individually may mean any Partner as

the context dictates.

"Partner Nonrecourse Debt" shall have the meaning set forth in Section

1.704-2(b)(4) of the Treasury Regulations.

"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.

"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.

"Partnership" shall mean the limited partnership continued under this

Agreement.

"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).

"Permanent Mortgage Commencement" shall mean the first date on which

the following have occurred: the Mortgage shall have closed and funded; and

amortization of the Mortgage shall have commenced.

"Person" shall mean an individual, proprietorship, trust, estate,

partnership, joint venture, association, company, corporation or other entity,

as the circumstances demonstrate.

"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. The General Partner agrees to assure that the

Contractor completes construction in accordance with the Plans and

Specifications. Any changes to the Plans and Specifications after approval by

the appropriate government building department shall require the Consent of the

Special Limited Partner. For rehabilitated properties without Plans and

<PAGE>

Specifications, this definition shall include any specifications manual and the

unit by unit scope of work approved by the local city or county building

department, if applicable, and the Special Limited Partner.

"Project Documents" shall mean all documents relating to Mortgage Loan,

Construction Contract, Title Policy and Partnership Agreement. It shall also

include all documents required by any governmental agency having jurisdiction

over the Apartment Housing in connection with the development, construction and

financing of the Apartment Housing, including but not limited to, the approved

Plans and Specifications for the development and construction of the Apartment

Housing.

"Projected Annual Tax Credits" shall mean LIHTC in the amount of $0 for

2005, $94,045 for each years 2006 through 2014, and $58,778 for 2015, 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 $940,640 to be available to the Partnership

"Projected Tax Credits" shall mean LIHTC in the aggregate amount of

$940,640.

"Qualified Tenants" shall mean any tenants who have incomes of 60% (or

such smaller percentage as the General Partner shall agree) or less of the area

median gross income, as adjusted for family size, so as to make the Apartment

Housing eligible for LIHTC.

"RD" shall mean the United States Department of Agriculture, Rural

Development-Minnesota (formerly Farmers Home Administration) or any successor

thereto.

"RD Interest Credit Agreement" shall mean the Multiple Family Housing

Interest Credit and Rental Assistance Agreement (Form RD 1944-7 or any successor

thereof) between the RD and the Partnership whereby RD will provide a monthly

credit subsidy to the Partnership's Mortgage account when the Partnership makes

each monthly payment on the Mortgage.

"RD Loan Agreement" shall mean the Loan Agreement for an RRH Loan to a

Limited Partnership Operating on a Limited Profit Basis (Form RD 1944-34 or any

successor thereof) between the RD and the Partnership made in consideration of

the Mortgage Loan to the Partnership by the RD pursuant to Section 515(b) of the

Housing Act of 1949 to build a low to moderate income apartment complex.

"Real Estate Taxes" shall mean the sum of $19,150 required to be paid

annually by the Partnership to the tax assessor, school district or similar

representative, of the Rockport, Aransas County for real estate taxes assessed

against the Apartment Housing. The Real Estate Taxes are payable as follows:

Each year prior to January 31st in full.

"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 Apartment Housing cannot exceed 30% of the qualifying income levels

of those units under Section 42.

"Revised Projected Tax Credits" shall have the meaning set forth in

Section 7.4(a) hereof.

"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 Apartment Housing or any part thereof, a claim against a title

insurance company, the refinancing of any Mortgage or other indebtedness of the

<PAGE>

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."

"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 Apartment Housing.

"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.

"State" shall mean the State of Texas.

"State Tax Credit Agency" shall mean the state agency of Texas, which

has the responsibility and authority to administer the LIHTC program in Texas.

"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.

"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).

"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.

"Tax Credit Compliance Fee" shall mean the fee payable to the General

Partner in accordance with Section 9.2(f) of this Agreement.

"Tax Credit Conditions" shall mean, for the duration of the Compliance

Period, any and all restrictions including, but not limited to: (a) the land use

restriction agreement required by the State Tax Credit Agency to be recorded

against the Apartment Housing; and (b) any 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.

"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.

"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 owner's title policy

<PAGE>

including the following endorsements: non-imputation, Fairways, access,

contiguity, survey, owner's comprehensive, zoning and subdivision. The Title

Policy shall also insure against rights-of-way, easements, blanket easement or

claims of easements, not shown by public records. The Title Policy shall be in

an amount equal to the Mortgage amount and the Limited Partner's Capital

Contribution. If allowed by the title company, the Title Policy shall name the

Limited Partner and the Special Limited Partner as insured parties, or, if

including the Limited Partner and Special Limited Partner as insured parties is

not allowed, the Title Policy shall reference them "as their interests may

appear in the partnership agreement of the owner."

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

"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).

"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 death, adjudication of insanity or incompetence,

Bankruptcy of such Partner or any of its principals, 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.

ARTICLE II

NAME

The name of the Partnership shall be "Saltgrass Landing Apartments,

Ltd."

ARTICLE III

PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE

Section 3.1 Principal Executive Office. The principal executive office

of the Partnership is located at 7217 McNeil Drive, Austin, Texas 78729, or at

such other place or places within the State as the 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 Gary L. Kersch , whose address is 7217

McNeil Drive, Austin, Texas 78729.

ARTICLE IV

PURPOSE

Section 4.1 Purpose of the Partnership.

<PAGE>

The purpose of the Partnership is to acquire, construct, own and

operate the Apartment Housing 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 Apartment Housing at the

conclusion of the Compliance Period. The Partnership shall not engage in any

business or activity that is not incident to the attainment of such purpose.

Section 4.2 Authority of the Partnership.

In order to carry out its purpose, the Partnership is empowered and

authorized to do any and all acts and things necessary, appropriate, proper,

advisable or incidental to the furtherance and accomplishment of its purpose,

and for protection and benefit of the Partnership in accordance with the

Partnership Agreement, including but not limited to the following:

(a) acquire ownership of the real property referred to in Exhibit "A"

attached hereto;

(b) construct, renovate, rehabilitate, and own, the Apartment Housing

in accordance with the Project Documents;

Set-Aside Test and the Rent Restriction Test and consistent with the

requirements of the Project Documents so long as any Project Documents remain in

force;

(d) maintain and operate the Apartment Housing, including hiring the

Management Agent (which Management Agent may be any of the Partners or an

Affiliate thereof) and entering into any agreement for the management of the

Apartment Housing during its rent-up and after its rent-up period in accordance

with this Agreement;

(e) enter into the Mortgage;

(f) rent dwelling units in the Apartment Housing from time to time, in

accordance with the provisions of the Code applicable to LIHTC; and

(g) do any and all other acts and things necessary or proper in

accordance with this Agreement.

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 Texas, and shall continue until December 1, 2059 unless

terminated earlier in accordance with the provisions of this Agreement or as

otherwise provided by law.

<PAGE>

ARTICLE VI

GENERAL PARTNER'S CONTRIBUTIONS AND LOANS

Section 6.1 Capital Contribution of General Partner.

The General Partner shall make a Capital Contribution equal to $100.

Section 6.2 Construction Obligations.

(a) The General Partner hereby guarantees lien free Completion of

Construction of the Apartment Housing on or before December 1, 2005 ("Completion

Date"). The General Partner further guarantees that the development of the

Apartment Housing and Improvements will not exceed a total development cost of

$2,703,888 ("Development Budget"), which includes all hard and soft costs

incident to the acquisition, development and construction of the Apartment

Housing in accordance with the Development Budget and the Project Documents. At

the time of Permanent Mortgage Commencement, if the actual hard costs and soft

costs of developing and constructing the Apartment Housing and Improvements

exceed the Development Budget then the General Partner prior to Permanent

Mortgage Commencement shall advance the money to the Partnership to pay the

difference between the aggregated actual hard and soft costs and the Development

Budget. At the time of Permanent Mortgage Commencement, if the remaining sources

of revenue from Capital Contributions and the Mortgage are insufficient, as

determined by the Accountant and Special Limited Partner, to pay any outstanding

hard and soft costs incident to the acquisition, development and construction of

the Apartment Housing, then the General Partner prior to Permanent Mortgage

Commencement shall advance the money to the Partnership to pay the additional

costs.

(b) At any time during construction and prior to Permanent Mortgage

Commencement, if the Special Limited Partner, in good faith, determine that the

actual construction and development costs exceed the Development Budget

(excluding the Development Fee) then the General Partner shall be responsible

for and shall be obligated to advance and deposit into the disbursement agent's

account within ten days following notice by the Special Limited Partner, the

difference thereof for payment to the Contractor or other vendors, suppliers, or

subcontractors. In addition, at any time during construction and prior to

Completion of Construction if the Special Limited Partner, in good faith,

determine there are insufficient funds to obtain Completion of Construction or

the funds are not available in accordance with the funding requirements of this

Agreement, then the General Partner shall be responsible for and shall be

obligated to advance and deposit into the disbursement account within ten days

following notice by the Special Limited Partner, the amount requested by the

Special Limited Partner to pay a current construction draw or an amount

necessary to obtain Completion of Construction.

shall not be repayable, shall not change the Interest of any Partner in the

Partnership and shall be considered a guaranteed payment to the Partnership for

cost overruns.

<PAGE>

Section 6.3 Operating Obligations.

(a) From the date the first apartment unit in the Apartment Housing is

available for its intended use (for properties being rehabilitated with the

tenants in residence, the period commences with the signing of this Agreement)

until three consecutive months of Breakeven Operations (for properties being

rehabilitated, the Operating Deficit Guarantee Period ends following three

consecutive months of Breakeven Operations after completion of all

rehabilitation as approved in the Plans and Specifications or scope of work),

the General Partner will immediately provide to the Partnership the necessary

funds to pay Operating Deficits, which funds shall not be repayable, shall not

change the Interest of any Partner and shall be considered a guaranteed payment

to the Partnership for cost overruns. For the balance of the Operating Deficit

Guarantee Period the General Partner will immediately provide Operating Loans to

pay any Operating Deficits. The aggregate maximum amount of the Operating

Loan(s) the General Partner will be obligated to lend will be $231,404 which is

equal to one year's operating expenses (including debt and reserves) as agreed

to by the General Partner and the Special Limited Partner. Each Operating Loan

shall be nonrecourse to the Partners, and shall be repayable out of 50% of the

available Net Operating Income or Sale or Refinancing Proceeds in accordance

with Article XI of this Agreement.

(b) The Partnership shall pay the amount of the Development Fee set

forth in Exhibit B to the Development Fee Agreement entered into as of even date

herewith on an annual basis (the "Scheduled Amount"). In the event the Net

Operating Income of the Partnership is insufficient to pay such annual amount,

the General Partner shall contribute to the Partnership the amount by which Net

Operating Income distributable for payment of the Development Fee pursuant to

Section 11.1 is less than the Scheduled Amount, and such amount shall be

includable in the General Partner's Capital Account.

Section 6.4 Other General Partner Loans.

Unless provided elsewhere, after expiration of the Operating Deficit

Guarantee Period, with the Consent of the Special Limited Partner, the General

Partner will 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 10-year Treasury money market rate in effect as

of the day of the General Partner loan, 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 invalid action taken by the General Partner and such

advance will be classified as a General Partner Capital Contribution.

Notwithstanding this provision, the General Partner remains obligated to the

Partnership, Limited Partner and Special Limited Partner as required in

accordance with the State limited partnership act, as amended from time to time.

<PAGE>

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 it has no further interest in the Partnership as a 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

$733,552, as may be adjusted in accordance with Section 7.4 of this Agreement,

in cash on the dates and subject to the conditions hereinafter set forth.

(a) $440,031 (which includes the Special Limited Partner's Capital

Contribution of $73) was paid on May 6, 2005:

(b) $110,216 shall be payable upon the Limited Partner's receipt and

approval of the following documents:

(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 the Title Policy;

(4) Insurance required during construction;

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

(6) an executed commitment from the Mortgage Lender to provide

the Mortgage; (7) an executed Development, Construction and Operating

Budget Agreement;

(8) an executed Construction Completion, Operating Deficit and

Tax Credit Guarantee Agreement;

(9) an executed Development Fee Agreement and Development Fee

Guaranty Agreement;

(10) the construction draw disbursement procedure;

<PAGE>

(11) all documents and workpapers supporting the 10% carryover

determination;

(12) payment of $0 for costs and expenses incurred in connection

with the Special Limited Partner's or its Affiliate's underwriting of

the Apartment Housing and Improvements.

approval of the following documents:

(1) a date-down to the Title Policy dated no more than fifteen

days prior to this Capital Contribution payment evidencing no

construction or development related liens;

(2) an audited cost certification together with the Accountant's

work papers verifying that the Partnership has expended the requisite

10% of the reasonably expected cost basis to meet the carryover test

provisions of Section 42 of the Code; and

(3) a determination by the Special Limited Partner that the

construction and financing are In-Balance.

(4) 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 Apartment Housing confirming the apartment

units are being placed in service for their intended purpose;

(5) a completion certification in a form substantially similar to

the form attached hereto as Exhibit "D" and incorporated herein by

this reference, indicating that the Improvements have been completed

in accordance with the Project Documents;

(6) a letter from the Contractor in a form substantially similar

to the form attached hereto as Exhibit "F" and incorporated herein by

this reference stating that all amounts payable to the Contractor have

been paid in full except USDA-RD requires hold back and that the

Partnership is not in violation of the Construction Contract;

(7) Insurance required during operations;

(8) any documents previously not provided to the Limited Partner

but required pursuant to this Section 7.2 and Sections 14.3(a) and

(b);

The Limited Partner and Special Limited Partner require receipt and approval of

100% of the initial tenant files as specified in a subsequent Capital

Contribution payment. The time required to collect, review and correct, if

applicable, tenant files can be substantial. Therefore, to expedite the process

the General Partner shall send tenant files to the Special Limited Partner as

soon as the file is complete instead of waiting to send the files all at one

time.

(d) $36,678 shall be payable upon the Limited Partner's receipt and

approval of the following documents:

<PAGE>

(1) Mortgage Loan documents signed and the Mortgage funded;

(2) an updated Title Policy dated no more than ten days prior to

the scheduled Capital Contribution confirming that there are no liens,

claims or rights to a lien or judgments filed against the property or

the Apartment Housing during the time period since the issuance of the

Title Policy referenced above in Section 7.2(a);

(3) an as-built survey adhering to the requirements referenced in

Exhibit "I" attached hereto and incorporated herein and a surveyor's

certification as referenced in Exhibit "I";

(4) the current rent roll evidencing a minimum 90% occupancy by

Qualified Tenants for 90 consecutive days immediately prior to funding

and 100% LIHTC qualified units;

(5) copies of all initial tenant files including executed lease

agreement, completed applications, completed questionnaires or

checklist of income and assets, documentation of third party

verification of income and assets, income certification forms (LIHTC

specific), and any other form or document collected by the Management

Agent, or General Partner, verifying each tenant's eligibility

pursuant to the Minimum Set-Aside Test and other applicable guidelines

under Section 42 of the Code. For purposes of this sub-section only,

the Limited Partner requires receipt of all the tenant documents as

described above, and approval of 10% of the initial tenant files.

Approval of the balance of the tenant files is withheld for a

subsequent Capital Contribution payment;

(6) Completion of Construction;

(7) a construction closeout binder, which shall include, but not

be 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;

(8) any documents previously not provided to the Limited Partner

but required pursuant to this Section 7.2 and Sections 14.3(a) and

(b); and

(9) notwithstanding the above conditions to this Capital

Contribution payment, the Limited Partner's payment will be held in

escrow until a copy of all the signed Mortgage documents have been

received by the Limited Partner.

(e) $36,678 shall be payable upon the Limited Partner's receipt and

approval of the following documents:

(1) a copy of the recorded declaration of restrictive

covenants/extended use agreement entered into between the Partnership

and the State Tax Credit Agency;

(2) an audited construction cost certification that includes an

itemization of development, acquisition, and construction or

rehabilitation costs of the Apartment Housing, the Land Acquisition

Fee, the Syndication Fee and the eligible basis and applicable

percentage of each building of the Apartment Housing;

<PAGE>

(3) the Accountant's final Tax Credit certification in a form

substantially similar to the form attached hereto as Exhibit "E" and

incorporated herein by this reference;

(4) Debt Service Coverage of 1.10 for 90 consecutive days

immediately prior to funding;

(5) a fully signed Internal Revenue Code Form 8609, or any

successor form;

(6) the first year tax return in which Tax Credits are taken by

the Partnership, unless the Tax Credits are deferred until the

following year and such deferral has been approved by the Special

Limited Partner;

(6) the audited Partnership financial statements required by

Section 14.2 for the year the Apartment Housing is placed-in-service;

(7) the Special Limited Partner's approval of the initial tenant

file; and

(8) any documents previously not provided to the Limited Partner

but required

pursuant to this Section 7.2 and Sections 14.3(a) and (b).

(f) The initial tenant files will be reviewed at the Limited Partner's

expense by an independent third-party. In the event that the independent

third-party and the Special Limited Partner recommend corrections to an initial

tenant file, the General Partner will cause the Management Agent to correct the

tenant file and provide the corrected tenant file to the Limited Partner. The

Limited Partner may withhold all or any portion of a Capital Contribution

payment until it has received all the initial tenant files and the same have

been reviewed, corrected and approved.

Section 7.3 Repurchase of Limited Partner's and Special 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 Apartment Housing to be placed in service within six

months of the Completion Date;

(b) achieve 100% occupancy of the Apartment Housing by Qualified

Tenants by December 1, 2005;

(d) at any time before the Completion Date, prevent a foreclosure,

abandonment, or restriction to construct the Apartment Housing;

<PAGE>

(e) replace a withdrawn Mortgage Loan commitment with a comparable

commitment acceptable to the Special Limited Partner within a reasonable period

of time;

(f) 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; or

(g) obtain a carryover allocation, within the meaning of Section 42 of

the Code, from the State Tax Credit Agency on or before the due date.

Section 7.4 Adjustment of Capital Contributions.

(a) The amounts of the Limited Partner's and the Special Limited

Partner's Capital Contributions were determined in part upon the amount of Tax

Credits that were expected to be available to the Partnership at a cost of

78.00% for each dollar of Tax Credit received, and were based on the assumption

that the Partnership would be eligible to claim, in the aggregate, the Projected

Tax Credits. 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, or by the tax certification required in accordance

with Section 7.2, provided to the Limited Partner and Special Limited Partner

are less than 99.99% of $940,545 then the new Projected Tax Credit amount, if

applicable, shall be referred to as the "Revised Projected Tax Credits." The

Limited Partner's and Special Limited Partner's Capital Contribution provided

for in Section 7.2 shall be equal to 78.00% times the Projected Tax Credit, or

the Revised Projected Tax Credits, if applicable, anticipated to be allocated to

the Limited Partner and Special Limited Partner. If any Capital Contribution

adjustment referenced in this Section 7.4(a) is a reduction which is greater

than the remaining Capital Contribution to be paid by the 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 to the Partner whose Capital Contribution is being

adjusted. The amount paid by the General Partner pursuant to this Section will

be deemed to be a Capital Contribution by the General Partner. Notwithstanding

anything to the contrary in this Agreement, the General Partner's Capital

Contribution required to be paid by this Section shall be disbursed to the

Limited Partner as a return of capital. If the Capital Contribution adjustment

referenced in this Section 7.4(a) is an increase then the Partner whose Capital

Contribution is being adjusted shall have ninety days from the date the Limited

Partner and Special Limited Partner have received notice from the General

Partner to pay the increase.

(b) The General Partner is required to use its best efforts to rent

100% of the Apartment Housing's apartment units to Qualified Tenants throughout

the Compliance Period. If at the end of any calendar year during the first five

calendar years following the year in which the Apartment Housing is placed in

service, the Actual Tax Credit for the applicable fiscal year or portion thereof

is or will be less than the Projected Annual Tax Credit, or the Projected Annual

Tax Credit as modified by Section 7.4(a) of this Agreement if applicable (the

"Annual Credit Shortfall"), then the next Capital Contribution owed by the

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. If the Annual Credit Shortfall is greater than the Limited Partner's

remaining Capital Contributions then the General Partner shall pay to the

Limited Partner the excess of the Annual Credit Shortfall over the remaining

Capital Contributions. The General Partner shall have sixty days to pay the

<PAGE>

Annual Credit Shortfall from the date the General Partner receives notice from

the Special Limited Partner. The provisions of this Section 7.4(b) shall apply

equally to the Special Limited Partner in proportion to its Capital Contribution

and anticipated annual Tax Credit. The amount paid by the General Partner

pursuant to this Section will be deemed to be a Capital Contribution by the

General Partner. Notwithstanding anything to the contrary in this Agreement, the

General Partner's Capital Contribution required by this Section shall be

disbursed to the Limited Partner as a return of capital.

Partner will receive Projected Annual Tax Credits of $0 in 2005 and $94,045 in

2006. In the event the 2005 or 2006 Actual Tax Credits are less than projected

then the Limited Partner's Capital Contribution shall be reduced by an amount

equal to 78.00% times the difference between the Projected Annual Tax Credits

for 2005 or 2006 and the Actual Tax Credits for 2005 or 2006. If the 2005 or

2006 Actual Tax Credits are less than projected then the Special Limited

Partner's Capital Contribution shall be reduced following the same equation

referenced in the preceding sentence. If, at the time of determination thereof,

the Capital Contribution adjustment referenced in this Section 7.4(c) is greater

than the balance of the Limited Partner's or Special Limited Partner's Capital

Contribution payment which is then due, if any, then the excess amount shall be

paid by the General Partner to the Limited Partner and/or the Special Limited

Partner within sixty days of the General Partner receiving notice of the

reduction from the Limited Partner and/or the Special Limited Partner. The

amount paid by the General Partner pursuant to this Section will be deemed to be

a Capital Contribution by the General Partner. Notwithstanding anything to the

contrary in this Agreement, the General Partner's Capital Contribution required

by this Section shall be disbursed to the Limited Partner as a return of

capital.

(d) The Partners recognize and acknowledge that the Limited Partner and

the Special Limited Partner are making their Capital Contribution, in part, on

the expectation that the Projected Tax Credits are allocated to the Partners

over the Tax Credit Period. If the Projected Tax Credits are not allocated to

the Partners during the Tax Credit Period then the Limited Partner's and Special

Limited Partner's Capital Contribution shall be reduced by an amount agreed upon

by the Partners, in good faith, to provide the Limited Partner and the Special

Limited Partner with their anticipated internal rate of return. In calculating

the internal rate of return, the Limited Partner and Special Limited Partner

acknowledge that the aggregate amount, and annual flow, of Tax Credits carries

more weight in the calculation than the increase in losses earned by the

Partnership.

(e) 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 or an adjustment to Schedule K-1 or a loss of future Tax

Credits; (2) a filing of a tax return by the Partnership evidencing a

disposition of the Apartment Housing prior to the expiration of the Compliance

Period causing a recapture of Tax Credits previously allocated to the Limited

Partner, or an adjustment to Schedule K-1, or a loss of future Tax Credits; (3)

a reduction in the qualified basis or eligible basis of the Apartment Housing

for income tax purposes following an examination or review by the Internal

Revenue Service ("IRS"), whether by settlement, mutual agreement or IRS

decision, resulting in a recapture or reduction of Tax Credits previously

claimed or an adjustment to Schedule K-1; (4) a decision by any court or

administrative body upholding an assessment of deficiency against the

Partnership with respect to any Tax Credit previously claimed or tax losses

previously claimed, in connection with the Apartment Housing, unless the

Partnership shall timely appeal such decision and the collection of such

<PAGE>

assessment shall be stayed pending the disposition of such appeal; or (5) 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 60 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) the cumulative tax

effect of a decrease in loss allocated to the Limited Partner and Special

Limited Partner by the Partnership; (C) any interest and penalties imposed on

the Limited Partner or Special Limited Partner with respect to such recapture;

(D) the cumulative increase of taxable income allocated to the Limited Partner

and Special Limited Partner by the Partnership; (E) an amount equal to the

product of the Tax Credit pricing percentage referenced in Section 7.4(a) and

future Tax Credits unable to be taken due to one of the above actions; and (F)

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), (B), (C) and (D). The amount paid by the General Partner pursuant to this

Section will be deemed to be a Capital Contribution by the General Partner.

Notwithstanding anything to the contrary in this Agreement, the General

Partner's Capital Contribution required by this Section shall be disbursed to

the Limited Partner as a return of Capital.

(f) The increase in the Capital Contribution of the Limited Partner and

the Special Limited Partner pursuant to Section 7.4(a) shall be subject to the

Limited Partner and Special Limited Partner having funds available to pay any

such increase at the time of its notification of such increase. For these

purposes, any funds theretofore previously earmarked by the Limited Partner or

Special Limited Partner to make other investments, or to be held as required

reserves, shall not be considered available for payment hereunder.

Section 7.5 Return of Capital Contribution.

From time to time the Partnership may have cash in excess of the amount

required for the conduct of the affairs of the Partnership, and the General

Partner may, with the Consent of the Special Limited Partner, determine that

such cash should, in whole or in part, be returned to the Partners, pro rata, in

reduction of their Capital Contribution. No such return shall be made unless all

liabilities of the Partnership (except those to Partners on account of amounts

credited to them pursuant to this Agreement) have been paid or there remain

assets of the Partnership sufficient, in the sole discretion of the General

Partner, to pay such liabilities.

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.

<PAGE>

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, or provide a

letter of credit, in an amount required by the RD, to be used for initial

operating capital as permitted or required by applicable RD regulations. Said

amount shall be reimbursed, without interest, out of Apartment Housing funds as

shall be authorized in accordance with applicable RD regulations, and if not so

reimbursed within five years of the deposit, any amount remaining unreimbursed

shall be forgiven and shall constitute an ordinary and necessary business

expense of the General Partner as part consideration for the payment of the

Development Fee.

Section 8.2 Reserve for Replacements.

The Partnership shall fund, establish and maintain a reserve account in

an amount required by the RD Loan Agreement which funds shall be used in

accordance with RD Regulation 7 CFR Part 1930-C, or any successor thereof, as

evidenced by the RD Loan Agreement.

Section 8.3 Tax and Insurance Account.

The General Partner, on behalf of the Partnership, shall open 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

an amount equal to 1/12th of the annual required amount. Notwithstanding the

foregoing, as part of its obligation to achieve Break-even Operations, the

General Partner shall cause the Partnership to prefund the T & I Account in an

amount equal to one year's property insurance premium and the next full

installment of real estate taxes based on improved land. The T & I Account shall

require the joint signature of the Special Limited Partner for any withdrawals.

Any balance remaining in the account at the time of a sale of the Apartment

Housing shall be allocated and distributed equally between the General Partner

and the Limited Partner. The Partnership is required to pay real estate taxes on

January 31st of each year.

Section 8.4 Operating Deficit Account.

The General Partner, on behalf of the Partnership, shall establish an

Operating Deficit Account on or before the Apartment Housing maintains

Break-even Operations for three consecutive months and shall deposit thereinto

an amount equal to one month's mandatory debt service payment and one month's

operating expenses. The funds in the Operating Deficit Account shall be used to

pay operating expenses excluding repair and maintenance items. The Operating

Deficit Account shall require the joint signature of the General Partner and the

Special Limited Partner for any withdrawals. The Operating Deficit Account shall

terminate upon conclusion of the Operating Deficit Guarantee Period. Upon

<PAGE>

termination of the Operating Deficit Guarantee Period, any remaining funds be

distributed by the Partnership to the Developer in partial satisfaction of the

Development Fee.

Section 8.5 Other Reserves.

The General Partner, on behalf of the Partnership, may 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 applicable RD regulations; 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 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. If there is

more than one General Partner, all acts, decisions or consents of the General

Partners shall require the concurrence of all of the General Partners. If a

General Partner takes action without the authorization of all the General

Partners then such act, decision, etc. shall not be deemed a valid action taken

by the General Partners pursuant to this Agreement. No intentional act by a

General Partner, or a principal of a General Partner, that violates State or

federal law will be deemed to be within the authority of this Agreement and,

therefore, the General Partner will be deemed to have acted in its individual

capacity and not as an agent of the Partnership. 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, 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 $340,402 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

<PAGE>

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 of this Agreement for costs

associated with the development and construction of the Apartment Housing

including, but not limited to, land costs, Land Acquisition Fee, architectural

fees, survey and engineering costs, financing costs, loan fees, Syndication Fee,

building materials and labor. If any Capital Contribution proceeds are remaining

after Completion of Construction and all acquisition, development and

construction costs, excluding the Development Fee, are paid in full, 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.

management fee for the leasing and management of the Apartment Housing 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. If the Management Agent is an Affiliate of the General Partner,

and there is an Operating Deficit following the termination of the Operating

Deficit Guarantee Period or the depletion of the maximum Operating Deficit

amount pursuant to Section 6.3, whichever occurs first, then 40% of the

management fee will be deferred ("Deferred Management Fee"). Deferred Management

Fees, if any, shall be paid to the Management Agent in accordance with Section

11.1 of this Agreement.

(1) The General Partner shall, upon receiving any request of the

Mortgage lender requesting such action, dismiss the Management Agent

as the entity responsible for management of the Apartment Housing

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.

(d) The Partnership shall pay to the Limited Partner an annual Asset

Management Fee commencing in 2006 equal to 15% of the Net Operating Income but

in no event less than $750 ("Minimum Amount") for the Limited Partner's services

in assisting with the preparation of tax returns and the reports required in

Section 14.2 and Section 14.3 of this Agreement. The minimum annual Asset

Management Fee of $750 shall be payable in monthly equal installments; provided,

however, that if in any year Net Operating Income is insufficient to pay the

full $750, 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. The General Partner shall ensure that any accrued

Asset Management Fee will be reflected in the annual audited financial

statement.

(e) The Partnership shall pay to the General Partner through the

Compliance Period an annual Incentive Management Fee equal to 35% commencing in

<PAGE>

2006 for overseeing the marketing, lease-up and continued occupancy of the

Partnership's apartment units, obtaining and monitoring the Mortgage Loan,

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 Apartment Housing 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 General Partner to operate the Partnership efficiently, to maximize

occupancy and to increase the Net Operating Income. The Incentive Management Fee

shall be payable from Net Operating Income in the manner and priority set forth

in 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 Incentive Management

Fee is not paid in any year it shall not accrue for payment in subsequent years.

(f) The Partnership shall pay to the General Partner through the

Compliance Period an annual Tax Credit Compliance Fee equal to 35% of Net

Operating Income commencing in 2006 for the services of the 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 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 General Partner,

in the Partnership's name and on its behalf, may:

(a) 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 within the scope of this Agreement;

(b) 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, except that this Section shall not be interpreted to circumvent the

General Partner's obligation under the Operating Deficit Guarantee;

Partnership's funds in a manner consistent with the provisions of this

Agreement;

(d) execute the Mortgage; and

(e) execute, acknowledge and deliver any and all instruments to

effectuate any of the foregoing.

Section 9.4 Authority Requirements.

<PAGE>

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.

Apartment Housing, no title or right to the possession and control of the

Apartment Housing 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 avoid a

recapture of Tax Credits thereof on the part of the former owners.

(d) Any conveyance or transfer of title to all or any portion of the

Apartment Housing 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 General Partner's Power and Authority.

Notwithstanding the provisions of this Article IX, 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;

(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 except as provided in this

Agreement;

(f) directly or indirectly transfer control of the General Partner;

(g) admit a Person as a Limited Partner or Special Limited Partner

except as provided in this Agreement;

(h) violate any provision of the Mortgage;

<PAGE>

(i) cause the Apartment Housing apartment units to be rented to anyone

other than Qualified Tenants;

(j) violate the Minimum Set-Aside Test or the Rent Restriction Test for

the Apartment Housing;

(k) allow the Insurance to expire;

(l) permit the Apartment Housing to be without utility service;

(m) cause any recapture of the Tax Credits;

(n) 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;

(o) commingle funds of the Partnership with the funds of another

Person;

(p) fail to cause the Partnership to make the Mortgage payment if the

Partnership fails to pay the same when due, subject to available funds,

including funds provided under Section 6.3 or Section 6.4;

(q) fail to cause the Accountant to issue the reports specified in

Section 14.2(a) and (b) of this Agreement;

(r) take any action which requires the Consent of the Special Limited

Partner or the consent of the Limited Partner unless the General Partner has

received said Consent;

(s) allow the Real Estate Taxes to be unpaid if the Partnership fails

to pay the same when due;

(t) pay any real estate commission for the sale or refinancing of the

Apartment Housing;

(u) take any action that would cause termination of the Partnership;

(v) encumber the Apartment Housing, except as provided herein;

(w) execute an assignment for the benefit of creditors; or

(x) permit the Partnership to make any loan to any Person.

Section 9.6 Restrictions on Authority of General Partner.

Without the Consent of the Special Limited Partner the General Partner

shall not:

(a) sell, exchange, lease (except in the normal course of business to

Qualified Tenants) or otherwise dispose of the Apartment Housing;

<PAGE>

(b) incur indebtedness in the name of the Partnership other than the

Mortgage;

of any Partners, their Affiliates, or any third party;

(d) 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;

(e) contract away the fiduciary duty owed to the Limited Partner and

the Special Limited Partner at common law;

(f) take any action which would cause the Apartment Housing to fail to

qualify, or which would cause a termination or discontinuance of the

qualification of the Apartment Housing, 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;

(g) make any expenditure of funds, 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;

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

(i) dissolve the Partnership;

(j) 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);

(k) become personally liable on or in respect of, or guarantee, the

Mortgage or any other indebtedness of the Partnership;

(l) 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;

(m) substitute the Accountant, Construction Inspector, Contractor or

Management Agent, as named herein, or terminate, amend or modify the

Construction Contract or any other Project Document, or grant any material

waiver or consent thereunder;

(n) cause the Partnership to redeem or repurchase all or any portion of

the Interest of a Partner;

(o) cause the Partnership to convert the Apartment Housing to

cooperative or condominium ownership;

<PAGE>

(p) cause or permit the Partnership to make loans to the General

Partner or any Affiliate;

(q) bring or defend, pay, collect, compromise, arbitrate, resort to

legal action or otherwise adjust claims or demands of or against the

Partnership;

(r) 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;

(s) cause any funds to be paid to the General Partner or its Affiliates

for laundry service, cable hook-up, telephone connection, computer access,

satellite connection, compliance monitoring, initial rental set-up fee or

similar service or fee;

(t) on behalf of the Partnership, file or cause to be filed a voluntary

petition in bankruptcy under the Federal Bankruptcy Code, or file or cause to be

filed a petition or answer seeking any reorganization, arrangement, composition,

readjustment, liquidation, dissolution or similar relief under any statute, law

or rule;

(u) settle any audit with the Internal Revenue Service concerning the

adjustment or readjustment of any Partnership tax item, extend any statute of

limitations, or initiate or settle any judicial review or action concerning the

amount or character of any Partnership tax item; or

(v) make, amend or revoke any tax election.

Section 9.7 Duties of General Partner.

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;

(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;

(e) have a fiduciary responsibility to not use or permit another to use

Partnership funds or assets in any manner except for the benefit of the

Partnership;

(f) 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 Apartment Housing to initially qualify, and to continue to qualify, for

LIHTC; (2) issuance of all necessary certificates of occupancy, including all

governmental approvals required to permit occupancy of all of the apartment

<PAGE>

units in the Apartment Housing; (3) compliance with all provisions of the

Project Documents and (4) a reservation and allocation of LIHTC from the State

Tax Credit Agency;

(g) make inspections of the Apartment Housing and assure that the

Apartment Housing is 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;

(h) 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;

(i) pay, before the same becomes due or expires, the Insurance premium

and utilities to the Apartment Housing;

(j) permit, and cause the Management Agent to permit, the Special

Limited Partner and its representatives: (1) to have access to the Apartment

Housing 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;

(k) exercise good faith in all activities relating to the conduct of

the business of the Partnership, including the development, operation and

maintenance of the Apartment Housing, 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;

(l) make any Capital Contributions, advances or loans required to be

made by the General Partner under the terms of this Agreement;

(m) establish and maintain all reserves required to be established and

maintained under the terms of this Agreement;

(n) cause the Partnership to pay, before the same becomes due, the

Mortgage payment, subject to available funds, including funds provided under

Section 6.3 or Section 6.4;

(o) pay, before the same becomes due the Real Estate Taxes;

(p) cause the Management Agent to manage the Apartment Housing in such

a manner that the Apartment Housing will be eligible to receive LIHTC with

respect to 100% of the apartment units in the Apartment Housing. 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 Apartment Housing as required, for at least the duration of

the Compliance Period; (3) to operate the Apartment Housing and cause the

Management Agent to manage the Apartment Housing so as to comply with the

requirements of Section 42 of the Code, as amended, or any successor thereto,

<PAGE>

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 Apartment Housing and cause the Management Agent to manage the

Apartment Housing so as to comply with all other Tax Credit Conditions;

(q) cause the Accountant to issue the information required in

accordance with Sections 14.2(a) and (b);

(r) perform such other acts as may be expressly required of it under

the terms of this Agreement;

(s) maintain on it's staff during construction and rent-up a trained

and experienced project manager who is responsible for the development and

construction of the Improvements, and responsible for obtaining Completion of

Construction. In lieu of this employee, or if the project manager position

remains vacant for twenty-one days, the General Partner shall retain the

services of a construction management firm, which firm shall be pre-approved by

the Special Limited Partner;

(t) maintain the initial tenant files, as may be corrected by the Management

Agent following the third party review, in a clean, dry, fireproof location for

a minimum period of twenty-one years; and

(u) abide by State law governing the operations of partnerships.

Section 9.8 Obligations to Repair and Rebuild Apartment Housing.

With the approval of any lender, if such approval is required, any

Insurance proceeds received by the Partnership due to fire or other casualty

affecting the Apartment Housing will be utilized to repair and rebuild the

Apartment Housing in satisfaction of the conditions contained in Section

42(j)(4) of the Code and to the extent required by any lender. Any such proceeds

received in respect of such event occurring after the Compliance Period shall be

so utilized or, if permitted by the Project Documents and with the Consent of

the Special Limited Partner, shall be treated as Sale or Refinancing Proceeds.

Section 9.9 Partnership Expenses.

(a) All of the Partnership's expenses shall be billed directly to and

paid by the Partnership unless otherwise provided in this Agreement.

Reimbursements to the General Partner or any of its Affiliates, by the

Partnership shall be allowed as provided herein. The General Partner shall not

be reimbursed if the General Partner is obligated to pay the same as an

Operating Deficit during the Operating Deficit Guarantee Period, or by operation

of law in accordance with the State limited partnership act as amended, or in

accordance with this Agreement, or subject to the limitations on the

reimbursement of such expenses set forth herein in which case the General

Partner shall be responsible for payment of the expense. For purposes of this

Section, 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

<PAGE>

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 cost of the goods or services must be no greater and preferably less than

the cost of the same goods or services from non-Affiliated vendors, contractors,

or managers in the market area, 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 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. For the purposes of this Section 9.9(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 9.10 General Partner Expenses.

The General Partner or Affiliates of the General Partner shall pay all

Partnership expenses which are not permitted to be reimbursed pursuant to

Section 9.9 and all expenses which are unrelated to the business of the

Partnership.

Section 9.11 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 Apartment

Housing. 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.

<PAGE>

Section 9.12 Covenants, Representations and Warranties.

The General Partner covenants, represents and warrants that the

following are presently true, will be true at the time of each Capital

Contribution payment made by the Limited Partner 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.

accordance with all applicable requirements of all appropriate governmental

entities and the Plans and Specifications of the Apartment Housing.

(d) The Apartment Housing is being operated in accordance with

standards and procedures that are prudent and customary for the operation of

properties similar to the Apartment Housing.

(e) No Partner has or will have any personal liability with respect to

or has or will have personally guaranteed the payment of the Mortgage.

(f) The Partnership is in compliance with all construction and use

codes applicable to the Apartment Housing and is not in violation of any zoning,

environmental or similar regulations applicable to the Apartment Housing.

(g) 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 Apartment Housing at the time of first

occupancy and throughout the term of the Partnership.

(h) 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.

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

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

Housing.

(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.

<PAGE>

(l) The General Partner will require the Accountant to depreciate

Partnership items in accordance with Exhibit "G" attached hereto and

incorporated herein by this reference and provide the information required by

Sections 14.2(a) and (b) of this Agreement.

(m) To the best of the 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 Apartment Housing and (2) no aboveground or

underground storage tanks are now or have ever been located on or under the

Apartment Housing. The General Partner will not install or allow to be installed

any aboveground or underground storage tanks on the Apartment Housing. The

General Partner covenants that the Apartment Housing shall be kept free of

Hazardous Substance and shall not be used to generate, manufacture, refine,

transport, treat, store, handle, dispose of, transfer, produce or process

Hazardous Substance, except in connection with the normal maintenance and

operation of any portion of the Apartment Housing. 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

Substance and shall keep, or cause to be kept, the Apartment Housing 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 Apartment

Housing, any Improvements constructed on the Apartment Housing, 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 Apartment Housing.

(n) The General Partner has not executed and will not execute any

agreements with provisions contradictory to, or in opposition of, 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

Apartment Housing other than those which are created or permitted by the Project

Documents or Mortgage or are noted or excepted in the Title Policy.

(q) The Partnership shall retain the Construction Inspector and ensure

that the Architect of Record's responsibilities include, but are not limited to,

preparing and overseeing the construction close-out procedures upon completion;

inspecting for and overseeing resolution of the Contractor's final punch list

items; receiving and approving operation and maintenance manuals; collecting,

reviewing, approving and forwarding to the Partnership all warranties, check key

count and key schedules; and confirming turnover of spare parts and materials.

(r) The buildings on the Apartment Housing 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 Apartment Housing

will satisfy the Minimum Set-Aside Test.

<PAGE>

(s) 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 governmental or lending authority.

(t) The General Partner has not lent or otherwise advanced any funds to

the Partnership other than its Capital Contribution, or Operating Deficit Loan,

if applicable, and the Partnership has no unsatisfied obligation to make any

payments of any kind to the General Partner or any Affiliate thereof.

(u) No event has occurred which constitutes a default under any of the

Project Documents.

(v) No event has occurred which has caused, and the General Partner has

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 the action

causing the Limited Partner to be liable for the Partnership obligations is

undertaken by the Limited Partner.

(w) 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 Apartment

Housing, has occurred the continuing effect of which has: (1) materially or

adversely affected the operation of the Partnership or the Apartment Housing;

(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 Apartment Housing; 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 Apartment Housing only insofar

as they or any of them are part of the general public.

(x) Neither the Partnership 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.

(y) Upon signing of the mortgage Loan and receipt of the mortgage

lender's written start order, the General Partner will cause rehabilitation of

the Improvements to commence and thereafter will cause the Contractor to

diligently proceed with rehabilitation of the Improvements according to the

Plans and Specifications so that the Improvements can be completed by the

Completion Date.

(aa) The General Partner has contacted the local tax assessor, or

similar representative, and has determined that the Real Estate Taxes are

accurate and correct, and that the Partnership will not be required to pay any

<PAGE>

more for real estate taxes, or property taxes, than the amount of Real Estate

Taxes, referenced in this Agreement, except for annual increases imposed on all

real estate within the same county as the Apartment Housing. In the event the

real estate taxes, or property taxes, are actually greater than the Real Estate

Taxes specified in this Agreement and as a result of the higher real estate tax,

or property tax, the Debt Service Coverage falls below 1.10 then the General

Partner will contribute additional capital to lower the principal of the

mortgage and reamortize the Mortgage so that the Debt Service Coverage is at a

sustainable 1.10 as approved by the Special Limited Partner. If the Mortgage

lender will not, or cannot, reamortize the loan as specified in this Section,

and the General Partner cannot obtain another mortgage, then the General Partner

will contribute additional capital as determined by the Special Limited Partner

to the T & I Account in an amount equal to the annual difference between the

actual real estate tax, or property tax, over the Real Estate Taxes specified in

this Agreement times the number of years remaining on the 15-year LIHTC

compliance term. Any payment by the General Partner pursuant to this section

shall be in addition to the General Partner's obligation to fund Operating

Deficits.

(bb) The Partnership will maintain a Debt Service Coverage of not less

than 1.10 and will not close on a permanent loan or refinance a Mortgage loan if

the Debt Service Coverage would fall below 1.10.

(cc) The General Partner will ensure that the Architect of Record will

have a policy of professional liability insurance in an amount not less than one

million dollars, which policy should remain in force for a period of at least

two years after the closing and funding of the Mortgage.

(dd) The General Partner and the Guarantor have and shall maintain an

aggregate net worth equal to at least $1,000,000 computed in accordance with

generally accepted accounting principles.

(ee) The Partnership is in compliance with and will maintain compliance

with the requirements of the federal Fair Housing Act of 1968 (42 U.S.C. 3600 et

seq.) as amended, with respect to the Apartment Housing.

(ff) Neither the General Partner nor its Affiliates will take any

action or agree to any terms or conditions that are contrary to, or in

disagreement with, the tax credit application used to secure the LIHTC, or the

land use restriction agreement required to be recorded against the Apartment

Housing.

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

9.12.

<PAGE>

Section 9.13 Indemnification of the Partnership and the Limited Partners

The General Partner will indemnify and hold the Partnership and the

Limited Partners harmless from and against any and all losses, damages and

liabilities (including reasonable attorney's fees) which the Partnership or any

Limited Partner may incur by reason of the past, present, or future actions or

omissions of the General Partner or any of its Affiliates that constitute gross

negligence or willful misconduct, fraud, malfeasance, breach of fiduciary duty

or breach of any material provision of this Agreement that has a material

adverse effect on the Apartment Housing, the Partnership, or any Limited

Partner.

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, 0.01% to the Special Limited Partner and 0.01% to the

General Partner. In determining the Income, Loss or Tax Credits, the special

allocation provisions of Section 10.3 shall not be taken into account.

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; and

(2) the balance, if any, of such Income shall be allocated to the

Partners in the proportion necessary so that the Partners will receive

the amount to which they are entitled pursuant to Section 11.2 hereof.

(b) Losses shall be allocated 99.98% to the Limited Partner, 0.01% to

the Special Limited Partner and 0.01% to the General Partner.

(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 0.01% of each

item includable in the calculation of Income or Loss not arising from a Sale or

<PAGE>

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 0.01%, respectively, of the items of Income

and Apartment Housing 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 0.01%, respectively, of the

items of Income not arising from a Sale or Refinancing and 99.98% and 0.01%,

respectively, of the Apartment Housing 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

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