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**FORM 10-QSECURITIES AND EXCHANGE COMMISSION****WASHINGTON, D.C. 20549**

**Quarterly ReportUnder Section 13 or 15(d)of the Securities Exchange Act of 1934**

 

| **For Quarter ended**      | **June  30, 2001** |
|----------------------------|--------------------|
|                       | ****               |
| **Commission file number** | **0-14276**        |
|                       | ****               |

 

**SIERRA PACIFIC DEVELOPMENT FUNDIII**(A Limited Partnership)

 

| **State  of California**                                        | **33-0043953**                           |
|-----------------------------------------------------------------|------------------------------------------|
| ****                                                            | ****                                     |
| (State or other  jurisdiction of incorporation or organization) | (I.R.S. Employer  Identification Number) |

 

| **5850  San Felipe, Suite 450 Houston, Texas** | **77057**  |
|------------------------------------------------|------------|
| ****                                           | ****       |
| (Address of principal  executive offices)      | (Zip Code) |

 

| **(713)  706-6271**                                       |
|-----------------------------------------------------------|
| ****                                                      |
| Registrant’s telephone  number, including area code: |

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.  Yes ý . Noo.

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PARTI - FINANCIAL INFORMATION

| ITEM  1. | FINANCIAL  STATEMENTS |
|----------|-----------------------|

The following financial statements aresubmitted in the next pages:

|                                                                                                                                                 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Consolidated  Balance Sheets – June 30, 2001 and December 31, 2000                                                                              |   |
| Consolidated  Statements of Operations – For the Six Months Ended June 30, 2001 and for the  Three Months Ended June 30, 2001 and 2000          |   |
| Consolidated  Statements of Changes in Partners’ Equity – For the Year Ended December 31,  2000 and for the Six Months Ended June 30, 2001 |   |
| Consolidated  Statements of Cash Flows - For the Six Months Ended June 30, 2001 and 2000                                                             |   |
| Notes  to Consolidated Financial Statements                                                                                                          |   |

 

| ITEM  2. | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL |
|----------|---------------------------------------------------------|
|     | CONDITION  AND RESULTS OF OPERATIONS                    |

 

| (a) | OVERVIEW |
|-----|----------|

The following discussion should be readin conjunction with Sierra Pacific Development Fund III’s (the Partnership)Consolidated Financial Statements and Notes thereto appearing elsewhere in thisForm 10-Q.

The Partnership currently owns a 66.45%interest in the Sierra Vista Partnership, which operated the Sierra Vistaproperty (the Property). The Property was sold in October 1997.  The Partnership’s remaining real estateinvestment is an 18.72% minority interest in Sorrento I Partners (SIP), whichoperates the Sierra Sorrento I property. The Partnership records its interest in SIP as an investment inunconsolidated joint venture and accounts for such investment on the equitymethod.

| (b) | RESULTS  OF OPERATIONS |
|-----|------------------------|

No rental income has been generated sincethe sale of the Property in 1997.

Operating expenses for the six monthsended June 30, 2001 increased by approximately $8,000, or 58%, in comparison tothe corresponding period in the prior year, primarily due to an increase inaccounting and auditing costs.  Suchcosts accounted for the majority of all operating expenses for the six monthsended June 30, 2001 and 2000.  Nooperating expenses were incurred during the quarter ended June 30, 2001.

The Partnership’s share of loss from itsinvestment in SIP for the six months and three months ended June 30, 2001increased by approximately $6,000 and $4,000, respectively, when compared tothe same periods in 2000.  This increasein loss was primarily due to higher insurance and accounting and auditing costsincurred by SIP.

|  (c) | LIQUIDITY  AND CAPITAL RESOURCES |
|-----------|----------------------------------|

The Partnership’s primary capitalrequirements are for the continued development and operation of the SierraSorrento I property.  It is anticipatedthat these requirements will be funded from the operations of Sierra Sorrento Iand the Partnership’s joint venture partner, Sierra Mira Mesa Partners(SMMP).  As required, SMMP eitheradvances or contributes cash to meet these requirements.  SMMP has adequate resources to make thenecessary advances during the foreseeable future.  During the six months ended June 30, 2001, the Partnershipreceived contributions of $24,000 from SMMP. These proceeds were used to pay operating expenses incurred during theperiod.

Certain factors raise substantial doubtabout the Partnership’s ability to continue as a going concern.  As shown in the financial statements, thePartnership has no operating assets and its only remaining real estateinvestment is its minority interest in SIP. The other partner in SIP, SMMP, will receive preferential distributionsfrom SIP until its contributed capital is returned.  The Partnership does not anticipate receiving any cashdistributions from SIP in the near future. Management believes the Partnership will be able to obtain any cashneeded to fund future overhead expenditures from related parties until suchtime as the Partnership engages in new activities or a decision is made toliquidate the Partnership.  Thefinancial statements do not include any adjustments relating to therecoverability and classification of asset carrying amounts or the amount andclassification of liabilities that might result should the Partnership beunable to continue as a going concern.

Inflation:

The Partnership does not expect inflationto be a material factor in its operations in 2001.

 

*SIERRA PACIFIC DEVELOPMENT FUND III(A Limited Partnership)*

*CONSOLIDATEDBALANCE SHEETS**June30, 2001 and December 31, 2000*

----

 

|                                            | June  30, 2001                                           |     | December  31, 2000 |     |
|-------------------------------------------------|----------------------------------------------------------|----------|--------------------|----------|
|                                            | (Unaudited)                                              |     |               |     |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
|                                            |                                                     |     |               |     |
| ASSETS                                          |                                                     |     |               |     |
|                                            |                                                     |     |               |     |
| Cash and cash equivalents                       | $                                                        | 3,335    |               | $        | 1,100 |   |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
| Total Assets                                    | $                                                        | 3,335    |               | $        | 1,100 |   |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
|                                            |                                                     |     |               |     |
| LIABILITIES  AND PARTNERS' EQUITY               |                                                     |     |               |     |
|                                            |                                                     |     |               |     |
| Investment in  unconsolidated  joint venture    | $                                                        | 370,975  |               | $        | 357,312 |   |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
| Total Liabilities                               | 370,975                                                  |     | 357,312            |     |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
| Minority interest in  consolidatedjoint venture | 30,709                                                   |     | 14,011             |     |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
| Partners' equity  (deficit):                    |                                                     |     |               |     |
|                                            | General Partner                                          | (398,349 | )                  | (370,223 | ) |
|                                            | Limited Partners:                                        |     |               |     |   |
|                                            | 60,000 units authorized,   36,521 issued and outstanding | 0        |               | 0        |   |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
| Total Partners' equity  (deficit)               | (398,349                                                 | )        | (370,223           | )        |
|                                            |                                                          |     |                    |     |
|                                            |                                                     |     |               |     |
| Total Liabilities and  Partners' equity         | $                                                        | 3,335    |               | $        | 1,100 |   |
|                                            |                                                          |     |                    |     |
|                                                 |                                                          |          |                    |          |  |  |  |  |

*See Accompanying Notes*

 

*SIERRA PACIFIC DEVELOPMENT FUND III(A Limited Partnership)*

*CONSOLIDATEDSTATEMENTS OF OPERATIONS**Forthe Six Months Ended June 30, 2001 and 2000and for the Three Months Ended June 30, 2001 and 2000*

----

 

|                                                                      | Six  Months Ended June 30, |    | Three  Months Ended June 30, |   |
|---------------------------------------------------------------------------|---------------------------------|---------|-----------------------------------|--------|
|                                                                      |                            |    |
|                                                                      |                                 |    |                                   |   |
|                                                                      | 2001                            |    | 2000                              |   | 2001 |   | 2000 |   |
|                                                                      | (Unaudited)                     |    | (Unaudited)                       |   | (Unaudited) |   | (Unaudited) |   |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| REVENUES:                                                                 |                            |    |                              |   |   |   |   |   |
|                                                                      | Total revenues                  | $       | 0                                 |   | $ | 0 |   | $ | 0 |   | $ | 0 |   |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| EXPENSES:                                                                 |                            |    |                              |   |   |   |   |   |
|                                                                      | Operating expenses              | 21,765  |                              | 13,735 |   | 0 |   | 70 |   |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
|                                                                      | Total costs and expenses        | 21,765  |                              | 13,735 |   | 0 |   | 70 |   |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| LOSS  BEFORE PARTNERSHIP'S SHARE OF UNCONSOLIDATED JOINT VENTURE LOSS     |                            |    |                              |   |   |   |   |   |
| (21,765                                                                   | )                               | (13,735 | )                                 | 0      |   | (70 | ) |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| PARTNERSHIP'S  SHARE OF UNCONSOLIDATED JOINT VENTURE LOSS                 |                            |    |                              |   |   |   |   |   |
| (13,663                                                                   | )                               | (7,341  | )                                 | (4,725 | ) | (852 | ) |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| LOSS  BEFORE MINORITY INTEREST'S SHARE OF CONSOLIDATED JOINT VENTURE LOSS |                            |    |                              |   |   |   |   |   |
| (35,428                                                                   | )                               | (21,076 | )                                 | (4,725 | ) | (922 | ) |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| MINORITY  INTEREST'S SHARE OF CONSOLIDATED JOINT VENTURE LOSS             |                            |    |                              |   |   |   |   |   |
| 7,302                                                                     |                            | 4,582   |                              | 0      |   | 23 |   |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| NET LOSS                                                                  | $                               | (28,126 | )                                 | $      | (16,494 | ) | $ | (4,725 | ) | $ | (899 | ) |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                      |                            |    |                              |   |   |   |   |   |
| Net loss per limited partnership  unit                                    | $                               | 0       |                              | $      | 0 |   | $ | 0 |   | $ | 0 |   |
|                                                                      |                                 |    |                                   |   |  |   |  |   |
|                                                                           |                                 |         |                                   |        |  |  |  |  |  |  |  |  |  |  |

*See Accompanying Notes*

 

*SIERRA PACIFIC DEVELOPMENT FUND III(A Limited Partnership)*

*CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY(DEFICIT)**Forthe Year Ended December 31, 2000 andfor the Six Months Ended June 30, 2001*

----

 

|                                                      | Limited  Partners |       | General  Partner |      | Total Partners'Equity |       |
|-----------------------------------------------------------|-------------------|------------|------------------|-----------|----------------------------|------------|
|                                                      |              |       |             |
|                                                      |                   |       |             |      |
|                                                      | Per  Unit         |       | Total            |      |                       |       |
|                                                      |                   |       |                  |      |                            |       |  |   |
|                                                      |              |       |             |      |                       |       |   |   |
| Proceeds from sale ofpartnership units                    |              |       |             |      |                       |       |   |   |
| $                                                         | 250.00            |       | $                | 9,222,500 |                       |       |   | $ | 9,222,500 |   |
| Underwriting  commissionsand other organization expenses  |              |       |             |      |                       |       |   |   |
| (37.00                                                    | )                 | (1,364,985 | )                |      |                       | (1,364,985 | ) |
| Repurchase of 369  partnership units                      | (0.18             | )          | (85,005          | )         |                       |       | (85,005 | ) |
| Cumulative net loss(to December 31, 1999)                 |              |       |             |      |                       |       |   |   |
| (201.63                                                   | )                 | (7,363,663 | )                | $         | (322,886                   | )          | (7,686,549 | ) |
| Cumulative  distributions(to December 31, 1999)           |              |       |             |      |                       |       |   |   |
| (11.19                                                    | )                 | (408,847   | )                | (21,522   | )                          | (430,369   | ) |
|                                                      |                   |       |                  |      |                            |       |  |   |
|                                                      |              |       |             |      |                       |       |   |   |
| Partners' equity  (deficit) - January 1, 2000             | 0                 |       | 0                |      | (344,408                   | )          | (344,408 | ) |
| Net loss                                                  | 0                 |       | 0                |      | (25,815                    | )          | (25,815 | ) |
|                                                      |                   |       |                  |      |                            |       |  |   |
|                                                      |              |       |             |      |                       |       |   |   |
| Partners' equity  (deficit) - December 31, 2000 (audited) | 0                 |       | 0                |      | (370,223                   | )          | (370,223 | ) |
| Net loss (unaudited)                                      | 0                 |       | 0                |      | (28,126                    | )          | (28,126 | ) |
|                                                      |                   |       |                  |      |                            |       |  |   |
|                                                      |              |       |             |      |                       |       |   |   |
| Partners' equity  (deficit) - June 30, 2001 (unaudited)   | $                 | 0          |             | $         | 0                          |       | $ | (398,349 | ) | $ | (398,349 | ) |
|                                                      |                   |       |                  |      |                            |       |  |   |

*See Accompanying Notes*

 

*SIERRA PACIFIC DEVELOPMENT FUND III(A Limited Partnership)*

*CONSOLIDATEDSTATEMENTS OF CASH FLOWS**Forthe Six Months Ended June 30, 2001 and 2000*

----

 

|                                                 | 2001                                                                      |    | 2000        |    |
|------------------------------------------------------|---------------------------------------------------------------------------|---------|-------------|---------|
|                                                 | (Unaudited)                                                               |    | (Unaudited) |    |
|                                                 |                                                                           |    |             |    |
| CASH FLOWS FROM  OPERATING ACTIVITIES:               |                                                                      |    |        |    |
|                                                 | Net loss                                                                  | $       | (28,126     | )       | $ | (16,494 | ) |
|                                                 | Adjustments to reconcile net loss   to cash used in operating activities: |    |        |    |   |
|                                                 | Partnership's share of unconsolidated   joint venture loss                | 13,663  |        | 7,341   |   |
|                                                 | Minority interest's share of consolidated   joint venture loss            | (7,302  | )           | (4,582  | ) |
|                                                 |                                                                           |    |             |    |
|                                                 |                                                                      |    |        |    |
|                                                 | Net cash used in operating activities                                     | (21,765 | )           | (13,735 | ) |
|                                                 |                                                                           |    |             |    |
|                                                 |                                                                      |    |        |    |
| CASH FLOWS FROM  FINANCING ACTIVITIES:               |                                                                      |    |        |    |
|                                                 | Contributions from minority partner                                       | 24,000  |        | 20,000  |   |
|                                                 | Distributions to minority partner                                         | 0       |        | (8,943  | ) |
|                                                 |                                                                           |    |             |    |
|                                                 |                                                                      |    |        |    |
|                                                 | Net cash provided by financing activities                                 | 24,000  |        | 11,057  |   |
|                                                 |                                                                           |    |             |    |
|                                                 |                                                                      |    |        |    |
| NET INCREASE  (DECREASE) IN CASHAND CASH EQUIVALENTS | 2,235                                                                     |    | (2,678      | )       |
|                                                 |                                                                      |    |        |    |
| CASH AND CASH  EQUIVALENTS                           |                                                                      |    |        |    |
|                                                 | Beginning of period                                                       | 1,100   |        | 3,722   |   |
|                                                 |                                                                           |    |             |    |
|                                                 |                                                                      |    |        |    |
| CASH AND CASH  EQUIVALENTS                           |                                                                      |    |        |    |
|                                                 | End of period                                                             | $       | 3,335       |    | $ | 1,044 |   |
|                                                 |                                                                           |    |             |    |
|                                                      |                                                                           |         |             |         |  |  |  |  |

*See Accompanying Notes*

 

SIERRAPACIFIC DEVELOPMENT FUND III AND SUBSIDIARY(A Limited Partnership)

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

----

1.          ORGANIZATION

In April 1993, Sierra Pacific DevelopmentFund III (the Partnership) created a general partnership (Sorrento I Partners(SIP)) with Sierra Mira Mesa Partners (SMMP) to facilitate cash contributionsby SMMP for the continued development and operation of the Sierra Sorrento Iproperty.  In February 1994, thePartnership formed a joint venture with SMMP known as Sierra Vista Partners(SVP) to facilitate cash contributions by SMMP for the continued developmentand operation of the Sierra Vista property.

The Partnership Agreements of SIP and SVP(the Agreements) were amended effective January 1, 1995 to consider bothcontributions and distributions when calculating each partner’s percentageinterest at January 1 of each year as called for by the Agreements.  Accordingly, on January 1, 2001, thePartnership’s interest in SIP was increased from 16.76% to 18.72% and thePartnership’s interest in SVP was decreased from 66.64% to 66.45% to reflect2000 contributions and distributions.

In October 1997, the Sierra Vistaproperty was sold for $5,630,000.  ThePartnership received cash proceeds of $2,141,000 from the sale, and thepurchaser assumed the Partnership’s debt on the property.  In accordance with the joint-ventureagreement, these proceeds were distributed to SMMP.  Under the terms of the agreement, SMMP receives preferential cashdistributions of available Distributable Funds (as defined) from the sale ofthe property to the extent of its capital contributions.  SMMP had made net contributions of$3,335,000 to the Partnership through the sale date.

The Partnership’s remaining real estateinvestment is a 18.72% minority interest in SIP.  Because the Partnership owns less than 50% of this entity, itrecords its interest in SIP as an investment in an unconsolidated joint ventureusing the equity method of accounting.

Certain factors raise substantial doubtabout the Partnership’s ability to continue as a going concern.  As shown in the financial statements, thePartnership has no operating assets and its only remaining real estateinvestment is its minority interest in SIP. The other partner in SIP, SMMP, will receive preferential distributionsfrom SIP until its contributed capital is returned.  The Partnership does not anticipate receiving any cashdistributions from SIP in the near future. Management believes the Partnership will be able to obtain any cashneeded to fund future overhead expenditures from related parties until suchtime as the Partnership engages in new activities or a decision is made toliquidate the  Partnership.   The financial  statements do notinclude any adjustments relating to the recoverability and classification ofasset carrying amounts or the amount and classification of liabilities thatmight result should the Partnership be unable to continue as a going concern.

2.          BASISOF FINANCIAL STATEMENTS

The accompanying unaudited consolidatedcondensed financial statements include the accounts of the Partnership and SVP,a majority-owned joint venture as of June 30, 2001.  All significant intercompany balances and transactions have beeneliminated in consolidation.

In the opinion of the Partnership’smanagement, these unaudited financial statements reflect all adjustmentsnecessary for a fair presentation of its financial position at June 30, 2001and results of operations and cash flows for the periods presented.  All adjustments included in these statementsare of a normal and recurring nature. These financial statements should be read in conjunction with thefinancial statements and notes thereto contained in the Annual Report of thePartnership for the year ended December 31, 2000.

3.          INVESTMENTIN UNCONSOLIDATED JOINT VENTURE

SIP was formed on April 1, 1993 betweenthe Partnership and SMMP, an affiliate, to develop and operate the SierraSorrento I property, an industrial building located in San Diego,California.  At June 30, 2001, thePartnership has an 18.72% equity interest in SIP.  This investment is accounted for using the equity method.

Summarized income statement informationfor SIP for the six months ended June 30, 2001 and 2000 is as follows:

|               | June  30 |    |
|--------------------|----------|---------|
|               |          |    |
|               | 2001     |    | 2000 |   |
|               |          |    |  |   |
| Rental income      | $        | 141,818 |   | $ | 155,262 |   |
| Total revenue      | 141,818  |    | 155,262 |   |
| Operating expenses | 79,952   |    | 60,477 |   |
| Net loss           | 72,984   |    | 43,804 |   |
|                    |          |         |  |  |  |  |

4.          RELATEDPARTY TRANSACTIONS

On April 16, 2001, the combined financialstatements of the parent of the general partner and other affiliates, includingthe general partner, (the Company) were issued.  The independent public accountants report on such statementscontained an explanatory paragraph relating to the ability of the Company tocontinue as a going concern.  TheCompany experienced losses in the periods presented and has a net capitaldeficiency.  Certain entities in thecombined financial statements have not made debt payments when due and variouslenders placed $10,520,000 of debt in default. Certain entities also needed to pay or refinance a significant amount ofdebt coming due in the next twelve months. These factors raise substantial doubt about the ability of the combinedentities to continue as a going concern.

Management of the Company has plansrelated to these matters, which include, in addition to those items discussedabove, obtaining additional loans from shareholders, obtaining extensions fromlenders or refinancing all debts through the completion of the transactiondiscussed in Note 6.  In addition, ifnecessary, management believes it could sell properties to generate cash to paydebt.  The Partnership does not believethat the effect of the ultimate outcome of the circumstances surrounding theCompany will have a material adverse effect on its results of operations orfinancial position.

5.          PARTNERS’EQUITY (DEFICIT)

Equity and net loss per limitedpartnership unit is determined by dividing the limited partner’s share of thePartnership’s equity and net loss by the number of limited partnership unitsoutstanding, 36,521.

6.          PENDINGTRANSACTION

CGS Real Estate Company, Inc. (CGS), anaffiliate of the corporate general partner of the Partnership, is continuingthe development of a plan which will combine the property owned by SIP with theproperties of other real estate partnerships managed by CGS and its affiliates.These limited partnerships own office properties, industrial properties,shopping centers and residential apartment properties.  It is expected that the acquiror, AmericanSpectrum Realty, Inc. (ASR), would qualify in the future as a real estateinvestment trust.  Limited partnerswould receive shares of common stock in ASR, which would be listed on anational securities exchange.

The Partnership’s participation in thisplan will require the consent of its limited partners.  ASR filed a registration statement on FormS-4 August 14, 2000 relating to the solicitation of consents with theSecurities and Exchange Commission (SEC). The registration statement was amended February 14, 2001, April 24,2001, June 26, 2001, and August 7, 2001 and was declared effective by the SECon August 8, 2001.  The plan and thebenefits and risks thereof were described in detail in the finalprospectus/consent solicitation statement included in the registrationstatement filed under the Securities Act of 1933 at the time it was declaredeffective by the SEC.  Solicitationmaterials will be provided to limited partners in connection with thesolicitation of the consent of the limited partners.  There can be no assurances that the plan described above will beconsummated.

7.          RECENTACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial AccountingStandards Board issued SFAS No. 133, “Accounting for Derivative Instruments andHedging Activities”. SFAS No. 133 requires a company to recognize allderivative instruments (including certain derivative instruments embedded inother contracts) as assets or liabilities in its balance sheet and measure themat fair value.  The statement requiresthat changes in the derivative’s fair value be recognized currently in earningsunless specific hedge accounting criteria are met.  SFAS No. 133, as amended, is effective for fiscal years beginningafter June 15, 2000.  The Partnershiphas evaluated SFAS No. 133 and the impact on existing accounting policies andfinancial reporting disclosures.  ThePartnership believes the adoption of SFAS No. 133 will not have a materialeffect on its financial statements.

 

PARTII  - OTHER INFORMATION

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)         Exhibits

             None

(b)        Reportson Form 8-K

             None

SIGNATURES

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report besigned on its behalf by the undersigned thereunto duly authorized.

 

|   |             |   | SIERRA  PACIFIC DEVELOPMENT FUND III   a Limited Partnership   S-P PROPERTIES, INC.   General Partner |
|--------|------------------|--------|-------------------------------------------------------------------------------------------------------|
| Date:  | August  13, 2001 |   | */s/  Thomas N. Thurber*                                                                              |
|   |             |   | **                                                                                                    |
|   |             |   | Thomas  N. Thurber   President and Director                                                           |
|   |             |   |                                                                                                  |
|   |             |   |                                                                                                  |
|   |             |   |                                                                                                  |
| Date:  | August  13, 2001 |   | */s/  G. Anthony Eppolito*                                                                            |
|   |             |   | **                                                                                                    |
|   |             |   | G.  Anthony Eppolito   Chief Accountant                                                               |
|   |             |   |                                                                                                  |