(Mark One)

Commission file number 1-9393

INTERSTATE GENERAL COMPANY L.P.
(Exact name of registrant as specified in its charter)

5160 Parkstone Drive, Suite 260-B
Chantilly, Virginia 20151
(Address of principal executive offices)(Zip Code)
(703) 263-1191
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days.

Yes /X/ No / /

Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date.

2,055,780 Common Shares

Interstate General Company L.P. (the "Company" or "IGC") was formed as a Delaware limited partnership in 1986. Directly and through predecessors, the Company has been engaged in business since 1957. IGC's headquarters are located in Chantilly, Virginia. IGC has traded publicly as a master limited partnership since February 1987 on the American Stock Exchange ("AMEX") and Pacific Stock Exchange ("PSE").

The Company is engaged in three primary lines of business. First, the Company develops residential and commercial land. Second, through its subsidiaries, IGC is engaged in the development and sale of waste disposal projects that use environmentally superior technology. Third, through its wholly owned subsidiary American Family Homes ("AFH"), the Company builds semi-custom homes on a scattered site basis.

IGC owns the following assets: Land zoned commercial in St. Charles, Maryland; single-family home lots in the Dorchester neighborhood of St. Charles, Maryland; developable land in Charles County and St. Mary's County, Maryland and in Prince William County, Virginia; a 50% interest in a partnership that owns land under development in Brandywine, Maryland; all of American Family Homes, LLC ("AFH"); a note receivable of $6.985 million (principal and interest) payable by a subsidiary of American Community Properties Trust ("ACPT"); as well as fractional interests in Chastleton Apartment Associates (District of Columbia) and Coachman's Limited Partnership (Maryland).

The Pomfret property lies within Charles County Maryland's designated development district. However, subsequent to the end of the quarter, the County Government created a new zoning category for deferred development, which includes the Pomfret property. This is an interim zone design to restrict development for a number of years. The Company is currently considering its options regarding this property. That analysis will include the number of years that development may be delayed, interim options to maximize value, and whether a permanent economic impairment has occurred relating to this property will need to be recognized. The remainder of the Company's real estate portfolio is unaffected by this new zoning category.

In addition, all of the common stock of Interstate Waste Technologies (IWT) and Caribe Waste Technologies (CWT) (excluding shares issued as incentive compensation for employees) is held in a trust (the "IWT/CWT Trust") for the benefit of IGC's Unit holders.

On October 5, 1998 IGC transferred its principal real estate operations to ACPT, and subsequently all the common shares of ACPT to the partners and unitholders of IGC (the "Distribution").

The accounting policies of the Company are the same as those described in the December 31, 1999 financial statements included in the Company's 1999 Form 10-K. Certain amounts and balances from 1999 have been reclassified to conform to the Year 2000 financial presentation.

The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes the disclosures made are adequate to make the information presented not misleading. The unaudited consolidated financial statements should be read, however, in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 1999.

In the opinion of the Company, the accompanying unaudited condensed financial statements reflect all adjustments necessary to present fairly the financial position of the Company as of June 30, 2000, and the results of operations for the three and six months ended June 30, 2000 and 1999 and cash flows for the six and three months ended June 30, 2000.

Interim results are not necessarily indicative of fiscal year performance because of the impact of seasonal and short-term variations.

Development Partnership

The following information summarizes financial data and principal activities of the Brandywine Investment Associates, L.P., which the Company accounts for under the equity method (in thousands):

At June 30, 2000, the Company held a 50% limited partnership interest and was the managing general partner of Brandywine Investment Associates, L.P. The partnership owns 277 acres of developable land in Brandywine, Maryland. This property is in the early stages of infrastructure development therefore, the summary of operations and operating cash flows have been omitted from this presentation. The investment in this project is accounted for under the equity method of accounting and has been included on the balance sheet under assets related to land development, other United States locations. A portion of the investment balance is a note receivable in the amount of $4.635 million.

The following information summarizes financial data and principal activities of unconsolidated housing partnerships, which the Company accounts for under the equity method (in thousands):

At December 31, 1999, IGC held interests in Chastleton Apartments Associates, Coachman's Limited Partnership, Headen House Associates Limited Partnership, Palmer Apartments Associates Limited Partnership, and Wakefield Third Age Associates Limited Partnership. As part of the 1998 restructuring, described in previous filings, the Company agreed to transfer its interest in the latter four of the properties to ACPT. This transfer occurred on February 7, 2000.

The Company's outstanding debt is collateralized primarily by land, land improvements, housing, receivables and investments in partnerships. The following table summarizes the indebtedness of IGC at June 30, 2000 and December 31, 1999 (in thousands):

As of June 30, 2000, the $1,586,000 of recourse debt related to land development assets is collateralized by $3,719,000 of land assets.

The homebuilding debt is secured by substantially all of the homebuilding assets.

The Company is not subject to any material covenants requiring disclosure under these loan agreements.

Financing of $10,840,000 is available to develop the Brandywine project. As of June 30, 2000, $2,249,000 has been drawn to pay for infrastructure, single-family and townhome development costs. Assets with a book value of $10,267,000 serve to collateralize this debt. The Brandywine project is being developed in a partnership, the results of which are included using the equity method of accounting. Accordingly, the debt is not included in these financial statements. The Company has guaranteed the development loans relating to the Brandywine project.

Prior to the Restructuring, the Company was a borrower together with ACPT under a loan agreement with Banc One Capital Partners IV, LTD ("Banc One"). Subsequent to the Restructuring, the Banc One loan was assumed by American Land Development U.S., Inc. ("American Land"), a subsidiary of ACPT. Although IGC does not have the primary responsibility to make loan payments and the collateral for the loan consists solely of land held by American Land, IGC was not released as a borrower on the loan. ACPT has indemnified IGC against any losses related to a default on this loan. The outstanding loan balance at June 30, 2000 was $10,931,000.

Certain officers, directors and a general partner ("IBC") of the Company have ownership interests in various entities that conducted business with IGC during the last two years. The financial impact of the related party transactions on the accompanying consolidated financial statements are reflected below:

Certain matters discussed and statements made within this Form 10-Q are forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 and as such may involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of the Company to be different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. These risks are detailed from time to time in the Company's filings with the Securities and Exchange Commission or other public statements.

Land development sales revenue increased 66% to $1,015,000 during the six months ended June 30, 2000, compared to sales of $612,000 during the six months ended June 30, 1999. The 2000 period reflects sales of 13 single family home lots as well as 22 town home lots, while the 1999 period reflects 19 single family sales and 5 town home lots. Seven of the 2000 single-family home lot sales occurred in the St. Mary's County, Maryland project of Westbury, with the remainder in the Dorchester neighborhood of St. Charles. Gross profit margins for these sales were 30% for the Westbury sales and 50% for the Dorchester sales. During the first six months of 1999, gross margins for single-family lot sales were 45%. The town home lot sales for 2000 were for the Montclair project in Prince William County, Virginia. The town home lots were sold at slight negative margins. The cost basis of this property is high due to the extended holding period and carrying costs that were capitalized during that period. The second quarter expense for these lots includes a write-down of $20,000 to estimated fair value based on estimated costs to complete the project. While these lots are producing a book loss associated with their extended holding period, they continue to provide positive cash flow for the Company when proceeds are compared to current development costs.

Homebuilding Operations

Revenues from home sales increased 34% to $7,073,000 for the six-month period ended June 30, 2000, compared to $5,277,000 during the six-month period ended June 30, 1999. The 2000 revenues were a result of increased home sales. In 2000, the Company sold 55 homes compared to 1999 sales of 46. There was a decrease in gross profit margin for the six-month period ended June 30, 2000 from 17% to 8% compared to the six-month period ended June 30, 1999. This decrease is the result of several factors including interest costs on homes that had extended construction periods due to weather delays. Included in the sales are three speculative lots that had extended holding periods. Management has conducted budget and pricing reviews on all homes and implemented pricing changes in

July designed to restore margins. However, since sales are not recognized until the home has been completed, the effects of these price increases are not reflected in current sales.

General and administrative expenses decreased to $1,372,000 from $1,437,000 during the six months ended June 30, 2000, compared to the same period for 1999. This decrease is the result of a reduction in the number of outstanding stock appreciation rights that were forfeited by a departed employee. Consequently, the Company's potential liability relating to these rights has been reduced. The Company has also made concerted efforts to reduce overhead costs company wide.

Interest expense increased $152,000 to $345,000 in the six months ended June 30, 2000, compared to $193,000 for the same period in 1999. The increase is due to an increase in debt outstanding during 2000, as well as increasing interest rates.

Homebuilding Operations

Revenues from home sales increased to $3,329,000 for the three-month period ended June 30, 2000, compared to $2,884,000 during the three-month period ended June 30, 1999. The 2000 revenues were a result of 26 home sales compared to the 1999 revenues resulting from 23 home sales. The margins for the second quarter improved to 11% compared to 5% during the first quarter of 2000, but additional steps are required to further improve homebuilding margins. Management has conducted budget and pricing reviews on all homes and implemented pricing changes in July designed to restore margins. However, since sales are not recognized until the home has been completed, the effects of these price increases are not reflected in current sales.

Sales and Marketing expenses declined $163,000 to $237,000 for the three-month period ended June 30, 2000. The decrease was the result of reduced marketing costs in American Family Homes as the Company continues to examine ways to reduce overhead while ensuring advertising dollars are expended in a cost effective manner.

General and administrative expenses decreased to $627,000 from $685,000 during the six months ended June 30, 2000, compared to the same period for 1999. This decrease is the result of concerted efforts to reduce overhead costs.

Interest expense increased $90,000 to $209,000 in the three months ended June 30, 2000, compared to $119,000 for the same period in 1999. The increase is due to an increase in the debt outstanding during 2000 and the increased cost of borrowing.

Cash and Cash equivalents were $323,000 and $367,000 respectively at June 30, 2000 and December 31, 1999.

Management has taken a number of steps to return AFH to profitability; however, there can be no assurance it will succeed. One of these steps is to close AFH's operations in Virginia. While Virginia historically accounted for 31% of annual revenue, margins were generally lower than in the Carolinas. Approximately 45% of AFH's losses have been attributable to operations in Virginia. By closing offices and operations in Virginia, management believes the Company will receive a two-fold benefit. AFH management will be able to concentrate its efforts in its core area of North Carolina where sales and operating margins have been stronger. The Company does not believe it will incur any substantial costs as a result of ceasing operations in Virginia. In addition, the Company will benefit from reduced overhead costs. The Company believes these actions will make AFH more attractive to potential buyers.

The proposed waste disposal plant operations of IWT/CWT are subject to municipal and other government bidding procedures, contract award, permitting and other approvals. A number of proposals by IWT/CWT to build waste disposal plants in the Caribbean and elsewhere are in various stages of the procurement process. CWT is currently pursuing a project in the Municipality of Caguas, Puerto Rico, where it previously signed a host community agreement. Both the Puerto Rican House and Senate recently passed enabling legislation for this project. Approval from the Governor was obtained on August 4, 2000. Permitting, licensing, and contractual activities will now commence. There can be no assurance that CWT will be awarded a contract to build and operate this facility or, if it is awarded such a contract, that it will be on terms which will allow CWT to go to financial closing.

In addition, the government of the U.S. Virgin Islands is expected to select a bidder for a waste project in late August or September. CWT has aggressively competed to win this award which management believes it is well positioned to do. Management believes IWT/CWT will be successful with these as well as other projects.

Management cannot predict when, if at all, IWT/CWT will generate positive cash flow.

A balance due from an affiliate of ACPT totaled $8.321 million at March 31, 2000. During the second quarter of 2000, the Company collected $1.5 million of principal and interest on this note leaving a balance at June 30, 2000 of $6.985 million. In the meantime, IBC, IGC's general partner, has signed a working capital support agreement with IGC secured by IGC's interest in this note receivable. As of June 30, 2000, IBC had advanced $3.095 million including interest under this agreement.

Management believes that the Company's real estate assets have sufficient value to enable the Company to finance development with conventional financing. The Company currently has development loans in place for its projects at Brandywine, Montclair, and the first section of Phase 2 at Westbury. In the first half of 2000, 22 of 54 lots at Montclair were sold. In addition, 13 single-family lots were sold in the Westbury and Dorchester projects. Development activity is continuing in Brandywine. The Company anticipates that the first town home sales will commence during the first quarter of 2001.

The Pomfret property lies within Charles County Maryland's designated development district. However, subsequent to the end of the quarter, the County Government created a new zoning category for deferred development, which includes the Pomfret property. This is an interim zone design to restrict development for a number of years. The Company is currently considering its options regarding this property. That analysis will include the number of years that development may be delayed, interim options to maximize value, and whether a permanent economic impairment has occurred relating to this property will need to be recognized. The remainder of the Company's real estate portfolio is unaffected by this new zoning category.

Town Center South in St. Charles, Maryland remains the most valuable real estate asset the Company holds and management is aggressively marketing it.

IGC intends to continue to refinance loans as they become due in the normal course of business. Debts totaling $1.296 million mature during the remainder of 2000, exclusive of an operating line of credit that matures in August that AFH utilizes to fund home construction. The Company's $1 million line of credit matures on August 18, 2000. Management has had preliminary discussions with the lender and anticipates receiving an extension of this line. The balance of the maturing loans are real estate development in nature. The Company expects to fulfill these obligations through related property sales.

The preliminary estimate for the cost of wetland remediation is $1.7 million. An integral component of the wetlands settlement is that it removed all development, sale and financing restrictions on 82 acres of improved commercial land in Town Center South, the heart of St. Charles. Following the settlement, IGC closed a $4.4 million line of credit secured by Town Center South. Under the loan agreement, $1.4 million was used to fund penalties due under the wetlands settlement; $2.1 million has been used for operating expenses, $400,000 is reserved for interest costs, and $500,000 of the line will be used as a revolving source of financing to fund remediation costs, with the balance to come from anticipated land sales.

Management believes that it will have the funds necessary to meet the Company's obligations for the balance of the year. While the Company believes it will obtain financing for continued land development and operational activities beyond the current year, there is no guarantee such financing will be available.

As of June 30, 2000, assets with a book value of $12,408,000 were encumbered by $6,541,000 of recourse debt. The significant terms of IGC's recourse debt financing are shown below (dollars in thousands):

The Company has guaranteed loans totaling $10,840,000 related to the Brandywine project. At June 30, 2000, $2,249,000 is outstanding on this debt. Assets with a book value of $10,267,000 collateralize this debt. The Brandywine project is being developed in a partnership, the results of which are included using the equity method of accounting. Accordingly, the debt is not included in these statements.

Subsequent to the end of the quarter, the Company obtained a $1.6 million line of credit, $300,000 of which is reserved to cover interest costs.

As of June 30, 2000, IGC has not experienced any material problems relating to the year 2000 (Y2K) issues nor did the preparation for Y2K have a significant impact on IGC's results of operations for the year ended December 31, 1999.

During 1999, the management of IGC evaluated its various Y2K failure scenarios for those systems used both internally and externally that may have been affected. The results of these assessments provided IGC with an acceptable level of assurance.

IGC has not incurred significant costs to achieve Y2K compliance, nor did it incur significant costs in upgrading its current applications and hardware. In addition, there have been no noticeable trends or events that have affected the company's operations. Although IGC's management believes that there are no remaining contingencies, there can be no assurance until significant time has passed.

The Company is exposed to certain financial market risks, the most being fluctuations in interest rates. Interest rate fluctuations are monitored by the Company's management as an integral part of the Company's overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on the Company's results of operations.

As of June 30, 2000, there have been no material changes in the Company's financial market risk since December 31, 1999 as reported in the Company's Annual Report on Form 10-K.

Sewer and Water Litigation

IGC, SCA, and SCC are involved in litigation with the County regarding the level of sewer and water connection fees that may be imposed. In addition, IGC and SCA are asserting claims against the County for refunds of excessive sewer and water fees. The history of this litigation is more fully described in previous filings, including the December 31, 1999 Form 10-K.

On October 6, 1999, the Court of Special Appeals upheld the Circuit Court's ruling with respect to sewer connection fees, but reversed its rulings with respect to water connection fees. The Court of Special Appeals concluded that the 1996 study procured by the County justified the County's imposition of increased water connection fees, but did not justify a similar increase in sewer connection fees. The Court further held that SCA and IGC may not pursue refund claims for connection fees paid before May 15, 1992 in the Tax Court because of an "accord and satisfaction" as to refund claims before that date. The Maryland Court of Appeals subsequently denied further review of the case.

Meanwhile, SCA and IGC have commenced an action in the Maryland Tax Court for refunds of excessive connection fees. That Tax Court case is titled St. Charles Associates Limited Partnership, et al. v. Charles County, et al., No. 1205, and was filed in February of 1997. It has been stayed pending the result of the appellate proceedings described herein.

The County has also filed two appeals raising the issue of whether IGC's and SCA's successors and assigns, including SCC and builders who purchased lots in the St. Charles communities, are entitled to the benefit of the reduced sewer connection fees provided for in the 1989 Settlement Agreement. The Circuit Court has ruled in favor if IGC, SCA, and SCC on this issue. The County's appeals are pending.

School Impact Fee Litigation

On February 9, 1999, American Rental Management Company ("ARMC"), a subsidiary of ACPT, Chastleton Apartments Associates ("Chastleton Associates") (a housing partnership in which IGC is the general partner), and Capitol Park Apartments Associates (the owner of an apartment complex managed by ARMC) received notification from the U.S. Department of Justice (the "Department") that they were alleged to be in violation of the Residential Lead-Based Paint Hazard Reduction Act of 1992 (the "Act"). These allegations were based on a finding by the Department of Housing and Urban Development ("HUD") that the owners and/or management had failed to make required disclosures regarding lead-based paint in two apartment projects, Chastleton and Capitol Park. The Act authorizes HUD to assess administrative penalties for such failures. The original Department notification was addressed to ARMC, the current managing agent, however, most of the alleged violations occurred during IGC's previous tenure as management agent. IGC has agreed to indemnify ACPT against any potential penalties that might be assessed against ARMC.

On February 9, 1999, HUD issued a letter to the Company alleging that it was in violation of certain regulations regarding lead-based paint. The letter threatened penalties against the Company of $1,511,943. On June 9, 1999, HUD issued an administrative complaint seeking penalties. On September 9, 1999, HUD amended the complaint to include ARMC and IGC in addition to the Company and to seek $6.7 million in penalties from the group of defendants. HUD reduced the amount of the proposed penalty to $619,100 in its Penalty Brief dated November 24, 1999. Trial before an administrative law judge occurred on December 8-9, 1999 and post-hearing briefs were submitted on February 1, 2000. Further briefing was requested by order dated March 10, 2000, and those briefs were filed on March 28, 2000. An initial decision was issued on May 26, 2000, dismissing counts 1 and 8 of the complaint in their entirety; dismissing all but one of the alleged violations in each of counts 2 and 3; and sustaining the remaining counts in the complaint. The judge determined that all but two of the violations constituted failures to document disclosures, rather than failures to make disclosures under the Act. The judge then assessed a civil money penalty of $34,800. As neither party appealed the initial decision, the judge's determination is now final.

In addition, on July 15, 1999, HUD and the Department of Justice filed suit against ARMC and the Company in the U.S. District Court for the District of Columbia seeking declaratory and injunctive relief based upon the alleged violations. The action does not seek monetary damages but does seek remediation. Both parties to the litigation have filed motions for summary judgment. The judge issued a Memorandum Opinion and Order on March 30, 2000, denying the government's motion for summary judgment, granting in part and denying in part ARMC's motion for summary judgment, and denying ARMC's motion to dismiss. The sole remaining issue in the litigation is whether there are any continuing disclosure violations and whether an injunction should be issued if such violations are found. An initial status conference was held on June 22, and the judge issued an initial scheduling and procedures order. Discovery is ongoing and must be completed by January 12, 2001. An interim status conference will be held on November 16, 2000. Dispositive motions must be filed by February 16, 2001. A final status conference and settlement conference will be held on May 17, 2001 (if needed). Management believes that the government has no basis for obtaining injunctive relief and that the case will be resolved without the need for trial.

On February 24, 2000 the Company and an officer of the Company were named as defendants in a claim by a private party alleging trespass and destruction of access to his property as a result of the construction of a county road in Charles County. The construction in question was completed by SCC, an ACPT subsidiary. The first and second counts of the complaint seek $10,000,000 in compensatory damages and $10,000,000 in punitive damages. The third and final count seeks an easement and right of way to the county road. As part of the 1998 restructure, any liability incurred by IGC or its previous officers as a result of actions undertaken by ACPT will be covered by an indemnification from ACPT. Management of both companies intends to vigorously defend itself against these allegations. While there can be no guarantee they will be successful, management believes the claims are without merit.

The Company is also engaged from time to time in other miscellaneous legal matters that arise in the normal course of business. In Management's opinion, none of the actions is of a material degree whereby disclosure would be required.

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Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.