FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-16645

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)


California		33-0157561

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


400 South El Camino Real, Suite 1100 San Mateo, California		94402-1708

(Address of principal executive offices)		(Zip Code)

(650) 343-9300

(Registrant’s telephone number, including area code)

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 reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Total number of units outstanding as of November 8, 2002: 13,307

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		Balance Sheets
		Statements of Operations
		Statement of Partners’ Equity
		Statements of Cash Flows
		Notes to Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Qualitative and Quantitative Information About Market Risk
	Item 4. Controls and procedures
Part II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Balance Sheets
(in thousands, except unit amounts)
(Unaudited)


			September 30,			December 31,
			2002			2001

Assets
Real estate investments:
	Rental properties, gross		$	6,508		$	6,381
	Accumulated depreciation			(2,386	)		(2,204	)

	Rental properties, net			4,122			4,177
Cash and cash equivalents				654			748
Deferred costs, net of accumulated amortization of $91 and $70 at September 30, 2002 and December 31, 2001, respectively				53			59
Prepaid expenses and other assets				36			14

		Total assets	$	4,865		$	4,998

Liabilities and Partners’ Equity
Liabilities:
	Accounts payable and accrued expenses		$	51		$	43
	Security deposits			79			78

		Total liabilities		130			121

Commitments and contingent liabilities (Note 4)
Partners’ Equity:
	General partner			(187	)		(189	)
	Limited partners, 13,406 and 13,560 limited partnership units outstanding at September 30, 2002 and December 31, 2001, respectively			4,922			5,066

		Total partners’ equity		4,735			4,877

		Total liabilities and partners’ equity	$	4,865		$	4,998

The accompanying notes are an integral part of these financial statements.

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Statements of Operations
(in thousands, except per unit amounts and units outstanding)
(Unaudited)


				Three months ended				Nine months ended
				September 30,				September 30,

				2002		2001		2002		2001

Revenues
	Rental income			$	268	$	243	$	848	$	722
	Interest and other income				3		6		8		21

			Total revenues		271		249		856		743

Expenses
	Operating				137		118		346		291
	Depreciation and amortization				71		53		203		161
	General and administrative				47		50		140		155

			Total expenses		255		221		689		607

Net income				$	16	$	28	$	167	$	136

Net income per limited partnership unit				$	1.21	$	2.05	$	12.25	$	9.79

Distributions per limited partnership unit:
	From net income			$	2.24	$	2.05	$	12.25	$	9.79
	Representing return of capital				7.88		8.04		7.88		10.31

		Total distributions per limited partnership unit		$	10.12	$	10.09	$	20.13	$	20.10

Weighted average number of limited partnership units outstanding during each period used to compute net income per limited partnership unit					13,412		13,684		13,464		13,783

The accompanying notes are an integral part of these financial statements.

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Statement of Partners’ Equity
For the nine months ended September 30, 2002
(in thousands)
(Unaudited)


	General			Limited
	Partners			Partners			Total

Balance at December 31, 2001	$	(189	)	$	5,066		$	4,877
Retirement of limited partnership units		—			(38	)		(38	)
Net income		2			165			167
Distributions		—			(271	)		(271	)

Balance at September 30, 2002	$	(187	)	$	4,922		$	4,735

The accompanying notes are an integral part of these financial statements.

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Statements of Cash Flows
(in thousands)
(Unaudited)


				Nine months ended
				September 30,

				2002			2001

Cash flows from operating activities:
	Net income			$	167		$	136
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			203			161
		Changes in certain assets and liabilities:
			Deferred costs		(15	)		(29	)
			Prepaid expenses and other assets		(22	)		(13	)
			Accounts payable and other liabilities		9			52

			Net cash provided by operating activities		342			307

Cash flows from investing activities:
	Additions to real estate				(127	)		(173	)

			Net cash used for investing activities		(127	)		(173	)

Cash flows from financing activities:
	Distributions to partners				(271	)		(277	)
	Retirement of limited partnership units				(38	)		(63	)

			Net cash used for financing activities		(309	)		(340	)

Net decrease in cash and cash equivalents					(94	)		(206	)
Cash and cash equivalents at beginning of period					748			931

Cash and cash equivalents at end of period				$	654		$	725

The accompanying notes are an integral part of these financial statements.

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2002
(Unaudited)

Note 1. THE PARTNERSHIP

Rancon Income Fund I (“the Partnership”) was organized in accordance with the provisions of the California Revised Limited Partnership Act for the purpose of acquiring, operating and disposing of existing income-producing commercial, industrial and residential real estate properties. The Partnership reached final funding in April 1989. The Partnership was formed with initial capital contributions from Rancon Income Partners I, L.P. (the General Partner) and Daniel Lee Stephenson, the initial limited partner, who indirectly owns and controls the General Partner. The General Partner and its affiliates are hereinafter referred to as the Sponsor. At September 30, 2002, 13,406 units were issued and outstanding.

In the opinion of Rancon Financial Corporation (RFC), the Sponsor and Glenborough Realty Trust Incorporated (“Glenborough”), the Partnership’s asset and property manager, the accompanying unaudited financial statements contain all adjustments (consisting of only normal accruals) necessary to present fairly the financial position of the Partnership as of September 30, 2002 and December 31, 2001, and the related statements of operations, partners’ equity, and cash flows for the nine months ended September 30, 2002 and 2001.

Allocation of Net Income and Net Loss — Allocations of the profits and losses from operations are made pursuant to the terms of the Partnership Agreement.

Generally, net income from operations is allocated to the general partner and the limited partners in proportion to the amounts of cash from operations distributed to the partners for each fiscal year. In no event shall the general partner be allocated less than 1% of the net income from any period. If there are no distributions of cash from operations during such fiscal year, net income shall be allocated 90% to the limited partners and 10% to the general partner. Net losses from operations are allocated 90% to the limited partners and 10% to the general partner until such time as a partner’s account is reduced to zero. Additional losses will be allocated entirely to those partners with positive account balances until such balances are reduced to zero. In no event will the general partner be allocated less than 1% of net loss for any period.

Net income other than net income from operations shall be allocated as follows: (i) first, 1% to the general partner; (ii) second, to the partners who have a deficit balance in their capital account in proportion to and to the extent of such deficit balances, provided, that in no event shall the general partner be allocated more than 10% of the net income other than net income from operations until the earlier of sale or disposition of substantially all of the assets or the distribution of cash (other than cash from operations) equal to the original invested capital of the general partner and the limited partner; (iii) the balance, if any, shall be allocated (a) first, to the general partner in an amount equal to the lesser of (1) the amount of cash from sale or financing anticipated to be distributed to the general partner or (2) an amount sufficient to increase the general partner’s account balance to an amount equal to such distribution from sale or financing; (b) the balance, to the limited partners. In no event shall the general partner be allocated less than 1% of the net income other than net income from operations for any period.

Distributions — Distributions of cash from operations are generally allocated as follows: (i) first, to the limited partners until they receive a non-cumulative 6% return per annum on their unreturned capital contributions and (ii) the remainder, if any in a given year, shall be divided in the ratio of 90% to the limited partners and 10% to the general partner.

Distributions of cash from sales or financing are generally allocated as follows: (i) first, 2% to the general partner and 98% to the limited partners until the limited partners have received an amount equal to their capital contributions; (ii) second, 2% to the general partner and 98% to the limited partners until the limited partners have received a cumulative non-compounded return of 6% per annum on their unreturned capital contributions (less prior distributions of cash from operations); (iii) third, to the general partner for the amount of subordinated real estate commissions payable per the Partnership Agreement; (iv) fourth, 2% to the general partner and 98% to the limited partners until the limited partners have received an additional 4% return on their unreturned capital contributions (less prior distributions of cash from operations); (v) fifth, 2% to the general partner and 98% to the limited partners

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2002
(Unaudited)

until the limited partners who purchased their partnership units (“Units”) prior to June 1, 1988, receive an additional return (depending on the date on which they purchased the Units) on their unreturned capital of either 8%, 5% or 2% (calculated through the first anniversary date of the purchase of the Units); (vi) sixth, 98% to the general partner and 2% to the limited partners until the general partner has received an amount equal to 15% of all prior distributions made to the limited partners and the general partners pursuant to subparagraphs (iv) and (v), reduced by the aggregate of all prior distributions to the general partner under subparagraphs (iv) and (v); and (vii) seventh, the balance, 85% to the limited partners and 15% to the general partner.

The terms of the Partnership agreement call for the general partner to restore any deficits that may exist in its capital account after allocation of gains and losses from the sale of the final property owned by the Partnership, but prior to any liquidating distributions being made to the partners.

Management Agreement — Effective January 1, 1995, Glenborough Corporation (“GC”) entered into an agreement with the Partnership and other related Partnerships (collectively, the “Rancon Partnerships”) to perform or contract on the Partnership’s behalf for financial, accounting, data processing, marketing, legal, investor relations, asset and development management and consulting services for a period of ten years or until the liquidation of the Partnership, whichever comes first. Effective January 1, 1998, the agreement was amended to eliminate GC’s responsibility for providing investor relation services and Preferred Partnership Services, Inc., a California corporation unaffiliated with the Partnership, contracted to assume the investor relations services. In October 2000, GC merged into Glenborough.

Effective July 1, 1999, the agreement was further amended to: (i) reduce the asset administration fee to $100,000 (ii) increase the sales fee for improved properties from 2% to 3% and (iii) reduce the management fee applicable to Wakefield Industrial Center from 5% to 3% of the gross rental receipts. The Partnership will also pay Glenborough: (i) a sales fees of 4% for land; (ii) a refinancing fee of 1% and (iii) a management fee of 5% of gross rental receipts from Bristol Medical Center. As part of this agreement, Glenborough will perform certain duties for the General Partner of the Rancon Partnerships. RFC agreed to cooperate with Glenborough should Glenborough attempt to obtain a majority vote of the limited partners to substitute itself as the Sponsor for the Rancon Partnerships. Glenborough is not an affiliate of the Partnership or RFC.

Risks and Uncertainties — The Partnership’s ability to achieve positive cash flow from operations, provide distributions from operations and continue as a going concern may be impacted by changes in property values, local and regional economic conditions, or the entry of other competitors into the market. The accompanying financial statements do not provide for adjustments with regard to these uncertainties.

Note 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting — The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results of operations during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

In June 2001, the FASB approved for issuance SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and that the associated asset retirement costs be capitalized as part of the carrying value of the

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2002
(Unaudited)

related long-lived asset. SFAS No. 143 will be effective January 1, 2003 for the Partnership. Management does not expect this standard to have a material impact on the Partnership’s financial position or results of operations.

In August 2001, the FASB approved for issuance SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 broadens the presentation of discontinued operations to include more transactions and eliminates the need to accrue for future operating losses. Additionally, SFAS No. 144 prohibits the retroactive classification of assets as held for sale and requires revisions to the depreciable lives of long-lived assets to be abandoned. SFAS No. 144 was effective January 1, 2002 for the Partnership. This new standard does not currently have a material impact on the Partnership’s financial position and results of operations, but may in future periods.

In May 2002, the FASB approved for issuance SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS 145 requires gains and losses from extinguishment of debt to be classified as an extraordinary item only if the criteria in APB No. 30 has been met. Further, lease modifications with economic effects similar to sale-leaseback transactions must be accounted for in the same manner as sale-leaseback transactions. While the technical corrections to existing pronouncements are not substantive in nature, in some instances they may change accounting practice. SFAS No. 145 will be effective January 1, 2003 for the Partnership. Management is currently assessing the impact of this new standard on the Partnership’s consolidated financial position and results of operations.

In June 2002, the FASB approved for issuance SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS 146 addresses accounting and reporting for costs associated with exit and disposal activities and supercedes Emerging Issues Task Force Issue No. 94-3 (EITF 94-3), “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, as defined by the Statement. Under EITF 94-3, an exit cost was recognized at the date an entity committed to an exit plan. Additionally, SFAS 146 provides that exit and disposal costs should be measured at fair value and that the associated liability will be adjusted for changes in estimated cash flows. The provisions of SFAS 146 are effective for exit and disposal activities that are initiated after December 31, 2002.

Rental Properties — Rental properties, including the related land, are stated at cost unless events or circumstances indicate that cost cannot be recovered, in which case the carrying value is reduced to the estimated fair value. Estimated fair value: (i) is based upon the Partnership’s plans for the continued operation of each property; and (ii) is computed using estimated sales price, as determined by prevailing market values for comparable properties and/or the use of capitalization rates multiplied by annualized rental income based upon the age, construction and use of the building. The fulfillment of the Partnership’s plans related to each of its properties is dependent upon, among other things, the presence of economic conditions which will enable the Partnership to continue to hold and operate the properties prior to their eventual sale. Due to uncertainties inherent in the valuation process and in the economy, it is reasonably possible that the actual results of operating and disposing of the Partnership’s properties could be materially different than current expectations.

Depreciation is provided using the straight-line method over five to forty years of useful lives of the respective assets.

Cash and Cash Equivalents — The Partnership considers certificates of deposit and money market funds with original maturities of less than ninety days to be cash equivalents.

Fair Value of Financial Instruments — For certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, recorded amounts approximate fair value due to the relatively short maturity period.

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2002
(Unaudited)

Deferred Costs — Deferred lease commissions are amortized over the initial fixed term of the related lease agreement on a straight-line basis.

Revenues

The Partnership recognizes rental revenue on a straight-line basis at amounts that it believes it will collect on a tenant by tenant basis. The estimation process may result in higher or lower levels from period to period as the Partnership’s collection experience and the credit quality of the Partnership’s tenants changes. Actual amounts collected could be lower or higher than the amounts recognized on a straight-line basis if specific tenants are unable to pay rent that the Partnership has previously recognized as revenue, or if other tenants pay rent whom the Partnership previously estimated would not.

The Partnership’s portfolio of leases turns over continuously, with the number and value of expiring leases varying from year to year. The Partnership’s ability to re-lease the space to existing or new tenants at rates equal to or greater than those realized historically is impacted by, among other things, the economic conditions of the market in which a property is located, the availability of competing space, and the level of improvements which may be required at the property. No assurance can be given that the rental rates that the Partnership will obtain in the future will be equal to or greater than those obtained under existing contractual commitments.

Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenses are incurred. Differences between estimated and actual amounts are recognized in the subsequent year.

Sales of Real Estate — The Partnership recognizes sales of real estate when a contract is in place, a closing has taken place, the buyer’s investment is adequate to demonstrate a commitment to pay for the property and the Partnership does not have a substantial continuing involvement in the property. Each property is considered a separately identifiable component of the Partnership and is reported in discontinued operations when the operations and cash flows of the Property have been (or will be) eliminated from the ongoing operations of the Partnership as a result of the disposal transaction and the Property will not have any significant continuing involvement in the operations of the Partnership after the disposal transaction.

Net Income (Loss) Per Limited Partnership Unit — Net income (loss) per limited partnership unit is calculated using the weighted average number of limited partnership units outstanding during the period and the limited partners’ allocable share of the net income (loss).

Income Taxes — No provision for income taxes is included in the accompanying financial statements as the Partnership’s results of operations are passed through to the partners for inclusion in their respective income tax returns. Net income (loss) and partners’ equity for financial reporting purposes will differ from the Partnership income tax return because of different accounting methods used for certain items, principally depreciation expense and the provision for impairment of investments in real estate.

Concentration Risk — Three tenants represented 60 percent of rental income for the nine months ended September 30, 2002. Two tenants represented 45 percent of rental income for the nine months ended September 30, 2001.

Reference to 2001 audited financial statements — These unaudited financial statements should be read in conjunction with the Notes to Financial Statements included in the December 31, 2001 audited financial statements on Form 10-K.

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2002
(Unaudited)

Note 3. RENTAL PROPERTY, NET

Rental properties as of September 30, 2002 and December 31, 2001 are as follows:


		2002			2001

Land		$	1,928,000		$	1,928,000
Buildings and improvements			3,648,000			3,594,000
Tenant improvements			932,000			859,000

			6,508,000			6,381,000
Less: accumulated depreciation			(2,386,000	)		(2,204,000	)

	Total	$	4,122,000		$	4,177,000

None of the Partnership’s properties are encumbered by debt as of September 30, 2002 and December 31, 2001.

Note 4. COMMITMENTS AND CONTINGENT LIABILITIES

General Uninsured Losses — The Partnership carries comprehensive liability, fire, flood, extended coverage and rental loss insurance with policy specifications, limits and deductibles customarily carried for similar properties. There are, however, certain types of extraordinary losses, which may be either uninsurable, or not economically insurable. Further, certain of the properties are located in areas that are subject to earthquake activity. Should a property sustain damage as a result of an earthquake, the Partnership may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. Should an uninsured loss occur, the Partnership could lose its investment in, and anticipated profits and cash flows from, a property.

Other matters — The Partnership is contingently liable for a subordinated real estate commission payable to the General Partner in the amount of $30,000 at September 30, 2002 for the May 1999 sale of Aztec. Per the Partnership Agreement, upon the sale of a Partnership property, the General Partner shall be entitled to a subordinated real estate commission, provided that, in no event shall the subordinated real estate commission payable to the General Partner exceed 3% of the gross sales price of the property which is sold. The subordinated real estate commission is payable only after the limited partners have received distributions equal to their original invested capital plus a cumulative non-compounded return of 6% per annum on their adjusted invested capital. Since the circumstances under which this commission would be payable are limited, the liability has not been recognized in the accompanying unaudited financial statements; however, the amount will be recorded if and when it becomes payable.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

New Accounting Pronouncements

During 2001, the Financial Accounting Standards Board (FASB) approved for issuance a number of new accounting standards. Management does not expect these new accounting standards to have a material impact on the Partnership’s financial position or results of operations, although they may in future periods. These new accounting standards are discussed in more detail in the notes to the accompanying financial statements.

Liquidity and Capital Resources

The following discussion should be read in conjunction with the Partnership’s December 31, 2001 audited financial statements and the notes thereto.

On April 21, 1989, Rancon Income Fund I (“the Partnership”) was funded from the sale of 14,559 limited partnership units (“Units”) in the amount of $14,559,000. Four Units were retired in 1990. In 2001 and 2000, a total of 273 and 722 Units were repurchased. During the nine months ended September 30, 2002, a total of 154 Units were repurchased. As of September 30, 2002, 13,406 Units remain outstanding.

As of September 30, 2002, the Partnership had cash of $654,000. The remainder of the Partnership’s assets consists primarily of its real estate investments, which totaled approximately $4,122,000 at September 30, 2002.

The Partnership is contingently liable for a subordinated real estate commission payable to the General Partner in the amount of $30,000 at September 30, 2002 for the May 1999 sale of Aztec Village Shopping Center. Per the Partnership Agreement, upon the sale of a Partnership property, the General Partner shall be entitled to a subordinated real estate commission, provided that, in no event shall the subordinated real estate commission payable to the General Partner exceed 3% of the gross sales price of the property which is sold. The subordinated real estate commission is payable only after the limited partners have received distributions equal to their original invested capital plus a cumulative non-compounded return of 6% per annum on their adjusted invested capital. Since the circumstances under which this commission would be payable are limited, the liability has not been recognized in the Partnership’s financial statements; however, the amount will be recorded if and when it becomes payable.

Operationally, the Partnership’s primary source of funds consists of cash generated from operating its rental properties. Cash flows from operating activities have been sufficient to provide funds to reinvest in the properties by way of improvements, as well as to fund distributions to the limited partners. Other sources of funds include the interest earned on invested cash balances and proceeds from property sales.

Management believes that the Partnership’s cash balance at September 30, 2002, together with the cash from operations and sales, will be sufficient to finance the Partnership’s and the properties continued operations on both a short-term and long-term basis. There can be no assurance that the Partnership’s results of operations will not fluctuate in the future and at times affect its ability to meet its operating requirements.

Operating Activities

During the nine months ended September 30, 2002, the Partnership’s cash provided by operating activities totaled $342,000.

The $15,000 increase in deferred costs at September 30, 2002, compared to December 31, 2001, was primarily due to lease commissions paid for new and renewal leases.

The $22,000 increase in prepaid expenses and other assets at September 30, 2002, compared to December 31, 2001, was primarily due to an increase in tenant rents receivable and the prepayment of an earthquake insurance premium.

The $9,000 increase in accounts payable and other liabilities at September 30, 2002, compared to December 31, 2001, was primarily due to an increase in accruals for property taxes and audit fees.

Investing Activities

During the nine months ended September 30, 2002, the Partnership’s cash used for investing activities totaled $127,000 for improvement of the rental properties.

Financing Activities

During the nine months ended September 30, 2002, the Partnership’s cash used for financing activities totaled $309,000, which consisted of $271,000 of distributions to the limited partners, and $38,000 paid to redeem 154 limited partnership units (“Units”).

RESULTS OF OPERATIONS

Revenues

Rental income increased $25,000, or 10%, and $126,000, or 17%, for the three and nine months ended September 30, 2002, compared to the three and nine months ended September 30, 2001, respectively, primarily due to an approximately 20% increase in occupancy at Bristol Medical Center in May 2001.

Occupancy rates at the Partnership’s rental properties were as follows:


	September 30,

	2002			2001

Bristol Medical Center		86	%		79	%
Wakefield Building		100	%		100	%

Total weighted average occupancy		93	%		87	%

The 7% increase in occupancy from September 30, 2001 to September 30, 2002 at Bristol Medical Center was primarily due to leasing 2,000 square feet of previously vacant space to two new tenants, as well as a 3,300 square foot expansion for an existing tenant. This increase was slightly offset by a decrease of 1,700 square feet due to an existing tenant moving out upon their lease expiration.

Interest and other income decreased $3,000, or 50%, and $13,000, or 62%, for the three and nine months ended September 30, 2002, compared to the three and nine months ended September 30, 2001, respectively, primarily due to a lower average invested cash balance resulting from the Partnership distributions in February and August 2002, as well as decreases in interest rates.

Expenses

Operating expenses increased $19,000, or 16%, and $55,000, or 19%, for the three and nine months ended September 30, 2002, compared to the three and nine months ended September 30, 2001, respectively, primarily due to the increase in occupancy at Bristol Medical Center.

Depreciation and amortization expense increased $18,000, or 34%, and $42,000, or 26%, for the three and nine months ended September 30, 2002, compared to the three and nine months ended September 30, 2001, respectively, primarily due to additions to rental properties.

General and administrative expenses decreased $3,000, or 6%, and $15,000, or 10%, for the three and nine months ended September 30, 2002, compared to the three and nine months ended September 30, 2001, respectively, primarily due to a decrease in legal fees and investor relation service expenses.

Critical Accounting Policies

Revenue recognized on a straight-line basis

The Partnership recognizes rental revenue on a straight-line basis at amounts that it believes it will collect on a tenant by tenant basis. The estimation process may result in higher or lower levels from period to period as the Partnership’s collection experience and the credit quality of the Partnership’s tenants changes. Actual amounts collected could be lower or higher than the amounts recognized on a straight-line basis if specific tenants are unable to pay rent that the Partnership has previously recognized as revenue, or if other tenants remain whom the Partnership previously believed would not.

Carrying value of rental properties

The Partnership’s rental properties, including the related land, are stated at depreciated cost unless events or circumstances indicate that depreciated cost cannot be recovered, in which case, the carrying value of the property is reduced to its estimated fair value. Estimated fair value is based upon (i) the Partnership’s plans for the continued operations of each property, and (ii) is computed using estimated sales price, as determined by prevailing market values for comparable properties and/or the use of capitalization rates multiplied by annualized rental income based upon the age, construction and use of the building. The fulfillment of the Partnership’s plans related to each of its properties is dependent upon, among other things, the presence of economic conditions which will enable the Partnership to continue to hold and operate the properties prior to their eventual sale. Due to uncertainties inherent in the valuation process and in the economy, it is reasonably possible that the actual results of operating and disposing of the Partnership’s properties could be materially different than current expectations.

Item 3. Qualitative and Quantitative Information About Market Risk

As of September 30, 2002, the Partnership had cash equivalents of $550,000 invested in interest-bearing certificates of deposit. These investments are subject to interest rate risk due to changes in interest rates upon maturity. Declines in interest rates over time would reduce Partnership interest income.

Item 4. Controls and procedures

(a) Evaluation of disclosure controls and procedures. The Partnership’s chief executive officer and chief financial officer, after evaluating the effectiveness of the Partnership’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the “Evaluation Date”) within 90 days before the filing date of this quarterly report, has concluded that as of the Evaluation Date, the Partnership’s disclosure controls and procedures were effective and designed to ensure that material information relating to the Partnership and its consolidated subsidiaries would be made known to him by others within those entities.

(b) Changes in internal controls. There were no significant changes in the Partnership’s internal controls or in other factors that could significantly affect those controls subsequent to the Evaluation Date.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

None.

(b) Reports on Form 8-K (incorporated herein by reference):

On July 25, 2002, the Partnership filed a report on Form 8-K regarding changes in registrant’s certifying accountant.

SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	RANCON INCOME FUND I, a California limited partnership

	By	Rancon Income Partners I, L.P. its General Partner


Date: November 8, 2002	By:	/s/ DANIEL L. STEPHENSON

		Daniel L. Stephenson Director, President, Chief Executive Officer and Chief Financial Officer of Rancon Financial Corporation, General Partner of Rancon Income Partners I, L.P.

I, DANIEL L. STEPHENSON, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of RANCON INCOME FUND I;

2.		Based on my knowledge, this quarterly 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 quarterly report;

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

4.		I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;

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

	c)		presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;

I have disclosed, based on my most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

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

I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 8, 2002

/s/ DANIEL L. STEPHENSON
Daniel L. Stephenson

Director, President, Chief Executive Officer
and Chief Financial Officer of
Rancon Financial Corporation,
General Partner of Rancon Income Partners I, L.P.

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RANCON INCOME FUND I 10-Q