**FORM 10-Q**

 

**SECURITIES AND EXCHANGE 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  March 31, 2003**                                                                |
|                                                                                                          |   |   |
| **Commission file number   33-18756**                                                               |

 

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

(Exactname of registrant as specified 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 checkmark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 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 BALANCE SHEETS

 
|                                    |   | **March 31,  2003** |       | **December  31,  2002** |   |
|-----------------------------------------|--------|---------------------|------------|-------------------------|--------|
|                                    |   | **(Unaudited)**     |       |                    |   |
|                                    |   |                |       |                    |   |
| ASSETS                                  |   |                |       |                    |   |
|                                    |   |                |       |                    |   |
| Rental property and equipment, at cost: |   |                |       |                    |   |
| Buildings and equipment                 |   | $                   | 16,037,801 |                    | $      | 16,018,401 |   |
| Accumulated depreciation                |   | (8,090,555          | )          | (7,959,382              | )      |
|                                    |   |                |       |                    |   |
|                                    |   | 7,947,246           |       | 8,059,019               |   |
| Land                                    |   | 723,111             |       | 723,111                 |   |
|                                    |   |                |       |                    |   |
|                                    |   | 8,670,357           |       | 8,782,130               |   |
|                                    |   |                |       |                    |   |
| Cash:                                   |   |                |       |                    |   |
| Rental operation                        |   | 126,482             |       | 138,910                 |   |
| Partnership                             |   | 21,548              |       | 27,368                  |   |
|                                    |   |                |       |                    |   |
|                                    |   | 148,030             |       | 166,278                 |   |
|                                    |   |                |       |                    |   |
| Restricted deposits:                    |   |                |       |                    |   |
| Tenant trust - security deposits        |   | 118,166             |       | 119,646                 |   |
| Reserve accounts                        |   | 618,607             |       | 651,193                 |   |
|                                    |   |                |       |                    |   |
|                                    |   | 736,773             |       | 770,839                 |   |
|                                    |   |                |       |                    |   |
| Other assets:                           |   |                |       |                    |   |
| Accounts receivable                     |   | 43,134              |       | 39,779                  |   |
| Accounts receivable - DGPs              |   | 24,079              |       | 24,079                  |   |
| Prepaid expenses                        |   | 34,934              |       | 19,115                  |   |
|                                    |   |                |       |                    |   |
|                                    |   | 102,147             |       | 82,973                  |   |
|                                    |   |                |       |                    |   |
|                                    |   | $                   | 9,657,307  |                    | $      | 9,802,220 |   |

 

2

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|                                            |   | **March 31,  2003** |       | **December  31,  2002** |   |
|-------------------------------------------------|--------|---------------------|------------|-------------------------|--------|
|                                            |   | **(Unaudited)**     |       |                    |   |
|                                            |   |                |       |                    |   |
| LIABILITIES AND PARTNERS’ EQUITY (DEFICIT) |   |                |       |                    |   |
|                                            |   |                |       |                    |   |
| Liabilities:                                    |   |                |       |                    |   |
| Mortgage notes payable                          |   | $                   | 12,247,575 |                    | $      | 12,257,788 |   |
| Accounts payable                                |   | 309,031             |       | 259,338                 |   |
| Due to affiliates                               |   | 750,643             |       | 740,768                 |   |
| Accrued liabilities                             |   | 120,077             |       | 111,491                 |   |
| Security deposits payable                       |   | 120,132             |       | 120,483                 |   |
|                                            |   |                |       |                    |   |
|                                            |   | 13,547,458          |       | 13,489,868              |   |
|                                            |   |                |       |                    |   |
| Minority interests in property partnerships     |   | 381,690             |       | 388,449                 |   |
|                                            |   |                |       |                    |   |
| Partners’ equity (deficit):                |   |                |       |                    |   |
| Limited partners                                |   | (4,197,915          | )          | (4,004,129              | )      |
| General partner                                 |   | (73,926             | )          | (71,968                 | )      |
|                                            |   |                |       |                    |   |
|                                            |   | (4,271,841          | )          | (4,076,097              | )      |
|                                            |   |                |       |                    |   |
|                                            |   | $                   | 9,657,307  |                    | $      | 9,802,220 |   |

 

See accompanying notes to consolidated financial statements.

 

3

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ASSISTEDHOUSING FUND L.P. I AND SUBSIDIARIES

CONSOLIDATED  STATEMENTS OF OPERATIONS(Unaudited)

 
|                                                       |   | **Quarter  Ended  March 31,  2003** |     | **Quarter  Ended  March 31,  2002** |   |
|------------------------------------------------------------|--------|-------------------------------------|----------|-------------------------------------|--------|
|                                                       |   |                                |     |                                |   |
| Revenue:                                                   |   |                                |     |                                |   |
| Rent                                                       |   | $                                   | 448,953  |                                | $      | 415,821 |   |
| Miscellaneous                                              |   | 14,434                              |     | 12,664                              |   |
|                                                       |   |                                |     |                                |   |
|                                                       |   | 463,387                             |     | 428,485                             |   |
|                                                       |   |                                |     |                                |   |
| Rental operating expenses:                                 |   |                                |     |                                |   |
| Repairs and maintenance                                    |   | 89,791                              |     | 97,973                              |   |
| Utilities                                                  |   | 85,474                              |     | 85,337                              |   |
| General and operating                                      |   | 128,089                             |     | 113,070                             |   |
| Taxes and insurance                                        |   | 100,180                             |     | 65,241                              |   |
| Interest                                                   |   | 76,294                              |     | 79,003                              |   |
| Depreciation                                               |   | 131,173                             |     | 136,170                             |   |
|                                                       |   |                                |     |                                |   |
|                                                       |   | 611,001                             |     | 576,794                             |   |
|                                                       |   |                                |     |                                |   |
| Income (loss) from rental operations                       |   | (147,614                            | )        | (148,309                            | )      |
|                                                       |   |                                |     |                                |   |
| Other income (expense):                                    |   |                                |     |                                |   |
| Interest earned on partnership cash                        |   | 19                                  |     | 30                                  |   |
| Minority interest in operations                            |   | 6,759                               |     | 6,775                               |   |
| General and administrative                                 |   | (54,908                             | )        | (3,805                              | )      |
|                                                       |   |                                |     |                                |   |
|                                                       |   | (48,130                             | )        | 3,000                               |   |
|                                                       |   |                                |     |                                |   |
| Net income (loss)                                          |   | $                                   | (195,744 | )                                   | $      | (145,309 | ) |
|                                                       |   |                                |     |                                |   |
| Net income (loss) per unit of limited partnership interest |   | $                                   | (278     | )                                   | $      | (207 | ) |

 

See accompanying notes toconsolidated financial statements.

 

4

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ASSISTEDHOUSING FUND L.P. I AND SUBSIDIARIES

 

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

Increase(Decrease) in Cash

(Unaudited)

 
|                                                                                                |   | **Quarter  Ended  March 31,  2003** |     | **Quarter  Ended  March 31,  2002** |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|-------------------------------------|--------|
|                                                                                                |   |                                |     |                                |   |
| Cash flows from operating activities:                                                               |   |                                |     |                                |   |
| Net income (loss)                                                                                   |   | $                                   | (195,744 | )                                   | $      | (145,309 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by  (used in) operating activities: |   |                                |     |                                |   |
| Depreciation                                                                                        |   | 131,173                             |     | 136,170                             |   |
| Minority interests in operations                                                                    |   | (6,759                              | )        | (6,775                              | )      |
| Changes in certain assets and liabilities:                                                          |   |                                |     |                                |   |
| Accounts receivable                                                                                 |   | (3,355                              | )        | (12,062                             | )      |
| Prepaid expenses                                                                                    |   | (15,819                             | )        | (9,646                              | )      |
| Accounts payable                                                                                    |   | 49,693                              |     | 24,899                              |   |
| Due to affiliates                                                                                   |   | 9,875                               |     | 18,986                              |   |
| Accrued liabilities                                                                                 |   | 8,586                               |     | (13,194                             | )      |
| Tenant security deposits                                                                            |   | 1,129                               |     | 4,145                               |   |
|                                                                                                |   |                                |     |                                |   |
| Net cash provided by (used in) operating activities                                                 |   | (21,221                             | )        | (2,786                              | )      |
|                                                                                                |   |                                |     |                                |   |
| Cash flows from investing activities:                                                               |   |                                |     |                                |   |
| Purchase of depreciable property                                                                    |   | (19,400                             | )        | —                              |   |
| Decrease (increase) in reserve deposits                                                             |   | 32,586                              |     | (6,265                              | )      |
|                                                                                                |   |                                |     |                                |   |
| Net cash provided by (used in) investing activities                                                 |   | 13,186                              |     | (6,265                              | )      |
|                                                                                                |   |                                |     |                                |   |
| Cash flows from financing activities:                                                               |   |                                |     |                                |   |
| Minority partner’s capital contributions                                                       |   | —                              |     | —                              |   |
| Mortgage principal payments                                                                         |   | (10,213                             | )        | (8,618                              | )      |
|                                                                                                |   |                                |     |                                |   |
| Net cash provided by (used in) financing activities                                                 |   | (10,213                             | )        | (8,618                              | )      |
|                                                                                                |   |                                |     |                                |   |
| Net increase (decrease) in cash                                                                     |   | (18,248                             | )        | (17,669                             | )      |
| Cash - beginning of year                                                                            |   | 166,278                             |     | 199,668                             |   |
|                                                                                                |   |                                |     |                                |   |
| Cash - end of period                                                                                |   | $                                   | 148,030  |                                | $      | 181,999 |   |
|                                                                                                |   |                                |     |                                |   |
| Supplemental disclosure of cash flow information:                                                   |   |                                |     |                                |   |
| Cash paid for interest                                                                              |   | $                                   | 76,294   |                                | $      | 75,804 |   |

 

See accompanying notes toconsolidated financial statements.

 

5

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

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

**Forthe Quarter Ended March 31, 2003**

**(Unaudited)**

** **

**NOTE 1 – GENERAL**

 

Theunaudited financial statements presented herein have been prepared inaccordance 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 (the InvestorPartnership) Form 10-K for the year ended December 31, 2002.  In the opinion of management, thesefinancial statements include all adjustments, consisting only of normalrecurring adjustments, necessary to present fairly the Investor Partnership’sfinancial position and results of operations. The results of operations for the periods may not be indicative of theresults to be expected for the year.

 

AssistedHousing Fund L.P. I is a limited partnership which was organized November 2,1987 under the laws of the state of Washington to acquire limited partnershipinterests in other partnerships (the Property Partnerships), each of which hasbeen organized to develop or purchase a low- or moderate-income apartmentproject.  The Investor Partnership’sGeneral Partner is Murphey Favre Properties, Inc. (MFP), a wholly-ownedsubsidiary of WM Financial, Inc., which is a wholly-owned subsidiary ofWashington Mutual Bank (WMB), a wholly-owned subsidiary of Washington Mutual,Inc.  At December 31, 2002, 335 partnersheld the 703 units of limited partnership interests outstanding**.**

** **

TheInvestor Partnership has invested as a limited partner in 11 PropertyPartnerships.  The developer of eachapartment 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 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 arerecovered by the Property Partnerships through an interest reduction programwhich reduces the effective interest rate over the lives of the mortgages to 1percent and a rental assistance program whereby RHS pays the PropertyPartnerships for a portion of qualified tenant rents.  Construction of the apartment projects began between June 1988and May 1990 and rental operations began between April 1989 and January 1991.

 

Additionally,in exchange for an allocation of federal low-income housing tax credits underSection 42 of the Internal Revenue Code, each Property Partnership has enteredinto an agreement with an agency of the state in which the apartment project islocated, whereby the Property Partnership has agreed to maintain all apartmentunits as both rent restricted and occupied by low-income tenants for a minimumperiod of 15 years.

 

Theinvestment objectives of the Investor Partnership include the following:

 

(1)                        provide Limited Partners with tax benefitsfrom investing in the Investor Partnership in the form of low-income housingtax credits under Section 42 of the Internal Review Code of 1986 (the Code),

(2)                        preserve and protect the Investor Partnershipcapital, and

 

6

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(3)                        realize long-term capital appreciation in thevalue of the properties upon the sale or refinancing of the properties or theProperty Partnerships.

 

Overthe next several years the properties will have completed the 15-yearcompliance period, during which a tax credit recapture event could occur whenthere is a failure to comply with the requirements of the Internal RevenueService. 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 RHS under its mortgagenote agreements.  The sale of anyproperties will be determined individually, on a case-by-case basis, and wecannot assure you that we will sell any of the properties or if we do sell anyof the properties, that we will realize any meaningful profit as a result ofthe sale.

 

**NOTE 2 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES**

 

a. Principles ofConsolidation

The financial statements consolidate thefinancial statements of the Investor Partnership and the following 11 PropertyPartnerships in which it has invested as a limited partner:

 

Fairview Apartments CompanyLimited Partnership (Fairview)

Ionia Limited DividendHousing Association Limited Partnership (Ionia)

Logan Apartments CompanyLimited Partnership (Logan)

Rolling Brook II LimitedDividend Housing Association Limited Partnership (Rolling Brook)

Wexford Manor LimitedDividend Housing Association Limited Partnership (Wexford)

Blue Heron ApartmentAssociates Limited Partnership (Blue Heron)

Glenwood ApartmentAssociates Limited Partnership (Glenwood)

Pacific Place ApartmentAssociates Limited Partnership (Pacific Place)

Cove Limited DividendHousing Association Limited Partnership (Cove)

Washington Street LimitedDividend Housing Association Limited Partnership (Washington)

Fayette Hills LimitedPartnership (Fayette).

 

Thefinancial statements 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, the InvestorPartnership controls certain fundamental decisions affecting the operation ofthe Property Partnerships.  Thesefundamental decisions include significant purchases of assets, materialborrowings or creation of liens on the underlying properties, entering intomaterial contracts, making tax elections and any act that would causetermination of the Property Partnership. All material inter-partnership transactions and balances have beeneliminated.  Net losses allocable to theminority partners for the three months ended March 31, 2003 and the twelvemonths ended December 31, 2002 were $6,759 and $26,594, respectively.

 

b. Method of Accounting

**The accrual method ofaccounting is used for financial statement purposes.**

 

c. Cost Overruns

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

 

d. Depreciation

Depreciation is computed for financialstatement purposes using the straight-line method over the estimated usefullives of the related assets as follows:

 

7

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

 

e. Income Taxes

No income tax provision has been included inthe financial statements since income or loss of the Investor Partnership isrequired to be reported by the respective partners on their income tax returns.

 

f. Cash Equivalents

For purpose of reporting cash flows,the Investor Partnership considers all investment instruments purchased with amaturity of three months or less to be cash equivalents.  At March 31, 2003 and December 31, 2002,there were no cash equivalents.

 

g. 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.

 

h. 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.

 

i. 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 normal recurringnature.

 

**NOTE - 3   TRANSACTIONS WITH AFFILIATES**

 

Inconnection with the acquisition and development of rental property and themanagement of both the rental property and the Investor Partnership, theInvestor Partnership and Property Partnerships have paid or accrued thefollowing amounts to certain affiliates:

 

|                                                                       |   | **Quarter  Ended  March 31, 2003** |   | **Year Ended  December 31, 2002** |   |
|----------------------------------------------------------------------------|--------|------------------------------------|--------|-----------------------------------|--------|
| Murphey Favre Properties – partnership service  fees                  |   | $                                  | 1,875  |                              | $      | 7,500 |   |
|                                                                       |   |                               |   |                              |   |
| Developer general partners and affiliates – property  management fees |   | $                                  | 24,617 |                              | $      | 96,431 |   |

 

Property management fees are paid out ofrental operations.  Partnership servicesfees are payable from future sales of the properties, to the extent they arenot paid from distributions of rental operation cash (see Note 6).

 

Under terms of the management serviceagreements, seven of the 11 Property Partnerships have affiliates of the DGPswhich provide management services for the rental properties. They receivecompensation for such services in amounts approximating 8.8% of rentalreceipts.  Three of the PropertyPartnerships are co-managed by affiliates of the DGPs and provide managementservices for the rental properties. These affiliates receive compensation for the services provided inamounts approximating 2.1% of rental receipts.

 

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

 

8

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|                               |   | **Quarter  Ended  March 31, 2003** |        | **Year  Ended  December 31, 2002** |       |
|------------------------------------|--------|------------------------------------|-------------|------------------------------------|------------|
| **Advances from DGPs**             |   | **$**                              | **201,784** | ** **                         | **$**      | **201,784** | ** ** |
| **Program management fees**        |   | **326,726**                        | ** **  | **326,726**                        | ** ** |
| **Partnership services fees**      |   | **61,875**                         | ** **  | **60,000**                         | ** ** |
| **Advances from MFP**              |   | **159,283**                        | ** **  | **151,283**                        | ** ** |
| **Advances from affiliate of DGP** |   | **975**                            | ** **  | **975**                            | ** ** |
|                               |   | **$**                              | **750,643** |                               | **$**      | **740,768** | ** ** |

** **

Advances from DGPs amounted to $201,784 atMarch 31, 2003 and December 31, 2002. Terms of RHS Loan Agreements require eachDGP to provide interest-free advances of stipulated amounts as initialoperating capital to the Property Partnerships.  The balances at March 31, 2003 and December 31, 2002 include DGPinterest-free advances of $152,107.  Inaddition, the balances include DGP advances of $35,468 for land improvementsand $14,209 to fund operating deficits. Advances from the DGPs may only berepaid from the proceeds of future sales of the respective properties.

 

Program management fees due to MFP amountedto $326,726 and represent amounts accrued through December 31, 1996.  No accruals have been recorded since thatdate (see Note 8).  Partnership servicesfees are also payable to MFP and reflect accruals through March 31, 2003 andDecember 31, 2002. Partnership fees are payable from future sales of theproperties, to the extent they are not paid from distributions of rentaloperation cash (see Note 6).

 

During the first quarter of 2003 and the fullyear 2002, MFP advanced $8,000 and $48,284, respectively, to the InvestorPartnership for administrative expenses. These advances brought the balances due to MFP at March 31, 2003 andDecember 31, 2002 to $159,283 and $151,283, respectively.

 

The Investor Partnership maintains depositswith WMB in certain checking and money market accounts which aggregated $21,548and $27,368 at March 31, 2003 and December 31, 2002, respectively.  Interest earned on such deposits totaled $19and $96, for the quarter ended March 31, 2003 and the year ended December 31,2002, respectively.

 

**NOTE 4 - CASH IN RESERVE ACCOUNTS**

 

TheLoan Agreements 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 the quarter ended March 31, 2003, RHSapproved the withdrawal of reserve funds at several of the PropertyPartnerships resulting in a net decrease of $32,586 in the restricted depositreserve accounts.

 

**NOTE 5 - MORTGAGE NOTES PAYABLE**

 

The mortgage notes are payable to RHS inmonthly installments totaling $26,959. In accordance with provisions of Interest Credit Agreements, RHSprovides monthly interest credits totaling $69,129 which reduce the interestrates stated in the mortgage notes to effective rates of one (1) percent overthe lives of the mortgages. Amortization of principal is based on the stated rates of 8.75% to10.75% under RHS’s Predetermined Amortization Schedule System (PASS).  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.

 

9

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The mortgage notes are regulated by the U.S.Government; there is no public or private market for the mortgage notes.Accordingly, management has determined that users of the financial statementswould derive no benefit from any estimate of fair value and performing such ananalysis would not be practicable.

** **

Principal payments on the mortgage notes forthe next 5 years are as follows:

 

| **Year**   |   | **Amount** |       |
|------------|--------|------------|------------|
| 2003(1)    |   | $          | 31,541     |   |
| 2004       |   | 46,132     |       |
| 2005       |   | 50,465     |       |
| 2006       |   | 55,205     |       |
| 2007       |   | 60,392     |       |
| Thereafter |   | 12,003,840 |       |
|       |   |       |       |
|       |   | $          | 12,247,575 |   |

 

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(1)  For the remaining 9 months

 

**NOTE 6 - RENTAL OPERATION CASH**

 

RHSregulations limit the distribution of rental operation cash to a maximum of$38,090 annually.  Any distribution tothe Investor Partnership from rental operation cash is to be made in accordancewith the respective partnership agreements. Whether or not a Property Partnership makes any limited distribution isbased on the Property Partnership’s results of operations and is at thediscretion of the DGP.

 

**NOTE 7 - GUARANTEES**

 

Eachof the DGPs has made a guarantee to the respective Property Partnership thatthey will compensate the Investor Partnership in the event the actuallow-income housing tax credit is less than 85% to 90% of the availablecredit.  Through March 31, 2003 nopayments have been made under these guarantees.

 

**NOTE 8 – CONTINGENCIES ANDSUBSEQUENT EVENTS**

 

TheInvestor Partnership has ceased accrual of the annual program management fee,payable in part to the general partner. Management has determined that thesource of payment, a future sale or refinance of one or more of the PropertyPartnerships, may not be sufficient to pay fees accrued in excess 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 December 31, 2002 and December31, 2001, the contingent liability for program management fees totaled $447,102and $372,585, respectively.

 

A DGP of Logan Apartments Company LimitedPartnership, a Property Partnership, did not comply with RHS regulationsregarding the handling of project cash during 2001 and 2000.  These instances of non-compliance werereported to the appropriate authorities during 2001.  During 2001 and 2000, this DGP made multiple unauthorizedwithdrawals of project cash totaling $9,000 and $15,079, respectively.  Further, it was discovered that project bankaccounts, totaling $60,131 as of December 31, 2002, have been pledged inviolation of RHS regulations.  As aresult of this DGP’s actions, RHS issued a Letter of Acceleration on themortgage note on August 29, 2001.  Themortgage note had a balance of $986,713 on March 31, 2003.  RHS suspended further proceedings on October11, 2001, based on preliminary negotiations with the other general partners andthe property management agent. This DGP declared Chapter 7 Bankruptcy onFebruary 19, 2002. MFP, on behalf of the Investor Partnership, filed a Motionfor Summary Judgment against the DGP on October 23, 2002.

 

10

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On April 2, 2003, thebankruptcy trustee drafted a motion to sell the DGP’s interest in Logan, to anOhio non-profit organization.  As acondition of the sale, the non-profit would restore or replenish the assetsthat were misappropriated by the Logan DGP. An Objection to the Trustee’s Motion was filed by the InvestorPartnership on April 21, 2003.

 

**Item 2. Management’s Discussion and Analysis**

 

Certainmatters discussed herein constitute forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995.  The Assisted Housing Fund L.P. I (AHF), theInvestor Partnership intends such forward-looking statements to be covered bythe safe 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.

 

Occupancylevels at the Property Partnerships are one of the key operating factors forthe Property Partnerships. The overall occupancy level for the quarter endingMarch 31, 2003 was 95% as compared to 96% for the same period of 2002. Three ofthe properties experienced a decline in occupancy levels from December 31, 2002to March 31, 2003. The lowest occupancy level at March 31, 2003 was 88%.

 

**Results of Operations**

 

Forthe Investor Partnership and its subsidiary Property Partnerships, theconsolidated net loss was ($195,744) and ($145,309) for the quarters endedMarch 31, 2003 and 2002, respectively. The net loss experienced in the first quarter of 2003 was 35% higherthan that recorded in the first quarter of 2002. Net loss before depreciationwas ($64,571) and ($9,139) for the quarters ended March 31, 2003 and 2002, withdepreciation expense of $131,173 and $136,170, respectively.

 

Revenue totaled $463,387 for the first quarter of 2003, an 8% increaseover the $428,485 recorded in the same period of 2002. The revenue increase wasprimarily due to rent level increases. Overall operating expenses increased by6% in the first quarter of 2003 as compared with the same period of 2002.  As has been the experience since the September11, 2001 tragedy, insurance premiums continue to rise.  The insurance and property tax expensecategory rose faster than any other operating expense category during the firstquarter of 2003.  Loss from rental operationsamounted to ($147,614) and ($148,309) for the first quarter of 2003 and 2002,respectively.

 

In the first quarter of 2003 non-operating expense increased $51,130over first quarter of 2002.  Theseexpenses included audit and accounting fees related to the InvestorPartnership.  In 2002, audit andaccounting expenses were recorded in the second quarter.  Additionally, in the first quarter of 2003the Investor Partnership paid approximately $7,500 related to audit fees forfive of the Property Partnerships. These particular Property Partnerships, because of their small number ofdwelling units, are not required by U.S. Department of Agriculture RuralDevelopment Agency, through its Rural Housing Service (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,Capital Resources, and Regulatory Compliance**

 

At March 31, 2003, the Investor Partnership’soperating cash amounted to $21,548 and the Property Partnerships’ operatingcash totaled $126,482 for a combined total of $148,030.  At March 31, 2002, the cash balance of

 

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$166,278 included $27,368 in InvestorPartnership cash and $138,910 in operating cash accounts of the PropertyPartnerships.

 

Consolidated operational cash flows for thefirst quarter of 2003 totaled ($21,221) compared to a ($2,786) in the sameperiod of 2002.  Achieving positive cashflows continues to be a problem at several of the Property Partnerships.  For the three months ended March 31, 2003,six properties generated positive cash flow. For the five that generatednegative cash flow, the deficits were funded from rental operating cash andauthorized reserve account withdrawals. The Investor Partnership is notrequired to fund additional amounts to the Property Partnerships based on eachProperty Partnership agreement. Additionally, each Property Partnership isoperated as an individual project, and without any contractual arrangements ofany kind between the Property Partnerships.

 

At March 31, 2003, Logan Apartments CompanyLimited Partnership’s (Logan) tenant security deposit account was under fundedby $3,418.  Additionally, Logan wasapproximately $27,000 in arrears in property taxes at the end of the firstquarter 2003.  While both of theseliquidity matters are violations of RHS regulations, RHS has taken no actionagainst Logan.  Further actions taken bya Logan DGP in 2000 and 2001 that led to certain other violations of RHSregulations are the subject of litigation and bankruptcy proceedings more fullydescribed in Part II. Item 1. Legal Proceedings.

 

Thereare no additional acquisitions nor any dispositions planned.

 

**Item 3. Quantitative and Qualitative Disclosures about MarketRisks**

 

Themanagement of the Investor Partnership does not believe that the operation ofthe Investor Partnership and the Property Partnerships are materially affectedby interest rates or other financial market risks at this time.  In the event of proposed future sale of anyof the Property Partnerships’ properties, mortgage interest rates andavailability of financing to potential buyers may have an impact on the sellingopportunity.

 

**Item 4. Controls and Procedures**

 

Within the ninety (90) days prior to the dateof this report, an evaluation was performed under the supervision and with theparticipation of the Investor Partnership, including the President and thePrincipal Accounting Officer of the General Partner, of the effectiveness of thedesign and operation of the Investor Partnership’s disclosure and controlprocedures.  Based on that evaluation,the Investor Partnership’s management, including the President and thePrincipal Accounting Officer of the General Partner, concluded that theInvestor Partnership’s disclosure controls and procedures were effective as ofMarch 31, 2003.  There have been nosignificant changes in the Investor Partnership’s internal controls or in otherfactors that could significantly affect internal controls subsequent to March31, 2003.

 

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**PART II.OTHER INFORMATION**

 

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

 

Item 1. Legal Proceedings

 

During 2001 and 2000, Arthur H. Winer(Winer), a Developer General Partner (DGP) of Logan, did not comply with RHSregulations regarding the handling of project cash. These instances ofnon-compliance were reported to the appropriate authorities during 2001. During2001 and 2000, Winer made multiple unauthorized withdrawals of project cashtotaling $9,000 and $15,079, respectively. Further, it was discovered thatproject bank accounts, totaling $60,131 at December 31, 2002 have been pledgedin violation of RHS regulations. As a result of Winer’s actions, RHS issued aLetter of Acceleration on August 29, 2001. RHS suspended further proceedings onOctober 11, 2001, based on preliminary agreements reached with the Logan’sother DGPs and the Logan property management agent.

 

OnFebruary 19, 2002, Winer filed a Petition in Bankruptcy in the U.S. BankruptcyCourt for the Southern District of West Virginia, in Charleston, WV, underChapter 7 of the U.S. Bankruptcy Code. As of the date of filing of the Petitionin Bankruptcy, the “automatic stay” under the Bankruptcy Code went into effectand all actions to collect debts of Winer were precluded, absent approval ofthe U.S. Bankruptcy Court. Among these debts were those previously mentionedunauthorized withdrawals of project cash and pledging of project bank accountswhich Winer improperly used for personal business.

 

OnMay 22, 2002 Murphey Favre Properties, Inc., General Partner of AHF,retained outside bankruptcy counsel to represent it, on behalf of Logan, in thepreviously mentioned bankruptcy action and to prepare and file  a Proof of Claim.   Additionally, outside counsel was engaged to register with theBankruptcy Court a creditor’s claim for Logan debts which arose from Winerremoving funds from various Logan reserve and other bank accounts.  A Complaint to Determine Dischargeability ofDebt and for Judgment was prepared and filed on behalf of Logan on May 31,2002.   In this Complaint Logan soughtto obtain a Court Order to protect the Logan Creditor’s claim for Logan debtfrom being dischargable as part of Winer’s bankruptcy action and to obtain ajudgment against Winer for the amount of the creditor’s claim. Winer filed anAnswer to Complaint to Determine Dischargeability of Debt on or aboutJune 17, 2002.

 

On or about January 7, 2003 the U.S.Trustee in the Winer personal bankruptcy filed a Trustee’s Motion to SellPersonal Property Free and Clear of All Liens and Encumbrances and to AllowExpenses (Trustee’s Motion).  TheTrustee’s Motion seeks to sell Winer’s partnership interest in Logan amongother personal assets of Winer, free and clear of all liens and encumbranceswhich may currently attach to them, to Buckeye Community Hope Foundation, anOhio non-profit corporation (Buckeye). AHF has prepared and filed an Objection to the Trustee’s Motion.

 

On February 5, 2003 the deposition ofWiner was taken in Charleston, WV by local bankruptcy counsel for AHF as a partof his personal bankruptcy and its related Adversary Proceeding. As a result ofadmissions made by Winer in his deposition, a Motion for Summary Judgment(SJ Motion) against him, which had been filed previously by AHF, wasmodified in the form of a Supplement dated March 7, 2003.  A Response to the SJ Motion was filed byWiner on March 31, 2003 (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 on issues arising under the SJ Motion and the Response toit.  The required additional briefingwas filed on April 30, 2003.

 

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On March 7, 2003 a letter was issued by Buckeyein which it offered to acquire from the Winer bankruptcy estate, among otherassets, Winer’s partnership interest in Logan under certain conditions.

 

OnApril 21, 2003 the Investor Partnership sent a letter to Thomas Runquist(Runquist) and Rural Housing Corporation (RHC), who are the other DGPs ofLogan, in addition to Winer. The letter demanded that Runquist and RHC, who arejointly liable for the actions of the Logan DGP as a whole, reimburse Logan forits damages and costs sustained as a result of Winer’s improper actions. Alsoon April 21, 2003 an Objection to the Trustee’s Motion was filed byAHF.  The position of AHF is that theproposed terms of the Trustee’s Motion do not adequately compensate Logan forall losses sustained due to Winer’s improper actions.  A hearing on the Trustee’s Motion was scheduled for May 16,2003, but was continued to a date to be set by the Court.  On May 1, 2003 a written response tothe demand letter was received from counsel for Runquist and RHC.  It acknowledged the demand but declinedcurrently to reimburse Logan for Winer’s improper actions.  AHF will reply to the Runquist/RHC responseletter.

 

Item 6.  Exhibits and Reports on Form 8-K

 

a.)                                   Exhibits.

 

**INDEX****OF EXHIBITS**

 
| **Exhibit No.** |   | **Description**                                                                                                                 |
|-----------------|--------|---------------------------------------------------------------------------------------------------------------------------------|
| 99(a)           |   | Certification of  the President of the General Partner Pursuant to 18 U.S.C. Section 1350  (filed herewith).                    |
| 99(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.

 

ASSISTEDHOUSING FUND L.P. I

Registrant

 
| By:    | Murphey Favre  Properties, Inc. |   |
|--------|---------------------------------|--------|
|   | Its General  Partner            |   |
|   |                            |   |
|   |                            |   |
|   |                            |   |
|   |                            |   |
| By:    | /s/ Robert  K.  Stump      |   | Date: | May 14, 2003 |   |   |
|   | Robert K.  Stump           |   |
|   | Its 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.              |   |
|--------|----------------------------------------------|--------|
|   | Its General  Partner                         |   |
|   |                                         |   |
|   |                                         |   |
|   |                                         |   |
|   |                                         |   |
| By:    | /s/ Brett J. Atkinson                        |   | Date: | May 14, 2003 |   |   |
|   | Brett J. Atkinson                            |   |
|   | Its Treasurer,  Principal Accounting Officer |   |
|        |                                              |        |  |  |  |  |  |

 

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ASSISTED HOUSING FUND L.P. I

CERTIFICATION

 

I,Robert K. Stump, certify that:

 

1)              I have reviewed thisquarterly report on Form 10-Q of Assisted Housing Fund L.P. I;

2)              Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

3)              Based on my knowledge, the financial statements,and other financial information included in this quarterly report, fairly presentin all material respects the financial condition, results of operations andcash flows of the registrant as of, and for, the periods presented in thisquarterly report;

4)              The registrant’s other certifying officers and Iare responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:

a)              designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisquarterly report is being prepared;

b)             evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

c)              presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

5)              The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent functions):

a)              all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

b)             any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

6)              The registrant’s other certifying officersand I have indicated in this quarterly report whether there were significantchanges in internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recent evaluation,including any corrective actions with regard to significant deficiencies andmaterial weaknesses.

 
| Date:  | May 14, 2003 |   |
|--------|--------------|--------|
|   |
|   |         | By:    | /s/   ROBERT K. STUMP |
|   |         |   | Robert  K. Stump  President |
|        |              |        |  |  |

 

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ASSISTED HOUSING FUND L.P. I

CERTIFICATION

 

I,Brett J. Atkinson, certify that:

 

1)              I have reviewed this quarterly report on Form10-Q of Assisted Housing Fund L.P. I;

2)              Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

3)              Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

4)              The registrant’s other certifying officersand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:

a)              designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

b)             evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

c)              presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

5)              The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent functions):

a)              all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

b)             any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

6)              The registrant’s other certifying officersand I have indicated in this quarterly report whether there were significantchanges in internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recent evaluation,including any corrective actions with regard to significant deficiencies andmaterial weaknesses.

 
| Date:  | May 14, 2003 |   |
|--------|--------------|--------|
|   |
|   |         | By:    | /s/   BRETT J. ATKINSON |
|   |         |   | Brett  J. Atkinson*Treasurer  Principal Accounting Officer* |
|        |              |        |  |  |

 

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