**FORM 10-Q**

 

**SECURITIES ANDEXCHANGE COMMISSION**

**Washington, D.C.20549**

 

| **ý**   **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|--------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |
| **For the quarter  ended   June 30, 2003**                                                                |
|                                                                                                                     |
| **Commission file  number    33-18756**                                                                   |

 

**ASSISTED HOUSINGFUND 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 Section12(b) of the Act:  None

 

Securities registered pursuant to Section12(g) of the Act:

 

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

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes ý   No  o

 

 

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Part I.  Financial Information

** **

Item 1. Financial Statements

** **

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

 

**CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION**

 

**(Unaudited)**

 
|                                              |   | **June 30,  2003** |       | **December 31,  2002** |   |
|---------------------------------------------------|--------|--------------------|------------|------------------------|--------|
|                                              |   |               |       |                   |   |
| **ASSETS**                                        |   |               |       |                   |   |
|                                              |   |               |       |                   |   |
| Rental property and  equipment, at cost:          |   |               |       |                   |   |
| Buildings and  equipment                          |   | $                  | 16,028,793 |                   | $      | 16,018,401 |   |
| Accumulated  depreciation                         |   | (8,221,471         | )          | (7,959,382             | )      |
|                                              |   | 7,807,322          |       | 8,059,019              |   |
| Land                                              |   | 723,111            |       | 723,111                |   |
|                                              |   | 8,530,433          |       | 8,782,130              |   |
| Cash:                                             |   |               |       |                   |   |
| Rental operation                                  |   | 144,226            |       | 138,910                |   |
| Partnership                                       |   | 16,514             |       | 27,368                 |   |
|                                              |   | 160,740            |       | 166,278                |   |
|                                              |   |               |       |                   |   |
| Restricted deposits:                              |   |               |       |                   |   |
| Tenant trust - security  deposits                 |   | 117,243            |       | 119,646                |   |
| Reserve accounts                                  |   | 597,127            |       | 651,193                |   |
|                                              |   | 714,370            |       | 770,839                |   |
| Other assets:                                     |   |               |       |                   |   |
| Accounts receivable                               |   | 39,957             |       | 39,779                 |   |
| Accounts receivable -  DGPs                       |   | 24,079             |       | 24,079                 |   |
| Prepaid expenses                                  |   | 21,023             |       | 19,115                 |   |
|                                              |   | 85,059             |       | 82,973                 |   |
| **TOTAL  ASSETS**                                 |   | $                  | 9,490,602  |                   | $      | 9,802,220 |   |
|                                              |   |               |       |                   |   |
| **LIABILITIES**                                   |   |               |       |                   |   |
|                                              |   |               |       |                   |   |
| Mortgage notes payable                            |   | $                  | 12,239,311 |                   | $      | 12,257,788 |   |
| Accounts payable                                  |   | 256,275            |       | 259,338                |   |
| Due to affiliates                                 |   | 792,518            |       | 740,768                |   |
| Accrued liabilities                               |   | 117,593            |       | 111,491                |   |
| Security deposits  payable                        |   | 118,531            |       | 120,483                |   |
| **TOTAL  LIABILITIES**                            |   | 13,524,228         |       | 13,489,868             |   |
|                                              |   |               |       |                   |   |
| Minority interests in  property partnerships      |   | 372,457            |       | 388,449                |   |
|                                              |   |               |       |                   |   |
| **PARTNERS’  DEFICIT**                       |   |               |       |                   |   |
| Limited partners                                  |   | (4,330,815         | )          | (4,004,129             | )      |
| General partner                                   |   | (75,268            | )          | (71,968                | )      |
|                                              |   | (4,406,083         | )          | (4,076,097             | )      |
| **TOTAL  LIABILITIES AND PARTNERS’ DEFICIT** |   | $                  | 9,490,602  |                   | $      | 9,802,220 |   |

 

See Accompanying Notes to ConsolidatedFinancial Statements.

 

2

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

 

**CONSOLIDATED STATEMENTS OF OPERATIONS**

 

**(Unaudited)**

 
|                                                               |   | **Three Months Ended  June 30,** |     | **Six Months Ended  June 30,** |   |
|--------------------------------------------------------------------|--------|----------------------------------|----------|--------------------------------|--------|
|                                                               |   | **2003**                         |     | **2002**                       |   | **2003** |   | **2002** |   |
| **Revenue:**                                                       |   |                             |     |                           |   |   |   |   |   |
| Rent                                                               |   | $                                | 431,689  |                           | $      | 424,604 |   | $ | 880,642 |   | $ | 840,425 |   |
| Miscellaneous                                                      |   | 14,254                           |     | 20,944                         |   | 28,688 |   | 33,607 |   |
|                                                               |   | 445,943                          |     | 445,548                        |   | 909,330 |   | 874,032 |   |
| **Rental  operating expenses:**                                    |   |                             |     |                           |   |   |   |   |   |
| Repairs and  maintenance                                           |   | 113,208                          |     | 78,189                         |   | 202,999 |   | 176,162 |   |
| Utilities                                                          |   | 85,677                           |     | 76,785                         |   | 171,151 |   | 162,121 |   |
| General and operating                                              |   | 92,975                           |     | 110,024                        |   | 221,064 |   | 226,293 |   |
| Taxes and insurance                                                |   | 76,372                           |     | 113,550                        |   | 176,552 |   | 178,791 |   |
| Interest                                                           |   | 82,427                           |     | 68,717                         |   | 158,721 |   | 144,521 |   |
| Depreciation                                                       |   | 130,916                          |     | 136,944                        |   | 262,089 |   | 273,114 |   |
|                                                               |   | 581,575                          |     | 584,209                        |   | 1,192,576 |   | 1,161,002 |   |
| **Loss  from rental operations**                                   |   | (135,632                         | )        | (138,661                       | )      | (283,246 | ) | (286,970 | ) |
|                                                               |   |                             |     |                           |   |   |   |   |   |
| **Other  income (expense):**                                       |   |                             |     |                           |   |   |   |   |   |
| Interest earned on  partnership cash                               |   | 19                               |     | 25                             |   | 38 |   | 55 |   |
| Minority interest in  operations                                   |   | 6,638                            |     | 6,668                          |   | 13,397 |   | 13,442 |   |
| General and  administrative                                        |   | (5,267                           | )        | (35,406                        | )      | (60,175 | ) | (39,210 | ) |
|                                                               |   | 1,390                            |     | (28,713                        | )      | (46,740 | ) | (25,713 | ) |
|                                                               |   |                             |     |                           |   |   |   |   |   |
| **Net  loss**                                                      |   | $                                | (134,242 | )                              | $      | (167,374 | ) | $ | (329,986 | ) | $ | (312,683 | ) |
|                                                               |   |                             |     |                           |   |   |   |   |   |
| **Net  loss per unit of limited partnership interest (703 units)** |   | $                                | (191     | )                              | $      | (238 | ) | $ | (469 | ) | $ | (445 | ) |

 

See Accompanying Notes to ConsolidatedFinancial Statements.

 

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

 

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

 

**(Unaudited)**

 
|                                                                                       |   | **Six Months Ended  June 30,** |     |
|--------------------------------------------------------------------------------------------|--------|--------------------------------|----------|
|                                                                                       |   | **2003**                       |     | **2002** |   |
|                                                                                       |   |                           |     |   |   |
| **Cash flows from operating activities:**                                                  |   |                           |     |   |   |
|                                                                                       |   |                           |     |   |   |
| Net  loss                                                                                  |   | $                              | (329,986 | ) | $ | (312,683 | ) |
| Adjustments  to reconcile net loss to net cash provided by (used in) operating activities: |   |                           |     |   |   |
| Depreciation                                                                               |   | 262,089                        |     | 273,114 |   |
| Minority  interests in operations                                                          |   | (15,992                        | )        | (13,442 | ) |
| Changes  in certain assets and liabilities:                                                |   |                           |     |   |   |
| Accounts  receivable                                                                       |   | (178                           | )        | (18,598 | ) |
| Prepaid  expenses                                                                          |   | (1,908                         | )        | 41 |   |
| Accounts  payable                                                                          |   | (3,063                         | )        | 7,920 |   |
| Due  to affiliates                                                                         |   | 51,750                         |     | 41,797 |   |
| Accrued  liabilities                                                                       |   | 6,102                          |     | 5,568 |   |
| Tenant  security deposits                                                                  |   | 451                            |     | 1,090 |   |
|                                                                                       |   |                           |     |   |   |
| Net  cash used in operating activities                                                     |   | (30,735                        | )        | (15,193 | ) |
|                                                                                       |   |                           |     |   |   |
| **Cash flows from investing activities:**                                                  |   |                           |     |   |   |
| Purchase  of depreciable property                                                          |   | (10,392                        | )        | (5,980 | ) |
| Decrease  in reserve deposits                                                              |   | 54,066                         |     | 5,539 |   |
|                                                                                       |   |                           |     |   |   |
| Net  cash provided by (used in) investing activities                                       |   | 43,674                         |     | (441 | ) |
|                                                                                       |   |                           |     |   |   |
| **Cash flows from financing activities:**                                                  |   |                           |     |   |   |
| Mortgage  principal payments                                                               |   | (18,477                        | )        | (17,859 | ) |
|                                                                                       |   |                           |     |   |   |
| Net  cash used in financing activities                                                     |   | (18,477                        | )        | (17,859 | ) |
|                                                                                       |   |                           |     |   |   |
| Net  decrease in cash                                                                      |   | (5,538                         | )        | (33,493 | ) |
| Cash  - beginning of year                                                                  |   | 166,278                        |     | 199,668 |   |
|                                                                                       |   |                           |     |   |   |
| Cash  - end of period                                                                      |   | $                              | 160,740  |   | $ | 166,175 |   |
|                                                                                       |   |                           |     |   |   |
| Supplemental  disclosure of cash flow information:                                         |   |                           |     |   |   |
| Cash  paid for interest                                                                    |   | $                              | 158,721  |   | $ | 144,521 |   |

 

See Accompanying Notes to ConsolidatedFinancial Statements.

 

4

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

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**Note1: Accounting Policies**

 

*Basis ofPresentation*

 

Theaccompanying Consolidated Financial Statements are unaudited and include theaccounts of Assisted Housing Fund L.P. I (the Investor Partnership).  The Investor Partnership’s accounting andfinancial reporting policies are in accordance with accounting principlesgenerally accepted in the United States of America.  The information furnished in these interim statements reflectsall adjustments that are, in the opinion of management, necessary for a fairstatement of the results for the periods presented.  Such adjustments are of a normal recurring nature unlessotherwise disclosed in this Form 10-Q. The results of operations in the interim statements are not necessarilyindicative of the results that may be expected for the full year.  The interim financial information should beread in conjunction with Assisted Housing Fund L.P. I’s 2002 Annual Report onForm 10-K.  Certain prior period amountshave been reclassified to conform to current period classifications.

 

**Note2: Transactions with Affiliates**

 

In connectionwith the acquisition and development of rental property and the management ofboth the rental property and the Investor Partnership, the Investor Partnershipand Property Partnerships, as defined in critical accounting policies, havepaid or accrued the following amounts to certain affiliates:

 
|                                                                              |   | **Six Months  Ended  June 30, 2003** |   | **Six Months  Ended  June 30, 2002** |   |
|-----------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
| Murphey Favre Properties (MFP) –  partnership service fees                   |   | $                                    | 3,750  |                                 | $      | 3,750 |   |
|                                                                              |   |                                 |   |                                 |   |
| Developer General Partners (DGPs) and  affiliates – property management fees |   | $                                    | 49,071 |                                 | $      | 42,100 |   |

 

Propertymanagement fees are 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.

 

Under terms ofthe management service agreements, seven of the 11 Property Partnerships haveaffiliates of the DGPs which provide property management services for therental properties.  These affiliatesreceive compensation for services in amounts approximating 8.8% of rentalreceipts.  Three of the rental propertiesare co-managed by affiliates of their DGPs. These affiliates receive compensation for the services provided inamounts approximating 2.1% of rental receipts.

 

As of June 30,2003 and December 31, 2002, related party payables consisted of the following:

 
|                           |   | **June 30,  2003** |    | **December  31, 2002** |   |
|--------------------------------|--------|--------------------|---------|------------------------|--------|
| Advances from DGPs             |   | $                  | 201,784 |                   | $      | 201,784 |   |
| Program management fees        |   | 326,726            |    | 326,726                |   |
| Partnership services fees      |   | 63,750             |    | 60,000                 |   |
| Advances from MFP              |   | 199,283            |    | 151,283                |   |
| Advances from affiliate of DGP |   | 975                |    | 975                    |   |
| Total Related Party Payables   |   | $                  | 792,518 |                   | $      | 740,768 |   |

 

5

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Advances fromDGPs were  $201,784 at June 30, 2003 andDecember 31, 2002.  Terms of RuralHousing Services (RHS) loan agreements require each DGP to provideinterest-free advances of stipulated amounts as initial operating capital tothe Property Partnerships.  The balancesat June 30, 2003 and December 31, 2002 include DGP interest-free advances of$152,107.  In addition, the balancesinclude DGP advances of $35,468 for land improvements and $14,209 to fundoperating deficits.  Advances from theDGPs may only be repaid from the proceeds of future sales of the respectiveproperties.

 

Programmanagement fees due to MFP of $326,726 represents amounts accrued throughDecember 31, 1996.  No accruals havebeen recorded since that date. Partnership services fees are also payable to MFP and reflect accrualsthrough June 30, 2003 and December 31, 2002. Partnership fees are payable fromfuture sales of the properties, to the extent they are not paid fromdistributions of rental operation cash.

 

During the sixmonths ended June 2003 and the full year 2002, MFP advanced $48,000 and$48,284, respectively, to the Investor Partnership for administrativeexpenses.  These advances brought thebalances due to MFP at June 30, 2003 and December 31, 2002 to $199,283 and$151,283, respectively.

 

The InvestorPartnership maintains deposits in checking and money market accounts whichaggregated $16,514 and $27,368 at June 30, 2003 and December 31, 2002,respectively.

 

**Note 3: Cash in Reserve Accounts**

 

The loanagreements between the Property Partnerships and RHS require the PropertyPartnerships to deposit into separate reserve accounts, maintained as savingsaccounts, $127,196 annually until the reserve accounts reach $1,271,277.  Subject to RHS approval, these funds may beused for specific purposes.  During thesix months ended June 30, 2003, RHS approved the withdrawal of reserve funds atseveral of the Property Partnerships which resulted in a net decrease of$54,066 in the restricted deposit reserve accounts.

 

**Note 4: Mortgage Notes Payable**

 

The mortgagenotes are payable to RHS in monthly installments totaling $26,959.  In accordance with provisions of InterestCredit Agreements, RHS provides monthly interest credits totaling $69,129,which reduce the interest rates stated in the mortgage notes to effective ratesof one percent over the lives of the mortgages.  Amortization of principal is based on the stated rates of 8.75%to 10.75% under RHS’s Predetermined Amortization Schedule System.  The mortgage notes mature May, 2039 throughMarch, 2040.  Substantially all of therental property and equipment is pledged as collateral on the mortgages.  No partner is individually liable on themortgage notes.

 

The mortgagenotes are regulated by the U.S. Government; there is no public or privatemarket for the mortgage notes. Accordingly, management has determined thatusers of the financial statements would derive no benefit from any estimate offair value, and performing such an analysis would not be practicable.

 

Principalpayments on the mortgage notes for the next 5 years are as follows:

 
| **Year**   |   | **Amount** |       |
|------------|--------|------------|------------|
| 2003 (1)   |   | $          | 23,277     | ** ** |
| 2004       |   | 46,132     |       |
| 2005       |   | 50,465     |       |
| 2006       |   | 55,205     |       |
| 2007       |   | 60,392     |       |
| Thereafter |   | 12,003,840 |       |
|       |   | $          | 12,239,311 |   |

 

----

(1)  For the remaining 6 months

 

6

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**Note 5: Guarantees**

 

Each of theDGPs has made a guarantee to the respective Property Partnership that they willcompensate the Investor Partnership in the event the actual low-income housing taxcredit is less than 85% to 90% of the available credit.  Through June 30, 2003 no payments have beenmade under these guarantees.

 

**Note 6: Contingencies andSubsequent Events**

 

The InvestorPartnership has ceased accrual of the annual program management fee, payable inpart to the general partner.  Managementhas determined 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 to treat fees for yearssubsequent to 1996 as a contingent liability. At June 30, 2003 and December 31, 2002, the contingent liability forprogram management fees totaled $447,102 and $372,585, respectively.

 

A DGP of LoganApartments Company Limited Partnership, a Property Partnership, did not complywith RHS regulations regarding the handling of project cash during 2001 and2000.  As a result, RHS issued a Letterof Acceleration on the mortgage note on August 29, 2001.  The mortgage note had a balance of $985,926on June 30, 2003.  This DGP filed aChapter 7 Petition in Bankruptcy on February 19, 2002.  MFP, on behalf of the Investor Partnership,filed a Complaint to Determine Dischargability of Debt and for Judgment on May31, 2002 and a Motion for Summary Judgment against the DGP on October 23,2002.  On April 2, 2003, the bankruptcytrustee drafted a motion to sell the DGP’s interest in Logan, to an Ohio non-profitorganization.  As a condition of thesale, the non-profit would restore or replenish the assets that weremisappropriated by the Logan DGP.  AnObjection to the Trustee’s Motion was filed by the Investor Partnership onApril 21, 2003.

 

Thesecontingencies and subsequent events are described in greater detail in theInvestor Partnership’s 2002 Annual Report on Form 10-K in Note 8 to theConsolidated Financial Statements - “Contingency and Subsequent Events” and“Part II – Other Information, Item 1. Legal Proceedings” of the Investor Partnership’sJune 30, 2003 on Form 10-Q.

 

**MANAGEMENT’S DISCUSSION AND ANALYSIS**

 

**Forward-Looking Statements**

 

Our Form 10-Qand other documents that we file with the Securities and Exchange Commissioncontain forward-looking statements. Forward-looking statements can be identified by the fact that they donot relate strictly to historical or current facts.  They often include words such as “expects,” “anticipates,”“intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similarmeaning, or future or conditional verbs such as “will,” “would,” “should,”“could,” or “may.”

 

Forward-lookingstatements provide our expectations or predictions of future conditions, eventsor results. They are not guarantees of future performance.  By their nature, forward-looking statementsare subject to risks and uncertainties. These statements speak only as of the date they are made.  We do not undertake to updateforward-looking statements to reflect the impact of circumstances or eventsthat arise after the date the forward-looking statements were made.  There are a number of factors, many of whichare beyond our control, that could cause actual conditions, events or resultsto differ significantly from those described in the forward-lookingstatements.  These factors include:

 

•                  Generalbusiness, economic and real estate conditions may significantly affect ourearnings;

•                  Our ability toeffectively manage or predict occupancy levels; could adversely affect ourearnings.

 

7

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**Controls and Procedures**

 

An evaluationwas performed under the supervision and with the participation of the InvestorPartnership’s management, including the President and the Principal AccountingOfficer of the General Partner, of the effectiveness of the design andoperation of the Investor Partnership’s disclosure controls and procedureswithin 90 days before the filing date of this quarterly report.  Based on that evaluation, the InvestorPartnership’s management, including the President and the Principal AccountingOfficer of the General Partner, concluded that the disclosure controls andprocedures were effective.  There havebeen no significant changes in the Investor Partnership’s internal controls orin other factors that could significantly affect internal controls subsequentto their evaluation.

 

We intend toreview and evaluate the design and effectiveness of our disclosure controls andprocedures on an ongoing basis to improve our controls and procedures over timeand to correct any deficiencies that we may discover in the future.  Our goal is to ensure that our seniormanagement has timely access to all material financial and non-financialinformation concerning our business. While we believe the present design of our disclosure controls and proceduresis effective to achieve our goal, future events affecting our business maycause us to modify our disclosure controls and procedures.

 

**Critical Accounting Policies**

 

Thepreparation of financial statements in accordance with accounting principlesgenerally accepted in the United States of America requires management to makea number of judgments, estimates and assumptions that affect the reportedamount of assets, liabilities, income and expenses in our ConsolidatedFinancial Statements and accompanying notes. We believe that the judgments, estimates and assumptions used inpreparation of our Consolidated Financial Statements are appropriate given thefactual circumstances as of June 30, 2003.

 

Principles of Consolidation:

 

The financialstatements consolidate the financial statements of the Investor Partnership andthe following 11 Property Partnerships in which it has invested as a limitedpartner:

 

FairviewApartments Company Limited Partnership (Fairview)

Ionia LimitedDividend Housing Association Limited Partnership (Ionia)

LoganApartments Company Limited Partnership (Logan)

Rolling BrookII Limited Dividend Housing Association Limited Partnership (Rolling Brook)

Wexford ManorLimited Dividend Housing Association Limited Partnership (Wexford)

Blue HeronApartment Associates Limited Partnership (Blue Heron)

GlenwoodApartment Associates Limited Partnership (Glenwood)

Pacific PlaceApartment Associates Limited Partnership (Pacific Place)

Cove LimitedDividend Housing Association Limited Partnership (Cove)

WashingtonStreet Limited Dividend Housing Association Limited Partnership (Washington)

Fayette HillsLimited 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

 

8

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fundamentaldecisions affecting the operation of the Property Partnerships.  These fundamental decisions includesignificant purchases of assets, material borrowings or creation of liens onthe underlying properties, entering into material contracts, making taxelections and any act that would cause termination of the PropertyPartnership.  All materialinter-partnership transactions and balances have been eliminated.  Net losses allocable to the minoritypartners for the six months ended June 30, 2003 and the twelve months endedDecember 31, 2002 were $13,397 and $26,594, respectively.

 

The criticalaccounting policies are described in greater detail in the InvestorPartnership’s 2002 Annual Report on Form 10-K in Note 1 to the ConsolidatedFinancial Statements - “Nature of Business and Summary of SignificantAccounting Policies.”

 

**Results of Operations**

 

For theInvestor Partnership and its subsidiary Property Partnerships, the net lossdecreased $33,132 and increased $17,303, or 20% and (6%) for the three and sixmonths ended June 30, 2003, compared with the same periods in 2002.  Net loss before depreciation was $3,326 and$30,430 for the three months ended June 30, 2003 and 2002, with depreciationexpense of $130,916 and $136,944, respectively.  Net loss before depreciation was $67,897 and $39,569 for the sixmonths ended June 30, 2003 and 2002, with depreciation expense of $262,089 and$273,114, respectively.

 

Total revenueof $445,943 and $909,330 for the three and six months ended June 30, 2003increased $395 and $35,298 compared with the same periods of 2002,respectively.  The year over yearrevenue increase was primarily due to rent level increases.  Overall operating expenses increased slightlyfor the three and six months ended June 30, 2003, as compared with the sameperiods of 2002.  Operating expensesincreased primarily due to increased costs for repair and maintenance duringthe three and six months ended June 30, 2003. Loss from rental operations was $135,632 and $283,246 for the three andsix months ended June 30,2003, compared with $138,661 and $286,970 for thethree and six months ended June 30, 2002.

 

Non-operatingincome increased $30,103 for the three months ended June 30, 2003, comparedwith the same period in 2002. Non-operating expense increased $21,027 for the six months ended June30, 2003 compared to the same period 2002. The year to date expenses included audit and accounting fees related tothe Investor Partnership.  In 2002,audit and accounting expenses were recorded in the second quarter.  Additionally, in the first quarter of 2003,the Investor Partnership paid approximately $7,500 related to audit fees forfive of the Property Partnerships. Previously additional audit procedures were done when the financialstatements were consolidated at the partnership level.  These particular Property Partnerships,because of their small number of dwelling units, are not required by U.S. Departmentof Agriculture Rural Development Agency, through its RHS, to have auditedfinancial statements.   In support ofthe new reporting and controls requirements of the Sarbanes-Oxley Act of 2002,the Investor Partnership now requires audited financial statements for allProperty Partnerships.

 

**Liquidity and Capital Resources**

 

The objectiveof liquidity management is to ensure the Company has the continuing ability tomaintain cash flows that are adequate to fund operations and meet obligationsand other commitments on a timely and cost-effective basis.  The principal sources of liquidity are fromthe parent holding company, Murphey Favre Properties, Inc.

 

At June 30,2003, the Investor Partnership’s operating cash was $16,514 and the PropertyPartnerships’ operating cash totaled $144,226 for a combined total of$160,740.  At June 30, 2002, the cashbalance of $166,175 included $27,624 in Investor Partnership cash and $139,351in operating cash accounts of the Property Partnerships.

 

9

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Net cash usedin operating activities for the six months ended June 30, 2003 totaled $30,735,compared to $15,193 for the same period of 2002.  Achieving positive cash flows is an ongoing challenge for severalof the Property Partnerships.  For thesix months ended June 30, 2003, only three properties generated positive cashflow. For the eight that generated negative cash flow, the deficits were fundedfrom rental operating cash and authorized reserve account withdrawals.  The Investor Partnership is not required tofund additional amounts to the Property Partnerships based on each PropertyPartnership agreement.  Additionally,each Property Partnership is operated as an individual project and without anycontractual arrangements of any kind between the Property Partnerships.

 

At June 30,2003, Logan Apartments Company Limited Partnership’s (Logan) tenant securitydeposit account was underfunded by $3,536. Additionally, Logan was approximately $27,000 in arrears in propertytaxes at June 30, 2003.  While both ofthese liquidity matters are violations of RHS regulations, RHS has taken noaction against Logan.  Further actionstaken by a Logan DGP in 2000 and 2001 that led to certain other violations ofRHS regulations are the subject of litigation and bankruptcy proceedings, morefully described in Part II. Item 1. Legal Proceedings.

 

**Market Risk Management**

 

The managementof the Investor Partnership does not believe that the operation of the InvestorPartnership and the Property Partnerships are materially affected by interestrates or other financial market risks at this time.  In the event of proposed future sale of any of the PropertyPartnerships’ properties, mortgage interest rates and availability of financingto potential buyers may have an impact on the selling opportunity.

 

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**PART II.OTHER INFORMATION**

 

Exceptfor the disclosures, set forth below, all items under Part II are inapplicableor have a negative response and are therefore omitted.

 

**Item1. Legal Proceedings**

 

In 2001 and 2000, Arthur H.Winer (Winer), a DGP of Logan, did not comply with RHS regulations in handlingproject cash.  This non-compliance wasreported to appropriate authorities in 2001. Winer made multiple unauthorized withdrawals of project cash totaling$9,000 and $15,079, for personal business. Further, project bank accounts,totaling $60,131 at December 31, 2002, were also pledged.  As a result, RHS issued a Letter ofAcceleration on August 29, 2001. RHS suspended further proceedings on October11, 2001, based on preliminary agreements reached with Logan’s other DGPs andthe Logan property management agent.

 

On February 19, 2002, Winerfiled a Chapter 7 Petition in Bankruptcy in the U.S. Bankruptcy Court for theSouthern District of West Virginia, in Charleston, WV, triggering the“automatic stay” under the Bankruptcy Code, which precluded all actions tocollect Winer debts, absent approval of the Bankruptcy Court, including theunauthorized withdrawals of project cash and pledging of project bank accountsmentioned above.  MFP, General Partnerof the Investor Partnership, through outside bankruptcy counsel, and on behalfof Logan, filed a creditor’s claim against and also filed a Complaint toDetermine Dischargeability of Debt and for Judgment to protect the claim forLogan debt from being dischargeable and to obtain a judgment against Winer forthe amount of the creditor’s claim. Winer filed an Answer to the Complaint contesting its assertions.  The U.S. Trustee filed a Motion to Sell PersonalProperty Free and Clear of All Liens and Encumbrances and to Allow Expenses(Trustee’s Motion) seeking, in part, to sell Winer’s partnership interest inLogan, free of all liens and encumbrances, to Buckeye Community HopeFoundation, an Ohio non-profit corporation (Buckeye).  The Investor Partnership initially prepared and filed anObjection to the Trustee’s Motion, but as result of further research anddiscussions, it will withdraw its Objection. A hearing on the Trustee’s Motion was scheduled for May 16, 2003,but was continued to August 15, 2003.

 

The Investor Partnershipalso filed a Motion for Summary Judgment (SJ Motion) against Winer, whichwas later modified.  A Response to theSJ Motion was filed by Winer (Response) contesting the SJ Motion.  A hearing date on the SJ Motion has not yetbeen set by the Bankruptcy Court in WV. Trial in the Adversary Proceeding was previously scheduled forApril 11, 2003 but was continued indefinitely pending Court-mandatedadditional briefing (since filed) on issues arising under the SJ Motion and theResponse.

 

The InvestorPartnership also sent a demand letter to Thomas Runquist (Runquist) and RuralHousing Corporation (RHC), the other DGPs of Logan, requiring that Runquist andRHC, who are jointly liable for the actions of Winer, reimburse Logan for itsdamages and costs sustained as a result of Winer’s improper actions.  A written response to the demand letter wasreceived from counsel for Runquist and RHC, acknowledging the demand butdeclining to reimburse Logan for Winer’s improper actions.  The Investor Partnership will reply to theRunquist/RHC response letter depending on the results of the hearing on theTrustee’s Motion.

 

We believe theclaims by AHF and MFP are meritorious and that the cash balances of Logan willbe restored as a result of these claims. However, litigation and legal disputes are inherently uncertain.  We cannot guarantee that AHF or MFP willprevail in their efforts, if the cash balances of the Logan property will berestored or if any cash will be recovered. Any cash shortfalls at Logan that will require replenishment by theInvestor Partnership will have an adverse effect on its financial position.

 

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Item6.  Exhibits and Reports on Form 8-K

 

a.)                                   Exhibits.

** **

**INDEX OF EXHIBITS**

 
| **Exhibit No.** |   | **Description**                                                                                                                                        |
|-----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |   |                                                                                                                                                   |
| 31(a)           |   | Certification of the  President of the General Partner Pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 (filed herewith).                    |
|            |   |                                                                                                                                                   |
| 31(b)           |   | Certification of the  Principal Accounting Officer of the General Partner Pursuant to Section 302  of the Sarbanes-Oxley Act of 2002 (filed herewith). |
|            |   |                                                                                                                                                   |
| 32(a)           |   | Certification of the  President of the General Partner Pursuant to 18 U.S.C. Section 1350 (filed  herewith).                                           |
|            |   |                                                                                                                                                   |
| 32(b)           |   | Certification of the  Principal Accounting Officer of the General Partner Pursuant to 18 U.S.C.  Section 1350 (filed herewith).                        |

 

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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.

 

 
| ASSISTED  HOUSING FUND L.P. I            |
|------------------------------------------|
| Registrant                               |
|                                     |   |   |
| By:  Murphey Favre Properties, Inc. |   |   |
| *General  Partner*                       |   |   |
|                                     |   |   |
|                                     |   |   |
| By:                                      | /s/ Robert K.  Stump |   |   | Date: | August 8, 2003 |   |
|                                     | Robert K.  Stump |   |   |
|                                     | *President* |   |   |
|                                          |  |  |  |  |  |  |

 

Pursuant to the requirements of theSecurities and Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the Registrant and in the capacities and on thedates indicated:

 
| By:    | Murphey Favre Properties,  Inc.              |   |
|--------|----------------------------------------------|--------|
|   | *General Partner*                            |   |
|   |                                         |   |
|   |                                         |   |
| By:    | /s/ Brett J. Atkinson                        |   | Date: | August 8, 2003 |   |
|   | Brett J. Atkinson                            |   |
|   | *Treasurer and Principal Accounting Officer* |   |
|        |                                              |        |  |  |  |

 

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