UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-KSB

(Mark One)

[X]

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended December 31, 2007



[ ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from _________to _________



Commission file number 0-10435



CENTURY PROPERTIES FUND XVI

(Name of small business issuer in its charter)



|                                |                    
|------------------------------- | -------------------
|California                      | 94-2704651         
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)



55 Beattie Place, PO Box 1089

Greenville, South Carolina 29602

(Address of principal executive offices)



Issuer's telephone number    (864) 239-1000



Securities registered under Section 12(b) of the Exchange Act:



None



Securities registered under Section 12(g) of the Exchange Act:



Limited Partnership Units

(Title of class)



Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [ ]



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 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. YesX No___



Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]  No [X]



State issuer's revenues for its most recent fiscal year.  $2,163,000



State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of December 31, 2007.  No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined.



DOCUMENTS INCORPORATED BY REFERENCE

None



Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]













FORWARD-LOOKING STATEMENTS



The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements in certain circumstances. Certain information included in this Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of redevelopments, the Partnerships future financial performance, including the Partnerships ability to maintain current or meet projected occupancy and rent levels, and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and, in addition, will be affected by a variety of risks and factors that are beyond the Partnerships control including, without limitation: natural disasters such as hurricanes; national and local economic conditions; the general level of interest rates; energy costs; the terms of governmental regulations that affect the Partnerships property and interpretations of those regulations; the competitive environment in which the Partnership operates; financing risks, including the risk that the Partnerships cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets; insurance risks; development risks; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Partnership. Readers should carefully review the Partnerships consolidated financial statements and the notes thereto, as well as the section entitled Risk Factors described in Item 1 of this Annual Report and the other documents the Partnership files from time to time with the Securities and Exchange Commission.



PART I



Item 1.

Description of Business



Century Properties Fund XVI (the "Partnership" or the "Registrant") was organized in December 1980 as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Capital Management Corporation (the "Managing General Partner" or "FCMC"), a California corporation, and Fox Realty Investors ("FRI or the "Non-Managing General Partner"), a California general partnership, are the general partners of the Partnership. NPI Equity Investments II Inc., a Florida corporation ("NPI Equity"), is the managing partner of FRI. Both FCMC and NPI Equity are subsidiaries of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The partnership agreement provides that the Partnership is to terminate on December 31, 2025 unless terminated prior to such date.



Beginning in August 1981 through April 1982, the Partnership offered and sold 130,000 Limited Partnership Units for an aggregate of $65,000,000. The net proceeds of this offering were used to acquire ten income-producing real estate properties. The Partnership's original property portfolio was geographically diversified with properties acquired in six states. The Partnership's acquisition activities were completed in 1983, and since then, the principal activity of the Partnership has been managing its portfolio. During the period from 1986 through 1991, eight multi-family residential properties were either sold or otherwise disposed. During 2004, one multi-family residential property was sold. The Partnership continues to own and operate one of its originally acquired properties. See "Item 2. Description of Property."



The Partnership has no full time employees. The Managing General Partner is vested with full authority as to the general management and supervision of the business and affairs of the Partnership.  The Non-Managing General Partner and the limited partners have no right to participate in the management or conduct of such business and affairs. An affiliate of the Managing General Partner provides day-to-day property management services to the Partnership's investment property.



Risk Factors



The risk factors noted in this section and other factors noted throughout this Report describe certain risks and uncertainties that could cause the Partnerships actual results to differ materially from those contained in any forward-looking statement.



Failure to generate sufficient net operating income may limit the Partnerships ability to pay distributions.



The Partnerships ability to make distributions to its investors depends on its ability to generate net operating income in excess of required debt payments and capital expenditure requirements. Net operating income may be adversely affected by events or conditions beyond the Partnerships control, including:



·

the general economic climate;

·

competition from other apartment communities and other housing options;

·

local conditions, such as loss of jobs or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates;

·

changes in governmental regulations and the related cost of compliance;

·

increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents;

·

changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing; and

·

changes in interest rates and the availability of financing.



The Partnerships existing and future debt financing could render it unable to operate, result in foreclosure on its property or prevent it from making distributions on its equity.



The Partnerships strategy is generally to incur debt to increase the return on its equity while maintaining acceptable interest coverage ratios. Payments of principal and interest may leave the Partnership with insufficient cash resources to operate its property or pay distributions.  The Partnership is also subject to the risk that its cash flow from operations will be insufficient to make required payments of principal and interest, and the risk that existing indebtedness may not be refinanced or that the terms of any refinancing will not be as favorable as the terms of existing indebtedness. If the Partnership fails to make required payments of principal and interest on secured debt, its lender could foreclose on the property securing such debt, which would result in loss of income and asset value to the Partnership.



Competition could limit the Partnerships ability to lease apartments or increase or maintain rents.



The Partnerships apartment property competes for residents with other housing alternatives, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing in such market area could adversely affect the Partnerships ability to lease apartments and to increase or maintain rental rates.



Laws benefiting disabled persons may result in the Partnerships incurrence of unanticipated expenses.













Under the Americans with Disabilities Act of 1990, or ADA, all places intended to be used by the public are required to meet certain Federal requirements related to access and use by disabled persons. Likewise, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990, to be accessible to the handicapped. These and other Federal, state and local laws may require modifications to the Partnerships property, or restrict renovations of the property. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although the Partnership believes that its property is substantially in compliance with present requirements, the Partnership may incur unanticipated expenses to comply with the ADA and the FHAA.



Potential liability or other expenditures associated with potential environmental contamination may be costly.



Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property.



Moisture infiltration and resulting mold remediation may be costly.



The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements.  The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.  Affiliates of the Managing General Partner have implemented policies, procedures, third-party audits and training and the Managing General Partner believes that these measures will prevent or eliminate mold exposure and will minimize the effects that mold may have on residents.  To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.  Because the law regarding mold is unsettled and subject to change the Managing General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnerships consolidated financial condition or results of operations.



A further description of the Partnership's business is included in "Item 6. Management's Discussion and Analysis or Plan of Operation" included in this Form 10-KSB.













Item 2.

Description of Property



The following table sets forth the Partnership's investment in property:



|                   |          |                       |           
|------------------ | -------- | --------------------- | ----------
|                   | Date of  |                       |           
|Property           | Purchase | Type of Ownership     | Use       
|                   |          |                       |           
|Woods of Inverness | 07/82    | Fee ownership subject | Apartments
|Apartments         |          | to a first mortgage   | 272 units 
|Houston, Texas     |          |                       |           



The property is held by a limited partnership that is wholly-owned by the Partnership.



Schedule of Property



Set forth below for the Partnership's property is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.



|                   |                |              |             |                |          
|------------------ | -------------- | ------------ | ----------- | -------------- | ---------
|                   | Gross          |              |             |                |          
|                   | Carrying       | Accumulated  | Depreciable | Method of      | Federal  
|Property           | Value          | Depreciation | Life        | Depreciation   | Tax Basis
|                   | (in thousands) |              |             | (in thousands)
|                   |                |              |             |                |          
|Woods of Inverness |                |              |             |                |          
|Apartments         | $11,835        | $8,154       | 5-30 yrs    | S/L            | $2,495   



See "Note A  Organization and Summary of Significant Accounting Policies to the consolidated financial statements included in Item 7. Financial Statements" for a description of the Partnership's capitalization and depreciation policies.



Schedule of Property Indebtedness



The following table sets forth certain information relating to the loan encumbering the Partnership's property.



|                   |                |          |           |          |               
|------------------ | -------------- | -------- | --------- | -------- | --------------
|                   | Principal      |          |           |          | Principal     
|                   | Balance At     |          |           |          | Balance       
|                   | December 31,   | Interest | Period    | Maturity | Due At        
|Property           | 2007           | Rate     | Amortized | Date     | Maturity (3)  
|                   | (in thousands) |          |           |          | (in thousands)
|                   |                |          |           |          |               
|Woods of Inverness |                |          |           |          |               
|Apartments         | $5,878         | (1)      | (2)       | 10/01/10 | $5,878        



(1)

Adjustable rate based on the one-month LIBOR rate plus 0.78%. The rate at December 31, 2007 was 6.01%.



(2)

Interest only payments.



(3)

See Note B  Mortgage Note Payable to the consolidated financial statements included in Item 7. Financial Statements for other specific details about the loan.



On September 21, 2007, the Partnership refinanced the mortgage encumbering Woods of Inverness Apartments. The refinancing replaced the existing mortgage, which at the time of refinancing had a principal balance of approximately $4,139,000, with a new mortgage loan in the principal amount of approximately $5,878,000. The new loan was refinanced under a secured real estate credit facility (Secured Credit Facility) with AEGON USA Realty Advisors, Inc., as agent for Transamerica Occidental Life Insurance Company, which has a maturity of October 1, 2010, with two one-year extension options. The new mortgage requires monthly payments of interest only beginning on November 1, 2007, through the October 1, 2010 maturity date, at which date the entire principal balance of approximately $5,878,000 is due.  The new loan has a variable interest rate of the one-month LIBOR rate plus 0.78% (6.01% per annum at December 31, 2007) and resets monthly.  The variable interest rate may increase to the one-month LIBOR rate plus 0.98% if the debt service coverage ratio of the investment property decreases below a prescribed threshold. The Secured Credit Facility provides mortgage loans on properties owned by other partnerships that are affiliated with the Managing General Partner. The Secured Credit Facility creates separate loans for each property that are not cross-collateralized or cross-defaulted with the other property loans. The loans are prepayable without penalty. As a condition of the Secured Credit Facility, the lender required AIMCO Properties, L.P., an affiliate of the Managing General Partner, to guarantee certain obligations and liabilities of the Partnership with respect to the new mortgage financing.  Total capitalized loan costs in connection with the new mortgage were approximately $94,000.  Loan costs associated with the previous mortgage were fully amortized.



Schedule of Rental Rates and Occupancy



Average annual rental rates and occupancy for 2007 and 2006 for the Partnership's property were as follows:



|                              |                |                |      |     
|----------------------------- | -------------- | -------------- | ---- | ----
|                              | Average Annual | Average Annual
|                              | Rental Rate    | Occupancy     
|                              | (per unit)     |                |     
|Property                      | 2007           | 2006           | 2007 | 2006
|                              |                |                |      |     
|Woods of Inverness Apartments | $7,621         | $7,618         | 93%  | 93% 



As noted under "Item 1. Description of Business", the real estate industry is highly competitive. The Partnership's property is subject to competition from other residential apartment complexes in the area. The Managing General Partner believes that the property is adequately insured. The property is an apartment complex that leases units for lease terms of one year or less. No residential tenant leases 10% or more of the available rental space. The property is in good physical condition, subject to normal depreciation and deterioration as is typical for an asset of this type and age.



Real Estate Taxes and Rate



Real estate taxes and rate in 2007 for the Partnership's property were as follows:



|                              |                |      
|----------------------------- | -------------- | -----
|                              | 2007           | 2007 
|                              | Billing        | Rate 
|                              | (in thousands) |      
|Woods of Inverness Apartments | $194           | 2.59%



Capital Improvements



During the year ended December 31, 2007, the Partnership completed approximately $810,000 of capital improvements at Woods of Inverness Apartments, consisting primarily of exterior lighting, recreational facility upgrades, appliance, air conditioning unit and floor covering replacements and construction related to the fire discussed in Item 6. Managements Discussion and Analysis or Plan of Operation, which includes the capitalization of construction period interest of approximately $37,000, real estate taxes of approximately $8,000 and operating costs of approximately $5,000. These improvements were funded from operating cash flow and insurance proceeds. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.



Capital expenditures will be incurred only if cash is available from operations or from Partnership reserves.  To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term.



Item 3.

Legal Proceedings



In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint.  Plaintiffs took an appeal from this order.



On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the Appeal) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the courts use of a referee and its order requiring Objector to pay those fees.



On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.  With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial courts order and remanded to the trial court for further findings on the basis that the state of the record is insufficient to permit meaningful appellate review.  The matter was transferred back to the trial court on June 21, 2005.  With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial courts order striking the first amended complaint.



On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court.  On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion.  On February 3, 2006, the Court held a hearing on the various matters pending before it and ordered additional briefing from the parties and Objector. On June 30, 2006, the trial court entered an order confirming its approval of the class action settlement and entering judgment thereto after the Court of Appeals had remanded the matter for further findings.  The substantive terms of the settlement agreement remain unchanged.  The trial court also entered supplemental orders on July 1, 2006, denying Objectors Motion to File a Complaint in Intervention, Objectors Motion for Leave of Discovery and Objectors Motion to Dissolve the Anti-Suit Injunction.  Notice of Entry of Judgment was served on July 10, 2006.



On August 31, 2006, the Objector filed a Notice of Appeal to the Courts June 30, 2006 and July 1, 2006 orders. The matter was argued and submitted and the Court of Appeal issued an opinion on February 20, 2008 affirming the order approving the settlement and judgment entered thereto. On March 12, 2008, the Court of Appeal denied Appellants Petition for Re-Hearing.  Appellant has until April 1, 2008 to file a Petition for Review with the California Supreme Court.



The Managing General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnerships overall operations.



Item 4.

Submission of Matters to a Vote of Security Holders



During the quarter ended December 31, 2007, no matters were submitted to a vote of security holders through the solicitation of proxies or otherwise.













PART II



Item 5.

Market for the Partnership's Common Equity and Related Partner Matters



The Partnership, a publicly-held limited partnership, offered and sold in 1981 and 1982, 130,000 Limited Partnership Units (the "Units") aggregating $65,000,000. The Partnership currently has 129,942 Units outstanding held by 2,938 limited partners of record. Affiliates of the Managing General Partner owned 84,899.69 Units or 65.34% of the outstanding Units at December 31, 2007.  No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future.



The Partnership distributed the following amounts during the years ended December 31, 2007 and 2006 (in thousands, except per unit data):



|                |                   |             |                   |            
|--------------- | ----------------- | ----------- | ----------------- | -----------
|                |                   | Per Limited |                   | Per Limited
|                | Year Ended        | Partnership | Year Ended        | Partnership
|                | December 31, 2007 | Unit        | December 31, 2006 | Unit       
|                |                   |             |                   |            
|Sale (1)        | $ 405             | $ 3.05      | $  --             | $  --      
|Refinancing (2) | 245               | 1.85        | --                | --         
|                | $650              | $4.90       | $--               | $--        



(1)

Proceeds from the January 2004 sale of Ralston Place Apartments.



(2)

Proceeds from the September 2007 refinancing of the mortgage encumbering Woods of Inverness Apartments.



Subsequent to December 31, 2007, the Partnership distributed approximately $230,000 (approximately $225,000 to the limited partners or $1.73 per Unit) from proceeds from the September 2007 refinancing of the mortgage encumbering Woods of Inverness Apartments.  Future cash distributions will depend on the levels of cash generated from operations, the timing of the debt maturity, property sale and/or refinancing.  The Partnerships cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit additional distributions to its partners in 2008 or subsequent periods.  See Item 2. Description of Property  Capital Improvements for information relating to anticipated capital expenditures at the property.



In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 84,899.69 Units in the Partnership representing 65.34% of the outstanding Units at December 31, 2007.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 65.34% of the outstanding Units, AIMCO and its affiliates are in a position to influence all voting decisions with respect to the Partnership. However, with respect to 47,488.68 Units owned by AIMCO IPLP, L.P., an affiliate of the Managing General Partner and of AIMCO, such affiliate is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to its affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on AIMCO and its affiliates' ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.



Item 6.

Management's Discussion and Analysis or Plan of Operation



This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report.



The Partnerships financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment property, interest rates on mortgage loans, costs incurred to operate the investment property, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the Managing General Partner may use rental concessions and rental rate reductions to offset softening market conditions; accordingly, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership, such as the local economic climate and weather, can adversely or positively affect the Partnerships financial results.



Results of Operations



The Partnership recognized net income of approximately $4,000 and $9,000 for the years ended December 31, 2007 and 2006, respectively. Net income remained relatively constant as an increase in total expenses was offset by an increase in total revenues. Total expenses increased due to increases in operating and general and administrative expenses, partially offset by decreases in depreciation and interest expenses.  Property tax expense remained relatively constant for the comparable period.  The increase in operating expense is primarily due to increases in utility and payroll related expenses, costs associated with water infiltration to one unit during 2007, and a change in the estimate of clean up costs recorded during the first quarter of 2006 associated with Hurricane Rita at the Partnerships investment property. The decrease in depreciation expense is due to assets placed into service in previous years becoming fully depreciated during the first quarter of 2007. The decrease in interest expense is primarily due to interest capitalized in connection with the reconstruction resulting from the casualty discussed below and a decrease in interest on advances from an affiliate of the Managing General Partner as a result of a lower average advance balance, partially offset by a higher debt balance as a result of the September 2007 refinancing of the mortgage encumbering the property (as discussed in Liquidity and Capital Resources).



The increase in general and administrative expenses is primarily due to an increase in management reimbursements to the Managing General Partner as allowed under the Partnership Agreement.  Also included in general and administrative expenses for the years ended December 31, 2007 and 2006 are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement.



In October 2006, there was a fire at Woods of Inverness Apartments, causing damage to eight units. During the year ended December 31, 2006, the Partnership estimated damages to be approximately $675,000. During the year ended December 31, 2006, the Partnership received insurance proceeds of approximately $250,000, which were held on deposit in a restricted escrow with the mortgage lender at December 31, 2006 and released to the Partnership during the year ended December 31, 2007.  During the year ended December 31, 2006, the Partnership recognized a casualty gain of approximately $191,000 as a result of the receipt of insurance proceeds of approximately $250,000, partially offset by the write off of undepreciated damaged assets of approximately $59,000. During the year ended December 31, 2007, the Partnership revised its estimate of damages to approximately $519,000. During the year ended December 31, 2007, the Partnership received additional insurance proceeds related to this casualty of approximately $173,000.  The Partnership recognized an additional casualty gain of approximately $187,000 for the year ended December 31, 2007 as a result of the receipt of insurance proceeds of approximately $173,000 and a change in the previous write off of undepreciated damaged assets of approximately $14,000.



The increase in total revenues is due to increases in both rental and other income. The increase in rental income is primarily due to reduced bad debt expense at the Partnerships investment property. The increase in other income is primarily due to increases in utility reimbursements and lease cancellation fees at the property.



Liquidity and Capital Resources



At December 31, 2007, the Partnership had cash and cash equivalents of approximately $531,000, compared to approximately $182,000 at December 31, 2006.  The increase in cash and cash equivalents of approximately $349,000 is due to approximately $551,000 and $178,000 of cash provided by operating and financing activities, respectively, partially offset by approximately $380,000 of cash used in investing activities.  Cash provided by financing activities consisted of proceeds received from the refinancing of the mortgage encumbering Woods of Inverness Apartments and advances received from an affiliate of the Managing General Partner, partially offset by repayment of the previous mortgage encumbering the Partnerships investment property, repayment of advances received from an affiliate of the Managing General Partner, a distribution to partners, loan costs paid and principal payments made on the previous mortgage encumbering Woods of Inverness Apartments.  Cash used in investing activities consisted of property improvements and replacements, partially offset by insurance proceeds received.  The Partnership invests its working capital reserves in interest bearing accounts.



AIMCO Properties, L.P., an affiliate of the Managing General Partner, has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. During 2004 and 2005, AIMCO Properties, L.P. exceeded this limit and advanced the Partnership approximately $920,000 to cover the payoff of the existing mortgage and closing costs related to the refinancing of the mortgage encumbering Woods of Inverness Apartments and to cover operating expenses and capital improvements. During the years ended December 31, 2007 and 2006, AIMCO Properties, L.P. advanced the Partnership approximately $16,000 and $174,000 to cover operating expenses and capital expenditures at Woods of Inverness Apartments, respectively. Interest was charged at prime plus 2% and interest expense was approximately $61,000 and $76,000 for the years ended December 31, 2007 and 2006, respectively. During the year ended December 31, 2007, the Partnership repaid approximately $786,000 of advances and approximately $81,000 of associated accrued interest with proceeds from the refinancing of the mortgage encumbering Woods of Inverness Apartments.  During the year ended December 31, 2006, approximately $201,000 of advances and approximately $75,000 of associated accrued interest were repaid with cash from operations. At December 31, 2007, there were no advances or associated accrued interest due to AIMCO Properties, L.P. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances.  For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.



The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the property to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The Managing General Partner monitors developments in the area of legal and regulatory compliance. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2008. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.



Capital expenditures will be incurred only if cash is available from operations or from Partnership reserves.  To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term.



The Partnership's assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. On September 21, 2007, the Partnership refinanced the mortgage encumbering Woods of Inverness Apartments. The refinancing replaced the existing mortgage, which at the time of refinancing had a principal balance of approximately $4,139,000, with a new mortgage loan in the principal amount of approximately $5,878,000. The new loan was refinanced under a secured real estate credit facility (Secured Credit Facility) with AEGON USA Realty Advisors, Inc., as agent for Transamerica Occidental Life Insurance Company, which has a maturity of October 1, 2010, with two one-year extension options. The new mortgage requires monthly payments of interest only beginning on November 1, 2007, through the October 1, 2010 maturity date, at which date the entire principal balance of approximately $5,878,000 is due.  The new loan has a variable interest rate of the one-month LIBOR rate plus 0.78% (6.01% per annum at December 31, 2007) and resets monthly.  The variable interest rate may increase to the one-month LIBOR rate plus 0.98% if the debt service coverage ratio of the investment property decreases below a prescribed threshold. The Secured Credit Facility provides mortgage loans on properties owned by other partnerships that are affiliated with the Managing General Partner. The Secured Credit Facility creates separate loans for each property that are not cross-collateralized or cross-defaulted with the other property loans. The loans are prepayable without penalty. As a condition of the Secured Credit Facility, the lender required AIMCO Properties, L.P., an affiliate of the Managing General Partner, to guarantee certain obligations and liabilities of the Partnership with respect to the new mortgage financing. Total capitalized loan costs in connection with the new mortgage were approximately $94,000 and are included in other assets on the consolidated balance sheet included in Item 7. Financial Statements.  Loan costs associated with the previous mortgage were fully amortized.





The Partnership distributed the following amounts during the years ended December 31, 2007 and 2006 (in thousands, except per unit data):



|                |                   |             |                   |            
|--------------- | ----------------- | ----------- | ----------------- | -----------
|                |                   | Per Limited |                   | Per Limited
|                | Year Ended        | Partnership | Year Ended        | Partnership
|                | December 31, 2007 | Unit        | December 31, 2006 | Unit       
|                |                   |             |                   |            
|Sale (1)        | $ 405             | $ 3.05      | $  --             | $  --      
|Refinancing (2) | 245               | 1.85        | --                | --         
|                | $650              | $4.90       | $--               | $--        



(1)

Proceeds from the January 2004 sale of Ralston Place Apartments.



(2)

Proceeds from the September 2007 refinancing of the mortgage encumbering Woods of Inverness Apartments.



Subsequent to December 31, 2007, the Partnership distributed approximately $230,000 (approximately $225,000 to the limited partners or $1.73 per Unit) from proceeds from the September 2007 refinancing of the mortgage encumbering Woods of Inverness Apartments.  Future cash distributions will depend on the levels of cash generated from operations, the timing of the debt maturity, property sale and/or refinancing.  The Partnerships cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit additional distributions to its partners in 2008 or subsequent periods.



Other



In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 84,899.69 Units in the Partnership representing 65.34% of the outstanding Units at December 31, 2007.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 65.34% of the outstanding Units, AIMCO and its affiliates are in a position to influence all voting decisions with respect to the Partnership. However, with respect to 47,488.68 Units owned by AIMCO IPLP, L.P., an affiliate of the Managing General Partner and of AIMCO, such affiliate is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to its affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on AIMCO and its affiliates' ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.







Critical Accounting Policies and Estimates



A summary of the Partnerships significant accounting policies is included in "Note A  Organization and Summary of Significant Accounting Policies" which is included in the consolidated financial statements in "Item 7. Financial Statements". The ManagingGeneral Partner believes that the consistent application of these policies enables the Partnership to provide readers of the consolidated financial statements with useful and reliable information about the Partnerships operating results and financial condition.  The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Partnership to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.  Judgments and assessments of uncertainties are required in applying the Partnerships accounting policies in many areas.  The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.



Impairment of Long-Lived Asset



Investment property is recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable.  If events or circumstances indicate that the carrying amount of the property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnerships estimate of the undiscounted future cash flows, excluding interest charges, of the property.   If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.



Real property investment is subject to varying degrees of risk.  Several factors may adversely affect the economic performance and value of the Partnerships investment property.  These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing.  Any adverse changes in these factors could cause impairment of the Partnerships asset.



Capitalized Costs Related to Redevelopment and Construction Projects



The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects. Costs including interest, property taxes and operating costs associated with redevelopment and construction projects are capitalized during periods in which redevelopment and construction projects are in progress in accordance with Statement of Financial Accounting Standards (SFAS) No. 34, Capitalization of Interest Costs, and SFAS No. 67, Accounting for Costs and the Initial Rental Operations of Real Estate Properties. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level.







Revenue Recognition



The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.













Item 7.

Financial Statements



CENTURY PROPERTIES FUND XVI



LIST OF FINANCIAL STATEMENTS



Report of Independent Registered Public Accounting Firm



Consolidated Balance Sheet - December 31, 2007



Consolidated Statements of Operations - Years ended December 31, 2007 and 2006



Consolidated Statements of Changes in Partners' (Deficiency) Capital - Years ended December 31, 2007 and 2006



Consolidated Statements of Cash Flows - Years ended December 31, 2007 and 2006



Notes to Consolidated Financial Statements













Report of Independent Registered Public Accounting Firm





The Partners

Century Properties Fund XVI





We have audited the accompanying consolidated balance sheet of Century Properties Fund XVI as of December 31, 2007, and the related consolidated statements of operations, changes in partners' (deficiency) capital, and cash flows for each of the two years in the period ended December 31, 2007. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Partnerships internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnerships internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Century Properties Fund XVI at December 31, 2007, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.





/s/ERNST & YOUNG LLP





Greenville, South Carolina

March 28, 2008















CENTURY PROPERTIES FUND XVI

CONSOLIDATED BALANCE SHEET

(in thousands, except unit data)



December 31, 2007









|                                                        |           |         
|------------------------------------------------------- | --------- | --------
|Assets                                                  |           |         
|Cash and cash equivalents                               |           | $    531
|Receivables and deposits                                |           | 40      
|Other assets                                            |           | 151     
|Investment property (Notes B and E):                    |           |         
|Land                                                    | $    905  |         
|Buildings and related personal property                 | 10,930    |         
|                                                        | 11,835    |         
|Less accumulated depreciation                           | (8,154)   | 3,681   
|                                                        |           | $4,403  
|                                                        |           |         
|Liabilities and Partners' (Deficiency) Capital          |           |         
|Liabilities                                             |           |         
|Accounts payable                                        |           | $     26
|Accrued property taxes                                  |           | 194     
|Tenant security deposit liabilities                     |           | 35      
|Other liabilities                                       |           | 132     
|Mortgage note payable (Note B)                          |           | 5,878   
|                                                        |           |         
|Partners' (Deficiency) Capital                          |           |         
|General partners                                        | $ (3,828) |         
|Limited partners (129,942 units issued and outstanding) | 1,966     | (1,862) 
|                                                        |           | $4,403  





See Accompanying Notes to Consolidated Financial Statements















CENTURY PROPERTIES FUND XVI

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)







|                                                 |                          |        
|------------------------------------------------ | ------------------------ | -------
|                                                 | Years Ended December 31,
|                                                 | 2007                     | 2006   
|Revenues:                                        |                          |        
|Rental income                                    | $ 1,899                  | $ 1,884
|Other income                                     | 264                      | 199    
|Total revenues                                   | 2,163                    | 2,083  
|                                                 |                          |        
|Expenses:                                        |                          |        
|Operating                                        | 1,214                    | 1,124  
|General and administrative                       | 202                      | 179    
|Depreciation                                     | 400                      | 416    
|Interest                                         | 353                      | 366    
|Property taxes                                   | 177                      | 180    
|Total expenses                                   | 2,346                    | 2,265  
|                                                 |                          |        
|Casualty gain (Note F)                           | 187                      | 191    
|                                                 |                          |        
|Net income (Note C)                              | $4                       | $9     
|                                                 |                          |        
|Net income allocated to general partners (6.9%)  | $    --                  | $     1
|                                                 |                          |        
|Net income allocated to limited partners (93.1%) | 4                        | 8      
|                                                 |                          |        
|                                                 | $4                       | $9     
|                                                 |                          |        
|Net income per limited partnership unit          | $0.03                    | $0.06  
|                                                 |                          |        
|Distribution per limited partnership unit        | $4.90                    | $--    







See Accompanying Notes to Consolidated Financial Statements













CENTURY PROPERTIES FUND XVI

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIENCY) CAPITAL

(in thousands, except unit data)







|                                 |             |          |          |         
|-------------------------------- | ----------- | -------- | -------- | --------
|                                 | Limited     |          |          |         
|                                 | Partnership | General  | Limited  |         
|                                 | Units       | Partners | Partners | Total   
|                                 |             |          |          |         
|Original capital contributions   | 130,000     | $--      | $65,000  | $65,000 
|                                 |             |          |          |         
|Partners' (deficiency) capital   |             |          |          |         
|At December 31, 2005             | 129,956     | $(3,816) | $ 2,591  | $(1,225)
|                                 |             |          |          |         
|Abandonment of limited           |             |          |          |         
|partnership units (Note A)       | (14)        | --       | --       | --      
|                                 |             |          |          |         
|Net income for the year ended    |             |          |          |         
|December 31, 2006                | --          | 1        | 8        | 9       
|                                 |             |          |          |         
|Partners' (deficiency) capital   |             |          |          |         
|at December 31, 2006             | 129,942     | (3,815)  | 2,599    | (1,216) 
|                                 |             |          |          |         
|Distribution to partners         | --          | (13)     | (637)    | (650)   
|                                 |             |          |          |         
|Net income for the year ended    |             |          |          |         
|December 31, 2007                | --          | --       | 4        | 4       
|                                 |             |          |          |         
|Partners (deficiency) capital at |             |          |          |         
|December 31, 2007                | 129,942     | $(3,828) | $1,966   | $(1,862)





See Accompanying Notes to Consolidated Financial Statements













CENTURY PROPERTIES FUND XVI



CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                            |              |        
|----------------------------------------------------------- | ------------ | -------
|                                                            | Years Ended 
|                                                            | December 31,
|                                                            | 2007         | 2006   
|Cash flows from operating activities:                       |              |        
|Net income                                                  | $     4      | $     9
|Adjustments to reconcile net income to net cash             |              |        
|provided by operating activities:                           |              |        
|Depreciation                                                | 400          | 416    
|Amortization of loan costs                                  | 38           | 39     
|Casualty gain                                               | (187)        | (191)  
|Change in accounts:                                         |              |        
|Receivables and deposits                                    | 311          | (132)  
|Other assets                                                | 24           | (6)    
|Accounts payable                                            | (19)         | 17     
|Accrued property taxes                                      | (9)          | (12)   
|Tenant security deposit liabilities                         | (3)          | 3      
|Other liabilities                                           | 20           | (13)   
|Due to affiliates                                           | (28)         | 9      
|Net cash provided by operating activities                   | 551          | 139    
|                                                            |              |        
|Cash flows from investing activities:                       |              |        
|Property improvements and replacements                      | (803)        | (258)  
|Insurance proceeds received                                 | 423          | --     
|Net withdrawals from restricted escrow                      | --           | 152    
|Net cash used in investing activities                       | (380)        | (106)  
|                                                            |              |        
|Cash flows from financing activities:                       |              |        
|Repayment of mortgage note payable                          | (4,139)      | --     
|Proceeds from mortgage note payable                         | 5,878        | --     
|Payments on mortgage note payable                           | (47)         | (67)   
|Distribution to partners                                    | (650)        |        
|Loan costs paid                                             | (94)         | --     
|Advances from affiliate                                     | 16           | 174    
|Payments on advances from affiliate                         | (786)        | (201)  
|Net cash provided by (used in) financing activities         | 178          | (94)   
|                                                            |              |        
|Net increase (decrease) in cash and cash equivalents        | 349          | (61)   
|                                                            |              |        
|Cash and cash equivalents at beginning of year              | 182          | 243    
|                                                            |              |        
|Cash and cash equivalents at end of year                    | $531         | $182   
|                                                            |              |        
|Supplemental disclosure of cash flow information:           |              |        
|Cash paid for interest, net of capitalized interest         | $281         | $328   
|                                                            |              |        
|Supplemental disclosure of non-cash activity:               |              |        
|Property improvements and replacements included in accounts |              |        
|payable                                                     | $15          | $8     
|Insurance proceeds held on deposit with the mortgage lender | $--          | $250   



Included in property improvements and replacements for the year ended December 31, 2006 are approximately $3,000 of improvements which were included in accounts payable at December 31, 2005.

See Accompanying Notes to Consolidated Financial Statements











CENTURY PROPERTIES FUND XVI



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



December 31, 2007





Note A - Organization and Summary of Significant Accounting Policies



Organization: Century Properties Fund XVI (the "Partnership" or "Registrant") is a California limited partnership organized in December 1980 to acquire and operate residential apartment properties.  The Partnership's general partners are Fox Capital Management Corporation ("FCMC" or the "Managing General Partner") and Fox Realty Investors ("FRI"). As of December 31, 2007, the Partnership operates one residential apartment complex located in Texas. The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust.  The Partnership Agreement provides that the Partnership is to terminate on December 31, 2025 unless terminated prior to such date.



Principles of Consolidation: The Partnership's consolidated financial statements include the accounts of the Partnership and one wholly owned partnership. All significant interpartnership transactions have been eliminated.



Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.



Allocation to Partners: Net income and losses (excluding those arising from the occurrence of sales or dispositions) of the Partnership will be allocated 5% to the general partners with the remaining 95% allocated 2% to the general partners and 98% to the limited partners.



Distributions of available cash, except as discussed below, are allocated 5% to the general partners with the remaining 95% allocated 2% to the general partners and 98% to the limited partners.



In accordance with the Partnerships agreement of limited partnership (the Partnership Agreement), any gain from the sale or other disposition of Partnership properties shall be allocated: (i) to the general partners to the extent they are entitled to receive distributions of cash; (ii) 7% to the general partners and 93% to the limited partners, to the extent the general partners have a deficit capital balance; and (iii) to the limited partners.



Cash from sales or other disposition, or refinancing and working capital reserves must be distributed as follows: (i) first, 2% to the general partners and 98% to the limited partners until an aggregate amount is distributed to the limited partners equal to the total of their original invested capital contributed plus 8% per year, determined on a cumulative, noncompounded basis, on adjusted invested capital, adjusted as needed, of such Limited Partnership Unit Holder; (ii) second, to the general partners 15% of any additional cash from sales or refinancing and working capital reserve available for distribution, and (iii) the remainder shall be allocated 98% to the limited partners and 2% to the general partners. Upon sale of all properties and termination of the Partnership, the general partners may be required to contribute certain funds to the Partnership in accordance with the Partnership Agreement.







Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks.  At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances include approximately $502,000 at December 31, 2007 that are maintained by an affiliated management company on behalf of affiliated entities in cash concentration accounts.



Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the apartment property and related personal property. For Federal income tax purposes, the modified accelerated cost recovery method is used for depreciation of (1) real property over 27 1/2 years and (2) personal property additions over 5 years.



Leases: The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.



Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged the unit and is current on rental payments.



Abandoned Units: During the year ended December 31, 2006, the number of limited partnership units (the Units) decreased by 14 Units due to limited partners abandoning their Units. In abandoning his or her Units, a limited partner relinquishes all right, title and interest in the Partnership as of the date of abandonment.



Net Income Per Limited Partnership Unit: Net income per Limited Partnership Unit is computed by dividing net income allocated to the limited partners by the number of Units outstanding at the beginning of the fiscal year. Per Unit information has been computed based on 129,942 Units outstanding for 2007 and 129,956 Units outstanding for 2006.



Deferred Costs: Loan costs of approximately $94,000, less accumulated amortization of approximately $7,000, are included in other assets and are amortized over the term of the related loan agreement. Amortization of loan costs is included in interest expense and was approximately $38,000 and $39,000 for the years ended December 31, 2007 and 2006, respectively. Amortization expense is expected to be approximately $31,000 for both 2008 and 2009, and approximately $25,000 for 2010.



Leasing commissions and other direct costs incurred in connection with successful leasing efforts are deferred and amortized over the terms of the related leases.  Amortization of these costs is included in operating expenses.



Investment Property: Investment property consists of one apartment complex and is stated at cost.  The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects, other tangible property improvements and replacements of existing property components.  Costs including interest, property taxes and operating costs associated with redevelopment and construction projects are capitalized during periods in which redevelopment and construction projects are in progress in accordance with Statement of Financial Standards (SFAS) No. 34, Capitalization of Interest Costs, and SFAS No. 67, Accounting for Costs and the Initial Rental Operations of Real Estate Properties.  Costs incurred in connection with capital projects are capitalized where the costs of the project exceed $250.  Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level. During the years ended December 31, 2007 and 2006, the Partnership capitalized interest of approximately $37,000 and $5,000, respectively, real estate taxes of approximately $8,000 and $3,000, respectively, and operating costs of approximately $5,000 and $1,000, respectively. Capitalized costs are depreciated over the useful life of the asset.  Expenditures for ordinary repairs, maintenance and apartment turnover costs are expensed as incurred.



In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  No adjustments for impairment of value were necessary for the years ended December 31, 2007 and 2006.



Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value.  Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnerships long term debt at the Partnerships incremental borrowing rate approximates its carrying value.



Advertising Costs: The Partnership expenses the costs of advertising as incurred.  Advertising expense was approximately $91,000 and $92,000 for the years ended December 31, 2007 and 2006, respectively, and is included in operating expenses.



Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information", established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. SFAS No. 131 also established standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment.



Reclassifications:  Certain reclassifications have been made to the 2006 balances to conform to the 2007 presentation.



Recent Accounting Pronouncements:In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS No. 157 establishes a hierarchy that prioritizes the information used in developing fair value estimates. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, such as the reporting entitys own data. SFAS No. 157 requires fair value measurements to be disclosed by level within the fair value hierarchy. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which deferred the effective date of SFAS No. 157 for all nonrecurring fair value measurements of non-financial assets and non-financial liabilities until fiscal years beginning after November 15, 2008.  The provisions of SFAS No. 157 are applicable to recurring fair value measurements of financial assets and liabilities for fiscal years beginning after November 15, 2007, which for the Partnership is generally limited to annual disclosures required by SFAS No. 107.  The Partnership is in the process of implementing SFAS No. 157; however, it has not completed its evaluation and thus has not yet determined the effect that SFAS No. 157 will have on the Partnerships consolidated financial statements.



In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Partnership adopted SFAS No. 159 on January 1, 2008, and at that time did not elect the fair value option for any of its financial instruments or other items within the scope of SFAS No. 159.



In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").  FIN 48 prescribes a two-step process for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  The first step involves evaluation of a tax position to determine whether it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position.  The second step involves measuring the benefit to recognize in the financial statements for those tax positions that meet the more-likely-than-not recognition threshold.  FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  FIN 48 is effective for fiscal years beginning after December 15, 2006.  The Partnership adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not have a material effect on the Partnerships consolidated financial condition or results of operations.



In June 2007, the American Institute of Certified Public Accountants (the AICPA) issued Statement of Position No. 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies ("SOP 07-1").  SOP 07-1 provides guidance for determining whether the accounting principles of the AICPA Audit and Accounting Guide Investment Companies are required to be applied to an entity by clarifying the definition of an investment company and, whether investment company accounting should be retained by a parent company upon consolidation of an investment company subsidiary, or by an investor in the application of the equity method of accounting to an investment company investee. In February 2008, the FASB issued FASB Staff Position SOP 07-1-1 that indefinitely defers the effective date of SOP 07-1.













Note B - Mortgage Note Payable



The terms of the mortgage note payable are as follows:



|                   |                   |          |          |                
|------------------ | ----------------- | -------- | -------- | ---------------
|                   | Principal         |          |          | Principal      
|                   | Balance at        | Interest | Maturity | Balance        
|Property           | December 31, 2007 | Rate     | Date     | Due at Maturity
|                   | (in thousands)    |          |          | (in thousands) 
|Woods of Inverness |                   |          |          |                
|Apartments         | $5,878            | (1)      | 10/01/10 | $5,878         



(1)

Adjustable rate based on the one-month LIBOR rate plus 0.78%. The rate at December 31, 2007 was 6.01%.



On September 21, 2007, the Partnership refinanced the mortgage encumbering Woods of Inverness Apartments. The refinancing replaced the existing mortgage, which at the time of refinancing had a principal balance of approximately $4,139,000, with a new mortgage loan in the principal amount of approximately $5,878,000. The new loan was refinanced under a secured real estate credit facility (Secured Credit Facility) with AEGON USA Realty Advisors, Inc., as agent for Transamerica Occidental Life Insurance Company, which has a maturity of October 1, 2010, with two one-year extension options. The new mortgage requires monthly payments of interest only beginning on November 1, 2007, through the October 1, 2010 maturity date, at which date the entire principal balance of approximately $5,878,000 is due.  The new loan has a variable interest rate of the one-month LIBOR rate plus 0.78% (6.01% per annum at December 31, 2007) and resets monthly.  The variable interest rate may increase to the one-month LIBOR rate plus 0.98% if the debt service coverage ratio of the investment property decreases below a prescribed threshold. The Secured Credit Facility provides mortgage loans on properties owned by other partnerships that are affiliated with the Managing General Partner. The Secured Credit Facility creates separate loans for each property that are not cross-collateralized or cross-defaulted with the other property loans. The loans are prepayable without penalty. As a condition of the Secured Credit Facility, the lender required AIMCO Properties, L.P., an affiliate of the Managing General Partner, to guarantee certain obligations and liabilities of the Partnership with respect to the new mortgage financing. Total capitalized loan costs in connection with the new mortgage were approximately $94,000 and are included in other assets.  Loan costs associated with the previous mortgage were fully amortized.



The mortgage note payable is non-recourse and is secured by pledge of the apartment property and by pledge of revenues from the property. The property may not be sold subject to existing indebtedness.



Scheduled principal payments of the mortgage note payable subsequent to December 31, 2007 are as follows (in thousands):



|      |       
|----- | ------
|2008  | $   --
|2009  | --    
|2010  | 5,878 
|Total | $5,878



Note C - Income Taxes



The Partnership is classified as a partnership for Federal income purposes. Accordingly, no provision for Federal income taxes is made in the consolidated financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners.





Differences between the net income as reported and Federal taxable income result primarily from depreciation over different methods and lives and on differing cost basis. The following is a reconciliation of reported net income and Federal taxable income (in thousands except per unit data):



|                                   |        |       
|---------------------------------- | ------ | ------
|                                   | 2007   | 2006  
|                                   |       
|Net income as reported             | $    4 | $    9
|(Deduct) add:                      |        |       
|Unearned revenue                   | (11)   | 4     
|Depreciation differences           | 237    | 255   
|Miscellaneous                      | 236    | (70)  
|Casualty gain/loss                 | (378)  | (191) 
|                                   |        |       
|Federal taxable income             | $88    | $7    
|                                   |        |       
|Federal taxable income per limited |        |       
|partnership unit                   | $0.63  | $0.05 



The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands):



|                                   |         
|---------------------------------- | --------
|                                   | 2007    
|                                   |         
|Net liabilities as reported        | $(1,862)
|Land and buildings                 | (75)    
|Accumulated depreciation           | (1,111) 
|Syndication and distribution costs | 8,258   
|Other                              | 65      
|                                   |         
|Net assets - Federal tax basis     | $5,275  



Note D - Transactions with Affiliated Parties



The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities.  The Partnership Agreement provides for payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.



Affiliates of the Managing General Partner receive 5% of gross receipts from the Partnership's property as compensation for providing property management services. The Partnership paid to such affiliates approximately $106,000 and $102,000 for the years ended December 31, 2007 and 2006 respectively, which are included in operating expenses.



Affiliates of the Managing General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $109,000 and $85,000 for the years ended December 31, 2007 and 2006, respectively, which is included in general and administrative expenses.



Pursuant to the Partnership Agreement, for managing the affairs of the Partnership, the Managing General Partner is entitled to receive a Partnership management fee equal to 5% of the Partnership's adjusted cash from operations as distributed. No such fees were paid for the years ended December 31, 2007 and 2006 as there were no distributions from operations during either period.



AIMCO Properties, L.P., an affiliate of the Managing General Partner, has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. During 2004 and 2005, AIMCO Properties, L.P. exceeded this limit and advanced the Partnership approximately $920,000 to cover the payoff of the existing mortgage and closing costs related to the refinancing of the mortgage encumbering Woods of Inverness Apartments and to cover operating expenses and capital improvements. During the years ended December 31, 2007 and 2006, AIMCO Properties, L.P. advanced the Partnership approximately $16,000 and $174,000 to cover operating expenses and capital expenditures at Woods of Inverness Apartments, respectively. Interest was charged at prime plus 2% and interest expense was approximately $61,000 and $76,000 for the years ended December 31, 2007 and 2006, respectively. During the year ended December 31, 2007, the Partnership repaid approximately $786,000 of advances and approximately $81,000 of associated accrued interest with proceeds from the refinancing of the mortgage encumbering Woods of Inverness Apartments.  During the year ended December 31, 2006, approximately $201,000 of advances and approximately $75,000 of associated accrued interest were repaid with cash from operations. At December 31, 2007, there were no advances or associated accrued interest due to AIMCO Properties, L.P. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances.  For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.



The Partnership insures its property up to certain limits through coverage provided by AIMCO, which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the years ended December 31, 2007 and 2006, the Partnership was charged by AIMCO and its affiliates approximately $58,000 and $54,000, respectively, for insurance coverage and fees associated with policy claims administration.



In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 84,899.69 Units in the Partnership representing 65.34% of the outstanding Units at December 31, 2007.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 65.34% of the outstanding Units, AIMCO and its affiliates are in a position to influence all voting decisions with respect to the Partnership. However, with respect to 47,488.68 Units owned by AIMCO IPLP, L.P., an affiliate of the Managing General Partner and of AIMCO, such affiliate is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to its affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on AIMCO and its affiliates' ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.













Note E - Investment Property and Accumulated Depreciation



|                   |                |                |             |               
|------------------ | -------------- | -------------- | ----------- | --------------
|                   |                | Initial Cost   |            
|                   |                | To Partnership |            
|                   |                | (in thousands) |            
|                   |                |                | Buildings   | Net Cost      
|                   |                |                | and Related | Capitalized   
|                   |                |                | Personal    | Subsequent to 
|Description        | Encumbrances   | Land           | Property    | Acquisition   
|                   | (in thousands) |                |             | (in thousands)
|Woods of Inverness |                |                |             |               
|Apartments         | $5,878         | $1,292         | $10,305     | $238          



|                   |                               |             |         |                |          |            
|------------------ | ----------------------------- | ----------- | ------- | -------------- | -------- | -----------
|                   | Gross Amount At Which Carried |             |         |               
|                   | At December 31, 2007          |             |         |               
|                   | (in thousands)                |             |         |               
|                   |                               |             |         |                |          |            
|                   |                               | Buildings   |         |                |          |            
|                   |                               | And Related |         |                |          |            
|                   |                               | Personal    |         | Accumulated    | Date     | Depreciable
|Description        | Land                          | Property    | Total   | Depreciation   | Acquired | Life       
|                   |                               |             |         | (in thousands) |          |            
|                   |                               |             |         |                |          |            
|Woods of Inverness |                               |             |         |                |          |            
|Apartments         | $905                          | $10,930     | $11,835 | $8,154         | 07/82    | 5-30 yrs   



Reconciliation of "Investment Property and Accumulated Depreciation":



|                                            |                          |        
|------------------------------------------- | ------------------------ | -------
|                                            | Years Ended December 31,
|                                            | 2007                     | 2006   
|                                            | (in thousands)          
|Investment Property                         |                          |        
|                                            |                          |        
|Balance at beginning of year                | $10,951                  | $11,008
|Property improvements                       | 810                      | 263    
|Revision of estimate (disposal) of property | 74                       | (320)  
|Balance at end of year                      | $11,835                  | $10,951
|                                            |                          |        
|Accumulated Depreciation                    |                          |        
|                                            |                          |        
|Balance at beginning of year                | $ 7,694                  | $ 7,539
|Additions charged to expense                | 400                      | 416    
|Revision of estimate (disposal) of property | 60                       | (261)  
|Balance at end of year                      | $8,154                   | $7,694 



The aggregate cost of the investment property for Federal income tax purposes at December 31, 2007 and 2006 is approximately $11,760,000 and $11,375,000, respectively.  The accumulated depreciation taken for Federal income tax purposes at December 31, 2007 and 2006 is approximately $9,265,000 and $9,102,000, respectively.



Note F  Casualty Event



In October 2006, there was a fire at Woods of Inverness Apartments, causing damage to eight units. During the year ended December 31, 2006, the Partnership estimated damages to be approximately $675,000. During the year ended December 31, 2006, the Partnership received insurance proceeds of approximately $250,000, which were held on deposit in a restricted escrow with the mortgage lender at December 31, 2006 and released to the Partnership during the year ended December 31, 2007.  During the year ended December 31, 2006, the Partnership recognized a casualty gain of approximately $191,000 as a result of the receipt of insurance proceeds of approximately $250,000, partially offset by the write off of undepreciated damaged assets of approximately $59,000. During the year ended December 31, 2007, the Partnership revised its estimate of damages to approximately $519,000. During the year ended December 31, 2007, the Partnership received additional insurance proceeds related to this casualty of approximately $173,000.  The Partnership recognized an additional casualty gain of approximately $187,000 for the year ended December 31, 2007 as a result of the receipt of insurance proceeds of approximately $173,000 and a change in the previous write off of undepreciated damaged assets of approximately $14,000.



Note G - Contingencies



In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint.  Plaintiffs took an appeal from this order.



On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the Appeal) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the courts use of a referee and its order requiring Objector to pay those fees.



On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.  With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial courts order and remanded to the trial court for further findings on the basis that the state of the record is insufficient to permit meaningful appellate review.  The matter was transferred back to the trial court on June 21, 2005.  With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial courts order striking the first amended complaint.



On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court.  On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion.  On February 3, 2006, the Court held a hearing on the various matters pending before it and ordered additional briefing from the parties and Objector. On June 30, 2006, the trial court entered an order confirming its approval of the class action settlement and entering judgment thereto after the Court of Appeals had remanded the matter for further findings.  The substantive terms of the settlement agreement remain unchanged.  The trial court also entered supplemental orders on July 1, 2006, denying Objectors Motion to File a Complaint in Intervention, Objectors Motion for Leave of Discovery and Objectors Motion to Dissolve the Anti-Suit Injunction.  Notice of Entry of Judgment was served on July 10, 2006.



On August 31, 2006, the Objector filed a Notice of Appeal to the Courts June 30, 2006 and July 1, 2006 orders. The matter was argued and submitted and the Court of Appeal issued an opinion on February 20, 2008 affirming the order approving the settlement and judgment entered thereto. On March 12, 2008, the Court of Appeal denied Appellants Petition for Re-Hearing.  Appellant has until April 1, 2008 to file a Petition for Review with the California Supreme Court.



The Managing General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnerships overall operations.



The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business.



Environmental



Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property.







Mold



The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements.  The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.  Affiliates of the Managing General Partner have implemented policies, procedures, third-party audits and training and the Managing General Partner believes that these measures will prevent or eliminate mold exposure and will minimize the effects that mold may have on residents.  To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.  Because the law regarding mold is unsettled and subject to change, the Managing General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnerships consolidated financial condition or results of operations.



Note H  Subsequent Event



Subsequent to December 31, 2007, the Partnership distributed approximately $230,000 (approximately $225,000 to the limited partners or $1.73 per Unit) from proceeds from the September 2007 refinancing of the mortgage encumbering Woods of Inverness Apartments.











ITEM 8.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure



None.



Item 8A.

Controls and Procedures



(a)

Disclosure Controls and Procedures



The Partnerships management, with the participation of the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnerships principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnerships disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnerships principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnerships disclosure controls and procedures are effective.



Managements Report on Internal Control Over Financial Reporting



The Partnerships management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the principal executive and principal financial officers of the Managing General Partner, who are the equivalent of the Partnerships principal executive officer and principal financial officer, respectively, and effected by the Partnerships management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:



·

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets;



·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the Partnerships management; and



·

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



The Partnerships management assessed the effectiveness of the Partnerships internal control over financial reporting as of December 31, 2007.  In making this assessment, the Partnerships management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.



Based on their assessment, the Partnerships management concluded that, as of December 31, 2007, the Partnerships internal control over financial reporting is effective.



This annual report does not include an attestation report of the Partnerships registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to the attestation by the Partnerships registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Partnership to provide only managements report in this annual report.



(b)

Changes in Internal Control Over Financial Reporting.



There have been no significant changes in the Partnerships internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2007 that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting.



Item 8B.

Other Information



On March 27, 2008, AIMCO announced that Scott W. Fordham, Senior Vice President and Chief Accounting Officer of AIMCO and the Managing General Partner, has announced his resignation. Mr. Fordham has chosen to leave AIMCO to return to Texas to pursue an opportunity as chief accounting officer with an office REIT led by Tom August, the former CEO of Prentiss Properties Trust ("Prentiss"), with whom Mr. Fordham served as senior vice president and chief accounting officer prior to Prentisss 2006 merger with Brandywine Realty Trust.

Mr. Fordham will remain with AIMCO through the first quarter close in order to ensure an orderly transition.













PART III



Item 9.

Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act



Century Properties Fund XVI (the Partnership or the Registrant) has no officers or directors. Fox Capital Management Corporation (FCMC or the Managing General Partner) manages and controls substantially all of the Partnerships affairs and has general responsibility in all matters affecting its business.



The names and ages of, as well as the positions and offices held by, the present directors and officers of the Managing General Partner are set forth below.  There are no family relationships between or among any officers or directors.



|                  |     |                                                
|----------------- | --- | -----------------------------------------------
|Name              | Age | Position                                       
|                  |     |                                                
|Martha L. Long    | 48  | Director and Senior Vice President             
|Harry G. Alcock   | 45  | Director and Executive Vice President          
|Timothy Beaudin   | 49  | Executive Vice President and Chief Development 
|                  |     | Officer                                        
|Lisa R. Cohn      | 39  | Executive Vice President, General Counsel and  
|                  |     | Secretary                                      
|Patti K. Fielding | 44  | Executive Vice President  Securities and Debt;
|                  |     | Treasurer                                      
|Thomas M. Herzog  | 45  | Executive Vice President and Chief             
|                  |     | Financial Officer                              
|Scott W. Fordham  | 40  | Senior Vice President and Chief Accounting     
|                  |     | Officer                                        
|Stephen B. Waters | 46  | Vice President                                 



Martha L. Long has been a Director and Senior Vice President of the Managing General Partner since February 2004.  Ms. Long has been with AIMCO since October 1998 and has served in various capacities.  From 1998 to 2001, Ms. Long served as Senior Vice President and Controller of AIMCO and the Managing General Partner.  During 2002 and 2003, Ms. Long served as Senior Vice President of Continuous Improvement for AIMCO.



Harry G. Alcock was appointed as a Director of the Managing General Partner in October 2004 and was appointed Executive Vice President of the Managing General Partner in February 2004 and has been Executive Vice President of AIMCO since October 1999.  Mr. Alcock has had responsibility for acquisition and financing activities of AIMCO since July 1994, serving as Vice President from July 1996 to October 1997 and as Senior Vice President from October 1997 to October 1999. Mr. Alcock focuses on transactions related to AIMCOs portfolio of properties in the western portion of the United States.



Timothy Beaudin was appointed Executive Vice President and Chief Development Officer of the Managing General Partner and AIMCO in October 2005.  Prior to this time, beginning in 1995, Mr. Beaudin was with Catellus Development Corporation, a San Francisco, California-based real estate investment trust.  During his last five years at Catellus, Mr. Beaudin served as Executive Vice President, with management responsibility for development, construction and asset management.



Lisa R. Cohn was appointed Executive Vice President, General Counsel and Secretary of the Managing General Partner and AIMCO in December 2007.  From January 2004 to December 2007, Ms. Cohn served as Senior Vice President and Assistant General Counsel of AIMCO.  Ms. Cohn joined AIMCO in July 2002 as Vice President and Assistant General Counsel.  Prior to joining AIMCO, Ms. Cohn was in private practice with the law firm of Hogan and Hartson LLP.



Patti K. Fielding was appointed Executive Vice President - Securities and Debt of the Managing General Partner in February 2004 and of AIMCO in February 2003.  Ms. Fielding was appointed Treasurer of AIMCO and the Managing General Partner in January 2005.  Ms. Fielding is responsible for debt financing and the treasury department.  Ms. Fielding previously served as Senior Vice President - Securities and Debt of AIMCO from January 2000 to February 2003.  Ms. Fielding joined AIMCO in February 1997 as a Vice President.



Thomas M. Herzog was appointed Chief Financial Officer of the Managing General Partner and AIMCO in November 2005 and was appointed Executive Vice President of the Managing General Partner and AIMCO in July 2005.  In January 2004, Mr. Herzog joined AIMCO as Senior Vice President and Chief Accounting Officer and of the Managing General Partner in February 2004.  Prior to joining AIMCO in January 2004, Mr. Herzog was at GE Real Estate, serving as Chief Accounting Officer & Global Controller from April 2002 to January 2004 and as Chief Technical Advisor from March 2000 to April 2002.  Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990 to 2000.



Scott W. Fordham was appointed Senior Vice President and Chief Accounting Officer in January 2007 of the Managing General Partner and AIMCO. Prior to joining AIMCO, Mr. Fordham served as Vice President and Chief Accounting Officer of Brandywine Realty Trust from January 2006 through December 2006. Prior to the merger of Prentiss Properties Trust with Brandywine Realty Trust, Mr. Fordham served as Senior Vice President and Chief Accounting Officer of Prentiss Properties Trust and was in charge of the corporate accounting and financial reporting groups. Prior to joining Prentiss Properties Trust in 1992, Mr. Fordham worked in public accounting with PricewaterhouseCoopers LLP.



Stephen B. Waters was appointed Vice President of the Managing General Partner and AIMCO in April 2004.  Mr. Waters previously served as a Director of Real Estate Accounting since joining AIMCO in September 1999.  Mr. Waters has responsibility for partnership accounting with AIMCO and serves as the principal financial officer of the Managing General Partner.



One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further, one or more of the above persons are also officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act.



The board of directors of the Managing General Partner does not have a separate audit committee. As such, the board of directors of the Managing General Partner fulfills the functions of an audit committee. The board of directors has determined that Martha L. Long meets the requirement of an "audit committee financial expert".



The directors and officers of the Managing General Partner with authority over the Partnership are all employees of subsidiaries of AIMCO. AIMCO has adopted a code of ethics that applies to such directors and officers that is posted on AIMCO's website (www.AIMCO.com). AIMCO's website is not incorporated by reference to this filing.













Item 10.

Executive Compensation



No direct form of compensation or remuneration was paid by the Partnership to any officer or director of Fox Capital Management Corporation during the year ended December 31, 2007.



Item 11.

Security Ownership of Certain Beneficial Owners and Management



Except as noted below, no person or entity was known by the Registrant to be the beneficial owner of more than 5% of the Limited Partnership Units (the Units) of the Registrant as of December 31, 2007.



|                            |                 |           
|--------------------------- | --------------- | ----------
|Name of                     |                 | Percentage
|Beneficial Owner            | Number of Units | of Class  
|                            |                 |           
|AIMCO IPLP, L.P.            |                 |           
|(an affiliate of AIMCO)     | 47,488.68       | 36.55%    
|AIMCO Properties, L.P.      |                 |           
|(an affiliate of AIMCO)     | 37,211.01       | 28.64%    
|Fox Capital Management Corp |                 |           
|(an affiliate of AIMCO)`    | 200.00          | 0.15%     



AIMCO IPLP, L.P. and Fox Capital Management Corp. are indirectly ultimately owned by AIMCO. Their business addresses are 55 Beattie Place, Greenville, SC 29602.



AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO.  Its business address is 4582 S. Ulster St. Parkway, Suite 1100, Denver, Colorado 80237.



No director or officer of the Managing General Partner owns any Units.



Item 12.

Certain Relationships and Related Transactions, and Director Independence



The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities.  The Partnership Agreement provides for payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.



Affiliates of the Managing General Partner receive 5% of gross receipts from the Partnership's property as compensation for providing property management services. The Partnership paid to such affiliates approximately $106,000 and $102,000 for the years ended December 31, 2007 and 2006 respectively, which are included in operating expenses on the consolidated statements of operations included in Item 7. Financial Statements.



Affiliates of the Managing General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $109,000 and $85,000 for the years ended December 31, 2007 and 2006, respectively, which is included in general and administrative expenses on the consolidated statements of operations included in Item 7. Financial Statements.



Pursuant to the Partnership Agreement, for managing the affairs of the Partnership, the Managing General Partner is entitled to receive a Partnership management fee equal to 5% of the Partnership's adjusted cash from operations as distributed. No such fees were paid for the years ended December 31, 2007 and 2006 as there were no distributions from operations during either period.







AIMCO Properties, L.P., an affiliate of the Managing General Partner, has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. During 2004 and 2005, AIMCO Properties, L.P. exceeded this limit and advanced the Partnership approximately $920,000 to cover the payoff of the existing mortgage and closing costs related to the refinancing of the mortgage encumbering Woods of Inverness Apartments and to cover operating expenses and capital improvements. During the years ended December 31, 2007 and 2006, AIMCO Properties, L.P. advanced the Partnership approximately $16,000 and $174,000 to cover operating expenses and capital expenditures at Woods of Inverness Apartments, respectively. Interest was charged at prime plus 2% and interest expense was approximately $61,000 and $76,000 for the years ended December 31, 2007 and 2006, respectively. During the year ended December 31, 2007, the Partnership repaid approximately $786,000 of advances and approximately $81,000 of associated accrued interest with proceeds from the refinancing of the mortgage encumbering Woods of Inverness Apartments.  During the year ended December 31, 2006, approximately $201,000 of advances and approximately $75,000 of associated accrued interest were repaid with cash from operations. At December 31, 2007, there were no advances or associated accrued interest due to AIMCO Properties, L.P. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances.  For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.



The Partnership insures its property up to certain limits through coverage provided by AIMCO, which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the years ended December 31, 2007 and 2006, the Partnership was charged by AIMCO and its affiliates approximately $58,000 and $54,000, respectively, for insurance coverage and fees associated with policy claims administration.



In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 84,899.69 Units in the Partnership representing 65.34% of the outstanding Units at December 31, 2007.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 65.34% of the outstanding Units, AIMCO and its affiliates are in a position to influence all voting decisions with respect to the Partnership. However, with respect to 47,488.68 Units owned by AIMCO IPLP, L.P., an affiliate of the Managing General Partner and of AIMCO, such affiliate is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to its affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on AIMCO and its affiliates' ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.





Neither of the Managing General Partners directors is independent under the independence standards established for New York Stock Exchange listed companies as both directors are employed by the parent of the Managing General Partner.



Item 13.

Exhibits



See Exhibit Index.



Item 14.

Principal Accountant Fees and Services



The Managing General Partner has reappointed Ernst & Young LLP as independent auditors to audit the consolidated financial statements of the Partnership for 2008.  The aggregate fees billed for services rendered by Ernst & Young LLP for 2007 and 2006 are described below.



Audit Fees.  Fees for audit services totaled approximately $36,000 and $34,000 for 2007 and 2006, respectively.   Fees for audit services also include fees for the reviews of the Partnership's Quarterly Reports on Form 10-QSB.



Tax Fees.  Fees for tax services totaled approximately $6,000 for both 2007 and 2006.











SIGNATURES







In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



| |                                         
| | ----------------------------------------
| | CENTURY PROPERTIES FUND XVI             
| |                                         
| | By:   Fox Capital Management Corporation
| | Managing General Partner                
| |                                         
| | By:   /s/Martha L. Long                 
| | Martha L. Long                          
| | Senior Vice President                   
| |                                         
| | By:   /s/Stephen B. Waters              
| | Stephen B. Waters                       
| | Vice President                          
| |                                         
| | Date: March 28, 2008                    



In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                     |                        |                     
|-------------------- | ---------------------- | --------------------
|/s/Harry G. Alcock   | Director and Executive | Date: March 28, 2008
|Harry G. Alcock      | Vice President         |                     
|                     |                        |                     
|/s/Martha L. Long    | Director and Senior    | Date: March 28, 2008
|Martha L. Long       | Vice President         |                     
|                     |                        |                     
|/s/Stephen B. Waters | Vice President         | Date: March 28, 2008
|Stephen B. Waters    |                        |                     











CENTURY PROPERTIES FUND XVI



EXHIBIT INDEX





Exhibit Number

Description of Exhibit



2.5

Master Indemnity Agreement incorporated by reference to Current Report on Form 8-K filed by Insignia Financial Group, Inc. with the Securities and Exchange Commission on September 1, 1995.



3.4

Agreement of Limited Partnership incorporated by reference to Exhibit A to the Prospectus of the Registrant dated August 17, 1981 and thereafter supplemented June 25, 1979 included in the Registrant's Registration Statement on Form S-11 (Reg. No. 2-71473).



10.11

Deed of Trust, Security Agreement and Fixture Filing dated September 21, 2007 between Woods of Inverness CPF 16, L.P., a Delaware limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation. (Incorporated by reference to the Partnerships Current Report on Form 8-K dated September 21, 2007)



10.12

Secured Promissory Note dated September 21, 2007 between Woods of Inverness CPF 16, L.P., a Delaware limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation. (Incorporated by reference to the Partnerships Current Report on Form 8-K dated September 21, 2007)



10.13

Carveout Guarantee and Indemnity Agreement dated September 21, 2007 between AIMCO Properties, L.P., a Delaware limited partnership, and Transamerica Occidental Life Insurance Company, an Iowa corporation. (Incorporated by reference to the Partnerships Current Report on Form 8-K dated September 21, 2007)



31.1

Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2

Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.1

Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.