<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATINO EXTRACTED
FROM SIERRA PACIFIC DEVELOPMENT FUND III SEPTEMBER 30, 1996 FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
       
                             
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               SEP-30-1996
<CASH>                                           9,523
<SECURITIES>                                         0
<RECEIVABLES>                                  142,909
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               157,108
<PP&E>                                      10,125,812
<DEPRECIATION>                               4,284,744
<TOTAL-ASSETS>                               6,221,219
<CURRENT-LIABILITIES>                          576,466
<BONDS>                                      3,410,795
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             0
<OTHER-SE>                                     387,810
<TOTAL-LIABILITY-AND-EQUITY>                 6,221,219
<SALES>                                        523,377
<TOTAL-REVENUES>                               523,377
<CGS>                                                0
<TOTAL-COSTS>                                  388,328
<OTHER-EXPENSES>                               412,794
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                             204,206
<INCOME-PRETAX>                               (62,245)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                           (62,245)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (62,245)
<EPS-PRIMARY>                                   (1.70)
<EPS-DILUTED>                                   (1.70)