SHELTER PROPERTIES I LTD PARTNERSHIP, 10KSB, 1999-03-26

SHELTER PROPERTIES I LTD PARTNERSHIP
10KSB, 1999-03-26
OPERATORS OF NONRESIDENTIAL BUILDINGS

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FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT
UNDER SECTION 13 OR 15(D)

(As last amended by 34-31905, eff. 4/26/93)

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]

For the fiscal year ended December 31, 1998

or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]

For the transition period.........to.........

Commission file number 0-10255

SHELTER PROPERTIES I
(Name of small business issuer in its charter)

South Carolina 57-0707398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number

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

None

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

Units of Limited Partnership Interest
(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
No

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

State issuer's revenues for its most recent fiscal year. $5,289,000

State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1998. No market exists for the limited
partnership interests of the Registrant, and, therefore, no aggregate market
value can be determined.
DOCUMENTS INCORPORATED BY REFERENCE

None

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Shelter Properties I (the "Partnership" or "Registrant") was organized as a
limited partnership under the laws of the State of South Carolina on April 7,
1980. The general partner responsible for management of the Partnership's
business is Shelter Realty I Corporation, a South Carolina corporation (the
"Corporate General Partner"). The only other general partner of the Partnership
is N. Barton Tuck, Jr. Mr. Tuck is not an affiliate of the Corporate General
Partner and is effectively prohibited by the Partnership's partnership agreement
(the "Partnership Agreement") from participating in the management of the
Partnership. The Corporate General Partner is a subsidiary of Apartment
Investment and Management Company ("AIMCO"). The Partnership Agreement provides
that the Partnership is to terminate on December 31, 2019 unless terminated
prior to such date.

The Registrant is engaged in the business of operating and holding real
properties for investment. In 1980, during its acquisition phase, the
Registrant acquired seven existing apartment properties. The Registrant
continues to own and operate four of these properties (See "Item 2. Description
of Properties")

Commencing July 3, 1980, the Registrant offered pursuant to a Registration
Statement filed with the Securities and Exchange Commission up to 14,900 Units
of Limited Partnership Interest (the "Units") at a purchase price of $1,000 per
Unit with a minimum purchase of 5 Units ($5,000). An additional 100 Units were
purchased by the Corporate General Partner.

The offering terminated on September 10, 1980. Upon termination of the
offering, the Registrant had accepted subscriptions for 15,000 Units, including
100 Units purchased by the Corporate General Partner, for an aggregate of
$15,000,000. The Registrant invested approximately $11,000,000 of such proceeds
in seven existing apartment properties and thereby completed its acquisition
program in December 1980. Since its initial offering, the Registrant has not
received, nor are limited partners required to make, additional capital
contributions.

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

The Registrant has no employees. Management and administrative services are
provided by the Corporate General Partner and by agents retained by the
Corporate General Partner. These services were provided by affiliates of the
Corporate General Partner for the years ended December 31, 1998 and 1997.

The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Registrant's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Corporate General
Partner in such market area, could have a material effect on the rental market
for apartments at the Registrant's properties and the rents that may be charged
for such apartments. While the Corporate General Partner and its affiliates are
a significant factor in the United States in the apartment industry, competition
for the apartments is local. In addition, various limited partnerships have
been formed by the Corporate General Partner and/or affiliates to engage in
business which may be competitive with the Registrant.

The Partnership receives income from its properties and is responsible for
operating expenses, capital improvements and debt service payments under
mortgage obligations secured by the properties. The Partnership financed its
properties primarily through non-recourse debt. Therefore, in the event of
default, the lender can generally look only to the subject property for recovery
of amounts due.

Both the income and expenses of operating the remaining properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside of the control of the Partnership.

There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.

Transfer of Control

Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership
interest in Insignia Properties Trust ("IPT"), the entity which controls the
Corporate General Partner. The Corporate General Partner does not believe that
this transaction will have a material effect on the affairs and operations of
the Partnership.

ITEM 2. DESCRIPTION OF PROPERTIES:

The following table sets forth the Registrant's investments in properties:

Date of
Property Purchase Type of Ownership Use
Quail Hollow Apartments 09/01/80 Fee ownership subject Apartment
West Columbia, South Carolina to first mortgage 215 units

Windsor Hills Apartments 09/01/80 Fee ownership subject Apartment
Blacksburg, Virginia to first and second 300 units
mortgage (1)

Heritage Pointe Apartments 09/15/80 Fee ownership subject Apartment
(Formerly Rome Georgian Apartments) to first mortgage 149 units
Rome, Georgia

Stone Mountain West Apartments 12/31/80 Fee ownership subject Apartment
Stone Mountain, Georgia to first mortgage 142 units

(1) Property is held by a Limited Partnership which the Registrant owns a
99.99% interest in.

SCHEDULE OF PROPERTIES:

Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
federal tax basis.

Gross

Carrying Accumulated Federal

Property Value Depreciation Rate Method Tax Basis

(in thousands) (in thousands)

Quail Hollow Apartments $ 5,483 $ 3,785 5-34 S/L $ 2,068

Windsor Hills Apartments 6,573 4,589 5-30 S/L 2,208

Heritage Pointe Apartments 3,459 2,482 5-35 S/L 1,181

Stone Mountain West

Apartments 4,850 3,374 5-37 S/L 1,955

Totals $20,365 $14,230 $ 7,412

See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation
policy.

SCHEDULE OF PROPERTY INDEBTEDNESS:

The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.

Principal Principal

Balance At Stated Balance

December 31, Interest Period Maturity Due At

Property 1998 Rate Amortized Date Maturity (2)

(in thousands) (in thousands)

Quail Hollow $ 2,850 7.33% none 11/01/03 $ 2,850

Windsor Hills:

1st mortgage 4,122 7.60% (1) 11/15/02 3,489

2nd mortgage 149 7.60% none 11/15/02 149

Heritage Pointe 1,400 7.33% none 11/01/03 1,400

Stone Mountain West 3,000 7.33% none 11/01/03 3,000

11,521

Less unamortized

present value

discounts (153)

Total $11,368 $10,888

(1) The principal and discount are being amortized over 257 months with a
balloon payment due November 15, 2002.
(2) See "Item 7, Financial Statements _ Note C" for information with respect to
the Registrant's ability to prepay these loans and other specific details
about the loans.

RENTAL RATES AND OCCUPANCY:

Average annual rental rate and occupancy for 1998 and 1997 for each property:

Average Annual Average Annual

Rental Rates Occupancy

Property 1998 1997 1998 1997

Quail Hollow $6,588 $6,432 95% 93%

Windsor Hills 6,102 5,617 96% 96%

Heritage Pointe 5,395 5,297 89% 91%

Stone Mountain West 9,191 8,824 96% 96%

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

REAL ESTATE TAXES AND RATES:

Real estate taxes and rates in 1998 for each property were:

1998 1998

Billing Rate

(in thousands)

Quail Hollow $74 28.06%

Windsor Hills 76 .96%

Heritage Pointe 39 3.51%

Stone Mountain West 81 4.44%

CAPITAL IMPROVEMENTS:

Quail Hollow Apartments

During 1998, the Partnership completed $126,000 of capital improvements at the
property, consisting primarily of roof replacements, carpet replacement, and
exterior building painting. These improvements were funded primarily from cash
flow. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the Corporate
General Partner on interior improvements, it is estimated that the property
requires approximately $315,000 of capital improvements over the near term. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $425,000 for 1999 consisting of carpet and vinyl replacement, roof
replacements, major landscaping and parking lot repairs.

Heritage Pointe Apartments
During 1998, the Partnership completed $58,000 of capital improvements at the
property, consisting primarily of carpet and appliance replacements and building
improvements. These improvements were funded primarily from cash flow and
Partnership reserves. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
Corporate General Partner on interior improvements, it is estimated that the
property requires approximately $315,000 of capital improvements over the near
term. The Partnership has budgeted, but is not limited to, capital improvements
of approximately $369,000 for 1999, consisting of various interior and
exterior building improvements.

Stone Mountain West Apartments

During 1998, the Partnership completed $135,000 of capital improvements at the
property, consisting primarily of swimming pool repairs, perimeter fencing
repairs and carpet replacements. These improvements were funded primarily from
cash flow and Partnership reserves. Based on a report received from an
independent third party consultant analyzing necessary exterior improvements and
estimates made by the Corporate General Partner on interior improvements, it is
estimated that the property requires approximately $315,000 of capital
improvements over the near term. The Partnership has budgeted, but is not
limited to, capital improvements of approximately $155,000 for 1999 consisting
of carpet and vinyl replacement, major landscaping, roof replacements and
parking lot repairs.

Windsor Hill Apartments

During 1998, the Partnership completed $119,000 of capital improvements at the
property, consisting primarily of HVAC condensing units, appliance, carpet and
vinyl replacements. These improvements were funded primarily from cash flow.
Based on a report received from an independent third party consultant analyzing
necessary exterior improvements and estimates made by the Corporate General
Partner on interior improvements, it is estimated that the property requires
approximately $390,000 of capital improvements over the near term. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $428,000 for 1999 consisting of carpet and vinyl replacement,
exterior building painting and parking lot and pool repairs and appliance
replacement.

The capital improvements planned for 1999 at the Partnerships properties will be
made only to the extent of cash available from operations and Partnership
reserves.

ITEM 3. LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates as well as a recently
announced agreement between Insignia and Apartment Investment and Management
Company. The complaint seeks monetary damages and equitable relief, including
judicial dissolution of the Partnership. On June 25, 1998, the Corporate General
Partner filed a motion seeking dismissal of the action. In lieu of responding to
the motion, the plaintiffs have filed an amended complaint. The Corporate
General Partner has filed demurrers to the amended complaint which were heard
during February 1999. No ruling on such demurrers has been received. The
Corporate General Partner does not anticipate that costs associated with this
case, if any, to be material to the Partnership's overall operations.

On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled EVEREST PROPERTIES, LLC. V.
INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of
California, county of Los Angeles. The action involves 44 real estate limited
partnerships (including the Partnership) in which the plaintiffs allegedly own
interests and which Insignia Affiliates allegedly manage or control (the
"Subject Partnerships"). This case was settled on March 3, 1999. The
Partnership is responsible for a portion of the settlement costs. The expense
will not have a material effect on the Partnership's net income.

The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the quarter ended December 31, 1998, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.

PART II

ITEM 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS

The Partnership, a publicly-held limited partnership, offered and sold 15,000
limited partnership units aggregating $15,000,000 including 100 units which were
purchased by the Corporate General Partner. The Partnership currently has 642
holders of record owning an aggregate of 15,000 Units. Affiliates of the
Corporate General Partner own 7,009 units or 46.726% at December 31, 1998. No
public trading market has developed for the Units, and it is not anticipated
that such a market will develop in the future.

During the year ended December 31, 1998 distributions from operations of
approximately $1,600,000 ($105.67 per limited partnership unit) were paid to the
partners. During the year ended December 31, 1997 a distribution of
approximately $1,258,000 ($83.87 per limited partnership unit) was paid all to
the limited partners from proceeds as a result of the Partnership's debt
refinancing proceeds on three of its four properties. Included in the above
distributions were payments of approximately $6,000 and $8,000 which were paid
on behalf of the non-resident partners in 1998 and 1997, respectively, to the
state of South Carolina in relation to 1997 and 1996 taxable income generated at
Quail Hollow. Future cash distributions will depend on the levels of net cash
generated from operations, refinancings property sales and the availability of
cash reserves. Subsequent to the Partnership's fiscal year-end a distribution
from operations of $1,000,000 was paid during January 1999. The Partnership's
distribution policy is reviewed on a quarterly basis. There can be no
assurance, however, that the Partnership will generate sufficient funds from
operations after required capital expenditures to permit any additional
distributions to its partners in 1999 or subsequent periods. In addition, the
Partnership is restricted from making distributions if the amount in the reserve
account at Quail Hollow, Heritage Pointe, and Stone Mountain West maintained by
the mortgage lender is less than $300 to $325 per apartment unit at such
properties. Windsor Hills is required to maintain a level of $1,000 per
apartment unit. The reserve accounts are currently fully funded. See "Item 2.
Capital Improvements" and "Item 6. Management's Discussion and Analysis or Plan
of Operation" for information relating to anticipated capital expenditures at
the properties.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussions
of the Registrant's business and results of operations, including forward-
looking statements pertaining to such matters, does not take into account the
effects of any changes to the Registrant's business and results of operations.
Accordingly, actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.

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

RESULTS OF OPERATIONS

The Registrant's net income for the year ended December 31, 1998 was $1,065,000
as compared to $465,000 for the year ended December 31, 1997. (See "Note D" of
the consolidated financial statements for a reconciliation of these amounts to
the Registrant's federal taxable income). The increase in net income was due to
an increase in total revenue and a decrease in total expenses. The increase in
revenues was due to an increase in rental income which was primarily
attributable to the increase in average annual rental rates at all four of the
Registrant's investment properties.

Expenses decreased due to a reduction in operating expense, which was partially
offset by an increase in both general and administrative expense and property
taxes. Operating expense decreased due to the completion during 1997 of (i)
installation of more efficient plumbing fixtures at Windsor Hills (ii) moisture
barriers under several buildings at Heritage Point, (iii) and interior building
improvements and painting at Heritage Pointe. The increase in property taxes is
attributable to an increase in the tax rate in 1998 at the Stone Mountain West
Apartments after an unsuccessful appeal for a lower rate.

The increase in general and administrative expense is primarily attributable to
payments made in connection with property valuations performed on the properties
and an increase in Corporate General Partner reimbursements. Depreciation and
interest expense remained relatively constant for the comparable periods.
Included in general and administrative expenses at both December 31, 1998 and
1997 are management reimbursements to the Corporate General Partner allowed
under the Partnership Agreement. In addition, costs associated with the
quarterly and annual communications with investors and regulatory agencies and
the annual audit required by the Partnership Agreement are also included.

As part of the ongoing business plan of the Registrant, the Corporate General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Registrant from increases in
expenses. As part of this plan, the Corporate General Partner attempts to
protect the Registrant from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Corporate General Partner will be able to sustain
such a plan.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1998, the Registrant had cash and cash equivalents of
approximately $1,682,000 as compared to approximately $2,028,000 at December 31,
1997. The decrease in cash and cash equivalents is due to approximately
$284,000 of cash used in investing activities and approximately $1,737,000 of
cash used in financing activities, which was partially offset by approximately
$1,675,000 of cash provided by operating activities. Cash used in investing
activities consisted of capital improvements, which was offset by withdrawals
from escrow accounts maintained by the mortgage lender. Cash used in financing
activities consisted primarily partner distribution and to a lesser extent
payments of principal made on the mortgages encumbering the Registrant's
properties. The Registrant invests its working capital reserves in money market
accounts.

The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Registrant and to comply with Federal,
state, and local legal and regulatory requirements. The Registrant has budgeted
approximately $1,377,000 in capital improvements for the Registrant's properties
in 1999. Budgeted capital improvements at Quail Hollow include roof, gutters,
and downspout replacements, landscaping and irrigation parking lot repairs.
Budgeted capital improvements at Heritage Pointe Apartments consist of various
interior and exterior building improvements. Budgeted capital improvements at
Stone Mountain West consist of landscaping and irrigation and roof replacements
and pool repairs. Budgeted capital improvements at Windsor Hills consist of
exterior building painting and parking lot and pool repairs. The capital
expenditures will be made only if cash is available from operations or from
partnership reserves. To the extent that such budgeted capital improvements
are completed, the Registrant's distributable cash flow, if any, may be
adversely affected at least in the short terms.

The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $11,368,000, net of discount, is amortized over
varying periods with required balloon payments ranging from November 15, 2002 to
November 1, 2003. The Corporate General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity date. If the
property cannot be refinanced or sold for a sufficient amount, the Registrant
may risk losing such property through foreclosure.

Cash distributions from operations of approximately $1,600,000 were made to the
Partners during the year ended December 31, 1998. A distribution of
approximately $1,258,000 from the proceeds received from refinancing three of
the Partnership's four properties in 1996 was made all to the limited partners
during the year ended December 31, 1997. Included in the above distribution was
payments of approximately $6,000 and $8,000 which were paid on behalf of the
non-resident partners in 1998 and 1997, respectively, to the state of South
Carolina in relation to 1997 and 1996 taxable income generated at Quail Hollow.
During the first quarter of 1999, the Registrant made a distribution in the
aggregate amount of approximately $1,000,000 from operations. The Registrant's
distribution policy is reviewed on a quarterly basis. There can be no assurance,
however, that the Registrant will generate sufficient funds from operations to
permit further distributions to its partners in 1999 or subsequent periods.

Year 2000 Compliance

General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the Corporate General Partner and its affiliates for
management and administrative services ("Managing Agent"). Any of the computer
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.

Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.

The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.

Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase

Computer Hardware:

During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.

The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.

Computer software:

The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.

During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.

The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.

Operating Equipment:

The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).

The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.

Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.

The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.

The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.

Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000

The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.

The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.

The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.

Costs to Address Year 2000

The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.

Risks Associated with the Year 2000

The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.

In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.

Contingency Plans Associated with the Year 2000

The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.

ITEM 7. FINANCIAL STATEMENTS

SHELTER PROPERTIES I

LIST OF FINANCIAL STATEMENTS

Report of Ernst & Young LLP, Independent Auditors

Consolidated Balance Sheet - December 31, 1998

Consolidated Statements of Operations - Years ended December 31, 1998
and 1997

Consolidated Statements of Changes in Partners' Deficit - Years
ended December 31, 1998 and 1997

Consolidated Statements of Cash Flows - Years ended December 31, 1998
and 1997

Notes to Consolidated Financial Statements

Report of Ernst & Young LLP, Independent Auditors

The Partners
Shelter Properties I

We have audited the accompanying consolidated balance sheet of Shelter
Properties I as of December 31, 1998, and the related consolidated statements of
operations, changes in partners' deficit and cash flows for each of the two
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Shelter Properties
I at December 31, 1998, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.

/s/ERNST & YOUNG LLP

Greenville, South Carolina
March 3, 1999

SHELTER PROPERTIES I

CONSOLIDATED BALANCE SHEET
(in thousands, except per unit data)

December 31, 1998

Assets

Cash and cash equivalents $ 1,682

Receivables and deposits 268

Restricted escrows 894

Other assets 260

Investment properties (Notes C & F):

Land $ 1,428

Buildings and related personal property 18,937

20,365

Less accumulated depreciation (14,230) 6,135

$ 9,239

Liabilities and Partners' Deficit

Liabilities

Accounts payable $ 85

Tenant security deposit liabilities 134

Accrued property taxes 74

Other liabilities 273

Mortgage notes payable (Note C) 11,368

Partners' Deficit

General partners' $ (52)

Limited partners' (15,000 units

issued and outstanding) (2,643) (2,695)

$ 9,239

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)

Years Ended December 31,

1998 1997

Revenues:

Rental income $ 4,998 $ 4,749

Other income 291 313

Total revenues 5,289 5,062

Expenses:

Operating 2,146 2,577

General and administrative 217 174

Depreciation 640 638

Interest 950 960

Property taxes 271 248

Total expenses 4,224 4,597

Net income (Note D) $ 1,065 $ 465

Net income allocated to general partners (1%) $ 11 $ 5

Net income allocated to limited partners (99%) 1,054 460

$ 1,065 $ 465

Net income per limited partnership unit $ 70.27 $ 30.67

Distributions per limited partnership unit $105.67 $ 83.87

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)

Limited

Partnership General Limited

Units Partners' Partners' Total

Original capital contributions 15,000 $ 2 $15,000 $15,002

Partners' deficit at

December 31, 1996 15,000 $(53) $(1,314) $(1,367)

Distributions paid -- -- (1,258) (1,258)

Net income for the year ended

December 31, 1997 -- 5 460 465

Partners' deficit at

December 31, 1997 15,000 (48) (2,112) (2,160)

Distributions paid -- (15) (1,585) (1,600)

Net income for the year ended

December 31, 1998 -- 11 1,054 1,065

Partners' deficit at

December 31, 1998 15,000 $(52) $(2,643) $(2,695)

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Years Ended December 31,

1998 1997

Cash flows from operating activities:

Net income $ 1,065 $ 465

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation 640 638

Amortization of discounts and loan costs 88 89

Change in accounts:

Receivables and deposits (75) 88

Other assets 17 (11)

Accounts payable (130) 151

Tenant security deposit liabilities 5 (3)

Accrued property taxes 68 (65)

Other liabilities (3) 13

Net cash provided by operating activities 1,675 1,365

Cash flows from investing activities:

Property improvements and replacements (438) (623)

Net withdrawals from (deposits to) restricted

escrows 154 (109)

Net cash used in investing activities (284) (732)

Cash flows from financing activities:

Payments on mortgage notes payable (137) (127)

Loan costs paid -- (12)

Distributions paid (1,600) (1,258)

Net cash used in financing activities (1,737) (1,397)

Net decrease in cash and cash equivalents (346) (764)

Cash and cash equivalents at beginning of period 2,028 2,792

Cash and cash equivalents at end of period $ 1,682 $ 2,028

Supplemental disclosure of cash flow information:

Cash paid for interest $ 862 $ 872

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization: Shelter Properties I (the "Partnership" or "Registrant") was
organized as a limited partnership under the laws of the State of South Carolina
on April 7, 1980. The general partner responsible for management of the
Partnership's business is Shelter Realty I Corporation, a South Carolina
corporation (the "Corporate General Partner"). The only other general partner of
the Partnership is N. Barton Tuck, Jr. Mr. Tuck is not an affiliate of the
Corporate General Partner and is effectively prohibited by the Partnership's
partnership agreement (the "Partnership Agreement") from participating in the
management of the Partnership. The Corporate General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"). See "Note B - Transfer
of Control." The directors and officers of the Corporate General Partner also
serve as executive officers of AIMCO. The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2019 unless terminated prior to
such date. The Partnership commenced operations on September 1, 1980, and
completed its acquisition of apartment properties on December 31, 1980. The
Partnership operates four apartment properties located in the South and
Southeast.

Principles of Consolidation: The consolidated financial statements include all
of the accounts of the Partnership and its 99.99% owned partnership. The
general partner of the consolidated partnership is Shelter Realty I Corporation.
Shelter Realty I Corporation may be removed by the Registrant; therefore, the
consolidated partnership is controlled and consolidated by the Registrant. All
significant interpartnership balances have been eliminated.

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

Allocation of Cash Distributions: Cash distributions by the Partnership are
allocated between general and limited partners in accordance with the provisions
of the Partnership Agreement. The Partnership Agreement provides that net cash
from operations means revenue received less operating expenses paid, adjusted
for certain specified items which primarily include mortgage payments on debt,
property improvements and replacements not previously reserved, and the effects
of other adjustments to reserves including reserve amounts deemed necessary by
the Corporate General Partner. In the following notes to consolidated financial
statements, whenever net cash provided by operations is used, it has the
aforementioned meaning. The following is a reconciliation of the subtotal in
the accompanying consolidated statements of cash flows captioned "net cash
provided by operating activities" to "net cash from operations", as defined in
the Partnership Agreement. However, "net cash from operations" should not be
considered an alternative to net income as an indicator of the Partnership's
operating performance or to cash flows as a measure of liquidity.

1998 1997

Net cash provided by operating activities $1,675 $1,365

Property improvements and replacements (438) (623)

Payments on mortgage notes payable (137) (127)

Changes in reserves for net operating

liabilities 118 (173)

Changes in restricted escrows, net 154 (109)

Additional operating reserves (372) --

Net cash from operations $1,000 $ 333

The Corporate General Partner believed it to be in the best interest of the
Partnership to reserve an additional $372,000 at December 31, 1998 to fund
continuing capital improvements at its investment properties. At December 31,
1997 no such amounts were reserved.

Distributions made from reserves no longer considered necessary by the general
partners are considered to be additional net cash from operations for allocation
purposes. Cash distributions of approximately $1,600,000 (operations) and
approximately $1,258,000 (refinance proceeds) were made during the years ended
December 31, 1998 and 1997, respectively. During the first quarter of 1999, the
Partnership made a distribution in the amount of approximately $1,000,000 from
operations.

The Partnership Agreement provides that 99% of distributions of net cash from
operations are allocated to the limited partners until they receive net cash
from operations for such fiscal year equal to 7% of their adjusted capital
values (as defined in the Partnership Agreement), at which point the general
partners will be allocated all net cash from operations until they have received
distributions equal to 10% of the aggregate net cash from operations distributed
to partners for such fiscal year. Thereafter, the general partners will be
allocated 10% of any distributions of remaining net cash from operations for
such fiscal year.

All distributions of distributable net proceeds (as defined in the Partnership
Agreement) from property dispositions and refinancings will be allocated to the
limited partners until each limited partner has received an amount equal to a
cumulative 7% per annum of the average of the limited partners' adjusted capital
value, less any prior distributions of net cash from operations and
distributable net proceeds, and has also received an amount equal to the limited
partners' adjusted capital value. Thereafter, the general partners receive 1%
of the selling prices of properties sold where they acted as a broker, and then
the limited partners will be allocated 85% of any remaining distributions of
distributable net proceeds and the general partners will receive 15%.

Distributions may be restricted by the requirement to deposit net operating
income (as defined in the mortgage note) into the reserve account until the
reserve account is funded in an amount equal to $300 to $325 per apartment unit
for Quail Hollow, Stone Mountain West, and Heritage Pointe for a total of
$164,500. The mortgage agreement stipulates a reserve of $1,000 per apartment
unit at Windsor Hills for a total of $300,000. As of December 31, 1998, the
Partnership has deposits of approximately $600,000 in its reserve accounts.

Undistributed Net Proceeds from Property Sales: At December 31, 1998,
undistributed proceeds from property sales amounted to approximately $101,000
which is payable to the general partners for related sales commissions when
certain levels of return are received by the limited partners.

Distributions Payable: During 1998 and 1997, the Partnership reported taxable
income related to Quail Hollow. The 1996 tax of approximately $8,000 was paid
to the State of South Carolina during 1997. The 1997 tax of approximately
$6,000 was paid to the State of South Carolina during 1998.

Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between general and limited partners in accordance
with the provisions of the Partnership Agreement.

Profits, not including gains from property dispositions, are allocated as if
they were distributions of net cash from operations.

Any gain from property dispositions attributable to the excess, if any, of the
indebtedness relating to a property immediately prior to the disposition of such
property over the Partnership's adjusted basis in the property shall be
allocated to each partner having a negative capital account balance, to the
extent of such negative balance. The balance of any gain shall be treated on a
cumulative basis as if it constituted an equivalent amount of distributable net
proceeds and shall be allocated to the general partners to the extent that
general partners would have received distributable net proceeds in connection
therewith; the balance shall be allocated to the limited partners. However, the
interest of the general partners will be equal to at least 1% of each gain at
all times during the existence of the Partnership.

All losses, including losses attributable to property dispositions, are
allocated 99% to the limited partners and 1% to the general partners.
Accordingly, net income as shown in the statements of operations and changes in
partners' deficit for 1998 and 1997 were allocated 99% to the limited partners
and 1% to the general partners. Net income per limited partnership unit for each
such year was computed as 99% of net income divided by 15,000 average units
outstanding.

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

Other Reserves: The general partners may designate a portion of cash generated
from operations as "other reserves" in determining net cash used in operations.
The general partners designated as other reserves an amount equal to the net
liabilities related to the operations of apartment properties during the current
fiscal year that are expected to require the use of cash during the next fiscal
year. The changes in the other reserves during 1998 and 1997 were approximately
$118,000 increase and approximately $173,000 decrease, respectively, which
amounts were determined by considering changes in the balances of receivables
and deposits, other assets, accounts payable, tenant security deposit
liabilities, accrued taxes and other liabilities. At this time, the Corporate
General Partner expects to continue to adjust other reserves based on the net
change in the aforementioned account balances.

Cash and Cash Equivalents: Includes cash on hand and in banks, money market
funds, and certificates of deposit with original maturities less than 90 days.
At certain times, the amount of cash deposited at a bank may exceed the limit on
insured deposits.

Restricted Escrows:

Capital Replacement Reserves - In connection with the refinancing of Quail
Hollow, Heritage Pointe and Stone Mountain West Apartments in 1996,
approximately $606,000 of the proceeds were designated as a Repair Escrow for
the funding of required capital improvements and repairs as noted in the loan
documents. At December 31, 1998, approximately $289,000 remained in the
account.

Replacement Reserves - In connection with the 1996 refinancings, each property
deposits between $300 and $325 per unit per year with the mortgage company to
establish and maintain a Replacement Reserve designated for repairs and
replacements at the properties. At December 31, 1998 this reserve totaled
approximately $256,000.

Reserve Account - A general Reserve Account was established in 1992 with the
refinancing proceeds for Windsor Hills. This fund was established to cover
necessary repairs and replacements of existing improvements, debt service, out
of pocket expenses incurred for ordinary and necessary administrative tasks,
and payment of real property taxes and insurance premiums. The Partnership is
required to deposit net operating income (as defined in the mortgage note)
from Windsor Hills to its Reserve Account until it equals $1,000 per apartment
unit or $300,000 in total. The balance at December 31, 1998, is approximately
$344,000, which includes interest earned on these funds.

Escrows for Taxes and Insurance: All tax escrow funds are designated for the
payment of real estate taxes and are held by the Partnership. These funds
totaled approximately $113,000 and are included in receivables and deposits.

Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984, and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of
the Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
additions over 27 1/2 years and (2) personal property additions over 7 years.

Loan Costs: Loan costs of approximately $426,000 less accumulated amortization
of approximately $176,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loans.

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

Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In
addition, the Corporate General Partner's policy is to offer rental concessions
during particularly slow months or in response to heavy competition from other
similar complexes in the area. Concessions are charged against rental income as
incurred.

Investment Properties: Investment properties consist of four apartment complexes
and are stated at cost. Acquisition fees are capitalized as a cost of real
estate. In accordance with Financial Accounting Standards Board Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," the Partnership records impairment losses on long-
lived assets used in operations when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
Costs of apartment properties that have been permanently impaired have been
written down to appraised value. No adjustments for impairment of value were
recorded in the years ended December 31, 1998 or 1997.

Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Standards No. 131, Disclosure about Segments of an
Enterprise and Related Information ("Statement 131"), which is effective for
years beginning after December 15, 1997. Statement 131 established standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports. It also establishes standards for related disclosures about products
and services, geographic areas, and major customers.
See "Note G" for detailed disclosure.

Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $46,000 and $59,000 for the years ended
December 31, 1998 and 1997, respectively were charged to operating expense as
incurred.

Reclassifications: Certain reclassifications have been made to the 1997
information to conform to the 1998 presentation.

NOTE B - TRANSFER OF CONTROL

NOTE C - MORTGAGE NOTES PAYABLE

The principle terms of mortgage notes payable are as follows:

Principal Monthly Principal

Balance At Payment Stated Balance

December 31, Including Interest Maturity Due At

Property 1998 Interest Rate Date Maturity

(in thousands) (in thousands)

Quail Hollow $ 2,850 $ 17 7.33% 11/01/03 $2,850

Windsor Hills:

1st mortgage 4,122 38 7.60 11/15/02 3,489

2nd mortgage 149 1 7.60 11/15/02 149

Heritage Pointe 1,400 9 7.33 11/01/03 1,400

Stone Mountain 3,000 18 7.33 11/01/03 3,000
West

11,521 $ 83

Less unamortized

discounts (153)

Total $11,368 $10,888

The Partnership exercised an interest rate buy-down option for the refinanced
mortgage notes payable of Windsor Hills, reducing the stated rate from 8.76% to
7.6%. The fee for the interest rate reduction amounted to approximately
$346,000 and is being amortized as a loan discount on the interest method over
the life of the loan. The discount fee is reflected as a reduction of the
mortgage notes payable and increases the effective rate of the debt to 8.76%.

On November 13, 1996, the Partnership refinanced the mortgage notes at Quail
Hollow, Heritage Pointe, and Stone Mountain West. Of the $7,250,000 gross
proceeds, approximately $5,232,000 of proceeds were used to pay off the old
mortgage debts at the refinanced properties. The old mortgage debt had interest
rates ranging from 8.00% to 9.36% with maturity dates ranging from April 5,
2004, to May 1, 2006. All three notes require monthly interest only payments at
a stated interest rate of 7.33%, and have balloon payments due November 1, 2003.

The mortgage notes payable are non-recourse and are secured by pledge of the
respective apartment properties and by pledge of revenues from the respective
apartment properties. Prepayment penalties are required if repaid prior to
maturity. Further the properties may not be sold subject to existing
indebtedness.

The estimated fair values of the Partnership's aggregated debt is approximately
$11,521,000. This estimate is not necessarily indicative of the amounts the
Partnership may pay in actual market transactions.

Scheduled principal payments of mortgage notes payable subsequent to December
31, 1998, are as follows (in thousands):

1999 $ 148

2000 160

2001 172

2002 3,791

2003 7,250

Thereafter --

$11,521

NOTE D - INCOME TAXES

The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.

The following is a reconciliation of reported net income and Federal taxable
income (in thousands except unit data):

1998 1997

Net income as reported $ 1,065 $ 465

Add (deduct):

Amortization of present value discounts 1 (1)

Depreciation differences 40 19

Change in prepaid rental (60) 95

Other 28 (16)

Federal taxable income $ 1,074 $ 562

Federal taxable income per limited

partnership unit $ 70.88 $ 37.09

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

Net deficit as reported $(2,695)

Land and buildings 1,891

Accumulated depreciation (614)

Syndication fees 1,895

Other 196

Net assets - tax basis $ 673

NOTE E - TRANSACTIONS WITH AFFILIATED PARTIES

The Partnership has no employees and is dependent upon the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to the
Corporate General Partner and affiliates during the year ended December 31, 1998
and 1997:

1998 1997

(in thousands)

Property management fees (included in operating expenses) $ 262 $ 249

Reimbursement for services of affiliates,

(included in general and administrative, operating expenses

and investment properties) (1) 138 129

Due to general partners 101 101

(1) Included in "reimbursements for services of affiliates" for the years ended
December 31, 1998 and 1997, is approximately $8,000 and $13,000,
respectively, in reimbursements for construction oversight costs.

During the years ended December 31, 1998 and 1997, affiliates of the Corporate
General Partner were entitled to receive 5% of gross receipts from all of
Registrant's properties for providing property management services. The
Registrant paid to such affiliates $262,000 and $249,000 for the years ended
December 31, 1998 and 1997 respectively.

An affiliate of the Corporate General Partner, received reimbursement of
accountable administrative expenses amounting to approximately $138,000 and
$129,000 for the years ended December 31, 1998 and 1997, respectively.

On July 21, 1998, an affiliate of the Corporate General Partner (the
"Purchaser") commenced a tender offer for limited partnership interests in the
Partnership. The Purchaser offered to purchase up to 2,400 of the outstanding
units of limited partnership interest in the Partnership at $625 per Unit, net
to the seller in cash. The Purchaser acquired 1,145 units pursuant to this
tender offer. As a result of this purchase, AIMCO currently owns, through its
affiliates, a total of 7,009 limited partnership units or 46.726%.
Consequently, AIMCO could be in a position to significantly influence all voting
decisions with respect to the Registrant. Under the Partnership Agreement,
unitholders holding a majority of the Units are entitled to take action with
respect to a variety of matters. When voting on matters, AIMCO would in all
likelihood vote the Units it acquired in a manner favorable to the interest of
the Corporate General Partner because of their affiliation with the Corporate
General Partner.

For the period of January 1, 1997 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Corporate General Partner with an insurer unaffiliated with the Corporate
General Partner. An affiliate of the Corporate General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Corporate
General Partner, which receives payment on these obligations from the agent.
The amount of the Partnership's insurance premiums accruing to the benefit of
the affiliate of the Corporate General Partner by virtue of the agent's
obligations is not significant.

NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION

Investment Properties

Initial Cost

To Partnership

(in thousands)

Buildings Cost

and Related Capitalized

Personal Subsequent to

Description Encumbrances Land Property Acquisition

(in thousands) (in thousands)

Quail Hollow Apartments

West Columbia, South Carolina $ 2,850 $ 459 $ 3,754 $ 1,270

Windsor Hills Apartments

Blacksburg, Virginia 4,271 520 4,575 1,478

Heritage Pointe Apartments

Rome, Georgia 1,400 239 2,410 810

Stone Mountain West Apartments

Stone Mountain, Georgia 3,000 210 3,408 1,232

Totals $11,521 $1,428 $14,147 $ 4,790

</TABLE>

Gross Amount At Which Carried

At December 31, 1998

(in thousands)

Buildings

And

Personal Accumulated Date of Date Depreciable

Description Land Property Total Depreciation Construction Acquired Life-Years

(in thousands)

Quail Hollow Apartments

West Columbia, South Carolina $ 459 $ 5,024 $ 5,483 $ 3,785 1973 09/01/80 5-34

Windsor Hill Apartments

Blacksburg, Virginia 520 6,053 6,573 4,589 1973 09/01/80 5-30

Heritage Pointe Apartments

Rome, Georgia 239 3,220 3,459 2,482 1967-1970 09/15/80 5-35

Stone Mountain West Apts.

Stone Mountain, Georgia 210 4,640 4,850 3,374 1972 12/31/80 5-37

Totals $1,428 $18,937 $20,365 $14,230

</TABLE>

Reconciliation of "Real Estate and Accumulated Depreciation":

Years Ended December 31,

1998 1997

(in thousands)

Real Estate

Balance at beginning of year $19,927 $19,304

Property improvements 438 623

Balance at end of Year $20,365 $19,927

Accumulated Depreciation

Balance at beginning of year $13,590 $12,952

Additions charged to expense 640 638

Balance at end of Year $14,230 $13,590

The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997 is approximately $22,256,000 and $21,818,000. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1998 and 1997, is approximately $14,844,000 and $14,244,000.

NOTE G - SEGMENT REPORTING

DESCRIPTION OF THE TYPES OF PRODUCTS AND SERVICES FROM WHICH THE REPORTABLE
SEGMENT DERIVES ITS REVENUE

As defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", the "Partnership" has one reportable segment: residential
properties. The Partnership's residential property segment consists of four
apartment complexes located in three states in the United States. The
Partnership rents apartment units to people for terms that are typically twelve
months or less.

MEASUREMENT OF SEGMENT PROFIT OR LOSS

The Partnership evaluates performance based on net income. The accounting
policies of the reportable segment are the same as those described in the
summary of significant accounting policies.

FACTORS MANAGEMENT USED TO IDENTIFY THE ENTERPRISE'S REPORTABLE SEGMENT

The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.

Segment information for the years 1998 and 1997 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related
items and income and expense not allocated to the reportable segment.

1998 RESIDENTIAL OTHER TOTALS

Rental income $ 4,998 $ -- $ 4,998
Other income 266 25 291
Interest expense 950 -- 950
Depreciation 640 -- 640
General and administrative expense -- 217 217
Segment profit (loss) 1,257 (192) 1,065
Total assets 8,415 824 9,239
Capital expenditures for
investment properties 438 -- 438

1997 RESIDENTIAL OTHER TOTALS

Rental income $ 4,749 $ -- $ 4,749
Other income 263 50 313
Interest expense 960 -- 960
Depreciation 638 -- 638
General and administrative expense -- 174 174
Segment profit (loss) 589 (124) 465
Total assets 8,799 1,137 9,936
Capital expenditures for
investment properties 623 -- 623

NOTE H - LEGAL PROCEEDINGS

The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The Registrant has no officers or directors. The Individual and Corporate
General Partners are as follows:

Individual General Partner - N. Barton Tuck, Jr., age 60, is the Individual
General Partner of the Registrant. Mr. Tuck is Chairman of GolfSouth
Management, Inc. Until August 1990, he served as Chairman and Chief Executive
Officer of U.S. Shelter Corporation ("Shelter"), the former parent of AmReal
Corporation (parent of the Corporate General Partner of the Partnership). For
six years prior to 1966, Mr. Tuck was employed in Greenville, South Carolina by
the certified public accounting firm of S.D. Leidesdorf & Company. From 1966 to
1970, he was a registered representative with the investment banking firm of
Harris Upham & Co., Inc. in Greenville, South Carolina. Since 1970, Mr. Tuck has
been engaged in arranging equity investments for individuals and partnerships.
Mr. Tuck is a graduate of the University of North Carolina. Mr. Tuck has
delegated to the Corporate General Partner all of his authority, as a general
partner of the Partnership, to manage and control the Partnership and its
business and affairs.

Corporate General Partner - The names and ages of, as well as the positions and
offices held by, the executive officers and directors of Shelter Realty
Corporation are set forth below. There are no family relationships between or
among any officers or directors.

Name Age Position

Patrick J. Foye 41 Executive Vice President and Director

Timothy R. Garrick 42 Vice President - Accounting and Director

Patrick J. Foye has been Executive Vice President and Director of the Corporate
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.

Timothy R. Garrick has served as Vice President-Accounting and Director of AIMCO
and Vice President-Accounting and Director of the Corporate General Partner
since October 1, 1998. Prior to that date, Mr. Garrick served as Vice
President-Accounting Services of Insignia Financial Group since June of 1997.
From 1992 until June of 1997, Mr. Garrick served as Vice President of
Partnership Accounting and from 1990 to 1992 as an Asset Manager for Insignia
Financial Group. From 1984 to 1990, Mr. Garrick served in various capacities
with U.S. Shelter Corporation. From 1979 to 1984, Mr. Garrick worked on the
audit staff of Ernst & Whinney. Mr. Garrick received his B.S. Degree from the
University of South Carolina and is a Certified Public Accountant.

ITEM 10. EXECUTIVE COMPENSATION

Neither the individual general partner nor any of the directors and officers of
the Corporate General Partner received any remuneration from the Registrant.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as noted below, as of December 31, 1998, no person or entity was known by
the Registrant to be the beneficial owner of more than 5% of the Limited
Partnership Units of the Registrant as of December 31, 1998.

Number

Entity of Units Percentage

Cooper River Properties, LLC

(an affiliate of AIMCO) 1,145 7.633%

Insignia Properties LP (an affiliate

of AIMCO) 5,864 39.093%

Cooper River Properties LLC and Insignia Properties LP are indirectly ultimately
owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC
29602.

No director or officer of the Corporate General Partner owns any Units. The
Corporate General Partner owns 100 Units as required by the terms of the
partnership agreement governing the Partnership.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The individual general partner and the Corporate General Partner received cash
distributions of $6,000 and $9,000 from operations as general partners during
the year ended December 31, 1998. The general partner did not receive any
proceeds from cash distributions during 1997 as distributions were from
refinancing proceeds. For a description of the share of cash distributions from
operations, if any, to which the general partners are entitled, reference is
made to Item 7, Financial Statements - Note A - Allocation of Cash Distributions
and Allocation of Profits, Gains, and Losses.

1998 1997

(in thousands)

Property management fees (included in operating expenses) $ 262 $ 249

Reimbursement for services of affiliates,

(included in general and administrative, operating

expenses and investment properties) (1) 138 129

Due to general partners 101 101

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.

(b) Reports on Form 8-K filed in the fourth quarter of fiscal year 1998:
Current Report on Form 8-K dated October 1, 1998 filed on October 16,
1998 disclosing the change in control of Registrant from Insignia
Financial Group, Inc. to AIMCO.

SIGNATURES

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

SHELTER PROPERTIES I

By: Shelter Realty Corporation
Corporate General Partner

By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President

By: /s/Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting

Date: March 26, 1999

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

/s/Patrick J. Foye Date: March 26, 1999
Patrick J. Foye
Executive Vice President and Director

/s/Timothy R. Garrick Date: March 26, 1999
Timothy R. Garrick
Vice President - Accounting
and Director

EXHIBIT INDEX

EXHIBIT

2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between AIMCO and IPT (incorporated by reference to Exhibit 2.1
of IPT's Current Report on Form 8-K, File No. 1-14179, dated
October 1, 1998).

3 See Exhibit 4(a)

4 (A) Amended and Restated Certificate and Agreement of Limited
Partnership [included as Exhibit A to the Prospectus of
Registrant dated July 3, 1980 contained in Amendment No. 1 to
Registration Statement No. 2-67384, of Registrant filed July 3,
1980 (the "Prospectus") and incorporated herein by reference].

(B) Subscription Agreements and Signature Pages [Filed with
Amendment No. 1 of Registration Statement No. 2-67384, of
Registrant filed July 3, 1980 and incorporated herein by
reference].

(C) Wrap Around Mortgage Note and South Carolina Mortgage of
Real Estate between Quail Hollow Company and Shelter Properties I
to acquire Quail Hollow Apartments.*

(D) Promissory Note and Deed of Trust and Security Agreement
between Pacific Mutual Life Insurance Company and Shelter
Properties I to refinance the debt on Windsor Hills Apartments.*

(E) Multifamily Note and Multifamily Deed to secure Debt between
Germania Federal Savings and Loan Association and Shelter
Properties I to refinance the debt on Rome Georgian Apartments.*

(F) Promissory Note and Deed to Secure Debt and Security
Agreement between Citizens and Southern Financial Corporation and
Stone Property Associates, Ltd. to acquire Stone Mountain
Apartments.*

*Filed as Exhibit 4(c), 4(d), 4(e) and 4(f), respectively, to
Form 10-K of Registrant for year ended December 31, 1987 and
incorporated herein by reference.

10(I) Contract related to acquisition or disposition of properties.

(A) Purchase Agreement dated December 5, 1979, between Quail
Hollow Associates Limited Partnership and U.S. Shelter
Corporation to purchase Quail Hollow Apartments.**

(B) Purchase Agreement dated December 5, 1979, between Windsor
Associates and U. S. Shelter Corporation to purchase Windsor
Hills Apartments.**

**Filed as Exhibits 12(c) and 12(d), respectively, to
Registration Statement No. 2-67384, of Registrant filed April 16,
1980 and incorporated herein by reference.

(C) Purchase Agreement dated June 4, 1980 between Paul Lipman,
Trustee and U.S. Shelter Corporation to purchase Rome Georgian
Apartments.***

***Filed as Exhibit 12(d), to Amendment No. 1 to Registration
Statement, No.2-67384, of Registrant filed July 3, 1980 and
incorporated herein by reference.

(D) Purchase Agreement dated December 17, 1980 between Stone
Property Associates, Ltd. and Shelter Properties I to purchase
Stone Mountain West Apartments. [Filed with Form 8-K of
Registrant dated December 18, 1980 and incorporated herein by
reference].

(E) Agreement of Sale dated September 30, 1983 between Shelter
Properties I and Case/Edwards Associates to sell Yorktown
Apartments. [Filed with Form 10-K of Registrant for year ended
December 31, 1983 and incorporated herein by reference].

(F) Contact of Sale dated December 29, 1983 between Shelter
Properties I and Volco, Inc. to sell Lamplighter Apartments.
[Filed with Form 10-K of Registrant for year ended December 31,
1984 and incorporated herein by reference].

(G) Agreement of Sale dated May 31, 1984 between Shelter
Properties I and BWIT Fifty-Fifth Street, Inc. to sell Middle
Plantation Apartments. [Filed with Form 10-K of Registrant for
year ended December 31, 1984 and incorporated herein by
reference].

(II) Form of Management Agreement with U.S. Shelter Corporation
subsequently assigned to Shelter Management Group, L.P. (now
known as Insignia Management, L.P.) [Filed with Amendment No. 1
of Registration Statement, No. 2-67384, of Registrant filed July
3, 1980 and incorporated herein by reference].

(III) Contracts related to refinancing the debt:

(A) Restated and Modified of First Deed of Trust and Security
Agreement dated October 28, 1992 between Windsor Hills I, L.P.
and Dewey B. Morris and Richard G. Joynt (Trustee) and First
Commonwealth Realty Credit Corporation, a Virginia Corporation,
securing the Windsor Hill property.****

(B) Second Deed of Trust and Security Agreement dated October
28, 1992 between Windsor Hills I, L.P. and Dewey B. Morris and
Richard G. Joynt (Trustee) and First Commonwealth Realty Credit
Corporation, a Virginia Corporation, securing the Windsor Hills
property.****

(C) First Assignment of Leases and Rents dated October 28, 1992
between Windsor Hills I, L.P. and First Commonwealth Realty
Credit Corporation, a Virginia Corporation, securing the Windsor
Hills property.****

(D) Second Assignment of Leases and Rents dated October 28, 1992
between Windsor Hills I, L.P. and Dewey B. Morris and Richard G.
Joynt (Trustee) and First Commonwealth Realty Credit Corporation,
a Virginia Corporation, securing the Windsor Hills property.****

(E) Restated and Modified Deed of Trust Note dated October 28,
1992 between Windsor Hills I, L.P. and First Commonwealth Realty
Credit Corporation relating to the Windsor Hills property.****

(F) Second Deed of Trust Note dated October 28, 1992 between
Windsor Hills I, L.P. and First Commonwealth Realty Credit
Corporation relating to the Windsor Hills property.****

****Filed as Exhibit 10(iii)(a) through (f), respectively, to
Form 10-KSB of Registrant for year ended December 31, 1992 and
incorporated herein by reference.

(G) Multifamily Note dated May 11, 1994 between Shelter
Properties I and Financial Federal Savings Bank relating to Rome
Georgian Apartments. *****

(H) Multifamily Deed to secure debt, assignments of rents and
security agreement, dated May 11, 1994 between Shelter Properties
I and Financial Federal Savings Bank securing Rome Georgian
Apartments. *****

(I) Multifamily Note secured by a Mortgage or Deed of Trust
dated November 1, 1996, between Shelter Properties I and Lehman
Brothers Holdings, Inc., d/b/a Lehman Capital, a Division of
Lehman Brothers Holdings Inc., relating to Quail Hollow
Apartments.

(J) Multifamily Note secured by a Mortgage or Deed of Trust
dated November 1, 1996, between Shelter Properties I and Lehman
Brothers Holdings, Inc., d/b/a Lehman Capital, a Division of
Lehman Brothers Holdings Inc., relating to Rome Georgian
Apartments.

(K) Multifamily Note secured by a Mortgage or Deed of Trust
dated November 1, 1996, between Shelter Properties I and Lehman
Brothers Holdings, Inc., d/b/a Lehman Capital, a Division of
Lehman Brothers Holdings Inc., relating to Stone Mountain West.

*****Filed as Exhibit 10(iii) (a) and (b), respectively, to Form
10QSB of Registrant for the quarter ended June 30, 1994 and
incorporated herein by reference.

22 Subsidiaries of the Registrant.

27 Financial Data Schedule.

99 (A) Prospectus of Registrant dated July 3, 1980 [included in
Registration Statement No. 2-67384, of Registrant] and
incorporated herein by reference.

(B) Agreement of Limited Partnership for Windsor Hills I, L.P.
between Shelter I G.P. Limited Partnership and Shelter I Limited
Partnership dated October 13, 1992. [Filed as Exhibit 28(b) to
Form 10-KSB of Registrant for year ended December 31, 1992 and
incorporated herein by reference].

EXHIBIT 22

SHELTER PROPERTIES I

SUBSIDIARY LIST

State of Incorporation/
Name of Subsidiary Formation Date

Windsor I Limited Partnership Delaware 1992

Shelter I GP Limited Partnership 1992

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Shelter
Properties I 1998 Year-End 10-KSB and is qualified in its entirety by reference
to such 10-KSB filing.
</LEGEND>
<CIK> 0000316220
<NAME> SHELTER PROPERTIES I
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,682
<SECURITIES> 0
<RECEIVABLES> 268
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 20,365
<DEPRECIATION> (14,230)
<TOTAL-ASSETS> 9,239
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,368
0
0
<COMMON> 0
<OTHER-SE> (2,695)
<TOTAL-LIABILITY-AND-EQUITY> 9,239
<SALES> 0
<TOTAL-REVENUES> 5,289
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 950
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,065
<EPS-PRIMARY> 70.27<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>

</TABLE>