SECOND AMENDMENT TO OPERATING AGREEMENT
                       OF RED CANYON AT PALOMINO PARK LLC


     THIS SECOND AMENDMENT TO OPERATING AGREEMENT OF RED CANYON AT PALOMINO PARK
LLC (this "Second  Amendment") is made as of the 16th day of November,  1998, by
and between AL FELD, an individual ("Feld"), and WELLSFORD PARK HIGHLANDS CORP.,
a Colorado corporation ("WPHC").

                                    RECITALS

     A.  Feld  and  WPHC  constitute  all  of  the  members  (collectively,  the
"Members")  of Red Canyon at  Palomino  Park LLC, a Colorado  limited  liability
company (the "Company"),  which is governed by that certain Operating  Agreement
of Red Canyon at  Palomino  Park LLC dated as of April 17,  1996,  as amended by
that certain First Amendment to Operating  Agreement dated May 19, 1997, between
Feld and WPHC (collectively, the "Operating Agreement").

     B. The Members now desire to further amend the  Operating  Agreement as set
forth herein.

     C.  Capitalized   terms  not  otherwise   defined  herein  shall  have  the
definitions set forth in the Operating Agreement.

     NOW,  THEREFORE,  for and in  consideration of the above recitals and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Feld and WPHC hereby agree follows:

     1. The second  sentence of Section 1(bk) of the Operating  Agreement,  with
respect to the definition of Net Operating  Income, is hereby amended to read in
its entirety as follows:

Notwithstanding  the  foregoing,  in  connection  with  the  calculation  of the
Completion Fee and the Incentive  Fee, Net Operating  Income shall be determined
on an  accrual  basis for the  relevant  period  with the  following  additional
adjustments:  if  property  taxes do not fully  reflect  the  completion  of the
Project,  then the  property  taxes shall be increased to the amount of property
taxes that would have been assessed had the Project been  completed and included
in the  calculation  of the  property  taxes.  With respect to  calculating  the
Completion  Fee only,  such  fully-assessed  tax estimate  shall be applied on a
per-building basis beginning only upon receipt of a certificate of occupancy for
each building.



     2. 7.6 of the Operating  Agreement is hereby  renumbered as Section 7.7 and
the following is hereby inserted as a new Section 7.6:

     7.6 Completion  Fee. The Company shall pay Feld at Final Closing a fee (the
"Completion  Fee") equal to 100% of Net  Operating  Income for the period ending
with  Substantial  Completion,  less an amount equal to all interest  accrued or
paid on the  Construction  Loan from and after  the  earlier  of (i) the date on
which  Budgeted  Construction  Loan Interest is  exhausted,  or (ii) the Date of
Substantial Completion; provided, however, that in no event shall the Completion
Fee exceed $500,000.

     3.  Headings  and  Captions.  The  headings  and  captions  of this  Second
Amendment  are  inserted  for  convenience  only and are in no way  intended  to
describe, interpret, define, or limit the scope, extent or intent of this Second
Amendment,  the First  Amendment,  the Operating  Agreement,  or any  provisions
thereof.

     4. Full Force and Effect. The Operating Agreement,  as specifically amended
herein,  is hereby  ratified by the  Members and shall  remain in full force and
effect.

     5.  Counterparts.  This Second  Amendment  may be executed in any number of
counterparts,  each of which shall be deemed to be an original and all of which,
when taken  together,  shall  constitute  one  agreement  binding on the parties
hereto,  notwithstanding  that  all the  parties  may not have  signed  the same
counterpart. Signature pages from one counterpart may be removed and attached to
another counterpart to create one fully-executed document.

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     IN WITNESS  WHEREOF,  the parties  hereto,  being all of the Members of the
Company, have executed this Second Amendment as of the date first written above.


           /s/ Al Feld
           -----------------------------------------
           Al Feld


           WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation

            By: /s/ David M. Strong
                -----------------------------------------
                David M. Strong, Vice President