**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

 

 

| **ý** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------|----------------------------------------------------------------------------------------------|

 

**For the quarterly periodended September 30, 2004**

 

 

**Commission file number 33-18756**

 

 

**ASSISTED HOUSING FUND L.P. I**

(Exact name of registrant asspecified in its charter)

 

| **Washington**          | ** ** | **91-1391150**                    |
|-------------------------|------------|-----------------------------------|
| (State of organization) |       | (IRS Employer Identification No.) |

 

 

 

 

| **1301 Fifth Avenue, Suite 1330, Seattle, WA** | ** ** | **98101**  |
|------------------------------------------------|------------|------------|
| (Address of principal executive offices)       |       | (Zip code) |

 

| ** **                                                                  |
|-----------------------------------------------------------------------------|
| Registrant’s telephone number, including area code: **(206) 377-1310** |

 

 

Securities registeredpursuant to Section 12(b) of the Act:  **None**

 

Securities registeredpursuant to Section 12(g) of the Act:

 

| **Units of Limited Partnership Interest** |
|-------------------------------------------|
| (Title of class)                          |

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes ý  No o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in rule 12b-2 of the Exchange Act.  Yes o  No ý

 

 

----

 

**ASSISTED HOUSING FUND L.P.I**

 

**FORM10-Q**

 

**For theNine Months Ended September 30, 2004**

 

**Tableof Contents**

 
|    | ** ** | **PART I. FINANCIAL  INFORMATION**                                                          |   |
|---------|------------|---------------------------------------------------------------------------------------------|--------|
|    |       |                                                                                        |   |
| Item 1  |       | Financial Statements:                                                                       |   |
|    |       | Consolidated Balance  Sheets                                                                |   |
|    |       | Consolidated  Statements of Operations                                                      |   |
|    |       | Consolidated  Statements of Cash Flows                                                      |   |
|    |       | Notes to  Consolidated Financial Statements                                                 |   |
| Item  2 |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
| Item  3 |       | Quantitative  and Qualitative Disclosures About Market Risk                                 |   |
| Item 4  |       | Controls and Procedures                                                                     |   |

 

 
|       | ** ** | **PART II. OTHER INFORMATION**    |   |
|------------|------------|-----------------------------------|--------|
|       |       |                              |   |
| Item  1    |       | Legal  Proceedings                |   |
| Item 6     |       | Exhibits and  Reports on Form 8-K |   |
| Signatures |       |                              |   |

 

 

2

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**PART I.FINANCIAL INFORMATION**

Item 1. FinancialStatements

 

**ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES**

**CONSOLIDATED  BALANCE SHEETS**

 
| ** **                                   | ** ** | **September 30,** | ** ** | ** **       | ** ** |
|----------------------------------------------|------------|-------------------|------------|------------------|------------|
| ** **                                   | ** ** | **2004**          | ** ** | **December 31,** | ** ** |
| ** **                                   | ** ** | **(unaudited)**   | ** ** | **2003**         | ** ** |
| **ASSETS**                                   |       |              |       |             |       |
|                                         |       |              |       |             |       |
| Rental property and equipment, at cost:      |       |              |       |             |       |
| Buildings and equipment                      |       | $                 | 16,123,577 |             | $          | 16,055,005 |   |
| Accumulated depreciation                     |       | (9,019,636        | )          | (8,565,223       | )          |
|                                         |       | 7,103,941         |       | 7,489,782        |       |
| Land                                         |       | 723,111           |       | 723,111          |       |
|                                         |       | 7,827,052         |       | 8,212,893        |       |
| Cash:                                        |       |              |       |             |       |
| Rental operation (Note 5)                    |       | 149,416           |       | 177,487          |       |
| Partnership                                  |       | 14,031            |       | 5,700            |       |
|                                         |       | 163,447           |       | 183,187          |       |
| Restricted deposits:                         |       |              |       |             |       |
| Tenant trust - security deposits             |       | 122,907           |       | 122,048          |       |
| Reserve accounts, partially pledged (Note 3) |       | 527,367           |       | 598,343          |       |
|                                         |       | 650,274           |       | 720,391          |       |
| Other assets:                                |       |              |       |             |       |
| Accounts receivable                          |       | 43,371            |       | 32,068           |       |
| Accounts receivable - DGP (Note 2)           |       | 24,079            |       | 24,079           |       |
| Prepaid expenses                             |       | 34,964            |       | 15,719           |       |
|                                         |       | 102,414           |       | 71,866           |       |
| **TOTAL ASSETS**                             |       | $                 | 8,743,187  |             | $          | 9,188,337 |   |
|                                         |       |              |       |             |       |
| **LIABILITIES**                              |       |              |       |             |       |
| Mortgage notes payable (Note 4)              |       | $                 | 12,180,805 |             | $          | 12,215,065 |   |
| Accounts payable                             |       | 272,448           |       | 266,284          |       |
| Due to affiliates (Note 2)                   |       | 874,597           |       | 798,510          |       |
| Accrued liabilities                          |       | 195,303           |       | 141,530          |       |
| Security deposits payable                    |       | 116,657           |       | 115,974          |       |
| **TOTAL LIABILITIES**                        |       | 13,639,810        |       | 13,537,363       |       |
|                                         |       |              |       |             |       |
| Commitments and contingencies (Note 6)       |       |              |       |             |       |
|                                         |       |              |       |             |       |
| Minority interests in property partnerships  |       | 338,938           |       | 361,389          |       |
|                                         |       |              |       |             |       |
| **PARTNERS' EQUITY (DEFICIT)**               |       |              |       |             |       |
| Limited partners                             |       | (5,151,998        | )          | (4,632,104       | )          |
| General partner                              |       | (83,563           | )          | (78,311          | )          |
|                                         |       | (5,235,561        | )          | (4,710,415       | )          |
| **TOTAL LIABILITIES AND PARTNERS' DEFICIT**  |       | $                 | 8,743,187  |             | $          | 9,188,337 |   |
|                                              |            |                   |            |                  |            |  |  |  |

 

See accompanying notes to consolidated financial statements.

 

3

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**ASSISTED HOUSING FUND L.P. I ANDSUBSIDIARIES**

**CONSOLIDATED STATEMENTS OFOPERATIONS**

(unaudited)

 
| ** **                                                     | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|----------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                     | ** ** | **September 30,**      | ** ** | **September 30,**     | ** ** |
| ** **                                                     | ** ** | **2004**               | ** ** | **2003**              | ** ** | **2004** | ** ** | **2003** | ** ** |
| **Revenue:**                                                   |       |                   |       |                  |       |   |   |   |   |
| Rent                                                           |       | $                      | 445,194    |                  | $          | 424,818 |   | $ | 1,315,460 |   | $ | 1,305,460 |   |
| Miscellaneous                                                  |       | 12,617                 |       | 16,935                |       | 46,450 |   | 45,623 |   |
|                                                           |       | 457,811                |       | 441,753               |       | 1,361,910 |   | 1,351,083 |   |
|                                                           |       |                   |       |                  |       |   |   |   |   |
| **Rental  operating expenses:**                                |       |                   |       |                  |       |   |   |   |   |
| Repairs and  maintenance                                       |       | 93,928                 |       | 104,321               |       | 264,803 |   | 307,319 |   |
| Utilities                                                      |       | 84,511                 |       | 80,918                |       | 255,646 |   | 252,070 |   |
| General and  operating                                         |       | 103,201                |       | 93,882                |       | 346,219 |   | 314,947 |   |
| Taxes and  insurance                                           |       | 102,537                |       | 94,640                |       | 284,872 |   | 271,193 |   |
| Interest                                                       |       | 76,026                 |       | 74,181                |       | 230,014 |   | 232,902 |   |
| Depreciation                                                   |       | 151,415                |       | 139,904               |       | 454,413 |   | 401,993 |   |
|                                                           |       | 611,618                |       | 587,846               |       | 1,835,967 |   | 1,780,424 |   |
| **Loss  from rental operations**                               |       | (153,807               | )          | (146,093              | )          | (474,057 | ) | (429,341 | ) |
|                                                           |       |                   |       |                  |       |   |   |   |   |
| **Other  income (expense):**                                   |       |                   |       |                  |       |   |   |   |   |
| Interest earned  on partnership cash                           |       | 1                      |       | 17                    |       | 2 |   | 56 |   |
| Minority  interest in operations                               |       | 6,821                  |       | 6,746                 |       | 20,589 |   | 20,143 |   |
| General and  administrative                                    |       | (6,531                 | )          | (8,009                | )          | (71,680 | ) | (68,184 | ) |
|                                                           |       | 291                    |       | (1,246                | )          | (51,089 | ) | (47,985 | ) |
| **Net  loss**                                                  |       | $                      | (153,516   | )                     | $          | (147,339 | ) | $ | (525,146 | ) | $ | (477,326 | ) |
|                                                           |       |                   |       |                  |       |   |   |   |   |
| Net loss per  unit of limited partnership interest (703 units) |       | $                      | (218       | )                     | $          | (210 | ) | $ | (747 | ) | $ | (679 | ) |
|                                                           |       |                   |       |                  |       |   |   |   |   |
|                                                                |            |                        |            |                       |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

See accompanying notes toconsolidated financial statements.

 

4

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**ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

(unaudited)

 
| ** **                                                                                 | ** ** | **Nine months ended September 30,** | ** ** |
|--------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                                                                 | ** ** | **2004**                            | ** ** | **2003** | ** ** |
| ** **                                                                                 | ** ** | ** **                          | ** ** | ** ** | ** ** |
| **Cash  flows from operating activities:**                                                 |       |                                |       |   |   |
| Net loss                                                                                   |       | $                                   | (525,146   | ) | $ | (477,326 | ) |
| Adjustments to  reconcile net loss to net cash provided by (used in) operating activities: |       |                                |       |   |   |
| Depreciation                                                                               |       | 454,413                             |       | 401,993 |   |
| Minority  interests in operations                                                          |       | (22,451                             | )          | (22,738 | ) |
| Changes in  certain assets and liabilities:                                                |       |                                |       |   |   |
| Accounts  receivable                                                                       |       | (11,303                             | )          | 40 |   |
| Prepaid expenses                                                                           |       | (19,245                             | )          | (13,421 | ) |
| Accounts payable                                                                           |       | 6,164                               |       | (13,289 | ) |
| Due to  affiliates                                                                         |       | 76,087                              |       | 55,867 |   |
| Accrued  liabilities                                                                       |       | 53,773                              |       | 23,205 |   |
| Tenant security  deposits                                                                  |       | (176                                | )          | 1,592 |   |
|                                                                                       |       |                                |       |   |   |
| Net cash  provided (used) in operating activities:                                         |       | 12,116                              |       | (44,077 | ) |
|                                                                                       |       |                                |       |   |   |
| **Cash  flows from investing activities:**                                                 |       |                                |       |   |   |
| Purchase of  depreciable property                                                          |       | (68,572                             | )          | (18,105 | ) |
| Decrease in  reserve deposits                                                              |       | 70,976                              |       | 70,468 |   |
|                                                                                       |       |                                |       |   |   |
| Net cash  provided in investing activities                                                 |       | 2,404                               |       | 52,363 |   |
|                                                                                       |       |                                |       |   |   |
| **Cash  flows from financing activities:**                                                 |       |                                |       |   |   |
| Mortgage  principal payments                                                               |       | (34,260                             | )          | (31,262 | ) |
|                                                                                       |       |                                |       |   |   |
| Net cash used in  financing activities                                                     |       | (34,260                             | )          | (31,262 | ) |
|                                                                                       |       |                                |       |   |   |
| Net decrease in  cash                                                                      |       | (19,740                             | )          | (22,976 | ) |
|                                                                                       |       |                                |       |   |   |
| Cash - beginning  of year                                                                  |       | 183,187                             |       | 166,278 |   |
|                                                                                       |       |                                |       |   |   |
| Cash - end of  period                                                                      |       | $                                   | 163,447    |   | $ | 143,302 |   |
|                                                                                       |       |                                |       |   |   |
| Supplemental  disclosure of cash flow information:                                         |       |                                |       |   |   |
| Cash paid for  interest                                                                    |       | $                                   | 230,014    |   | $ | 232,902 |   |
|                                                                                       |       |                                |       |   |   |

 

See accompanying notes toconsolidated financial statements.

 

5

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**ASSISTED HOUSING FUND L.P. I ANDSUBSIDIARIES**

 

**NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS**

 

**For theNine Months Ended September 30, 2004**

**(Unaudited)**

** **

**NOTE1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

General

The unauditedfinancial statements presented herein have been prepared in accordance with theinstructions to Form 10-Q and do not include all of the information and notedisclosures required by accounting principles generally accepted in the UnitedStates of America.  These statementsshould be read in conjunction with financial statements and notes theretoincluded with the Assisted Housing Fund L.P. I’s (the Investor Partnership)Form 10-K for the year ended December 31, 2003. In the opinion of management, these financial statements include alladjustments, consisting only of normal recurring adjustments, necessary topresent fairly the Investor Partnership’s financial position and results ofoperations.  The results of operationsfor the periods may not be indicative of the results to be expected for theyear.

 

Nature of Business

Assisted HousingFund L.P.I is a limited partnership which was organized November 2, 1987, underthe laws of the state of Washington, to acquire limited partnership interestsin other partnerships (the Property Partnerships), each of which has beenorganized to develop or purchase a low- or moderate-incomeapartment project.  The InvestorPartnership’s General Partner is Murphey Favre Properties, Inc. (MFP), a wholly-ownedsubsidiary of Washington Mutual Bank (WMB), a wholly-owned subsidiary ofWashington Mutual, Inc.  At December 31,2003, 336 partners held the 703 units of limited partnership interestsoutstanding**.**

** **

The InvestorPartnership has invested as a limited partner in 11 Property Partnerships.  The developer of each apartment projectserves as the Developer General Partner (DGP) of the respective PropertyPartnership. The properties owned by the Property Partnerships are located inMichigan, Wisconsin, Ohio, West Virginia and Washington.  The apartment projects were financed andconstructed under Section 515 of the National Housing Act, as amended(administered by the U. S. Department of Agriculture Rural Development Agency,through its Rural Housing Service (RHS)). Under this program, the PropertyPartnerships provide housing to low-and moderate-incometenants.  Lower rental charges to tenantsare recovered by the Property Partnerships through an interest reductionprogram which reduces the effective interest rate over the lives of the mortgagesto 1 percent and through a rental assistance program whereby RHS pays theProperty Partnerships for a portion of qualified tenant rents.  During the three and nine months endedSeptember 30, 2004, rental revenue from RHS totaled $167,371 and $487,281,representing 37% and 36% of total revenue, respectively.   Construction of the apartment projects beganbetween June 1988 and May 1990 and rental operations began between April 1989and January 1991.

 

Additionally, inexchange for an allocation of federal low-income housing tax creditsunder Section 42 of the Internal Revenue Code, each Property Partnership hasentered into an agreement with an agency of the state in which the apartmentproject is located, whereby the Property Partnership has agreed to maintain allapartment units as both rent restricted and occupied by low-incometenants for a minimum period of 15 years.

 

The investmentobjectives of the Investor Partnership include the following:

 

•                  provide limited partners with tax benefits from investing in theInvestor Partnership in the form of low-income housing tax credits underSection 42 of the Internal Review Code of 1986, as amended (the Code),

•                  preserve and protect the Investor Partnership capital, and

•                  realize long-term capital appreciation in the value of the propertiesupon the sale or refinancing of the properties or the Property Partnerships.

 

 

6

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During 2004, the properties will have completed the 15-year complianceperiod, thus eliminating the opportunity for an occurrence of a tax creditrecapture event which may occur when there is a failure to comply with therequirements of the Internal Revenue Service. As each property completes the compliance period, the InvestorPartnership may explore opportunities to sell or refinance the propertieswithin the guidelines allowed and permissions granted by the U.S. Department ofAgriculture Rural Development Agency, through its Rural Housing Service (RHS),under its mortgage note agreements.

 

Principles of Consolidation

The financial statements consolidate the financial statements of theInvestor Partnership and the following 11 Property Partnerships in which it hasinvested as a limited partner:

 
| Fairview Apartments Company Limited Partnership  (Fairview)                                |
|--------------------------------------------------------------------------------------------|
| Ionia Limited Dividend Housing Association Limited  Partnership (Ionia)                    |
| Logan Apartments Company Limited Partnership (Logan)                                       |
| Rolling Brook II Limited Dividend Housing  Association Limited Partnership (Rolling Brook) |
| Wexford Manor Limited Dividend Housing Association  Limited Partnership (Wexford)          |
| Blue Heron Apartment Associates Limited Partnership  (Blue Heron)                          |
| Glenwood Apartment Associates Limited Partnership  (Glenwood)                              |
| Pacific Place Apartment Associates Limited  Partnership (Pacific Place)                    |
| Cove Limited Dividend Housing Association Limited  Partnership (Cove)                      |
| Washington Street Limited Dividend Housing  Association Limited Partnership (Washington)   |
| Fayette Hills Limited Partnership (Fayette).                                               |

 

The financialstatements are presented on a consolidated basis because the InvestorPartnership holds approximately 99 percent of the profit and loss interests andapproximately 55 percent of the equity interests in each PropertyPartnership.  Through an affiliate, whois a Special Limited Partner in each of the 11 Property Partnerships, theInvestor Partnership controls certain fundamental decisions affecting theoperation of the Property Partnerships. These fundamental decisions include significant purchases of assets, materialborrowings or creation of liens on the underlying properties, entering intomaterial contracts, making tax elections and any act that would causetermination of the Property Partnership. All material inter-partnership transactions and balances have beeneliminated.  Net losses allocable to theminority partners for the nine months ended September 30, 2004 and for thetwelve months ended December 31, 2003 were $20,589 and $26,980, respectively.

 

Method of Accounting

**The accrual method of accounting is used for financialstatement purposes.**

 

Cost Overruns

The partnership agreements for the Property Partnerships required theDGPs to fund cost overruns on the development of the apartment projects.  Such cost overruns, totaling $589,462, havebeen recorded as minority interests in Property Partnerships and have beenincluded in the cost basis of the rental property.  All depreciation related thereto has beenspecially allocated to the respective DGPs.

 

Depreciation

Depreciation is computedfor financial statement purposes using the straight-line method over theestimated useful lives of the related assets as follows:

 

| Building shell and components |   | 27.5 | years |
|-------------------------------|--------|------|-------|
| Land improvements             |   | 15   | years |
| Appliances                    |   | 5-10 | years |
| Carpets and draperies         |   | 5-10 | years |

 

7

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Income Taxes

No income tax provision has been included in the financial statementssince income or loss of the Investor Partnership is required to be reported bythe respective partners on their income tax returns.

 

CashEquivalents

For purpose of reportingcash flows, the Investor Partnership considers all investment instrumentspurchased with a maturity of three months or less to be cash equivalents.  At September 30, 2004 and December 31, 2003,there were no cash equivalents.

 

Concentration of Credit

The Property Partnershipsmaintain cash in bank deposit accounts which, at times, may exceed federallyinsured limits.  The PropertyPartnerships have not experienced any losses in such accounts.  Management believes the Property Partnershipsare not exposed to any significant credit risk on cash in such bank depositaccounts.

 

Estimates

The preparation of financialstatements, in conformity with accounting principles generally accepted in theUnited States of America, requires management to make estimates and assumptionsthat affect certain reported amounts and disclosures.

 

Adjustments

The unaudited interimfinancial statements include all adjustments that are, in the opinion ofmanagement, necessary to fairly state the results for the interim periods presented.  These adjustments are all of a normalrecurring nature.

 

Reclassification

Certain amounts as previously presented have been reclassified toconform to the current year presentation.

 

**NOTE - 2   TRANSACTIONS WITHAFFILIATES**

 

In connection withthe acquisition and development of rental property and the management of boththe rental property and the Investor Partnership, the Investor Partnership andProperty Partnerships have paid or accrued the following amounts to certainaffiliates:

 
| ** **                                                                 | ** ** | **Nine Months Ended**  | ** ** | **Nine Months Ended**  | ** ** |
|----------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                 | ** ** | **September 30, 2004** | ** ** | **September 30, 2003** | ** ** |
| Murphey Favre  Properties — partnership service fees                  |       | $                      | 5,625      |                   | $          | 5,625 |   |
|                                                                       |       |                   |       |                   |       |
| Developer  general partners and affiliates — property management fees |       | $                      | 73,973     |                   | $          | 73,738 |   |

 

Property management feesare paid out of rental operations. Partnership services fees are payable from future sales of theproperties, to the extent they are not paid from distributions of rentaloperation cash (see Note 5).

 

Under terms of themanagement service agreements, seven of the 11 Property Partnerships haveaffiliates of the DGPs which provide management services for the rentalproperties. They receive compensation for such services in amountsapproximating 9% of rental receipts. Three of the Property Partnerships areco-managed by affiliates of the DGPs and provide management services for therental properties.  These affiliatesreceive compensation for the services provided in amounts approximating 2% ofrental receipts.

 

8

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As of September 30, 2004 and December 31, 2003, related party payablesconsisted of the following:

 
| ** **                      | ** ** | **September 30, 2004** | ** ** | **December 31, 2003** | ** ** |
|---------------------------------|------------|------------------------|------------|-----------------------|------------|
| Advances from  DGPs             |       | $                      | 201,784    |                  | $          | 201, 784 |   |
| Program  management fees        |       | 326,726                |       | 326,726               |       |
| Partnership  services fees      |       | 73,125                 |       | 67,500                |       |
| Advances from  MFP              |       | 271,987                |       | 201,525               |       |
| Advances from  affiliate of DGP |       | 975                    |       | 975                   |       |
|                            |       | $                      | 874,597    |                  | $          | 798,510 |   |
|                            |       |                   |       |                  |       |

** **

** **

Advances from DGPs amounted to $201,784 at September 30, 2004 andDecember 31, 2003. Terms of RHS Loan Agreements require each DGP to provideinterest-free advances of stipulated amounts as initial operating capitalto the Property Partnerships.  Thebalances at September 30, 2004 and December 31, 2003 include DGP interest-freeadvances of $152,107.  In addition, thebalances include non-interest bearing DGP advances of $35,468 for landimprovements and $14,209 to fund operating deficits. Advances from the DGPs mayonly be repaid from the proceeds of future sales of the respective properties.

 

Program management fees due to MFP amounted to $326,726 and representamounts accrued through December 31, 1996. No accruals have been recorded since that date (see Note 6).  Partnership services fees are also payable toMFP and reflect accruals through September 30, 2004 and December 31, 2003.Partnership fees are payable from future sales of the properties, to the extentthey are not paid from distributions of rental operation cash (see Note 5).

 

During the nine months ended September 30 and the full year 2003, MFPadvanced $70,462 and $50,242, respectively, to the Investor Partnership foradministrative expenses.  These advancesbrought the balances due to MFP at September 30, 2004 and December 31, 2003 to$271,987 and $201,525, respectively.

 

An affiliate of one ofthe DGPs advanced $975 to the Property Partnership of the DGP.  Advances made to one of the DGPs during 2001totaled $9,000.  During 2000, advances tothis same DGP totaled $15,079 (see Note 6).

 

The Investor Partnershipmaintains deposits with WMB in certain checking and money market accounts whichaggregated $14,031 and $5,700 at September 30, 2004 and December 31, 2003,respectively.

 

**NOTE 3 - CASH IN RESERVE ACCOUNTS**

 

The LoanAgreements between the Property Partnerships and RHS require the PropertyPartnerships to deposit into separate reserve accounts $127,196 annually untilthe reserve accounts reach $1,271,277. Subject to RHS approval, these funds may be used for specific purposes.During the nine months ended September 30, 2004, RHS approved the withdrawal ofreserve funds at several of the Property Partnerships resulting in a netdecrease of $70,976 in the restricted deposit reserve accounts.

 

As of September 30, 2004 and December 31, 2003, reserve funds pledgedby the Logan DGP totaled $52,300 (see Note 6).

 

9

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**NOTE 4 - MORTGAGE NOTES PAYABLE**

 

The mortgage notes are payable to RHS in monthly installments totaling$26,959.  In accordance with provisionsof Interest Credit Agreements, RHS provides monthly interest credits totaling$69,129 which reduce the interest rates stated in the mortgage notes toeffective rates of one (1) percent over the lives of the mortgages.  Amortization of principal is based on thestated rates of 8.75% to 10.75% under RHS’s Predetermined Amortization ScheduleSystem (PASS).  The mortgage notes matureMay 2039 through March 2040. Substantially all of the rental property and equipment is pledged ascollateral on the mortgages.  No partneris individually liable on the mortgage notes.

 

The mortgage notes are regulated by the U.S. Government; there is nopublic or private market for the mortgage notes. Accordingly, management hasdetermined that users of the financial statements would derive no benefit fromany estimate of fair value and performing such an analysis would not bepracticable.

** **

Principal payments on the mortgage notes for the next 5 years are asfollows:
| **Year**                         | ** ** | ** ** | **Amount** | ** ** |
|----------------------------------|------------|------------|------------|------------|
| 2004 for the  remaining 3 months |       | ** ** | $          | 11,937     | ** ** |
| 2005                             |       |       | 50,535     |       |
| 2006                             |       |       | 55,281     |       |
| 2007                             |       |       | 59,803     |       |
| 2008                             |       |       | 66,159     |       |
| Thereafter                       |       |       | 11,937,090 |       |
|                             |       |       | $          | 12,180,805 |   |

 

 

Logan received a Letter of Acceleration of the Loan Account in 2001; furtherproceedings were suspended in 2001 and have not been resumed.  In addition, real estate taxes totaling $57,637were delinquent at September 30, 2004, which is a violation of the LoanAgreement.  At the time of this filing,no notice of default has been received regarding the delinquent real estatetaxes.  The Logan mortgage note balancetotaled $981,731 and $984,306 at September 30, 2004 and December 31, 2003,respectively.

 

**NOTE 5 - RENTAL OPERATION CASH**

 

RHS regulations limit the distribution of rental operation cash to amaximum of $38,090 annually.  Anydistribution to the Investor Partnership from rental operation cash is to bemade in accordance with the respective partnership agreements.  Whether or not a Property Partnership makesany limited distribution is based on the Property Partnership’s results ofoperations and is at the discretion of the DGP.

 

**NOTE 6 - CONTINGENCIES**

 

The Investor Partnership has ceased accrual of the annual programmanagement fee, payable in part to the general partner. Management hasdetermined that the source of payment, a future sale or refinance of one ormore of the Property Partnerships, may not be sufficient to pay fees accrued inexcess of the $544,540 payable at December 31, 1996.  As a consequence, management has elected totreat fees for years subsequent to 1996 as a contingent liability. At September30, 2004 and December 31, 2003, the contingent liability for program managementfees totaled $540,248 and $521,619, respectively.

 

 

As discussed in Note 2, one of the Logan DGP owes Logan $24,079 foradvances not in compliance with RHS regulations.  In addition, that Logan DGP pledged Loganassets for his own use (see Note 3).  Helater filed a petition in personal bankruptcy.  The Logan DGP is in the processof being replaced.  That U.S. BankruptcyCourt has approved a transfer of that DGP’s ownership interest in Logan to areplacement DGP.  The replacement DGP isexpected to restore the advances and pledged accounts to Logan either in the fourthquarter of 2004 or in the first quarter of 2005 when the transfer is expectedto occur.  Accordingly, no adjustment hasbeen made to the carrying value of these assets.

 

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**Item 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

 

#### **Cautionary Statements**

Certain matters discussed herein constitute forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of1995.  The Assisted Housing Fund L.P. Iintends such forward-looking statements to be covered by the safe harborprovisions for forward-looking statements and is including this statement forpurposes of complying with these safe harbor provisions.  Although the Investor Partnership believesthe forward-looking statements are based on reasonable assumptions, the InvestorPartnership can give no assurance that their expectations will beattained.  Actual results and the timingof certain events could differ materially from those projected or contemplatedby the forward-looking statements due to a number of factors including, withoutlimitation, occupancy levels, the outcome of legal proceeding regarding theLogan DGP, general economic and real estate conditions and interest rates.

 

Occupancy levels at the Property Partnerships are one of the keyoperating factors for the Property Partnerships. The overall occupancy levelfor the quarter ending September 30, 2004 was 90% as compared to 91% for thesame period of 2003. Four of the properties experienced a decline in occupancylevels from June 30, 2004 to September 30, 2004. The lowest occupancy level foran individual Property Partnership at September 30, 2004 was 75%.

 

**Results of Operations**

For the Investor Partnership and its subsidiary Property Partnerships, netloss increased $6,177 and $47,820 or 4% and 10% for the three and nine monthsended September 30, 2004 compared with the same periods in 2003.  Net loss before depreciation was $70,733 and $75,333for the nine months ended September 30, 2004 and 2003, with depreciationexpense of $454,413 and $401,993, respectively.

 

Total Revenue of $457,811 and $1,361,910 for the three and nine monthsended September 30, 2004 increased $16,058 and $10,827, respectively, comparedwith the same periods in 2003.  The Revenueincrease was primarily due to an increase in rent.   Overall operating expenses increased $23,772 and$55,543 for the three and nine months ended September 30, 2004 respectively, ascompared with the same period in 2003.  Increases in general and administrative expenses were due to increased auditfees of $6,500 attributable to compliance testing related to the Sarbanes-OxleyAct of 2002 and an increase in on site salaries and benefits of $16,300.  Other increases over the same period last yearare depreciation of $52,420 and property taxes and insurance of $13,679. Repairand Maintenance expenses decreased $42,516 for the nine months ended September30, 2004 compared to September 30, 2003. The decrease is mainly attributable to non-recurring major repairs forlast year’s storm damage at a couple of the properties.

 

Net loss from rental operations increased $7,714 and $44,716 or 5% and 10%for the three and nine months ended September 30, 2004 respectively, comparedwith the same periods in 2003.

 

##### **Liquidity, Capital Resources, and RegulatoryCompliance**

At September 30, 2004, the Investor Partnership’s operating cashamounted to $14,031 and the Property Partnerships’ operating cash totaled $149,416for a combined total of $163,447.  AtDecember 31, 2003, the cash balance of $183,187 included $5,700 in InvestorPartnership cash and $177,487 in operating cash accounts of the PropertyPartnerships.

 

Consolidated operational cash flows for nine months ended September 30,2004 totaled $12,116 compared to a net operational cash flow used of $44,077 inthe same period of 2003.  Achievingpositive cash flows continues to be a problem at several of the PropertyPartnerships.  For the nine months ended September30, 2004, six properties generated positive cash flow. For the five thatgenerated negative cash flow, the deficits were funded from rental operatingcash and authorized reserve account withdrawals. The Investor Partnership isnot required to fund additional amounts to the Property Partnerships based oneach Property Partnership agreement. Additionally, each Property Partnership isoperated as an individual project, and without any contractual arrangements ofany kind between the Property Partnerships.

 

At September 30, 2004, Logan Apartments Company Limited Partnership’s(Logan) was approximately $57,836 in arrears in property taxes.  While this liquidity matter is a violation ofRHS regulations, RHS has taken no action against Logan.  Further actions taken by a Logan DGP in 2000and 2001 that led to certain other violations of RHS regulations are thesubject of litigation and bankruptcy proceedings, more fully described in PartII. Item 1. Legal Proceedings.

 

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**Item 3. Quantitative andQualitative Disclosures about Market Risks**

 

The management of the Investor Partnership does not believe that theoperation of the Investor Partnership and the Property Partnerships arematerially affected by interest rates or other financial market risks at thistime.  In the event of proposed futuresale of any of the Property Partnerships’ properties, mortgage interest rates andavailability of financing to potential buyers may have an impact on the sellingopportunity.

 

**Item 4. Controls andProcedures**

 

Within the ninety (90) days prior to the date of this report, anevaluation was performed under the supervision and with the participation ofthe Investor Partnership, including the President and the Principal AccountingOfficer of the General Partner, of the effectiveness of the design andoperation of the Investor Partnership’s disclosure and control procedures.  Based on that evaluation, the InvestorPartnership’s management, including the President and the Principal AccountingOfficer of the General Partner, concluded that the Investor Partnership’sdisclosure controls and procedures were effective as of September 30, 2004.  There have been no significant changes in theInvestor Partnership’s internal controls or in other factors that couldsignificantly affect internal controls subsequent to September 30, 2004.

 

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**PART II. OTHER INFORMATION**

 

Except for thedisclosures, set forth below, all items under Part II are inapplicable or havea negative response and are therefore omitted.

 

**Item 1. Legal Proceedings**

 

There have been no changes to the legal proceedings as disclosed in ourmost recent Form 10-K filed for the year ended December 31, 2003 except asfollows:  a wholly-owned subsidiary ofBuckeye Community Hope Foundation, namely, Logan Housing Partners, Inc., anOhio corporation (“LHP1”), is expected to execute a definitive purchase andsale agreement either during the fourth quarter of 2004 or the first quarter of2005 to acquire Winer’s GP/DGP interest in Logan. This was generally approvedby the U.S. Bankruptcy Court in September 2003. LHP1 will then restore and replenish Logan assets misappropriated byWiner.  Concurrently with its acquisitionof Winer’s partnership interests in Logan, LHP1 will also acquire thepartnership interests of Thomas R. Runquist and Rural Housing Corporation (theother GPs/DGPs) in Logan.

 

###### **Item6.  Exhibits and Reports on Form 8-K**

 

a.)                                   Exhibits.

**INDEXOF EXHIBITS**

 
| **Exhibit  No.** | ** ** | **Description**                                                                                                                                        |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                                                   |
| 31.1             |       | Certification of the  President of the General Partner Pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 (filed herewith).                    |
|             |       |                                                                                                                                                   |
| 31.2             |       | Certification of the  Principal Accounting Officer of the General Partner Pursuant to Section 302  of the Sarbanes-Oxley Act of 2002 (filed herewith). |
|             |       |                                                                                                                                                   |
| 32.1             |       | Certification of the  President of the General Partner Pursuant to 18 U.S.C. Section 1350 (filed  herewith).                                           |
|             |       |                                                                                                                                                   |
| 32.2             |       | Certification of the  Principal Accounting Officer of the General Partner Pursuant to 18 U.S.C.  Section 1350 (filed herewith).                        |

 

 

(b)  Noreports on Form 8-K were filed during the quarterly period ended September 30,2004.

 

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**SIGNATURES**

 

 

 

 

 

Pursuant to the requirements of theSecurities and Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized and onthe date indicated.

 

 

ASSISTEDHOUSING FUND L.P. I

Registrant

 
| By:      | Murphey Favre Properties,  Inc. |   |   |
|----------|---------------------------------|--------|--------|
|     | *General Partner*               |   |   |   |
|     |                            |   |   |   |
|     |                            |   |   |   |
|     |                            |   |   |   |
|     |                            |   |   |   |
| By:      | /s/ Don L. Rigsbee              |   | Date:  | November 12, 2004 |
|     | Don L. Rigsbee                  |   |   |   |
| * * | *President*                     |   |   |   |

 

Pursuant to the requirementsof the Securities and Exchange Act of 1934, this report has been signed belowby the following persons on behalf of the Registrant and in the capacities andon the dates indicated:

 

 
| By:      | Murphey Favre Properties,  Inc.               |   |   |
|----------|-----------------------------------------------|--------|--------|
|     | *General Partner*                             |   |   |   |
|     |                                          |   |   |   |
|     |                                          |   |   |   |
|     |                                          |   |   |   |
|     |                                          |   |   |   |
| By:      | /s/ Larry Breitbarth                          |   | Date:  | November 12, 2004 |
|     | Larry Breitbarth                              |   |   |   |
| * * | *Treasurer and Principal  Accounting Officer* |   |   |

 

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