BFC GUARANTY CORP, S-4/A, 1997-02-24

BFC GUARANTY CORP
S-4/A, 1997-02-24
ASSET-BACKED SECURITIES

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As filed with the Securities and Exchange Commission on February 24, 1997
REGISTRATION NO. 333-17969
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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

BFC GUARANTY CORP.
(Exact name of Registrant as specified in its charter)

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DELAWARE 6748 52-1994622
(State of (Primary Standard Industrial (I.R.S. Employer
Incorporation) Classification Code Number) Identification Number)

BFC GUARANTY CORP.
1455 PENNSYLVANIA AVENUE, SUITE 230
WASHINGTON, DC 20004

(202) 639-0512
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

ROGER BAILEY
BFC GUARANTY CORP.
1455 PENNSYLVANIA AVENUE, SUITE 230
WASHINGTON, DC 20004

(202) 639-0512
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

COPY TO:

THOMAS J. MANCUSO, ESQ.
BROWNSTEIN HYATT FARBER & STRICKLAND, P.C.
410 SEVENTEENTH STREET, 22ND FLOOR
DENVER, CO 80202
(303) 534-6335

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are being offered
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: / /

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
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CROSS-REFERENCE SHEET

PURSUANT TO ITEM 501(b) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM S-4

REGISTRATION STATEMENT
ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
- -------------------------------------------- ---------------------------------

1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus . . . . . . . . Outside Front Cover Page

2. Inside Front and Outside
Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . Inside Front Cover Page;
Outside Back Cover Page

3. Risk Factors, Ratio of
Earnings to Fixed Charges
and Other Information. . . . . . . . . . Prospectus Summary; Risk
Factors; Selected Historical
Financial Data

4. Terms of the Transaction . . . . . . . . Outside Front Cover Page;
Prospectus Summary; The
Exchange Offer; Description of
Exchange Bonds

5. Pro Forma Financial
Information. . . . . . . . . . . . . . . Pro Forma Financial Data

6. Material Contracts with the
Company Being Acquired . . . . . . . . . Inapplicable

7. Additional Information
Required for Reoffering by
Persons and Parties Deemed
to be Underwriters . . . . . . . . . . . Inapplicable

8. Interests of Named Experts
and Counsel. . . . . . . . . . . . . . . Legal Matters; Independent
Auditors

9. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities . . . . . Inapplicable

10. Information with Respect to
S-3 Registrants. . . . . . . . . . . . . Inapplicable

11. Incorporation of Certain
Information by Reference . . . . . . . . Inapplicable

12. Information with Respect to
S-2 or S-3 Registrants . . . . . . . . . Inapplicable

13. Incorporation of Certain
Information by Reference . . . . . . . . Inapplicable

14. Information with Respect to
Registrants other than S-2
or S-3 Registrants . . . . . . . . . . . Outside Front Cover Page;
Prospectus Summary; Risk
Factors; Use of Proceeds;
Capitalization; Selected
Historical Financial Data;
Management's Discussion and
Analysis of Financial Condition
and Results of Operations; The
Project; The Authority; The
Districts; Credit Enhancement;
Management; Security Ownership;
Certain Transactions

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15. Information with Respect to
S-3 Companies. . . . . . . . . . . . . . Inapplicable

16. Information with Respect to
S-2 or S-3 Companies . . . . . . . . . . Inapplicable

17. Information with Respect to
Companies Other than S-2 or
S-3 Companies. . . . . . . . . . . . . . Inapplicable

18. Information if Proxies,
Consents or Authorizations
are to be Solicited. . . . . . . . . . . Inapplicable

19. Information if Proxies,
Consents or Authorizations
are not to be Solicited or
in an Exchange Offer . . . . . . . . . . Management; Security Ownership;
Certain Transactions

<PAGE>

EXPLANATORY NOTE

The legend along the left side of the front cover of the Prospectus will be
printed in red on the final version of the Prospectus.

<PAGE>

SUBJECT TO COMPLETION, DATED DECEMBER __, 1996

PROSPECTUS
__________, 1997

GUARANTEE OF $66,975,000
CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY
PUBLIC FACILITIES REVENUE BONDS, SERIES 1996B
BY BFC GUARANTY CORP.

OFFER TO EXCHANGE GUARANTEED PUBLIC FACILITIES REVENUE BONDS, SERIES 1996 B
FOR ANY AND ALL OUTSTANDING GUARANTEED PUBLIC FACILITIES REVENUE BONDS,
SERIES 1996

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_______________, 1997 UNLESS EXTENDED

Castle Rock Ranch Public Improvements Authority, a Colorado nonprofit
corporation (the "Authority"), hereby offers (the "Exchange Offer"), upon the
terms and conditions set forth in this Prospectus (the "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
$5,000 principal amount of its Public Facilities Revenue Bonds, Series 1996 B
(the "Exchange Bonds"), which will have been registered under the Securities Act
of 1933, as amended (the "Securities Act") pursuant to a Registration Statement
of which this prospectus is a part, for each $5,000 principal amount of its
outstanding Public Facilities Revenue Bonds, Series 1996 (the "Bonds"), of which
$66,975,000 principal amount is outstanding. The Bonds are, and the Exchange
Bonds will be, guaranteed (the "Credit Enhancement") by BFC Guaranty Corp. (the
"Credit Enhancement Provider") as described herein. The form and terms of the
Exchange Bonds are the same as the form and term of the Bonds (which they
replace) except that the Exchange Bonds will bear a Series B designation and,
because the Credit Enhancement will have been registered under the Securities
Act, the Exchange Bonds will not bear legends restricting their transfer and
will not contain certain provisions relating to an increase in the interest rate
which were included in the terms of the Bonds in certain circumstances relating
to the timing of the Exchange Offer. The Exchange Bonds will evidence the same
debt as the Bonds (which they replace) and will be issued under and be entitled
to the benefits of the Indenture (the "Indenture") dated as of March 1, 1996
between the Authority and SouthTrust Bank of Alabama, National Association (the
"Trustee") governing the Bonds. See "The Exchange Offer" and "Description of
Exchange Bonds."

The Authority has not issued, and has no current plans to issue, any other
indebtedness. The Exchange Bonds will be limited obligations of the Authority
payable solely from the funds held under the Indenture, Revenues (as defined
herein) of the Authority and payments under the Credit Enhancement. The
Authority has executed a Deed of Trust (as defined herein) to provide security
to the Trustee for the benefit of the bondholders and to provide security to the
Credit Enhancement Provider with regard to amounts payable by the Credit
Enhancement Provider, including amounts payable pursuant to a Reimbursement
Agreement dated as of March 1, 1996 (the "Reimbursement Agreement") between the
Authority and the Credit Enhancement Provider.

SEE "RISK FACTORS" BEGINNING ON PAGE 9 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR BONDS IN THE
EXCHANGE OFFER.

The Authority itself has no taxing power. The Authority is acting as an
instrumentality of Dawson Ridge Metropolitan District No. 5 (the "District").
On November 7, 1995, the voters of the District and certain related improvement
districts (the "Related Districts") approved the execution and delivery of an
Operating Agreement and an Intergovernmental Agreement obligating the Related
Districts to provide funds to the District for payment to the Authority to the
extent that revenues from the Project (as defined herein) are insufficient to
fund debt service on the Bonds and operating expenses of the Project, such funds
to be derived from a mill levy that is subject to certain limitations, including
a 35-mill limitation on taxable property within the District and the Related
Districts (collectively, the "Districts"). The Operating Agreement and the
Intergovernmental Agreement will not become effective until one of two
conditions (hereinafter discussed) for imposition of the mill levy are
satisfied. In order to provide an alternate source of revenue, the Authority
has entered into a Development Agreement dated as of March 1, 1996, with Douglas
County Development Corporation, the owner of approximately 75% of the taxable
property in the Districts, providing for a payment in lieu of taxes by Douglas
County Development Corporation and all subsequent owners of the property owned
by Douglas County Development Corporation in the Districts. Neither the
principal of the Bonds, nor the interest accruing thereon, shall ever constitute
a general indebtedness of the Authority, the District or the Related Districts
or an indebtedness of the State of Colorado or any political subdivision thereof
within the meaning of any constitutional or statutory provision whatsoever or
shall ever constitute or give rise to a pecuniary liability of the State of
Colorado or any political subdivision thereof or a charge against the general
credit or taxing power of the State of Colorado or any political subdivision
thereof, nor will the Bonds be, or be deemed

<PAGE>

to be, an obligation of the State of Colorado or any political subdivision
thereof. The taxing power of the District and the Related Districts is
limited.

The Authority will accept for exchange any and all Bonds validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on __________________,
1997, unless extended by the Authority in its reasonable discretion (the
"Expiration Date"). Notwithstanding the foregoing, the Authority will not
extend the Expiration Date beyond , 1997. Tenders of Bonds may be
withdrawn at any time prior to 5:00 p.m. on the Expiration Date. The Exchange
Offer is subject to certain customary conditions. The Bonds were sold by the
Authority on March 27, 1996 in a transaction not registered under the Securities
Act in reliance upon exemptions under the Securities Act. Because of the
exemption from registration relied upon for the issuance of the Credit
Enhancement, the Bonds may not be reoffered, resold or otherwise transferred in
the United States unless the Credit Enhancement is registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Bonds are being
offered hereunder in order to satisfy the obligations of the Authority and the
Credit Enhancement Provider under the Registration Rights Agreement (as defined
herein) entered into by the Authority in connection with the offering of the
Bonds. See "The Exchange Offer."

Based on no-action letters issued by the staff of the Securities and
Exchange Commission to third parties, the Authority believes the Exchange Bonds
issued pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by any holder thereof (other than any such holder that is
an "affiliate" of the Authority or the Credit Enhancement Provider within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Bonds are acquired in the ordinary course of such holders'
business and such holder has no arrangement or understanding with any person to
participate in the distribution of such Exchange Bonds. See "The Exchange
Offer--Purpose and Effect of the Exchange Offer" and "The Exchange Offer--Resale
of the Exchange Bonds." Each broker-dealer (a "Participating Broker-Dealer")
that receives Exchange Bonds for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Bonds. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of Exchange Bonds received in exchange for Bonds where such Bonds were acquired
by such Participating Broker-Dealer as a result of market-making activities or
other trading activities. The Authority has agreed that, for a period of 180
days after the Expiration Date, it will make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."

Holders of Bonds not tendered and accepted in the Exchange Offer will
continue to hold such Bonds and will be entitled to all the rights and benefits
and will be subject to the limitations applicable thereto under the Indenture
and with respect to transfer under the Securities Act. The Authority will pay
all the expenses incurred by it incident to the Exchange Offer. See "The
Exchange Offer."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

There has not previously been any public market for the Bonds or the
Exchange Bonds. The Authority does not intend to list the Exchange Bonds on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Exchange Bonds will develop. See "Risk Factors--Lack of Public Market."
Moreover, to the extent that Bonds are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Bonds could
be adversely affected.

The Exchange Bonds will be available only in book-entry form. The
Authority expects that the Exchange Bonds issued pursuant to this Exchange Offer
will be issued in the form of a Global Certificate (as defined herein), which
will be deposited with, or on behalf of, The Depository Trust Company and
registered in the name of Cede & Co., its nominee. Beneficial interests in the
Global Certificate representing the Exchange Bonds will be shown on, and
transfers thereof to qualified institutional buyers will be effected through,
records maintained by The Depository Trust Company and its participants. After
the initial issuance of the Global Certificate, Exchange Bonds in certificated
form will be issued in exchange for the Global Certificate only on the terms set
forth in the Indenture. See "Description of Exchange Bonds--Book-Entry;
Delivery and Form."

<PAGE>

AVAILABLE INFORMATION

The Credit Enhancement Provider has filed with the Securities and Exchange
Commission a Registration Statement on Form S-4 (the "Exchange Offer
Registration Statement," which term shall encompass all amendments, exhibits,
annexes and schedules thereto) pursuant to the Securities Act, and the rules and
regulations promulgated thereunder, covering the Credit Enhancement of the
Exchange Bonds being offered hereby. This Prospectus does not contain all the
information set forth in the Exchange Offer Registration Statement. For further
information with respect to the Authority, the Exchange Offer and the Credit
Enhancement and Credit Enhancement Provider, reference is made to the Exchange
Offer Registration Statement. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Exchange Offer Registration Statement,
including the exhibits thereto, can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, at the Regional Offices of the Commission
at 7 World Trade Center, Suite 1300, New York, New York 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, DC
20549, at prescribed rates. The Commission also maintains a Web site that
contains reports, proxy and information statements and other materials that are
filed through the Commission's Electronic Data Gathering, Analysis and Retrieval
system. This Web site can be accessed at http://www.sec.gov.

At a result of the filing of the Exchange Offer Registration Statement with
the Securities and Exchange Commission, the Credit Enhancement Provider will
become subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, and in accordance therewith will be required to file
periodic reports and other information with the Securities and Exchange
Commission. The obligation of the Credit Enhancement Provider to file periodic
reports and other information with the Securities and Exchange Commission will
be suspended if the Exchange Bonds are held of record by fewer than 300 holders
as of the beginning of any fiscal year of the Credit Enhancement Provider other
than the fiscal year in which the Exchange Offer Registration Statement is
declared effective. The Credit Enhancement Provider will nevertheless be
required to continue to file reports with the Securities and Exchange Commission
if the Exchange Bonds are listed on a national securities exchange, although the
Authority does not intend to list the Exchange Bonds on any securities exchange.
In addition and in the event the Credit Enhancement Provider ceases to be
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, in order to satisfy the requirements of Rule 15c2-12 of the
Securities Exchange Act of 1934, as amended, the Authority, the Credit
Enhancement Provider, the Districts and the Trustee have entered into a
Continuing Disclosure Agreement for the benefit of owners of the Bonds.
Pursuant to such agreement, the Authority, the Credit Enhancement Provider and
the Districts have covenanted to provide to each nationally recognized municipal
securities information repository and to the Colorado state information
depository, if and when established, certain annual financial information and
operating data, including audited financial statements, within 210 days
following the end of each of their fiscal years. The Authority, the Credit
Enhancement Provider and each District have covenanted to provide notice in a
timely manner to each nationally recognized municipal securities information
repository or to the Municipal Securities Rulemaking Board and to the Colorado
state information depository of its failure to provide the required annual
financial information on or before the date specified in the Continuing
Disclosure Agreement.

<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL DATA, INCLUDING
THE FINANCIAL STATEMENTS, ELSEWHERE IN THIS PROSPECTUS.

THE AUTHORITY AND THE CREDIT ENHANCEMENT PROVIDER

The Authority is a nonprofit corporation created as an instrumentality of
the District for the purpose of acquiring from Douglas County Development
Corporation, an affiliate of The Franklin L. Haney Company, of an approximately
876 acre portion of the Dawson Ridge development in the Town of Castle Rock,
Colorado (the "Real Estate"), and for the acquisition from Douglas County
Development Corporation of an estimated 900 acre feet of water rights in the
Arapahoe, Laramie-Fox Hills, Denver and lower Dawson aquifers (collectively with
the Real Estate, the "Property") for $54,550,000. It is anticipated that the
Authority will construct a 36-hole golf course on the Real Estate, to be
operated as a municipal golf course, although none of the necessary governmental
approvals or permits have been obtained. Consequently, no assurances can be
given that the contemplated golf course will be ultimately constructed. See
"The Project" and "The Authority."

The Credit Enhancement Provider is a newly-formed Delaware corporation
formed for the purpose of providing the Credit Enhancement. The Credit
Enhancement Provider has executed a Collateralized Credit Enhancement Agreement
to provide for the due, prompt and complete payment of the Bonds. As
collateral, the Credit Enhancement Provider has pledged and delivered to the
Trustee $67,075,000 Series B REMIC Bonds. See "Credit Enhancement."

The Authority's address is 4582 South Ulster Street, Suite 902, Denver,
Colorado 80237, and its telephone number is (303) 770-4760.

The Credit Enhancement Provider's address is 1455 Pennsylvania Avenue,
Suite 230, Washington, DC 20004, and its telephone number is (202) 639-0512.

THE PROJECT

The proceeds of the Bonds will be used for the acquisition from Douglas
County Development Corporation, an affiliate of The Franklin L. Haney Company,
of the Property. The purchase price for this acquisition ($54,550,000) was not
determined in an arm's length negotiation, but rather is the appraised fair
market value determined by THK Associates, Inc., independent appraisers, in
their February 26, 1996 appraisal. It is anticipated that the Authority will
construct a 36-hole golf course on the Real Estate, to be operated by the
Authority as a municipal golf course. No assurances, however, can be given that
the contemplated golf course will be ultimately constructed. The Bonds will be
used solely for real estate and water rights acquisitions (and payment of cost
of issuance, including the payment of fees and expenses of the Credit
Enhancement Provider in connection with providing the Credit Enhancement).
Following the completion of construction documentation and the issuance of all
the necessary government permits and approvals, the Authority intends to issue
one or more subsequent series of bonds in order to finance the design,
construction and completion of golf course and recreational facility
improvements and equipment, and for roadway construction (all such acquisition
and construction constituting the "Project").

The construction and completion of the golf course and other recreational
facility improvements is currently estimated to cost $5,150,000. The Authority
also expects to incur approximately $25,000,000 of additional costs to complete
nonrevenue producing infrastructure, including roadways, which will be
transferred to the District on completion. Under the terms of the Indenture,
any additional bonds issued by the Authority will be issued on a subordinate
basis. There can be no assurance that the Authority will be able to issue any
additional bonds or issue them in amounts needed to finance construction of the
golf course and other recreational facility improvements and non-revenue
producing infrastructure.

On November 7, 1995, the voters of the District and the Related Districts
approved the execution and delivery of an Operating Agreement and an
Intergovernmental Agreement obligating the Related Districts to provide funds to
the District for payment to the Authority to the extent that revenues from the
Project are insufficient to fund debt service on the Bonds and operating
expenses of the Project, such funds to be derived from a mill levy that is
subject to certain limitations, including a 35-mill limitation on taxable
property within the Districts. The Operating Agreement and the
Intergovernmental Agreement will not become effective until one of two
conditions (discussed in "SECURITY AND SOURCE OF PAYMENT") for imposition of the
mill levy are satisfied. In order to provide an alternate source of revenue,
the Authority has entered into a Development Agreement dated as of March 1,
1996, with Douglas County Development Corporation, the owner of approximately
75% of the taxable property in the Districts, providing for a payment in lieu of
taxes by Douglas County Development Corporation and all subsequent owners of the
property owned by Douglas County Development Corporation in the Districts. See
"DEFINITIONS OF CERTAIN TERMS AND

<PAGE>

SUMMARIES OF PRINCIPAL DOCUMENTS" herein for a more complete description of
the Operating Agreement, the Intergovernmental Agreement and the Development
Agreement.

Development of the Project will require that the Town of Castle Rock
approve amendments to each of the Districts service plans, as discussed in "THE
DISTRICTS--Service Plan" and "--Town of Castle Rock Agreements." At the present
time, the Town of Castle Rock is not accepting any applications for service plan
amendments until it finalizes new policies regarding the use and powers of
special districts located within its jurisdiction. These new policies are
expected to be in place in the spring of 1997. Once the new policies are in
effect, the Districts will submit their applications for service plan amendments
to the Town of Castle Rock. Such amendments to the Districts' service plans may
also be a condition to the effectiveness of the Operating Agreement and the
Intergovernmental Agreement, as described in "SECURITY AND SOURCE OF PAYMENT."
There can be no assurance that the Town of Castle Rock will approve the
amendments to the Districts' service plans. In addition, undertaking completion
of the Project will require various governmental permits and approvals
(including revisions of the previously approved Planned Unit Development ("PUD")
for the Dawson Ridge development). While the Districts and the Authority have
commenced initial conversations with Town of Castle Rock staff on the nature and
extent of such requirements, no formal PUD amendments will be submitted to the
Town of Castle Rock or the Town of Castle Rock Zoning Commission until the Town
of Castle Rock has approved the amendments to the Districts' service plans.
Even if the service plan amendments are approved by the Town of Castle Rock, no
assurance can be given that the requisite approvals for actual development of
the Project will be forthcoming or that they will be obtained in a timely
fashion.

In the event that the design and construction of the golf course and
recreational facility improvements and equipment within the Project are not
completed, there will be no revenues from the operation of those facilities
available for payment of principal and interest on the Bonds, although the
Credit Enhancement will continue to be available for that purpose. If the golf
course and recreational facilities are built, but the residential development of
Dawson Ridge is not completed as planned, then the amount of mill levy revenues
collected by the Districts together with the net revenues from operation could
be insufficient to make full payment of principal and interest on the Bonds,
although the Credit Enhancement will continue to be available for that purpose
(exclusive of Extra Payments). In either such event, the Credit Enhancement
Provider might foreclose on the Project and convert it into a non-public
facility. Such a change in use could adversely affect the exclusion of interest
on the Bonds from gross income for federal income tax purposes. Consequently,
the Deed of Trust requires that, before the Credit Enhancement Provider can
foreclose on the Project, it must obtain an opinion of Special Tax Counsel
acceptable to the Trustee that such foreclosure will not adversely affect the
exclusion of interest on the Bonds from gross income for federal income tax
purposes. In addition, the Deed of Trust will be terminated as to the
Bondholders if the Credit Enhancement Provider forecloses on it because of a
default by the Authority under the Reimbursement Agreement.

At the present time there exist no material contracts with respect to the
development of the Project. With respect to the planned golf course, the
Authority previously engaged Global Golf Course Design, Inc. for the preparation
of a detailed design and construction package based on a review of Real Estate
suitability, creation of a detailed golf course design, and overview of on-site
construction requirements. Contracts for final design of the golf course
between the Authority and Global Golf Course Design, Inc. are anticipated to be
executed once the service plan amendments are approved by the Town of Castle
Rock.

2
<PAGE>

THE OFFERING

Securities The Bonds were sold by the Authority on March 29, 1996 to
Offered Lehmann Brothers Inc., acting as placement agent, pursuant
to a Purchase Agreement dated March 26, 1996 (the "Purchase
Agreement"). Lehmann Brothers Inc. subsequently resold the
Bonds to qualified institutional buyers pursuant to Rule
144A under the Securities Act and to institutional
accredited investors that agreed to comply with certain
transfer restrictions and other conditions. The Authority
is a public instrumentality of the State of Colorado. As a
result, the offer and sale of the Bonds and the Exchange
Bonds is exempt from the registration requirements of the
Securities Act pursuant to Section 3(a)(2) of the Securities
Act. However, the Credit Enhancement Provider is not a
public instrumentality and the Credit Enhancement is not so
exempt.

The Exchange $5,000 principal amount of the Exchange Bonds in exchange
Offer for each $5,000 principal amount of Bonds. As of the date
hereof, $66,975,000 aggregate principal amount of Bonds are
outstanding. The Authority will issue the Exchange Bonds to
holders on or promptly after the Expiration Date.

Based on an interpretation by the staff of the
Securities and Exchange Commission set forth in no
action letters issued to third parties, the Authority
and the Credit Enhancement Provider believe that
Exchange Bonds issued pursuant to the Exchange Offer
in exchange for Bonds may be offered for resale,
resold and otherwise transferred by any holder thereof
(other than any such holder which is an "affiliate" of
the Authority or the Credit Enhancement Provider
within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act,
provided that such Exchange Bonds are acquired in the
ordinary course of such holder's business and that
such holder does not intend to participate and has no
arrangement or understanding with any person to
participate in the distribution of such Exchange Bonds.

Each Participating Broker-Dealer that receives
Exchange Bonds for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Bonds. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning
of the Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with
resales of Exchange Bonds received in exchange for
Bonds where such Bonds were acquired by such
Participating Broker-Dealer as a result of
market-making activities or other trading activities.
The Authority has agreed that, for a period of 180
days after the Expiration Date, it will make this
Prospectus available to any Participating
Broker-Dealer for use in connection with any such
resale. See "Plan of Distribution."

Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the Exchange Bonds
could not rely on the position of the staff of the
Securities and Exchange Commission enunciated in
no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and
prospectus delivery

3
<PAGE>

requirements of the Securities Act in connection with
any resale transaction. Failure to comply with such
requirements in such instance may result in such
holder incurring liability under the Securities Act
for which the holder is not indemnified by the
Authority.

Expiration Date 5:00 p.m., New York City time, on _________________, 1997
unless the Exchange Offer is extended, in which case the
term "Expiration Date" means the latest date and time to
which the Exchange Offer is extended.

Accrued Interest Each Exchange Bond will bear interest from its
on the Exchange issuance date. Holders of Bonds that are accepted
Bonds and the for exchange will receive, in cash, accrued
Bonds interest thereon to, but not including, the
issuance date of the Exchange Bonds. Such
interest will be paid with the first interest
payment on the Exchange Bonds. Interest on the
Bonds accepted for exchange will cease to accrue
upon issuance of the Exchange Bonds.

Conditions The Exchange Offer is subject to certain customary
conditions, which must be satisfied or waived by the
Authority and the Credit Enhancement Provider prior
to the Expiration Date. See "The Exchange
Offer-Conditions."

Procedures for Each holder of Bonds wishing to accept the
Tendering Bonds Exchange Offer must complete, sign and date
the accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein,
and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
the Bonds and any other required
documentation to the Exchange Agent (as
defined) at the address set forth herein. By
executing the Letter of Transmittal, each
holder will represent to the Authority and
the Credit Enhancement Provider that, among
other things, the Exchange Bonds acquired
pursuant to the Exchange Offer are being
obtained in the ordinary course of business
of the person receiving such Exchange Bonds,
whether or not such person is the holder,
that neither the holder nor any such other
person has any arrangement or understanding
with any person to participate in the
distribution of such Exchange Bonds and that
neither the holder nor any such other person
is an "affiliate," as defined under Rule 405
of the Securities Act, of the Authority and
the Credit Enhancement Provider. See "The
Exchange Offer-Purpose and Effect of the
Exchange Offer" and "-Procedures for
Tendering."

Untendered Bonds Following the consummation of the Exchange Offer, holders of
Bonds eligible to participate but who do not tender their
Bonds will not have any further exchange rights and such
Bonds will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for such
Bonds could be adversely affected.

Consequences of Because of the Credit Enhancement, the Bonds that are not
Failure to Exchange exchanged pursuant to the Exchange Offer will remain
restricted securities. Accordingly, such Bonds may be
resold only (1) to the Authority, (ii) pursuant to Rule 144A
or Rule 144 under the Securities Act or pursuant to some
other exemption under the Securities Act, (iii) outside the
United States to a foreign person

<PAGE>

pursuant to the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective
registration statement under the Securities Act. See
"The Exchange Offer-Consequences of Failure to
Exchange."

Special Procedures Any beneficial owner whose Bonds are registered in the
for Beneficial name of a broker, dealer, commercial bank, trust
Owners company or other nominee and who wishes to tender
should contact such registered holder promptly and
instruct such registered holder to tender on such
beneficial owner's behalf. If such beneficial owner
wishes to tender on such owner's own behalf, such
owner must, prior to completing and executing the
Letter of Transmittal and delivering its Bonds, either
make appropriate arrangements to register ownership of
the Bonds in such owner's name or obtain a properly
completed bond power from the registered holder. The
transfer of registered ownership may take considerable
time. The Authority will keep the Exchange Offer open
for not less than twenty business days in order to
provide for the transfer of registered ownership.

Guaranteed Holders of Bonds who wish to tender their
Delivery Bonds and whose Bonds are not immediately
Procedures available or who cannot deliver their Bonds,
the Letter of Transmittal or any other
documents required by the Letter of
Transmittal to the Exchange Agent (or comply
with the procedures for book-entry transfer)
prior to the Expiration Date must tender
their Bonds according to the guaranteed
delivery procedures set forth in "The
Exchange Offer Guaranteed Delivery
Procedures."

Use of Proceeds There will be no cash proceeds to the Authority from the
exchange pursuant to the Exchange Offer.

Withdrawal Rights Tenders may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.

Acceptance of The Authority will accept for exchange any and all
Bonds and Delivery Bonds which are properly tendered in the Exchange
of Exchange Bonds Offer prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Bonds issued pursuant
to the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer-Terms of the Exchange Offer."

Exchange Agent SouthTrust Bank of Alabama, National Association, 100
Office Park Drive, Lower Level, Birmingham, Alabama
35223, attention Judy Miller, telephone number (205)
254-5000, fax (205) 254-4180.

Registration Pursuant to the Purchase Agreement, the Authority,
Rights Agreement the Credit Enhancement Provider and Lehmann
Brothers Inc. entered into a Registration Rights
Agreement dated as of March 1, 1996 (the
"Registration Rights Agreement"), which grants the
holder of the Bonds certain exchange and
registration rights. The Exchange Offer is
intended to satisfy such exchange rights which
terminate upon the consummation of the Exchange
Offer.

Tax Consequences Brownstein Hyatt Farber & Strickland, P.C., special counsel
to the Authority, has advised the Authority that in its
opinion, the exchange of the Bonds for Exchange Bonds
pursuant to the Exchange Offer will not be treated as an
"exchange" for federal income tax purposes because the
Exchange Bonds will not be

5
<PAGE>

considered to differ materially in kind or extent from
the Bonds. Rather, the Exchange Bonds received by a
holder will be treated as a continuation of the Bonds
in the hands of such holder. As a result, there will
be no federal income tax consequences to holders
exchanging Bonds for Exchange Bonds pursuant to the
Exchange Offer.

6
<PAGE>

THE EXCHANGE BONDS

General The form and terms of the Exchange Bonds are the same
as the form and terms of the Bonds (which they
replace) except that (i) the Exchange Bonds bear a
Series B designation, (ii) the Credit Enhancement for
the Exchange Bonds has been registered under the
Securities Act and, therefore, the Exchange Bonds will
not bear legends restricting the transfer thereof, and
(iii) the holders of Exchange Bonds will not be
entitled to certain rights under the Registration
Rights Agreement, including the provisions providing
for an increase in the interest rate on the Bonds in
certain circumstances relating to the timing of the
Exchange Offer, which rights will terminate when the
Exchange Offer is consummated. See "The Exchange
Offer-Purpose and Effect of the Exchange Offer." The
Exchange Bonds will evidence the same debt as the
Bonds and will be entitled to the benefits of the
Indenture. See "Description of Exchange Bonds. The
Bonds and the Exchange Bonds are referred to herein
collectively as the "Securities."

Securities Offered $66,975,000 aggregate principal amount of Public Facilities
Revenue Bonds, Series 1996 B.

Maturity Schedule MATURITY DATE COUPON REOFFERING
and Interest Rate (DECEMBER 1) PAR AMOUNT RATE YIELD
------------- ---------- ------ ----------
1999 $1,980,000 5.75% 4.75%
2000 2,095,000 5.75 4.95
2001 2,215,000 5.75 5.15
2002 2,340,000 5.75 5.30
2003 2,475,000 5.90 5.40
2004 2,620,000 6.00 5.50
2005 2,780,000 6.10 5.60
2006 2,950,000 5.70 5.70
2007 3,115,000 6.30 5.80
2008 3,310,000 6.40 5.90
2009 3,525,000 6.50 6.00

$7,750,000 6.375% Term Bonds due December 1, 2011 at 6.15%

$29,820,000 6.25% Term Bonds due December 1, 2017 at 6.35%

Interest Payment
Dates June 1 and December 1, commencing December 1, 1996.

Optional The Exchange Bonds are not subject to redemption at the
Redemption option of the Authority.

Extraordinary The Exchange Bonds are subject to
Mandatory extraordinary mandatory redemption in whole
Redemption at a redemption price of 100% of the
principal amount thereof plus accrued
interest to the date fixed for redemption
from proceeds of prepayment of the
Collateral. In the event that the Series B
REMIC Bonds (as defined herein under "CREDIT
ENHANCEMENT") are prepaid in full while the
Exchange Bonds are outstanding, the proceeds
of such prepayment will be used to redeem the
Exchange Bonds. The Acquisition and
Construction Notes (as defined herein under
"CREDIT ENHANCEMENT") permit optional
prepayments in full to be made on and after
December 1, 2015. Under the trust indenture
for the

<PAGE>

Series B REMIC Bonds, prepayments of
the Acquisition and Construction Notes
requires prepayment of the Series B REMIC
Bonds. See "CREDIT ENHANCEMENT."

Credit The Exchange Bonds will be guaranteed by the Credit
Enhancement Enhancement Provider. The Exchange Bonds are limited
obligations of the Authority, secured by a Deed of Trust
interest in the Property. See "DEFINITIONS OF CERTAIN TERMS
AND SUMMARIES OF PRINCIPAL DOCUMENTS--THE DEED OF TRUST."

Collateral The Collateral consists of $67,075,000 in principal
amount of BFC Finance Corp. REMIC Lease-Backed Bonds,
Series 1996, Federal Lease-Backed Bonds, Class B,
which will effectively be payable from certain
payments to be made by the U.S. Government under a
lease for space in a building in the District of
Columbia.

SELECTED FINANCIAL DATA-BFC GUARANTY CORP.

The income statement data set forth below for the period from March 29, 1996
to October 31, 1996 and the balance sheet data at October 31, 1996 have been
derived from the audited financial statements of BFC Guaranty Corp.

Period from March 29, 1996
to October 31, 1996

INCOME STATEMENT DATA:

Revenues $334,143
Provision for Income Taxes 113,609
Net Income 220,534

Weighted Average Common Shares
Outstanding 1,500

Primary and Fully Diluted Earnings per
Common Share $147.02

BALANCE SHEET DATA:

Cash 1,000
Debt Securities (1) --
Advances to Parent Company $4,018,500
Total Assets 554,882
Stockholders Equity 221,534

(1) Debt securities consist of $67,075,000 par value Series B REMIC leased
backed bonds owned by the company, but held in trust until March 1, 1998,
at which time they will be issued to the company at no cost. The bonds are
considered held-to-maturity and are valued at cost as prescribed by
Statement of Financial Accounting Standards Number 115. The bonds serve as
collateral for the Exchange Bonds.

<PAGE>

RISK FACTORS

Prospective investors should carefully consider the following factors IN
addition to the other information set forth in this Prospectus before accepting
the Exchange Offer.

APPROVALS NECESSARY FOR CONSTRUCTION OF THE PROJECT

The Authority intends to construct a 36-hole golf course on the Real
Estate, which will generate revenue that will be used to pay interest and the
principal on the Exchange Bonds. Construction will not commence until the
requisite local government approvals, including approvals of amendments to the
Districts' service plans, are granted. See "THE PROJECT" herein for a further
discussion of the necessary governmental approvals for construction of the
Project. No assurance can be given that the necessary approvals will be
forthcoming, or that such construction will be successful or completed on a
timely basis. If the golf course is not completed, revenues from the Project
may be insufficient to fund debt service on the Bonds and operating expenses of
the Project, in which case payments of such amounts would be dependent on the
Credit Enhancement (in the case of debt service payments on the Bonds), the
Operating Agreement, the Intergovernmental Agreement and the Development
Agreement. See "THE PROJECT--Necessary Approvals."

COMPETITIVE CONDITIONS

Although the Property is situated in one of the fastest growing counties in
the country, Douglas County, Colorado, there are a number of existing planned
unit developments in the immediate vicinity of the Property which will compete
with the Property if it is ever developed. In addition to such competing
developments, many more planned unit developments exist in the greater Denver
metropolitan area.

ADDITIONAL BONDS

The Authority has the power to issue additional bonds which are subordinate
in right of payment to the Exchange Bonds.

LACK OF PUBLIC MARKET

The Bonds are currently owned by a relatively small number of beneficial
owners. Prior to the Exchange Offer, there has not been any public market for
the Bonds. The Bonds and the Credit Enhancement have not been registered under
the Securities Act and will be subject to restrictions on transferability to the
extent that they are not exchanges for New Securities by holders who are
entitled to participate in this Exchange Offer. The Authority does not intend
to list the Exchange Bonds on any national securities exchange or to seek the
admission thereof to trading in the National Association of Securities Dealers
Automated Quotation System. Lehmann Brothers Inc. has advised the Authority
that they currently intend to make a market in the Exchange Bonds, but they are
not obligated to do so and may discontinue such market making at any time. In
addition, such market making activity will be subject to the limited imposed by
the Securities Act and the Securities Exchange Act of 1934, as amended, and may
be limited during the Exchange Offer (as defined herein) and the pendency of the
Shelf Registration Statement. Accordingly, no assurance can be given that an
active public or other market will develop for the New Securities or as to the
liquidity of the trading market for the Exchange Bonds. If a trading market
does not develop or is not maintained, holders of the Exchange Bonds may
experience difficulty in reselling the Exchange Bonds or may be unable to sell
them at all. If a market for the Exchange Bonds develops, any such market may
be discontinued at any time.

If a public trading market develops for the Exchange Bonds, future trading
prices for such securities will depend on many factors, including, among other
things, prevailing interest rates, the Authority's result of operations and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Authority, or the Credit Enhancement Provider the Exchange
Bonds may trade at a discount from their principal amount.

Issuance of the Exchange Bonds in exchange for the Bonds pursuant to the
Exchange Offer will be made only after a timely receipt by the Authority of such
Bonds, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of the Bonds desiring to tender
such Bonds in exchange for Exchange Bonds should allow sufficient time to ensure
timely delivery. The Authority is under no duty to give notification of defects
or irregularities with respect to the tenders of Bonds for exchange. Bonds that
are not tendered or are tendered but not accepted will, following the
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof, and upon consummation of the Exchange Offer
certain registration rights under the Registration Rights Agreement will
terminate. In addition, any holder of Bonds who tenders in the Exchange Offer
for a purpose of participating in a distribution of the Exchange Bonds may be
deemed to have received restricted securities and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives Exchange Bonds for its own account

<PAGE>

in exchange for Bonds, where such Bonds were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale
of such New Securities. See "Plan of Distribution." To the extent that
Bonds are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Bonds could be adversely affected.
See "The Exchange Offer."

TAXATION

The treatment of interest on the Exchange Bonds, as described herein under
"TAX EXEMPTION" assumes the accuracy of the certifications of the Authority, and
continuing compliance by the Authority with the requirements of the Internal
Revenue Code of 1986, as amended (the "Code"). If such certifications are not
accurate, or if the Authority fails to continue to comply with the Code
requirements, the treatment of interest on the Exchange Bonds could be adversely
affected as described below. Furthermore, ownership of the Bonds may result in
collateral federal income tax consequences to certain taxpayers, including,
without limitation, financial institutions, property and casualty insurance
companies, individual recipients of Social Security or Railroad Retirement
benefits, certain S corporations with "excess net passive income" and taxpayers
who may be deemed to have incurred or continued indebtedness to purchase or
carry the Exchange Bonds. Special Tax Counsel has expressed no opinion as to
such collateral tax consequences. Purchasers of the Bonds should consult their
own tax advisors as to collateral federal income tax consequences.

The Code sets forth certain requirements which must be met subsequent to
the issuance and delivery of the Bonds for interest thereon to remain excludable
from the gross income of the owners of the Bonds for federal income tax
purposes, including investment restrictions, periodic payments of arbitrage
profits to the United States, requirements regarding the proper use of bond
proceeds and the facilities financed therewith and certain other matters. The
Authority has covenanted to comply with such requirements. Noncompliance with
such requirements could cause the interest on the Bonds to be includable in the
gross income of the owners of the Bonds for federal income tax purposes,
retroactive to the date of issue of the Bonds.

PREPAYMENT

In addition to the mandatory sinking fund provisions of the Exchange Bonds,
the Exchange Bonds are subject to mandatory prepayment in full in the
circumstances described under "DESCRIPTION OF EXCHANGE BONDS--Redemption
Provisions."

USE OF PROCEEDS

This Exchange Offer is intended to satisfy certain of the Authority's
obligations under the Purchase Agreement and the Registration Rights Agreement.
The Authority will not receive any cash proceeds from the issuance of the
Exchange Bonds offered hereby. In consideration for issuing the Exchange Bonds
contemplated in this Prospectus, the Authority will receive Bonds in like
principal amount, the form and terms of which are the same as the form and terms
of the Exchange Bonds (which they replace), except as otherwise described
herein. The Bonds surrendered in exchange for Exchange Bonds will be retired
and canceled and cannot be reissued. Accordingly, issuance of the Exchange
Bonds will not result in any increase or decrease in the indebtedness of the
Authority.

The net proceeds from the Bonds in the initial offering were used (1) to
acquire the Property, (2) to pay capitalized interest, and (3) to pay certain
costs of issue the Bonds. The following table shows the estimated sources and
uses of funds from the offering of the Bonds:

SOURCES:
Proceeds of Bonds (1) $67,760,621.05
Accrued Interest 321,393.53
--------------
TOTAL SOURCES OF FUNDS $68,082,014.58

USES:
Project Fund Deposit $54,550,000.00
Debt Service Fund Deposit (2) 7,729,585.70
Costs and Expenses of Issuance (3) 5,802,428.88
--------------
TOTAL USES OF FUNDS $68,082,014.58

__________________
(1) Includes premium of $785,621.05.
(2) Represents capitalized interest to March 1, 1998 and accrued interest.
(3) Includes underwriter's discount, legal fees, initial, first and second
annual Trustee fee, rating fee, credit enhancement fee, printing and
miscellaneous expenses.

10
<PAGE>

CAPITALIZATION

The following table sets forth the historical capitalization of the
Credit Enhancement Provider at September 30, 1996. This table should be read
in conjunction with the Selected Historical Financial Data included elsewhere
in this Prospectus.

As of
September 30,
1996

STOCKHOLDER'S EQUITY:

Common Stock, no $1,000
par value, 1,500
shares authorized
and issued

RETAINED EARNINGS
190,480
--------

Total Stockholder's $191,480
Equity and --------
Capitalization --------

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following should be read IN conjunction with the Financial Statements
and notes thereto included elsewhere IN this Prospectus.

MARCH 29, 1996 THROUGH DECEMBER 31, 1996.

The Credit Enhancement Provider is a special purpose entity formed solely
to provide credit enhancement for the Bonds. In connection with the issuance of
the Bonds, the Authority paid $4,018,500 to the Credit Enhancement Provider as a
commitment fee. The Credit Enhancement Provider advanced this fee to its
parent, the Building Finance Company of Tennessee. The Credit Enhancement
Provider has no other operations.

The Authority received $67,760,621 in net proceeds from the issuance of the
Bonds, $54,550,000 was used to acquire land and water rights from the Douglas
County Development Corporation. The Authority has no other operations.

12
<PAGE>

THE PROJECT

GENERAL

The proceeds of the Bonds will be used for the acquisition from Douglas
County Development Corporation, an affiliate of The Franklin L. Haney
Company, of the Property. Douglas County Development Corporation is owned
entirely by Franklin L. Haney. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS" herein. The purchase price for this acquisition ($54,550,000)
was not determined in an arm's length negotiation, but rather is the
appraised fair market value determined by THK Associates, Inc., independent
appraisers, in their February 26, 1996 appraisal. It is anticipated that the
Authority will construct a 36-hole golf course on the Real Estate, to be
operated by the Authority as a municipal golf course. No assurances,
however, can be given that the contemplated golf course will be ultimately
constructed. The Authority has covenanted in the Reimbursement Agreement to
take all reasonable efforts and diligently proceed to complete the
Recreational Facilities, including the golf course. It is expected that
certain roadways will also be constructed on the Real Estate. In addition,
it is expected that tennis and other recreational facilities will be built at
a central golf course club house facility, which facilities will be open to
the public. The Bonds will be used solely for real estate and water rights
acquisitions (and payment of cost of issuance, including the payment of fees
and expenses of the Credit Enhancement Provider in connection with providing
the Credit Enhancement). Following the completion of construction
documentation and the issuance of all the necessary government permits and
approvals, the Authority intends to issue one or more subsequent series of
bonds in order to finance the design, construction and completion of golf
course and recreational facility improvements and equipment, and for roadway
construction (all such acquisition and construction constituting the
"Project").

THE APPRAISAL REPORT

THK Associates, Inc. was engaged by C. Roger Addlesperger, a director of
the Authority, to conduct an appraisal of the Property for the purpose of
establishing the fair market value. The investigation included a comprehensive
market analysis, examination of lot and parcel sales, review of development
costs, derivation of a discount rate, inquiry of water rights values, and
physical inspection of the site and surrounding area.

THK Associates, Inc., conducted a "Highest and Best Use Analysis" which is
the reasonably probable and legal use of vacant land or an improved property,
which is physically possible, appropriately supported, financially feasible, and
that results in the highest value. It was determined by THK Associates, Inc.
that there are no physical limitations, legal restrictions, or economic
limitations, and that the proposed and zoned uses offer the greatest potential
return to the Property. The highest and best use recommendation by THK
Associates, Inc. is for mixed use, residential, office, industrial, retail and
related uses. A discounted cash flow/subdivision approach was utilized as a
method of valuation, based upon the highest and best use being for current
development and the partial improvement of the site. The valuation of the
Property was determined to be $52,300,000, with excess water rights totalling
$2,250,000 for a combined value of $54,550,000. The appraisal report issued by
THK Associates, Inc, is subject to a number of assumptions and limiting
conditions, each of which are set forth in the appraisal. A copy of the
appraisal is available from the Exchange Agent.

THK Associates, Inc. was selected by the Authority to conduct the appraisal
analysis because of its nationally recognized expertise in golf course
feasibility and valuation. THK Associates, Inc. has prepared over 300 studies
for various types of golf courses and golf course real estate developments
across the country. For the period from January 1, 1993 through December 31,
1996, THK Associates, Inc. was paid $41,838 for its professional services
relating to the appraisal of the Property and feasibility study and land
development assistance with respect to the Project. During such time, THK
Associates, Inc has also performed other valuation and consulting services for
affiliates of the Registrant and has been paid $53,854 for such services.

GOLF COURSE DESIGN WORK

The Authority engaged Global Golf Course Design, Inc. to produce a detailed
design and construction package based on a review of Real Estate suitability,
creation of a detailed golf course design, and overview of on-site construction
requirements. Global Golf Design, Inc. was founded by James J. Engh. Mr. Engh
has been involved with golf course design and construction since 1981. Global
Golf Design, Inc.'s current project list includes 13 golf courses located
primarily in the western United States although some are in Thailand and China.
Other golf courses designed by Mr. Engh and presently open include facilities in
Thailand, Austria, Italy, France, Germany, England, Ireland and Belgium.

ESTIMATED COSTS TO COMPLETE THE PROJECT

The construction and completion of the golf course and other recreational
facility improvements currently estimated to cost $5,150,000. The Authority
also expects to incur approximately $25,000,000 of additional costs to complete
nonrevenue producing infrastructure, including roadways, which will be
transferred to the District on completion. Under the terms of the

<PAGE>

Indenture, any additional bonds issued by the Authority will be issued on a
subordinate basis. There can be no assurance that the Authority will be able
to issue any additional bonds or issue them in amounts needed to finance
construction of the golf course and other recreational facility improvements
and non-revenue producing infrastructure.

NECESSARY APPROVALS

Development of the Project will require that the Town of Castle Rock
approve amendments to each of the Districts service plans, as discussed in "THE
DISTRICTS--Service Plan" and"--Town of Castle Rock Agreements." At the present
time, the Town of Castle Rock is not accepting any applications for service plan
amendments until it finalizes new policies regarding the use and powers of
special districts located within its jurisdiction. These new policies are
expected to be in place in the spring of 1997. Once the new policies are in
effect, the Districts will submit their applications for service plan amendments
to the Town of Castle Rock. Such amendments to the Districts' service plans may
also be a condition to the effectiveness of the Operating Agreement and the
Intergovernmental Agreement, as described in "SECURITY AND SOURCE OF PAYMENT."
There can be no assurance that the Town of Castle Rock will approve the
amendments to the Districts' service plans. In addition, undertaking completion
of the Project will require various governmental permits and approvals
(including revisions of the previously approved Planned Unit Development ("PUD")
for the Dawson Ridge development). While the Districts and the Authority have
commenced initial conversations with Town of Castle Rock staff on the nature and
extent of such requirements, no formal PUD amendments will be submitted to the
Town of Castle Rock or the Town of Castle Rock Zoning Commission until the Town
of Castle Rock has approved the amendments to the Districts' service plans.
Even if the service plan amendments are approved by the Town of Castle Rock, no
assurance can be given that the requisite approvals for actual development of
the Project will be forthcoming or that they will be obtained in a timely
fashion. Once construction has commenced, it is anticipated that completion of
the golf course and other recreational improvements component of the Project
will occur within eighteen months of commencement of construction.

COMPETITIVE CONDITIONS

INSURANCE COVERAGE

The Property is currently covered by $2,000,000 of general liability
insurance. There are no physical improvements located on the Property at the
present time.

LIMITATIONS ON IMPOSITION OF MILL LEVY

On November 7, 1995, the voters of the District and the Related Districts
approved the execution and delivery of an Operating Agreement and an
Intergovernmental Agreement obligating the Related Districts to provide funds to
the District for payment to the Authority to the extent that revenues from the
Project are insufficient to fund debt service on the Bonds and operating
expenses of the Project, such funds to be derived from a mill levy not to exceed
35 mills on all of the taxable property within the Districts. The Operating
Agreement and the Intergovernmental Agreement will not become effective,
however, until one of two conditions (discussed in "SECURITY AND SOURCE OF
PAYMENT") for imposition of the mill levy are satisfied. In order to provide an
alternate source of revenue, the Authority has entered into a Development
Agreement dated as of March 1, 1996, with Douglas County Development
Corporation, the owner of approximately 75% of the taxable property in the
Districts, providing for a payment in lieu of taxes by Douglas County
Development Corporation and all subsequent owners of the property owned by

<PAGE>

Douglas County Development Corporation in the Districts. See "DEFINITIONS OF
CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS" herein for a more complete
description of the Operating Agreement, the Intergovernmental Agreement and the
Development Agreement.

EFFECT OF FORECLOSURE ON THE DEED OF TRUST

The Deed of Trust requires that, before the Credit Enhancement Provider can
foreclose on the Project, it must obtain an opinion of Special Tax Counsel
acceptable to the Trustee that such foreclosure will not adversely affect the
exclusion of interest on the Bonds from gross income for federal income tax
purposes. In addition, the Deed of Trust will be terminated as to the
Bondholders if the Credit Enhancement Provider forecloses on it because of a
default by the Authority under the Reimbursement Agreement. See "DEFINITIONS OF
CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS--THE DEED OF TRUST" herein.

THE AUTHORITY

The Authority was created in 1996 as a nonprofit corporation organized
under the laws of the State of Colorado, intended to be in general compliance
with the requirements of the Internal Revenue Service Revenue Procedure 82-26.
Generally, that revenue procedure provides that the Internal Revenue Service
will ordinarily rule that obligations issued by a nonprofit corporation are
issued on behalf of a governmental unit if the following requirements are met:

I. The corporation must engage in activities that are essentially public
in nature.

II. The corporation must not be organized for profit except to the extent
of retiring indebtedness.

III. The corporate income may not inure to any private person.

IV. The governmental unit must have a beneficial interest in the
corporation while the indebtedness remains outstanding.

V. The governmental unit must obtain full legal title to the property of
the corporation with respect to which the indebtedness was incurred
upon retirement of the indebtedness.

VI. The governmental unit must approve both the nonprofit corporation and
the specific obligations to be issued by the corporation.

The District is a sponsoring governmental unit for purposes of the
requirements of Internal Revenue Service Revenue Procedure 82-26.

As a newly formed organization, the Authority has no other undertakings or
obligations other than with respect to the Bonds and the Project. Franklin L.
Haney and C. Roger Addlesperger are the members of the board of directors of the
Authority. Franklin L. Haney is one of the principals of Douglas County
Development Corporation, the owner of the Real Estate. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."

C. Roger Addlesperger, one of the directors for each of the Districts, has
consulted for the Franklin L. Haney Company and Douglas County Development
Corporation on matters pertaining to the real estate within Dawson Ridge and
other developments in the State of Colorado. In connection with such
consultation, Mr. Addlesperger has received compensation from The Franklin L.
Haney Company, and anticipates having a future relationship with The Franklin L.
Haney Company. Mr. Addlesperger is a Vice President of Douglas County
Development Corporation. Candace Addlesperger, who is also a director of each
of the Districts, is Mr. Addlesperger's wife. Each of the Districts currently
has three directors. See "District Management."

The Articles of Incorporation of the Authority provide that it is organized
and shall be operated exclusively on behalf of and for the benefit and in
furtherance of the purposes of Dawson Ridge Metropolitan District No. 5. The
Articles of Incorporation also provide that all monies realized by the Authority
will be used exclusively for the operation, maintenance and development of
property of the Authority, including payment of obligations of the Authority in
connection therewith, which property shall be used to provide public facilities.
Such property must be located within the District or have a substantial
connection therewith.

In furtherance of those purposes, the Authority has all powers that may now
or hereafter be exercised by a nonprofit corporation organized under the laws of
the State of Colorado.

<PAGE>

Restrictions on the power of the Authority include a requirement that no
part of the net earnings of the Authority will inure to the benefit of any
private person, and no substantial part of the activities of the Authority shall
consist of carrying on propaganda activities or otherwise attempting to
influence legislation. All property of the Authority shall be owned for the
benefit of the District. Upon dissolution of the Authority, all of the
Authority's assets (remaining after payment of or provision for all its
liabilities) shall be paid to the District.

COMPLIANCE WITH REVENUE PROCEDURE 82-26

The following discussion addresses the Authority's compliance with Internal
Revenue Service Procedure 82-26.

I. ACTIVITIES ESSENTIALLY PUBLIC IN NATURE. The Authority is deemed to
be engaged in activities that are essentially public in nature if the activities
and purposes of the Authority are those permitted under the general nonprofit
corporation law of the State of Colorado and the property to be provided by the
Bonds is located within the geographical boundaries of or has a substantial
connection with the District. The Articles of Incorporation provide that the
Authority was organized and is operated exclusively on behalf of and for the
benefit and furtherance of the purposes of the District and the inhabitants
thereof and that the Authority has and may exercise all of the powers conferred
upon nonprofit corporations organized under the laws of Colorado.

II. NOT ORGANIZED FOR PROFIT. The Authority will be deemed not to be
organized for profit except to the extent of retiring indebtedness if the
Authority is organized under the general nonprofit corporation law of the State
of Colorado and the Articles of Incorporation of the Authority provide that the
Authority is one that is not organized for profit. The Authority is organized
under the general nonprofit corporation law of the State of Colorado and the
Articles of Incorporation of the Authority provide that the corporation at all
times shall be one not organized for profit.

III. NO PRIVATE INUREMENT. The income of the Authority will be deemed to
not inure to any private person if the Articles of Incorporation provide that
the Authority's income will not inure to any private person and, in fact, the
Authority's income does not inure to any private person. The Articles of
Incorporation provide that no part of the net earnings or earnings of the
Authority shall inure to, or to the benefit of or be distributable to, any
private person.

IV. BENEFICIAL INTEREST BY GOVERNMENTAL UNIT. The District will be deemed
to have a beneficial interest in the Authority while the Bonds remain
outstanding if the District has the right at any time to obtain unencumbered fee
title and exclusive possession of the property financed by the Bonds, and any
additions to that property, by (1) placing into escrow an amount that will be
sufficient to defease the Bonds, and (2) paying reasonable costs incident to the
defeasance. The District, at any time before it defeases the Bonds, may not
agree or otherwise be obligated to convey any interest in the property to any
person for any period extending beyond or beginning after defeasance of the
Bonds. If the District exercises the right to obtain unencumbered fee title by
defeasing the Bonds, the Authority must, within a reasonable time, cancel all
encumbrances on the property, including leases and management contracts.
Additionally, the District must have an exclusive option to purchase the
property financed by the obligations in the event the Authority defaults in its
payments under the obligations. Pursuant to the terms of the Operating
Agreement, the above requirements will be satisfied. See "DEFINITIONS OF
CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS--THE OPERATING AGREEMENT."

V. GOVERNMENTAL UNIT TO OBTAIN FULL LEGAL TITLE. The requirement that
the District must obtain full legal title to the property of the Authority with
respect to which the Bonds were incurred upon retirement of the Bonds will be
met if (i) the Bonds of the Authority are issued on behalf of no more than one
governmental unit and unencumbered fee title the property will vest solely in
that governmental unit when the Bonds are discharged; (ii) all of the original
proceeds and investment proceeds of the Bonds are used to provide tangible real
or tangible personal property; (3) the District obtains upon discharge of the
Bonds unencumbered fee title and exclusive possession and use of the property
financed by the Bonds; (4) before the Bonds are issued, the District adopts a
resolution stating that it will accept title to the property financed by the
Bonds, including any additions to that property, when the Bonds are discharged;
(5) the indenture or other documents under which the Bonds are used to provide
the property state that any other obligations issued by the Authority either to
make improvements to the property or to refund a prior issue of the Authority's
obligations will be discharged no later than the latest maturity date of the
Bonds, and the maturity date of the Bonds, or any other obligations issued by
the Authority with respect to the property, may not be extended beyond the
latest maturity date of the original obligations; (6) the proceeds of fire or
other casualty insurance policies received in connection with damage to or
destruction of the property financed by the Bonds, including any additions to
the property, will, subject to the claims of the holders of the Bonds, be used
to reconstruct the property, regardless of whether the insurance proceeds are
sufficient to pay for the reconstruction or be remitted to the District; and
(7) a reasonable estimate of the fair market value of the property on the latest
maturity date of the Bonds, regardless of whether the Bonds are callable at an
earlier date, must equal at least 20% of the original cost of the property
financed by the Bonds determined without including in the value any addition to
the property or any increase or decrease for inflation or deflation during the
terms of Bonds, and a reasonable estimate of the remaining useful life of the
property on the latest maturity date of the Bonds must be the longer of one year
or 20% of the originally-estimated useful life of the property financed by the
Bonds.

<PAGE>

The obligations of the Authority are issued only on behalf of the District
and unencumbered fee title to the property financed by the Bonds will vest
solely in the District when the Bonds are discharged. All of the original
proceeds and investment proceeds of the Bonds were used to acquire real
property, including water rights. Assuming continuing compliance with the
requirements set forth in the Operating Agreement, the above requirements will
be satisfied.

VI. DISTRICT APPROVAL OF AUTHORITY AND BONDS. The District must approve
both the Authority and the Bonds to be issued by the Authority. The District
adopted a resolution approving the purposes and activities of the Authority and
the Bonds to be issued by the Authority.

Noncompliance with the requirements of Internal Revenue Service Revenue
Procedure 82-26 could cause the interest on the Bonds to be included in gross
income for Federal and state income tax purposes retroactive to the date of
issuance of the Bonds.

THE DISTRICTS

GENERAL

The Project is located in a proposed development generally referred to as
Dawson Ridge. Since the inception of planning for Dawson Ridge, it has been
proposed that Dawson Ridge be serviced by multiple special districts each
serving a portion of Dawson Ridge. Special districts are political subdivisions
of the State of Colorado and quasi-municipal corporations created pursuant to
Title 32, Colorado Revised Statutes, as amended (the "Act"). The five
contiguous special districts serving Dawson Ridge are referred to as Dawson
Ridge Metropolitan Districts Nos. 1 through 5 (the "Districts"). The purpose of
multiple metropolitan districts is to assure that residential infrastructure is
supported by the benefitted property, and that then-current residents and
taxpayers of an area are not unreasonably burdened by the cost of future
development.

The Districts were organized in 1985 for the purpose of providing certain
water, sewer, street, park and recreation and safety improvements for Dawson
Ridge, which is located entirely within the boundaries of the Town of Castle
Rock.

The Dawson Ridge development contains approximately 1,883 acres of which
approximately 876 acres are being acquired by the Authority with Bond proceeds
for use in the Project.

SERVICE PLAN

The preparation and approval of a service plan is a requirement under
Colorado Statutes for the organization of a special district. The service plans
for each District consisted of a financial survey and preliminary engineering
survey showing how the proposed services were to be provided and financed,
including a description, among other things, of facilities to be constructed.
In the preparation of the service plans, projections were utilized regarding
construction costs, amounts of revenues to each District proposing the service
plan, building rates and other matters. A separate service plan was prepared,
in substantially identical form, with respect to each of the five Districts.
Following preparation of the Districts' service plans, they were submitted to
the Town of Castle Rock and approved by the Town of Castle Rock and by a
majority of the electors within each District. The organization of each
District was then approved by the District Court for Douglas County, Colorado.

Any material departure from a service plan may be enjoined by the District
Court for Douglas County on its own motion or upon motion by the Town of Castle
Rock, residents or property owners of the District or municipalities or special
districts within a radius of three miles of each District. To this extent, the
powers of the Districts may be considered limited by their respective service
plans. The Act permits amendments to existing service plans by a procedure
analogous to that required in the original approval, when required for changes
of a basic essential nature. Such a revision would require the approval of the
Town of Castle Rock. However, no further approval by the District Court is
required after revision approval by the Town of Castle Rock. In connection with
the expected development in the Districts, including development of the Project,
it is contemplated that amendments to the service plan of each District will be
required. No assurance can be given regarding whether any such service plan
amendments will be approved or the timing thereof. See "SECURITY AND SOURCE OF
PAYMENT" and "THE DISTRICTS--Town of Castle Rock Agreements."

ORIGINAL DEVELOPMENT

The primary owner of the property within the geographic boundaries of the
development at the time of the organization of the Districts was Bellamah
Community Development, a New Mexico general partnership. Bellamah Community
Development was an affiliate of and controlled by Public Service Company of New
Mexico.

<PAGE>

In April 1986, District No. 1 issued its general obligation bonds in the
original principal amount of $24,725,000 (the "1986 Bonds"), the payment of
which was secured in part by the pledge of taxes of District No. 1, service
charges and development fees. In connection with the issuance of the 1986
Bonds, Bellamah Community Development entered into a Facilities Development Fee
Agreement (the "Fee Agreement") wherein it agreed to pay fees to District No. 1
in the total amount of $21,431,867 for the right to use facilities of District
No. 1.

Subsequent to the issuance of the 1986 Bonds, utility rate payers in
Albuquerque, New Mexico successfully challenged Public Service Company of New
Mexico's participation in real estate development activities, including those
related to Bellamah Community Development's activities with respect to the
property within the geographic boundaries of the Districts. These utility rate
payers convinced the New Mexico legislature to revoke Public Service Company of
New Mexico's authority to participate in real estate development activities. As
a result, Public Service Company of New Mexico ceased all financial support of
Bellamah Community Development.

In 1988, Bellamah Community Development defaulted on its payment
obligations under the Fee Agreement and District No. 1 initiated foreclosure of
a lien against Bellamah Community Development property arising under the Fee
Agreement. In June 1988, Bellamah Community Development filed a Chapter 11
bankruptcy petition, and District No. 1 sought and received relief from the
bankruptcy court to enable it to attempt to foreclose on Bellamah Community
Development's property. Subsequently, Bellamah Community Development's Chapter
11 proceeding was converted to a Chapter 7 liquidation.

The fees due to District No. 1 under the Fee Agreement were projected to be
the primary source of repayment of the 1986 Bonds until development produced
enough revenues to pay the debt service requirement from reasonable mill levies.
At the time of the Bellamah Community Development bankruptcy, no homes had been
constructed within the geographic boundaries of District No. 1, and, without the
collection of fees anticipated to be derived from Bellamah Community
Development's development, District No. 1 determined that a mill levy of
approximately 10,000 mills would have been necessary to pay 1991 debt service on
the 1986 Bonds, a level the board of directors of District No. 1 believed to be
uncollectible. Accordingly, on September 28, 1990, District No. 1 determined it
was insolvent and filed a Chapter 9 petition in bankruptcy.

Under District No. 1's plan of reorganization, holders of the 1986 Bonds
received (i) the pro rata distribution of the unexpended bond proceeds in the
amount of approximately $9,300,000 (which amounted to approximately $.356 per
dollar of the creditor claims), and (ii) an exchange refunding bond (the "1992
Bonds") for the remaining portion of such claims. The total principal amount of
the 1992 Bonds was $21,054,000 (representing the original principal amount of
the 1986 Bonds, plus accrued interest, less distribution of existing funds).
The 1992 Bonds were additionally secured by a Deed of Trust (the "1992 Deed of
Trust") from District No. 1, with respect to all property which it had obtained
from Bellamah Community Development in satisfaction of the Fee Agreement.

At substantially the same time as the issuance of the 1992 Bonds, Douglas
County Development Corporation, a Colorado corporation related to The Franklin
L. Haney Company, made a tender offer to purchase 1992 Bonds from the holders
thereof for the price of $.15 per dollar of principal amount of the 1986 Bonds
outstanding on the date of the filing of the Chapter 9 proceeding by the
District. A vote accepting or rejecting the plan of reorganization did not
constitute an acceptance or rejection of the offer of Douglas County Development
Corporation to purchase the 1992 Bonds. Douglas County Development Corporation
eventually purchased substantially all the 1992 Bonds, although in some
instances the purchase price paid was in excess of $.15 per dollar.

The 1992 Bonds were issued as limited tax obligations of District No. 1,
payable from a mill levy against property within the District not to exceed 35
mills, plus additional development fees paid by developers of property, plus a
pledge of the proceeds of the sale of the real estate encumbered by the 1992
Deed of Trust.

Subsequent to the bankruptcy of District No. 1, Douglas County Development
Corporation also offered to purchase from District No. 1 all of the property
pledged pursuant to the 1992 Deed of Trust and outstanding utility service taps
which had previously been delivered to Bellamah Community Development, but had
been recovered by the District, under the Fee Agreement. On June 1, 1993,
Douglas County Development Corporation purchased such property and utility
service taps from District No. 1 for a purchase price of $127,847,640. The
proceeds from the sale of the real estate and taps by District No. 1 to Douglas
County Development Corporation were deposited with the trustee for the 1992
Bonds and were applied to defease the 1992 Bonds under the original Indenture of
Trust pursuant to which the 1992 Bonds were issued, and no taxes, fees or other
revenues of District No. 1 will be required to be collected for the 1992 Bonds,
substantially all of which Douglas County Development Corporation has
subsequently sold.

If the amendment to District No. 1's service plan is approved, it will be
obligated to impose a mill levy not to exceed 35 mills upon all of the taxable
property located within District No. 1 pursuant to the terms of the
Intergovernmental Agreement. District No. 1's past bankruptcy will not affect
its obligation to impose the mill levy under the Intergovernmental Agreement.

<PAGE>

DISTRICT MANAGEMENT

Each District is governed by an elected board of directors consisting of
three members. While the Act anticipates a five-member board of directors,
directors must be registered electors of the State of Colorado and they or their
spouse must either own taxable real or personal property within the District or
live within the District. At the present time, Douglas County Development
Corporation owns approximately 75% of the taxable property within the Districts.
Property interests within the Districts are also owned by C. Roger Addlesperger
and Joseph Knopinski. Mr. Knopinski, Mr. Addlesperger and Ms. Candace
Addlesperger are the members of the board of each of the five Districts.

C. Roger Addlesperger, one of the directors for each of the Districts, has
consulted for the Franklin L. Haney Company and Douglas County Development
Corporation on matters pertaining to the real estate within Dawson Ridge and
other developments in the State of Colorado. In connection with such
consultation, Mr. Addlesperger has received compensation from The Franklin L.
Haney Company, and anticipates having a future relationship with The Franklin L.
Haney Company. Mr. Addlesperger is a Vice President of Douglas County
Development Corporation. Candace Addlesperger, who is a director of the
District, is Mr. Addlesperger's wife.

Pursuant to Colorado law, a director must disqualify himself or herself
from voting on any issue in which he or she has a conflict of interest unless he
or she has disclosed such conflict of interest in a certificate filed with the
Colorado Secretary of State and the board of directors at least 72 hours in
advance of any meeting in which such conflicts may arise. Each of the directors
believes that such laws have been complied with fully.

TOWN OF CASTLE ROCK AGREEMENTS

In order to provide for the orderly extension of certain public services of
the Districts, each District and the Town of Castle Rock entered into a separate
Intergovernmental Agreement dated August 15, 1985, as amended. Subsequently, in
connection with the bankruptcy of Bellamah Community Development, the Districts
and the Town of Castle Rock executed a Suspension Agreement pursuant to which it
was agreed that further development of the Districts would require the
submission to the Town of Castle Rock, and approval by the Town of Castle Rock,
of service plan amendments outlining the anticipated development of the
Districts. While the Districts have commenced discussions on revised service
plans with the Town of Castle Rock, the Town of Castle Rock will not formally
consider such amendments to the service plans until it has completed its own
revisions to the Town of Castle Rock's existing policies concerning special
districts located within its jurisdiction. See "THE PROJECT--Necessary
Approvals." No assurance can be given that the Town of Castle Rock will approve
such revisions to the Districts' service plans, and a failure to receive such
approval could interfere with development of each of the Districts, including
construction of the contemplated golf course and construction of residences.

DISTRICT POWERS

The operation and administration of each District are controlled by its
board of directors. The rights, powers, privileges, authority, functions and
duties of the District are established by the laws of the State of Colorado,
particularly the Act. Each District has the power, among other powers, to enter
into contracts and agreements; to sue and be sued, to incur indebtedness and
issue bonds following approval at an election or to refund any bonded
indebtedness of the District at lower interest rates without an election; to fix
rates, tolls or charges for services or facilities furnished by the District; to
adopt and enforce regulations promulgated by the board; to levy and collect
general ad valorem property taxes; to acquire, dispose of and encumber real and
personal property, to have the management, control and supervision of all the
business affairs of the District and the construction, installation, operation
and maintenance of District improvements; and to exercise the powers of eminent
domain for the condemnation of private property for public use.

DISTRICT LIABILITY

In the opinion of the board of directors of each District, the insurance
presently held by each District and public employee bonds coverage, together
with the provisions of the Colorado Governmental Immunity Act, Part 1 of Article
10 of Title 24, Colorado Revised Statutes, as amended (the "Immunity Act") will
provide adequate protection for each District and its board against the majority
of potential liability claims.

The Immunity Act states for political subdivisions of the State of
Colorado, that sovereign immunity acts as a bar to any action against a public
entity, such as any District, but only to the extent and subject to the
conditions provided therein. The Immunity Act generally provides that a
District is immune from liability resulting from claims for injury which lie in
tort or those which could lie in tort, except for specified actions for damages
or injuries resulting from: the operation of a motor vehicle of or on behalf of
the District; the operation of any public hospital, correctional facility or
jail; a dangerous condition of any public building of the District; a dangerous
condition caused by the District which interferes with the movement of traffic
on any public highway,

<PAGE>

road, street or sidewalk; a dangerous condition of any public facility of the
District; and the operation and maintenance of water and sanitation
facilities. The Immunity Act establishes a limitation on judgments for the
above-described activities such that the maximum allowed for one person is
$150,000, and for an injury to two or more persons, the maximum allowed is
$150,000 per person or $600,000, whichever is less. The Immunity Act also
provides that in the event the District is unable to pay a settlement or
judgment due to a lack of available funds, the District shall certify a
general ad valorem tax to discharge such settlement or judgment. In no case
shall such tax exceed a total of ten mills per year of assessment for all
outstanding settlements or judgments. For injuries occurring prior to July
1, 1986, sovereign immunity is deemed to be waived to the extent that the
District's insurance covers such injury. With regard to injuries occurring
on and after such date, a District may, by resolution, increase any maximum
amount that may be recovered from the District for the type of injury
described in the resolution. However, no District has adopted a resolution
to increase such maximum amounts. A District may not be held liable either
directly or by indemnification for punitive or exemplary damages.

A District may not be able to claim governmental immunity and, therefore,
may be subject to certain civil liabilities premised upon certain causes of
action founded in various federal laws. This could occur, for example, in suits
filed pursuant to 42 U.S.C. Section 1983 alleging the deprivation of the civil
rights of an individual, or suits alleging anti-competitive practices and
violation of the anti-trust laws by the District in the exercise of its
delegated powers. However, the Immunity Act provides that it applies to any
action against a public entity or public employee in any court of this state
having jurisdiction over any claim brought pursuant to any federal law, if such
action lies in tort or could lie in tort.

BUDGETARY PROCESS

Each District is subject to the Local Government Budget Law of Colorado,
part 1 of article 1 of title 29, Colorado Revised Statutes, as amended. Under
this statute, the District's budget is required to be adopted before
certification of a mill levy for the forthcoming calendar year. The budget is
required to set forth all proposed expenditures for the administration,
operation, maintenance and debt service of the District, including all
expenditures for capital projects to be undertaken or executed in the fiscal
year. The budget must show the actual figures for the prior fiscal year,
estimated figures projected through the end of the current fiscal year,
including disclosure of all beginning and ending fund balances, and the
anticipated expenditures for the ensuing year. In addition, it must set forth
the anticipated revenues and other means of financing the proposed expenditures
for the ensuing year. After the proposed budget is prepared, a notice must be
published indicating that the budget is open for public inspection and that a
hearing will be held on the budget.

Before the beginning of the ensuing year, the board of each District must
enact resolutions making appropriations for that year. The amounts appropriated
may not exceed the amounts fixed in the budget as adopted by the board. Upon
the adoption of the budget, the board must file certified copies of the budget
with the Colorado Division of Local Government. In the event of some
contingency which could not have been reasonably foreseen at the time of
adoption of the budget, the board of the District may also authorize the
expenditure of funds in excess of the budget by a resolution adopted by a
majority vote of the board at a public meeting.

Through the preparation of the budget, and by taking into consideration all
sources of revenue, costs of constructing, operating and maintaining the
facilities of each District, the required tax levy is determined each year. Any
property tax levy which results in tax revenues for District operations (but not
principal and interest payments on District indebtedness, including the
obligations arising under the Operating Agreement and the Intergovernmental
Agreement) exceeding 105.5% of the amount raised in the previous year (but with
an exemption for increased valuation for assessment attributable to annexation
or inclusions, or increased valuation due to new construction) must be submitted
to the Colorado Division of Local Government for approval. If approval is not
granted, such approval can be obtained by vote of electors within the District.
However, the provisions of an amendment to the Constitution of the State of
Colorado, approved in the November 3, 1992 general election and commonly
referred to as Amendment One ("Amendment One"), may result in a more restrictive
increase (or a decrease) in property tax revenues and spending for the
Districts. As mentioned above in "THE PROJECT," the Districts' obligations
imposed by the Operating Agreement and the Intergovernmental Agreement were
approved by the Districts' voters on November 7, 1995.

FINANCIAL STATEMENTS

Under Colorado statutes, unless exempted (E.G., for insubstantial financial
activity) the board of each District is required to have the financial
statements of the District audited at least annually. The audited financial
statements must be filed with the board by July 1 of each year, and with the
State Auditor 30 days thereafter. If such audit is not filed as required by
law, the State Auditor may authorize the County Treasurer holding moneys of the
District generated pursuant to the taxing authority of the District to prohibit
the release of such moneys until the District complies with the audit law.

<PAGE>

AMENDMENT ONE

Amendment One amended the Colorado Constitution to require voter approval
prior to: (1) imposition of a new tax, tax rate increase, mill levy increase,
valuation for assessment ratio increase, tax extension, or other change in
policy which results in a net gain of tax revenues; or (2) creation for more
than one fiscal year of any debt or other financial obligation, with limited
exceptions. Authorization for the execution of the Operating Agreement and the
Intergovernmental Agreement, including the imposition of a mill levy not to
exceed 35 mills upon all of the taxable property within the Districts, was
approved by the electors of each District in compliance with Amendment One on
November 7, 1995.

Amendment One also limits increases in property tax revenues, with certain
adjustments (including voter-approved revenue changes), (1) for local
governments, to the total of inflation plus the net percentage change in actual
value of all real property within the local government due to construction of
improvements and additional taxable real property; and (2) for school districts,
to the total of inflation plus the percentage change in student enrollment. In
addition, Amendment One limits percentage increases in spending, with certain
adjustments, (including voter-approved revenue changes) (1) for local
governments, to the total of inflation plus the net percentage change in actual
value of all real property within the local government due to construction of
improvements and additional taxable real property and (2) for school districts,
to a total of inflation plus the percentage change in student enrollment.
Revenues collected in excess of limits are required to be refunded unless voters
approve a revenue change as an offset.

However, Amendment One provides that the future creation of local
government debt shall increase (and retiring or refinancing debt shall lower)
fiscal year property tax revenue by the annual debt service so funded.

Amendment One also provides that if annual local government revenue is less
than the annual payments on general obligation bonds, pensions and final court
judgments, the election requirements and the limits for percentage changes in
spending and property tax revenues will be suspended to provide for the
deficiency.

It is not possible to predict the effect of Amendment One on future
activities of the Districts, including their ability to raise taxes and other
funds to generate sufficient revenues for their general funds, to undertake
additional programs or to engage in any subsequent financing activities.

TAX EXEMPTION

GENERAL

On the date of issuance of the Bonds, Special Tax Counsel delivered its
opinion to the effect that the interest on the Bonds is excludable from gross
income for purposes of federal income tax under existing laws as enacted and
construed on the date of such opinion, assuming the accuracy of the
certifications of the Issuer, and continuing compliance by the Issuer with the
requirements of the Internal Revenue Code of 1986, as amended (the "Code").
Interest on the Bonds will not be an item of tax preference for purposes of
either individual or corporate alternative minimum tax for individuals or
corporations under the Code.

The alternative minimum tax for corporations is levied for taxable years
beginning after December 31, 1986 in addition to the corporate regular tax in
certain cases. The alternative minimum tax, if any, depends upon the
corporation's alternative minimum taxable income, which is the corporation's
taxable income with certain adjustments. One of the adjustment items used in
computing the alternative minimum taxable income of a corporation (excluding S
Corporations, Regulated Investment Companies, Real Estate Investment Trusts and
REMICs) is an amount equal to 75% of the excess of such corporation's "adjusted
current earnings" over an amount equal to its alternative minimum taxable income
(before such adjustment item and the alternative tax net operating loss
deduction). The term "adjusted current earnings" would include all tax-exempt
interest, including interest on the Bonds.

Section 59A of the Code imposes an "environmental" tax with respect to
corporations on the excess over $2,000,000 of a corporation's "modified
alternative minimum taxable income", which would include interest on the Bonds.
The environmental tax applied with respect to taxable years beginning after
December 31, 1986 and before January 1, 1996.

Under Section 884 of the Code, interest on the Bonds is to be taken into
account in the computation of the foreign branch profits tax.

Ownership of the Bonds may result in collateral federal income tax
consequences to certain taxpayers, including, without limitation, financial
institutions, property and casualty insurance companies, individual recipients
of Social Security or Railroad Retirement benefits, certain S corporations with
"excess net passive income" and taxpayers who may be deemed to have incurred

21
<PAGE>

or continued indebtedness to purchase or carry the Bonds. Special Tax
Counsel expresses no opinion as to such collateral tax consequences.
Purchasers of the Bonds should consult their own tax advisors as to
collateral federal income tax consequences.

The Code sets forth certain requirements which must be met subsequent to
the issuance and delivery of the Bonds for interest thereon to remain excludable
from the gross income of the owners of the Bonds for federal income tax
purposes, including investment restrictions, periodic payments of arbitrage
profits to the United States, requirements regarding the proper use of bond
proceeds and the facilities financed therewith and certain other matters. The
Issuer has covenanted to comply with such requirements. Noncompliance with such
requirements could cause the interest on the Bonds to be includable in the gross
income of the owners of the Bonds for federal income tax purposes, retroactive
to the date of issue of the Bonds.

BOND PREMIUM

An investor may purchase a Bond at a price in excess of its stated
principal amount. Such excess is characterized as "bond premium" and must be
amortized by the investor on a constant yield basis over the remaining term of
the Bond in a manner that takes into account potential call dates and call
prices. An investor cannot deduct amortized bond premium relating to a
tax-exempt bond for federal income tax purposes. However, as bond premium is
amortized, it reduces the investor's basis in the Bond. Investors who purchase
a Bond at a premium should consult their own tax advisors regarding the
amortization of bond premium and its affect on the Bond's basis for purposes of
computing gain or loss in connection with the sale, exchange, redemption or
early retirement of the Bond.

ORIGINAL ISSUE DISCOUNT

The initial offering price of one maturity of the Bonds was less than the
principal amount payable at maturity. The difference between the issue price of
such maturity of the Bonds and the amount payable at maturity is original issue
discount. The issue price (the "Issue Price") for such maturity of the Bonds
was the price at which a substantial amount of such maturity of the Bonds is
first sold to the public.

For an investor who purchased a Bond of such maturity in the initial
offering at the Issue Price for such maturity and who holds such Bond to its
stated maturity, subject to the condition that the Authority complies with the
covenants discussed under "TAX EXEMPTION - General" above, (a) the full amount
of original issue discount with respect to such Bond constitutes interest which
is not includable in the gross income of the owner thereof for federal income
tax purposes and (b) such owner will not realize taxable capital gain or market
discount upon payment of such Bond at its stated maturity; such interest is not
included as an item of tax preference in computing an adjustment used in
determining the alternative minimum tax for individuals and corporations under
the Code, but is taken into account in computing an adjustment used in
determining the alternative minimum tax for certain corporations under the Code,
as described above; and the accretion of original issue discount in each year
may result in an alternative minimum tax liability for corporations or certain
other collateral federal income tax consequences in each year even though a
corresponding cash payment may not be received until a later year.

Owners of Bonds who dispose of Bonds prior to the stated maturity (whether
by sale, redemption or otherwise), who purchase Bonds in the initial offering,
but at a price different from the Issue Price or who purchase Bonds subsequent
to the initial offering at a price other than the Bond's Issue Price plus
accredited original issue discount should consult their own tax advisors.

EXCHANGE BONDS

Brownstein Hyatt Farber & Strickland, P.C., special counsel to the
Authority, has advised the Authority that in its opinion, the exchange of the
Bonds for Exchange Bonds pursuant to the Exchange Offer will not be treated as
an "exchange" for federal income tax purposes because the Exchange Bonds will
not be considered to differ materially in kind or extent from the Bonds.
Rather, the Exchange Bonds received by a holder will be treated as a
continuation of the Bonds in the hands of such holder. As a result, there will
be no federal income tax consequences to holders exchanging Bonds for Exchange
Bonds pursuant to the Exchange Offer.

<PAGE>

DESCRIPTION OF EXCHANGE BONDS

GENERAL

The Exchange Bonds will be delivered to the purchasers thereof only as
fully registered bonds in the denominations of $100,000 and integral multiples
of $5,000 in excess thereof in book-entry only form as described below under the
subheading "Book-Entry-Only System" and as provided in the Indenture.

The Exchange Bonds will bear interest at the rates, and will mature,
subject to the right of redemption described below, in the principal amounts and
on the dates set forth on the cover page hereof. Interest on the Exchange Bonds
from the dated date thereof will be payable only on December 1, 1996 and
semiannually thereafter on each June 1 and December 1 (each, an "Interest
Payment Date") and until maturity or prior redemption.

Interest on the Exchange Bonds is payable in lawful money of the
United States of America by check mailed by first class mail on each Interest
Payment Date to the registered owner as of the close of business on the 15th day
of the calendar month immediately preceding such Interest Payment Date (whether
or not a business day) (the "Record Date"); provided, however, that any owners
of $1,000,000 or more of the principal amount of the Exchange Bonds may, at any
time prior to a Record Date, give to the Trustee written instructions for
payment of such interest on each succeeding Interest Payment Date by wire
transfer. The principal on the Exchange Bonds and premium, if any, thereon are
payable when due upon presentation thereof at the principal corporate trust
office of the Trustee in lawful money of the United States of America.

Any such interest not so timely paid or duly provided for shall cease
to be payable to the person who is the registered owner thereof on the Record
Date and shall be payable to the person who is the registered owner thereof at
the close of business on a special record date (the "Special Record Date")
established for the payment of the defaulted interest. Such Special Record Date
shall be fixed by the Trustee whenever moneys become available for payment of
the defaulted interest, and notice of the Special Record Date shall be given to
the registered owners of the Exchange Bonds not less than ten days prior to the
Special Record Date by first-class mail to each such registered owner as shown
on the registration books kept by the Trustee on a date selected by the Trustee.
Such notice shall state the date of the Special Record Date and the date fixed
for the payment of such defaulted interest.

REDEMPTION PROVISIONS

MANDATORY SINKING FUND REDEMPTION. The Exchange Bonds maturing
December 1, 2011 and December 1, 2017 shall be subject to mandatory sinking fund
redemption at a redemption price of 100% of the principal amount thereof, plus
accrued interest to the date fixed for redemption, on December 1 of each of the
years and in the principal amounts set forth below:

<TABLE>
Exchange Bonds Maturing December 1, 2011 Exchange Bonds Maturing December 1, 2017
- ---------------------------------------- ----------------------------------------
<S> <C> <C> <C>
Year Amount Year Amount
- ---- ------ ---- ------

2010 $3,755,000 2012 $4,250,000
2011* 3,995,000 2013 4,515,000
2014 4,795,000
2015 5,095,000
2016 5,415,000
2017* 5,750,000
</TABLE>

- ------------
*Stated Maturity

The Exchange Bonds to be redeemed will be selected by the Trustee by lot, using
a computer system which randomly selects which bonds will be redeemed within the
maturity or maturities called for redemption.

EXTRAORDINARY MANDATORY REDEMPTION. The Exchange Bonds are subject to
extraordinary mandatory redemption in whole at a redemption price of 100% of the
principal amount thereof plus accrued interest to the date fixed for redemption
from

<PAGE>

proceeds of prepayment of the Collateral. In the event that the Series B
REMIC Bonds (as defined herein under "CREDIT ENHANCEMENT") are prepaid in full
while the Exchange Bonds are outstanding, the proceeds of such prepayment will
be used to redeem the Exchange Bonds. The Acquisition and Construction Notes
(as defined herein under "CREDIT ENHANCEMENT") permit optional prepayments in
full to be made on and after December 1, 2015. Under the trust indenture for
the Series B REMIC Bonds, prepayments of the Acquisition and Construction Notes
requires prepayment of the Series B REMIC Bonds. See "CREDIT ENHANCEMENT."

BOOK-ENTRY-ONLY SYSTEM

A portion of the information contained in this section has been extracted
from a report from DTC entitled "Book-Entry-Only Municipals". No representation
is made by the Authority or the Credit Enhancement Provider as to the
completeness or the accuracy of such information or as to the absence of
material adverse changes in such information subsequent to the date hereof.

DTC will act as securities depository for the Bonds. The ownership of one
fully registered Bond for each maturity set forth on the cover page hereof, each
in the aggregate principal amount of such maturity, will be registered in the
name of CEDE & CO., as nominee for DTC. DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities of its participants (the "Direct
Participants") and to facilitate the clearance and settlement of securities
transactions among Direct Participants, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations, some of whom (and/or their representatives) own
DTC. Access to the DTC system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and the Direct Participants and
Indirect Participants are on file with the Securities and Exchange Commission.

Purchases of Bonds under the DTC system must be made through Direct
Participants, who will receive a credit for the Bonds on DTC's records. The
ownership interest of each actual purchaser of each Bond (each a "Beneficial
Owner") will be recorded through the records of the Direct Participants and
Indirect Participants. Beneficial Owners will not receive written confirmations
of their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct Participant or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Bonds will be accomplished by book
entries made by DTC and by the Direct Participants and Indirect Participants
which act on behalf of the Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interest in the Bonds, except
as specifically provided in the Indenture. NEITHER THE AUTHORITY NOR THE
TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DIRECT PARTICIPANTS OR
INDIRECT PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT
TO THE PAYMENTS TO, OR THE PROVIDING OF NOTICE FOR, SUCH DIRECT PARTICIPANTS OR
INDIRECT PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES.

All notices that are to be given to owners of the Bonds by the Trustee will
be given only to DTC as registered owner. Conveyance of notices and other
communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.

SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF
DTC, REFERENCES HEREIN TO THE BONDHOLDERS OR REGISTERED OWNERS OF THE BONDS
SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS.
BENEFICIAL OWNERS OF THE BONDS OR INTERESTS IN THE BONDS WILL NOT RECEIVE OR
HAVE THE RIGHT TO RECEIVE PHYSICAL DELIVERY OF SUCH BONDS.

Under the Indenture, payment made by the Trustee to DTC or its nominee
shall satisfy the Authority's obligation under the Indenture to the extent of
such payments.

Principal, redemption price, if any, and interest payments on the Bonds
will be made to DTC or its nominee, CEDE & CO., as registered owners of the
Bonds. Upon receipt of moneys, DTC's current practice is to credit immediately
the accounts of the Direct Participants in accordance with their respective
holdings shown on the records of DTC. Payments by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is now the case with municipal
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Direct Participants and
Indirect Participants and not of DTC, the Trustee or the Authority, subject to
any statutory and regulatory requirements as may be in effect from time to time.

<PAGE>

For every transfer and exchange of the Bonds, the Beneficial Owners may be
charged a sum sufficient to cover any tax, fee or other governmental charge that
may be imposed in relation thereto.

DTC may determine to discontinue providing its services with respect to the
Bonds at any time by giving notice to the Authority and the Trustee and
discharging its responsibilities with respect thereto under applicable law.
Under such circumstances, bond certificates are required to be delivered as
described in the Indenture. Each Beneficial Owner, upon registration of
certificates held in such Beneficial Owner's name, will become a Bondholder.

The Authority, in its reasonable discretion, may determine that continuation
of the system of book-entry transfers through DTC (or a successor securities
depository) is not in the best interests of the Beneficial Owners. In such
event, bond certificates will be delivered as described in the Indenture.

In the event that the Book-Entry-Only System is discontinued, the following
provisions would apply to the Bonds. The Trustee shall keep the registration
books for the Bonds at its principal corporate trust office. Subject to the
further conditions contained in the Indenture, the Bonds may be transferred or
exchanged for one or more Bonds of the same maturity in different authorized
denominations upon surrender thereof at the principal corporate trust office of
the Trustee by the registered owners or their duly authorized attorneys; upon
surrender of any Bonds to be transferred or exchanged, the Trustee shall record
the transfer or exchange in its registration books and shall authenticate and
deliver new Bonds of the same maturity appropriately registered and in
appropriate authorized denominations; during the 15 days immediately preceding
the date of mailing of any notice of redemption or at any time following the
mailing of any notice of redemption, the Trustee shall not be required to effect
or register any transfer or exchange of any Bond which has been selected for
such redemption, except that Bonds properly surrendered for partial redemption
may be exchanged for new Bonds of the same maturity in authorized denominations
equal in the aggregate to the unredeemed portion; the Authority and the Trustee
shall be entitled to treat the registered owners of the Bonds, as their names
appear in the registration books as of the appropriate dates, as the owners of
such Bonds for all purposes under the Indenture. No transfer or exchange made
other than as described above and in the Indenture shall be valid or effective
for any purposes under the Indenture.

DEBT SERVICE REQUIREMENTS ON THE BONDS

The table below indicates total debt service on the Bonds for the periods
indicated.

Period Ending Total Debt
December 31 Principal Interest Service Requirement
------------- --------- -------- -------------------

1996 - $ 3,099,151.88 $ 3,099,151.88
1997 - 4,132,202.50 4,132,202.50
1998 - 4,132,202.50 4,132,202.50
1999 $ 1,980,000.00 4,132,202.50 6,112,202.50
2000 2,095,000.00 4,018,352.50 6,113,352.50
2001 2,215,000.00 3,897,890.00 6,112,890.00
2002 2,340,000.00 3,770,527.50 6,110,527.50
2003 2,475,000.00 3,635,977.50 6,110,977.50
2004 2,620,000.00 3,489,952.50 6,109,952.50
2005 2,780,000.00 3,332,752.50 6,112,752.50
2006 2,950,000.00 3,163,172.50 6,113,172.50
2007 3,115,000.00 2,995,022.50 6,110,022.50
2008 3,310,000.00 2,798,777.50 6,108,777.50
2009 3,525,000.00 2,586,937.50 6,111,937.50
2010 3,755,000.00 2,357,812.50 6,112,812.50
2011 3,995,000.00 2,118,431.25 6,113,431.25
2012 4,250,000.00 1,863,750.00 6,113,750.00
2013 4,515,000.00 1,598,125.00 6,113,125.00
2014 4,795,000.00 1,315,937.50 6,110,937.50
2015 5,095,000.00 1,016,250.00 6,111,250.00
2016 5,415,000.00 697,812.50 6,112,812.50
2017 5,750,000.00 359,375.00 6,109,375.00
-------------- -------------- ---------------

Total $66,975,000.00 $60,512,615.63 $127,487,615.63
-------------- -------------- ---------------
-------------- -------------- ---------------

25
<PAGE>
SECURITY AND SOURCE OF PAYMENT

The Bonds are limited obligations of the Authority, secured only by the
trust estate identified in the Indenture and payable solely from the funds held
under the Indenture (including capitalized interest deposited from the proceeds
of the Bonds), Revenues of the Authority and payments made under the Credit
Enhancement.

Revenues of the Authority include, without limitation, all income, rents,
receipts and profits of the Authority (excluding certain payments for operation
and maintenance expenses and specifically restricted gifts, bequests and other
forms of contributions). Revenues will include income derived from operation of
the golf course and the swimming and tennis facilities which the Authority
intends to construct on the Real Estate. See "The Project." The Authority is
acting as an instrumentality of the District. On November 7, 1995, the voters
of the District and the Related Districts approved the execution and delivery of
the Operating Agreement and the Intergovernmental Agreement obligating the
Related Districts to provide funds to the District for payment to the Authority
to the extent that revenues from the Project are insufficient to fund debt
service on the Bonds and operating expenses of the Project. Such funds would be
derived from a mill levy that is subject to certain limitations, including a 35-
mill limitation on taxable property within the District and the Related
Districts. The Operating Agreement and the Intergovernmental Agreement will not
become effective until an amendment to the Districts' service plans including
the mill levy is approved by the Town of Castle Rock, or the Districts receive
an acceptable opinion of counsel acceptable to the Districts that such mill levy
may be imposed without regard to any service plan amendment. Each of the
Districts has covenanted in the Recreational Facilities Agreement to take all
reasonable action necessary to effect such service plan amendment or to obtain
such opinion. At the present time, the Town of Castle Rock is not accepting any
applications for service plan amendments until it finalizes new policies
regarding the use and powers of special districts located within its
jurisdiction. These new policies are expected to be in place in the spring of
1997. Once the new policies are in effect, the Districts will submit their
applications for service plan amendments to the Town of Castle Rock. There can
be no assurance that the Town of Castle Rock will approve the amendments to the
Districts' service plans. See "THE PROJECT--Necessary Approvals."

In order to provide an alternate source of revenue, the Authority entered
into a Development Agreement dated as of March 1, 1996 (the "Development
Agreement") with Douglas County Development Corporation, the owner of
approximately 75% of the taxable property in the Districts, providing for a
payment in lieu of taxes by Douglas County Development Corporation and all
subsequent owners of the property owned by Douglas County Development
Corporation in the Districts. The amount of such payment will be equivalent to
the amount which would be generated by a mill levy against all of the taxable
real and personal property in the Districts pursuant to the Operating Agreement
and the Intergovernmental Agreement. The payment obligations under the
Development Agreement are absolute and unconditional and no conditions must be
satisfied for the Development Agreement to become effective. Payment
obligations under the Development Agreement are required to be paid within
fifteen days after any applicable payment date, as set forth in the Development
Agreement. The Authority has assigned its interests in the Development
Agreement to the Credit Enhancement Provider and the Trustee, allowing the
Credit Enhancement Provider and the Trustee to accelerate any amounts due but
not paid under the Development Agreement, and to foreclose on such property for
which payments have not been made, if necessary. Summaries of the Operating
Agreement, the Intergovernmental Agreement, the Development Agreement and the
Recreational Facilities Agreement appear herein under the caption "DEFINITIONS
OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS."

Debt service on the Securities for the period prior to March 1, 1998 is
payable from the proceeds of the Bonds. As credit enhancement for the
Securities, the Credit Enhancement Provider executed a Collateralized Credit
Enhancement Agreement for the benefit of the Trustee, pursuant to which the
Credit Enhancement Provider is obligated to make payment of debt service on the
Securities for the period commencing March 1, 1998, but the Credit Enhancement
Provider's liability is limited to the Collateral pledged and assigned to the
Trustee. The Collateral to be assigned by the Credit Enhancement Provider
consists of the Series B REMIC Bonds and the debt service payments on the Series
B REMIC Bonds, which will be payable effectively from certain payments to be
made by the U.S. Government under a lease for space in a building in the
District of Columbia. See "Credit Enhancement" and "DEFINITIONS OF CERTAIN
TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS--THE LEASE." The amounts required to
be paid on the Series B REMIC Bonds, if timely paid, will be sufficient to pay
principal of and interest on the Bonds when due for the period commencing
March 1, 1998, but not to pay Extra Payments.

Pursuant to the Reimbursement Agreement between the Authority and the
Credit Enhancement Provider, monies applied by the Trustee from the proceeds of
the Series B REMIC Bonds to pay principal and interest on the Bonds are required
to be reimbursed to the Credit Enhancement Provider from operating revenues of
the Authority (which are currently expected to be primarily golf course revenues
and mill levy payments by the Districts). There is no assurance that such
revenues will be sufficient to enable the Authority to meet these obligations,
and a failure to do so constitutes a default under the Reimbursement Agreement.
If such a default occurs and the Credit Enhancement Provider is not in default
under the Collateralized Credit Enhancement Agreement, the Credit Enhancement
Provider is entitled to exercise various remedies, including foreclosing on the
Deed of Trust, thereby terminating the rights of the Bondholders in various
security (other than the Collateral), including the Authority's interest in the
Project. However, such foreclosure is permitted only if the Credit Enhancement
Provider obtains an opinion of Special Tax

26
<PAGE>

Counsel acceptable to the Trustee that such foreclosure will not adversely
affect the exclusion of interest on the Bonds from gross income for federal
income tax purposes. See "DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF
PRINCIPAL DOCUMENTS--THE DEED OF TRUST," "--COLLATERALIZED CREDIT ENHANCEMENT
AGREEMENT" and "--REIMBURSEMENT AGREEMENT."

CREDIT ENHANCEMENT

The Credit Enhancement Provider executed the Collateralized Credit
Enhancement Agreement for the benefit of the Trustee. Pursuant to the
Collateralized Credit Enhancement Agreement, the Credit Enhancement Provider has
agreed to provide to the Trustee amounts sufficient to provide for the due,
prompt and complete payment of the Bonds, including principal and interest
payable thereunder for the period commencing March 1, 1998 (but excluding
payments with respect to premium on the Bonds, interest on the Bonds in excess
of the pre-default rate thereon, Additional Interest and amounts due solely as a
result of acceleration or redemption of the Bonds (collectively, "Extra
Payments")) all of which shall be paid solely from payments on the Series B
REMIC Bonds.

In order to secure its obligations under the Collateralized Credit
Enhancement Agreement, the Credit Enhancement Provider has pledged and delivered
to the Trustee the Series B REMIC Bonds payable from an interest in a trust
estate (the "REMIC Trust Estate") under an indenture of trust (the "REMIC
Indenture") between BFC Finance Corp. and SouthTrust Bank of Alabama, National
Association (the "REMIC Trustee"), in accordance with the provisions of a Bond
Pledge and Security Agreement between the Credit Enhancement Provider, the
Trustee and the REMIC Trustee. An election will be made to have the REMIC Trust
Estate treated as a "real estate mortgage investment conduit" for federal income
tax purposes.

The Series B REMIC Bonds, along with another series of bonds representing a
regular interest in the REMIC Trust Estate (the "Series A REMIC Bonds"), will be
payable on a parity with the Series A REMIC Bonds from amounts paid on notes
held in the REMIC Trust Estate, and such payments will be pledged as Collateral
and used to pay the debt service payments on the Series A REMIC Bonds and Series
B REMIC Bonds described above. Certain of the notes held in the REMIC Trust
Estate (the "Acquisition and Construction Notes") have been issued by Parcel 49C
Limited Partnership, a District of Columbia limited partnership, in respect of
loans to Parcel 49C Limited Partnership related to the acquisition and
construction by Parcel 49C Limited Partnership of an office building (with
parking garage) in the District of Columbia commonly referred to as Portals II.
Space in such office building has been leased by Parcel 49C Limited Partnership
to the U.S. Government pursuant to a lease agreement dated August 12, 1994, as
amended and supplemented (the "Lease"). Parcel 49C Limited Partnership will
assign the Lease and rent payable thereunder to Building Finance Company of
Tennessee, Inc., as collateral for amounts loaned by Building Finance Company of
Tennessee, Inc. to Parcel 49C Limited Partnership, which amounts are evidenced
by the Acquisition and Construction Notes. Building Finance Company of
Tennessee, Inc., will transfer the Acquisition and Construction Notes and the
collateral therefor to the issuer of the REMIC Bonds, BFC Finance Corp., a
subsidiary of Building Finance Company of Tennessee, Inc., which will then
assign all such assets to the REMIC Trustee as security for the Series A REMIC
Bonds and Series B REMIC Bonds. Amounts payable on the Acquisition and
Construction Notes (and, in turn, amounts payable on the Series A REMIC Bonds
and the Series B REMIC Bonds other than certain initial interest on the Series A
REMIC Bonds) are expected to come from the portion of payments under the Lease
which is not subject to set-aside by the U.S. Government (the "Non Set-Off Lease
Payments"). The Non Set-Off Lease Payments received under the Lease are
expected to be sufficient to pay principal and interest on both the Series A
REMIC Bonds and the Series B REMIC Bonds when due. The amounts required to be
paid as principal and interest on the Series B REMIC Bonds (which amounts will
be paid to the Trustee), if timely paid, will be sufficient to pay principal and
interest on the Bonds when due for the period commencing March 1, 1998, but not
to pay Extra Payments. Nonpayment of Extra Payments, in and of itself, will not
constitute an Event of Default under the Indenture or give rise to the right to
foreclose under the Deed of Trust. See "DEFINITIONS OF CERTAIN TERMS AND
SUMMARIES OF PRINCIPAL DOCUMENTS--THE DEED OF TRUST" and "--THE LEASE."

THE SERIES A REMIC BONDS AND SERIES B REMIC BONDS

Certain proceeds of the Series A REMIC Bonds and Series B REMIC Bonds were
transferred by BFC Finance Corp. to Building Finance Company of Tennessee, Inc.,
to enable that company, using such proceeds and other funds at its disposal, to
make (i) a loan of $99,000,000 to Parcel 49C Limited Partnership in connection
with the partnership's construction of the Portals II office building and
related parking garage in the District of Columbia, and (ii) a $27,087,366.74
loan to the partnership for costs to acquire and develop property on which the
office building is to be constructed.

Certain proceeds of the Series A REMIC Bonds and Series B REMIC Bonds were
also used by BFC Finance Corp. to lend $9,310,689.07 to DCDC II, Inc. for which
BFC Finance Corp. received a note in such principal amount (the "DCDC II Note"),
secured by a deed of trust on approximately 300 acres of undeveloped land in
Castle Rock, Colorado (the "DCDC II Mortgage") and a pledge of United States
Government securities pursuant to an Assignment of Collateral and Trust
Agreement (the "Pledge Agreement").

27
<PAGE>

Pursuant to the REMIC Indenture, BFC Finance Corp. deposited with the
Trustee certain assets comprising the trust estate including all rights to
payments under the Acquisition and Construction Notes which accrue after
January 31, 1998, deeds of trust on the Portals II property, an assignment of
Lease, the DCDC II Note, the DCDC II Mortgage and the Pledge Agreement.

The terms of the Acquisition and Construction Notes and the Lease are such
that amounts payable thereunder are expected to be sufficient to pay principal
of and interest on the Series A REMIC Bonds and Series B REMIC Bonds as and when
due from and after March 1, 1998. The terms of the DCDC II Note and the
collateral securing the DCDC II Note are such that amounts payable thereunder
are expected to be sufficient to pay interest on the Series A REMIC Bonds and
Series B REMIC Bonds which accrues from March 1, 1996 through January 31, 1998.
In addition, the REMIC Trustee will be a beneficiary of certain insurance
policies covering casualty risks related to the property which is the subject of
the Lease, both during construction and after completion of construction. Such
policies are to be in amounts which are anticipated to be sufficient to enable
payment of debt service on the Series A REMIC Bonds and Series B REMIC Bonds
during any period of Lease interruption or, together with proceeds from the sale
of the property, to redeem the Series A REMIC Bonds and Series B REMIC Bonds in
the event the Lease is terminated as a result of a casualty. However, there can
be no assurance that such proceeds will be sufficient to pay such debt service
or redemption price.

The trustee for the REMIC Trust Estate is also to be the beneficiary of
certain casualty insurance policies which are to be purchased with respect to
Portals II. In the event the Lease is terminated as a result of casualty or
condemnation, proceeds of such insurance policies or of any condemnation award
would be used to redeem the Series B REMIC Bonds and such redemption proceeds
would be used to redeem the Bonds. There can be no assurance that insurance or
condemnation proceeds would be received in amounts sufficient to redeem all or
any of the Bonds. See "The Bonds - Redemption Provisions - Extraordinary
Mandatory Redemption."

In the event that the Series B REMIC Bonds are prepaid in full while the
Securities are outstanding, the proceeds of such prepayment will be used to
redeem the Securities. The Acquisition and Construction Notes permit optional
prepayments in full to be made on and after December 1, 2015. Under the REMIC
Indenture, prepayments of the Acquisition and Construction Notes requires
prepayment of the Series B REMIC Bonds.

The Authority will be required to reimburse the Credit Enhancement Provider
for such payments pursuant to the Reimbursement Agreement. See "DEFINITIONS OF
CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS--REIMBURSEMENT AGREEMENT."

THE PORTALS II BUILDING

Construction of the Portals II office building and parking garage, which is
being leased to the U.S. government pursuant to the Lease, commenced in the
spring of 1996. In December of 1996, the U.S. Government exercised its option
to lease the remaining space in the building so that the U.S. Government now has
a lease for 100% of the net usable square footage of the building. The U.S.
Government must commence paying rent directly to the REMIC Trustee, pursuant to
the assignment of the Lease, on March 1, 1998.

The base rent payable under the Lease is based on an initial annual rental
rate of $38.85 per net usable square foot for the first 287,483 of net usable
square feet of space leased and $37.95 per net usable square foot for the
remaining 247,647 of net usable square feet leased for a total initial amount of
$20,566,918.20 per year or $1,713,909.85 per month. The U.S. Government may
deduct from the base rent during any year of the term of the Lease an amount
which will not exceed $8.50 per net usable square foot (which amount may be
increased each year in accordance with a formula set forth in the Lease using
the same methodology for calculating the increase in the rent for operating
costs set forth in the Lease) for the partnership's failure to perform its
obligations under the Lease, but the government has agreed pursuant to an
attornment agreement to give the REMIC Trustee notice of and an opportunity to
cure the partnership's failure to perform its obligations under the Lease prior
to deducting amounts from the base rent, unless the partnership's failure to
perform has caused a life or health-threatening condition. Consequently, the
total base rent not subject to set-off is $16,018,313.20 per year, or
$1,334,859.43 per month. Rent is payable in equal monthly installments in
arrears. It was a condition to issuance of the Series A REMIC Bonds and
Series B REMIC Bonds that counsel for the government render an opinion that the
obligations of the government to pay rent under the Lease constitutes an
absolute and unconditional obligation of the government. As is the case with
most federal agencies, the government's access to funds requires an annual
appropriation by Congress. The government's ability to make payments under the
Lease requires such an appropriation to the Federal Buildings Fund, the fund
from which all the government's long-term leases are paid. In the event
Congress fails to make such appropriation, or in the event any payments that are
properly due and owing the partnership under the Lease are not made, the
partnership or the REMIC Trustee would be entitled, in the opinion of the
counsel for the government, to enforce the payment obligations of the United
States in accordance with the terms of the Lease, or as otherwise may be
available at law or in equity. For a further description of the Lease, see
"DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS--THE LEASE."

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THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

The Bonds were originally sold by the Authority on March 27, 1996 to
Lehmann Brothers Inc. pursuant to the Purchase Agreement. Lehmann Brothers Inc.
subsequently resold the Bonds to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and to an institutional accredited investor
that agreed to comply with certain transfer restrictions and other conditions.
As a condition to the Purchase Agreement, the Authority and the Credit
Enhancement Provider entered into the Registration Rights Agreement with Lehmann
Brothers Inc. (the "Registration Rights Agreement"). The Registration Rights
Agreement provides that (i) the Authority and the Credit Enhancement Provider
will file an Exchange Offer Registration Statement with the Securities and
Exchange Commission on or prior to December 24, 1996, (ii) the Authority and the
Credit Enhancement Provider will use their best efforts to have the Exchange
Offer Registration Statement declared effective by the Securities and Exchange
Commission on or prior to March 23, 1997, and (iii) unless the Exchange Offer
would not be permitted by applicable law or Securities and Exchange Commission
policy, the Authority will commence the Exchange Offer and use its best efforts
to issue on or prior to 30 business days after the date on which the Exchange
Offer Registration Statement was declared effective by the Securities and
Exchange Commission, Exchange Bonds in exchange for all Bonds tendered prior
thereto in the Exchange Offer. If (a) the Authority and the Credit Enhancement
Provider fail to file any of the Registration Statements required by the
Registration Rights Agreement on or before the date specified for such filing,
(b) any of such Registration Statements is not declared effective by the
Securities and Exchange Commission on or prior to the date specified for such
effectiveness, or (c) the Authority fails to consummate the Exchange Offer
within 30 business days of the date specified for such effectiveness with
respect to the Exchange Offer Registration Statement, then the Authority will
pay Additional Interest to each holder of Securities, additional interest
calculated at the rate of 1% per annum on the principal amount of Securities
held by such holder. Additional Interest, if any, shall be due and payable on
each Interest Payment Date; provided that (1) Additional Interests shall be paid
solely to the extent funds therefor are available from Revenues as provided for
in the Indenture, (2) no Additional Interest shall be paid while any installment
of interest (other than Additional Interest) or principal is due and payable
under the Indenture or (unless paid from Revenues received under the Development
Agreement) any amount is due to the Credit Enhancement Provider under the
Reimbursement Agreement, (3) the Bonds shall not accelerate as a result of
nonpayment of Additional Interest and (4) neither nonpayment of Additional
Interest nor any of the events referred to in clauses (a) through (c) above,
shall constitute an event of default under the Indenture. Following
registration under the Act of the Bonds for resale by the holders thereof, the
payment of Additional Interest will cease. Upon the Exchange Offer Registration
Statement being declared effective, the Authority will offer the Exchange Bonds
in exchange for surrender of the Bonds. The Authority will keep the Exchange
Offer open for not less than 20 business days (or longer if required by
applicable law) after the date on which notice of the Exchange Offer is mailed
to the holders of the Bonds. For each Bond surrendered to the Authority
pursuant to the Exchange Offer, the holder of such Bond will receive an Exchange
Bond having a principal amount equal to that of the surrendered Bond. Interest
on each Exchange Bond will accrue from the date of its original issue.

Under existing interpretations of the staff of the Securities and Exchange
Commission contained in several no-action letters to third parties, the Exchange
Bonds would in general be freely tradeable after the Exchange Offer without
further registration under the Securities Act. However, any purchaser of Bonds
who is an "affiliate" of the Authority or the Credit Enhancement Provider or who
intends to participate in the Exchange Offer for the purpose of distributing the
Exchange Bonds (i) will not be able to rely on the interpretation of the staff
of the Securities and Exchange Commission, (ii) will not be able to tender its
Bonds in the Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of the Bonds, unless such sale or transfer is made pursuant to
an exemption from such requirements.

Each holder of the Bonds (other than certain specified holders) who wishes
to exchange the Bonds for Exchange Bonds in the Exchange Offer will be required
to represent in the Letter of Transmittal that (i) it is not an affiliate of the
Authority or the Credit Enhancement Provider, (ii) the Exchange Bonds to be
received by it were acquired in the ordinary course of its business and (iii) at
the time of commencement of the Exchange Offer, it has no arrangement with any
person to participate in the distribution (within the meaning of the Securities
Act) of the Exchange Bonds. In addition, in connection with any resales of
Exchange Bonds, any Participating Broker-Dealer who acquired the Bonds for its
own account as a result of market making or other trading activities must
deliver a prospectus meeting the requirements of the Securities Act. The
Securities and Exchange Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Bonds (other than a resale of an unsold allotment from the
original sale of the Bonds) with the prospectus contained in the Exchange Offer
Registration Statement. Under the Registration Rights Agreement, the Authority
is required to allow Participating Broker-Dealers and other persons, if any,
subject to similar prospectus delivery requirements to use the prospectus
contained in the Exchange Offer Registration Statement in connection with the
resale of such Exchange Bonds.

Holders of Bonds will be required to make certain representations to the
Authority (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer.

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The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part.

Following the consummation of the Exchange Offer, holders of the Bonds who
were eligible to participate in the Exchange Offer, but who did not tender their
Bonds will not have any further registration rights and such Bonds will continue
to be subject to certain restrictions on transfer. Accordingly, the liquidity
of the market for such Bonds could be adversely affected.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Authority will accept any and all Bonds
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Authority will issue $1,000 principal amount of
Exchange Bonds in exchange for each $5,000 principal amount of outstanding Bonds
accepted in the Exchange Offer. Holders may tender some or all of their Bonds
pursuant to the Exchange Offer. However, Bonds may be tendered only in integral
multiples of $5,000.

The form and terms of the Exchange Bonds are the same as the form and terms
of the Bonds except that (i) the Exchange Bonds bear a Series B designation and
a different CUSIP Number from the Bonds, (ii) the Exchange Bonds have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof and (iii) the holders of the Exchange Bonds will not be
entitled to certain rights under the Registration Rights Agreement, including
the provisions providing for an increase in the interest rate on the Bonds in
certain circumstances relating to the timing of the Exchange Offer, all of which
rights will terminate when the Exchange Offer is terminated. The Exchange Bonds
will evidence the same debt as the Bonds and will be entitled to the benefits of
the Indenture.

As of the date of this Prospectus, $66,975,000 aggregate principal amount
of Bonds were outstanding. The Authority has fixed the close of business on
________, 1997 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.

Holders of Bonds do not have any appraisal or dissenters' rights under the
General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Authority intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder.

The Authority shall be deemed to have accepted validly tendered Bonds when,
as and if the Authority has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the Exchange Bonds from the Authority.

If any tendered Bonds are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Bonds will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.

Holders who tender Bonds in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Bonds pursuant to
the Exchange Offer. The Authority will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
____________ 1997, unless the Authority, in its reasonable discretion, extends
the Exchange Offer, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended. Notwithstanding
the foregoing, the Authority will not extend the Expiration Date beyond
, 1997.

In order to extend the Exchange Offer, the Authority will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date.

The Authority reserves the right, in its reasonable discretion, (i) to
delay accepting any Bonds, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the

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<PAGE>

Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.

INTEREST ON THE EXCHANGE BONDS

The Exchange Bonds will bear interest from their date of issuance. Holders
of Bonds that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the Exchange Bonds. Such
interest will be paid with the first interest payment on the Exchange Bonds on
_______________, 1997. Interest on the Bonds accepted for exchange will cease
to accrue upon issuance of the Exchange Bonds.

Interest on the Securities is payable semi-annually on each June 1 and
December 1, commencing on June 1, 1996.

PROCEDURES FOR TENDERING

Only a holder of Bonds may tender such Bonds in the Exchange Offer. To
tender in the Exchange Offer, a holder must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed
if required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Bonds and any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. To be tendered effectively, the Bonds, Letter of
Transmittal and other required documents must be completed and received by the
Exchange Agent at the address set forth below under "Exchange Agent" prior to
5:00 p.m., New York City time, on the Expiration Date. Delivery of the Bonds
may be made by book-entry transfer in accordance with the procedures described
below. Confirmation of such book-entry transfer must be received by the
Exchange Agent prior to the Expiration Date.

By executing the Letter of Transmittal, each holder will make to the
Authority the representations set forth above in the third paragraph under the
heading "Purpose and Effect of the Exchange Offer."

The tender by a holder and the acceptance thereof by the Authority will
constitute agreement between such holder and the Authority in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.

THE METHOD OF DELIVERY OF BONDS AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE
HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR BONDS SHOULD BE SENT TO THE AUTHORITY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.

Any beneficial owner whose Bonds are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf See "Instruction to
Registered Holder and/or Book-Entry Transfer Facility Participant from Owner"
included with the Letter of Transmittal.

Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of the Medallion System unless
the Bonds tendered pursuant thereto are tendered (i) by a registered holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of a member firm of the Medallion System. In the event that signatures
on a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System.

If the Letter of Transmittal is signed by a person other than the
registered holder of any Bonds listed therein, such Bonds must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Bonds with the signature
thereon guaranteed by a member firm of the Medallion System.

If the Letter of Transmittal or any Bonds or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Authority of their authority to so act must be submitted with the Letter of
Transmittal.

The Authority understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Bonds at the book-entry transfer facility, The Depository Trust Company, for
the purpose of facilitating the Exchange Offer, and subject to the establishment
thereof, any financial institution that is a participant in The

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Depository Trust Company's system may make book-entry delivery of Bonds by
causing such Book-Entry Transfer Facility to transfer such Bonds into the
Exchange Agent's account with respect to the Bonds in accordance with The
Depository Trust Company's procedures for such transfer. Though delivery of
the Bonds may be effected through book-entry transfer into the Exchange
Agent's account at The Depository Trust Company, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted
to and received or confirmed by the Exchange Agent at its address set forth
below on or prior to the Expiration Date, or, if the guaranteed delivery
procedures described below are complied with, within the time period provided
under such procedures. Delivery of documents to The Depository Trust Company
does not constitute delivery to the Exchange Agent.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Bonds and withdrawal of tendered Bonds will be
determined by the Authority in its reasonable discretion, which determination
will be final and binding. The Authority reserves the absolute night to reject
any and all Bonds not properly tendered or any Bonds the Authority's acceptance
of which would, in the opinion of counsel for the Authority, be unlawful. The
Authority also reserves the right in its reasonable discretion to waive any
defects, irregularities or conditions of tender as to particular Bonds. The
Authority's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Bonds must be cured within such time as the Authority
shall determine. Although the Authority intends to notify holders of defects or
irregularities with respect to tenders of Bonds, neither the Authority, the
Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Bonds will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Bonds
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned by
the Exchange Agent to the tendering holders, unless otherwise provided in the
Letter of Transmittal, as soon as practicable following the Expiration Date.

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Bonds and (i) whose Bonds are not
immediately available, (ii) who cannot deliver their Bonds, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:

(a) the tender is made through a member firm of the Medallion System;

(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Bonds and the principal amount of Bonds tendered, stating that the
tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s)
representing the Bonds (or a confirmation of book-entry transfer of such
Bonds into the Exchange Agent's account at The Depository Trust Company),
and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and

(c) such properly completed and executed Letter of Transmittal (of facsimile
thereof), as well as the certificate(s) representing all tendered Bonds in
proper form for transfer (or a confirmation of book-entry transfer of such
Bonds into the Exchange Agent's account at The Depository Trust Company),
and all other documents required by the Letter of Transmittal are received
by the Exchange Agent upon five New York Stock Exchange trading days after
the Expiration Date.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Bonds according to the guaranteed
delivery procedures set forth above.

WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Bonds may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.

To withdraw a tender of Bonds in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify
the name of the person having deposited the Bonds to be withdrawn, (ii) identify
the Bonds to be withdrawn (including the certificate number(s) and principal
amount of such Bonds, or, in the case of Bonds transferred by book-entry
transfer, the name and number of the account at The Depository Trust Company to
be credited), (iii) be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such Bonds were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to have

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the Trustee with respect to the Bonds register the transfer of such Bonds
into the name of the person withdrawing the tender and (iv) specify the name
in which any such Bonds are to be registered, if different from that of the
person having deposited the Bonds to be withdrawn. All questions as to the
validity, form and eligibility (including time of receipt) of such notices
will be determined by the Authority, whose determination shall be final and
binding on all parties. Any Bonds so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no Exchange
Bonds will be issued with respect thereto unless the Bonds so withdrawn are
validly retendered. Any Bonds which have been tendered but which are not
accepted for exchange will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Bonds may be
retendered by following one of the procedures described above under
"-Procedures for Tendering" at any time prior to the Expiration Date.

CONDITIONS

Notwithstanding any other term of the Exchange Offer, the Authority shall
not be required to accept for exchange, or Exchange Bonds for, any Bonds, and
may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Bonds, if:

(a) any action or proceeding is instituted or threatened in any court or by or
before any governmental agency with respect to the Exchange Offer which, in
the reasonable judgment of the Authority, might materially impair the
ability of the Authority to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Authority or any of its subsidiaries; or

(b) any law, statute, rule, regulation or interpretation by the staff of the
Securities and Exchange Commission is proposed, adopted or enacted, which,
in the reasonable judgment of the Authority, might materially impair the
ability of the Authority to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Authority; or

(c) any governmental approval has not been obtained, which approval the
Authority shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.

If the Authority determines in its reasonable discretion that any of the
conditions are not satisfied, the Authority may (i) refuse to accept any Bonds
and return all tendered Bonds to the tendering holders, (ii) extend the Exchange
Offer and retain all Bonds tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of holders to withdraw such Bonds (see
"Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect
to the Exchange Offer and accept all properly tendered Bonds which have not been
withdrawn.

All conditions to the Exchange Offer (with the exception of certain
governmental approvals) must be satisfied or waived prior to the Expiration
Date. The Authority shall not be required to accept for exchange, or Exchange
Bonds for, any Bonds, and may terminate or amend the Exchange Offer if any of
the specified conditions do not occur prior to the Expiration Date.

EXCHANGE AGENT

SouthTrust Bank of Alabama, N.A.
P.O. Box 2554
Birmingham, Alabama 35290

Attention: Judy Miller
Telephone: (205) 254-5000
Fax: (205) 254-4180

Delivery to an address other than as set forth above will not constitute a
valid delivery.

FEES AND EXPENSES

The expenses of soliciting tenders will be born by the Authority. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Authority and its affiliates.

The Authority has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Authority, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.

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The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Authority. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, among
others.

ACCOUNTING TREATMENT

The Exchange Bonds will be recorded at the same carrying value as the
Bonds, which is face value, as reflected in the Authority's accounting records
on the date of exchange. Accordingly, no gain or loss for accounting purposes
will be recognized by the Authority. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Bonds.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages (as of September 30, 1996) and a brief
account of the business experience of each person who is a director or executive
officer of the Credit Enhancement Provider.

NAME AGE POSITION

Franklin L. Haney 56 President and Director
Emeline W. Haney 49 Director
Chris E. Zahnd 55 Director
Roger D. Bailey 51 Secretary

FRANKLIN L. HANEY. Mr Haney is a graduate of the University of Tennessee at
Knoxville and received his law degree from George Washington School of Law. Mr.
Haney is the founder and sole proprietor of the Franklin L. Haney Company which
was established in 1968. The Franklin L. Haney Company is engaged in real
estate development and finance brokering. Mr. Haney is married to Emeline W.
Haney.

EMELINE W. HANEY. Mrs. Haney is a graduate of the University of Georgia. Mrs.
Haney has not been employed during the past five years, but is the mother of
five children and is active in many civic and community projects. She was
instrumental in establishing the Childrens Advocacy Center of Hamilton County,
the first such center in Tennessee and is currently working to establish Home
Safe, a Childrens Advocacy Center in Palm Beach, Florida. Mrs. Haney is also
active in the Franklin L. Haney Company. Mrs. Haney is married to Franklin L.
Haney.

CHRIS ZAHND. Mr. Zahnd is a graduate of the University of Tennessee at
Chattanooga. Mr. Zahnd has worked in the hotel industry for the past 16 years.
During more than the past five years, he has been the evening Manager of the
Holiday Inn Chattanooga Choo-Choo in Chattanooga, Tennessee, where he has been
responsible for all aspects of the evening operations of the hotel. Prior to
entering the inn keeping business, he was involved in the accounting and banking
industries.

ROGER D. BAILEY. Mr. Bailey is a former C.P.A. with Arthur Andersen & Co. and
has over 25 years experience in accounting and financial businesses. He is
currently Chief Financial Officer for the Franklin L. Haney Company, a position
he has held for more than the last five years. As Chief Financial Officer, Mr.
Bailey is responsible for the financial operations of the Franklin L. Haney
Company, including accounting, bookkeeping, auditing, tax matters and financial
reporting.

EXECUTIVE COMPENSATION

None of the officers or directors of the Authority or the Credit
Enhancement Provider receives compensation from either the Authority or the
Credit Enhancement Provider for serving as an officer or a director, although
certain of them are employed by Franklin L. Haney Company, an entity affiliated
with the Credit Enhancement Provider. See "Management." Franklin L. Haney,
President and a Director of the Credit Enhancement Provider and Secretary and a
Director of the Authority, has financial interests in some of the transactions
described in this Prospectus. See "Certain Relationships and Related
Transactions."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Franklin L. Haney, the President and a Director of the Credit Enhancement
Provider, is also the President and a Director of a number of other affiliated
companies: Tower Associates, Inc.; Tower Associates II, Inc.; Building Finance
Company of Tennessee, Inc.; BFC Finance Corp.; BFC Guaranty Corp.; Douglas
County Development Corporation; and DCDC II, Inc. In addition, Franklin L.
Haney is the Secretary and a Director of Castle Rock Public Improvement
Authority. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS--Graphical
Depiction of Affiliates."

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SECURITY OWNERSHIP

The Authority is a nonprofit corporation organized under the laws of the
State of Colorado to be in general compliance with the requirements of Internal
Revenue Service Revenue Procedure 82-26, which provides that the Internal
Revenue Service will ordinarily rule obligations issued by a nonprofit
corporation or issued on behalf of a governmental unit with the requirements of
the revenue procedure that the requirements of the revenue procedure are met.
See "The Authority." The Authority has no members and no shareholders, but is
organized and operated exclusively on behalf of and for the benefit and in
furtherance of the purposes of Dawson Ridge Metropolitan District No. 5, which
is a municipal corporation and political subdivision of the State of Colorado.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following is a description of certain relationships and related-party
transactions.

SALE OF THE PROPERTY

Franklin L. Haney is a Director of the Authority, which recently acquired
the Property from DCDC for $54,550,000 cash. Franklin L. Haney owns Douglas
County Development Corporation. At the present time, DCDC owns approximately
75% of the taxable property within the Districts.

THE CREDIT ENHANCEMENT

Franklin L. Haney also owns 49% of Building Finance Company of Tennessee,
Inc. ("BFCT"). BFCT owns the Registrant, BFC Guaranty Corp., which is providing
the Credit Enhancement for the Bonds. BFCT also owns BFC Finance Corp., which
issued the $67,075,000 Series B REMIC Bonds that secure the Credit Enhancement.
The Series B REMIC Bonds are payable from notes held in a trust estate (the
"REMIC Trust Estate") under an indenture of trust between the trustee and BFC
Finance Corp.

The remaining 51% of BFCT is owned by Franklin L. Haney's father-in-law,
Herbert L. Oakes. Franklin L. Haney and his wife Emeline W. Haney are the
Directors and, respectively, the President and Secretary of BFCT.

REMIC TRUST ESTATE - OTHER ASSETS

In addition to the Series B REMIC Bonds securing the Credit Enhancement,
the REMIC Trust Estate contains assets resulting from other transactions between
BFCT and BFC Finance Corp., but that do not secure the Credit Enhancement.
These assets include (i) notes issued by DCDC II, Inc., a Colorado corporation,
representing a $9,310,689.07 loan originated by BFCT and (ii) notes issued by
Parcel 49C Limited Partnership, a limited partnership, representing a
$99,000,000 loan originated by BFCT. Franklin L. Haney owns 21%, and Douglas
County Development Corporation owns 79%, of DCDC II, Inc. Franklin L. Haney
owns 16%, and various members of his family own the remaining 84%, of Tower
Associates II, Inc., which is a general partner and a limited partner of
Parcel 49C Limited Partnership. (See "Credit Enhancement.") The REMIC Trust
Estate also contains $74,925,000 Series A REMIC Bonds, which were issued by BFC
Finance Corp.

OFFICERS AND DIRECTORS

The officers and directors of BFC Guaranty Corp., BFC Finance Corp., and
Tower Associates II, Inc., each of which is a Delaware Corporation, are
identical. (See "Management.")

C. Roger Addlesperger is a director for each of the Districts, as is his
wife, Candace Addlesperger. C. Roger Addlesperger has also served as a
consultant on matters relating to the real estate within the Dawson Ridge
development for Franklin L. Haney Company, a sole proprietorship owned by
Franklin L. Haney. Mr. Addlesperger has received approximately $363,267.33 from
Franklin L. Haney Company for his consulting services since the beginning of
Franklin L. Haney Company's last full fiscal year. Mr. Addlesperger has also
served as Vice President of Douglas County Development Corporation.

ABSENCE OF PREFERENTIAL TERMS

According to the Registrant, the transactions described herein are on no
more favorable terms than would have been achieved if each of the transactions
was between unrelated third parties.

GRAPHICAL DEPICTION OF AFFILIATES

The following chart depicts the relationships between the various
affiliates of the Registrant.

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<PAGE>

------------------------
FRANKLIN L. HANEY -
INDIVIDUAL

FRANKLIN L. HANEY
COMPANY
A SOLE PROPRIETORSHIP
-----------------------
|
|
---------------------------------------------------------------------------------
| | | |
| | | |
| | | |
- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------
CASTLE ROCK RANCH DOUGLAS COUNTY BUILDING FINANCE COMPANY TOWER ASSOCIATES, INC. TOWER ASSOCIATES
PUBLIC IMPROVEMENTS DEVELOPMENT CORPORATION OF TENNESSEE II, INC.
AUTHORITY (DCDC)
OWNERSHIP: OWNERSHIP: OWNERSHIP:
OWNERSHIP: NONE - OWNERSHIP: FRANKLIN L. HANEY 49% FRANKLIN L. HANEY FRANKLIN L. HANEY
GOVERNMENTAL ENTITY FRANKLIN L. HANEY 100% HERBERT OAKES 51% AND HIS FAMILY 100% AND HIS FAMILY 100%
- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------
| | | |
| | | |
| | | |
------------------------ ------------------------ ------------------------ ------------------------
DCDC II BFC FINANCE CORP. PARCEL 49B PARCEL 49C
(REMIC) LIMITED PARTNERSHIP LIMITED PARTNERSHIP
OWNERSHIP: OWNERSHIP:
OWNERSHIP: OWNERSHIP: TOWER ASSOCIATES, TOWER ASSOCIATES II,
FRANKLIN L. HANEY 21% BUILDING FINANCE COMPANY INC. 50% INC. 50%
DCDC 79% OF TENNESSEE, INC. 100% OTHER UNRELATED 50% OTHER UNRELATED 50%
------------------------ ------------------------ ------------------------ ------------------------
|
|
|
------------------------
BFC GUARANTY CORP.

OWNERSHIP:
BUILDING FINANCE COMPANY
OF TENNESSEE, INC. 100%
------------------------
</TABLE>

<PAGE>

DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS

Capitalized terms used in this Prospectus, and not otherwise defined, are
used with the meanings assigned to such terms in the Indenture, the Operating
Agreement, the Intergovernmental Agreement, the Deed of Trust, the
Collateralized Credit Enhancement Agreement, the Reimbursement Agreement, the
Development Agreement, the Recreational Facilities Agreement and the Lease, as
applicable. The following definitions of such capitalized terms are summaries
of the definitions applicable in such documents, with such modifications as may
be appropriate for use in this Prospectus. Summaries of the Indenture, the
Collateralized Credit Enhancement Agreement, the Deed of Trust, the Operating
Agreement, the Intergovernmental Agreement, the Lease, the Development Agreement
and the Recreational Facilities Agreement are included in this Prospectus, but
are qualified in their entirety by reference to the actual documents being
summarized. Copies of such documents are available from the Exchange Agent.

DEFINITIONS OF CERTAIN TERMS

"1986 BONDS" shall mean the general obligation bonds in the original
principal amount of $24,725,000 issued by Dawson Ridge Metropolitan
District No. 1.

"1992 BONDS" shall mean

"1992 DEED OF TRUST" shall mean the Deed of Trust securing the 1992 Bonds.

"ACCOUNTANT" shall mean a person or firm engaged in the practice of
accounting who is a nationally recognized certified public accountant
acceptable to the Trustee and who is independent of the entity whose accounts
are being audited.

"ACQUISITION AND CONSTRUCTION NOTES" shall mean those notes held in REMIC
Trust Estate issued by Parcel 49C Limited Partnership.

"ACT" shall mean Title 32 of the Colorado Revised Statutes, as amended.

"ACT OF BANKRUPTCY" shall mean the filing of a petition in bankruptcy (or
other commencement of a bankruptcy or similar proceeding) by or against the
Authority under any applicable bankruptcy, insolvency or similar law as now
or hereafter in effect.

"ADDITIONAL INTEREST" shall mean additional interest payable to each
Holder of Transfer Restricted Securities calculated at the rate of 1% per
annum on the principal amount of such Transfer Restricted Securities during
the period (prior to the registration of the Bonds) that any Nonregistration
exists.

"AMENDMENT ONE" shall mean the provisions of an amendment to the
Constitution of the State of Colorado, approved in the November 3, 1992
general election which may affect property tax revenues and spending for the
Districts.

"AUTHORITY" shall mean Castle Rock Ranch Public Improvements Authority, a
corporate instrumentality of the District and a nonprofit corporation
organized and existing under and by virtue of the laws of the State of
Colorado.

"AVAILABLE MONEYS" shall mean (a) proceeds of the Bonds received
contemporaneously with the issuance and sale of the Bonds and held by the
Trustee at all times since receipt of such proceeds in a separate and
segregated account in which only Available Monies were at any time held, and
the proceeds from the investment thereof, (b) monies paid by the Authority to
the Trustee which monies shall have been held by the Trustee for at least 126
days prior to the date such monies are to be applied to the payment of
principal or interest on the Bonds, provided that no Act of Bankruptcy shall
have occurred during such 126 day period, (c) monies drawn under any Credit
Enhancement which are either applied directly to the payment of the principal
of or interest on the Bonds or which, if not so applied, are held in a
separate and segregated subaccount under the Indenture until so applied, (d)
deposits with the Trustee as agent and bailee of proceeds of the issuance of
refunding obligations or obligations of the Authority or the District if, in
the written opinion of nationally recognized counsel experienced in
bankruptcy matters and acceptable to the Trustee, the deposit and use of such
proceeds will not constitute a voidable preference under the Bankruptcy Code
in the case of bankruptcy of the Authority or the District, (e) any other
money the application of which will not, in the written opinion of nationally
recognized counsel experienced in bankruptcy matters and acceptable to the
Trustee, constitute a voidable preference under the Bankruptcy Code in the
case of bankruptcy of the Authority or the District, and (f) investment
income derived from the investment of the foregoing types of monies; provided
that such proceeds, monies or income shall not

39
<PAGE>

be deemed to be Available Monies or available for payment of the Bonds if,
among other things, an injunction, restraining order or stay is in effect
preventing such proceeds, monies or income from being applied to make such
payment.

"BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of 1978, as amended.

"BENEFICIAL OWNER" shall mean each actual purchaser of each Bond or
Exchange Bond.

"BOND COUNSEL" shall mean any attorney at law or firm of attorneys selected
by the Authority, of nationally recognized standing in matters pertaining to the
validity of and federal tax exemption of interest on obligations issued by
states and political subdivisions, and duly admitted to practice law before the
highest court of any state of the United States of America.

"BONDS" shall mean the Authority's $66,975,000 aggregate principal amount
of Public Facilities Revenue Bonds, Series 1996, issued pursuant to the
Indenture and, after the exchange pursuant to the Registration Rights Agreement,
shall include the bonds issued in exchange therefor (all such bonds to have the
same rights and to be considered as one series for all purposes under the
Indenture).

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

"COLLATERAL" shall mean the Series B REMIC Bonds, the payments on such
Bonds and any Federal Securities substituted therefor.

"CREDIT ENHANCEMENT" shall mean that Collateralized Credit Enhancement
Agreement from the Credit Enhancement Provider for the benefit of the Trustee,
together with the Collateral (which shall be pledged and assigned pursuant
thereto).

"CREDIT ENHANCEMENT PROVIDER" shall mean BFC Guaranty Corp., a Delaware
corporation.

"DEED OF TRUST" shall mean that certain Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents and Leases, dated March 1, 1996,
from the Authority for the benefit of the Trustee and the Credit Enhancement
Provider.

"DEVELOPMENT AGREEMENT" shall mean the Development Agreement, dated as of
March 1, 1996, between the Authority and Douglas County Development Corporation.

"DIRECT PARTICIPANTS" shall mean participants in the DTC and shall include
security brokers and dealers, banks, trust companies, clearing corporations and
certain other organizations.

"DISTRICT" shall mean generally the Dawson Ridge Metropolitan District No.
5 as the same is organized and existing under and by virtue of the laws of the
State of Colorado now in effect and as hereafter amended. "DISTRICTS" shall
mean the following Districts: Dawson Ridge Metropolitan District No. 1, Dawson
Ridge Metropolitan District No. 2, Dawson Ridge Metropolitan District No. 3,
Dawson Ridge Metropolitan District No. 4 and Dawson Ridge Metropolitan District
No. 5. "RELATED DISTRICTS" shall mean Dawson Ridge Metropolitan District No. 1,
Dawson Ridge Metropolitan District No. 2, Dawson Ridge Metropolitan District No.
3 and Dawson Ridge Metropolitan District No. 4.

"EVENT OF DEFAULT" shall have the meaning given to that term in the
document in which such term is being used.

"EXCHANGE BONDS" shall mean the Public Facilities Revenue Bonds, Series
1996B.

"EXCHANGE OFFER" shall mean the offer by the Authority to exchange $5,000
principal amount of the Exchange Bonds for each $5,000 principal amount of its
outstanding Bonds, of which $66,975,000 principal amount is outstanding.

"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean the registration
statement filed in connection with the offering of the Exchange Bonds.

"EXPENSE OBLIGATION" shall mean the obligation of each District to pay its
Proportionate Share of Operations and Maintenance Expense pursuant to the
Intergovernmental Agreement.

"EXPIRATION DATE" shall mean 5:00 p.m., New York City time on _____________,
1997 unless the Exchange Offer is extended, in which case it shall mean the
latest date and time to which the Exchange Offer is extended.

40
<PAGE>

"EXTRA PAYMENTS" shall mean payments with respect to premium, if any, on
the Bonds, interest on the Bonds in excess of the pre-default rate thereon,
Additional Interest and amounts due solely as a result of acceleration of the
Bonds.

"FEDERAL SECURITIES" shall mean securities of the type described in
paragraphs (a), (b) and (c)(v) of the definition of Investment Securities.

"FEE AGREEMENT" shall mean the Facilities Development Fee Agreement, dated
as of April 1986, between Bellamah Community Development and Dawson Ridge
Metropolitan District No. 1.

"FINANCING OBLIGATIONS" shall mean the obligations which arise pursuant to
the provisions of the Intergovernmental Agreement as evidenced by the execution
of the Intergovernmental Agreement by each District.

"HOLDER" or "BONDHOLDER" shall mean the person in whose name such Bond
shall be registered.

"IMMUNITY ACT" shall mean the Colorado Governmental Immunity Act, Part I of
Article 10 of Title 24, Colorado Revised Statutes, as amended.

"INDEBTEDNESS" shall mean any indebtedness or obligation of the Authority
which, in accordance with generally accepted accounting principles, is
classified as a liability on a balance sheet.

"INDENTURE" shall mean the Indenture of Trust, dated as of March 1, 1996,
between the Issuer and the Trustee, together with any indentures supplemental
thereto made in conformity therewith.

"INDIRECT PARTICIPANTS" shall include banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly.

"INTEREST PAYMENT DATE" shall mean June 1 and December 1 of each year,
commencing with respect to the Bonds, on December 1, 1996.

"INTERGOVERNMENTAL AGREEMENT" shall mean the Intergovernmental Agreement,
dated as of March 1, 1996, among the Districts, and any amendments or
supplements thereto.

"INVESTMENT SECURITIES" shall mean, and includes, any of the following
investments, to the extent permitted or authorized by applicable law at the time
purchased by the Trustee, bearing interest or issued at a discount to the extent
permitted by applicable law:

(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America
(including obligations issued or held in book-entry form on the books
of the Department of the Treasury of the United States of America);

(b) bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such
obligations are backed by the full faith and credit of the United
States of America (stripped securities are only permitted if they have
been stripped by the agency itself):

(i) U.S. Export-Import Bank (direct obligations or fully
guaranteed certificates of beneficial ownership);

(ii) Farmers Home Administration (certificates of beneficial
ownership);

(iii) Federal Financing Bank;

(iv) General Services Administration participation certificates;

(v) Government National Mortgage Association ("GNMA") guaranteed
mortgage-backed bonds and pass through certificate obligations;

(vi) U.S. Maritime Administration guaranteed Title XI financing
obligations; or

41
<PAGE>

(vii) U.S. Department of Housing and Urban Development (HUD)
project notes, local authority bonds, new communities debentures (U.S.
guaranteed) and U.S. public housing notes and bonds -- U.S. government
guaranteed public housing notes and bonds;

(c) bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit U.S.
government agencies (stripped securities are only permitted if they
have been stripped by the agency itself):

(i) Federal Home Loan Bank System senior debt obligations;

(ii) FHLMC senior debt obligations and participation certificates;

(iii) FNMA mortgage-backed securities and senior debt obligations;

(iv) Student Loan Marketing Association senior debt obligations;
or

(v) Resolution Funding Corporation obligations; or

(d) money market mutual funds rated "AAAm" or "AAAm-G" by Standard &
Poor's Ratings Services, whose investments are limited to securities
of the types listed in (a)-(c) above.

"ISSUE PRICE" shall mean the price at which a substantial amount of one
maturity of the Bonds is first sold to the public.

"LEASE" shall mean that certain U.S. Government Lease for Real Property,
dated August 12, 1994, as supplemented by a Supplemental Lease Agreement No.1,
dated January 3, 1996, and a supplemental Lease Agreement No. 2, dated March 27,
1996, between the General Services Administration of the United States of
America and Parcel 49C Limited Partnership, a District of Columbia limited
partnership, as the same may be further supplemented or amended.

"LETTER OF TRANSMITTAL" shall mean the letter of transmittal accompanying
the Prospectus.

"NON-RECOURSE INDEBTEDNESS" shall mean any indebtedness secured by a lien,
which is not a general obligation of the Authority and liability for which is
effectively limited to the property subject to such lien with no recourse to, or
lien upon, directly or indirectly, the Revenues or any other property of the
Authority.

"NON SET-OFF LEASE PAYMENTS" shall mean rental payments made pursuant to
the Lease that are not subject to set-off by reason of the failure of 49C to
perform its obligations thereunder.

"OPERATING AGREEMENT" shall mean the Operating Agreement, dated as of March
1, 1996, by and between the Authority and the District.

"OPERATING AGREEMENT PAYMENTS" shall mean the Operating Agreement Payments
required to be made by the District under the Operating Agreement, as the same
shall be amended and supplemented from time to time in accordance with the
express provisions thereof.

"OPERATION AND MAINTENANCE EXPENSES" shall mean such reasonable and
necessary current expenses, paid or accrued, for operation, maintenance and
repair of the Recreational Facilities (as such term is defined in the Operating
Agreement) as may be determined by the Authority, and the term may also include
except as limited by contract or otherwise limited by law, without limiting the
generality of the foregoing:

(1) legal and overhead expenses of the Authority directly related and
reasonably allocable to the administration of the Recreational
Facilities;

(2) all insurance premiums and premiums or fees for fidelity bonds
appertaining to or required for the Recreational Facilities or a
reasonably allocable share of a premium of any blanket bond or
policy pertaining to the Recreational Facilities;

(3) contractual services, professional services, salaries,
administrative expenses, and costs of labor appertaining to the
Recreational Facilities;

42
<PAGE>

(4) the costs incurred in the collection of all or any part of the
Revenues from Recreational Facilities;

(5) any costs of utility services furnished to the Recreational
Facilities; and

(6) payments of taxes, payments in lieu of taxes, assessments imposed
by any governmental unit or public corporation, or any monthly
deposits to an escrow established for any such purposes;

"Operation and Maintenance Expenses" does not include:

(a) any allowance for depreciation;

(b) any costs of Recreational Facilities renewals or replacements, major
repairs, reconstruction, improvements, extensions, or betterments;

(d) any reserves for operation, maintenance, or repair of the Recreational
Facilities;

(e) any allowance for the redemption of the Bonds, or the payment of any
interest thereon;

(f) any liabilities incurred in the acquisition or improvement of any
properties comprising the Recreational Facilities or any combination
thereof; and

(g) any other ground of legal liability not based on contract.

"OPINION OF COUNSEL" shall mean a written opinion of counsel (who may be
counsel for the Authority) appointed by the Authority.

"OUTSTANDING" shall mean all Bonds (including, under certain
circumstances, pledged bonds) theretofore authenticated and delivered by the
Trustee under the Indenture except:

(a) Bonds theretofore cancelled by the Trustee or surrendered to the
Trustee for cancellation;

(b) Bonds for the payment or redemption of which Available Moneys in the
necessary amount shall have theretofore been deposited with the Trustee (whether
upon or prior to the maturity or the redemption date of such Bonds); provided
that, if such Bonds are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as provided in the Indenture or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
and

(c) Bonds in lieu of, or in substitution for, which other Bonds shall have
been authenticated and delivered by the Trustee pursuant to the Indenture.

"PARTICIPATING BROKER-DEALER" shall mean a broker-dealer that receives
Exchange Bonds for its own account pursuant to the Exchange Offer.

"PROJECT" shall mean the acquisition, construction, equipping and improving
of certain public improvements consisting of parks and recreational facilities.

"PROPERTY" means the Real Estate (upon which certain of the Project
facilities will be located) and water rights acquired with proceeds of the
Bonds.

"PROPORTIONATE SHARE" shall mean, for a District, the ratio of the
estimated assessed value of all taxable real and personal property in such
District to the total assessed value of all taxable real and personal property
in all the Districts.

"PROSPECTUS" shall mean the Prospectus relating to the initial offering of
the Exchange Bonds.

"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of March
26, 1996, between the Authority and Lehmann Brothers Inc.

43
<PAGE>

"RATING AGENCY" shall mean Standard & Poor's Ratings Services or, if
Standard & Poor's Ratings Services is no longer rating the Bonds, any nationally
recognized statistical rating organization which is then rating the Bonds.

"REAL ESTATE" shall mean an approximately 876 acre portion of the Dawson
Ridge Development in the Town of Castle Rock, Colorado.

"RECORD DATE" shall mean the close of business on the 15th day of the
calendar month immediately preceding the Interest Payment Date.

"RECREATIONAL FACILITIES" shall mean parks and recreational facilities
located within or for the benefit of the District.

"RECREATIONAL FACILITIES AGREEMENT" shall mean the Recreational Facilities
Agreement, dated as of March 1, 1996, between the Authority and the District.

"REGISTRATION RIGHTS AGREEMENT" shall mean the agreement among the
Authority, the Credit Enhancement Provider and the Underwriter, described more
fully under "THE BONDS - Registration Rights, - Additional Interest."

"REIMBURSEMENT AGREEMENT" shall mean the Reimbursement Agreement, dated as
of March 1, 1996, between the Authority and the Credit Enhancement Provider, as
the same may be supplemented or amended.

"REMIC INDENTURE" shall mean an indenture of trust between BFC Finance
Corp. and SouthTrust Bank of Alabama, National Association.

"REMIC TRUST ESTATE" shall mean a trust estate established under the REMIC
Indenture in accordance with the provisions of a Bond Pledge and Security
Agreement between the Credit Enhancement Provider, the Trustee and the REMIC
Trustee.

"REMIC TRUSTEE" shall mean the SouthTrust Bank of Alabama, National
Association.

"REVENUE OBLIGATION" shall mean the obligation of the Districts under the
Intergovernmental Agreement to pay the deficiencies required to pay obligations
secured by the Deed of Trust.

"REVENUES" shall mean all proceeds, charges, income, rents, receipts,
profits, benefits and existing fund balances of the Authority, exclusive of (i)
payments for Operation and Maintenance Expenses paid by the District pursuant to
the Operating Agreement, (ii) any gifts, grants, bequests, donations and
contributions to the extent specifically restricted by the donor to a particular
purpose inconsistent with their use for Bond payments, and (iii) any payments
received by the Authority pursuant to the Development Agreement.

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

"SPECIAL RECORD DATE" shall mean a date fixed by the Trustee whenever
moneys become available for payment of defaulted interest.

"TRUSTEE" shall mean SouthTrust Bank of Alabama, National Association, a
national banking association organized and existing under and by virtue of the
laws of the United States of America having a corporate trust office in
Birmingham, Alabama, or its successor as Trustee under the Indenture.

"TRUST ESTATE" shall mean all of the property described in the granting
clauses of the Indenture or of any supplemental indenture.

"UNDERWRITER" shall mean Lehmann Brothers Inc.

THE INDENTURE

The following summarizes certain provisions of the Indenture which are not
summarized elsewhere in the Limited Offering Memorandum. This summary does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by, reference to the Indenture. Copies of the
Indenture are available from the Trustee.

44
<PAGE>

AUTHORIZED AMOUNT OF BONDS

The total principal amount of Bonds that may be issued under the Indenture
is expressly limited to $66,975,000. The Authority may issue Bonds under the
Indenture in exchange for the Bonds pursuant to the Registration Rights
Agreement.

ADDITIONAL BONDS AND SUBORDINATE INDEBTEDNESS

So long as any of the Bonds remain Outstanding, the Authority will not
issue any additional bonds or obligations payable from Revenues or having a lien
upon the Trust Estate having priority over, or on a parity with, the Bonds.

The Authority may incur any Indebtedness secured by a lien or encumbrance
which is expressly stated to be junior and subordinate to the lien and
encumbrance upon the Revenues created under the Indenture and to the Deed of
Trust except as otherwise provided in the Indenture. Subordinate Indebtedness
shall have no rights of acceleration or foreclosure. No such subordinate
Indebtedness shall be secured by the Credit Enhancement. No such subordinate
Indebtedness shall be issued without the consent of the Credit Enhancement
Provider.

ESTABLISHMENT OF FUNDS

Upon the issuance of the Bonds, the Authority and/or the Trustee will
establish and create the following funds and accounts:

(a) Project Fund; and within the Project Fund, the Costs of Issuance
Account.

(b) Revenue Fund.

(d) Interest Fund, and within the Interest Fund, the following
accounts:

(i) Capitalized Interest Account

(ii) Collateralized Credit Interest Account

(iii) Revenue Interest Account

(e) Principal Fund, and within the Principal Fund, the following
accounts:

(i) Collateralized Credit Principal Account

(ii) Revenue Principal Account

(iii) The Sinking Fund Accounts

(f) Redemption Fund, and within the Redemption Fund, the following
accounts:

(i) Special Redemption Account

(ii) Redemption Holding Account

(g) Rebate Fund.

PROJECT FUND

The Authority shall establish, maintain and hold a separate fund to be
known as the "Project Fund." The proceeds of the Bonds deposited in the Project
Fund shall be applied for the purpose of providing funds for the acquisition of
the Property and payment of expenses incident to the Project, including
architectural and engineering fees and expenses, tests and inspection, surveys,
land acquisition, the fees and expenses of the Trustee, costs of issuance and
all other expenses in connection with the preparation, issuance and delivery of
the Bonds of legal fees and expenses of counsel, and similar expenses.

45
<PAGE>

Before any expenditure is made from the Project Fund, the Authority shall
determine that the entire sum of the expenditures then to be made and of all
other expenditures previously made from the Project Fund have been used to
finance the acquisition of the Property and expenses incident thereto, all of
which property other than land is of a character subject to the allowance for
depreciation under Section 167 of the Code.

REVENUE FUND

The Authority agrees that, so long as any of the Bonds remain Outstanding,
all of the Revenues of the Authority shall be deposited as soon as practicable
upon receipt in the Revenue Fund which the Authority shall establish and
maintain in an account to be held by the Trustee. Subject only to the
provisions of the Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth therein, the Authority pledges and, to
the extent permitted by law, grants a security interest to the Trustee in the
Revenue Fund to secure the payment of the principal of, premium, if any, and
interest on the Bonds.

CREDIT ENHANCEMENT OF THE BONDS; ALLOCATION OF REVENUES

So long as the Credit Enhancement is in effect and no Event of a Default
exists thereunder, all payments of principal and interest on the Bonds (except
for interest for the period prior to March 1, 1998, Additional Interest, other
Extra Payments and amounts payable on redemption in the event of a taking of the
Project by eminent domain) shall be made from the proceeds of draws on the
Credit Enhancement which are to be deposited directly in the Collateralized
Credit Fund. Pursuant to the Bond Pledge and Security Agreement, all payments
in regard to the Collateral are to be made directly to the Trustee, and shall be
deposited in the Collateralized Credit Fund. To the extent that the amount in
the Collateralized Credit Fund is insufficient on any Interest Payment Date to
pay interest (other than interest for the period prior to March 1, 1998,
Additional Interest, any other interest constituting Extra Payments and Interest
due as a result of a redemption (described above) and principal due and payable
on the Bonds on such Interest Payment Date (other than amounts payable on such a
redemption) the Trustee shall demand that the Credit Enhancement Provider
immediately deposit the amount of such deficiency in the Collateralized Credit
Fund.

The Trustee shall have the obligation to hold and maintain the Credit
Enhancement for the benefit of the owners of Bonds in accordance with its terms.
If at any time during the term of the Credit Enhancement any successor Trustee
shall be appointed and qualified under the Indenture, the resigning Trustee
shall request that the provider of such Credit Enhancement transfer or cause the
transfer of the Credit Enhancement to the successor Trustee. If the resigning
Trustee fails to make this request, the successor Trustee shall do so before
accepting appointment.

On or before each Interest Payment Date, the Trustee shall transfer from
the Revenue Fund and deposit into the following respective accounts or transfer
the respective amount directly, as provided below, the following amounts, in the
following order of priority, the requirements of each such account (including
the making up of any deficiencies in any such account resulting from lack of
moneys sufficient to make any earlier required deposit) at the time of deposit
to be satisfied before any transfer is made to any account subsequent in
priority:

(1) Available Moneys to the Revenue Interest Account, in an
amount equal to the aggregate amount of interest becoming due and payable on
the next such Interest Payment Date on all Bonds then Outstanding (other than
Additional Interest, interest constituting Excess Payments or payable as a
result of certain redemptions) less any amounts to be transferred to the
Interest Fund from the Capitalized Interest Account as capitalized interest
and less any transfers from the Collateralized Credit Interest Account for
the payment of such interest;

(2) Available Moneys to the Revenue Principal Account, in an
amount equal to the aggregate amount of principal, if any, becoming due and
payable on the Outstanding Bonds (including any mandatory sinking fund
payments required to be paid into the respective Sinking Fund Accounts for
Outstanding Bonds) on the next ensuing Interest Payment Date, less any
transfers from the Collateralized Credit Principal Account for the payment of
such principal;

(3) To the Rebate Fund in accordance with the rebate
instructions;

(4) To the Credit Enhancement Provider to the extent an amount
equal to amounts drawn under the Credit Enhancement and applied to the
payment of principal of or interest on the Bonds, together with interest
thereon as determined pursuant to the Reimbursement Agreement, to the extent
a request for the same has been submitted to the Trustee by the Credit
Enhancement Provider or otherwise provided pursuant to the Credit
Enhancement, and to the extent not previously reimbursed to the Credit
Enhancement Provider by the Trustee from Revenues, unless a default by the
Credit Enhancement Provider has occurred and is continuing under the Credit
Enhancement, in which event such amount shall remain in the Revenue Fund
until such default has been cured or otherwise waived by the Trustee, at
which time such amount shall be paid

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to the Credit Enhancement Provider; provided that Revenues received under the
Development Agreement shall be used first for item (5) that follows;

(5) To the Revenue Interest Account to the extent necessary
for the payment of Additional Interest or any other interest constituting
Extra Payments, to be applied to pay such interest in the order in which it
accrued;

(6) To the extent necessary to pay any other Extra Payments in
the order in which such Extra Payments become due and payable;

(7) To the extent necessary to pay any Trustee and other fees
and expenses then due and payable under the Indenture in the order that such
amounts become due and payable.

Any moneys remaining in the Revenue Fund after the foregoing transfers
may be used by the Authority for any lawful purpose.

REBATE FUND

The Indenture creates and establishes, with the Trustee, a Rebate Fund in
the name of the Authority which shall be expended in accordance with the
provisions of the Indenture and the Tax Certificate. The Trustee shall make
deposits to and disbursements from the Rebate Fund based upon the instructions
of the Authority pursuant to the Indenture and the Tax Certificate. The
Authority shall be responsible for making all such deposits in the Rebate Fund
as required in the Indenture. The Trustee shall invest the Rebate Fund at the
direction of the Authority subject to the restrictions set forth in the tax
certificate to be delivered at the time of issuance of the Bonds.

INVESTMENT OF FUNDS

Subject to the provisions of the Indenture regarding the deposit of and use
of moneys in the Rebate Fund, all moneys in any of the funds and accounts
established pursuant to the Indenture and held by the Trustee shall be invested
by the Trustee as directed by the Authority in writing solely in Investment
Securities. Investment Securities may be purchased at such prices determined by
the Authority. The Authority shall direct such investment so that all
Investment Securities shall be acquired subject to the Authority's tax covenants
contained in the Indenture, the limitations as to maturities set forth in the
Indenture and such additional limitations or requirements consistent with the
foregoing as may be established by written request of the Authority. Absent the
direction of the Authority in the time and manner set forth above, the Trustee
shall invest only in Federal Securities.

All interest, profits and other income received from the investment of
moneys in the Project Fund shall be deposited to the Revenue Fund. All
interest, profits and other income received from the investment of moneys in any
other fund or account established pursuant to the Indenture shall be credited to
the fund or account for the credit of which such Investment Security was
acquired.

DISCHARGE OF THE INDENTURE

When all Bonds secured by the Indenture shall be paid in accordance with
their terms (or payment of such Bonds has been provided for in the manner set
forth in the following paragraph) together with all other sums payable
thereunder, including, amounts due and payable to the Trustee, then the
Indenture and the Trust Estate and all rights granted thereunder (except for any
provisions which may continue to apply as described in the following paragraph)
shall thereupon cease, terminate and become void and be discharged and
satisfied. In such event the Trustee shall assign and transfer to the Authority
(or to the Credit Enhancement Provider if amounts are then due under the
Reimbursement Agreement or the Deed of Trust) all property then held by the
Trustee thereunder and shall execute such documents as may be reasonably
required by the Authority (or by the Credit Enhancement Provider if amounts are
then due under the Reimbursement Agreement or the Deed of Trust) or shall turn
over to the Authority (or to the Credit Enhancement Provider if amounts are then
due under the Reimbursement Agreement or the Deed of Trust) any surplus in any
fund, except the Rebate Fund.

Payment of any outstanding Bond prior to the maturity or redemption date
thereof shall be deemed to have been provided for if (i) in case said Bond is to
be redeemed on any date prior to its maturity, the Authority shall have given to
the Trustee in form satisfactory to it irrevocable instructions to give on a
date in accordance with the provisions of notice of redemption of such Bond on
said redemption date, (ii) there shall have been deposited with the Trustee
either Available Moneys in an amount which shall be sufficient or noncallable
Federal Securities the principal of and the interest on which when due, and
without any reinvestment thereof, will provide moneys which, together with the
Available Moneys, if any, deposited with or held by the Trustee at the same time
and available therefor, shall be sufficient, as verified by an Accountant's
report, to pay when due the principal

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of, premium, if any, and interest due and to become due on said Bond on and
prior to the redemption date or maturity date thereof, as the case may be,
(iii) the Trustee shall have a valid first priority security interest in such
Federal Securities and all proceeds thereof and distributions thereon and
such Federal Securities shall be in the name of the Trustee for the benefit
of the Holders, (iv) the Trustee shall have received an opinion of counsel to
the effect that (1) the Federal Securities have been duly and validly
assigned and delivered to the Trustee for the benefit of the Holders, and (2)
the security interest of the Trustee for the benefit of the Holders is a
first priority security interest perfected to the extent perfection is
permissible under the laws of the state where the collateral is located, (v)
the Trustee will receive an opinion of bond counsel to the effect that
defeasance in accordance with the provisions of the Indenture shall not
adversely affect the exclusion from gross income of interest on the Bonds for
federal income tax purposes, (vi) the Trustee shall have received written
confirmation from the Rating Agency that the defeasance will not result in a
downgrade, withdrawal or qualification of the ratings then assigned to the
Bonds, and (vii) in the event said Bond is not by its terms subject to
redemption within the next 35 days, the Authority shall have given the
Trustee in form satisfactory to it irrevocable instructions to give, as soon
as practicable in the same manner as the notice of redemption is given
pursuant hereto, a notice to the registered owner of such Bond that the
deposit required by (ii) above has been made with the Trustee and that
payment of said Bond has been provided for in accordance with the Indenture.

DISTRICT RIGHTS

The Authority covenants and agrees that all activities of the Authority
shall be undertaken for the benefit of the District. Upon termination of the
Indenture and discharge of the obligations of the Authority, the District
shall be entitled to acquire title to the Project without cost.

The District is granted the right to obtain, at any time, unencumbered
fee title and exclusive possession of property financed by obligations of the
Authority (including the Bonds), and any additions to such property by (1)
placing into escrow an amount that will be sufficient to defease such
obligations, (2) paying reasonable costs incident to the defeasance, (3)
paying any amount then due by the Authority to the Credit Enhancement
Provider pursuant to the Reimbursement Agreement and the Deed of Trust, and
(4) paying or defeasing any subordinate obligation issued or incurred
pursuant to the Indenture. The District, at any time before it defeases such
obligations, shall not agree or otherwise be obligated to convey any interest
in the Project to any person (including the United States of America or its
agencies or instrumentalities) for any period extending beyond or beginning
after the District defeases such obligations. In addition, the District
shall not agree or otherwise be obligated to convey a fee interest in the
Project to any person who was a user thereof (or a related person) before the
defeasance within 90 days after the District defeases such obligations.

The Authority shall immediately cancel all encumbrances on the Project,
including all leases and management agreements. Any lease, management
contract, or similar encumbrance on the Project will be considered
immediately cancelled if the lessee, management company, or other user
vacates the Project within a reasonable time, generally not to exceed 90
days, after the date the District exercises its rights under the immediately
preceding paragraph.

In addition to the foregoing, if the Authority defaults in its payment
obligations, the District is granted an exclusive option to purchase the
Project for the amount of the outstanding indebtedness and accrued interest
to the date of default. The Trustee shall provide notice to the District of
any Event of Default within 30 days of the occurrence thereof. The District
shall have (a) 90 days from the date it is notified by the Trustee of the
default in which to exercise the option (which shall be exercised by giving
written notice of such exercise to the Trustee and the Authority), and (b) 90
days from the date it exercises the option to purchase the property.

Unencumbered fee title to the Project and any additions thereto and
exclusive possession and use thereof will vest in the District without demand
or further action on its part when all obligations issued under the Indenture
(including the Bonds) are discharged.

EVENTS OF DEFAULT

Each of the following is defined as and shall be deemed an "Event of
Default" under the Indenture:

a. Default shall be made in the due or punctual payment (other than
Extra Payments prior to the maturity of the Bonds) of the principal of, or
premium (if any) on, any Bond when and as the same shall become due and
payable, whether at maturity as therein expressed, by proceedings for
redemption, by declaration or otherwise;

b. Default shall be made in the due and punctual payment (other than
Extra Payments prior to the maturity of the Bonds) of any installment of
interest on any Bond, when and as such interest installment shall become
due and payable;

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c. Default shall be made by the Authority in the performance or
observance of any other of the covenants, agreements or conditions on its
part in the Indenture or in the Bonds contained, and such default shall
have continued for a period of 45 days after written notice thereof,
specifying such default and requiring the same to be remedied, shall have
been given to the Authority and the Credit Enhancement Provider by the
Trustee, or to the Authority and the Trustee by the Credit Enhancement
Provider;

d. The Authority shall (1) admit in writing its inability to pay its
debts generally as they become due, (2) file a petition in bankruptcy or to
take advantage of any insolvency act, (3) make an assignment for the
benefit of its creditors, (4) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property, or (5) on a
petition in bankruptcy filed against the Authority, be adjudicated a
bankrupt;

e. The Authority shall file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any
other applicable law of the United States of America or any State thereof;

f. A court of competent jurisdiction shall enter an order, judgment
or decree appointing, without the consent of the Authority, a receiver of
the Authority, or of the whole or any substantial part of its property, or
approving a petition filed against the Authority seeking reorganization of
the Authority under the federal bankruptcy laws or any other applicable law
of the United States of America or any State thereof, and such order,
judgment or decree shall not be vacated or set aside and stayed within 60
days from the date of the entry thereof;

g. Under the provisions of any other law for the relief or aid of
debtors, any court of competent jurisdiction shall assume custody or
control of the Authority or of the whole or any substantial part of its
property, and such custody or control shall not be terminated or stayed
within 60 days from the date of assumption of such custody or control; or

h. There is a breach of a covenant or a material representation by
the Credit Enhancement Provider under the Credit Enhancement.

Notwithstanding the foregoing, so long as the Bondholders are being paid
and no default exists under the Credit Enhancement, the occurrences described in
paragraphs (c) through (h) above shall not be deemed to be Events of Default
unless and until the Credit Enhancement Provider has consented thereto.

ACCELERATION

Subject to certain rights of the District set forth in the Indenture, upon
the occurrence of any Event of Default, the Trustee, by notice in writing to the
Authority may, and upon written request of the Credit Enhancement Provider or
the Holders of not less than 25% in aggregate principal amount of the Bonds at
the time outstanding, shall, declare the principal of all the Bonds then
outstanding, and the interest accrued thereon, to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, but only if Available Money sufficient to pay such
Bonds shall be deposited with the Trustee on or before the date specified for
such acceleration. The foregoing is subject to the limitation that (i) no
acceleration shall occur without the consent of the Credit Enhancement Provider
while the Credit Enhancement Provider has continued to meet its obligations to
the Trustee pursuant to the Credit Enhancement and is otherwise not in breach of
a covenant or a material representation by the Credit Enhancement Provider under
the Credit Enhancement and (ii) neither the consent of the Credit Enhancement
Provider nor the deposit of Available Money shall be required for acceleration
if the Credit Enhancement Provider has failed to meet such obligations or is
otherwise in breach of a covenant or material representation by the Credit
Enhancement Provider under the Credit Enhancement.

OTHER REMEDIES; RIGHTS OF BONDHOLDERS

Upon the happening and continuance of an Event of Default the Trustee may
pursue any available remedy to enforce the performance of or compliance with any
other obligation or requirement of the Indenture. Further, upon the happening
of an Event of Default resulting in acceleration, the Trustee shall have the
right to (a) foreclose on the mortgage created by the Deed of Trust through
judicial proceedings or through the exercise of a power of sale; and (b) by
suit, action, or proceeding in any court of competent jurisdiction cause
possession of the Project or any part thereof to be awarded to the Trustee or to
obtain the appointment of a receiver of the Project.

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The Holders of a majority in aggregate principal amount of the Bonds at the
time outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, under the Indenture. In the event
that the Trustee, upon the happening of an Event of Default, shall have taken
some action, by judicial proceedings or otherwise, pursuant to its duties under
the Indenture, whether upon its own discretion or upon the request of the Credit
Enhancement Provider and the Holders of 25% in aggregate principal amount of
Bonds then outstanding, it shall have full power, in the exercise of its
discretion for the best interests of the Bondholders, with the consent of the
Credit Enhancement Provider so long as there are no defaults under the Credit
Enhancement, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action; provided, however, that
the Trustee shall not, unless there no longer continues an Event of Default,
discontinue, withdraw, compromise, settle or otherwise dispose of any litigation
pending at law or in equity, if at the time there has been filed with it a
written request signed by the Credit Enhancement Provider or the Holders of at
least a majority in aggregate principal amount of the Bonds at the time
outstanding opposing such discontinuance, withdrawal, compromise, settlement or
other disposal of such litigation.

LIMITATION ON BONDHOLDERS' RIGHT TO SUE

No Holder of any Bond issued under the Indenture shall have the right to
institute any suit, action or proceeding at law or in equity, for the execution
of any trust or power of the Indenture or for any other remedy under or upon the
Indenture, unless (a) such Holder shall have previously given to the Trustee and
the Credit Enhancement Provider written notice of the occurrence of an Event of
Default; (b) the Holders of at least 25% in aggregate principal amount of the
Bonds then outstanding shall have made written request to the Trustee to
exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name; (c) such Holder or said Holders shall have tendered
to the Trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request; and (d) the Trustee shall have
refused or omitted to comply with such request for a period of 30 days after
such written request shall have been received by, and said tender of indemnity
shall have been made to, the Trustee.

DISTRICT'S RIGHT TO PURCHASE PROJECT

Anything to the contrary in the Indenture notwithstanding, if an Event of
Default shall occur, the District shall have an exclusive option to purchase all
properties, equipment or other assets financed by the Bonds and any and all
additions to that property, equipment or assets for an amount equal to the
unpaid principal amount of all Bonds then outstanding and accrued interest
thereon to the date of the Event of Default.

SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF BONDHOLDERS

The Authority, when authorized by resolution of the District, and the
Trustee, from time to time and at any time, but with the consent of the Credit
Enhancement Provider (so long as the Credit Enhancement Provider is not in
default under the Credit Enhancement), subject to the conditions and
restrictions in the Indenture contained, may enter into an indenture or
indentures supplemental thereto, which indenture or indentures thereafter shall
form a part thereof, for any one or more or all of the following purposes:

a. to add to the covenants and agreements of the Authority in the
Indenture contained, other covenants and agreements thereafter to be
observed, or to surrender any right or power therein reserved to or
conferred upon the Authority, provided, that no such covenant, agreement or
surrender shall adversely affect the interests of the Holders of the Bonds;

b. to evidence the succession of another corporation to the
Authority, or successive successions, and the assumption by a successor
corporation of the covenants and obligations of the Authority in the Bonds
and in the Indenture contained;

c. to make such provisions for the purpose of curing any ambiguity,
or of curing, correcting or supplementing any defective provision contained
in the Indenture, or in regard to other matters or questions arising under
the Indenture, as the Authority may deem necessary or desirable and not
inconsistent with the Indenture and which shall not materially adversely
affect the interests of the Holders of the Bonds; or

d. to modify, amend or supplement the Indenture or any indenture
supplemental thereto in such manner as to permit the qualification thereof
under the Trust Indenture Act of 1939 or any similar federal statute
hereafter in effect, and, if they so determine, to add to the Indenture or
any indenture supplemental thereto such other terms, conditions and
provisions as may be permitted by said Trust

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Indenture Act of 1939 or similar federal statute, and which shall not
adversely affect the interests of the Holders of the Bonds.

Any Supplemental Indenture authorized by the provisions of this Section may
be executed by the Authority and the Trustee without the consent of the Holders
of any of the Bonds at the time outstanding but the Trustee shall not be
obligated to enter into any such Supplemental Indenture which affects the
Trustee's own rights, duties or immunities under the Indenture or otherwise.

SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS

With the consent of the Credit Enhancement Provider (so long as the Credit
Enhancement Provider is not in default under the Credit Enhancement) and the
Holders of not less than 60% in aggregate principal amount of the Bonds at the
time Outstanding, the Authority, when authorized by a resolution of the
District, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental to the Indenture for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any Supplemental Indenture; provided, however, that no
such Supplemental Indenture shall (1) extend the fixed maturities of the Bonds
or reduce the rate of interest thereon or extend the time of payment of
interest, or reduce the amount of the principal thereof, or reduce any premium
payable on the redemption thereof, without the consent of the Holder of each
Bond so affected, or (2) reduce the aforesaid percentage of Holders of Bonds
whose consent is required for the execution of any such Supplemental Indenture,
or permit the creation of any lien on the Trust Estate prior to or on a parity
with the lien of the Indenture or deprive the Holders of the Bonds of the lien
created by the Indenture upon the Trust Estate, without the consent of the
Holders of all of the Bonds then Outstanding and the Credit Enhancement
Provider. Upon receipt by the Trustee of a certified resolution authorizing the
execution of any such Supplemental Indenture, and upon the filing with the
Trustee of evidence of the consent of the Credit Enhancement Provider and
Bondholders, as aforesaid, the Trustee shall join with the Authority in the
execution of such Supplemental Indenture unless such Supplemental Indenture
affects the Trustee's own rights, duties or immunities under the Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such Supplemental Indenture.

AMENDMENTS TO OPERATING AGREEMENT AND INTERGOVERNMENTAL AGREEMENT

The Operating Agreement and the Intergovernmental Agreement may be amended
only with the consent of the Trustee and the Credit Enhancement Provider (so
long as the Credit Enhancement Provider is not in default under the Credit
Enhancement). The Trustee shall consent to such amendments on the same basis as
it consents to amendments to the Indenture.

COLLATERALIZED CREDIT ENHANCEMENT AGREEMENT

In order to provide credit enhancement for the Bonds, the Credit
Enhancement Provider and the Trustee have entered into a Collateralized Credit
Enhancement Agreement dated as of March 1, 1996 (the "Collateralized Credit
Enhancement Agreement"). Under the Collateralized Credit Enhancement Agreement,
the Credit Enhancement Provider is required to provide the Trustee with all
amounts necessary to pay the principal of and interest on the Bonds when due
(the "Indebtedness"). The Indebtedness does not include any Extra Payments.
This obligation of the Credit Enhancement Provider has been secured by the
pledge and delivery to the Trustee of the Collateral. The obligation of the
Credit Enhancement Provider to pay principal of and interest on the Bonds as
described above continues until such time as the Indebtedness has been paid in
full, but the Credit Enhancement Provider's liability therefor is limited to the
Collateral.

Pursuant to the provisions of the Collateralized Credit Enhancement
Agreement, the Trustee may not, without the consent of the Credit Enhancement
Provider, change any of the terms of the Bonds contained in the Indenture,
modify or waive any of the terms of any agreement with the Authority with
respect to the Bonds or take and hold any security for the payment of the Bonds
or performance of the Credit Enhancement Provider's obligations thereunder.

Under the Collateralized Credit Enhancement Agreement, the obligations of
the Authority to the Credit Enhancement Provider or any other person controlled
by or owned in whole or in part by the Credit Enhancement Provider are
subordinated to the Authority's obligations on the Indebtedness during any
period that a default exists under the Indebtedness. The Collateralized Credit
Enhancement Agreement also provides that, without the prior written consent of
the Trustee, any such subordinated indebtedness may not be paid, nor may the
Credit Enhancement Provider accept or cause or permit any other person
controlled by or owned in whole or in part by it to accept any payment of such
subordinated indebtedness, at any time after default exists under the
Indebtedness.

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REIMBURSEMENT AGREEMENT

In connection with the Credit Enhancement Provider providing the Credit
Enhancement to secure the payment of the principal of and interest on the Bonds,
the Authority and the Credit Enhancement Provider shall enter into a
Reimbursement Agreement dated as of March 1, 1996 ("Reimbursement Agreement")
establishing the terms and conditions of the payment by the Authority to the
Credit Enhancement Provider of any amounts paid by it under the Credit
Enhancement. In accordance with the Reimbursement Agreement, the Authority is
required to pay to the Credit Enhancement Provider all amounts paid by the
Credit Enhancement Provider under the Credit Enhancement. Such amounts are
payable on the day on which such a payment is made pursuant to the Credit
Enhancement, together with interest on any amounts not timely paid at the rate
of 9% per annum. The Authority is not obligated to pay interest on any payment
under the Credit Enhancement if it has deposited with the Trustee the total
amount of the payment to be made pursuant to the Credit Enhancement prior to the
date of payment thereof. In addition, the Authority has agreed to pay to the
Credit Enhancement Provider, on the date of the issuance of the Bonds, a
commitment fee of 6% of the principal amount of the Bonds.

The Authority is required under the Reimbursement Agreement to: comply with
all laws, ordinances, orders, rules and regulations applicable to it; take all
reasonable efforts and diligently proceed to complete the Recreational
Facilities (as defined in the Reimbursement Agreement), including the golf
course; maintain and preserve all of its properties; not amend, modify or
supplement certain documents related to the Credit Enhancement without the
Credit Enhancement Provider's prior consent; maintain its existence as a non-
profit corporation under the laws of the State of Colorado; and provide certain
financial information to the Credit Enhancement Provider, including the
Authority's annual budget, annual mill levy certifications of each of the
Districts and the assessed valuation of all property owned by the Authority.
The Authority has also agreed to charge and collect such rents, rates, fees or
charges for the use of the Project as will be sufficient, together with certain
other revenues, to produce Net Income Available for Debt Service (as defined in
the Indenture) equal to at least 1.30 times Aggregate Annual Debt Service (as
defined in the Indenture) on all Bonds Outstanding for the next fiscal year.

Under the Reimbursement Agreement, the following constitute Events of
Default:

1. If any representation or warranty is made by the Authority
thereunder or in any related document or in any other
certificate or statement furnished by the Authority
thereunder or pursuant to any related document is false or
untrue or incomplete in any material respect when made;

2. If the Authority fails to observe or perform any of the
covenants, conditions or provisions of the Reimbursement
Agreement, and such failure continues for ten days after
notice from the Credit Enhancement Provider to the
Authority;

3. If a default by the Authority occurs under the Indenture and
continues for a period of ten days, or a default by the
Authority occurs and any applicable grace period lapses
under any other related documents to which the Authority is
a party;

4. If the Reimbursement Agreement or any other related document
to which the Authority is a party is no longer valid and
binding on the Authority;

5. If the Authority becomes insolvent or bankrupt or certain
other related bankruptcy actions are taken by or with
respect to the Authority; and

6. If the Authority fails to pay any amounts due and owing
under the Reimbursement Agreement.

If an Event of Default occurs under the Reimbursement Agreement, the Credit
Enhancement Provider may exercise any of the following remedies;

1. Foreclose on the Deed of Trust, subject to the limitations
thereof;

2. Institute an action of mandamus or other proceeding to
enforce its rights under the Reimbursement Agreement;

3. Require the Authority to account for funds as if it were the
trustee of an express trust for the benefit of the Credit
Enhancement Provider;

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4. Institute an injunction action;

5. Declare all obligations of the Authority under the
Reimbursement Agreement to be immediately due and payable;
and

6. Select whatever other action at law or equity is necessary
to enforce its rights under the Reimbursement Agreement or
any related document.

To the extent permitted by law, the Authority has also agreed to indemnify
and hold harmless the Credit Enhancement Provider from and against certain
claims, damages, losses, liabilities and reasonable costs and expenses by reason
of, or in connection with, the execution and delivery of or payment or failure
to pay under the Credit Enhancement and the issuance and sale of the Bonds,
except for the willful misconduct or gross negligence of the Credit Enhancement
Provider.

THE DEED OF TRUST

The following summary of certain provisions of the Deed of Trust does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by, reference to the Deed of Trust, copies of which
are available from the Trustee.

The Authority shall deliver the Deed of Trust for the purpose of securing
(i) repayment of the indebtedness evidenced by the Bonds, the Note (as defined
therein) and the Credit Enhancement Note (as defined therein) (collectively, the
"Indebtedness"); (ii) the payment of all other sums, with interest thereon,
advanced in accordance with the Deed of Trust; (iii) the performance of the
covenants and agreements of the Authority contained in the Deed of Trust, the
Note, the Credit Enhancement Note, the Reimbursement Agreement and the Indenture
(collectively, the "Secured Obligations"); and (iv) the repayment of any future
disbursements, with interest thereon, made to the Authority by the Trustee or
the Credit Enhancement Provider. The Deed of Trust irrevocably grants and
conveys to the Public Trustee of Douglas County, Colorado, in trust, with power
of sale, the interests of the Authority in the Property, together with all
buildings and improvements, and fixtures or appurtenances, now and hereafter
erected thereon, construction material, supplies and equipment intended to be
incorporated and installed therein or used in construction thereon; all building
permits, construction contracts, claims and warranties under construction
contracts, tap fees, architectural plans and specifications relating to
construction of improvements on the Real Estate and trademarks and logos
relating to marketing the Property and any and all rents and leases (subject to
the rights to collect and apply such rents), profits, royalties, claims to
water, water rights, minerals, geothermal resources, oil and gas rights and
profits, easements and access rights, less any of said property which may be
released from the Deed of Trust (together, the "Pledged Property").

COVENANTS OF THE AUTHORITY

The Authority covenants and agrees in the Deed of Trust to promptly pay the
Trustee and the Credit Enhancement Provider (collectively, the "Beneficiary")
all principal and interest and all other sums of money payable by virtue of the
Bonds, the Note, the Credit Enhancement Note, the Reimbursement Agreement, the
Indenture and the Deed of Trust, which the Trustee or the Credit Enhancement
Provider is entitled to receive, and to perform each and every covenant and
agreement in the Bonds, the Credit Enhancement Note, the Reimbursement
Agreement, the Deed of Trust, the Indenture, the Note or any other documents
relating to the loan represented by the Bonds or the Note.

The Authority covenants and agrees in the Deed of Trust to do all things
necessary to preserve and keep in full force and effect its existence under the
laws of the State of Colorado and to comply with all regulations, rules,
ordinances, statutes, orders and decrees of any governmental authority or court
applicable to the Authority or to the Pledged Property or any part thereof.

The Authority agrees to pay all taxes, assessments and other charges, fines
and impositions attributable to the Pledged Property as well as leasehold
payments or ground rents, if any, when due and payable, before they become
delinquent and before any interest attaches or any penalty is incurred. If any
tax, assessment or other charge, fine or imposition becomes of record, the
Authority agrees that such shall be satisfied and discharged of record within
thirty days of becoming of record, and a certified copy of the official document
evidencing such satisfaction and discharge shall be sent to the Beneficiary
within ten days after such discharge. However, the Authority shall not be
required to discharge any lien if (a) the Authority shall, in good faith,
contest such lien by, or defend enforcement of such lien in, legal proceedings
which operate to prevent the enforcement of the lien or forfeiture of the
Pledged Property or any part thereof and (b) the Authority shall give the
Beneficiary notice of such contest and the Beneficiary is provided with an
opinion of competent counsel that the failure to discharge the lien will not
have a materially detrimental effect on the security provided by the Deed of
Trust.

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The Authority agrees to procure and maintain, or cause to be procured and
maintained, continuously in effect until the Bonds are paid in full, insurance
as provided for in the Indenture. The Authority covenants to maintain the
Pledged Property in good repair as provided in the Indenture.

If the Authority fails to perform the covenants and agreements contained in
the Deed of Trust, or if any action or proceeding is commenced which materially
affects, or may materially affect, the Beneficiary's respective interests in the
Project, then the Beneficiary, at the Beneficiary's option, may make such
appearances, disburse such sums and take such actions as the Beneficiary
determines are necessary to protect its respective interest and the interest of
the holders of the Bonds, including, but not limited to, disbursement for
reasonable attorney's fees and entry upon the Project to make repairs. Any
amounts disbursed pursuant to this paragraph, together with interest thereon,
shall become additional indebtedness of the Authority, secured by the Deed of
Trust. Unless the Authority and the Beneficiary agree in writing to other terms
of payment, such amounts shall be payable upon notice to the Authority
requesting payment thereof. Nothing contained in this paragraph shall require
the Beneficiary to incur any expense or take any action. The Beneficiary, on
making good and performing following any default or defaults on the part of the
Authority, shall be thereby subrogated to any and all rights of the person or
persons to whom payment is made by the Beneficiary. The rights of the
Beneficiary shall be exercised by the Credit Enhancement Provider so long as the
Credit Enhancement Provider is not in default of its obligations under the
Credit Enhancement.

EVENTS OF DEFAULT; ACCELERATION; POWER OF SALE; UCC REMEDIES

The following shall constitute "Events of Default" under the Deed of Trust:

(a) A default or breach of the terms, conditions and provisions of
the Deed of Trust (other than as provided in (b), (c) or (d) below) for a period
of 60 days after written notice, specifying such default and requesting that it
be remedied, is given to the Authority by the Beneficiary, unless the
Beneficiary shall agree in writing to an extension of such time period prior to
its expiration, or such longer period as may be reasonably necessary to remedy
such default, provided that the Authority is proceeding with reasonable
diligence to remedy the same;

(b) An Event of Default as such term is defined in the Indenture
shall occur and be continuing;

(c) Any Indebtedness is not promptly and fully paid when due and such
default continues for 10 days (except that no default under the Deed of Trust
shall occur on the failure to make any payment under the Note or the Indenture
where such failure is not an Event of Default under the Indenture); or

(d) If the Authority shall:

(i) admit in writing its inability to pay its debts generally
as they become due; or

(ii) file a petition in bankruptcy to be adjudicated a
voluntary bankrupt or file a similar petition under any insolvency
act, or approve or consent to any such petition filed against it; or

(iii) make an assignment for the benefit of its creditors; or

(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property; or

(v) on a petition in bankruptcy filed against it, be
adjudicated bankrupt or if a court of competent jurisdiction shall
enter an order or decree appointing a receiver or trustee of the
Authority or of the whole or substantially all of its property, and
such adjudication, order or decree shall not be vacated or set aside
or stayed within 90 days from the date of the entry thereof.

Following an Event of Default, the Beneficiary may declare all of the sums
secured by the Deed of Trust to be immediately due and payable and may invoke
the power of sale and any other remedies permitted by applicable law. The
Beneficiary shall be entitled to collect all reasonable costs and expenses
incurred in pursuing any remedies, including, but not limited to, reasonable
attorney's fees.

Following an Event of Default, the Beneficiary may exercise any rights and
remedies of a secured party under the Colorado Uniform Commercial Code or other
applicable laws and require the Authority to assemble any collateral covered by

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the Deed of Trust and constituting personal property at a place to be designated
by the Beneficiary which is reasonably convenient to both parties.

Notwithstanding the foregoing, foreclosure of the Deed of Trust shall not
be permitted unless the Beneficiary shall have received an opinion of Special
Tax Counsel that such foreclosure shall not adversely affect the exclusion of
interest on the Bonds from gross income for federal income tax purposes, and the
Credit Enhancement Provider shall not be entitled to foreclose on the Deed of
Trust or accelerate the Indebtedness secured thereby following the occurrence
and continuance of a default by the Credit Enhancement Provider under the Credit
Enhancement.

ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER

As additional security under the Deed of Trust, the Authority assigns to
the Beneficiary the rents, issues and profits of the Project, provided that
until a default under the Deed of Trust occurs, the Authority shall have the
right to collect and retain such rents, issues and profits as they become due
and payable, except to the extent otherwise provided in the Indenture. In the
event of default under the Deed of Trust, the Beneficiary shall be entitled to
enter upon, take possession of and manage the Project and to collect the rents,
issues and profits of the Project, including those past due. All rents
collected by the Beneficiary shall be applied first to payment of the costs of
management of the Project and collection of rents and then to the sums secured
by the Deed of Trust.

In the Event of Default under the Deed of Trust, the Beneficiary may apply
for and obtain, either in its own name, or through the Trustee, EX PARTE and
without notice (notice being expressly waived), the appointment of a receiver
for the Pledged Property and for the rents, issues and profits therefrom and may
have such receiver appointed as a matter of right without regard to the solvency
of the Authority or any other person or corporation, or the adequacy of any
security or the existence of waste. The Beneficiary may have sums received by
such receiver, after deduction and payment of the costs and expenses of the
receivership, including the Beneficiary's attorney's fees, applied to the sums
secured by the Deed of Trust in such manner and order as specified by the
Beneficiary; provided that following the occurrence and continuance of a default
by the Credit Enhancement Provider under the Credit Enhancement, such amounts
shall be applied as provided in the Indenture.

NONRECOURSE

Notwithstanding any other agreement or instrument relating to the Bonds,
the Note or the Project, neither the Authority, its officers or directors,
employees and agents, nor its or their heirs, successors or assigns, shall have
any liability for payment or performance of the covenants or obligations set
forth in the Indenture, in the Reimbursement Agreement or in any other agreement
or instrument securing the indebtedness and obligations created or secured under
the Deed of Trust, except from Revenues described and pledged under the
Indenture, Pledged Property, other money derived from the foreclosure of the
Project, and moneys in the Funds created under the Indenture, and the
Beneficiary and the Bondholders may not then assert or claim a deficiency or
other personal money judgment against the Authority, its officers or directors,
employees and agents of the Authority, or its or their heirs, successors or
assigns, but rather agree to look absolutely, strictly and solely to the Project
(including any proceeds from any foreclosure thereof), the Revenues and the
moneys in the Funds under the Indenture, for payment of the principal of and
interest on all indebtedness and obligations secured by the Deed of Trust and to
any other of the Authority's property, rights, accounts, general intangibles,
leases, rents, issues, profits, income, insurance premiums, awards, payments and
consideration conveyed, mortgaged, assigned or pledged under the Deed of Trust
or under any other instrument which secures the indebtedness secured by the Deed
of Trust or in which a security interest has been granted to or for the benefit
of the Beneficiary to secure the Bonds or the Note. The foregoing shall not be
deemed or construed to be a release of the indebtedness secured by the Deed of
Trust or in any way to impair, limit or otherwise affect the lien of the
Indenture or of the Deed of Trust or of any such other instrument on the
property, funds or rights covered thereby as security for the payment of the
indebtedness secured by the Deed of Trust and for the performance of the
covenants in the Indenture or in the Deed of Trust, or prevent the Beneficiary
from naming the Authority as a defendant in any action to enforce any remedy for
a default, so long as no monetary judgment or other judgment is sought or
entered therein against the Authority, its officers or directors, employees and
agents, or its heirs, successors or assigns, or against any property of the
Authority other than the Revenues, the Trust Estate described in the Indenture
and all other property described in the foregoing sentence. Notwithstanding the
foregoing, it is expressly understood and agreed that the aforesaid limitation
on liability shall in no way affect or apply to the Authority's continued
liability for the payment to the Beneficiary arising while the Project is owned
by the Authority of (a) any rents, issues, profits and income actually collected
by the Authority from the Project after an Event of Default not applied to the
operation of the Project; (b) security deposits made by tenants of the Project;
or (c) insurance proceeds and condemnation awards, payments and consideration
which the Authority actually receives and to which the Beneficiary is entitled
pursuant to the Deed of Trust or the Indenture. It is further expressly
understood and agreed that the aforesaid limitation on liability shall in no way
affect or apply to the Authority's continued liability throughout and after its
ownership of the Project to the Beneficiary for payment, indemnification, and
reimbursement of all obligations and liabilities, whether legal or equitable,
arising under any federal, state, or local environmental law, statute,

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regulation, ordinance, order, by-law, code, requirement, or directive or under
common law regarding the presence, generation, use, management, transport,
treatment, release, discharge, emission or disposal of any Hazardous Substances
to, at or from the Project, to the extent caused by the Authority, all as
further set forth in the Indenture.

RELEASE

Upon payment of all sums secured by the Deed of Trust and upon full
performance thereof by the Authority, the Beneficiary shall promptly, after
written notice from the Authority, execute and deliver to the Authority a
request for the release of the Deed of Trust directed to the Beneficiary. The
Authority shall, however, pay all costs and expenses in connection with the
recordation and execution of said release. In addition, property subject to the
Deed of Trust may be released from the Deed of Trust upon the mutual agreement
of the Borrower and the Beneficiary or as provided in the Indenture.

THE OPERATING AGREEMENT

The following summary of certain provisions of the Operating Agreement does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by, reference to the Operating Agreement,
copies of which are available from the Trustee.

The Authority will be the owner of the Project and the District will have
no fee title thereto until such time as a deed to all or any portion of the
Property and the Project is delivered to the District.

The Authority will be responsible for the acquisition, construction and
completion of the Project.

PROJECT CONTRACTS

The Authority has executed or shall execute, or has awarded or shall award,
all contracts and purchase orders needed to complete the Project.

TERM

The Operating Agreement term shall commence as of the date that either (i)
the Town of Castle Rock, Colorado shall have approved an amendment to the
service plan of the District specifically authorizing the mill levy imposition
described below under "Operating Agreement Payments", or (ii) the District shall
have received an opinion acceptable to the District of counsel acceptable to the
District that such mill levy may be imposed without regard to any service plan
amendment. Each of the Districts has covenanted in the Recreational Facilities
Agreement to take all reasonable action necessary to effect such service plan
amendment or to obtain such opinion. The Operating Agreement shall terminate on
payment of all obligations secured by the Deed of Trust.

OPERATING AGREEMENT PAYMENTS

(a) The District covenants to pay to the Authority, its successors
and assigns, the following Operating Agreement Payments: (i) all Operations
and Maintenance Expenses to the extent not paid from Revenue, and (ii) any
deficiencies of Revenue required to pay obligations secured by the Deed of
Trust, subject to the limitations in (c) below.

(b) Overdue Operating Agreement Payments shall continue as an
obligation of the District until the amount in default has been fully paid
and shall bear interest at the rate of 15% per annum.

(c) The provisions of (a) and (b) above are limited to amounts (i)
collected from a mill levy against taxable real and personal property
within the District not to exceed 35 mills, and subject to other
limitations specified in the questions voted upon by the election of the
District on November 7, 1995; and (ii) amounts collected by the District
from the Related Districts pursuant to the Intergovernmental Agreement.
See "DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS--THE
INTERGOVERNMENTAL AGREEMENT--Payments and Nature of Obligations" herein.
In the event amounts collected from such sources shall be insufficient in
any year, the amount of such deficiency shall nevertheless be a continuing
obligation of the District payable from such sources in subsequent years.
The District agrees to include in its annual certification to the Board of
County Commissioners of Douglas County, Colorado, a mill levy sufficient,
when combined with other revenues reasonably anticipated to be available,
to satisfy its obligations under the Operating Agreement.

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(d) Notwithstanding the foregoing, the District will be under no
obligation to pay Operating Agreement Payments unless and until the date
that either (i) the Town of Castle Rock, Colorado shall have approved an
amendment to the service plan of the District specifically authorizing the
mill levy imposition described in (c) above, or (ii) the District shall
have received an opinion acceptable to the District of counsel acceptable
to the District that such mill levy may be imposed without regard to any
service plan amendment. Each of the Districts has covenanted in the
Recreational Facilities Agreement to take all reasonable action necessary
to effect such service plan amendment or to obtain such opinion.

TITLE

During the term of the Operating Agreement, the Authority shall hold title
to and ownership of each of the Project facilities and any and all additions
thereto which comprise repairs, replacements, modifications, improvements and
substitutions until such Project facility is transferred to the District. The
District agrees that any damage to the Project that would materially impact the
operation of the Project and that is occasioned by the removal of fixtures and
improvements shall be promptly repaired. Notwithstanding anything to the
contrary in the Operating Agreement, it is understood that title to personal
property permanently attached to the Project by the District or any other
entity, instrumentality, authority or department of the District shall become a
part of the Project.

MAINTENANCE, UTILITIES AND TAXES

The Authority and the District each agree that during the term of the
Operating Agreement it will itself at its own expense or will cause others to
(a) keep the Project facilities which it owns in as reasonably safe condition as
its operations will reasonably permit, and (b) keep the Project facilities which
it owns in good repair and in good operating condition, making from time to time
all necessary repairs thereto and renewals and replacements thereof, which may
be necessary for this purpose, so that the Project facilities which it owns will
remain suitable and efficient for use of the character described in and
contemplated by the Indenture.

Throughout the term of the Operating Agreement all improvement, repair and
maintenance of the Project facilities shall be the responsibility of the party
owning such facilities, and such party shall pay for or otherwise arrange for
the payment of all utility services supplied to such facilities, which may
include (without limitation) cleaning services, maintenance, security, power and
electricity, gas, telecommunications and radio equipment and all utilities and
services supplied to or in connection with the Project, and shall pay for or
otherwise arrange for the payment of the cost of the repair and replacement of
such facilities or any part thereof resulting from ordinary wear and tear.

Each party shall also pay or cause to be paid, without abatement, deduction
or offset, all property taxes and general and special assessments (collectively,
"property taxes") of any type or nature levied, assessed or charged by an
authorized governmental authority to and against the Project facilities which it
owns, the improvements thereto from time to time and the respective interests or
estates therein; provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of
years, each party shall be obligated to pay only such installments as are
required to be paid during the term of the Operating Agreement as and when the
same become due.

The foregoing provisions are not a limitation on the obligations of the
District to pay Operating Agreement Payments to the Authority.

Each party may, at its expense and in its name, in good faith contest any
such taxes, assessments, utility and other charges and, in the event of any such
contest, may permit the taxes, assessments or other charges so contested to
remain unpaid during the period of such contest and any appeal therefrom unless,
by nonpayment of any such items, the Project or any part thereof will be subject
to loss or forfeiture, in which event the responsible party shall promptly pay
such taxes, assessments or charges or provide full security against any loss
which may result from nonpayment, in form satisfactory to the Credit Enhancement
Provider and the Trustee.

Any payments by the Authority of the foregoing amounts with respect to
Recreational Facilities shall be considered Operating Agreement Payments due
from the District under the Operating Agreement.

DAMAGE, DESTRUCTION AND CONDEMNATION

Unless the District shall have exercised its option to terminate the
Operating Agreement (see "Option to Terminate" below), if prior to full payment
of the Bonds (or provisions for payment thereof having been made in accordance
with the provisions of the Indenture) (i) the Project or any portion thereof is
damaged or destroyed (in whole or in part) by fire or other casualty or (ii)
title to, or the temporary use of, the Project or any part thereof shall be
taken under the exercise of the power of

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eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, the District shall be obligated to
continue to pay all Operating Agreement Payments with no abatement or
reduction in such amounts whatsoever.

The proceeds of any award resulting from any damage to or destruction or
condemnation of the Project shall be deposited with the Trustee, as described
and provided for in the Indenture. See "THE INDENTURE."

The amount of Operating Agreement Payments for the Project shall not be
abated or diminished during any period in which by reason of damage or
destruction there is substantial interference with the use by the District of
the Project, or any portion thereof or for any other reason whatsoever;
provided, however, that if any insurance proceeds shall be deposited with the
Trustee under the Indenture, they shall be treated as Revenues and credited
against Operating Agreement Payments due and payable under the Operating
Agreement to the extent applied to the payment of principal of or interest on
the Bonds or to reimburse the Credit Enhancement Provider with respect to
amounts paid under the Credit Enhancement and so applied. In the event of any
such damage or destruction, the Operating Agreement shall nonetheless continue
in full force and effect and the District waives any right to terminate the
Operating Agreement by virtue of any such damage and destruction.

ASSIGNMENT

The Authority's rights under the Operating Agreement (except for certain of
the Authority's indemnification rights and rights to attorney's fees and
expenses), including the right to receive and enforce payment of the Operating
Agreement Payments to be made by the District under the Operating Agreement, may
be assigned by the Authority to the Trustee or the Credit Enhancement Provider
without the consent of the District.

The Operating Agreement may be assigned as a whole or in part, by the
District with the written consent of the Authority, the Credit Enhancement
Provider and the Trustee (which consents shall not be unreasonably withheld),
subject, however, to each of the following conditions:

(a) No assignment shall relieve the District from primary liability
for any obligations under the Operating Agreement, and in the event of any
such assignment the District shall continue to remain primarily liable for
payment of the amounts specified in the Operating Agreement and for
performance and observance of each of the other agreements to be performed
and observed by the District to the same extent as though no assignment had
been made.

(b) In the case of an assignment, the assignee shall assume the
obligations of the District under the Operating Agreement to the extent of
the interest assigned.

(c) The District shall, within 30 days after the delivery thereof,
furnish or cause to be furnished to the Authority and the Trustee a true
and complete copy of each such assumption or assignment as the case may be.

(d) No such assignment by the District shall cause the Project to be
used for a purpose other than as may be authorized under applicable law and
under the Indenture and the Reimbursement Agreement.

AMENDMENT OF OPERATING AGREEMENT

The Operating Agreement may not be effectively changed, amended or modified
except with the written consent of the Trustee and the Credit Enhancement
Provider.

EVENTS OF DEFAULT

Each of the following shall be and constitute an "Event of Default" by the
District and a breach of the Operating Agreement:

(a) Failure by the District to pay any Operating Agreement Payment
when due and payable, and the continuation of any such failure for a period of 3
Business Days after any such payment is due, unless such failure occurs as the
result of the application of clause (c) above under the subheading "Operating
Agreement Payments";

(b) Failure by the District to pay when due any other amounts
required to be paid by the District under the Operating Agreement, unless such
failure occurs as the result of the application of clauses (c) and (d) above
under "Operating Agreement Payments", or to observe and perform any covenant,
condition, agreement or provision (other than as

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specified in paragraph (a) above or this paragraph (b)) contained in the
Operating Agreement or in documents executed in connection therewith on the
part of the District to be observed or performed, which failure shall
continue for a period of 30 days after written notice thereof, specifying
such failure and requesting that it be remedied, shall have been given to the
District by the Authority, the Trustee or the Credit Enhancement Provider by
first class mail or hand delivery, any of which may give such notice in their
discretion, unless the Person giving such notice shall agree in writing to an
extension of such thirty day period prior to expiration; provided, however,
that the Authority, the Trustee and the Credit Enhancement Provider, as the
case may be, shall be deemed to have agreed to an extension of such period if
corrective action is initiated by the District within such period, is being
diligently pursued, and can be continued and completed in such manner as to
not adversely affect the rights of the Owners of the Bonds, the Credit
Enhancement Provider or the normal operations of the Project or the use
thereof for the purposes for which such operations are and were originally
intended;

(c) The District shall (i) apply for or consent to the appointment of
or taking of possession by a receiver, trustee, custodian, liquidator or other
similar official of itself or of all or a substantial part of its properties or
assets, (ii) admit in writing its inability to pay its debts as they become due
or generally become unable to pay its debts as they become due, (iii) make a
general assignment for the benefit of creditors, or (iv) commence a voluntary
case as debtor under the federal bankruptcy laws (whether under any Title of the
United States Code or otherwise under any federal law) as now or hereafter
constituted or file a petition seeking to take advantage of any other law
relating to bankruptcy, reorganization, insolvency, winding up, or composition
or adjustment of debts, or acquiesce in writing to, or fail to controvert in a
timely manner, a petition filed against it in any involuntary case under such
federal bankruptcy laws, as the case may be, or any action shall be taken by it
for the purpose of effecting any of the foregoing;

(d) A case or proceeding shall be commenced, without the application
or consent of the District in any court of competent jurisdiction, seeking the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of debts, of the District, or the appointment of a receiver,
trustee, custodian, liquidator or any similar official of the District or of all
or a substantial part of the assets of the District, or similar relief with
respect to the District under any federal laws relating to bankruptcy (including
under any Title of the United States Code or otherwise under any federal law),
insolvency, liquidation, reorganization, winding up, or composition or
adjustment of debts, shall be commenced against the District and such case or
proceeding shall continue undismissed or unstayed and in effect for any period
of 60 consecutive days, or an order for relief against the District shall be
entered in an involuntary case under such federal or other bankruptcy laws;

(e) If (i) the District is adjudged insolvent by a court of competent
jurisdiction, or (ii) an order, judgment or decree is entered by any court of
competent jurisdiction appointing, without the consent of the District, a
receiver, trustee or custodian of the District or of the whole or any part of
its property and any of the aforesaid adjudications, orders, judgments or
decrees shall not be vacated or set aside or stayed within 60 days from the date
of entry thereof;

(f) If, under the provisions of any other law for the relief or aid
of debtors, any court of competent jurisdiction shall assume custody or control
of the District or of the whole or any substantial part of the property of the
District and such custody or control shall not be terminated within 60 days from
the date of assumption of such custody or control; or

(g) Any warranty, representation or other statement of the District
contained in the Operating Agreement or in any instrument furnished in
compliance with or in reference to the Operating Agreement shall prove to have
been false or misleading in any material respect on the date as of which it was
made.

In case the Authority (or the Credit Enhancement Provider, as the assignee
of the Authority) shall have proceeded to enforce any right under the Operating
Agreement and such proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Authority or the Trustee,
then and in every such case the District, the Authority, the Trustee and the
Credit Enhancement Provider shall be restored to their respective positions and
rights thereunder, and all rights, remedies and powers of the District, the
Authority, the Trustee and the Credit Enhancement Provider shall continue as
though no such proceeding had been taken, but subject to the limitations of any
such adverse determination.

REMEDIES

Whenever any Event of Default referred to above shall have happened and be
continuing the Authority, the Trustee and the Credit Enhancement Provider shall
have the right (a) to inspect, examine and make copies of the books and records
and any and all accounts, data and income tax and other tax returns of the
District during regular business hours of the District if reasonably necessary
in the opinion of the Trustee, the Credit Enhancement Provider, or the
Authority, and (b) to take whatever action at law or in equity may appear
necessary or desirable to collect the amounts then due and thereafter to become
due, or to enforce performance and observance of any obligation, agreement or
covenant of the District under the Operating Agreement.

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In case the District shall fail forthwith to pay such amounts upon such
demand, the Credit Enhancement Provider shall be entitled, following payment of
the Bonds or provision therefor, as provided in the Indenture, to liquidate and
sell investments held by the Credit Enhancement Provider or the Trustee in any
account within the Bond Fund and apply the proceeds thereof to payment of such
amounts and the Credit Enhancement Provider shall further be entitled and
empowered to otherwise institute any actions or proceedings at law or in equity
for the collection of the sums so due and unpaid, and may prosecute any such
action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the District and collect in the manner provided
by law out of the property of the District the moneys adjudged or decreed to be
payable.

Any amounts collected pursuant to action taken under the above provisions
shall be applied in accordance with the provisions of the Indenture and the
Reimbursement Agreement.

The foregoing provisions are subject to the limitation that, except for the
rights specified in clause (a) of the third preceding paragraph, the Trustee
shall be entitled to exercise its rights under the Operating Agreement only if
the Credit Enhancement Provider has failed to provide payments to the Trustee
pursuant to the Credit Enhancement, or if the Trustee's failure to exercise such
rights could be anticipated to materially adversely effect the holders of the
Bonds.

RIGHT TO ACQUIRE PROJECT

The District is granted the right to obtain, at any time, unencumbered fee
title and exclusive possession of property (including the Project) financed by
obligations of the Authority (including the Bonds and obligations arising under
the Reimbursement Agreement), and any additions to such property, by (1) placing
into escrow an amount that will be sufficient to defease such obligations, and
(2) paying reasonable costs incident to the defeasance, in the manner provided
in the Operating Agreement and the Indenture. The District, at any time before
it defeases such obligations, shall not agree or otherwise be obligated to
convey any interest in such property to any person (including the United States
of America or its agencies or instrumentalities) for any period extending beyond
or beginning after the District defeases such obligations. In addition, the
District shall not agree or otherwise be obligated to convey a fee interest in
such property to any person who was a user thereof (or a related person) before
the defeasance within 90 days after the District defeases such obligations.

DEFAULT RIGHTS

In addition to the foregoing, if the Authority defaults in its payments
under obligations described in the Indenture, the District is granted an
exclusive option to purchase the property financed thereby (including the
Project) for the amount of the outstanding indebtedness of the Authority and
accrued interest to the date of default. The District shall have (a) not less
than 90 days from the date it is notified by the Authority of the default in
which to exercise the option, and (b) not less than 90 days from the date it
exercises the option to purchase the property.

INDENTURE RIGHTS

The Authority covenants that it will take no action to amend or supplement
the Indenture in any manner which would materially affect the obligations of the
District under the Operating Agreement without obtaining the prior written
consent of the District to such amendment or supplement.

OPTION TO TERMINATE

The District shall have the following options to terminate the
Operating Agreement:

(i) At any time prior to full payment of the Bonds, the
District may make provision for payment of the Bonds in accordance
with the provisions of the Indenture (see "THE INDENTURE"), and the
District may terminate the Operating Agreement, regardless of whether
the Bonds are then subject to optional redemption, (A) by paying to
Trustee an amount which, when added to all amounts then on deposit in
the Bond Fund, will be sufficient to pay, retire and redeem all the
Outstanding Bonds in accordance with the provisions of the Indenture
(including, without limiting the generality of the foregoing,
principal of the Outstanding Bonds and interest to maturity or
earliest applicable redemption date, as the case may be, and premium,
if any, expenses of redemption and all fees and expenses of the
Trustee and the District) and, in case of redemption, by giving notice
and making arrangements satisfactory to the Trustee for the giving of
the required notice of redemption under the Indenture, (B) by giving
the Authority, the Trustee and the Credit Enhancement Provider notice
in writing of such termination, and (C) by paying all amounts unpaid
under the Reimbursement Agreement and the Deed of Trust, and such
termination shall forthwith become effective.

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(ii) After full payment of the Bonds (or provision for payment
thereof having been made in accordance with the provisions of the
Indenture), and after payment of all amounts arising under the
Reimbursement Agreement and the Deed of Trust, the District may
terminate the Operating Agreement by giving the Authority, the Trustee
and the Credit Enhancement Provider notice in writing of such
termination and such termination shall forthwith become effective.

The prepayment amount payable by the District in the event of any
prepayment to be made pursuant to paragraphs (i) or (ii) above shall be the sum
of the following:

(1) An amount of money which, when added to amounts then on
deposit in the Bond Fund, will be sufficient to retire and redeem all
the then Outstanding Bonds in the manner required by the Indenture and
on the earliest possible date after notice of redemption is given as
provided in the Indenture, whether or not such date is an Interest
Payment Date, including, without limitation, the principal amount
thereof, all interest to accrue to said redemption date, the
applicable redemption premium and expenses, if any, plus

(2) An amount of money equal to the administrative fees and
expenses of the Trustee and the Authority accrued and to accrue until
such final payment and redemption or purchase of the Bonds, plus

(3) An amount equal to all amounts then accrued and to accrue
until such final payment and redemption or purchase of the Bonds, plus

(4) An amount of money equal to all sums then due the Authority
under the Operating Agreement, plus

(5) To the extent not included in the foregoing, an amount
sufficient to pay all obligations under the Reimbursement Agreement
and the Indenture.

The District shall have the extraordinary option to terminate the Operating
Agreement and prepay the amounts sufficient to provide for the full payment of
the Bonds (or to make provision for such payment in accordance with the
provisions of the Indenture) and all amounts due under the Reimbursement
Agreement and the Deed of Trust, upon damage, destruction or condemnation of the
Project.

THE INTERGOVERNMENTAL AGREEMENT

The following summary of certain provisions of the Intergovernmental
Agreement does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by, reference to the
Intergovernmental Agreement, copies of which are available from the Trustee.

GENERAL INTENT

It is the purpose and intent of the Districts to coordinate and assist in
the financing of the acquisition of the Property, and to coordinate all related
activities and to affirmatively cooperate with each other in order to best
accomplish the goals stated in the Intergovernmental Agreement.

TERM

The Intergovernmental Agreement shall not be effective as to any District
until either (A) the Town of Castle Rock, Colorado, has approved the amendment
to the service plan of such District specifically authorizing the imposition of
the mill levy described below under "Limitation on Obligations" by such District
or (B) such District shall have received an opinion acceptable to the District
of counsel acceptable to the District that such mill levy may be imposed without
regard to any service plan amendment. Each of the Districts has covenanted in
the Recreational Facilities Agreement to take all reasonable action necessary to
effect such service plan amendment or to obtain such opinion. Once effective as
to any District, the Intergovernmental Agreement shall continue in effect as to
such District until all of the Operating Agreement Payments have been satisfied;
provided that if such Operating Agreement Payments shall be satisfied pursuant
to a refinancing of the Bonds or the refinancing or discharge of the obligations
under the Reimbursement Agreement, the obligation of the Authority with respect
to any such refinancing or discharge shall be considered Operating Agreement
Payments for purposes of the Intergovernmental Agreement.

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ASSESSMENT OF FEES AND CHARGES

Each District shall, subject to limitations of any other agreement
theretofore or thereafter executed by such District, be free to assess
facilities development fees, service charge surcharges, and other fees,
rates, tolls, charges, and taxes in amounts determined to be required by each
such District in order to meet its Financing Obligations under the
Intergovernmental Agreement.

PAYMENTS

Each Related District promises to pay to the District all of its Expense
Obligations and Revenue Obligations in accordance with the terms of the
Intergovernmental Agreement. With respect to any particular District, the
Revenue Obligation of such District evidenced thereby shall be general
obligation indebtedness to which such District pledges its full faith and
credit, subject to the provisions described in "Limitation on Obligations"
below, and shall be incurred and exist from and after the effective date of the
Intergovernmental Agreement. Notwithstanding anything contained in the
Intergovernmental Agreement to the contrary, in compliance with the limitations
imposed by the November 7, 1995 resolutions adopted by the voters of the
Districts, the maximum principal amount of the general obligation represented by
the Intergovernmental Agreement shall not exceed $100,000,000 in principal
amount or $500,000,000 in maximum debt service, subject to the limitations
described below under "Limitations on Obligations". The Revenue Obligations and
indebtedness incurred shall be payable only in accordance with the terms of the
Intergovernmental Agreement. Interest shall be paid by each District on the
principal amount of its Revenue Obligation, which interest shall also be a
Revenue Obligation. The maximum net effective interest rate accruing on any
particular District's indebtedness shall be 45%.

NATURE OF OBLIGATIONS

It is recognized by the Districts that the Revenue Obligations imposed upon
the Districts under the Intergovernmental Agreement constitute "indebtedness"
within the meaning of the Constitution of the State of Colorado. At duly called
and noticed elections held for each District on November 7, 1995, the electorate
of each District authorized the incurrence of indebtedness by each District of
an amount sufficient to fund the various Revenue Obligations expressed in the
Intergovernmental Agreement, and also approved execution of the
Intergovernmental Agreement by each District. In addition, it is recognized by
the District that the Expense Obligations constitute a multiple fiscal year
obligation as to which each District is obligated to increase taxes in an amount
not to exceed $1,500,000 annually, in compliance with the limitations imposed by
the November 7, 1995 resolutions adopted by the voters of the Districts. In no
event shall any commitment, covenant, promise or other obligation under the
Intergovernmental Agreement require the issuance or incurrence of the
indebtedness by the Districts in excess of their respective voted indebtedness
authorization.

PROPORTIONATE SHARE OF REVENUE OBLIGATIONS

The Proportionate Share of the total Revenue Obligations for each District
shall be determined by the District in the preparation of an annual budget for
each year. The "Proportionate Share" for each District shall be the ratio of
the estimated assessed value of all taxable real and personal property in such
District to the total assessed value of all taxable real and personal property
in all of the Districts.

LIMITATION ON OBLIGATIONS

Notwithstanding any provision of the Intergovernmental Agreement to the
contrary, the obligation of a District to pay any or all amounts thereunder in
any year shall be limited to amounts collected under a maximum mill levy
imposition of 35 mills. Any Proportionate Share in excess of the amounts
collected pursuant to such mill levy limit shall continue to be due from such
District, and shall bear interest at the rate of 15% per annum, subject to the
provisions described above under "Payments" and "Nature of Obligations", until
the end of the term of the Intergovernmental Agreement, and shall thereupon be
forgiven. In the event the method for determining assessed value or mill levies
for the State of Colorado is hereafter amended, the District shall provide a
statement of revised procedures to each of the Related Districts so the amounts
collected under such revised method shall equal as closely as reasonably
possible the amounts which would have been collected absent such revision. In
addition, no District shall have any obligation to pay its Proportionate Share
until either (A) the Town of Castle Rock, Colorado, has approved the amendment
to the service plan of such District specifically authorizing the imposition of
such mill levy, or (B) such District shall have received an opinion acceptable
to such District of counsel acceptable to such District that such mill levy may
be imposed without regard to any service plan amendment. Each of the Districts
has covenanted in the Recreational Facilities Agreement to take all reasonable
action necessary to effect such service plan amendment or to obtain such
opinion.

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BUDGET AND APPROPRIATIONS

On or before September 1 of each year, the District shall prepare a
proposed Project budget, specifying the anticipated Proportionate Share to be
paid in the ensuing fiscal year by each of the Related Districts. On or before
September 10 of each year, the Related Districts shall either approve budget
documents prepared by the District or propose to the District, in writing,
additions to and/or deletions from the proposed budgets. Absent receipt by the
District of a written proposal for additions and/or deletions by September 15 of
such year, the Related Districts shall be deemed to have approved the items
included in the proposed budgets. In the event the Related Districts propose
additions and/or deletions to the proposed budgets for consideration by the
District and for inclusion in the budget documents prepared by the District, and
if such additions and/or deletions are not agreed to by the District, the issue
shall be submitted to the Arbitrator (as defined in the Intergovernmental
Agreement) who shall accept and/or reject such proposed additions and/or
deletions pursuant to the provisions of the Intergovernmental Agreement.
Following the Arbitrator's decision, the District shall approve its budget for
the next ensuing year.

Each Related District shall adopt budgets, and make appropriations
therefor, sufficient to pay its Proportionate Share of Revenue Obligations as
required under the Intergovernmental Agreement, subject to the provisions
described above under "Limitation on Obligations." Each District shall include
such amounts in its budget for the ensuing year, and shall certify an ad valorem
tax levy in an amount sufficient, together with other revenues of such District,
to pay the full amounts required under the Intergovernmental Agreement, subject
to the provisions described above under "Limitation on Obligations."

BREACH OF INTERGOVERNMENTAL AGREEMENT

The Districts agree that no breach of the Intergovernmental Agreement shall
justify or permit termination of the continuing obligations under the
Intergovernmental Agreement.

In addition to any other available remedies, in the event of a breach of
the Intergovernmental Agreement, any District may ask a court of competent
jurisdiction to enter a writ of mandamus to compel the board of directors of the
breaching District to perform its duties under the Intergovernmental Agreement,
and any District may seek from a court of competent jurisdiction temporary
and/or permanent restraining orders, or orders of specific performance, to
compel the other to perform in accordance with the obligations set forth under
the Intergovernmental Agreement.

ASSIGNMENT

Neither the Intergovernmental Agreement, nor any of any District's rights,
obligations, duties or authorities thereunder may be assigned in whole or in
part without the prior written consent of each of the other Districts and the
Trustee. Any purported attempt to assign the Intergovernmental Agreement or any
rights thereunder shall be void and of no force and effect. Consent to one
assignment shall not be consent to any subsequent assignment. The foregoing is
subject to the limitation that the District has assigned or shall be entitled to
assign all or any portion of its rights thereunder to the Authority (which may
similarly assign its rights to the Trustee) or the Trustee, or any successor to
the foregoing, or to any other party without the consent of the Related
Districts.

AMENDMENT

The Intergovernmental Agreement may not be modified, amended, changed or
terminated, in whole or in part, except by an agreement in writing duly
authorized and executed by each of the Districts and consented to in writing by
the Authority, the Trustee and the Credit Enhancement Provider.

THE LEASE

The following summary of certain provisions of the Lease does not purport
to be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by, reference to the Lease, copies of which are
available from the Trustee.

GENERAL

Parcel 49C Limited Partnership (the "Partnership") has entered into a lease
(the "Lease") with the United States Government, acting by and through the
General Services Administration (the "Government"), pursuant to which the
Government has agreed to lease 449,859 net usable square feet of the
approximately 535,000 net usable square feet of space in the Project. Rent
payments under the Lease will commence on March 1, 1998.

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LEASE PAYMENT OBLIGATIONS

The base rent payable under the Lease shall be based on an initial annual
rental rate of $38.85 per net usable square foot for the first 287,483 of net
usable square feet of space leased and $37.95 per net usable square foot for the
remaining 162,376 of net usable square feet leased for a total initial amount of
$17,330,883.75 per year or $1,444,240.31 per month. The Government may deduct
from the base rent during any year of the term of the Lease an amount which will
not exceed $8.50 per net usable square foot (which amount may be increased each
year in accordance with a formula set forth in the Lease using the same
methodology for calculating the increase in the rent for operating costs set
forth in the Lease) for the Lessor's failure to perform its obligations under
the Lease, but the Government has agreed pursuant to an attornment agreement
(the "Attornment Agreement") to give the Trustee notice of and an opportunity to
cure the Partnership's failure to perform its obligations under the Lease prior
to deducting amounts from the base rent, unless the Partnership's failure to
perform has caused a life or health-threatening condition. Consequently, the
total base rent not subject to set-off is $13,507,082.22 per year, or
$1,125,590.19 per month. Rent is payable in equal monthly installments in
arrears. It is a condition to issuance of the Bonds that counsel for the
Government render an opinion that the obligations of the Government to pay rent
under the Lease constitutes an absolute and unconditional obligation of the
Government. As is the case with most federal agencies, the Government's access
to funds requires an annual appropriation by Congress. The Government's ability
to make payments under the Lease requires such an appropriation to the Federal
Buildings Fund, the fund from which all the Government's long-term leases are
paid. In the event Congress fails to make such appropriation, or in the event
any payments that are properly due and owing the Partnership under the Lease are
not made, the Partnership or the Trustee would be entitled, in the opinion of
the counsel for the Government, to enforce the payment obligations of the United
States in accordance with the terms of the Lease, or as otherwise may be
available at law or in equity.

COMPLETION OF CONSTRUCTION

In the event that the space rented to the Government is not completed as
scheduled (which is to occur in six phases) and the delay is attributable to the
Partnership, rather than an adjustment to the rent commencement date or any
other provisions for liquidated damages, the Partnership is required to pay the
Government liquidated damages equal to the rent payable with respect to each
phase for the period of time from the applicable rent commencement date until
the phase has been determined to be substantially complete. The imposition of
such liquidated damages does not relieve the Government of its obligation to pay
rent or in any way affect the assignment of such rent to the Trustee.

CASUALTY OR CONDEMNATION

If the premises leased to the Government are totally destroyed by fire or
other casualty, the Government will have the right to terminate the Lease by
providing written notice to the Partnership within 120 days after the occurrence
of such event. In case of partial destruction or damage, so as to render all or
a portion of the premises unrentable, as reasonably determined by the
Government, the rent will be reduced proportionately from the date of such
partial destruction or damage. The Government may not terminate the Lease as a
result of such partial destruction or damage so long as the Partnership
diligently commences and pursues the repair and restoration of the premises.
Although not specifically covered by the Lease, in the event of a condemnation
of the building, the Government may have the right to terminate the Lease.

PARTNERSHIP RESPONSIBILITIES

The Partnership has various obligations under the Lease, including
obligations regarding hazardous waste, asbestos, illegal activities, kickbacks
and compliance with certain statutes regarding contractors' employment
practices. Failure of the Partnership to comply with such obligations may give
the Government valid claims against the Partnership, but the Government has
agreed pursuant to the Attornment Agreement not to terminate the Lease for such
failure. The Lease also requires that the Partnership as lessor to certify that
it has no knowledge of any illegal or improper activity in the procurement of
the Lease. The Partnership will be required to deliver such a certificate at
the date of issuance of the Bonds. If the Government determines that such a
violation exists, the Government may elect to (i) reduce the amount of its
monthly rent payments by five percent for each month of the remaining term of
the Lease, including any option periods, and recover up to five percent of the
rent already paid; (ii) reduce payments for alterations not included in monthly
rental payments by five percent of the amount of the alterations agreement; or
(iii) reduce the rent payments for violations by the Partnership's subcontractor
by an amount not exceeding the amount of profit or fee reflected in the
subcontract at the time the subcontract was placed.

The Lease also provides that if any price negotiated in connection with any
construction contract of the Partnership relating to the Project is increased by
any significant amount because the Partnership or a subcontractor furnished cost
or pricing data that was not complete, accurate and current, the price or cost
shall be reduced accordingly and the contract shall be modified to reflect such
reduction. The Lease also provides that the Government may seek a reduction in
the contract price if defective cost or pricing data previously submitted
indicates that the price or cost should be reduced accordingly and that the
Lease should be modified.

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OPTIONS TO LEASE ADDITIONAL SPACE

The Government has been granted three options to lease additional space,
aggregating an additional 85,271 of net usable square feet, at an annual rental
rate of $37.95 per net usable square foot, upon the same terms and conditions
set forth in the Lease. The deadline for the Government's exercise of these
options is December 31, 1996.

THE DEVELOPMENT AGREEMENT

The following summary of certain provisions of the Development Agreement
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by, reference to the Development Agreement,
copies of which are available from the Trustee.

GENERAL

Until the mill levy described in the Operating Agreement and the
Intergovernmental Agreement is imposed, certain charges (payments in lieu of
taxes) will be assessed pursuant to the Development Agreement upon the property
owned by Douglas County Development Corporation ("DCDC") located within the
Districts (the "Property") (such charges are referred to as the "Development
Charges") and subsequent owners of the Property, in an amount equivalent to that
which would be generated by a mill levy against all of the taxable real and
personal property in the Districts pursuant to the Operating Agreement and the
Intergovernmental Agreement.

Under the Development Agreement, DCDC has granted to the Authority, for the
purpose of providing security for the payment of the Development Charges, a good
and sufficient lien upon the Property, subject to no encumbrances other than the
permitted encumbrances described in the Development Agreement.

ESTABLISHMENT AND ACCEPTANCE OF THE DEVELOPMENT CHARGE OBLIGATION

Each parcel, lot or tract constituting a portion of the Property shall have
a Development Charge obligation under the Development Agreement equal to the
amount of the Development Charges payable in respect of such parcel, lot or
tract in accordance with the terms of the Development Agreement, which
obligation shall be secured by the Development Charge lien created under the
Development Agreement. DCDC for and on behalf of itself, its successors and
assigns, accepts and acknowledges the Development Charge obligation with respect
to the Property, and agrees that the Property and each such parcel, lot or tract
shall be bound thereby.

GRANT AND RELEASE OF DEVELOPMENT CHARGE LIEN

In consideration of the Authority's issuance of the Bonds and undertaking
the financial obligations set forth therein relating to the Project which will
benefit the Property and the owners, residents, tenants and occupants thereof,
and to secure the payment of the Development Charge obligation in accordance
with the Development Agreement and the performance of any and all other
covenants, agreements, warranties and conditions of DCDC contained in the
Development Agreement, DCDC has, under the terms of the Development Agreement,
encumbered and mortgaged unto the Authority, its successors and assigns, the
Property, together with all improvements, fixtures and other property, real and
personal, owned by DCDC, which may belong to, or be or thereafter become a part
thereof; SUBJECT, HOWEVER, TO THE CONDITION that the Development Charge lien
thereby granted shall automatically cease, terminate and be released upon the
occurrence of any of the following events: (i) the Bonds are no longer
outstanding and the Credit Enhancement Provider has consented to the release of
the Development Charge lien; (ii) the Credit Enhancement Provider has consented
to the release of the Development Charge lien and if, in the opinion of
nationally recognized bond counsel, the release of the Development Charge lien
will not cause interest on the Bonds to be includable in gross income for
federal income tax purposes, (iii) the amendment to the Districts' service plan
authorizing the imposition of the mill levy provided for in the Operating
Agreement and the Intergovernmental Agreement has been formally approved by the
Town; or (iv) if, in the opinion acceptable to the District of counsel
acceptable to the District, the imposition of the mill levy as described in the
Operating Agreement and the Intergovernmental Agreement is otherwise valid and
enforceable without regard to such service plan amendment. Upon the cessation
of the Development Charge lien, the Authority or its assigns shall execute and
record all documents necessary to evidence the release of the Development Charge
lien of record.

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DEVELOPMENT CHARGES

Until such time as the Development Charge lien is released, the Authority
shall be entitled to collect the Development Charges payable in respect of the
Property or any parcel, lot or tract constituting a portion of the Property,
which charges are to be assessed and paid within fifteen (15) days after any
applicable payment date.

Development Charges shall be assessed by the Authority against the Property
in an annual amount equivalent to the amount the District or a Related District
would collect if it were to impose a mill levy not to exceed 35 mills against
the Property. In the event of a change in the method for determining assessed
value or the ratio of valuation for assessment, the maximum mill levy shall be
adjusted to account for such revision so that the Development Charges imposed by
the Authority shall be determined as if such change had not occurred. The total
Development Charges to be imposed in any year by the Authority against the
Property shall be determined by its Board of Directors.

In the event that additional parcels, lots or tracts of land become a part
of the Property by amendment or supplement to the Development Agreement, the
Development Charge obligation shall be assessed against each parcel, lot or
tract relative to all Included Property served by the Project.

Each owner of the Property or any parcel, lot or tract constituting a
portion of the Property shall pay its allocable share (as determined by the
District) of the Development Charge within fifteen (15) days after the
applicable payment date. The Authority shall cause billings to be sent to each
owner of the Property or any parcel, lot or tract constituting a portion of the
Property, setting forth the amount of the Development Charges required to be
paid and the applicable payment date.

SALE OR LEASE OF THE PROPERTY

The Development Charge lien will remain a lien upon each parcel of the
Property, subject to no encumbrances or lease of such parcel of the Property to
any third party except the permitted encumbrances, whether such transaction is
by lease, deed, contract for deed or other conveyance.

LIMITATIONS ON DEVELOPMENT CHARGE OBLIGATIONS

The Authority covenants, agrees and consents that if at any time the
Property is comprised of more than one parcel, lot or tract, then each parcel,
lot or tract constituting a portion of the Property shall be security for, and
subject to a Development Charge lien with respect to, only the Development
Charges attributable to such parcel, lot or tract constituting a portion of the
Property. The Authority further covenants, agrees and consents that the
Development Charges collected by the Authority shall be used solely in a manner
which would satisfy the financial obligations of the District under the
Operating Agreement and the Intergovernmental Agreement.

DEFAULTS BY ANY OWNER OF THE PROPERTY AND REMEDIES OF THE AUTHORITY

Any one or more of the following shall be deemed to be a default with
respect to any portion of the Property to which the same is applicable:

any default in the payment or satisfaction of the Development Charges or
any part thereof with respect to such portion of the Property;

the attachment of, seizure of or levy upon such portion of the Property
that is then subject to the Development Charge lien pursuant to any legal
process, if the same is not cured within thirty (30) days, except to the extent
the Development Charge lien is prior to the lien giving rise to such attachment,
seizure or levy; or

a failure by any owner of such portion of the Property to pay, prior to
delinquency, all taxes, assessments, whether general or special, governmental
charges, utility charges, and all other charges of any kind whatsoever that may
at any time be lawfully charged, assessed or levied with respect to such portion
of the Property then owned by such Person, and which are secured by any prior
lien or encumbrance thereon, or any portion thereof, or which may result in the
creation of a prior lien or encumbrance upon such portion of the Property, in
the event of nonpayment thereof (collectively, "Charges"); PROVIDED, HOWEVER,
that such failure shall not constitute a default while such owner is contesting
in good faith such Charges and takes such action as may be reasonably necessary
to prevent issuance of a county treasurer's deed or other action that would
defeat the Development Charge lien.

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Upon the occurrence of any one or more of the foregoing defaults, the
Authority may exercise certain remedies under the Development Agreement,
including but not limited to, the right to foreclose upon the portion of the
Property in default.

THE RECREATIONAL FACILITIES AGREEMENT

The following summary of certain provisions of the Recreational Facilities
Agreement does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by, reference to the
Recreational Facilities Agreement, copies of which are available from the
Trustee.

To provide for the ownership and operation of the Project until the
Operating Agreement becomes effective, the Authority and the District will enter
into the Recreational Facilities Agreement. Pursuant to the terms of the
Recreational Facilities Agreement, the Authority will be the owner of the
Project and the District will have no fee title thereto until such time as a
deed to all or any portion of the Project is delivered to the District.

The Recreational Facilities Agreement will be replaced (except to the
extent provided therein) by the Operating Agreement and the Intergovernmental
Agreement when such agreements become effective pursuant to their respective
terms. See "THE OPERATING AGREEMENT" and "THE INTERGOVERNMENTAL AGREEMENT"
above.

During the Term of the Recreational Facilities Agreement, the Authority
shall hold title to and ownership of each of the Project facilities and any and
all additions thereto which comprise repairs, replacements, modifications,
improvements and substitutions until such Project facility is transferred to the
District. The District agrees that any damage to the Project that would
materially impact the operation of the Project that is occasioned by the
District's removal of fixtures and improvements shall be promptly repaired by
the District. Notwithstanding anything to the contrary in the Recreational
Facilities Agreement, it is understood that title to personal property
permanently attached to the Project by the District or any other entity,
instrumentality, authority or department of the District shall become a part of
the Project.

PLAN OF DISTRIBUTION

Each Participating Broker-Dealer that receives Exchange Bonds for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Bonds. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Bonds
received in exchange for Bonds where such Bonds were acquired as a result of
market-making activities or other trading activities. The Authority has agreed
that for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any Participating Broker-
Dealer, all dealers effecting transactions in the for use in connection with
any such resale. In addition, until Exchange Bonds may be required to deliver
a prospectus.

The Authority will not receive any proceeds from any sales of the Exchange
Bonds by Participating Broker-Dealers. Exchange Bonds received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Bonds or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchaser or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Bonds. Any Participating Broker-Dealer that resells the
Exchange Bonds that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Bonds may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of Exchange Bonds and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.

For a period of 180 days after the Expiration Date the Authority will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.

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LEGAL MATTERS

The validity of the issuance of the Exchange Bonds will be passed upon for
the Authority by Brownstein Hyatt Farber & Strickland, P.C., Denver, Colorado.

INDEPENDENT ACCOUNTANTS

The financial statements of Castle Rock Ranch Public Improvements Authority
and BFC Guaranty Corp. as of December 31, 1996 included in this Prospectus have
been so included in reliance on the report of Joseph Decosimo & Company, LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

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INDEX TO FINANCIAL STATEMENTS

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

Report of Independent Accountants
Balance Sheet
Statement of Revenues, Expenses and Changes in Fund Equity
Statement of Cash Flows
Notes to Financial Statements

BFC GUARANTY CORP.

Report of Independent Accountants
Balance Sheet
Statement of Income and Retained Earnings
Statement of Cash Flows
Notes to Financial Statements

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

FINANCIAL STATEMENTS AND AUDIT REPORT

October 31, 1996

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY
CONTENTS

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

REPORT OF INDEPENDENT ACCOUNTANTS 1

BALANCE SHEET 2

STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND EQUITY 3

STATEMENT OF CASH FLOWS 4

NOTES TO FINANCIAL STATEMENTS 5/8

<PAGE>

A TENNESSEE REGISTERED LIMITED LIABILITY PARTNERSHIP

- ------------------------------------------------------------------------------
Private Companies Practice Section SEC Practice Section
Member AICPA Division for CPA Firms

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
Castle Rock Ranch Public Improvements Authority
Castle Rock, Colorado

We have audited the accompanying financial statements of Castle Rock Ranch
Public Improvements Authority as of October 31, 1996, and for the period from
March 29, 1996 to October 31, 1996. These financial statements are the
responsibility of Castle Rock Ranch Public Improvements Authority's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and generally accepted government auditing standards issued by the Comptroller
General of the United States and Office of Management and Budget (OMB) Circular
A-128, "Audits of State and Local Governments." Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

The financial statements present only Castle Rock Ranch Public Improvements
Authority and are not intended to present fairly the financial position of the
Dawson Ridge Metropolitan Districts and the results of operations and cash flows
of its fund types in conformity with generally accepted accounting principles.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Castle Rock Ranch Public
Improvements Authority as of October 31, 1996, and the results of its operations
and cash flows for the period from March 29, 1996 to October 31, 1996, in
conformity with generally accepted accounting principles.

Chattanooga, Tennessee
November 19, 1996, except for
the subsequent events note
as to which the date is
December 13, 1996

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

BALANCE SHEET

October 31, 1996

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

ASSETS

LAND AND WATER RIGHTS $ 54,550,000
------------

OTHER ASSETS
Restricted Cash and Investments 7,792,040
Accrued Interest - Restricted Investments 204,885
Deferred Commitment Fee - Related Party -
less accumulated amortization of $123,172 3,895,328
Deferred Bond Issuance Costs - less accumulated
amortization of $48,029 1,735,900
------------

Total Other Assets 13,628,153
------------

TOTAL ASSETS $ 68,178,153
------------
------------

LIABILITIES AND FUND EQUITY

LIABILITIES
Bonds Payable, plus unamortized
bond premium of $710,828 $ 67,685,828
Accrued Interest Payable 2,754,801
------------

Total Liabilities 70,440,629

FUND EQUITY
Accumulated Deficit ( 2,262,476)
------------

TOTAL LIABILITIES AND FUND EQUITY $ 68,178,153
------------
------------

The accompanying notes are an integral part of the financial statements.

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITY

Period from March 29, 1996 to October 31, 1996

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

OPERATING EXPENSES
Amortization of Bond Issuance Costs $ (48,029)
Amortization of Deferred Commitment Fee - Related Party (123,172)
-----------

OPERATING LOSS (171,201)
-----------

NONOPERATING REVENUE (EXPENSE)
Interest Income 267,340
Interest Expense (2,358,615)
-----------
(2,091,275)
-----------

NET LOSS (2,262,476)

FUND EQUITY - beginning of period -
-----------

FUND EQUITY - end of period $(2,262,476)
-----------
-----------

The accompanying notes are an integral part of the financial statements.

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

STATEMENT OF CASH FLOWS

Period from March 29, 1996 to October 31, 1996

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

CASH FLOWS FROM OPERATING ACTIVITIES
Operating Loss $ (171,201)
Amortization of Bond Issuance Costs 48,029
Amortization of Deferred Commitment Fee - Related Party 123,172
------------

NET CASH PROVIDED BY OPERATING ACTIVITIES -
------------

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Capital Expenditures (54,550,000)
Issuance of Bonds, plus accrued interest sold 68,082,015
Commitment Fee Paid (4,018,500)
Deposit to Restricted Cash (7,729,586)
Increase in Restricted Cash (81,212)
Payment of Debt Issuance Costs (1,783,929)
------------

NET CASH USED BY CAPITAL AND RELATED
FINANCING ACTIVITIES (81,212)
------------

CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received 81,212
------------

NET INCREASE IN CASH -

CASH - beginning of period -
------------

CASH - end of period $ -
------------
------------

The accompanying notes are an integral part of the financial statements.

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and practices followed by Castle Rock Ranch
Public Improvements Authority are as follows:

REPORTING ENTITY - Castle Rock Ranch Public Improvements Authority (the
Authority) is a Colorado nonprofit corporation created March 11, 1996, to be
operated as an instrumentality of Dawson Ridge Metropolitan District No. 5 (the
District). The Authority was created to issue Guaranteed Public Facilities
Revenue Bonds Series 1996 (the Bonds) to purchase certain land and water rights
in the Dawson Ridge development of Castle Rock, Douglas County, Colorado and to
pay the debt service on the bonds.

The District appoints all board members and is primarily responsible for
retirement of the bonds recorded as a liability of the Authority. The Authority
is considered to be a discrete component unit of the District.

The accounting policies of the Authority conform to the generally accepted
accounting principles applicable to governmental entities. The more significant
accounting policies of the Authority are summarized as follows:

YEAR END - The Authority's year end is December 31.

BASIS OF ACCOUNTING - The financial statements of the Authority have been
prepared on the accrual basis of accounting. Accordingly, revenues are
recognized when earned and expenses are recognized when they are incurred.

BUDGETS - The Authority has established no formal budget procedures as its
primary function is as a debt service fund for the District.

LAND AND WATER RIGHTS - Land and water rights are recorded at cost. When the
bonds are paid off or mature, title to the land and water rights transfers to
the District.

BOND ISSUANCE COSTS - Bond issuance costs are amortized on a straight-line basis
over the term of the Bonds.

DEFERRED COMMITMENT FEE - The deferred commitment fee is recognized on a
straight-line basis over the term of the Bonds.

RESTRICTED INVESTMENTS - Restricted investments are considered held-to-maturity
and are recorded at cost adjusted for the amortization of premiums and accretion
of discounts, which are recognized as adjustments to interest income using the
interest method.

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

BOND PREMIUM - The premium recorded on issuance of the Bonds is recorded as an
adjustment to the par value of the Bonds and is amortized over the term of the
Bonds and recognized as an adjustment to interest expense using the interest
method.

INCOME TAXES - As a nonprofit corporation and instrumentality of the District,
the Authority is exempt from federal and state income taxes.

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

RESTRICTED CASH AND INVESTMENTS

Restricted cash and investments as of October 31, 1996, consist of the
following:

BOOK VALUE FAIR VALUE

5.375% - 6.5% United States Treasury Notes -
maturing at various dates from November 30,
1996 through May 31, 1998 $ 7,562,755 $ 7,563,929
Money Market Fund 229,285 229,285
----------- -----------

$ 7,792,040 $ 7,793,214
----------- -----------
----------- -----------

BONDS PAYABLE

The Bonds were issued March 29, 1996, at coupon rates ranging from 5.7% to 6.5%
and maturing at varying amounts beginning December 1, 1999 and ending December
1, 2017. Par value of the Bonds is $66,975,000 and the proceeds from issuance
were $67,760,621 plus accrued interest of $321,394. The proceeds were used to
acquire 876 acres of real property and 900 acre feet of water rights in Dawson
Ridge development in the town of Castle Rock, Douglas County, Colorado. The
land and water rights were purchased from a related party, Douglas County
Development Corporation (DCDC), an affiliate of The Franklin L. Haney Company.
Mr. Haney is a director of the Authority. The land acquired will be used to
develop a golf course and other recreational facilities for the benefit of the
Dawson Ridge Metropolitan Districts. The Bonds have a debt service reserve
retained from the proceeds from their issuance sufficient to fund interest
payments on the Bonds until March 1, 1998.

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

BONDS PAYABLE - continued

BFC Guaranty Corp., a related company controlled by Mr. Haney, entered into a
collateralized credit enhancement agreement for the benefit of the Trustee of
the Bonds. Under the terms of the agreement, BFC Guaranty Corp. will guarantee
complete payment of the Bonds for the period commencing March 1, 1998, until the
Bonds are redeemed or mature.

In order to secure its obligations under the Collateralized Credit Enhancement
Agreement, BFC Guaranty Corp. has pledged and delivered to the Trustee, Series B
REMIC Bonds with a par value of $67,075,000, and coupon rates ranging from 5.7%
to 6.5%. The Series B REMIC Bonds mature at varying amounts beginning December
1, 1998 and ending December 1, 2017. The Series B REMIC Bonds will be issued to
BFC Guaranty Corp. on March 1, 1998, at no cost.

The Series B REMIC Bonds, along with another series of bonds representing a
regular interest in the REMIC Trust Estate (the "Series A REMIC Bonds"), were
issued under an indenture of trust between BFC Finance Corp. and SouthTrust Bank
of Alabama. The proceeds from the Series A REMIC Bonds will be used to fund the
acquisition and construction of an office building in the District of Columbia
to be leased by the U.S. Government. Scheduled lease payments will be
sufficient to retire all principal and interest payments on the Series A and
Series B REMIC Bonds.

Debt service requirements and sinking fund requirements as of October 31, 1996,
are as follows:

PRINCIPAL INTEREST

YEAR ENDING
October 31, 1997 $ - $ 5,165,253
October 31, 1998 - 4,132,203
October 31, 1999 - 4,132,203
October 31, 2000 1,980,000 4,075,278
October 31, 2001 2,095,000 3,958,121
Later Years 62,900,000 39,049,558
------------ ------------
Total $ 66,975,000 $ 60,512,616
------------ ------------
------------ ------------

The fair value of the bonds payable approximates book value.

REIMBURSEMENT AGREEMENT

The Authority also entered into a Reimbursement Agreement with BFC Guaranty
Corp. that requires the Authority to reimburse BFC Guaranty Corp. for any
principal and interest payments made by BFC Guaranty Corp. under the provisions
of the Collateralized Credit Enhancement Agreement. Interest at the rate of 9%
will be charged on the payments. In addition, the Authority paid BFC Guaranty
Corp. a commitment fee of 6% of the Bond proceeds which totaled $4,018,500.

<PAGE>

CASTLE ROCK RANCH PUBLIC IMPROVEMENTS AUTHORITY

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

OPERATING AND DEVELOPMENT AGREEMENTS

The Authority has entered into an operating agreement obligating the Dawson
Ridge Metropolitan Districts to provide funds to the extent that revenues from
the golf course and recreational facilities are insufficient to fund the debt
service on the Bonds. Such funds would be derived from a mill levy on taxable
property in the Dawson Ridge districts. The levy would be subject to certain
limitations including a 35-mill limitation. In order to provide an alternate
source of revenue, the Authority entered into a development agreement with DCDC
providing for a payment in lieu of taxes by DCDC in an amount equivalent to the
amount which would be generated by the mill levy pursuant to the operating
agreement. DCDC owns approximately 85% of the property in the Dawson Ridge
districts. As of October 31, 1996, there were no obligations owed to the
Authority pursuant to the development agreement.

SUBSEQUENT EVENT

On December 13, 1996, the Authority filed a Registration Statement on Form S-4
with the Securities and Exchange Commission offering to exchange the entire
issue of Guaranteed Public Facilities Revenue Bonds, (Series 1996) for an
identical issue of Guaranteed Public Facilities Bonds, (Series 1996B). The
Series 1996B Bonds and the Credit Enhancement of BFC Guaranty Corp. will be
registered under the Securities Act of 1933 and as a result, the Series 1996B
Bonds will not be subject to the transfer restrictions associated with the
Series 1996 Bonds. No gain or loss will be recognized for financial statement
purposes on the exchange.

<PAGE>

BFC GUARANTY CORP.

FINANCIAL STATEMENTS AND AUDIT REPORT

October 31, 1996

<PAGE>

BFC GUARANTY CORP.

CONTENTS

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

REPORT OF INDEPENDENT ACCOUNTANTS 1

BALANCE SHEET 2

STATEMENT OF INCOME AND RETAINED EARNINGS 3

STATEMENT OF CASH FLOWS 4

NOTES TO FINANCIAL STATEMENTS 5/8

<PAGE>

A TENNESSEE REGISTERED LIMITED LIABILITY PARTNERSHIP

- ------------------------------------------------------------------------------
Private Companies Practice Section SEC Practice Section
Member AICPA Division for CPA Firms

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholder
BFC Guaranty Corp.
Washington, D.C.

We have audited the accompanying balance sheet of BFC Guaranty Corp. (a Delaware
corporation) as of October 31, 1996, and the related statements of income,
retained earnings and cash flows for the period from March 29, 1996 to October
31, 1996. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BFC Guaranty Corp. as of
October 31, 1996, and the results of its operations and its cash flows for the
period from March 29, 1996 to October 31, 1996, in conformity with generally
accepted accounting principles.

Chattanooga, Tennessee
November 19, 1996, except for
the subsequent events note
as to which the date is
December 13, 1996

<PAGE>

BFC GUARANTY CORP.

BALANCE SHEET

October 31, 1996

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

ASSETS

Cash $ 1,000
Debt Securities -
Advances to Parent Company 4,018,500
Accrued Interest on Advances to Parent Company 210,971
Deferred Tax Asset 1,324,411
-----------

TOTAL ASSETS $ 5,554,882
-----------
-----------

LIABILITIES AND STOCKHOLDER'S EQUITY

Accrued Income Taxes $ 1,438,020
Deferred Income - Related Party 3,895,328
-----------

Total Liabilities 5,333,348
-----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY
Common Stock - no par value - 1,500 shares
authorized and issued 1,000
Retained Earnings 220,534
-----------

Total Stockholder's Equity 221,534
-----------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 5,554,882
-----------
-----------

The accompanying notes are an integral part of the financial statements.

<PAGE>

BFC GUARANTY CORP.

STATEMENT OF INCOME AND RETAINED EARNINGS

Period from March 29, 1996 to October 31, 1996

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

INCOME
Commitment Fee Income - Related Party $ 123,172
Interest Income - Related Party 210,971
---------

INCOME BEFORE PROVISION FOR INCOME TAXES 334,143

Provision for Income Taxes 113,609
---------

NET INCOME 220,534

RETAINED EARNINGS - beginning of period -
---------

RETAINED EARNINGS - end of period $ 220,534
---------
---------

PRIMARY AND FULLY DILUTED EARNINGS
PER COMMON SHARE $ 147.02
---------
---------

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,500
---------
---------

The accompanying notes are an integral part of the financial statements.

<PAGE>

BFC GUARANTY CORP.

STATEMENT OF CASH FLOWS

Period from March 29, 1996 to October 31, 1996

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

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 220,534
Deferred Income Taxes (1,324,411)
Increase in Deferred Income 3,895,328
Increase in Accrued Interest - Related Party (210,971)
Increase in Income Taxes Payable 1,438,020
-----------

NET CASH PROVIDED BY OPERATING ACTIVITIES 4,018,500
-----------

CASH FLOWS FROM INVESTING ACTIVITIES
Advances to Parent Company (4,018,500)
-----------

CASH FLOWS FROM FINANCING ACTIVITIES
Cash Received from Issuance of Common Stock 1,000
-----------

INCREASE IN CASH 1,000

CASH - beginning of period -
-----------

CASH - end of period $ 1,000
-----------
-----------

SUPPLEMENTAL DISCLOSURE OF OPERATING ACTIVITIES
Income Taxes Paid $ -

The accompanying notes are an integral part of the financial statements.

<PAGE>

BFC GUARANTY CORP.

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and practices followed by the company are as
follows:

DESCRIPTION OF BUSINESS - The company was organized on March 21, 1996, as a
wholly-owned subsidiary of Building Finance Company of Tennessee. The company
was formed solely to provide credit enhancement for the Castle Rock Ranch Public
Improvement Authority Guaranteed Public Facilities Revenue Bonds, Series 1996
(the "Castle Rock Bonds"), acquire assets in connection with the provision of
credit enhancement for the Castle Rock Bonds and enter into documents related
thereto. Operations of the company commenced March 29, 1996.

DEBT SECURITIES - Debt securities are considered held-to-maturity and are
stated at cost in accordance with Statement of Financial Accounting Standards
Number 115.

DEFERRED INCOME - Deferred income is recognized on a straight-line basis over
the term of the Castle Rock Bonds and Collateralized Credit Enhancement
Agreement.

YEAR END - The company's year end is December 31.

INCOME TAXES - Deferred tax assets and liabilities are recognized for the future
tax effects attributed to temporary differences between book and tax bases of
assets and liabilities. The measurement of current and deferred tax assets and
liabilities is based on enacted tax law.

EARNINGS PER COMMON SHARE - Earnings per common share is computed by dividing
the net income for the period by the weighted average number of common shares
outstanding during the period.

DEBT SECURITIES

Debt securities consist of $67,075,000 par value REMIC Federal Lease-Backed
Bonds (Series 1996, Class B) issued by a related party, BFC Finance Corp. The
bonds are currently pledged as collateral for the Castle Rock bonds and are held
in trust by the Bond Trustee. The bonds will be issued on March 1, 1998, to the
company at no cost.

<PAGE>

BFC GUARANTY CORP.

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

DEBT SECURITIES - continued

The bonds will be issued with varying maturity dates at an aggregate discount of
$5,738,773 and accrued interest of $1,034,574. Aggregate maturities and cash
payments to be received by the company are as follows:

COUPON PRINCIPAL INTEREST
RATE PAYMENTS PAYMENTS

Within 1 Year - $ - $ -
1 Year through 5 Years 5.75% 4,090,000 13,217,167
After 5 Years through
10 Years 5.75% - 6.1% 12,455,000 17,782,264
After 10 Years 5.7% - 6.5% 50,530,000 21,312,433
------------ ------------
$ 67,075,000 $ 52,311,864
------------ ------------
------------ ------------

The fair value of the bonds as of October 31, 1996, approximates $67,685,000,
the carrying value of the Castle Rock bonds as of October 31, 1996.

COLLATERALIZED CREDIT ENHANCEMENT AGREEMENT

The company has entered into a collateralized credit enhancement agreement for
the benefit of the Trustee of the Castle Rock Bonds. Under the terms of the
agreement, the company will guarantee complete payment of the Castle Rock Bonds
for the period commencing March 1, 1998, until the Bonds are redeemed or mature.

The Castle Rock Bonds were issued March 29, 1996, by Castle Rock Ranch Public
Improvements Authority (the Authority) at coupon rates ranging from 5.7% to 6.5%
and maturing at varying amounts beginning December 1, 1999 and ending December
1, 2017. Par value of the Castle Rock Bonds is $66,975,000 and the proceeds
from issuance were $67,760,621. The proceeds were used to acquire real property
and water rights in Dawson Ridge development in the town of Castle Rock, Douglas
County, Colorado. The land and water rights were purchased from a related
party, Douglas County Development Corporation (DCDC), an affiliate of The
Franklin L. Haney Company. Mr. Haney is the President of BFC Guaranty Corp.
The land acquired will be used to develop a golf course and other recreational
facilities for the benefit of the Dawson Ridge Metropolitan Districts. The
Castle Rock Bonds have a debt service reserve retained from the proceeds from
their issuance sufficient to fund interest payments on the Bonds until March 1,
1998.

<PAGE>

BFC GUARANTY CORP.

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

COLLATERALIZED CREDIT ENHANCEMENT AGREEMENT - continued

In order to secure its obligations under the Collateralized Credit Enhancement
Agreement, the company has pledged and delivered to the Trustee Series B REMIC
Bonds with a par value of $67,075,000, and coupon rates ranging from 5.7% to
6.5%. The Series B REMIC Bonds mature at varying amounts beginning December 1,
1998 and ending December 1, 2017. The Series B REMIC Bonds will be issued to
the company on March 1, 1998, at no cost.

REIMBURSEMENT AGREEMENT

In conjunction with the Collateralized Credit Enhancement Agreement, the company
also entered into a Reimbursement Agreement with Castle Rock Ranch Public
Improvements Authority that requires the Authority to reimburse the company for
any principal and interest payments made by the company under the provisions of
the Collateralized Credit Enhancement Agreement. Interest at the rate of 9%
will be charged on the payments. In addition, the Authority paid the company a
commitment fee of 6% of the Castle Rock Bond proceeds which totaled $4,018,500.
The company advanced the fee to its parent company, Building Finance Corporation
of Tennessee.

The Authority has entered into an operating agreement obligating the Dawson
Ridge Metropolitan Districts to provide funds to the extent that revenues from
the golf course and recreational facilities are insufficient to fund the debt
service on the Castle Rock Bonds. Such funds would be derived from a mill levy
on taxable property in the Dawson Ridge districts. The levy would include a 35
mill limitation. In order to provide an alternate source of revenue, the
Authority entered into a development agreement with DCDC providing for a payment
in lieu of taxes by DCDC in an amount equivalent to the amount which would be
generated by the mill levy pursuant to the operating agreement. DCDC owns
approximately 85% of the property in the Dawson Ridge districts.

<PAGE>

BFC GUARANTY CORP.

NOTES TO FINANCIAL STATEMENTS

October 31, 1996

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

INCOME TAXES

The provision for income taxes is as follows:

Current $ 1,438,020
Deferred (1,324,411)
-----------
$ 113,609
-----------
-----------

The deferred tax provision and the related deferred tax asset result from income
recognized when received for tax purposes, but deferred for financial statement
purposes.

SUBSEQUENT EVENT

On December 13, 1996, the Authority filed a Registration Statement on Form S-4
with the Securities and Exchange Commission offering to exchange the entire
issue of Guaranteed Public Facilities Revenue Bonds, (Series 1996) for an
identical issue of Guaranteed Public Facilities Bonds, (Series 1996B). The
Series 1996B Bonds and the Credit Enhancement of the company will be registered
under the Securities Act of 1933 and as a result, the Series 1996B Bonds will
not be subject to the transfer restrictions associated with the Series 1996
Bonds. No gain or loss will be recognized for financial statement purposes by
the Authority on the exchange.

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

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell
or the solicitation of an offer to buy any securities other than the
securities to which it relates or an offer to sell or the solicitation of an
offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Credit Enhancement
Provider since the date hereof or that the information herein is correct as
of any time subsequent to its date.

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

TABLE OF CONTENTS

PAGE
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . i
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 12
The Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Districts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Tax Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Description of Exchange Bonds. . . . . . . . . . . . . . . . . . . . . 23
Security and Source of Payment . . . . . . . . . . . . . . . . . . . . 26
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . 27
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Security Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Certain Relationships and Related Transactions . . . . . . . . . . . . 37
Definitions of Certain Terms and Summaries of Principal Documents. . . 39
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 67
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . 68
Index to Consolidated Financial Statements . . . . . . . . . . . . . . F-1

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

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

CASTLE ROCK RANCH
PUBLIC IMPROVEMENTS AUTHORITY

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

PROSPECTUS

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

OFFER TO EXCHANGE ITS PUBLIC FACILITIES
REVENUE BONDS, SERIES 1996 B FOR ANY AND
ALL OF ITS OUTSTANDING PUBLIC FACILITIES
REVENUE BONDS, SERIES 1996

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

70
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS.

1.1 Purchase Agreement dated as of March 26, 1996, between Castle Rock Ranch
Public Improvements Authority (the "Authority") and Lehmann Brothers,
Inc.*

3.1 Certificate of Incorporation of the Registrant.*

3.2 By-laws of the Registrant.*

3.3 Certificate of Incorporation of Castle Rock Ranch Public Improvements
Authority (the "Authority").*

3.4 Bylaws of the Authority.*

4.1 Indenture of Trust dated as of March 1, 1996 between the Authority and
SouthTrust Bank of Alabama, National Association, as Trustee (the
"Trustee").*

5.1 Opinion and consent of Brownstein Hyatt Farber & Strickland, P.C.**

8.1 Opinion and consent of Brownstein Hyatt Farber & Strickland, P.C.**

10.1 Collateralized Credit Enhancement Agreement dated as of March 1, 1996,
from the Registrant for the benefit of the Trustee.*

10.2 Reimbursement Agreement dated as of March 1, 1996 between the Authority
and the Registrant.*

10.3 Bond Pledge and Security Agreement dated as of March 1, 1996 between the
Registrant and the Trustee.*

10.4 Agreement for Purchase and Sale of Real Property dated as of March 1,
1996 between Douglas County Development Corporation (the "DCDC") and the
Authority.*

10.5 Intergovernmental Agreement dated as of March 1, 1996 between Dawson
Ridge Metropolitan Districts No. 1, No. 2, No. 3, No. 4 and No. 5.*

<PAGE>

10.6 Development Agreement dated as of March 1, 1996 between the Authority
and the DCDC.*

10.7 Operating Agreement dated as of March 1, 1996 between the Authority and
Dawson Ridge Metropolitan District No. 5.*

10.8 Recreational Facilities Agreement dated as of March 1, 1996 between the
Authority and Dawson Ridge Metropolitan District No. 5.*

10.9 General Services Administration Lease No. GS-11B-40155, GSA Supplemental
Lease Agreement No. 1 and GSA Supplemental Lease Agreement No. 2, each
between the United States Government acting through the General Services
Administration and Parcel 49C Limited Partnership.***

12.1 Statement of Computation of Ratios.***

21.1 Subsidiaries of the Registrant. The Registrant has No Subsidiaries.

23.1 Consent of Joseph DeCosimo & Co.***

23.2 Consent of Brownstein Hyatt Farber & Strickland, P.C. (included in
Exhibits 5.1 and 8.1).**

24.1 Power of Attorney (included in signature page).*

25.1 Statement of Eligibility of Trustee on Form T-1.**

27.1 Financial Data Schedule.*

99.1 Form of Letter of Transmittal.**

99.2 Form of Notice of Guaranteed Delivery.**

99.3 Form of Tender Instructions.**

- -----------------
* Previously filed
** To be filed by amendment
*** Filed with Amendment No. 1

(B) FINANCIAL STATEMENT SCHEDULES.

Not Applicable.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Amendment to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Chattanooga, State
of Tennessee, on February 24, 1997.

BFC GUARANTY CORP.

By: /s/ Franklin L. Haney
-----------------------------------
Franklin L. Haney
President

Pursuant to the requirements of the Securities Act, this Registration
Statement and Power of Attorney have been signed on February 24, 1997 by the
following persons in the capacities indicated.

SIGNATURE CAPACITY

/s/ Franklin L. Haney President and Director
- ---------------------------- (Principal Executive Officer)
Franklin L. Haney

/s/ Roger D. Bailey* (Principal Financial Officer and
- ---------------------------- Principal Accounting Officer)
Roger D. Bailey

/s/ Emeline W. Haney* Director
- ----------------------------
Emeline W. Haney

/s/ Chris E. Zahnd* Director
- ----------------------------
Chris E. Zahnd

* By: /s/ Franklin L. Haney
- ----------------------------
Attorney in Fact

<PAGE>

- ------------------------------------------------------------------------------
STANDARD FORM 2 U.S. GOVERNMENT
FEBRUARY 1965 EDITION LEASE FOR REAL PROPERTY
GENERAL SERVICES ADMINISTRATION
FPR (41 CFR) 1016-601
- ------------------------------------------------------------------------------
DATE OF LEASE: LEASE No. GS-11B-40155 "NEG"
- ------------------------------------------------------------------------------
THIS LEASE, made and entered into this date between PARCEL 49C LIMITED
PARTNERSHIP

whose address is: c/o Republic Properties Corporation [See Lease Rider No.2 for
1130 Connecticut Avenue, NW, #650 additional notice party]
Washington, DC 20038

and whose interest in the property hereinafter described is that of OWNER,
hereinafter called the LESSOR, and the UNITED STATES OF AMERICA, hereinafter
called the Government.

WITNESSETH: The parties hereto for the considerations hereinafter mentioned,
covenant and agree as follows:

1. The Lessor hereby leases to the Government the following described
premises:

1.) A TOTAL OF 287,453 NET USABLE SQUARE FEET (NUSF) OF OFFICE
AND RELATED SPACE CONSISTING OF 313 NUSF ON FLOOR EL+14,
21,684 NUSF ON FLOOR EL+23, 24,535 NUSF ON FLOOR EL+35,
29,074 NUSF ON EACH OF FLOORS 1 THROUGH 7, AND 37,433 NUSF
ON FLOOR 8, IN THE BUILDING KNOWN AS PORTALS BUILDING C,
PHASE IIA, LOCATED AT 445 12TH STREET, SW, WASHINGTON, DC
20024 (AS SHOWN ON ATTACHED PLANS).

2.) ELEVEN OFFICIAL PARKING SPACES WITHIN THE BUILDING.

3.) ONE LOADING DOCK DEDICATED TO THE EXCLUSIVE USE AND CONTROL OF
THE GOVERNMENT ABLE TO ACCOMMODATE AT LEAST TWO 40' TRACTOR
TRAILERS SIMULTANEOUSLY.

4.) ONE PARKING SPACE FOR A TRUCK (14' LONG, 8' WIDE, 8' HIGH)
CONTIGUOUS TO LOADING DOCK.

5.) ROOFTOP SPACE OF AT LEAST 7,500 SQUARE FEET OF UNOBSTRUCTED
ROOF SPACE WITH NO DIMENSION OF LESS THAN 60 FEET.

to be used for SUCH PURPOSES AS DETERMINED BY THE GOVERNMENT.

2. TO HAVE AND TO HOLD the said premises with their appurtenances for
the term of twenty (20) years to commence in accordance with Lease
Rider No. 1 attached hereto and with the commencement and expiration
dates, TO BE SET FORTH IN SUPPLEMENTAL LEASE AGREEMENT NUMBER 1,
subject to termination and renewal rights as may be hereinafter set
forth.

3. The Government shall pay the Lessor annual rent of $11,169,200.00 at
the rate of $830,766.67 per MONTH in arrears. Rent for a lesser
period shall be prorated. Rent checks shall be made payable to:
PARCEL 49C LIMITED PARTNERSHIP, C/O REPUBLIC PROPERTIES CORPORATION,
1130 CONNECTICUT AVENUE, NW, #650, WASHINGTON, DC 20038.

4. The Lessor shall furnish to the Government, as part of the rental
consideration, the following:

A. ALL SERVICES, MAINTENANCE, ALTERATIONS, REPAIRS, AND UTILITIES IN
ACCORDANCE WITH SPO NO. 85-100 AND ALL ATTACHMENTS AND RIDERS MADE A
PART OF THIS LEASE, except that the Government shall reimburse the
Lessor $6,522,214.00, either in a lump sum or amortized over the
term of the Lease for the work required by the Performance
Specifications in accordance with the terms and provisions of Rider
No. 1 to the Lease.

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

<PAGE>

5. The following are attached and made a part hereof:

1. SOLICITATION FOR OFFERS (SPO) NO. 88-100 - 46 PAGES
2. AMENDMENTS 1-11 TO SFO 88-100 - 59 PAGES
3. SFO NO. 88-100 ATTACHMENT A - PERFORMANCE SPECIFICATIONS - 231 PAGES
4. SFO NO. 88-100 ATTACHMENT B - ALTERNATES SECTION - 3 PAGES
5. SFO NO. 88-100 ATTACHMENT C - SPACE PLANNING SCOPE OF WORK - 9 PAGES
6. SFO NO. 88-100 ATTACHMENT D - CLARIFICATIONS FOR SPECIAL
REQUIREMENTS - 6 PAGES
7. LEASE RIDER #1 - TENANT DESIGN AND BUILDOUT - 8 PAGES
8. LEASE RIDER #2 - CLARIFICATIONS TO GENERAL CLAUSES - 4 PAGES
9. LEASE RIDER #3 - PURCHASE OPTION - 1 PAGE
10. LEASE RIDER #4 - TECHNICAL AND AWARDS FACTORS SUMMARY - 8 PAGES
11. LEASE RIDER #5 - ALTERNATE PROPOSALS - 2 PAGES
12. GSA FORM 3517, GENERAL CLAUSES (REV 1/91) - 24 PAGES
13. GSA FORM 3518, REPRESENTATIONS AND CERTIFICATIONS (REV 1/91) - 8 PAGES
14. GSA FORM 1217, LESSOR'S ANNUAL COST STATEMENT - 1 PAGE
15. SMALL BUSINESS ADMINISTRATION SUBCONTRACTING PLAN - 7 PAGES
16. FLOOR PLANS OF LEASED AREA - 5 PAGES
17. UNIFORM FEDERAL ACCESSIBILITY STANDARDS - 89 PAGES

6. The following changes were made in this lease prior to its execution:

PARAGRAPHS 4 AND 5 OF THIS STANDARD FORM 2 HAVE BEEN DELETED IN THEIR
ENTIRETY.

IN WITNESS WHEREOF, the parties hereto have hereunto subscribed their names as
of the date first above written.
- --------------------------------------------------------------------------------

LESSOR - PARCEL 49C LIMITED PARTNERSHIP

BY: Portals Development Associates Limited
Partnership, General Partner

BY: Republic Properties Corporation,
General Partner

BY:
---------------------------
President

IN THE PRESENCE OF: ___________________ ADDRESS _____________________________
- --------------------------------------------------------------------------------
UNITED STATES OF AMERICA

BY:_______________________________ CONTRACTING OFFICER, GSA, NCR, OPR, RED
- --------------------------------------------------------------------------------

<PAGE>

- -----------------------------------------------------------------------------
GENERAL SERVICES ADMINISTRATION SUPPLEMENTAL AGREEMENT DATE
PUBLIC BUILDING SERVICE NO. 1 1/3/96
SUPPLEMENTAL LEASE AGREEMENT -----------------------------------
TO LEASE NO.
GS-11B-40155
- -----------------------------------------------------------------------------
ADDRESS OF PREMISES
The Portals, 445 - 12th Street, SW, Washington, DC 20024
- -----------------------------------------------------------------------------

THIS AGREEMENT, made and entered into this date by and between
PARCEL 49C LIMITED PARTNERSHIP

whose address is
c/o Republic Properties Corporation
1250 Maryland Avenue, S.W., Suite 280
Washington, DC 20024

hereinafter called the Lessor, and the UNITED STATES OF AMERICA, hereinafter
called the Government.

WHEREAS, the parties hereto desire to amend the above Lease.

NOW THEREFORE, these parties for the considerations hereinafter mentioned
covenant and agree that the said Lease is amended, effective upon complete
execution hereof, as follows:

Notwithstanding any other provisions of the lease, or attachments thereto,
this SLA No. 1 shall govern over any other provision of the lease, or
attachments thereto, with respect to the following:

1. Amount of Space

The Lessor leases to the Government, and the Government agrees to lease,
the following described premises:

A total of 449,859 NUSF of office and related space will be provided
consisting of 7,098 NUSF on the Maine Avenue level; 49,845 NUSF on the
12th Street Entrance Level; 35,419 NUSF on the Courtyard Level; 54,265
NUSF each on Levels 1 through 3; 24,700 NUSF on Level 4; 38,579 NUSF
each on Levels 5 through 7; and 54,265 NUSF on Level 8, in the building
known as Portals Building, Phase II, located at 445 12th Street, S.W.,
Washington, DC 20024. (As shown on plans in Attachment A to this SLA
No. 1). It is the intent of the Government that the Federal
Communications Commission shall be the initial occupant of the leased
space (this shall not in any way alter the Government's rights under
the General Clauses incorporated in this Lease, including but not
limited to clauses 12 and 13 thereof).

Options for an additional Amount of Space are provided by paragraph 15
of this SLA No. 1.

See Continuation Pages 2-7 for additional terms and provisions of this SLA
No. 1.

All other terms and conditions of the lease shall remain in force and effect,
except as specifically modified herein.

IN WITNESS WHEREOF, the parties subscribed their names as of the above date.

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

LESSOR PARCEL 49C LIMITED PARTNERSHIP, by Portals Development
Associates Limited Partnership, Its Management Agent

BY General Partner
-------------------------------- ---------------------------------
(Signature) (Title)

IN PRESENCE OF

1250 Maryland Avenue, S.W.,
Washington, DC
-------------------------------- ---------------------------------
(Signature) (Address)

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

UNITED STATES OF AMERICA

BY Contracting Officer
-------------------------------- ---------------------------------
(Signature) (Official Title)

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

2. Rental Rate

The rental amount shall be based on an annual rental rate of $38.85 for the
original 287,483 NUSF of space leased and $37.95 for the additional 162,376 NUSF
of space leased pursuant to this SLA, for a total rental amount of
$17,330,883.75 per annum, payable in equal monthly installments of $1,444,240.32
in arrears. The per annum rental rate for any option space shall be $37.95 per
NUSF.

3. Occupancy Date, Tenant Design and Buildout

The initial phase of the leased space must be ready for occupancy no later
than eighteen (18) months from the commencement of construction, and all of the
leased space must be ready for complete occupancy no later than seven (7) months
from initial occupancy, subject to the terms and conditions of Rider No. 1 to
SFO 88-100, provided however, initial occupancy shall not be before July 1,
1997. Construction of the building of which the leased premises will be a part
shall commence no later than one hundred twenty (120) days after the date of
this SLA.

The Government will provide to the Lessor within twenty (20) business days
of the date the Federal Communications Commission is statutorily authorized to
return to work through a Continuing Resolution or other funding or statutory
authorization: (i) the specifications for those standard tenant improvements and
those "Specials" (above lease standard tenant buildout requirements) which
affect the base building structure or systems, (ii) the complete Program of
Requirements for the FCC's consolidated headquarters, and (iii) the "blocking
and stacking" for the FCC's consolidated headquarters.

The design and the buildout of the tenant improvements to the leased space
shall be done in approximately six (6) equal phases. Phase I will include at
least the Commission Meeting Room (block outline only; the rest of the design
intent information for this space will be included as part of Phase II),
Computer Room, Print Plant, Hearing Rooms, Telecommunications Riser and
Distribution System and the Twelfth Street Entrance and Courtyard Functions.
The remaining phases shall be determined by the Government, but shall proceed
generally from the lowest floor to the highest floor. Deviations from this
general requirement shall be allowed to the extent such changes do not
materially impact the design, construction and/or occupancy of the building and
the leased space. The Government shall submit a phasing plan to Lessor in
accordance with this provision within 30 days of the date of this SLA No. 1.
Lessor shall prepare a schedule for the delivery of each phase in accordance
with the requirements of this SLA and Rider No. 1 to the Lease, within 30 days
of the receipt by Lessor of the Government's phasing plan.

The Government shall prepare the Design Intent Drawings generally in
accordance with Rider No. 1 to the Lease provided that the Design Intent
Drawings shall be delivered to Lessor in accordance with the following schedule:

Phase One February 8, 1996
Phase Two April 10, 1996
Phase Three May 15, 1996
Phase Four June 24, 1996
Phase Five August 7, 1996
Phase Six September 20, 1996

In the event that the Government fails to deliver the Design Intent
Drawings in accordance with the schedule set forth above, the delay shall be
Government delay and in accordance with Rider No. 1 to the lease, there shall be
a day-for-day delay in the delivery date. Delay in a prior phase shall not
automatically constitute delay in a subsequent phase.

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 2 of 7
Lessor _____ Government _____

<PAGE>

4. Tax Adjustment

The Government's percentage of occupancy for determining its percentage
share of any increases in real estate taxes is established as 82.41%, subject to
proportional adjustment to reflect the increase in the leased space in the event
the Government exercises any or all of the options as set forth in paragraph 15
of this SLA. Following delivery and acceptance of the leased space, the
Government's percentage share of the leased space shall be adjusted if necessary
to reflect the measurement of the leased space.

5. Operating Costs

The base rate for operating cost adjustments was established as
$4,183,688.70 for the twelve (12) month period beginning June of 1993, subject
to proportional adjustment to reflect the increase in the leased space in the
event the Government exercises any or all of the options as set forth in
paragraph 15 of this SLA. Immediately upon commencement of the lease, and each
year thereafter, the Government shall pay adjusted rent for changes in the cost
of services in accordance with the base rate. For purposes of calculating the
adjustment for operating costs in accordance with paragraph 20 Operating Costs,
"the index figure published for the month prior to rent commencement date" shall
mean the index figure published for May of 1993. No adjusted rent for operating
costs shall be due, or interest thereon payable, for any period prior to lease
commencement as determined in accordance with this SLA No. 1.

6. Performance Specifications, Unit Costs for Adjustments, and Alternates

Pricing for the Special Requirements Performance Specifications shall be
adjusted by multiplying the amount in question by the percentage of change in
the Cost of Living Index. The percentage change shall be computed by comparing
the index figure for March of 1993 with the index figure for the month in which
the work containing the units are accepted, or the Leases Commencement Date,
whichever is later. The Contractor, A/E and Lessor's markups for any other
above SFO standard work requested by the Government shall be as set forth in the
pricing or the Special Requirements Performance Specifications. Within forty-
five (45) days of the date of execution of this SLA, the Lessor and the
Government shall renegotiate the Unit Costs for Adjustments. Pricing for
Alternate Proposals (Rider No. 5) is deleted in its entirety.

7. Acceptance of Plans

The Government accepts the Lessor's plans as reflected on the attached
schematics for the base building as satisfying the requirements of SFO 88-100.
To the extent that any changes are made to the special and other elements of the
building after the date of this SLA at the Government's request and such change
increases the Lessor's cost or time of performance, then the Government shall
provide the Lessor with an equitable adjustment in accordance with General
Clause 17 of GSAF 3517 for its reasonable costs and delays resulting from such
changes.

8. Assignability

Lessor may sell, assign or transfer the lease or its interest therein,
including the rights and obligations set forth, and if the Government is
reasonably satisfied with the ability of the assignee to perform, the Parcel 49C
Limited Partnership will be discharged of any further obligations under the
lease. If, by virtue of the sale, assignment, or transfer, Parcel 49C Limited
Partnership is no longer the Lessor, the Government and the successor lessor
shall execute a Novation Agreement generally in the form set forth in Part 42 of
the Federal Acquisition Regulation.

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 3 of 7
Lessor _____ Government _____
<PAGE>

9. Codes, Standards, and Requirements

For purposes of paragraph 29 of the lease, Codes Standards and
Requirements, the "latest edition" of the codes and standards with which the
proposal must comply, shall be the latest edition in effect as of September 1,
1995.

10. General Clauses

PARA 3. Termination for Default

General Clause 3 is amended by adding at the end: "Notwithstanding the
foregoing, the Government will not terminate the lease agreement, but will rely
on its other rights and remedies."

PARA 15. Failure in Performance

Rider No. 2 clarifying General Clause 15, is amended to provide that the
period of time within which to cure the failure must be "reasonable", and that
the provision for waiving notice in the event of an emergency is deleted.
Additionally, the Government shall send a copy of the required notice to
Lessor's Lender at the address to be provided by Lessor. The following shall be
added at the end of the clause: "The maximum amount the Government may deduct
from the rent during any year of the lease term pursuant to paragraph 15 of the
General Clauses shall not exceed an amount equal to $8.50 per NUSF of space
leased by the Government under this lease, with the understanding that such
offset limitation amount shall increase each during the term of the lease by
using the same methodology as used to calculate increases in the base rate for
operating costs in accordance with Paragraph 20, Operating Costs." Subject to
the foregoing limitation on the amount the Government may deduct during any
particular year, the Government may carry forward (but not backward) any excess
amounts not deducted in a particular calendar year because of the deduction
limitation and take such deductions in subsequent calendar years. The foregoing
shall not limit the Government's right to pursue other rights and remedies it
may have in connection with such failure in performance.

11. Rent Commencement

The Government's obligation to pay rent for the Phase 1 space shall
commence on July 1, 1997, for the Phase 2 space shall commence on August 15,
1997, for the Phase 3 space shall commence on October 10, 1997, for the Phase 4
space shall commence on November 19, 1997, for the Phase 5 space shall commence
on January 2, 1998 and for the Phase 6 space shall commence on February 1, 1998.
This obligation shall be absolute and unconditional in all events, and, as a
contractual matter, is not subject to any setoff, defense, counterclaim,
recoupment, deduction or abatement or any other right, except as set forth in
General Clause 15 as amended. The 20-year lease term shall be deemed to
commence on the composite lease commencement date as provided in paragraph H of
Rider No. 1 to the Lease and shall expire on the 20th anniversary of the
composite lease commencement date.

12. Liquidated Damages

In the event that a particular phase has not been determined to be
substantially complete in accordance with paragraph G of Rider No. 1 to the
Lease by the applicable rent commencement date as set forth in paragraph 11
above, then, only in the case of and to the extent of Lessor delay, rather than
an adjustment to the rent commencement date or any other provisions for
liquidated damages, the Government shall be paid by the Lessor, within thirty
(30) days of the date of a Notice to Lessor, liquidated damages equal to the
rent payable with respect to each phase for the period of time from the rent
commencement date for that phase, until the phase has been determined to be
substantially complete. Under no circumstances shall the Government's failure
to provide a Notice be deemed a waiver of either the Government's right to
receive liquidated damages or the date from which such damages are measured.

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 4 of 7
Lessor _____ Government _____
<PAGE>

13. No Fault Delay

In the event that the Government's occupancy of all or any portion of the
leased space is delayed due to an act of force majeure or as a result of any
other circumstance which is not the fault of the Government and for which the
Government is not otherwise compensated pursuant to the terms of this lease as
amended by this SLA, then in consideration of the Government's agreement to
commence paying rent notwithstanding such event of force majeure or other
uncompensated delay as set forth in paragraph 11 above, the Government, at its
option (to be exercised prior to the end of the fifteenth lease year), may
extend the lease term for a period equal to the period of force majeure or other
uncompensated delay, but in no event to exceed twelve (12) months, on the same
terms and conditions as set forth herein, provided that the rent for such period
shall be equal to $3.75 per NUSF plus the amount of the base operating expenses
as escalated to the date of such extension as provided in paragraph 20 of
SFO 88-100 attached to and incorporated in the lease and amended by this SLA,
including paragraph 5 above and subject to the understanding that the Government
shall be liable for its percentage share of the real estate taxes for the
building for the extension period. In no event shall the Lessor be obligated to
carry out any upgrading or refurbishments to the leased space (such as
installing new carpet or repainting the walls) during such extended period of
the lease term, other than as may be required as part of the normal day to day
maintenance and operation of the leased space.

14. Performance and Payment Bonds

Prior to the commencement of construction of any of the improvements,
Lessor shall furnish or cause to be furnished, a performance and payment bond or
bonds that name the United States of America, acting by and through the General
Services Administration, as a Co-Obligee thereunder. Each such bond or bonds
shall be in the form of, or substantial equivalent of, the forms then currently
approved for use by the American Institute of Architects. The Payment and
Performance Bond shall be issued with a penal amount of not less than 100% of
the cost of construction. Such bond shall be issued by a surety company or
companies listed by the Department of Treasury as "Companies Holding
Certificates of Authority As Accepted Sureties On Federal Bonds And As
Acceptable Reinsuring Companies" as revised annually on July 1 (See Federal
Register Vol. 57, No. 127) and the surety shall verify in writing that such
performance and payment bond shall not be subject to revocation, modification or
cancellation without the prior written approval of the Government.

15. Options to Increase Demised Premises

The Government shall have three (3) options to lease additional space upon
the same terms and conditions as set forth in the SLA No. 1 for the leased
premises (including the same weighted average lease and rent commencement date
for the option space as provided for the leased space described in paragraph 1
above), as set forth below. The options may be exercised in any order or in any
combination, but the options must be exercised by giving written notice to the
Lessor by no later than December 31, 1996, and if such options are not exercised
by such dates they shall expire and be of no further force and effect.

(i) An additional 47,058 NUSF on Levels 5, 6, and 7; and

(ii) An additional 29,565 NUSF on Level 4; and

(iii) An additional 8,648 NUSF on the Courtyard Level.

Attachment B hereto contains floor plans which depict the option space.

16. Food Service Establishments

Lessor agrees to make arrangements, from time to time, with retail food
service establishments or contractors for the provision of a cafeteria, other
moderately priced restaurants, or food service establishments to operate at the
Portals site. These establishments shall be open to the public, including the
non-exclusive use of

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 5 of 7
Lessor _____ Government _____
<PAGE>

Government personnel at time reasonably consistent with the commercial
practices of such establishments. The Lessor agrees to use its best efforts
to obtain food service establishments or contractors to provide full service
throughout the normal work day, including breakfast and lunch service and
afternoon (post lunch hour) limited service. These arrangements shall
provide that a minimum of 400 seats are continuously available for use in the
combined establishments, commencing at least by the composite lease commencement
date established by SLA and continuing for ten years thereafter. Paragraph 23
of SLA 88-100 is deleted and replaced with the following: The Government
shall not operate, lease or contract for any food service, vending or retail
facilities within its leased space which competes with the food service which
the Lessor is obligated to provide under this SLA No. 1. A satisfactory site
for a "Randolph-Sheppard" vending facility (defined for purposes of this
lease as a small vending machine and snack bar area without seating, but not
a cafeteria) determined pursuant to 20 U.S.C. Section 107a and implementing
regulations at 34 C.F.R. Section 395.31 shall be deemed not to compete with
the food service to be provided by the Lessor. GSA will control the number,
kind, and location of vending machines within the vending facility. The
Lessor is required to provide necessary utilities and to make related
alterations. The cost of the improvements will be negotiated and payment
will be made on a lump sum basis.

17. Small Business Subcontracting Plan

Within forty-five (45) days of the execution of this SLA, the Lessor shall
update its Small Business Subcontracting Plan to reflect the increased amount of
space leased by the Government. The updated Subcontracting Plan shall use the
same percentage goals as contained in the current Plan.

18. Loading Dock Parking

The Government shall have the right to park a vehicle in the North loading
dock in a space designated by the Lessor overnight without additional cost to
the Government.

19. Lobby Displays

The Government shall have the right, subject to prior approval of the
Lessor, not to be unreasonably withheld, to set up and maintain visual displays
in the Twelfth Street and Maine Avenue Level entrance lobbies from time to time
during the term of the Lease. The Government shall not be required to pay any
additional rent for such use so long as Lessor does not incur any additional
expenses as a result of such use.

20. Daycare Center, Fitness Center

The Lessor agrees to use vigorous efforts to lease space on the Courtyard
level of the Portals Phase I building to a daycare center operator who will
operate a daycare center in such space and shall offer daycare services first to
occupants of the Portals Phase I and Phase II buildings and then to the general
public. "Vigorous efforts" shall not include an obligation on the part of the
Lessor to offer financial incentives or operating subsidies to induce a daycare
center operator to lease such space and operate a daycare facility in such space
or for Lessor to take operating risks with respect to any daycare facility. If
the Lessor does not lease space in the Portals I building to a daycare provider
for the operation of a daycare facility, the Lessor shall make such space
available for lease by the Government as additional option space for the
operation of a daycare facility if such space remains available for lease.

Government employees shall have equal priority with occupants of the
Portals Phase I building to join the health club facility located in the Portals
Phase I building, which rights shall be in preference to anyone who is not a
tenant in either the Portals Phase I or Portals Phase II buildings.

21. Release of Claims

In consideration for the Government's execution of this SLA, the Lessor
releases the Government, as of the date this SLA is executed, of and from any
and all claims, demands for relief, remedies or equitable

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 6 of 7
Lessor _____ Government _____
<PAGE>

adjustments, known and unknown, of any nature or description whatsoever,
legal or equitable, which relate directly or indirectly or in any manner
whatsoever to the execution of Lease No. GS-11B-40155 on August 12, 1994, the
administration of the Lease up to the date this SLA No. 1 is executed by all
parties, including but not limited to any actions or omissions by the
Government prior to such date, the Agreement dated August 12, 1994 between
the parties, and the action designated as Parcel 49C Limited Partnership v.
United States. The foregoing release shall in no way relieve the Government
from its obligations under this Lease as amended by this SLA No. 1 from and
after the date this SLA No. 1 is executed by all parties hereto.

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 7 of 7
Lessor _____ Government _____
<PAGE>

- -----------------------------------------------------------------------------
GENERAL SERVICES ADMINISTRATION SUPPLEMENTAL AGREEMENT DATE
PUBLIC BUILDING SERVICE NO. 2 3/26/96
SUPPLEMENTAL LEASE AGREEMENT -----------------------------------
TO LEASE NO.
GS-11B-40155
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ADDRESS OF PREMISES
The Portals, 445 - 12th Street, SW, Washington, DC 20024
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THIS AGREEMENT, made and entered into this date by and between
PARCEL 49C LIMITED PARTNERSHIP

whose address is
c/o Republic Properties Corporation
1250 Maryland Avenue, S.W., Suite 280
Washington, DC 20024

hereinafter called the Lessor, and the UNITED STATES OF AMERICA, hereinafter
called the Government.

WHEREAS, the parties hereto desire to amend the above Lease.

NOW THEREFORE, these parties for the considerations hereinafter mentioned
covenant and agree that the said Lease is amended, effective upon complete
execution hereof, as follows:

The General Clauses attached to and incorporated in the Lease are hereby
amended as follows:

Clause 11 of the General Clauses is amended and restated in its entirety to
read as follows:

(a) If the said premises be totally destroyed by fire or other casualty,
the Government shall have the right to terminate this Lease by written
notice to Landlord within one hundred twenty (120) days after the
occurrence of such event. In the event the Government fails to provide
written notice of termination as aforesaid or elects not to terminate this
Lease then the Lessor shall commence repair and restoration in accordance
with subparagraph (b) below; it being understood that all references to
partial destruction or damage in subparagraph (b) below shall be deemed to
mean total destruction for purposes of this subparagraph (a).

(b) In the event of partial destruction or damage that renders the entire
premises untenantable, as reasonably determined by the Government, then (1)
the Lessor shall, within one hundred twenty (120) days, diligently commence
the repair or restoration of the entire leased premises to a tenantable
condition and shall complete such repair or restoration within such one
hundred twenty (120) day period by diligent commencement and continuous
pursuit of such repair or restoration, or if such repair or restoration
cannot be completed in such one hundred twenty (120) day

See Continuation Pages 2 and 3 for additional terms and provisions of this
SLA No. 2.

All other terms and conditions of the lease shall remain in force and effect,
except as specifically modified herein.

IN WITNESS WHEREOF, the parties subscribed their names as of the above date.
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LESSOR PARCEL 49C LIMITED PARTNERSHIP, by Portals Development
Associates Limited Partnership, Its Management Agent

BY General Partner
----------------------------- -------------------------------
(Signature) (Title)

IN PRESENCE OF

1250 Maryland Avenue, S.W.,
Washington, DC
----------------------------- -------------------------------
(Signature) (Address)
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UNITED STATES OF AMERICA

BY Contracting Officer
----------------------------- -------------------------------
(Signature) (Official Title)
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<PAGE>

(b) (continued) period with diligent commencement and continuous
pursuit of such repair or restoration, such repair or restoration shall be
completed as soon as is reasonably practicable, (2) the rent during the
period of partial destruction or damage shall be wholly abated during the
period that such partial destruction or damage to any portion of the premises
renders the entire premises untenantable effective from the date of such
partial destruction or damage, (3) the Government shall reoccupy the premises
upon completion of such repairs or restoration and (4) the Government shall
not be permitted to terminate this Lease as a result of such partial
destruction or damages so long as the Lessor diligently commences to repair
or restore and thereafter diligently and continuously pursues such repair or
restoration to completion.

(c) In the event of a partial destruction or damage that renders a part
of the premises untenantable, as reasonably determined by the Government,
then (1) the Lessor shall, within one hundred twenty (120) days, diligently
commence the repair or restoration of such portion of the leased premises to
the condition in which such part of the premises existed before such
destruction or damage and complete such repair or restoration within such one
hundred twenty (120) day period by diligent commencement and continuous
pursuit of such repair or restoration, or if such repair or restoration
cannot be completed within such one hundred twenty (120) day period with
diligent commencement and continuous pursuit of such repair or restoration,
such repair or restoration shall be completed as soon as is reasonably
practicable, (2) the rent during the period of partial destruction or damage
shall be proportionately abated during the period that such part of the
premises is untenantable effective from the date of such partial destruction
or damage, (3) the Government shall reoccupy such part of the premises upon
completion of such repairs or restoration and (4) the Government shall not be
permitted to terminate this Lease as a result of such partial destruction or
damage so long as the Lessor diligently and continuously pursues such repair
or restoration to completion. Solely for purposes of determining the
proportion of rent that shall be abated during such period of
untenantability, any part of the premises that have not been rendered
untenantable by such partial destruction or damage but the use of which by
the Government is substantially related to and dependent upon the
availability of such parts of the premises that have been rendered
untenantable by such partial destruction or damage shall be deemed to have
been rendered untenantable for such period of untenantability.

(d) As soon as practicable after a partial destruction of damage to the
premises, but in no event more than thirty (30) days thereafter, the Lessor
shall provide to the Government a schedule and plans for accomplishing the
repair or restoration. The Government shall have the right to review and
approve such schedule and plans for repair or restoration of the premises,
with the Government's approval not to be unreasonably withheld, conditioned
or delayed.

(e) Nothing in this Lease shall be construed as relieving Lessor from
liability for damage to or the destruction of property of the United States
of America caused by the willful or negligent act or omission of the Lessor.

(f) In the event of a fire or other casualty not caused by the
Government, its employees, agents, contractors or invitees which renders all
or a portion of the leased premises untenantable, but with respect to which
the Lease is not terminated and the leased premises will be repaired and
restored and the Government will reoccupy the damaged portion of the leased
premises as provided in subparagraphs (b) or (c) above, Lessor, to the extent
of insurance proceeds available therefor, will reimburse the Government for
reasonable moving and temporary relocation costs and expenses (which shall
not include any rental expense to provide temporary space other than rental
costs in excess of the rent abated as a result of the fire or other casualty,
any costs to replace personal property damaged or destroyed as a result of
the casualty or any costs to repair or restore the leased premises to the
condition such space was in prior to the casualty, but shall include all
other third party costs incurred by the Government to provide temporary
replacement space for the tenant agency occupying the leased space until such
space has been repaired and is again ready for Government occupancy) the
Government may incur in connection with the casualty affecting the leased
premises. To the extent such moving and temporary relocation costs exceed

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 2 of 3
Lessor _____ Government _____

<PAGE>

available insurance proceeds, the Government shall have the option (to be
exercised no later than six months following the re-acceptance of the leased
space following the casualty) to extend the term of the lease for a number of
days equal to (i) the amount of such excess costs, but in no event more than
$9,578,250.00, divided by the product of $25.80 multiplied by the square
footage of the leased premises, (ii) multiplied by 365. During such lease
extension the total annual rent payable by the Government shall be equal to
$3.75 per/NUSF plus the amount of the base operating expenses as escalated to
the date of such extension as provided in paragraph 20 of SFO 88-100 attached
to and incorporated in the lease as amended by SLA No. 1 to the lease and
subject to the understanding that the Government shall continue to be liable
for its percentage share of real estate taxes for the building for such
extension period. As part of its usual and customary insurance, Lessor will
carry "extra expense coverage" or a similar type endorsement to its fire and
casualty insurance policy in an amount of $5,000,000, if and to the extent
commercially available, which will be available to reimburse Lessor for
various costs and expenses associated with the casualty, including reasonable
moving and temporary relocation costs and expenses of the Government which it
may incur in connection with a casualty effecting the leased premises.target

Supplemental Lease Agreement to Lease No. GS-11B-40155 - Page 3 of 3
Lessor _____ Government _____
<PAGE>

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GENERAL CLAUSES
(Acquisition of Leasehold Interests in Real Property)

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<TABLE>

CATEGORY CLAUSE NO. 48 CFR REF. CLAUSE TITLE
- -------- ---------- ----------- ------------------------------------------
<S> <C> <C> <C>
DEFINITIONS 1 552.270-10 Definitions
GENERAL 2 552.270-11 Subletting and Assignment
3 552.270-18 Successors Bound
4 552.270-34 Subordination, Nondisturbance and
Attornment
5 552.270-35 Statement of Lease
6 552.270-36 Substitution of Tenant Agency
7 552.270-37 No Waiver
8 552.270-38 Integrated Agreement
9 552.270-39 Mutuality of Obligation

PERFORMANCE 10 552.270-27 Delivery and Condition
11 552.270-28 Default in Delivery - Time Extensions
12 552.270-30 Progressive Occupancy
13 552.270-32 Effect of Acceptance and Occupancy
14 552.270-12 Maintenance of Building and Premises-Right
of Entry
15 552.270-17 Failure in Performance
16 552.270-33 Default by Lessor During the Term
17 552.270-13 Fire and Casualty Damage
18 552.270-15 Compliance with Applicable Law
19 552.270-19 Alterations
20 Acceptance of Space

INSPECTION 21 552.270-16 Inspection-Right of Entry

PAYMENT 22 552.232-71 Prompt Payment
23 552.232-73 Electronic Funds Transfer Payment
24 552.232-72 Invoice Requirements
25 52.232-23 Assignment of Claims
26 Payment

STANDARDS 27 52.203-1 Officials Not To Benefit
OF CONDUCT 28 552.203-5 Covenant Against Contingent Fees
29 52.203-7 Anti-Kickback Procedures
30 52.203-9 Requirement for Certificate of Procurement
Integrity-Modification

ADJUSTMENTS 31 552.203-73 Price Adjustment for Illegal or
Improper Activity
32 52.215-22 Price Reduction for Defective Cost or
Pricing Data
33 552.270-20 Proposals for Adjustment
34 552.270-21 Changes

AUDITS 35 52.215-1 Examination of Records by
Comptroller General
36 552.215-70 Examination of Records by GSA

DISPUTES 37 52.233-1 Disputes
</TABLE>

INITIALS: ___________ & ___________ 1
LESSOR GOVERNMENT
<PAGE>
<TABLE>

CATEGORY CLAUSE NO. 48 CFR REF. CLAUSE TITLE
- -------- ---------- ----------- ------------------------------------------
<S> <C> <C> <C>
ENVIRONMENTAL 38 552.270-40 Asbestos and Hazardous Waste Management
PROTECTION

LABOR 39 52.222-26 Equal Opportunity
STANDARDS 40 52.222-35 Affirmative Action for Special Disabled
and Vietnam Era Veterans
41 52.222-36 Affirmative Action for Handicapped Workers
42 52.222-37 Employment Reports on Special Disabled
Veterans and Veterans of the Vietnam Era

SUBCONTRACTING 43 52.209-6 Protecting the Government's Interest When
Subcontracting with Contractors Debarred,
Suspended, or Proposed for Debarment
44 52.215-24 Subcontractor Cost or Pricing Data
45 52.219-8 Utilization of Small Business Concerns and
Small Disadvantaged Business Concerns
46 52.219-9 Small Business and Small Disadvantaged
Business Subcontracting Plan
47 52.219-16 Liquidated Damages-Small Business
Subcontracting Plan
48 52.219-13 Utilization of Women-Owned Small Business
</TABLE>

INITIALS: ___________ & ___________ 2
LESSOR GOVERNMENT
<PAGE>

GENERAL CLAUSES
(Acquisition of Leasehold Interests in Real Property)

1. 552.270-10 - DEFINITIONS (AUG 1992)

The following terms and phrases (except as otherwise expressly provided or
unless the context otherwise requires) for all purposes of this lease shall
have the respective meanings hereinafter specified:

(a) "Commencement Date" means the first day of the term.

(b) "Contract" and "Contractor" means "Lease" and "Lessor," respectively.

(c) "Contracting Officer" means a person with the authority to enter into,
administer, and/or terminate the contracts and make related
determinations and findings. The term includes certain authorized
representatives of the Contracting Officer acting within the limits of
their authority as delegated by the Contracting Officer.

(d) "Delivery Date" means the date specified in or determined pursuant to
the provisions of this lease for delivery of the premises to the
Government, improved in accordance with the provisions of this lease
and substantially complete, as such date may be modified in accordance
with the provisions of this lease.

(e) "Delivery Time" means the number of days provided by this lease for
delivery of the premises to the Government, as such number may be
modified in accordance with the provisions of this lease.

(f) "Excusable Delays" means delays arising without the fault or
negligence of Lessor and Lessor's subcontractors and suppliers at any
tier, and shall include, without limitation, (1) acts of God or of the
public enemy, (2) acts of the United States of America in either its
sovereign or contractual capacity, (3) acts of another contractor in
the performance of a contract with the Government, (4) fires,
(5) floods, (6) epidemics, (7) quarantine restrictions, (8) strikes,
(9) freight embargoes, (10) unusually severe weather, or (11) delays
of subcontractors or suppliers at any tier arising from unforeseeable
causes beyond the control and without the fault or negligence of both
the Lessor and any such subcontractor or supplier.

(g) "Lessor" means the sub-lessor if this lease is a sublease.

(h) "Lessor shall provide" means the Lessor shall furnish and install at
Lessor's expense.

(i) "Notice" means written notice sent by certified or registered mail,
Express Mail or comparable service, or delivered by hand. Notice
shall be effective on the date delivery is accepted or refused.

(j) "Premises" means the space described on the Standard Form 2, U.S.
Government Lease for Real Property, of this lease.

(k) "Substantially complete" and "substantial completion" means that the
work, the common and other areas of the building, and all other things
necessary for the Government's access to the premises and occupancy,
possession, use and enjoyment thereof, as

INITIALS: ___________ & ___________ 3
LESSOR GOVERNMENT
<PAGE>

provided in this lease, have been completed or obtained, excepting
only such minor matters as do not interfere with or materially diminish
such access, occupancy, possession, use or enjoyment.

(l) "Work" means all alterations, improvements, modifications, and other
things required for the preparation or continued occupancy of the
premises by the Government as specified in this lease.

2. 552.270-11 - SUBLETTING AND ASSIGNMENT (AUG 1992)

- -------------- The Government may sublet any part of the premises but shall
INITIALS not be relieved from any obligations under this lease by reason
- -------------- of any such subletting. The Government may at any time assign
Lessor Gov't this lease, and be relieved from all obligations to Lessor
- -------------- under this lease excepting only unpaid rent and other
liabilities, if any, that have accrued to the date of said
assignment. Any assignment shall be subject to prior written
consent of Lessor and [Lessor's Lender], which shall not be
- -------------- unreasonably withheld.

3. 552.270-18 - SUCCESSORS BOUND (AUG 1992)

This lease shall bind, and inure to the benefit of, the parties and their
respective heirs, executors, administrators, successors, and assigns.

4. 552.270-34 - SUBORDINATION, NONDISTURBANCE AND ATTORNMENT (AUG 1992)

(a) Lessor warrants that it holds such title to or other interest in the
premises and other property as is necessary to the Government's access
to the premises and full use and enjoyment thereof in accordance with
the provisions of this lease. Government agrees, in consideration of
the warranties and conditions set forth in this clause, that this
lease is subject and subordinate to any and all recorded mortgages,
deeds of trust and other liens now or hereafter existing or imposed
upon the premises, and to any renewal, modification or extension
thereof. It is the intention of the parties that this provision shall
be self-operative and that no further instrument shall be required to
effect the present or subsequent subordination of this lease.
Government agrees, however, within twenty (20) business days next
following the Contracting Officer's receipt of a written demand, to
execute such instruments as Lessor may reasonably request to evidence
further the subordination of this lease to any existing or future
mortgage, deed of trust or other security interest pertaining to the
premises, and to any water, sewer or access easement necessary or
desirable to serve the premises or adjoining property owned in whole
or in part by Lessor if such easement does not interfere with the full
enjoyment of any right granted the Government under this lease.

(b) No such subordination, to either existing or future mortgages, deeds
of trust or other lien or security instrument shall operate to affect
adversely any right of the Government under this lease so long as the
Government is not in default under this lease. Lessor will include in
any future mortgage, deed of trust or other security instrument to
which this lease becomes subordinate, or in a separate nondisturbance
agreement, a provision to the foregoing effect. Lessor warrants that
the holders of all notes or other obligations secured by existing
mortgages, deeds of trust or other security instruments have consented
to the provisions of this clause, and agrees to provide true copies of
all such consents to the Contracting Officer promptly upon demand.

INITIALS: ___________ & ___________ 4
LESSOR GOVERNMENT

<PAGE>

(c) In the event of any sale of the premises or any portion thereof by
foreclosure of the lien of any such mortgage, deed of trust or other
security instrument, or the giving of a deed in lieu of foreclosure,
the Government will be deemed to have attorned to any purchaser,
purchasers, transferee or transferees of the premises or any portion
thereof and its or their successors and assigns, and any such
purchasers and transferees will be deemed to have assumed all
obligations of the Lessor under this lease, so as to establish direct
privity of estate and contract between Government and such purchasers
or transferees, with the same force, effect and relative priority in
time and right as if the lease had initially been entered into between
such purchasers or transferees and the Government; provided, further,
that the Contracting Officer and such purchasers or transferees shall,
with reasonable promptness following any such sale or deed delivery in
lieu of foreclosure, execute all such revisions to this lease, or
other writings, as shall be necessary to document the foregoing
relationship.

(d) None of the foregoing provisions may be deemed or construed to imply a
waiver of the Government's rights as a sovereign.

5. 552.270-35 - STATEMENT OF LEASE (AUG 1992)

(a) The Contracting Officer will, within thirty (30) days next following
the Contracting Officer's receipt of a joint written request from
Lessor and a prospective lender or purchaser of the building, execute
and deliver to Lessor a letter stating that the same is issued subject
to the conditions stated in this clause and, if such is the case, that
(1) the lease is in full force and effect; (2) the date to which the
rent and other charges have been paid in advance, if any; and (3)
whether any notice of default has been issued.

(b) Letters issued pursuant to this clause are subject to the following
conditions:

(1) That they are based solely upon a reasonably diligent review of
the Contracting Officer's lease file as of the date of issuance;

(2) That the Government shall not be held liable because of any
defect in or condition of the premises or building;

(3) That the Contracting Officer does not warrant or represent that
the premises or building comply with applicable Federal, State
and local law; and

(4) That the Lessor, and each prospective lender and purchaser are
deemed to have constructive notice of such facts as would be
ascertainable by reasonable prepurchase and precommitment
inspection of the Premises and Building and by inquiry to
appropriate Federal, State and local Government officials.

6. 552.270-36 - SUBSTITUTION OF TENANT AGENCY (AUG 1992)

The Government may, at any time and from time to time, substitute any
Government agency or agencies for the Government agency or agencies, if
any, named in the lease.

7. 552.270-37 - NO WAIVER (AUG 1992)

No failure by either party to insist upon the strict performance of any
provision of this lease or to exercise any right or remedy consequent upon
a breach thereof, and no acceptance of full or partial rent or other
performance by either party during the continuance of any such breach shall
constitute a waiver of any such breach of such provision.

INITIALS: ___________ & ___________ 5
LESSOR GOVERNMENT

<PAGE>

8. 552.270-38 - INTEGRATED AGREEMENT (AUG 1992)

This Lease, upon execution, contains the entire agreement of the parties
and no prior written or oral agreement, express or implied, shall be
admissible to contradict the provisions of the Lease.

9. 552.270-39 - MUTUALITY OF OBLIGATION (AUG 1992)

The obligations and covenants of the Lessor, and the Government's
obligation to pay rent and other Government obligations and covenants,
arising under or related to this Lease, are interdependent. The Government
may, upon issuance of and delivery to Lessor of a final decision asserting
a claim against Lessor, set off such claim, in whole or in part, as against
any payment or payments then or thereafter due the Lessor under this lease.
No setoff pursuant to this clause shall constitute a breach by the
Government of this lease.

10. 552.270-27 - DELIVERY AND CONDITION (AUG 1992)

(a) Unless the Government elects to have the space occupied in increments,
the space must be delivered ready for occupancy as a complete unit.
The Government reserves the right to determine when the space is
substantially complete.

(b) If the premises do not in every respect comply with the provisions of
this lease the Contracting Officer may, in accordance with the Failure
in Performance clause of this lease, elect to reduce the rent
payments.

11. 552.270-28 - DEFAULT IN DELIVERY - TIME EXTENSIONS (JUNE 1994)

(a) With respect to Lessor's obligation to deliver the premises
substantially complete by the delivery date (as such date may be
modified pursuant to this lease), time is of the essence. If the
Lessor fails to prosecute the work with the diligence that will insure
its substantial completion by the delivery date or fails to
substantially complete the work by such date, the Government may by
notice to the Lessor terminate this lease, which termination shall be
effective when received by Lessor. The Lessor and the Lessor's
sureties, if any, shall be jointly and severally liable for any
damages to the Government resulting from such termination, as provided
in this clause. The Government shall be entitled to the following
damages:

(1) The Government's aggregate rent and estimated real estate tax and
operating cost adjustments for the firm term and all option terms
of its replacement lease or leases, in excess of the aggregate
rent and estimated real estate tax and operating cost adjustments
for the term; provided, if the Government procures, replacement
premises for a term (including all option terms) in excess of the
term, the Lessor shall not be liable for excess Government rent
or adjustments during such excess part of such term;

(2) All administrative and other costs borne by the Government in
procuring a replacement lease or leases;

(3) Such other, additional relief as may be provided for in this
lease, at law or in equity.

(4) Damages to which the Government may be entitled under this clause
shall be due and payable thirty (30) days next following the date
Lessor receives notice from the Contracting Officer specifying
such damages.

INITIALS: ___________ & ___________ 6
LESSOR GOVERNMENT

<PAGE>

(b) Delivery by Lessor of less than the minimum occupiable square footage
required by this lease shall in no event be construed as substantial
completion, except as permitted by the Contracting Officer.

(c) Notwithstanding paragraph (a) of this clause, this lease shall not be
terminated under this clause nor the Lessor charged with damages under
this clause, if (1) the delay in substantially completing the work
arises from excusable delays and (2) the Lessor within 10 days from
the beginning of any such delay (unless extended in writing by the
Contracting Officer) provides notice to the Contracting Officer of the
causes of delay. The Contracting Officer shall ascertain the facts
and the extent of delay. If the facts warrant such action, the
delivery date shall be extended, by the Contracting Officer, to the
extent of such delay at no additional costs to the Government. A time
extension is the sole remedy of the Lessor.

12. 552.270-30 - PROGRESSIVE OCCUPANCY (AUG 1992)

The Government shall have the right to elect to occupy the space in partial
increments prior to the substantial completion of the entire leased
premises, and the Lessor agrees to schedule its work so as to deliver the
space incrementally as elected by the Government. The Government shall pay
rent commencing with the first business day following substantial
completion of the entire leased premise unless the Government has elected
to occupy the leased premises incrementally. In case of incremental
occupancy, the Government shall pay rent pro rata upon the first business
day following substantial completion of each incremental unit. Rental
payments shall become due on the first workday of the month following the
month in which an increment of space is substantially complete, except that
should an increment of space be substantially completed after the fifteenth
day of the month, the payment due date will be the first workday of the
second month following the month in which it was substantially complete.
The commencement date of the firm lease term will be a composite determined
from all rent commencement dates.

13. 552.270-32 - EFFECT OF ACCEPTANCE AND OCCUPANCY (AUG 1992)

Neither the Government's acceptance of the premises for occupancy, nor the
Government's occupancy thereof, shall be construed as a waiver of any
requirement of or right of the Government under this Lease, or as otherwise
prejudicing the Government with respect to any such requirement or right.

14. 552.270-12 - MAINTENANCE OF BUILDING AND PREMISES - RIGHT OF ENTRY (AUG
1992)

Except in case of damage arising out of the willful act or negligence of a
Government employee, Lessor shall maintain the premises, including the
building and all equipment, fixtures, and appurtenances furnished by the
lessor under this lease, in good repair and condition so that they are
suitable in appearance and capable of supplying such heat, air
conditioning, light, ventilation, access and other things to the premises,
without reasonably preventable or recurring disruption, as is required for
the Government's access to, occupancy, possession, use and enjoyment of the
premises as provided in this lease. For the purpose of so maintaining the
premises, the Lessor may at reasonable times enter the premises with the
approval of the authorized Government representative in charge.

INITIALS: ___________ & ___________ 7
LESSOR GOVERNMENT

<PAGE>

15. 552.270-17 - FAILURE IN PERFORMANCE (AUG 1992)

- -------------- The covenant to pay rent and the covenant to provide any
INITIALS service, utility, maintenance, or repair required under this
- -------------- lease are interdependent. [In the event the payments to be
Lessor Gov't deducted will exceed one half month's rent, the Government will
- -------------- issue a written notice to cure to the Lessor and the Lessor's
Lender, allowing the Lessor and/or the Lender the opportunity
to cure within a reasonable period of time as determined by the
Government. If the failure can result in danger to life or
- -------------- health, this notice will not be given.] In the event of any
failure by the Lessor to provide any service, utility, maintenance, repair or
replacement required under this lease the Government may, by contract or
otherwise, perform the requirement and deduct from any payment or payments
under this lease, then or thereafter due, the resulting cost to the
Government, including all administrative costs. If the Government elects to
perform any such requirement, the Government and each of its contractors
shall be entitled to access to any and all areas of the building, access to
which is necessary to perform any such requirement, and the Lessor shall
afford and facilitate such access. Alternatively, the Government may deduct
from any payments under this lease, then or thereafter due, an amount which
reflects the reduced value of the contract requirement not performed. No
deduction from rent pursuant to this clause shall constitute a default by the
Government under this lease. These remedies are not exclusive and are in
addition to any other remedies which may be available under this lease or at
law.

16. 552.270-33 - DEFAULT BY LESSOR DURING THE TERM (AUG 1992)

(a) Each of the following shall constitute a default by Lessor under this
lease:

(1) Failure to maintain, repair, operate or service the premises as
and when specified in this lease, or failure to perform any other
requirement of this lease as and when required provided any such
failure shall remain uncured for a period of thirty (30) days
next following Lessor's receipt of notice thereof from the
Contracting Officer or an authorized representative.

(2) Repeated and unexcused failure by Lessor to comply with one or
more requirements of this lease shall constitute a default
notwithstanding that one or all such failures shall have been
timely cured pursuant to this clause.

- -------------- (b) If a default occurs, the Government may, by notice to
INITIALS Lessor, terminate this lease for default and if so
- -------------- terminated, the Government shall be entitled to the
Lessor Gov't damages specified in the Default in Delivery-Time
- -------------- Extensions clause. [However, if a default occurs, the
Government will not terminate this lease without issuing
a written notice to cure to the Lessor's Lender, allowing
the Lender the opportunity to correct the default within
- -------------- a reasonable time as determined by the Government, if the
failure ran result in danger to life or health, this
notice will not be given.]

INITIALS: ___________ & ___________ 8
LESSOR GOVERNMENT

<PAGE>

17. 552.270-13 - FIRE AND CASUALTY DAMAGE (AUG 1992)

- -------------- If the entire premises are destroyed by fire or other casualty,
INITIALS this lease will immediately terminate. [In case of partial
- -------------- destruction or damage, the Government will issue a written
Lessor Gov't notice to cure to the Lessor within 15 days, allowing the
- -------------- Lessor the opportunity to correct the damage. If in the sole
opinion of the Government the premises cannot be rendered
tenantable for the Government within 60 days, the lease can be
terminated at the option of the Government.] The Government may
- -------------- terminate the lease by giving written notice to the Lessor
within 15 calendar days of the fire or other casualty; if so terminated, no rent
will accrue to the Lessor after such partial destruction or damage; and if not
so terminated, the rent will be reduced proportionately by supplemental
agreement hereto effective from the date of such partial destruction or damage.
Nothing in this lease shall be construed as relieving Lessor from liability for
damage to or destruction of propertyof the United States of America caused by
the willful or negligent act or omission of Lessor.

18. 552.270-15 - COMPLIANCE WITH APPLICABLE LAW (AUG 1992)

Lessor shall comply with all Federal, state and local laws applicable to
the Lessor as owner or lessor, or both, of the building or premises,
including, without limitation, laws applicable to the construction,
ownership, alteration or operation of both or either thereof, and will
obtain all necessary permits, licenses and similar items at Lessor's
expense. The Government will comply with all Federal, state and local laws
applicable to and enforceable against it as a tenant under this lease;
provided that nothing in this lease shall be construed as a waiver of any
sovereign immunity of the Government. This lease shall be governed by
Federal law.

19. 552.270-19 - ALTERATIONS (JUNE 1985)

The Government shall have the right during the existence of this lease to
make alterations, attach fixtures, and erect structures or signs in or upon
the premises hereby leased, which fixtures, additions or structures so
placed in, on, upon, or attached to the said premises shall be and remain
the property of the Government and may be removed or otherwise disposed of
by the Government. If the lease contemplates that the Government is the
sole occupant of the building, for purposes of this clause, the leased
premises include the land on which the building is sited and the building
itself. Otherwise, the Government shall have the right to tie into or make
any physical connection with any structure located on the property as is
reasonably necessary for appropriate utilization of the leased space.

20. ACCEPTANCE OF SPACE (JUNE 1994)

(a) When the Lessor has completed all alterations, improvements, and
repairs necessary to meet the requirements of the lease, the Lessor
shall notify the Contracting Officer. The Contracting Officer or
designated representative shall promptly inspect the space.

(b) The Government will accept the space and the lease term will begin
after determining that the space is substantially complete and
contains the required occupiable square footage as indicated in the
paragraph of this solicitation entitled "Amount and Type of Space."

INITIALS: ___________ & ___________ 9
LESSOR GOVERNMENT

<PAGE>

21. 552.270-16 - INSPECTION - RIGHT OF ENTRY (AUG 1992)

(a) At any time and from time to time after receipt of an offer (until the
same has been duly withdrawn or rejected), after acceptance thereof
and during the term, the agents, employees and contractors of the
Government may, upon reasonable prior notice to Offeror or Lessor,
enter upon the offered premises or the premises, and all other areas
of the building access to which is necessary to accomplish the
purposes of entry, to determine the potential or actual compliance by
the Offeror or Lessor with the requirements of the solicitation or
this lease, which purposes shall include, but not be limited to: (1)
inspecting, sampling and analyzing of suspected asbestos-containing
materials and air monitoring for asbestos fibers; (2) inspecting the
heating, ventilation and air conditioning system, maintenance records,
and mechanical rooms for the offered premises or the premises;
(3) inspecting for any leaks, spills, or other potentially hazardous
conditions which may involve tenant exposure to hazardous or toxic
substances; and (4) inspecting for any current or past hazardous waste
operations, to ensure that appropriate mitigative actions were taken
to alleviate any environmentally unsound activities in accordance with
Federal, State and local law.

(b) Nothing in this clause shall be construed to create a Government duty
to inspect for toxic materials or to impose a higher standard of care
on the Government than on other lessees. The purpose of this clause
is to promote the ease with which the Government may inspect the
building. Nothing in this clause shall act to relieve the Lessor of
any duty to inspect or liability which might arise as a result of
Lessor's failure to inspect for or correct a hazardous condition.

22. 552.232-71 - PROMPT PAYMENT (APR 1989)

The Government will make payments under the terms and conditions specified
in this clause. Payment shall be considered as being made on the day a
check is dated or an electronic funds transfer is made. All days referred
to in this clause are calendar days, unless otherwise specified.

(a) Payment due date.

(1) Rental payments. Rent shall be paid monthly in arrears and will
be due on the first workday of each month, and only as provided
for by the lease.

(i) When the date for commencement of rent falls on the 15th day
of the month or earlier, the initial monthly rental payment
under this contract shall become due on the first workday of
the month following the month in which the commencement of
the rent is effective.

(ii) When the date for commencement of rent falls after the 15th
day of the month, the initial monthly rental payment under
this contract shall become due on the first workday of the
second month following the month in which the commencement
of the rent is effective.

(2) Other payments. The due date for making payments other than rent
shall be the later of the following two events:

(i) The 30th day after the designated billing office has
received a proper invoice from the Contractor.

(ii) The 30th day after Government acceptance of the work or
service. However, if the designated billing office fails to
annotate the invoice with the actual date of receipt, the
invoice payment due date shall be deemed

INITIALS: ___________ & ___________ 10
LESSOR GOVERNMENT

<PAGE>

to be the 30th day after the Contractor's invoice is dated,
provided a proper invoice is received and there is no
disagreement over quantity, quality, or Contractor compliance
with contract requirements.

(b) Invoice and inspection requirements for payments other than rent.

(1) The Contractor shall prepare and submit an invoice to the
designated billing office after completion of the work. A proper
invoice shall include the following items:

(i) Name and address of the Contractor.

(ii) Invoice date.

(iii) Lease number.

(iv) Government's order number or other authorization.

(v) Description, price, and quantity of work or services
delivered.

(vi) Name and address of Contractor official to whom payment is
to be sent (must be the same as that in the remittance
address in the lease or the order.)

(vii) Name (where practicable), title, phone number, and mailing
address of person to be notified in the event of a defective
invoice.

(2) The Government will inspect and determine the acceptability of
the work performed or services delivered within 7 days after the
receipt of a proper invoice or notification of completion of the
work or services unless a different period is specified at the
time the order is placed. If actual acceptance occurs later, for
the purpose of determining the payment due date and calculation
of interest, acceptance will be deemed to occur on the last day
of the 7-day inspection period. If the work or service is
rejected for failure to conform to the technical requirements of
the contract, the 7 days will be counted beginning with receipt
of a new invoice or notification. In either case, the Contractor
is not entitled to any payment or interest unless actual
acceptance by the Government occurs.

(1) An interest penalty shall be paid automatically by the
Government, without request from the Contractor, if payment is
not made by the due date.

(2) The interest penalty shall be at the rate established by the
Secretary of the Treasury under Section 12 of the Contract
Disputes Act of 1978 (41 U.S.C. 611) that is in effect on the day
after the due date. This rate is referred to as the
"Renegotiation Board Interest Rate," and it is published in the
FEDERAL REGISTER semiannually on or about January 1 and July 1.
The interest penalty shall accrue daily on the payment amount
approved by the Government and be compounded in 30-day increments
inclusive from the first day after the due date through the
payment date.

(3) Interest penalties will not continue to accrue after the filing
of a claim for such penalties under the clause at 52.233-1,
Disputes, or for more than 1 year. Interest penalties of less
than $1.00 need not be paid.

(4) Interest penalties are not required on payment delays due to
disagreement between the Government and Contractor over the
payment amount or other issues involving contract compliance or
on amount temporarily withheld or retained in accordance with the
terms of the contract. Claims involving disputes, and any
interest that may be payable, will be resolved in accordance with
the clause at 52.233-1, Disputes.

INITIALS: ___________ & ___________ 11
LESSOR GOVERNMENT

<PAGE>

23. 552.232-73 - ELECTRONIC FUNDS TRANSFER PAYMENT (AUG 1992)

(a) Payments under this lease will be made by the Government either by
check or electronic funds transfer (EFT). If the Lessor elects to
receive payment by EFT, after award, but no later than 30 days before
the first payment, the Lessor shall designate a financial institution
for receipt of EFT payments, and shall submit this designation to the
Contracting Officer or other Government official, as directed.

(b) For payment by EFT, the Lessor shall provide the following
information:

(1) The American Bankers Association 9-digit identifying number for
wire transfers of the financing institution receiving payment if
the institution has access to the Federal Reserve Communications
System.

(2) Number of account to which funds are to be deposited.

(3) Type of depositor account ("C" for checking, "S" for savings).

(4) If the Lessor is a new enrollee to the EFT system, a "Payment
Information Form," SF 3881, must be completed before payment can
be processed.

(c) In the event the Lessor, during the performance of this contract,
elects to designate a different financial institution for the receipt
of any payment made using EFT procedures, notification of such change
and the required information specified above must be received by the
appropriate Government official no later than 30 days prior to the
date such change is to become effective.

(d) The documents furnishing the information required in this clause must
be dated and contain the signature, title, and telephone number of the
Lessor or an authorized representative designated by the Lessor, as
well as the Lessor's name and lease number.

(e) Lessor failure to properly designate a financial institution or to
provide appropriate payee bank account information may delay payments
of amounts otherwise properly due.

24. 552.232-72 - INVOICE REQUIREMENTS (VARIATION) (APR 1989)

(This clause applies to payments other than rent.)

(a) Invoices shall be submitted in an original only, unless otherwise
specified, to the designated billing office specified in this contract
or purchase/delivery order.

(b) Invoices must include the Accounting Control Transaction (ACT) number
provided below or on the purchase/delivery order.

ACT Number (to be supplied on individual orders)

(c) If information or documentation in addition to that required by the
Prompt Payment clause of this contract is required in connection with
an invoice for a particular order, the order will indicate what
information or documentation must be submitted.

25. 52.232-23 - ASSIGNMENT OF CLAIMS (JAN 1986)

(a) The Contractor, under the Assignment of Claims Act, as amended, 31 USC
3727, 41 USC 15 (hereafter referred to as the "the Act"), may assign
its rights to be paid amounts

INITIALS: ___________ & ___________ 12
LESSOR GOVERNMENT

<PAGE>

due or to become due as a result of the performance of this contract
to a bank, trust company, or other financing institution, including
any Federal lending agency. The assignee under such an assignment may
thereafter further assign or reassign its right under the original
assignment to any type of financing institution described in the
preceding sentence.

(b) Any assignment or reassignment authorized under the Act and this
clause shall cover all unpaid amounts payable under this contract, and
shall not be made to more than one party, except that an assignment or
reassignment may be made to one party as agent or trustee for two or
more parties participating in the financing of this contract.

(c) The Contractor shall not furnish or disclose to any assignee under
this contract any classified document (including this contract) or
information related to work under this contract until the Contracting
Officer authorizes such action in writing.

26. PAYMENT (JUNE 1994)

(a) When space is offered and accepted, the occupiable square footage
delivered will be confirmed by:

(1) the Government's measurement of plans submitted by the successful
offeror as approved by the Government, and an inspection of the
space to verify that the delivered space is in conformance with
such plans or

(2) a mutual on-site measurement of the space, if the Contracting
Officer determines that it is necessary.

(b) Payment will not be made for space which is in excess of the amount of
occupiable square footage stated in the lease.

(c) If it is determined that the amount of occupiable square foot actually
delivered is less than the amount agreed to in the lease, the lease
will be modified to reflect the amount of occupiable space delivered
and the annual rental will be adjusted as follows:

Occupiable square feet not delivered multiplied by the occupiable
square foot (OSF) rate equals the reduction in annual rent. The rate
per occupiable square foot is determined by dividing the total annual
rental by the occupiable square footage set forth in the lease.

OSF Not Delivered X Rate per OSF = Reduction in Annual Rent.

27. 52.203-1 - OFFICIALS NOT TO BENEFIT (APR 1984)

No member of or delegate to Congress, or resident commissioner, shall be
admitted to any share or part of this contract, or to any benefit arising
from it. However, this clause does not apply to this contract to the
extent that this contract is made with a corporation for the corporation's
general benefit.

28. 552.203-5 - COVENANT AGAINST CONTINGENT FEES (FEB 1990)

(a) The Contractor warrants that no person or agency has been employed or
retained to solicit or obtain this contract upon an agreement or
understanding for a contingent fee,

INITIALS: ___________ & ___________ 13
LESSOR GOVERNMENT

<PAGE>

except a bona fide employee or agency. For breach or violation of this
warranty, the Government shall have the right to annul this contract
without liability or, in its discretion, to deduct from the contract
price or consideration, or otherwise recover the full amount of the
contingent fee.

(b) "Bona fide agency," as used in this clause, means an established
commercial or selling agency (including licensed real estate agents or
brokers), maintained by a Contractor for the purpose of securing
business, that neither exerts nor proposes to exert improper influence
to solicit or obtain Government contracts nor holds itself out as
being able to obtain any Government contract or contracts through
improper influence.

"Bona fide employee," as used in this clause, means a person, employed
by a Contractor and subject to the Contractor's supervision and
control as to time, place, and manner of performance, who neither
exerts nor proposes to exert improper influence to solicit or obtain
Government contracts nor holds out as being able to obtain any
Government contract or contracts through improper influence.

"Contingent fee," as used in this clause, means any commission,
percentage, brokerage, or other fee that is contingent upon the
success that a person or concern has in securing a Government
contract.

"Improper influence," as used in this clause, means any influence that
induces or tends to induce a Government employee or officer to give
consideration or to act regarding a Government contract on any basis
other than the merits of the matter.

29. 52.203-7 - ANTI-KICKBACK PROCEDURES (OCT 1988)

(a) Definitions.

"Kickback," as used in this clause, means any money, fee, commission,
credit, gift, gratuity, thing of value, or compensation of any kind
which is provided, directly or indirectly, to any prime Contractor,
prime Contractor employee, subcontractor, or subcontractor employee
for the purpose of improperly obtaining or rewarding favorable
treatment in connection with a prime contract or in connection with a
subcontract relating to a prime contract.

"Person," as used in this clause, means a corporation, partnership,
business association of any kind, trust, joint-stock company, or
individual.

"Prime contract," as used in this clause, means a contract or
contractual action entered into by the United States for the purpose
of obtaining supplies, materials, equipment, or services of any kind.

"Prime Contractor," as used in this clause, means a person who has
entered into a prime contract with the United States.

"Prime Contractor employee," as used in this clause, means any
officer, partner, employee, or agent of a prime Contractor.

INITIALS: ___________ & ___________ 14
LESSOR GOVERNMENT

<PAGE>

"Subcontract," as used in this clause, means a contract or contractual
action entered into by a prime Contractor or subcontractor for the
purpose of obtaining supplies, materials, equipment, or services of
any kind under a prime contract.

"Subcontractor," as used in this clause, (1) means any person, other
than the prime Contractor, who offers to furnish or furnishes any
supplies, materials, equipment, or services of any kind under a prime
contract or a subcontract entered into in connection with such prime
contract, and (2) includes any person who offers to furnish or
furnishes general supplies to the prime Contractor or a higher tier
subcontractor.

"Subcontractor employee," as used in this clause, means any officer,
partner, employee, or agent of a subcontractor.

(b) The Anti-Kickback Act of 1986 (41 U.S.C. 51-58) (the Act), prohibits
any person from--

(1) Providing or attempting to provide or offering to provide any
kickback;

(2) Soliciting, accepting, or attempting to accept any kickback; or

(3) Including, directly or indirectly, the amount of any kickback in
the contract price charged by a prime Contractor to the United
States or in the contract price charged by a subcontractor to a
prime Contractor or higher tier subcontractor.

(c) (1) The Contractor shall have in place and follow reasonable
procedures designed to prevent and detect possible violations
described in paragraph (b) of this clause in its own operations
and direct business relationships.

(2) When the Contractor has reasonable grounds to believe that a
violation described in paragraph (b) of this clause may have
occurred, the Contractor shall promptly report in writing the
possible violation. Such reports shall be made to the inspector
general of the contracting agency, the head of the contracting
agency if the agency does not have an inspector general, or the
Department of Justice.

(3) The Contractor shall cooperate fully with any Federal agency
investigating a possible violation described in paragraph (b) of
this clause.

(4) The Contracting Officer may (i) offset the amount of the kickback
against any monies owed by the United States under the prime
contract and/or (ii) direct that the Prime Contractor withhold
from sums owed a subcontractor under the prime contract, the
amount of the kickback. The Contracting Officer may order that
monies withheld under subdivision (c)(4)(ii) of this clause be
paid over to the Government unless the Government has already
offset those monies under subdivision (c)(4)(i) of this clause.
In the either case, the Prime Contractor shall notify the
Contracting Officer when the monies are withheld.

(5) The Contractor agrees to incorporate the substance of this
clause, including subparagraph (c)(5) but excepting subparagraph
(c)(1), in all subcontracts under this contract.

30. 52.203-9 - REQUIREMENT FOR CERTIFICATE OF PROCUREMENT INTEGRITY
MODIFICATION (NOV 1990)

(a) DEFINITIONS. The definitions set forth in FAR 3.104-4 are hereby
incorporated in this clause.

INITIALS: ___________ & ___________ 15
LESSOR GOVERNMENT
<PAGE>

(b) The contractor agrees that it will execute the certification set forth
in paragraph (c) of this clause, when requested by the Contracting
Officer in connection with the execution of any modification of this
contract.

(c) CERTIFICATION. As required in paragraph (b) of this clause, the
officer or employee responsibile for the modification proposal shall
execute the following certification:

CERTIFICATE OF PROCUREMENT INTEGRITY - MODIFICATION (NOV 1990)

(1) I, [NAME OF CERTIFIER], am the officer or employee responsible
for the preparation of this modification proposal and hereby certify that, to
the best of my knowledge and belief, with the exception of any information
described in this certification, I have no information concerning a violation or
possible violation of subsections 27(a), (b), (d), or (f) of the Office of
Federal Procurement Policy Act, as amended* (41 U.S.C. 423) (hereinafter
referred to as "the Act"), as implemented in the FAR, occurring during the
conduct of this procurement (CONTRACT AND MODIFICATION NUMBER).

(2) As required by subsection 27(e)(1)(B) of the Act, I further
certify that, to the best of my knowledge and belief each officer, employee,
agent, representative, and consultant of [NAME OF OFFEROR] who has participated
personally and substantially in the preparation or submission of this proposal
has certified that he or she is familiar with, and will comply with, the
requirements of subsection 27(a) of the Act, as implemented in the FAR, and will
report immediately to me any information concerning a violation or possible
violation of subsections 27(a), (b), (d), or (f) of the Act, as implemented in
the FAR, pertaining to this procurement.

(3) Violations or possible violations: (Continue on plain bond paper
if necessary and label Certificate of Procurement Integrity-Modification
(Continuation Sheet), ENTER "NONE" IF NONE EXISTS)

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

(SAMPLE - DO NOT COMPLETE OR SIGN THIS CERTIFICATE. THE CONTRACTING OFFICER
WILL SPECIFICALLY REQUEST IT WHEN NEEDED.)

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

- --------------------------------------------------------------------------------
[signature of the officer or employee responsible for the modification proposal
and date]

- --------------------------------------------------------------------------------
[typed name of the officer or employee responsible for the modification
proposal]

*Subsections 27(a), (b), and (d) are effective on December 1, 1990. Subsection
27(f) is effective on June 1, 1991.

THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE
UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION
MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001.

INITIALS:_______ & ___________ 16
LESSOR GOVERNMENT

<PAGE>

(End of certification)

(d) In making the certification in paragraph (2) of the certificate, the
officer or employee of the competing Contractor responsible for the
offer or bid, may rely upon a one-time certification from each
individual required to submit a certification to the competing
Contractor, supplemented by periodic training. These certifications
shall be obtained at the earliest possible date after an individual
required to certify begins employment or association with the
Contractor. If a Contractor decides to rely on a certification
executed prior to the suspension of section 27 (i.e., prior to
December 1, 1989), the Contractor shall ensure that an individual who
has so certified is notified that section 27 has been reinstated.
These certifications shall be maintained by the Contractor for a
period of 6 years from the date a certifying employee's employment
with the company ends or, for an agency, representative, or
consultant, 6 years from the date such individual ceases to act on
behalf of the contractor.

(e) The certification required by paragraph (c) of this clause is a
material representation of fact upon which reliance will be placed in
executing this modification.

31. 552.203-73 - PRICE ADJUSTMENT FOR ILLEGAL OR IMPROPER ACTIVITY (SEP 1990)

(a) If the head of the contracting activity (HCA) or his or her designee
determines that there was a violation of subsection 27(a) of the
Office of Federal Procurement Policy Act, as amended (41 U.S.C. 423),
as implemented in the Federal Acquisition Regulation, the Government,
at its election, may--

(1) Reduce the monthly rental under this lease by 5 percent of the
amount of the rental for each month of the remaining term of the
lease, including any option periods, and recover 5 percent of the
rental already paid;

(2) Reduce payments for alterations not included in monthly rental
payments by 5 percent of the amount of the alterations agreement;
or

(3) Reduce the payments for violations by Lessor's subcontractor by
an amount not to exceed the amount of profit or fee reflected in
the subcontract at the time the subcontract was placed.

(b) Prior to making a determination as set forth above, the HCA or
designee shall provide to the Lessor a written notice of the action
being considered and the basis therefor. The Lessor shall have a
period determined by the agency head or designee, but not less than 30
calendar days after receipt of such notice, to submit in person, in
writing, or through a representative, information and argument in
opposition to the proposed reduction. The agency head or designee
may, upon good cause shown, determine to deduct less than the above
amounts from payments.

(c) The rights and remedies of the Government specified herein are not
exclusive, and are in addition to any other rights and remedies
provided by law or under this lease.

32. 52.215-22 - PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (JAN 1991)

(Applies when cost or pricing data is required.)

(a) If any price, including profit or fee, negotiated in connection with
this contract, or any cost reimbursable under this contract, was
increased by any significant amount because

INITIALS:_______ & ___________ 17
LESSOR GOVERNMENT

<PAGE>

(1) the Contractor or a subcontractor furnished cost or pricing data
that were not complete, accurate, and current as certified in its
Certificate of Current Cost or Pricing Data, (2) a subcontractor or
prospective subcontractor furnished the Contractor cost or pricing
data that were not complete, accurate, and current as certified in
the Contractor's Certificate of Current Cost or Pricing Data, or
(3) any of these parties furnished data of any description that were
not accurate, the price or cost shall be reduced accordingly and the
contract shall be modified to reflect the reduction.

(b) Any reduction in the contract price under paragraph (a) above due to
defective data from a prospective subcontractor that was not
subsequently awarded the subcontract shall be limited to the amount,
plus applicable overhead and profit markup, by which (1) the actual
subcontract or (2) the actual cost to the Contractor, if there was no
subcontract, was less than the prospective subcontract cost estimate
submitted by the Contractor; provided, that the actual subcontract
price was not itself affected by defective cost pricing data.

(c) (1) If the Contracting Officer determines under paragraph (a) of this
clause that a price or cost reduction should be made, the
Contractor agrees not to raise the following matters as a
defense:

(i) The Contractor or subcontractor was a sole source supplier
or otherwise was in a superior bargaining position and thus
the price of the contract would not have been modified even
if accurate, complete, and current cost or pricing data had
been submitted.

(ii) The Contracting Officer should have known that the cost or
pricing data in issue were defective even though the
Contractor or subcontractor took no affirmative action to
bring the character of the data to the attention of the
Contracting Officer.

(iii) The contract was based on an agreement about the total
cost of the contract and there was no agreement about
the cost of each item procured under the contract.

(iv) The Contractor or subcontractor did not submit a Certificate
of Current Cost or Pricing Data.

(2) (i) Except as prohibited by subdivision (c)(2)(ii) of this
clause, an offset in an amount determined appropriate by
the Contracting Officer based upon the facts shall be
allowed against the amount of a contract price reduction
if--

(A) The Contractor certifies to the Contracting Officer
that, to the best of the Contractor's knowledge and
belief, the Contractor is entitled to the offset in
the amount requested; and

(B) The Contractor proves that the cost or pricing data
were available before the date of agreement on the
price of the contract (or price of the modification)
and that the data were not submitted before such date.

(ii) An offset shall not be allowed if--

(A) The understated data was known by the Contractor to be
understated when the Certificate or Current Cost or
Pricing Data was signed; or

(B) The Government proves that the facts demonstrate that
the contract price would not have increased in the
amount to be offset even if the available data had been
submitted before the date of agreement on price.

INITIALS:_______ & ___________ 18
LESSOR GOVERNMENT
<PAGE>

(d) If any reduction in the contract price under this clause reduces the
price of items for which payment was made prior to the date of the
modification reflecting the price reduction, the Contractor shall be
liable to and shall pay the United States at the time such overpayment
is repaid--

(1) Simple interest on the amount of such overpayment to be computed
from the date(s) of overpayment to the Contractor to the date the
Government is repaid by the Contractor at the applicable
underpayment rate effective for each quarter prescribed by the
Secretary of the Treasury under 26 U.S.C. 6621(a)(2); and

(2) For Department of Defense contracts only, a penalty equal to the
amount of the overpayment, if the Contractor or subcontractor
knowingly submitted cost or pricing data which were incomplete,
inaccurate, or noncurrent.

33. 552.270-20 - PROPOSALS FOR ADJUSTMENT (AUG 1992)

(a) The Contracting Officer may, from time to time during the term of this
lease, require changes to be made in the work or services to be
performed and in the terms or conditions of this lease. Such changes
will be required under the Changes clause.

(b) If the Contracting Officer makes a change within the general scope of
the lease, the Lessor shall submit, in a timely manner, an itemized
cost proposal for the work to be accomplished or services to be
performed when the cost exceeds $25,000. The proposal, including all
subcontractor work, will contain at least the following details--

(1) Material quantities and unit costs;

(2) Labor costs (identified with specific item or material to be
placed or operation to be performed);

(3) Equipment costs;

(4) Worker's compensation and public liability insurance;

(5) Overhead;

(6) Profit; and

(7) Employment taxes under FICA and FUTA.

(c) The following Federal Acquisition Regulation (FAR) provisions also
apply to all proposals exceeding $100,000 in cost--

(1) The Lessor shall provide cost or pricing data including
subcontractor cost or pricing data (48 CFR 15.804-2);

(2) The Lessor's representative, all contractors, and subcontractors
whose portion of the work exceeds $100,000 must sign and return
the "Certificate of Current Cost or Pricing Data"
(48 CFR 15.804-4); and

(3) The agreement for "Price Reduction for Defective Cost or Pricing
Data" must be signed and returned (48 CFR 15.804-8).

(d) Lessor shall also refer to 48 CFR Part 31, Contract Cost Principles,
for information on which costs are allowable, reasonable, and
allocable in Government work.

INITIALS:_______ & ___________ 19
LESSOR GOVERNMENT

<PAGE>

34. 552.270-21 - CHANGES (JUNE 1994)

(a) The Contracting Officer may at any time, by written order, make
changes within the general scope of this lease in any one or more of
the following:

(1) Specifications (including drawings and designs);

(2) Work or services; or

(3) Facilities or space layout.

(b) If any such change causes an increase or decrease in Lessor's cost of
or the time required for performance under this lease, whether or not
changed by the order, the Contracting Officer shall modify this lease
to provide for one or more of the following:

(1) A modification of the delivery date;

(2) An equitable adjustment in the rental rate;

(3) A lump sum equitable adjustment; or

(4) An equitable adjustment of the annual operating costs per
occupiable square foot specified in this lease.

(c) The Lessor shall assert its right to an adjustment under this clause
within 30 days from the date of receipt of the change order and shall
submit a proposal for adjustment. Failure to agree to any adjustment
shall be a dispute under the Disputes clause. However, nothing in
this clause shall excuse the lessor from proceeding with the change as
directed.

(d) Absent such written change order, the Government shall not be liable
to Lessor under this clause.

35. 52.215-1 - EXAMINATION OF RECORDS BY COMPTROLLER GENERAL (APR 1984)

(a) This clause applies if this contract exceeds $10,000 and was entered
into by negotiation.

(b) The Comptroller General of the United States or a duly authorized
representative from the General Accounting Office shall, until 3 years
after final payment under this contract or for any shorter period
specified in Federal Acquisition Regulation (FAR) Subpart 4.7,
Contractor Records Retention, have access to and the right to examine
any of the Contractor's directly pertinent books, documents, paper, or
other records involving transactions related to this contract.

(c) The Contractor agrees to include in first-tier subcontracts under this
contract a clause to the effect that the Comptroller General or a duly
authorized representative from the General Accounting Office shall,
until 3 years after final payment under the subcontract or for any
shorter period specified in FAR Subpart 4.7, have access to and the
right to examine any of the subcontractor's directly pertinent books,
documents, paper, or other records involving transactions related to
the subcontract. "Subcontract," as used in this clause, excludes (1)
purchase orders not exceeding $10,000 and (2) subcontracts or purchase
orders for public utility services at rates established to apply
uniformly to the public, plus any applicable reasonable connection
charge.

(d) The periods of access and examination in paragraphs (b) and (c) above
for records relating to (1) appeals under the Disputes clause, (2)
litigation or settlement of claims

INITIALS:_______ & ___________ 20
LESSOR GOVERNMENT

<PAGE>

arising from the performance of this contract, or (3) costs and
expenses of this contract to which the Comptroller General or a duly
authorized representative from the General Accounting Office has
taken exception shall continue until such appeals, litigation,
claims, or exceptions are disposed of.

36. 552.215-70 - EXAMINATION OF RECORDS BY GSA (APR 1984)

The Contractor agrees that the Administrator of General Services or any
duly authorized representatives shall, until the expiration of 3 years
after final payment under this contract, or of the time periods for the
particular records specified in Subpart 4.7 of the Federal Acquisition
Regulation (48 CFR 4.7), whichever expires earlier, have access to and the
right to examine any books, documents, papers, and records of the
Contractor involving transactions related to this contract or compliance
with any clauses thereunder. The Contractor further agrees to include in
all its subcontracts hereunder a provision to the effect that the
subcontractor agrees that the Administrator of General Services or any duly
authorized representatives shall, until the expiration of 3 years after
final payment under the subcontract, or of the time periods for the
particular records specified in Subpart 4.7 of the Federal Acquisition
Regulation (48 CFR 4.7), whichever expires earlier, have access to and the
right to examine any books, documents, papers, and records of such
subcontractor, involving transactions related to the subcontract or
compliance with any clauses thereunder. The term "subcontract" as used in
this clause excludes (a) purchase orders not exceeding $10,000 and (b)
subcontracts or purchase orders for public utility services at rates
established for uniform applicability to the general public.

37. 52.233-1 - DISPUTES (DEC 1991)

(a) This contract is subject to the Contract Disputes Act of 1978, as
amended (41 USC 601-613).

(b) Except as provided in the Act, all disputes arising under or relating
to this contract shall be resolved under this clause.

(c) "Claim," as used in this clause, means a written demand or written
assertion by one of the contracting parties seeking, as a matter of
right, the payment of money in a sum certain, the adjustment or
interpretation of contract terms, or other relief arising under or
relating to this contract. A claim arising under a contract, unlike a
claim relating to that contract, is a claim that can be resolved under
a contract clause that provides for the relief sought by the claimant.
However, a written demand or written assertion by the Contractor
seeking the payment of money exceeding $50,000 is not a claim under
the Act until certified as required by subparagraph (d)(2) below. A
voucher, invoice, or other routine request for payment that is not in
dispute when submitted is not a claim under the Act. The submission
may be converted to a claim under the Act, by complying with the
submission and certification requirements of this clause, if it is
disputed either as to liability or amount or is not acted upon in a
reasonable time.

(d) (1) A claim by the Contractor shall be made in writing and submitted
to the Contracting Officer for a written decision. A claim by
the Government against the Contractor shall be subject to a
written decision by the Contracting Officer.

(2) For Contractor claims exceeding $50,000, the Contractor shall
submit with the claim a certification that--

(i) The claim is made in good faith;

INITIALS:_______ & ___________ 21
LESSOR GOVERNMENT

<PAGE>

(ii) Supporting data are accurate and complete to the best of
the Contractor's knowledge and belief; and

(iii) The amount requested accurately reflects the contract
adjustment for which the Contractor believes the
Government is liable.

(3) (i) If the Contractor is an individual, the certification shall
be executed by that individual.

(ii) If the Contractor is not an individual, the certification
shall be executed by--

(A) A senior company official in charge at the Contractor's
plant or location involved; or

(B) An officer or general partner of the Contractor having
overall responsibility for the conduct of the
Contractor's affairs.

(e) For Contractor claims of $50,000 or less, the Contracting Officer
must, if requested in writing by the Contractor, render a decision
within 60 days of the request. For Contractor certified claims over
$50,000, the Contracting Officer must, within 60 days, decide the
claim or notify the Contractor of the date by which the decision will
be made.

(f) The Contracting Officer's decision shall be final unless the
Contractor appeals or files a suit as provided in the Act.

(g) At the time a claim by the Contractor is submitted to the Contracting
Officer or a claim by the Government is presented to the Contractor,
the parties, by mutual consent, may agree to use alternative means of
dispute resolution. When using alternate dispute resolution
procedures, any claim, regardless of amount, shall be accompanied by
the certification described in paragraph (d)(2) of this clause, and
executed in accordance with paragraph (d)(3) of this clause.

(h) The Government shall pay interest on the amount found due and unpaid
from (1) the date the Contracting Officer receives the claim (properly
certified if required), or (2) the date payment otherwise would be
due, if that date is later, until the date of payment. Simple
interest on claims shall be paid at the rate, fixed by the Secretary
of the Treasury as provided in the Act, which is applicable to the
period which the Contracting Officer receives the claim and then at
the rate applicable for each 6-month period as fixed by the Treasury
Secretary during the pendency of the claim.

(i) The Contractor shall proceed diligently with performance of this
contract, pending final resolution of any request for relief, claim,
appeal, or action arising under the contract, and comply with any
decision of the Contracting Officer.

38. 552.270-40 - ASBESTOS AND HAZARDOUS WASTE MANAGEMENT (AUG 1992)

The certifications made by the Offeror regarding asbestos and hazardous
waste management contained in the representation and certification
provisions of this lease are material representations of fact upon which
the Government relies when making award. If it is later determined that
the presence or management of asbestos and/or hazardous waste has been
misrepresented, the Government reserves the right to require the Lessor, at
no cost to the Government, to abate (remove, encapsulate, enclose, or
repair) such asbestos and/or mitigate hazardous waste conditions, with such
work performed in accordance with Federal (e.g., EPA, OSHA, and DOT),
State, and local regulations and guidance, or, alternatively, the
Government may terminate the lease. This is in addition to other remedies
available to the Government.

INITIALS:_______ & ___________ 22
LESSOR GOVERNMENT

<PAGE>

39. 52.222-26 - EQUAL OPPORTUNITY (APR 1984)

(Applicable to leases which exceed $10,000.)

(a) If, during any 12-month period (including the 12 months preceding the
award of this contract), the Contractor has been or is awarded
nonexempt Federal contracts and/or subcontracts that have an aggregate
value in excess of $10,000, the Contractor shall comply with
subparagraphs (b)(1) through (11) below. Upon request, the Contractor
shall provide information necessary to determine the applicability of
this clause.

(b) During performing this contract, the Contractor agrees as follows:

(1) The Contractor shall not discriminate against any employee or
applicant for employment because of race, color, religion, sex,
or national origin.

(2) The Contractor shall take affirmative action to ensure the
applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, sex,
or national origin. This shall include, but not be limited to,
(i) employment, (ii) upgrading, (iii) demotion, (iv) transfer,
(v) recruitment or recruitment advertising, (vi) layoff or
termination, (vii) rates of pay or other forms of compensation,
and (viii) selection for training, including apprenticeship.

(3) The Contractor shall post in conspicuous places available to
employees and applicants for employment the notices to be
provided by the Contracting Officer that explain this clause.

(4) The Contractor shall, in all solicitations or advertisements for
employees placed by or on behalf of the Contractor, state that
all qualified applicants will receive consideration for
employment without regard to race, color, religion, sex, or
national origin.

(5) The Contractor shall send, to each labor union or representative
of workers with which it has a collective bargaining agreement or
other contract or understanding, the notice to be provided by the
Contracting Officer advising the labor union or workers'
representative of the Contractor's commitments under this clause,
and post copies of the notice in conspicuous places available to
employees and applicants for employment.

(6) The Contractor shall comply with Executive Order 11246, as
amended, and the rules, regulations, and orders of the Secretary
of Labor.

(7) The Contractor shall furnish to the contracting agency all
information required by Executive Order 11246, as amended, and by
the rules, regulations, and orders of the Secretary of Labor.
Standard Form 100 (EEO-1), or any successor form, is the
prescribed form to be filed within 30 days following the award,
unless filed within 12 months preceding the date of award.

(8) The Contractor shall permit access to its books, records, and
accounts by the contracting agency or the Office of Federal
Contract Compliance Programs (OFCCP) for the purpose of
investigation to ascertain the Contractor's compliance with the
applicable rules, regulations, and orders.

(9) If the OFCCP determines that the Contractor is not in compliance
with this clause or any rule, regulation, or order of the
Secretary of Labor, this contract may be canceled, terminated, or
suspended in whole or in part and the Contractor may be declared
ineligible for further Government contracts, under the procedures
authorized in Executive

INITIALS:_______ & ___________ 23
LESSOR GOVERNMENT

<PAGE>

Order 11246, as amended. In addition, sanctions may be imposed
and remedies invoked against the Contractor as provided in
Executive Order 11246, as amended, the rules, regulations, and
orders of the Secretary of Labor, or as otherwise provided by law.

(10) The Contractor shall include the terms and conditions of
subparagraph (b)(1) through (11) of this clause in every
subcontract or purchase order that is not exempted by the rules,
regulations, or orders of the Secretary of Labor issued under
Executive Order 11246, as amended, so that these terms and
conditions will be binding upon each subcontractor or vendor.

(11) The Contractor shall take such action with respect to any
subcontract or purchase order as the contracting agency may
direct as a means of enforcing these items and conditions,
including sanctions for noncompliance; provided, that if the
Contractor becomes involved in, or is threatened with, litigation
with a subcontractor or vendor as a result of any direction, the
Contractor may request the United States to enter into the
litigation to protect the interests of the United States.

(c) Notwithstanding any other clause in this contract, disputes relative
to this clause will be governed by the procedures in 41 CFR 60-1.1.

40. 52.222-35 - AFFIRMATIVE ACTION FOR SPECIAL DISABLED AND VIETNAM ERA
VETERANS (APR 1984)

(Applicable to leases which exceed $10,000.)

(a) Definitions.

"Appropriate office of the State employment service system," as used in
this clause, means the local office of the Federal-State national system of
public employment offices assigned to serve the area where the employment
opening is to be filled, including the District of Columbia, Guam, Puerto
Rico, Virgin Islands, American Samoa, and the Trust Territory of the
Pacific Islands.

"Openings that the Contractor proposes to fill from within its own
organization," as used in this clause, means employment openings for which
no one outside the Contractor's organization (including any affiliates,
subsidiaries, and the parent companies) will be considered and includes any
openings that the Contractor proposes to fill from regularly establish
"recall" lists.

"Opening that the Contractor proposes to fill under a customary and
traditional employer-union hiring arrangement," as used in this clause,
means employment openings that the Contractor proposes to fill from union
halls, under their customary and traditional employer-union hiring
relationship.

"Suitable employment openings," as used in this clause--

(1) Includes, but is not limited to, openings that occur in jobs
categorized as--

(i) Production and nonproduction;

(ii) Plant and office;

(iii) Laborers and mechanics;

(iv) Supervisory and nonsupervisory;

(v) Technical; and

(vi) Executive, administrative, and professional positions
compensated on a salary basis of less than $25,000 a year;
and

INITIALS:_______ & ___________ 24
LESSOR GOVERNMENT

<PAGE>

(2) Includes full-time employment, temporary employment of over 3
days, and part-time employment, but not openings that the
Contractor proposes to fill from within its own organization or
under a customary and traditional employer-union hiring
arrangement, nor openings in an educational institution that are
restricted to students of that institution.

(b) General.

(1) Regarding any position for which the employee or applicant for
employment is qualified, the Contractor shall not discriminate
against the individual because the individual is a special
disabled or Vietnam era veteran. The Contractor agrees to take
affirmative action to employ, advance in employment, and
otherwise treat qualified special disabled and Vietnam era
veterans without discrimination based upon their disability or
veterans' status in all employment practices such as--

(i) Employment;

(ii) Upgrading;

(iii) Demotion or transfer;

(iv) Recruitment;

(v) Advertising;

(vi) Layoff or termination;

(vii) Rates of pay or other forms of compensation; and

(viii) Selection for training, including apprenticeship.

(2) The Contractor agrees to comply with the rules, regulations, and
relevant orders of the Secretary of Labor (Secretary) issued
under the Vietnam Era Veterans' Readjustment Assistance Act of
1972 (the Act), as amended.

(1) The Contractor agrees to list all suitable employment openings
existing at contract award or occurring during contract
performance, at an appropriate office of the State employment
service system in the locality where the opening occurs. These
openings include those occurring at any contractor facility,
including one not connected with performing this contract. An
independent corporate affiliate is exempt from this requirement.

(2) State and local government agencies holding Federal contracts of
$10,000 or more shall also list all their suitable openings with
the appropriate office of the State employment service.

(3) The listing of suitable employment openings with the State
employment service system is required at least concurrently with
using any other recruitment source or effort and involves the
obligations of placing a bona fide job order, including accepting
referrals of veterans and nonveterans. This listing does not
require hiring any particular job applicant or hiring from any
particular group of job applicants and is not intended to relieve
the Contractor from any requirements of Executive orders or
regulations concerning nondiscrimination in employment.

(4) Whenever the Contractor becomes contractually bound to the
listing terms of this clause, it shall advise the State
employment service system, in each State where it has
establishments, of the name and location of each hiring location
in the State. As long as the Contractor is contractually bound
to these terms and has so advised the State system, it need not
advise the State system of subsequent contracts. The Contractor
may advise the State system when it is no longer bound by this
contract clause.

INITIALS:_______ & ___________ 25
LESSOR GOVERNMENT

<PAGE>

(5) Under the most compelling circumstances, an employment opening
may not be suitable for listing, including situations when (i)
the Government's needs cannot reasonably be supplied, (ii)
listing would be contrary to National security, or (iii) the
requirement of listing would not be in the Government's interest.

(d) Applicability.

(1) This clause does not apply to the listing of employment openings
which occur and are filled outside the 50 states, the District of
Columbia, Puerto Rico, Guam, Virgin Islands, American Samoa, and
the Trust Territory of the Pacific Islands.

(2) The terms of paragraph (c) above of this clause do not apply to
openings that the Contractor proposes to fill from within its own
organization or under a customary and traditional employer-union
hiring arrangement. This exclusion does not apply to a
particular opening once an employer decides to consider
applicants outside of its own organization or employer-union
arrangement for that opening.

(e) Postings.

(1) The Contractor agrees to post employment notices stating (i) the
Contractor's obligation under the law to take affirmative action
to employ and advance in employment qualified special disabled
veterans and veterans of the Vietnam era, and (ii) the rights of
applicants and employees.

(2) These notices shall be posted in conspicuous places that are
available to employees and applicants for employment. They shall
be in a form prescribed by the Director, Office of Federal
Contract Compliance Programs, Department of Labor (Director) and
provided by or through the Contracting Officer.

(3) The Contractor shall notify each labor union or representative of
workers with which it has a collective bargaining agreement or
other contract understanding, that the Contractor is bound by the
terms of the Act, and is committed to take affirmative action to
employ, and advance in employment, qualified special disabled and
Vietnam era veterans.

(f) Noncompliance.

If the Contractor does not comply with the requirements of this
clause, appropriate actions may be taken under the rules, regulations,
and relevant orders of the Secretary issued pursuant to the Act.

(g) Subcontracts.

The Contractor shall include the terms of this clause in every
subcontract or purchase order of $10,000 or more unless exempted by
rules, regulations, or orders of the Secretary. The Contractor shall
act as specified by the Director to enforce the terms, including
action for noncompliance.

41. 52.222-36 - AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS (APR 1984)

(Applicable to leases which exceed $2,500.)

(a) General.

(1) Regarding any position for which the employee or applicant for
employment is qualified, the Contractor shall not discriminate
against any employee or applicant

INITIALS:_______ & ___________ 26
LESSOR GOVERNMENT
<PAGE>

because of physical or mental handicap. The Contractor agrees to
take affirmative action to employ, advance in employment and
otherwise treat qualified handicapped individuals without
discrimination based upon their physical or mental handicap in all
employment practices such as--

(i) Employment;

(ii) Upgrading;

(iii) Demotion or transfer,

(iv) Recruitment;

(v) Advertising;

(vi) Layoff or termination;

(vii) Rates of pay or other forms of compensation; and

(viii) Selection for training, including apprenticeship.

(2) The Contractor agrees to comply with the rules, regulations, and
relevant orders of the Secretary of Labor (Secretary) issued
under the Rehabilitation Act of 1973 (29 USC 793) (the Act), as
amended.

(b) Postings.

(1) The Contractor agrees to post employment notices stating (i) the
Contractor's obligation under the law to take affirmative action
to employ and advance in employment qualified handicapped
individuals and (ii) the rights of applicants and employees.

(2) These notices shall be posted in conspicuous places that are
available to employees and applicants for employment. They shall
be in a form prescribed by the Director, Office of Federal
Contract Compliance Programs, Department of Labor (Director), and
provided by or through the Contracting Officer.

(3) The Contractor shall notify each labor union or representative of
workers with which it has a collective bargaining agreement or
other contract understanding, that the Contractor is bound by the
terms of Section 503 of the Act and is committed to take
affirmative action to employ, and advance in employment,
qualified physically and mentally handicapped individuals.

(c) Noncompliance. If the Contractor does not comply with the
requirements of this clause, appropriate actions may be taken under
the rules, regulations, and relevant orders of the Secretary issued
pursuant to the Act.

(d) Subcontracts. The Contractor shall include the terms of this clause
in every subcontract or purchase order in excess of $2,500 unless
exempted by rules, regulations, or orders of the Secretary. The
Contractor shall act as specified by the Director to enforce the
terms, including action for noncompliance.

42. 52.222-37 - EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS AND VETERANS OF
THE VIETNAM ERA (JAN 1988)

(Applicable to leases which exceed $10,000.)

(a) The Contractor shall report at least annually, as required by the
Secretary of Labor, on:

(1) The number of special disabled veterans and the number of
veterans of the Vietnam era in the workforce of the contractor by
job category and hiring location; and

INITIALS:________ & ___________ 27
LESSOR GOVERNMENT

<PAGE>

(2) The total number of new employees hired during the period covered
by the report, and of that total, the number of special disabled
veterans, and the number of veterans of the Vietnam era.

(b) The above items shall be reported by completing the form entitled
"Federal Contractor Veterans' Employment Report VETS-100."

(d) The employment activity report required by paragraph (a)(2) of this
clause shall reflect total hires during the most recent 12-month
period as of the ending date selected for the employment profile
report required by paragraph (a)(1) of this clause. Contractors may
select an ending date: (1) As of the end of any pay period during the
period January through March 1 of the year the report is due, or (2)
as of December 31, if the Contractor has previous written approval
from the Equal Employment Opportunity Commission to do so for purposes
of submitting the Employer Information Report EEO-1 (Standard Form
100).

(e) The count of veterans reported according to paragraph (a) of this
clause shall be based on voluntary disclosure. Each Contractor
subject to the reporting requirements at 38 U.S.C. 2012(d) shall
invite all special disabled veterans and veterans of the Vietnam era
who wish to benefit under the affirmative action program at 38 U.S.C.
2012 to identify themselves to the Contractor. The invitation shall
state that the information is voluntarily provided, that the
information will be kept confidential, that disclosure or refusal to
provide the information will not subject the applicant or employee to
any adverse treatment, and that the information will be used only in
accordance with the regulations promulgated under 38 U.S.C. 2012.

(f) Subcontracts. The Contractor shall include the terms of this clause
in every subcontract or purchase order of $10,000 or more unless
exempted by rules, regulations, or orders of the Secretary.

43. 52.209-6 - PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH
CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT (JUNE 1991)

(a) The Government suspends or debars Contractors to protect the
Government's interests. Contractors shall not enter into any
subcontract in excess of the small purchase limitation at FAR 13.000
with a Contractor that has been debarred, suspended, or proposed for
debarment unless there is a compelling reason to do so.

(b) The Contractor shall require each proposed first-tier subcontractor,
whose subcontract will exceed the small purchase limitation a FAR
13.000, to disclose to the Contractor, in writing, whether as of the
time of award of the subcontract, the subcontractor, or its
principals, is or is not debarred, suspended, or proposed for
debarment by the Federal Government.

(c) A corporate officer or designee of the Contractor shall notify the
Contracting Officer, in writing, before entering into a subcontract
with a party that is debarred, suspended or proposed for debarment
(See FAR 9.404 for information on the List of Parties Excluded from
Procurement Programs). The notice must include the following:

INITIALS:________ & ___________ 28
LESSOR GOVERNMENT

<PAGE>

(1) The name of the subcontractor;

(2) The Contractor's knowledge of the reasons for the subcontractor
being on the List of Parties Excluded from Procurement Programs;

(3) The compelling reason(s) for doing business with the
subcontractor notwithstanding its inclusion on the List of
Parties Excluded from Procurement Programs;

(4) The systems and procedures the Contractor has established to
ensure that it is fully protecting the Government's interests
when dealing with such subcontractor in view of the specific
basis for the party's debarment, suspension, or proposed
debarment.

44. 52.215-24 - SUBCONTRACTOR COST OR PRICING DATA (DEC 1991)

(Applies when the clause 52.215-22 is applicable.)

(a) Before awarding any subcontract expected to exceed $100,000, or for
the Department of Defense, the National Aeronautics and Space
Administration and the Coast Guard, expected to exceed $500,000, when
entered into, or before pricing any subcontract modification involving
a pricing adjustment expected to exceed $100,000, or for the
Department of Defense, the National Aeronautics and Space
Administration and the Coast Guard, expected to exceed $500,000, the
Contractor shall require the subcontractor to submit cost or pricing
data (actually or by specific identification in writing), unless the
price is--

(1) Based on adequate price competition;

(2) Based on established catalog or market prices of commercial items
sold in substantial quantities to the general public; or

(3) Set by law or regulation.

(b) The Contractor shall require the subcontractor to certify in
substantially the form prescribed in subsection 15.804-4 of the
Federal Acquisition Regulation (FAR) that, to the best of its
knowledge and belief, the data submitted under paragraph (a) of this
clause were accurate, complete, and current as of the date of
agreement on the negotiated price of the subcontract or subcontract
modification.

(c) In each subcontract that exceeds $100,000, or for the Department of
Defense, the National Aeronautics and Space Administration, and the
Coast Guard, expected to exceed $500,000, when entered into, the
Contractor shall insert either--

(1) The substance of this clause, including this paragraph (c), if
paragraph (a) above requires submission of cost or pricing data
for the subcontract; or

(2) The substance of the clause at at 52.215-25, Subcontractor Cost
or Pricing Data--Modifications.

45. 52.219-8 - UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED
BUSINESS CONCERNS (FEB 1990)

(Applicable to leases which exceed $25,000.)

(a) It is the policy of the United States that small business concerns and
small business concerns owned and controlled by socially and
economically disadvantaged individuals

INITIALS:________ & ___________ 29
LESSOR GOVERNMENT

<PAGE>

shall have the maximum practicable opportunity to participate in
performing contracts let by any Federal agency, including contracts
and subcontracts for subsystems, assemblies, components, and related
services for major systems. It is further the policy of the United
States that its prime contractors establish procedures to ensure the
timely payment of amounts due pursuant to the terms of their
subcontracts with small business concerns and small business concerns
owned and controlled by socially and economically disadvantaged
individuals.

(b) The Contractor hereby agrees to carry out this policy in the awarding
of subcontracts to the fullest extent consistent with efficient
contract performance. The Contractor further agrees to cooperate in
any studies or surveys as may be conducted by the United States Small
Business Administration or the awarding agency of the United States as
may be necessary to determine the extent of the Contractor's
compliance with this clause.

(c) As used in this contract, the term "small business concern" shall mean
a small business as defined pursuant to section 3 of the Small
Business Act and relevant regulations promulgated pursuant thereto.
The term "small business concern owned and controlled by socially and
economically disadvantaged individuals" shall mean a small business
concern (1) which is at least 51 percent unconditionally owned by one
or more socially and economically disadvantaged individuals; or, in
the case of any publicly owned business, at least 51 per centum of the
stock of which is unconditionally owned by one or more socially and
economically disadvantaged individuals; and (2) whose management and
daily business operations are controlled by one or more of such
individuals. This term also means a small business concern that is at
least 51 percent unconditionally owned by an economically
disadvantaged Indian tribe or Native Hawaiian Organization, or a
publicly owned business having at least 51 percent of its stock
unconditionally owned by one of these entities which has its
management and daily business controlled by members of an economically
disadvantaged Indian tribe or Native Hawaiian Organization, and which
meets the requirements of 13 CFR 124. The Contractor shall presume
that socially and economically disadvantaged individuals include Black
Americans, Hispanic Americans, Native Americans, Asian-Pacific
Americans, Subcontinent Asian Americans, and other minorities, or any
other individual found to be disadvantaged by the Administration
pursuant to section 8(a) of the Small Business Act. The Contractor
shall presume that socially and economically disadvantaged entities
also include Indian Tribes and Native Hawaiian Organizations.

(d) Contractors acting in good faith may rely on written representations
by their subcontractors regarding their status as either a small
business concern or a small business concern owned and controlled by
socially and economically disadvantaged individuals.

46. 52.219-9 - SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING
PLAN (JAN 1991)

(Applicable to leases which exceed $500,000.)

This clause incorporates the clause at FAR 52.219-9 by reference. It has
the same force and effect as if it were included in full text. Upon
request, the contracting officer will make the full text available.

INITIALS:________ & ___________ 30
LESSOR GOVERNMENT

<PAGE>

47. 52.219-16 - LIQUIDATED DAMAGES--SMALL BUSINESS SUBCONTRACTING PLAN
(VARIATION) (AUG 1989).

(Applicable to leases which exceed $500,000)

(a) "Failure to make a good faith effort to comply with the subcontracting
plan," as used in this clause, means a willful or intentional failure
to perform in accordance with the requirements of the subcontracting
plan approved under the clause in this contract entitled "Small
Business and Small Disadvantaged Business Subcontracting Plan," or
willful or intentional action to frustrate the plan.

(b) If, at contract completion, or in the case of a commercial products
plans, at the close of the fiscal year for which the plan is
applicable, the Contractor has failed to meet its subcontracting goals
and the Contracting Officer decides in accordance with paragraph (c)
of this clause that the Contractor failed to make a good faith effort
to comply with its subcontracting plan, established in accordance with
the clause in this contract entitled Small and Small Disadvantaged
Business Subcontracting Plans, the Contractor shall pay the Government
liquidated damages in an amount stated. The amount of damages
attributable to the Contractor's failure to comply shall be an amount
equal to the actual dollar amount by which the Contractor failed to
achieve each subcontract goal or, in the case of a commercial products
plan, that portion of the dollar amount allocable to Government
contracts by which the Contractor failed to achieve each subcontract
goal.

(c) Before the Contracting Officer makes a final decision that the
Contractor has failed to make such good faith effort, the Contracting
Officer shall give the Contractor written notice specifying the
failure and permitting the contractor to demonstrate what good faith
efforts have been made. Failure to respond to the notice may be taken
as an admission that no valid explanation exists. If, after
consideration of all pertinent data, the Contracting Officer finds
that the Contractor failed to make a good faith effort to comply with
the subcontracting plan, the Contracting Officer shall issue a final
decision to that effect and require that the contractor pay the
Government liquidated damages as provided in paragraph (b) of this
clause.

(d) The Contractor shall have right of appeal, under the clause in this
contract entitled Disputes, from any final decision of the Contracting
Officer.

(e) Liquidated damages shall be in addition to any other remedies that the
Government may have.

48. 52.219-13 - UTILIZATION OF WOMEN-OWNED SMALL BUSINESSES (AUG 1986)

(a) "Women-owned small businesses," as used in this clause, means
businesses that are at least 51 percent owned by women who are United
States citizens and who also control and operate the business.

"Control," as used in this clause, means exercising the power to make
policy decisions.

"Operate," as used in this clause, means being actively involved in
the day-to-day management of the business.

INITIALS:________ & ___________ 31
LESSOR GOVERNMENT

<PAGE>

"Small business concern," as used in this clause, means a concern
including its affiliates, that is independently owned and operated,
not dominant in the field of operation in which it is bidding on
Government contracts, and qualified as a small business under the
criteria and size standards in 13 CFR 121.

(b) It is the policy of the United States that women-owned small
businesses shall have the maximum practicable opportunity to
participate in performing contracts awarded by any Federal agency.

(c) The Contractor agrees to use its best efforts to give women-owned
small businesses the maximum practicable opportunity to participate in
the subcontracts it awards to the fullest extent consistent with the
efficient performance of its contract.

(d) The Contractor may rely on written representations by its
subcontractors regarding their status as women-owned small businesses.

INITIALS:________ & ___________ 32
LESSOR GOVERNMENT

<PAGE>

ADDENDUM TO GENERAL CLAUSES

PART ONE - GENERAL CLAUSES:

The Government has received requests to modify some of its General Clauses.
Some of the requested changes have been considered because some offerors
indicated that these changes would enable them to obtain better financing
through which a lower rental rate could be offered to the Government.

At this time the Government would like to further consider this issue to assess
the financial impact of it. Therefore, best and final offers are requested to
also contain a rental rate structured on the following potential General Clause
modifications. Owners and/or their agents should submit an alternative GSA form
1364 to reflect a revised offer based on the General Clauses modifications
contained in this Amendment. Block 20 should indicate that the alternate offer
is based on these modifications.

Although the financial evaluation portion of all offerors will not be based on
the additional rental rate as requested above, if there is a financial impact in
the event the Government decided to allow the modifications to the General
Clauses contained herein, owners and/or their agents are requested to submit an
additional rental rate structured on these modifications contained herein. If
there is no financial impact, an alternate GSA Form 1364 is not required, but
offerors must state that there is no impact in their offer. If the Government
determines that the reduced rental rate the winning offeror submits justifies
the various risks assumed in allowing the modifications contained in this
amendment to the General Clauses, the Government reserves the right to accept
the offer of the prevailing offeror with the modifications allowed.

The following Modifications to the General Clauses are proposed:

1. General Clause 2. 552.270-11 - Subletting and Assignment

The Government may assign the lease or sublet any part of the premises, but
shall not be relieved of any obligation under this lease by reason of any such
assignment or subletting.

INITIALS:________ & ___________ 33
LESSOR GOVERNMENT

<PAGE>

EXHIBIT 12.1 - RATIO OF EARNINGS TO FIXED CHARGES

PERIOD ENDED OCTOBER 31, 1996

Castle Rock Ranch
BFC Guaranty Public Improvements
Corp. Authority
----- ---------

Net Income (Loss) 220,534 (2,262,476)
Income Taxes 113,609 0
Fixed Charges 0 2,481,787
---------
Earnings 334,143 219,311
------- ---------
Fixed Charges
Amortization of Bond Issue Costs 0 123,172
Interest Expense 0 2,358,615
Total Fixed Charges 0 2,481,787
---------

Ratio of Earnings To Fixed Charges 0 8.84%
---------

Castle Rock Ranch Public Improvements Authority's earnings are inadequate to
cover fixed charges. The total deficiency is $2,262,476. The deficiency will
be covered by the debt service reserve of $7,792,040 as of October 31, 1996.

<PAGE>

CONSENT OF JOSEPH DECOSIMO AND COMPANY, LLP

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of BFC Guaranty Corp.
and Castle Rock Ranch Public Improvements Authority, respectively, for the
registration and guarantee of $66,975,000 par value of Public Facilities Revenue
Bonds, Series 1996B, and to the inclusion herein of our reports dated November
19, 1996, except for the subsequent events notes as to which the date is
December 13, 1996, with respect to the financial statements of BFC Guaranty
Corp. and Castle Rock Ranch Public Improvements Authority for the period from
March 29, 1996 to October 31, 1996, filed with the Securities and Exchange
Commission.

/s/ JOSEPH DECOSIMO AND COMPANY, LLP
-------------------------------------
Joseph DeCosimo and Company
A Tennessee Registered Limited
Liability Partnership

Chattanooga, Tennessee
February 24, 1997