diff --git a/idea/src/org/jetbrains/jet/codegen/ExpressionCodegen.java b/idea/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
index 378ae4dc240..161cb49a81d 100644
--- a/idea/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
+++ b/idea/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
@@ -1,10 +1,8 @@
 package org.jetbrains.jet.codegen;
 
-import gnu.trove.TObjectIntHashMap;
 import org.jetbrains.jet.lang.psi.*;
 import org.jetbrains.jet.lang.resolve.BindingContext;
 import org.jetbrains.jet.lang.types.DeclarationDescriptor;
-import org.jetbrains.jet.lang.types.ValueParameterDescriptor;
 import org.objectweb.asm.Label;
 import org.objectweb.asm.MethodVisitor;
 import org.objectweb.asm.Opcodes;
@@ -22,11 +20,11 @@ public class ExpressionCodegen extends JetVisitor {
     private final Stack<Label> myLoopEnds = new Stack<Label>();
 
     private final InstructionAdapter v;
-    private final TObjectIntHashMap<JetProperty> myVarIndex = new TObjectIntHashMap<JetProperty>();
-    private       int myMaxVarIndex = 0;
+    private final FrameMap myMap;
     private final BindingContext bindingContext;
 
-    public ExpressionCodegen(MethodVisitor v, BindingContext bindingContext) {
+    public ExpressionCodegen(MethodVisitor v, BindingContext bindingContext, FrameMap myMap) {
+        this.myMap = myMap;
         this.v = new InstructionAdapter(v);
         this.bindingContext = bindingContext;
     }
@@ -214,7 +212,7 @@ public class ExpressionCodegen extends JetVisitor {
         List<JetElement> statements = expression.getStatements();
         for (JetElement statement : statements) {
             if (statement instanceof JetProperty) {
-                myVarIndex.put((JetProperty) statement, myMaxVarIndex++);
+                myMap.enter(bindingContext.getPropertyDescriptor((JetProperty) statement));
             }
         }
 
@@ -228,9 +226,8 @@ public class ExpressionCodegen extends JetVisitor {
         for (JetElement statement : statements) {
             if (statement instanceof JetProperty) {
                 JetProperty var = (JetProperty) statement;
-                int index = myVarIndex.remove(var);
+                int index = myMap.leave(bindingContext.getPropertyDescriptor(var));
                 v.visitLocalVariable(var.getName(), getType(var).getDescriptor(), null, blockStart, blockEnd, index);
-                myMaxVarIndex--;
             }
         }
 
@@ -251,15 +248,43 @@ public class ExpressionCodegen extends JetVisitor {
     @Override
     public void visitReferenceExpression(JetReferenceExpression expression) {
         final DeclarationDescriptor descriptor = bindingContext.resolveReferenceExpression(expression);
-        if (descriptor instanceof ValueParameterDescriptor) {
-            final int index = ((ValueParameterDescriptor) descriptor).getIndex();
-            v.visitVarInsn(Opcodes.ALOAD, index);  // TODO +1 for non-static methods
+        int index = myMap.getIndex(descriptor);
+        if (index >= 0) {
+            v.visitVarInsn(Opcodes.ALOAD, index);
         }
         else {
             throw new UnsupportedOperationException("don't know how to generate reference " + descriptor);
         }
     }
 
+/*
+    @Override
+    public void visitCallExpression(JetCallExpression expression) {
+        List<JetArgument> args = expression.getValueArguments();
+        for (JetArgument arg : args) {
+            gen(arg.getArgumentExpression());
+        }
+
+        JetExpression callee = expression.getCalleeExpression();
+
+        if (callee instanceof JetReferenceExpression) {
+            DeclarationDescriptor funDescriptor = bindingContext.resolveReferenceExpression((JetReferenceExpression) callee);
+            if (funDescriptor instanceof FunctionDescriptor) {
+            }
+            else {
+                throw new CompilationException();
+            }
+        }
+        else {
+            throw new UnsupportedOperationException("Don't know how to generate a call");
+        }
+    }
+
+    @Override
+    public void visitBinaryExpression(JetBinaryExpression expression) {
+    }
+*/
+
     private Type getType(JetProperty var) {
         return InstructionAdapter.OBJECT_TYPE;  // TODO:
     }
@@ -270,7 +295,7 @@ public class ExpressionCodegen extends JetVisitor {
 
     @Override
     public void visitProperty(JetProperty property) {
-        int index = myVarIndex.get(property);
+        int index = myMap.getIndex(bindingContext.getPropertyDescriptor(property));
 
         assert index >= 0;
 
diff --git a/idea/src/org/jetbrains/jet/codegen/FrameMap.java b/idea/src/org/jetbrains/jet/codegen/FrameMap.java
new file mode 100644
index 00000000000..9ac3e6bd522
--- /dev/null
+++ b/idea/src/org/jetbrains/jet/codegen/FrameMap.java
@@ -0,0 +1,26 @@
+package org.jetbrains.jet.codegen;
+
+import gnu.trove.TObjectIntHashMap;
+import org.jetbrains.jet.lang.types.DeclarationDescriptor;
+
+/**
+ * @author max
+ */
+public class FrameMap {
+    private final TObjectIntHashMap<DeclarationDescriptor> myVarIndex = new TObjectIntHashMap<DeclarationDescriptor>();
+    private int myMaxIndex = 0;
+
+    public void enter(DeclarationDescriptor descriptor) {
+        myVarIndex.put(descriptor, myMaxIndex++);
+    }
+
+    public int leave(DeclarationDescriptor descriptor) {
+        myMaxIndex--;
+        return myVarIndex.remove(descriptor);
+    }
+
+    public int getIndex(DeclarationDescriptor descriptor) {
+        return myVarIndex.get(descriptor);
+    }
+
+}
diff --git a/idea/src/org/jetbrains/jet/codegen/FunctionCodegen.java b/idea/src/org/jetbrains/jet/codegen/FunctionCodegen.java
index 63544a5c48b..e8e48901537 100644
--- a/idea/src/org/jetbrains/jet/codegen/FunctionCodegen.java
+++ b/idea/src/org/jetbrains/jet/codegen/FunctionCodegen.java
@@ -5,6 +5,7 @@ import org.jetbrains.jet.lang.resolve.BindingContext;
 import org.jetbrains.jet.lang.types.FunctionDescriptor;
 import org.jetbrains.jet.lang.types.JetStandardClasses;
 import org.jetbrains.jet.lang.types.JetStandardLibrary;
+import org.jetbrains.jet.lang.types.ValueParameterDescriptor;
 import org.objectweb.asm.ClassVisitor;
 import org.objectweb.asm.MethodVisitor;
 import org.objectweb.asm.Opcodes;
@@ -56,7 +57,15 @@ public class FunctionCodegen {
                 method.getName(), method.getDescriptor(), null, null);
         mv.visitCode();
         final JetExpression bodyExpression = f.getBodyExpression();
-        bodyExpression.accept(new ExpressionCodegen(mv, bindingContext));
+        FrameMap frameMap = new FrameMap();
+
+        List<ValueParameterDescriptor> parameDescrs = bindingContext.getFunctionDescriptor(f).getUnsubstitutedValueParameters();
+
+        for (ValueParameterDescriptor parameter : parameDescrs) {
+            frameMap.enter(parameter);
+        }
+
+        bodyExpression.accept(new ExpressionCodegen(mv, bindingContext, frameMap));
         generateReturn(mv, bodyExpression);
         mv.visitMaxs(0, 0);
         mv.visitEnd();
diff --git a/idea/testData/codegen/localProperty.jet b/idea/testData/codegen/localProperty.jet
new file mode 100644
index 00000000000..a40915d37b3
--- /dev/null
+++ b/idea/testData/codegen/localProperty.jet
@@ -0,0 +1,6 @@
+fun f(a:Int) : Int {
+   val x = 42
+   val y = 50
+
+   y
+}
diff --git a/idea/tests/org/jetbrains/jet/codegen/ExpressionGenTest.java b/idea/tests/org/jetbrains/jet/codegen/ExpressionGenTest.java
index 9173eb5216a..2696c92edbe 100644
--- a/idea/tests/org/jetbrains/jet/codegen/ExpressionGenTest.java
+++ b/idea/tests/org/jetbrains/jet/codegen/ExpressionGenTest.java
@@ -60,7 +60,7 @@ public class ExpressionGenTest extends LightDaemonAnalyzerTestCase {
         JetProperty p = PsiTreeUtil.getParentOfType(getFile().findElementAt(0), JetProperty.class);
 
         TraceMethodVisitor trace = new TraceMethodVisitor();
-        p.getInitializer().accept(new ExpressionCodegen(trace, null));
+        p.getInitializer().accept(new ExpressionCodegen(trace, null, new FrameMap()));
 
         StringWriter out = new StringWriter();
         trace.print(new PrintWriter(out));
diff --git a/idea/tests/org/jetbrains/jet/codegen/NamespaceGenTest.java b/idea/tests/org/jetbrains/jet/codegen/NamespaceGenTest.java
index 5f697925f6a..71f8604972b 100644
--- a/idea/tests/org/jetbrains/jet/codegen/NamespaceGenTest.java
+++ b/idea/tests/org/jetbrains/jet/codegen/NamespaceGenTest.java
@@ -1,8 +1,6 @@
 package org.jetbrains.jet.codegen;
 
 import com.intellij.testFramework.fixtures.LightCodeInsightFixtureTestCase;
-import org.jetbrains.jet.lang.ErrorHandler;
-import org.jetbrains.jet.lang.JetSemanticServices;
 import org.jetbrains.jet.lang.psi.JetFile;
 import org.jetbrains.jet.lang.psi.JetNamespace;
 import org.jetbrains.jet.parsing.JetParsingTest;
@@ -54,8 +52,19 @@ public class NamespaceGenTest extends LightCodeInsightFixtureTestCase {
 
         final Class aClass = generateToClass();
         final Method main = firstMethod(aClass);
-        final Object returnValue = main.invoke(null, 42);
-        assertEquals(new Integer(42), returnValue);
+        final Object returnValue = main.invoke(null, 50);
+        assertEquals(new Integer(50), returnValue);
+    }
+
+    public void testLocalPropery() throws Exception {
+        myFixture.configureByFile(JetParsingTest.getTestDataDir() + "/codegen/localProperty.jet");
+        final String text = generateToText();
+        System.out.println(text);
+
+        final Class aClass = generateToClass();
+        final Method main = firstMethod(aClass);
+        final Object returnValue = main.invoke(null, 76);
+        assertEquals(new Integer(50), returnValue);
     }
 
     private String generateToText() {