Shelter Properties I LTD Partnership 10QSB 2006 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB

(Mark One)

[X]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

[ ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission file number 0-10255

SHELTER PROPERTIES I

(Exact Name of Small Business Issuer as Specified in Its Charter)

South Carolina

57-0707398

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

55 Beattie Place, Post Office Box 1089

Greenville, South Carolina 29602

(Address of principal executive offices)

(864) 239-1000

(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ___ No _X_

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

SHELTER PROPERTIES I

CONSOLIDATED BALANCE SHEET

(Unaudited)

(in thousands, except unit data)

September 30, 2006


Assets
Cash and cash equivalents		$ 261
Receivables and deposits		46
Restricted escrows		5
Other assets		183
Investment property:
Land	$ 459
Buildings and related personal property	7,230
	7,689
Less accumulated depreciation	(5,348)	2,341
		$ 2,836

Liabilities and Partners' Deficit
Liabilities
Accounts payable		$ 38
Tenant security deposit liabilities		28
Accrued property taxes		96
Other liabilities		139
Mortgage notes payable		4,512

Partners' Deficit
General partners	$ (296)
Limited partners (15,000 units issued and
outstanding)	(1,681)	(1,977)
		$ 2,836

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per unit data)


	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2006	2005	2006		2005
Revenues:
Rental income	$ 363	$ 295	$ 1,048		$ 873
Other income	43	31	141		104
Casualty gain (Note E)	--	--	70		--
Total revenues	406	326	1,259		977

Expenses:
Operating	208	257	596		598
General and administrative	25	36	111		102
Depreciation	64	61	192		180
Interest	86	96	287		281
Property taxes	33	29	97		104
Total expenses	416	479	1,283		1,265

Loss from continuing operations	(10)	(153)	(24)		(288)
Income (loss) from discontinued
operations (Note A)	--	30	(1,161)		200
Gain on sale of discontinued
Operations (Notes A and D)	--	--	12,105		--
Net (loss) income	$ (10)	$ (123)	$10,920		$ (88)

Net (loss) income allocated to
general partners	$ --	$ (1)	$ 732		$ (1)
Net (loss) income allocated to
limited partners	(10)	(122)	10,188		(87)

Net (loss) income	$ (10)	$ (123)	$10,920		$ (88)

Per limited partnership unit:
Loss from continuing operations	$ (0.67)	$(10.11)	$ (1.60)		$(19.00)
Income (loss) from discontinued
operations	--	1.98	(65.47)		13.20
Gain on sale of discontinued
operations	--	--	746.27		--
Net (loss) income per limited
partnership unit	$ (0.67)	$ (8.13)	$679.20		$ (5.80)
Distributions per limited
partnership unit	$ 35.67	$ --	$345.00		$ --

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT

(Unaudited)

(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, 2005	15,000	$ (114)	$(6,694)	$(6,808)

Net income for the nine months
ended September 30, 2006	--	732	10,188	10,920

Distributions to partners	--	(914)	(5,175)	(6,089)

Partners' deficit at
September 30, 2006	15,000	$ (296)	$(1,681)	$(1,977)

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Nine Months Ended
	September 30,
	2006	2005
Cash flows from operating activities:
Net income (loss)	$10,920	$ (88)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation	192	386
Amortization of loan costs	10	14
Loss on early extinguishment of debt	1,261	--
Gain on sale of discontinued operations	(12,105)	--
Casualty gain	(70)	--
Change in accounts:
Receivables and deposits	10	(4)
Other assets	60	(52)
Accounts payable	(33)	28
Tenant security deposit liabilities	(50)	3
Accrued property taxes	96	12
Other liabilities	(118)	(2)
Due to affiliates	(197)	(18)
Net cash (used in) provided by operating
activities	(24)	279

Cash flows from investing activities:
Property improvements and replacements	(381)	(550)
Proceeds from the sale of discontinued operations	13,477	--
Insurance proceeds received	82	--
Net cash provided by (used in) investing
activities	13,178	(550)

Cash flows from financing activities:
Payments on mortgage notes payable	(176)	(269)
Repayment of mortgage note payable	(5,883)	--
Advances from affiliates	55	513
Payments on advances from affiliate	(944)	(123)
Distributions to partners	(6,089)	--
Net cash (used in) provided by financing
activities	(13,037)	121

Net increase (decrease) in cash and cash equivalents	117	(150)
Cash and cash equivalents at beginning of period	144	236

Cash and cash equivalents at end of period	$ 261	$ 86

Supplemental disclosure of cash flow information:
Cash paid for interest	$ 443	$ 597

Supplemental disclosure of non-cash activity:
Property improvements and replacements included in
accounts payable	$ 13	$ 126

Included in property improvements and replacements for the nine months ended September 30, 2006 and 2005 are approximately $121,000 and $34,000 of improvements which were included in accounts payable at December 31, 2005 and 2004, respectively.

See Accompanying Notes to Consolidated Financial Statements

SHELTER PROPERTIES I

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A - Basis of Presentation

The accompanying unaudited consolidated financial statements of Shelter Properties I (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 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 Corporate General Partner is a wholly owned subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The non-corporate general partner, AIMCO Properties, L.P. is also an affiliate of AIMCO. In the opinion of the Corporate General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2006, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2006. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 2005.

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting For the Impairment or Disposal of Long-Lived Assets”, the accompanying consolidated statement of operations for the three and nine months ended September 30, 2006 and 2005 reflect the operations of Windsor Hills Apartments as income (loss) from discontinued operations due to the property’s sale in March 2006 (see Note D).

Note B - Reconciliation of Cash Flows

As required by the Partnership Agreement, the following is a reconciliation of "Net cash provided by operating activities" in the accompanying consolidated statements of cash flows to "Net cash used in operations", as defined in the Partnership Agreement. However, "Net cash used in 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.


	For the Nine Months Ended
	September 30,
	(in thousands)
	2006	2005

Net cash (used in) provided by operating activities	$ (24)	$ 279
Payments on mortgage notes payable	(176)	(269)
Property improvements and replacements	(381)	(550)
Changes in reserves for net operating
liabilities	232	33

Net cash used in operations	$ (349)	$ (507)

During the nine months ended September 30, 2006 and 2005 the Corporate General Partner used approximately $349,000 and $507,000, respectively, of reserves to fund continuing capital improvements, repairs and operations at the Partnership's investment properties. Distributions made from reserves no longer considered necessary by the Corporate General Partner are considered to be additional net cash from operations for allocation purposes.

Note C - Transactions with Affiliated Parties

The Partnership has no employees and depends on the Corporate General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.

Affiliates of the Corporate General Partner receive 5% of gross receipts from both of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $84,000 and $124,000 for the nine months ended September 30, 2006 and 2005, respectively, which is included in operating expenses and income (loss) from discontinued operations.

Affiliates of the Corporate General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $81,000 and $104,000 for the nine months ended September 30, 2006 and 2005, respectively, which is included in general and administrative expenses, investment property and gain on sale of discontinued operations. The portion of these reimbursements included in investment property and gain on sale of discontinued operations for the nine months ended September 30, 2006 and 2005 are fees related to construction management services provided by an affiliate of the Corporate General Partner of approximately $24,000 and $43,000, respectively.

In accordance with the Partnership Agreement, during the nine months ended September 30, 2006 and 2005 an affiliate of the Corporate General Partner advanced the Partnership approximately $55,000 and $513,000, respectively, to cover operating expenses and real estate taxes at Quail Hollow Apartments. Additionally, during the quarter ended December 31, 2005, the Corporate General Partner advanced approximately $499,000 to cover operating expenses and capital expenditures at Quail Hollow and Windsor Hills Apartments. Interest was charged at prime plus 2% and amounted to approximately $24,000 and $7,000 for the nine months ended September 30, 2006 and 2005, respectively. Total advances and accrued interest of approximately $987,000 and $125,000 were repaid during the nine months ended September 30, 2006 and 2005, respectively.

The Partnership Agreement provides for a commission to the Corporate General Partner upon the sale of a Partnership investment property. This commission is payable when certain levels of return are received by the limited partners. The Partnership has met these levels and during the nine months ended September 30, 2006 the Corporate General Partner earned and was paid a commission of approximately $147,000 from the sale of Windsor Hills Apartments (see "Note D" for further discussion).

The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Corporate General Partner. During the nine months ended September 30, 2006 and 2005, the Partnership was charged by AIMCO and its affiliates approximately $81,000 and $46,000, respectively, for hazard insurance coverage and fees associated with policy claims administration.

Note D – Disposition of Investment Property

On March 31, 2006, the Partnership sold Windsor Hills Apartments to a third party for net proceeds of approximately $13,477,000 after a deduction for immediate capital needs, a prepayment penalty owed by the Partnership and closing costs. The Partnership used approximately $5,883,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $12,105,000 as a result of the sale during the nine months ended September 30, 2006. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $1,261,000 as a result of unamortized loan costs written off and a prepayment penalty. This amount is included in loss from discontinued operations for the nine months ended September 30, 2006. Also included in loss from discontinued operations for the nine months ended September 30, 2006 is approximately $100,000 of income, including revenues of approximately $480,000 for the nine month period. Included in income from discontinued operations for the three and nine months ended September 30, 2005 are results of the property’s operations of approximately $30,000 and $200,000, respectively, including revenues of approximately $501,000 and $1,511,000, respectively.

Note E – Casualty Events

In June and July 2005, Quail Hollow Apartments experienced damage from two flood events. During the nine months ended September 30, 2006, the Partnership received insurance proceeds of approximately $82,000 and wrote off undepreciated damaged assets of approximately $12,000 resulting in a casualty gain of approximately $70,000.

Note F - Contingencies

In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitledRosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Corporate General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire l imited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captionedHeller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal from this order.

On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the “Appeal”) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the court’s use of a referee and its order requiring Objector to pay those fees.

On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court’s order and remanded to the trial court for further findings on the basis that the “state of the record is insufficient to permit meaningful appellate review”. The matter was transferred back to the trial court on June 21, 2005. With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court’s order striking the first amended complaint.

On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion. On February 3, 2006, the Court held a hearing on the various matters pending before it and ordered additional briefing from the parties and Objector. On June 30, 2006, the trial court entered an order confirming its approval of the cla ss action settlement and entering judgment thereto after the Court of Appeals had remanded the matter for further findings. The substantive terms of the settlement agreement remain unchanged. The trial court also entered supplemental orders on July 1, 2006, denying Objector’s Motion to File a Complaint in Intervention, Objector’s Motion for Leave of Discovery and Objector’s Motion to Dissolve the Anti-Suit Injunction. Notice of Entry of Judgment was served on July 10, 2006. On August 31, 2006, the Objector filed a Notice of Appeal to the Court’s June 30, 2006 and July 1, 2006 orders.

The Corporate General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership’s overall operations.

AIMCO Properties L.P. and NHP Management Company, both affiliates of the Corporate General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the court conditionally certified the collective action on both the on-call and overtime issues. Approximately 1,049 individuals opted in to the class. The defendants moved to decertify the collective action on both issues and the plaintiffs have responded. Because the court denied plaintiffs’ motion to certify state subclasses, in September 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and in November 2005 in Montgomery County Maryland Circuit Court. The California and Maryland cases have been stayed pending the outcome of the decertification motion in the District of Columbia case. Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Corporate General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business.

Environmental

Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property.

Mold

The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. Affiliates of the Corporate General Partner have implemented a national policy and procedures to prevent or eliminate mold from its properties and the Corporate General Partner believes that these measures will minimize the effects that mold could have on residents. To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change the Corporate General Partner ca n make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

Item 2.

Management's Discussion and Analysis or Plan of Operation

The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending cla ims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission.

The Partnership's investment property consists of one apartment complex. The following table sets forth the average occupancy of the property for each of the nine months ended September 30, 2006 and 2005:


	Average
	Occupancy
Property	2006	2005

Quail Hollow Apartments (1)
West Columbia, South Carolina	90%	79%

(1)

The Corporate General Partner attributes the increase in occupancy at Quail Hollow Apartments to increased marketing efforts and competitive pricing.

The Partnership’s financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment property, interest rates on mortgage loans, costs incurred to operate the investment property, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the Corporate General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Corporate General Partner attempts to protect the Partnership 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. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnership’s financial results.

Results of Operations

The Partnership’s net (loss) income for the three and nine months ended September 30, 2006 was approximately ($10,000) and $10,920,000, respectively, compared to net loss of approximately $123,000 and $88,000 for the three and nine months ended September 30, 2005, respectively.

On March 31, 2006, the Partnership sold Windsor Hills Apartments to a third party for net proceeds of approximately $13,477,000 after a deduction for immediate capital needs, a prepayment penalty owed by the Partnership and closing costs. The Partnership used approximately $5,883,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $12,105,000 for the nine months ended September 30, 2006 as a result of the sale. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $1,261,000 as a result of unamortized loan costs written off and a prepayment penalty during the nine months ended September 30, 2006. This amount is included in loss from discontinued operations for the nine months ended September 30, 2006. Also included in loss from discontinued operations for the nine months ended September 30, 2006 is approximately $100,000 of income, including revenues of approximately $480,000 for the nine month period. Included in income from discontinued operations for the three and nine months ended September 30, 2005 are results of the property 6;s operations of approximately $30,000 and $200,000, respectively, including revenues of approximately $501,000 and $1,511,000, respectively.

The Partnership recognized loss from continuing operations of approximately $10,000 and $24,000 for the three and nine months ended September 30, 2006, respectively, compared to loss from continuing operations of approximately $153,000 and $288,000 for the three and nine months ended September 30, 2005, respectively. Loss from continuing operations decreased for the three months ended September 30, 2006 due to an increase in total revenues and a decrease in total expenses. Loss from continuing operations decreased for the nine months ended September 30, 2006 due to an increase in total revenues partially offset by an increase in total expenses.

Total revenues increased for both the three and nine months periods ended September 30, 2006 due to increases in rental and other income. Additionally, there was an increase in casualty gain during the nine months ended September 30, 2006, as discussed below. Rental income increased for both the three and nine months ended September 30, 2006 due to increases in occupancy and the average rental rate, and a decrease in bad debt expense at Quail Hollow Apartments. Other income increased for the three months ended September 30, 2006 primarily due to an increase in interest income. Other income increased for the nine months ended September 30, 2006 due to increases in interest income, application fees, and tenant utility reimbursements.

Total expenses decreased for the three months ended September 30, 2006 due to decreases in operating, interest and general and administrative expenses partially offset by an increase in depreciation expense. Total expenses increased for the nine months ended September 30, 2006 due to increases in depreciation, interest and general and administrative expenses, partially offset by a decrease in property tax expense. Operating expenses decreased for the three months ended September 30, 2006 primarily due to decreases in administrative and maintenance expense at the investment property. Administrative expense decreased as a result of a decrease in temporary help costs. Maintenance expense decreased due to a reduction in contract services at the investment property. Operating expenses remained comparable for the nine months ended September 30, 2006. Depreciation expense increased for both the three and nine months ended September 30, 2006 due to assets placed in service over the past twelve months now being depreciated. Interest expense increased for the nine months ended September 30, 2006 due to an increase in interest expense on advances from an affiliate of the Corporate General Partner partially offset by a decrease in interest expense on the mortgage encumbering Quail Hollow Apartments as a result of scheduled principal payments which reduced the carrying balance of the mortgage. Interest expense decreased for the three months ended September 30, 2006 due to decreases in interest on advances from an affiliate of the Corporate General Partner and on the mortgage encumbering Quail Hollow as a result of scheduled principal payments. Property tax expense decreased for the nine months ended September 30, 2006 as a result of a property tax adjustment at Quail Hollow Apartments made in 2005.

General and administrative expense decreased for the three months ended September 30, 2006 primarily due to a decrease in the cost of services included in management reimbursements to an affiliate of the Corporate General Partner as a result of the sale of Windsor Hills during 2006. General and administrative expenses increased for the nine months ended September 30, 2006 due to an increase in the costs associated with the annual audit partially offset by a decrease in the cost of services included in management reimbursements to an affiliate of the Corporate General Partner as a result of the sale of Windsor Hills during 2006. Also included in general and administrative expenses are costs associated with the quarterly and annual communications with investors and regulatory agencies.

Liquidity and Capital Resources

At September 30, 2006 the Partnership had cash and cash equivalents of approximately $261,000 compared to approximately $86,000 at September 30, 2005. Cash and cash equivalents increased approximately $117,000 since December 31, 2005 due to approximately $13,178,000 of cash provided by investing activities partially offset by approximately $13,037,000 and $24,000 of cash used in financing activities and operating activities, respectively. Cash provided by investing activities consisted of proceeds from the sale of Windsor Hills Apartments and insurance proceeds received, partially offset by property improvements and replacements. Cash used in financing activities consisted of repayment of the mortgage encumbering Windsor Hills Apartments, payments of principal on mortgages encumbering the Partnership’s properties, repayment of advances from an affiliate of the Corporate General Partner and distributions to partners partially offset by advances from an affiliate of the Corporate General Partner. The Partnership invests its working capital reserves in interest-bearing 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 Partnership and to comply with Federal, state and local legal and regulatory requirements. The Corporate General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance. Capital improvements planned for each of the Partnership's properties are detailed below.

Quail Hollow Apartments

During the nine months ended September 30, 2006, the Partnership completed approximately $97,000 of capital improvements at the property consisting primarily of floor covering, appliance, and roof replacements. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2006. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Windsor Hills Apartments

During the nine months ended September 30, 2006, the Partnership completed approximately $176,000 of capital improvements at the property, consisting primarily of water and sewer repairs, floor covering replacements, plumbing fixtures and fitness equipment. These improvements were funded from operating cash flow. This property was sold during March 2006.

Capital improvements will be incurred only if cash is available from operations, Partnership reserves or advances from an affiliate of the Corporate General Partner. To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term.

The Partnership's assets are thought to be sufficient for any near term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering Quail Hollow Apartments of approximately $4,512,000 requires monthly principal and interest payments and matures October 2018 at which time a balloon payment of approximately $1,284,000 is due. The Corporate General Partner will attempt to refinance the indebtedness of Quail Hollow Apartments and/or sell the property prior to its maturity date. If the property cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing the property through foreclosure.

The Partnership distributed the following amounts during the nine months ended September 30, 2006 and 2005 (in thousands, except per unit data):


	Nine Months Ended	Per Limited	Nine Months Ended	Per Limited
	September 30,	Partnership	September 30,	Partnership
	2006	Unit	2005	Unit

Sale (1)	$6,089	$345.00	$ --	$ --

(1)

From the sale proceeds of Windsor Hill Apartments in March 2006.

Future cash distributions will depend on the levels of cash generated from operations, the timing of the property sale and/or refinancing. The Partnership’s cash available for distribution is reviewed on a monthly basis. There can be no assurance that the Partnership will generate sufficient funds from operations to permit any additional distributions to its partners in 2006 or subsequent periods.

Other

In addition to its indirect ownership of the general partner interests, in the Partnership, AIMCO and its affiliates owned 12,023.50 limited partnership units (“Units”) in the Partnership representing 80.16% of the outstanding Units at September 30, 2006. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 80.16% of the outstanding Units, AIMCO and its affiliates are in a position to control all voting decisions with respect to the Partnership. Although the Corporate General Partner owes fiduciary duties to the limited partners of the Partnership, the Corporate General Partner also owes fiduciary duties to AIMCO as its sole stockholde r. As a result, the duties of the Corporate General Partner, as corporate general partner, to the Partnership and its limited partners may come into conflict with the duties of the Corporate General Partner to AIMCO as its sole stockholder.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.

Impairment of Long-Lived Asset

Investment property is recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of the property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.

Real property investment is subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership’s investment property. These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing. Any adverse changes in these factors could cause impairment of the Partnership’s asset.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease. The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.

Item 3.

Controls and Procedures

(a)

Disclosure Controls and Procedures. The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the Corporate General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Corporate General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure con trols and procedures are effective.

(b)

Internal Control Over Financial Reporting. There have not been any changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion. On February 3, 2006, the Court held a hearing on the various matters pending before it and ordered additional briefing from the parties and Objector. On June 30, 2006, the trial court entered an order confirming its approval of the class action settlement and entering judgment thereto after the Court of Appeals had remanded the matter for further findings. The substantive terms of the settlement agreement remain unchanged. The trial court also entered supplemental orders on July 1, 2006, denying Objector’s Motion to File a Complaint in Intervention, Objector’s Motion for Leave of Discovery and Objector’s Motion to Dissolve the Anti-Suit Injunction. Notice of Entry of Judgment was served on July 10, 2006. On August 31, 2006, the Objector filed a Notice of Appeal to the Court’s June 30, 2006 and July 1, 2006 orders.

AIMCO Properties L.P. and NHP Management Company, both affiliates of the Corporate General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the court conditionally certified the collective action on both the on-call and overtime issues. Approximately 1,049 individuals opted in to the class. The defendants moved to decertify the collective action on both issues and the plaintiffs have responded. Because the court denied plaintiffs’ motion to certify state subclasses, in September 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and in November 2005 in Montgomery County Maryland Circuit Court. The California and Maryland cases have been stayed pending the outcome of the decertification motion in the District of Columbia case. Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Corporate General Partner does not believe that the ultimate outcome will ha ve a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

Item 5.

Other Information

None.

Item 6.

Exhibits

See Exhibit Index Attached.

SIGNATURES

In accordance with the requirements 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 I Corporation
	Corporate General Partner

Date: November 13, 2006	By: /s/Martha L. Long
	Martha L. Long
	Senior Vice President

Date: November 13, 2006	By: /s/Stephen B. Waters
	Stephen B. Waters
	Vice President

SHELTER PROPERTIES I

EXHIBIT INDEX

Exhibit

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).

10(i)

Contracts 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.*

(c)

Purchase and Sale Agreement and Joint Escrow Instructions between Windsor Hills I, Limited Partnership, a Delaware Limited Partnership, and the affiliated Selling Partnerships and California State Teachers’ Retirement System, a public entity, dated November 14, 2005. Filed as Exhibit 10(i)(c) to the Current Report on Form 8-K dated November 14, 2005 and filed December 13, 2005 and incorporated herein by reference.

*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.

10(iii)

Contracts related to refinancing of debt:

(m)

Multifamily Note dated June 27, 2001, by and between Shelter Properties I Limited Partnership, a South Carolina limited partnership, and GMAC Commercial Mortgage Corporation. Filed as Exhibit 10(iii)(m) to Form 10-QSB of Registrant for quarter ended June 30, 2001 and incorporated herein by reference.

31.1

Certification of equivalent of Chief Executive Officer pursuant

to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of equivalent of Chief Financial Officer pursuant

to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of equivalent of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99 (a)

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

Exhibit 31.1

CERTIFICATION

I, Martha L. Long, certify that:

I have reviewed this quarterly report on Form 10-QSB of Shelter Properties I;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: November 13, 2006

/s/Martha L. Long

Martha L. Long

Senior Vice President of Shelter Realty I Corporation, equivalent of the chief executive officer of the Partnership

Exhibit 31.2

CERTIFICATION

I, Stephen B. Waters, certify that:

I have reviewed this quarterly report on Form 10-QSB of Shelter Properties I;

(a)

(b)

(c)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: November 13, 2006

/s/Stephen B. Waters

Stephen B. Waters

Vice President of Shelter Realty I Corporation, equivalent of the chief financial officer of the Partnership

Exhibit 32.1

Certification of CEO and CFO

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-QSB of Shelter Properties I (the "Partnership"), for the quarterly period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.


	/s/Martha L. Long
	Name: Martha L. Long
	Date: November 13, 2006

	/s/Stephen B. Waters
	Name: Stephen B. Waters
	Date: November 13, 2006

This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Shelter Properties I LTD Partnership Inactive 10QSB2006 Q3 Quarterly report (small business)