**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.20549**

 

**FORM 10-Q**

 

**ý****  QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended  June 30,2004**

 

**Commission file****number   33-18756**

 

**ASSISTEDHOUSING 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 registered pursuant to  Section 12(b) of the Act:  **None**              |
|                                                                                          |       |                              |
| Securities registered pursuant to  Section 12(g) of the Act:                             |

 

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

 

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o

 

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

 

 

----

 

**ASSISTEDHOUSING FUND L.P.****I**

 

**FORM 10-Q**

 

**For the Six Months EndedJune 30, 2004**

 

**Table of 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

----

 

**PART I. FINANCIALINFORMATION**

Item1. FinancialStatements

 

**ASSISTEDHOUSING FUND L.P.****I AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

 
| ** **                                        | ** ** | **June 30,  2004** | ** ** | **December 31,  2003** | ** ** |
|---------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                        | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| **ASSETS**                                        |       |                    |       |                        |       |
|                                              |       |                    |       |                        |       |
| Rental property and equipment, at cost:           |       |                    |       |                        |       |
| Buildings and equipment                           |       | $                       | 16,090,692 |                        | $          | 16,055,005 |   |
| Accumulated depreciation                          |       | (8,868,221              | )          | (8,565,223                  | )          |
|                                              |       | 7,222,471               |       | 7,489,782                   |       |
| Land                                              |       | 723,111                 |       | 723,111                     |       |
|                                              |       | 7,945,582               |       | 8,212,893                   |       |
| Cash:                                             |       |                    |       |                        |       |
| Rental operation (Note 5)                         |       | 157,154                 |       | 177,487                     |       |
| Partnership                                       |       | 14,032                  |       | 5,700                       |       |
|                                              |       | 171,186                 |       | 183,187                     |       |
| Restricted deposits:                              |       |                    |       |                        |       |
| Tenant trust - security deposits                  |       | 120,761                 |       | 122,048                     |       |
| Reserve accounts, partially pledged (Note  3)     |       | 561,810                 |       | 598,343                     |       |
|                                              |       | 682,571                 |       | 720,391                     |       |
| Other assets:                                     |       |                    |       |                        |       |
| Accounts receivable                               |       | 38,671                  |       | 32,068                      |       |
| Accounts receivable - DGP (Note 2)                |       | 24,079                  |       | 24,079                      |       |
| Prepaid expenses                                  |       | 19,429                  |       | 15,719                      |       |
|                                              |       | 82,179                  |       | 71,866                      |       |
| **TOTAL ASSETS**                                  |       | $                       | 8,881,518  |                        | $          | 9,188,337 |   |
| ** **                                        |       |                    |       |                        |       |
| **LIABILITIES**                                   |       |                    |       |                        |       |
| Mortgage notes payable (Note 4)                   |       | $                       | 12,192,488 |                        | $          | 12,215,065 |   |
| Accounts payable                                  |       | 265,600                 |       | 266,284                     |       |
| Due to affiliates (Note 2)                        |       | 868,066                 |       | 798,510                     |       |
| Accrued liabilities                               |       | 178,476                 |       | 141,530                     |       |
| Security deposits payable                         |       | 113,175                 |       | 115,974                     |       |
| **TOTAL LIABILITIES**                             |       | 13,617,805              |       | 13,537,363                  |       |
|                                              |       |                    |       |                        |       |
| Commitments and contingencies (Note 6)            |       |                    |       |                        |       |
|                                              |       |                    |       |                        |       |
| Minority interests in property partnerships       |       | 345,758                 |       | 361,389                     |       |
|                                              |       |                    |       |                        |       |
| **PARTNERS’ EQUITY  (DEFICIT)**              |       |                    |       |                        |       |
| Limited partners                                  |       | (5,000,017              | )          | (4,632,104                  | )          |
| General partner                                   |       | (82,028                 | )          | (78,311                     | )          |
|                                              |       | (5,082,045              | )          | (4,710,415                  | )          |
| **TOTAL LIABILITIES  AND PARTNERS’ DEFICIT** |       | $                       | 8,881,518  |                        | $          | 9,188,337 |   |

 

See accompanying notes to consolidated financial statements.

 

3

----

 

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

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

(unaudited)

 
| ** **                                                     | ** ** | **Three months ended  June 30,** | ** ** | **Six months ended  June 30,** | ** ** |
|----------------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                                     | ** ** | **2004**                              | ** ** | **2003**                            | ** ** | **2004** | ** ** | **2003** | ** ** |
| **Revenue:**                                                   |       |                                  |       |                                |       |   |   |   |   |
| Rent                                                           |       | $                                     | 438,089    |                                | $          | 431,689 |   | $ | 870,266 |   | $ | 880,642 |   |
| Miscellaneous                                                  |       | 21,887                                |       | 14,254                              |       | 33,833 |   | 28,688 |   |
|                                                           |       | 459,976                               |       | 445,943                             |       | 904,099 |   | 909,330 |   |
|                                                           |       |                                  |       |                                |       |   |   |   |   |
| **Rental operating  expenses:**                                |       |                                  |       |                                |       |   |   |   |   |
| Repairs and maintenance                                        |       | 85,767                                |       | 113,208                             |       | 170,875 |   | 202,999 |   |
| Utilities                                                      |       | 79,158                                |       | 85,677                              |       | 171,135 |   | 171,151 |   |
| General and operating                                          |       | 101,937                               |       | 92,975                              |       | 243,018 |   | 221,064 |   |
| Taxes and insurance                                            |       | 82,489                                |       | 76,372                              |       | 182,335 |   | 176,552 |   |
| Interest                                                       |       | 76,734                                |       | 82,427                              |       | 153,988 |   | 158,721 |   |
| Depreciation                                                   |       | 150,448                               |       | 130,916                             |       | 302,998 |   | 262,089 |   |
|                                                           |       | 576,533                               |       | 581,575                             |       | 1,224,349 |   | 1,192,576 |   |
| **Loss from rental  operations**                               |       | (116,557                              | )          | (135,632                            | )          | (320,250 | ) | (283,246 | ) |
|                                                           |       |                                  |       |                                |       |   |   |   |   |
| **Other income  (expense):**                                   |       |                                  |       |                                |       |   |   |   |   |
| Interest earned on partnership cash                            |       | —                                |       | 19                                  |       | 1 |   | 38 |   |
| Minority interest in operations                                |       | 6,440                                 |       | 6,638                               |       | 13,768 |   | 13,397 |   |
| General and administrative                                     |       | (9,424                                | )          | (5,267                              | )          | (65,149 | ) | (60,175 | ) |
|                                                           |       | (2,984                                | )          | 1,390                               |       | (51,380 | ) | (46,740 | ) |
| **Net loss**                                                   |       | $                                     | (119,541   | )                                   | $          | (134,242 | ) | $ | (371,630 | ) | $ | (329,986 | ) |
|                                                           |       |                                  |       |                                |       |   |   |   |   |
| Net loss per unit of limited partnership  interest (703 units) |       | $                                     | (170       | )                                   | $          | (191 | ) | $ | (529 | ) | $ | (469 | ) |

 

See accompanying notes to consolidatedfinancial statements.

 

4

----

 

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

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

(unaudited)

 
| ** **                                                                                 | ** ** | **Six Months Ended June 30,** | ** ** |
|--------------------------------------------------------------------------------------------|------------|------------------------------------|------------|
| ** **                                                                                 | ** ** | **2004**                           | ** ** | **2003** | ** ** |
|                                                                                       |       |                               |       |   |   |
| **Cash flows from  operating activities:**                                                 |       |                               |       |   |   |
| Net loss                                                                                   |       | $                                  | (371,630   | ) | $ | (329,986 | ) |
| Adjustments to reconcile net loss to net  cash provided by (used in) operating activities: |       |                               |       |   |   |
| Depreciation                                                                               |       | 302,998                            |       | 262,089 |   |
| Minority interests in operations                                                           |       | (15,631                            | )          | (15,992 | ) |
| Changes in certain assets and liabilities:                                                 |       |                               |       |   |   |
| Accounts receivable                                                                        |       | (6,603                             | )          | (178 | ) |
| Prepaid expenses                                                                           |       | (3,710                             | )          | (1,908 | ) |
| Accounts payable                                                                           |       | (684                               | )          | (3,063 | ) |
| Due to affiliates                                                                          |       | 69,556                             |       | 51,750 |   |
| Accrued liabilities                                                                        |       | 36,946                             |       | 6,102 |   |
| Tenant security deposits                                                                   |       | (1,512                             | )          | 451 |   |
|                                                                                       |       |                               |       |   |   |
| Net cash provided (used) in operating  activities:                                         |       | 9,730                              |       | (30,735 | ) |
|                                                                                       |       |                               |       |   |   |
| **Cash flows from  investing activities:**                                                 |       |                               |       |   |   |
| Purchase of depreciable property                                                           |       | (35,687                            | )          | (10,392 | ) |
| Decrease in reserve deposits                                                               |       | 36,533                             |       | 54,066 |   |
|                                                                                       |       |                               |       |   |   |
| Net cash provided in investing activities                                                  |       | 846                                |       | 43,674 |   |
|                                                                                       |       |                               |       |   |   |
| **Cash flows from  financing activities:**                                                 |       |                               |       |   |   |
| Mortgage principal payments                                                                |       | (22,577                            | )          | (18,477 | ) |
|                                                                                       |       |                               |       |   |   |
| Net cash used in financing activities                                                      |       | (22,577                            | )          | (18,477 | ) |
|                                                                                       |       |                               |       |   |   |
| Net decrease in cash                                                                       |       | (12,001                            | )          | (5,538 | ) |
|                                                                                       |       |                               |       |   |   |
| Cash - beginning of year                                                                   |       | 183,187                            |       | 166,278 |   |
|                                                                                       |       |                               |       |   |   |
| Cash - end of period                                                                       |       | $                                  | 171,186    |   | $ | 160,740 |   |
|                                                                                       |       |                               |       |   |   |
| Supplemental disclosure of cash flow  information:                                         |       |                               |       |   |   |
| Cash paid for interest                                                                     |       | $                                  | 153,988    |   | $ | 158,721 |   |

 

See accompanying notes to consolidated financial statements.

 

5

----

 

**ASSISTEDHOUSING FUND L.P.****I AND SUBSIDIARIES**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

 

**For the Six Months EndedJune 30, 2004**

 

**(Unaudited)**

 

**NOTE 1 – SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES**

** **

General

The unaudited financial statements presented herein have been preparedin accordance with the instructions to Form 10-Q and do not include all of theinformation and note disclosures required by accounting principles generallyaccepted in the United States of America. These statements should be read in conjunction with financial statementsand notes thereto included with the Assisted Housing Fund L.P. I’s (theInvestor Partnership) Form 10-K for the year ended December 31, 2003.  In the opinion of management, these financialstatements include all adjustments, consisting only of normal recurringadjustments, necessary to present fairly the Investor Partnership’s financialposition and results of operations.  Theresults of operations for the periods may not be indicative of the results tobe expected for the year.

 

Nature of Business

Assisted Housing Fund L.P.I is a limited partnership which wasorganized November 2, 1987, under the laws of the state of Washington, toacquire limited partnership interests in other partnerships (the PropertyPartnerships), each of which has been organized to develop or purchase a low-or moderate-income apartment project. The Investor Partnership’s General Partner is Murphey Favre Properties,Inc. (MFP), a wholly-owned subsidiary of Washington Mutual Bank (WMB), awholly-owned subsidiary of Washington Mutual, Inc.  At December 31, 2003, 336 partners heldthe 703 units of limited partnership interests outstanding**.**

 

The Investor Partnership has invested as a limited partner in 11Property Partnerships.  The developer ofeach apartment project serves as the Developer General Partner (DGP) of therespective Property Partnership. The properties owned by the PropertyPartnerships are located in Michigan, Wisconsin, Ohio, West Virginia andWashington.  The apartment projects werefinanced and constructed under Section 515 of the National Housing Act, asamended (administered by the U. S. Department of Agriculture Rural DevelopmentAgency, through its Rural Housing Service (RHS)). Under this program, theProperty Partnerships provide housing to low-and moderate-income tenants.  Lower rental charges to tenants are recoveredby the Property Partnerships through an interest reduction program whichreduces the effective interest rate over the lives of the mortgages to 1percent and through a rental assistance program whereby RHS pays the PropertyPartnerships for a portion of qualified tenant rents.  Construction of the apartment projects beganbetween June 1988 and May 1990 and rental operations began betweenApril 1989 and January 1991.

 

Additionally, in exchange for an allocation of federal low-incomehousing tax credits under Section 42 of the Internal Revenue Code, eachProperty Partnership has entered into an agreement with an agency of the statein which the apartment project is located, whereby the Property Partnership hasagreed to maintain all apartment units as both rent restricted and occupied bylow-income tenants for a minimum period of 15 years.

 

The investment objectives of the Investor Partnership include thefollowing:

 

•      provide limited partnerswith tax benefits from investing in the Investor Partnership in the form oflow-income housing tax credits under Section 42 of the Internal ReviewCode of 1986, as amended (the Code),

•      preserve and protect theInvestor Partnership capital, and

•      realize long-term capitalappreciation in the value of the properties upon the sale or refinancing of theproperties or the Property Partnerships.

 

6

----

 

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 LimitedPartnership (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 LimitedPartnership (Washington)

Fayette Hills Limited Partnership (Fayette).

 

The financial statements are presented on a consolidated basis becausethe Investor Partnership holds approximately 99 percent of the profit and lossinterests and approximately 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,material borrowings or creation of liens on the underlying properties, enteringinto material 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 six months ended June 30, 2004 and for thetwelve months ended December 31, 2003 were $6,440 and $26,980,respectively.

 

Method of Accounting

**Theaccrual method of accounting is used for financial statement 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 computed for financial statement purposes using thestraight-line method over the estimated useful lives of the related assets asfollows:

 

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

 

7

----

 

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 by the respective partners on their income taxreturns.

 

Cash Equivalents

For purpose of reporting cash flows, theInvestor Partnership considers all investment instruments purchased with amaturity of three months or less to be cash equivalents.  At June 30, 2004 and December 31,2003, there were no cash equivalents.

 

Concentration of Credit

The Property Partnerships maintain cash inbank deposit accounts which, at times, may exceed federally insuredlimits.  The Property Partnerships havenot experienced any losses in such accounts. Management believes the Property Partnerships are not exposed to anysignificant credit risk on cash in such bank deposit accounts.

 

Estimates

The preparation of financial statements, inconformity with accounting principles generally accepted in the United Statesof America, requires management to make estimates and assumptions that affectcertain reported amounts and disclosures.

 

Adjustments

The unaudited interim financial statementsinclude all adjustments that are, in the opinion of management, necessary tofairly 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 WITH AFFILIATES**

 

In connection with the acquisition and development of rental propertyand the management of both the rental property and the Investor Partnership,the Investor Partnership and Property Partnerships have paid or accrued thefollowing amounts to certain affiliates:

 
| ** **                                                                 | ** ** | **Six Months Ended  June 30, 2004** | ** ** | **Six Months Ended  June 30, 2003** | ** ** |
|----------------------------------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
| Murphey Favre Properties – partnership  service fees                  |       | $                                        | 3,750      |                                     | $          | 3,750 |   |
|                                                                       |       |                                     |       |                                     |       |
| Developer general partners and affiliates –  property management fees |       | $                                        | 49,782     |                                     | $          | 49,071 |   |

 

Property management fees are paid out of rental operations.  Partnership services fees are payable fromfuture sales of the properties, to the extent they are not paid fromdistributions of rental operation cash (see Note 5).

 

Under terms of the management service agreements, seven of the 11Property Partnerships have affiliates of the DGPs which provide managementservices for the rental properties. They receive compensation for such servicesin amounts approximating 9% of rental receipts. These affiliates receivecompensation for the services provided in amounts approximating 2% of rentalreceipts.

 

8

----

 

As of June 30, 2004 and December 31, 2003, related partypayables consisted of the following:

** **
| ** **                     | ** ** | **June 30, 2004** | ** ** | **December 31, 2003** | ** ** |
|--------------------------------|------------|------------------------|------------|----------------------------|------------|
| Advances from DGPs             |       | $                      | 201,784    |                       | $          | 201, 784 |   |
| Program management fees        |       | 326,726                |       | 326,726                    |       |
| Partnership services fees      |       | 71,250                 |       | 67,500                     |       |
| Advances from MFP              |       | 267,331                |       | 201,525                    |       |
| Advances from affiliate of DGP |       | 975                    |       | 975                        |       |
|                           |       | $                      | 868,066    |                       | $          | 798,510 |   |

 

Advances from DGPs amounted to $201,784 at June 30, 2004 andDecember 31, 2003. Terms of RHS Loan Agreements require each DGP toprovide interest-free advances of stipulated amounts as initial operatingcapital to the Property Partnerships. The balances at June 30, 2004 and December 31, 2003 includeDGP interest-free advances of $152,107. In addition, the balances include non-interest bearing DGP advances of$35,468 for land improvements and $14,209 to fund operating deficits. Advancesfrom the DGPs may only be repaid from the proceeds of future sales of therespective 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 June 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 six months ended June 30 and the full year 2003, MFPadvanced $65,806 and $50,242, respectively, to the Investor Partnership foradministrative expenses.  These advances broughtthe balances due to MFP at June 30, 2004 and December 31, 2003 to$267,331 and $201,525, respectively.

 

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

 

The Investor Partnership maintains deposits with WMB in certainchecking and money market accounts which aggregated $14,032 and $5,700 atJune 30, 2004 and December 31, 2003, respectively.

 

**NOTE 3- CASH IN RESERVE ACCOUNTS**

 

The Loan Agreements between the Property Partnerships and RHS requirethe Property Partnerships to deposit into separate reserve accounts $127,196annually until the reserve accounts reach $1,271,277.  Subject to RHS approval, these funds may beused for specific purposes. During the six months ended June 30, 2004, RHSapproved the withdrawal of reserve funds at several of the PropertyPartnerships resulting in a net decrease of $36,533 in the restricted deposit reserveaccounts.

 

As of June 30, 2004 and December 31, 2003, reserve fundspledged by the Logan DGP totaled $52,300 (see Note 6).

 

9

----

 

**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 AmortizationSchedule System (PASS).  Themortgage notes mature May 2039 through March 2040.  Substantially all of the rental property andequipment is pledged as collateral on the mortgages.  No partner is individually liable on themortgage 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 6 months |       | $          | 23,620     |   |
| 2005                            |       | 50,535     |       |
| 2006                            |       | 55,281     |       |
| 2007                            |       | 59,803     |       |
| 2008                            |       | 66,159     |       |
| Thereafter                      |       | 11,937,090 |       |
|                            |       | $          | 12,192,488 |   |

 

Logan received a Letter of Acceleration of the Loan Account in 2001;further proceedings were suspended in 2001 and have not been resumed.  In addition, real estate taxes totaling$57,637 were delinquent at June 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 $982,608 and $984,306 at June 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 has determinedthat the source of payment, a future sale or refinance of one or more of theProperty Partnerships, may not be sufficient to pay fees accrued in excess ofthe $544,540 payable at December 31, 1996. As a consequence, management has elected to treat fees for yearssubsequent to 1996 as a contingent liability. At June 30, 2004 andDecember 31, 2003, the contingent liability for program management feestotaled $540,248 and $521,619, respectively.

 

As discussed in Note 2, the Logan DGP owes Logan $24,079 for advancesnot in compliance with RHS regulations. In addition, one of the Logan DGPs pledged Logan assets for his own use(see Note 3).  He later filed a petitionin personal bankruptcy.  That Logan DGPis in the process of being replaced, with U.S. Bankruptcy Court approval of atransfer of that DGPs ownership interest in Logan to a replacement DGP.  The replacement DGP is expected to restorethe advances and pledged accounts to Logan in the third quarter of 2004 whenthe transfer is expected to occur. Accordingly, no adjustment has been made to the carrying value of theseassets.

 

10

----

 

**Item 2.****Management’s Discussion****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. I intends such forward-looking statements to be covered by thesafe harbor provisions for forward-looking statements and is including thisstatement for purposes of complying with these safe harbor provisions.  Although the Investor Partnership believesthe forward-looking statements are based on reasonable assumptions, theInvestor Partnership 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 June 30, 2004 was 91% as compared to 92% for thesame period of 2003. Four of the properties experienced a decline in occupancylevels from March 31, 2004 to June 30, 2004. The lowest occupancylevel for an individual Property Partnership at June 30, 2004 was 75%.

 

**Resultsof Operations**

For the Investor Partnership and its subsidiary Property Partnerships,net loss decreased $14,701 and increased $41,644 or 11% and (13%) for the threeand six months ended June 30, 2004 compared with the same periods in2003.  Net loss before depreciation was$68,632 and $67,897 for the six months ended June 30, 2004 and 2003, withdepreciation expense of $302,998 and $262,089, respectively.

 

Total revenue of $459,976 and $904,099 forthe three and six months ended June 30, 2004 increased $14,033 anddecreased ($5,231) compared with the same periods in 2003, respectively. TheRevenue decrease was primarily due to a high vacancy rate during the first quarterof 2004. Overall operating expenses decreased ($5,042) and increased $31,772for the three and six months ended June 30, 2004, as compared with thesame periods in 2003, respectively. Increases in general and administrativeexpenses were due to increased audit fees of $6,500 attributable to compliancetesting related to the Sarbanes-Oxley Act of 2002 and an increase in on sitesalaries and benefits of $7,610. Repair and Maintenance expenses decreased$32,124 for six months ended June 30, 2004 compared to June 30, 2003.This is due to major repairs for last year’s storm damage at a couple of theproperties..

 

Net loss from rental operations decreased $19,075 and increased($37,004) or 14% and (13%) for the three and six months ended June 30,2004, compared with the same periods in 2003.

 

##### **Liquidity, Capital Resources, and Regulatory Compliance**

At June 30, 2004, the Investor Partnership’s operating cashamounted to $14,032 and the Property Partnerships’ operating cash totaled$152,154 for a combined total of $171,186. At December 31, 2003, the cash balance of $183,187 included $5,700in Investor Partnership cash and $177,487 in operating cash accounts of theProperty Partnerships.

 

Consolidated operational cash flows for six months ended June 30,2004 totaled $9,730 compared to a net operational cash flow used of $30,735 inthe same period of 2003.  Achievingpositive cash flows continues to be a problem at several of the PropertyPartnerships.  For the six months endedJune 30, 2004, six properties generated positive cash flow. For the fivethat generated negative cash flow, the deficits were funded from rentaloperating cash and authorized reserve account withdrawals. The InvestorPartnership is not required to fund additional amounts to the Property Partnershipsbased on each Property Partnership agreement. Additionally, each PropertyPartnership is operated as an individual project, and without any contractualarrangements of any kind between the Property Partnerships.

 

At June 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.

 

11

----

 

**Item 3.****Quantitative and Qualitative 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 ratesand availability of financing to potential buyers may have an impact on theselling opportunity.

 

**Item 4.****Controls and Procedures**

 

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 June 30,2004.  There have been no significantchanges in the Investor Partnership’s internal controls or in other factorsthat could significantly affect internal controls subsequent to June 30,2004.

 

12

----

 

**PARTII.****OTHER INFORMATION**

 

Except for the disclosures, set forth below, all items under Part IIare inapplicable or have a negative response and are therefore omitted.

 

**Item 1.****LegalProceedings**

 

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 acquire Winer’s GP/DGP interests inLogan during the third quarter of 2004. This was generally approved by the U.S. Bankruptcy Court inSeptember 2003.  LHP1 will thenrestore and replenish Logan assets misappropriated by Winer.  Concurrently with its acquisition of Winer’spartnership interests in Logan, LHP1 will also acquire the partnershipinterests of Thomas R. Runquist and Rural Housing Corporation (the otherGPs/DGPs) in Logan.

 

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

 

a.)            Exhibits.

 

**INDEX OF 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)  No reports on Form 8-K were filed during thequarterly period ended June 30, 2004.

 

13

----

 

**SIGNATURES**

 

Pursuantto the requirements of the Securities and Exchange Act of 1934, the Registranthas duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized and on the date indicated.

 

 

ASSISTED HOUSING FUND L.P. I

Registrant

 
| By:  Murphey Favre Properties, Inc. |                       |
|------------------------------------------|----------------------------|
|                                     | *General Partner*          |   |
|                                     |                       |
|                                     |                       |
| By:                                      | /s/  Robert K.  Stump |   | Date:  | August 14,  2004 |   |
|                                     | Robert  K.  Stump     |   |
|                                     | *President*                |   |
|                                          |                            |  |  |  |  |  |

 

Pursuantto the requirements of the Securities and Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the Registrant and inthe capacities and on the dates indicated:

 
| By:    | Murphey Favre Properties, Inc.                |   |
|--------|-----------------------------------------------|--------|
|   | *General Partner*                             |   |
|   |                                          |   |
|   |                                          |   |
| By:    | /s/ Brett J. Atkinson                         |   | Date:  | August 14,  2004 |   |
|   | Brett J. Atkinson                             |   |
|   | *Treasurer and Principal  Accounting Officer* |   |
|        |                                               |        |  |  |  |

 

14

----