10-Q

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, 2003

OR

[  ] 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	(I.R.S. Employer
incorporation or organization)	Identification No.)
400 South El Camino Real, Suite 1100
San Mateo, California	94402-1708
(Address of principal	(Zip Code)
executive offices)

(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  [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [X]  No [  ]

Total number of units outstanding as of November 11, 2003: 12,978

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TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		Balance Sheets
		Statements of Income
		Statement of Partners’ Equity For the nine months ended September 30, 2003
		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 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 10.3
EXHIBIT 31.1
EXHIBIT 32.1

INDEX
RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

			Page No.
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements of Rancon Income Fund I (Unaudited):
		Balance Sheets at September 30, 2003 and December 31, 2002		3
		Statements of Income for the three and nine months ended September 30, 2003 and 2002		4
		Statement of Partners’ Equity for the nine months ended September 30, 2003		5
		Statements of Cash Flows for the nine months ended September 30, 2003 and 2002		6
		Notes to Financial Statements		7-10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			11-13
Item 3.	Qualitative and Quantitative Information About Market Risk			13
Item 4.	Controls and Procedures			13
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings			14
Item 4.	Submission of Matters to a Vote of Security Holders			14
Item 6.	Exhibits and Reports on Form 8-K			14
SIGNATURES				15

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Balance Sheets
(in thousands, except units outstanding)
(Unaudited)

			September 30,			December 31,
			2003			2002
ASSETS
Investments in real estate:
	Rental properties		$	6,882		$	6,522
	Accumulated depreciation			(2,646	)		(2,450	)
	Rental properties, net			4,236			4,072
Cash and cash equivalents				375			712
Deferred costs, net of accumulated amortization of $133 and $99 at September 30, 2003 and December 31, 2002, respectively				74			54
Prepaid expenses and other assets				35			33
		Total assets	$	4,720		$	4,871
LIABILITIES AND PARTNERS’ EQUITY
Liabilities:
	Accounts payable and accrued expenses		$	69		$	48
	Security deposits			70			83
		Total liabilities		139			131
Commitments and contingent liabilities (Note 4)
Partners’ Equity:
	General partner			(185	)		(187	)
	Limited partners, 12,991 and 13,279 limited partnership units outstanding at September 30, 2003 and December 31, 2002, respectively			4,766			4,927
		Total partners’ equity		4,581			4,740
		Total liabilities and partners’ equity	$	4,720		$	4,871

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

3

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

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

				Three months ended				Nine months ended
				September 30,				September 30,
				2003		2002		2003		2002
REVENUE
	Rental income			$	307	$	268	$	955	$	848
	Interest and other income				1		3		5		8
			Total revenues		308		271		960		856
EXPENSES
	Operating				128		137		383		346
	Depreciation and amortization				82		71		230		203
	General and administrative				52		47		149		140
			Total expenses		262		255		762		689
Net income				$	46	$	16	$	198	$	167
Basic and diluted net income per limited partnership unit				$	3.54	$	1.21	$	14.87	$	12.25
Distributions per limited partnership unit:
	From net income – current quarter			$	3.54	$	1.21	$	14.87	$	12.25
	From net income – previous quarter				––		1.03		––		––
	Representing return of capital				6.79		7.88		5.68		7.88
		Total distributions per limited partnership unit		$	10.33	$	10.12	$	20.55	$	20.13
Weighted average number of limited partnership units outstanding during each period					13,067		13,412		13,182		13,464

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

4

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Statement of Partners’ Equity
For the nine months ended September 30, 2003
(in thousands)
(Unaudited)

	General			Limited
	Partners			Partners			Total
Balance at December 31, 2002	$	(187	)	$	4,927		$	4,740
Redemption of limited partnership units		––			(86	)		(86	)
Distributions		––			(271	)		(271	)
Net income		2			196			198
Balance at September 30, 2003	$	(185	)	$	4,766		$	4,581

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

5

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Statements of Cash Flows
(in thousands)
(Unaudited)

					Nine months ended
					September 30,
					2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	198		$	167
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				230			203
		Changes in certain assets and liabilities:
			Deferred costs			(54	)		(15	)
			Prepaid expenses and other assets			(2	)		(22	)
			Accounts payable and other liabilities			8			9
				Net cash provided by operating activities		380			342
CASH FLOWS FROM INVESTING ACTIVITIES:
	Additions to real estate					(360	)		(127	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Distributions to partners					(271	)		(271	)
	Redemption of limited partnership units					(86	)		(38	)
				Net cash used for financing activities		(357	)		(309	)
Net decrease in cash and cash equivalents						(337	)		(94	)
Cash and cash equivalents at beginning of period						712			748
Cash and cash equivalents at end of period					$	375		$	654

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

6

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2003
(Unaudited)

Note 1. ORGANIZATION

Rancon Income Fund I, a California Limited Partnership, (“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, 2003, 12,991 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, 2003 and December 31, 2002, and the related statements of income for the three and nine months ended September 30, 2003 and 2002, partners’ equity for the nine months ended September 30, 2003, and cash flows for the three and nine months ended September 30, 2003 and 2002.

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 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.

7

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2003
(Unaudited)

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 dissolution of the Partnership, whichever comes first. Effective January 1, 1998, GC ceased to have the 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 plus CPI annually ($79,000 and $77,000 as of September 30, 2003 and 2002, respectively); (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 the agreement, Glenborough will perform certain duties for the General Partner of the Rancon Partnerships. RFC agreed to cooperate with Glenborough, should Glenborough attempt with a vote of those Limited Partners owning not less than a majority (and in certain cases 100%) of the outstanding units to substitute itself as the general partner of the Rancon Partnerships. Glenborough is not an affiliate of RFC or the Partnership.

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 of America.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 January 2003, the FASB approved for issuance FASB Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities.” FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applies immediately to variable interest entities (VIEs) created after January 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. It was originally to be applied in the first fiscal year or interim period beginning after June 15, 2003, to VIEs in which an enterprise holds a variable interest that it acquired before February 1, 2003. In October 2003, the FASB deferred the June 15, 2003 date to the first fiscal year or interim period ending after December 15, 2003. FIN 46 may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year

8

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2003
(Unaudited)

restated. The disclosure requirements of FIN 46 are effective for all financial statements initially issued after January 31, 2003. The adoption of FIN 46 will not have a material impact on the financial statements of the Partnership.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003 and, otherwise, is effective at the beginning of the first interim period beginning after June 15, 2003. Certain provisions have been deferred indefinitely by the FASB. This standard did not have a material impact on the financial statements or results of operations of the Partnership.

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 the five to forty year estimated 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 when purchased to be cash equivalents.

Deferred Costs

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

Revenue

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.

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).

9

RANCON INCOME FUND I,
A CALIFORNIA LIMITED PARTNERSHIP

Notes to Financial Statements

September 30, 2003
(Unaudited)

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

Two tenants represented 42 percent of rental income for the nine months ended September 30, 2003. Three tenants represented 60 percent of rental income for the nine months ended September 30, 2002.

Reference to 2002 audited financial statements

These unaudited financial statements should be read in conjunction with the Notes to Financial Statements included in the December 31, 2002 audited financial statements on Form 10-K.

Note 3. INVESTEMENT IN REAL ESTATE

Rental properties consisted of the following at September 30, 2003 and December 31, 2002:

		2003			2002
Land		$	1,928,000		$	1,928,000
Buildings and improvements			3,858,000			3,662,000
Tenant improvements			1,096,000			932,000
			6,882,000			6,522,000
Less: accumulated depreciation			(2,646,000	)		(2,450,000	)
	Total	$	4,236,000		$	4,072,000

None of the Partnership’s properties were encumbered by debt as of September 30, 2003 and December 31, 2002.

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, 2003 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.

10

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

Results of Operations

Comparison of the three and nine months ended September 30, 2003 to the three and nine months ended September 30, 2002.

Revenue

Rental income increased $39,000, or 15%, and $107,000, or 13%, for the three and nine months ended September 30, 2003, compared to the three and nine months ended September 30, 2002, resulting from 92% occupancy in March 2003, and 100% occupancy in June 2003 at Bristol Medical Center. The occupancy rate decreased to 78% when the lease of a tenant, St. Jude Heritage Health, expired on August 31, 2003.

Occupancy rates at the Partnership’s rental properties as of September 30, 2003 and 2002 were as follows:

	2003			2002
Bristol Medical Center		78	%		86	%
Wakefield Building		100	%		100	%
Weighted average occupancy		88	%		93	%

The 8% decrease in occupancy from September 30, 2002 to September 30, 2003 at Bristol Medical Center was primarily due to the expiration of St. Jude Heritage Health’s lease. St. Jude Heritage Health, one of the tenants at Bristol Medical Center, vacated approximately 11,300 square feet of space in September 2002, and continued paying its monthly rent to August 31, 2003, when its lease term expired. A new tenant has leased 6,800 square feet of the vacant space and is expected to move in November 2003. An existing tenant has expanded 750 square feet into the vacant space as well, and will move in October 2003.This will result in an occupancy rate of 93%. Management, along with independent leasing brokers, is aggressively marketing the remaining space.

Expenses

Operating expenses decreased $9,000, or 7%, for the three months ended September 30, 2003, compared to the three months ended September 30, 2002, respectively, primarily due to a property tax refund resulting from a tax appeal for Bristol Medical Center. Operating expenses increased $37,000, or 11%, for the nine months ended September 30, 2003, compared to the nine months ended September 30, 2002, respectively, primarily due an increased occupancy rate during 2003 at Bristol Medical Center prior to the lease expiration of the anchor tenant, St. Jude Heritage Health, at the end of August 2003, and an increase in utility and janitorial costs, offset by a property tax refund resulting from a tax appeal for Bristol Medical Center.

Depreciation and amortization expense increased $11,000, or 15%, and $27,000, or 13%, for the three and nine months ended September 30, 2003, compared to the three and nine months ended September 30, 2002, respectively, primarily due to additions to investments in real estate.

General and administrative expenses increased $5,000, or 11%, and $9,000, or 6%, for the three and nine months ended September 30, 2003, compared to the three and nine months ended September 30, 2002, respectively, primarily due to an increase in postage costs in investor relation service expenses.

Liquidity and Capital Resources

The following discussion should be read in conjunction with the Partnership’s December 31, 2002 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 2002, 2001 and 2000, a total of 281, 273 and 722 Units were redeemed, respectively. During the nine months ended September 30, 2003, a total of 288 Units were redeemed at an average price of $300. As of September 30, 2003, there were 12,991 Units outstanding.

As of September 30, 2003, the Partnership had cash of $375,000. The remainder of the Partnership’s assets consists primarily of its real estate investments, which totaled approximately $4,236,000 at September 30, 2003.

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, 2003 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.

11

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. Another source of funds has been the interest earned on invested cash balances.

Management believes that the Partnership’s cash balance at September 30, 2003, 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, 2003, the Partnership’s cash provided by operating activities totaled $380,000.

The $54,000 increase in deferred costs at September 30, 2003, compared to December 31, 2002, was primarily due to lease commissions paid for new and renewal leases.

The $8,000 increase in accounts payable and other liabilities at September 30, 2003, compared to December 31, 2002, was primarily due to an increase in accruals for building operating expenses and property taxes, offset by a decrease in security deposits resulting from the lease expiration of St Jude Heritage Health.

Investing Activities

During the nine months ended September 30, 2003, the Partnership’s cash used for investing activities totaled $360,000 for building and tenant improvements at Bristol Medical Center.

Financing Activities

During the nine months ended September 30, 2003, the Partnership’s cash used for financing activities totaled $357,000, which consisted of $271,000 of distributions to the limited partners, and $86,000 paid to redeem 288 limited partnership units (“Units”).

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 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.

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.

New Accounting Pronouncements

In January 2003, the FASB approved for issuance FASB Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities.” FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applies immediately to variable interest entities (VIEs) created after January 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. It was originally to be applied in the first fiscal year or interim period beginning after June 15, 2003, to VIEs in which an enterprise holds a variable interest that it acquired before February 1, 2003. In October 2003, the FASB deferred the June 15, 2003 date to the first fiscal year or interim period ending after December 15, 2003. FIN 46 may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. The disclosure requirements of FIN 46 are effective for all financial statements initially issued after January 31, 2003. The adoption of FIN 46 will not have a material impact on the financial statements of the Partnership.

12

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003 and, otherwise, is effective at the beginning of the first interim period beginning after June 15, 2003. Certain provisions have been deferred indefinitely by the FASB. This standard did not have a material impact on the financial statements or results of operations of the Partnership.

Item 3. Qualitative and Quantitative Information About Market Risk

As of September 30, 2003, the Partnership had cash equivalents of $200,000 invested in interest-bearing certificates of deposit. These investments are subject to interest rate risk due to changes in interest rates upon maturity. The Partnership does not own any derivative instruments. 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.

13

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Certain claims and lawsuits have arisen against the Partnership in its normal course of business. The Partnership believes that such claims and lawsuits will not have a material adverse effect on the Partnership’s financial position, cash flow or results of operations.

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

None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

10.3	Agreement for Acquisition of Management Interests, dated December 20, 1994.
31.1	Section 302 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.
32.1	Section 906 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.

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

None.

14

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 14, 2003	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.

15

EXHIBIT INDEX

Exhibit No.	Description
10.3	Agreement for Acquisition of Management Interests, dated December 20, 1994.
31.1	Section 302 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.
32.1	Section 906 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.

EX-10.3

                                                                    EXHIBIT 10.3

                                    AGREEMENT

         This Agreement is made and entered into as of the 20th day of December,
1994 by and among GLENBOROUGH INLAND REALTY CORPORATION, a California
corporation ("Glenborough"), RANCON FINANCIAL CORPORATION, a California
corporation ("Rancon"), DANIEL LEE STEPHENSON individually ("DLS") and as the
trustee of the Daniel Lee Stephenson Family Trust dated December 10, 1987 ("DLS
Trust"), those entities described on Exhibit A hereto under the caption "General
Partners" and any affiliate of such general partners who may later be admitted
to the Partnerships as additional General Partners (collectively the "General
Partners") who constitute all of the General Partners of the Limited
Partnerships named under the caption "Partnerships" in Exhibit A hereto (the
"Limited Partnerships") and hold the partnership interests indicated next to
each General Partner's name on Exhibit A hereto and the Limited Partnerships.
The Limited Partnerships are herein sometimes also collectively called the
"Partnerships." Glenborough, Rancon, DLS, the General Partners and the
Partnerships are herein sometimes collectively referred to as the "Parties."

         WHEREAS, Rancon and DLS have been managing general partners of the
Partnerships and have determined that Rancon can no longer manage the
Partnerships without incurring substantial losses; and

         WHEREAS, Glenborough has the expertise and capacity to efficiently and
economically manage the Partnerships and has agreed

                                       1



to do so for fixed fees which are no greater than fees previously charged to the
Partnerships by the General Partners; and

         WHEREAS, the consideration received by Rancon, DLS and the DLS Trust
pursuant to this Agreement shall be used to defray debt, taxes, space and
equipment lease payments and other obligations of Rancon and DLS; and

         WHEREAS, the parties hereto intend by this Agreement (a) to provide the
terms and conditions whereby Glenborough will provide asset management services
for the General Partners and provide for the Partnerships (i) all partnership
administrative services which the General Partners and their affiliates are
obligated to perform for or render to the Partnerships, subject to certain
controls by the General Partners, (ii) real estate brokerage services and/or
acquisition or disposition consulting services and (iii) property management
services for the properties owned, operated or managed, in whole or in part, by
the Partnerships and (b) to provide a basis whereby Glenborough shall receive
all general partner Partnership distributions to the General Partners and may be
substituted as the general partner of the Limited Partnerships; and

         WHEREAS, for the purposes of this Agreement, "Ownership Interests"
shall include, without limitation, all types of general partnership equity
interests, whether held directly or indirectly, through a partnership,
corporation or other entity, or through a series or combination thereof.

                                       2



         NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties hereto agree as follows:

         1.       General Partner Consulting Agreement. Glenborough agrees,
during reasonable business hours, to consult with the General Partners
concerning the management of the Partnerships and the properties owned by the
Partnerships and such changes as should be made with respect thereto. In
addition, Glenborough shall render the specific services provided in the
Management Agreement referenced in Section 4 hereof.

         2.       Consideration Payable by Glenborough.

                  a.       Consideration at Closing. As consideration for the
execution of this Agreement and the performance hereunder by Rancon, DLS and the
General Partners, and in consideration of the rights which Glenborough will
acquire pursuant to the Management Agreement, Glenborough shall deliver to the
General Partners the following consideration, all to be delivered at the Closing
except the cash payment described in section 2.a.iv shall be paid as provided in
Section 2.b below:

                           i.       Cash payable directly to Rancon employees
                                    Judy Henrich-$119,700; Roy
                                    Storrasli-$131,250; and Robert
                                    Kirkpatrick-$562,300 as consideration for
                                    their respective covenants not to compete
                                    with Glenborough, in total amount of .
                                    .$813,250.00

                           ii.      Assumption of the Debt of the Daniel Lee
                                    Stephenson Family Trust dated

                                       3



                                    December 10, 1987 to Mitsui Bank (with
                                    interest paid current to Closing) . .
                                    1,715,000.00

                           iii.     Cash payable to the DLS Trust 1,000,000.00

                           iv.      Cash payable to DLS Trust as provided in
                                    Section 2.b. below . . . . . . . . . .
                                    1,900,000.00

                           v.       Note payable to the DLS Trust (term - 24
                                    months; equal monthly payments without
                                    interest, commencing February 1, 1995) . . .
                                    . . . . . . . 1,566,000.00
                                    TOTAL . .. . . . $6,994,250.100

                  b.       Payment of Section 2.a.,iv Cash. Under separate
agreement, Glenborough has agreed to purchase the assets of Rancon Current Yield
12+ L.P. ("Fund 12") on or before September 30, 1995 for the sum of ONE MILLION
EIGHT HUNDRED THIRTY THOUSAND DOLLARS ($1,830,000). The $1,900,000 cash portion
of the consideration provided for in Section 2.a.iv, above, ,shall be paid upon
closing of the transaction described in the preceding sentence. Should that
transaction not close on or before September 30, 1995,Glenborough shall pay said
$1,900,000 cash to the DLS Trust, on October 2, 1995 and shall not thereafter be
obligated to purchase the Fund 12 assets pursuant to the separate agreement
providing for such purchase.

                  c.       Adjustments to Note. Should the Management Agreement
provided for herein be terminated for cause at any time

                                       4



prior to payment in full of sums due under the Note provided for in Section
2.a.v, the Note shall then be canceled and no further performance or payment
thereunder by Glenborough shall thereafter be required.

         3.       Consideration Payable by General Partners.

                  a.       The General Partners are entitled to receive the
distributions described on Exhibit B hereto ("Distributions") as a consequence
of their general partner interests in the Partnerships. In addition to the
consideration provided for in the Management Agreement, the General Partners
agree to pay to Glenborough an amount equal to the total amount which all
general partners, including but not limited to the General Partners, shall
receive at any time as Distributions to general partners from the Partnerships.
The parties acknowledge that certain General Partners' interests have been
assigned to certain employees of Rancon prior to the date of this Agreement, and
the General Partners hereby agree that all general partner interests in all of
the Partnerships shall be subject to the General Partners' control and all
rights therein assigned or transferred as provided by the terms of this
Agreement. When at any time and as any General Partner receives any of such
Distributions, such General Partner shall forthwith pay to Glenborough an amount
equal to the amount received by such General Partner as a Distribution within
ten (10) days after the General Partner's receipt thereof. Such amount paid to
Glenborough

                                       5



is referred to as the "Distribution Fee." It is the intention of the parties
that Exhibit B hereto and the reference to "Distribution" or "Distributions"
herein is intended to include all distributions to which the General Partners
are entitled on account of their general partner interests in the Partnerships,
whether or not the same may be listed in Exhibit B. Should the Partnership fail
to deliver to General Partner any Distribution, or part thereof, to which
General Partner is entitled within thirty (30) days after the Distribution is
due and payable, General Partner agrees to take all necessary actions, including
without limitation filing of legal action, to obtain the' Distribution as soon
as reasonably possible and, if General Partner fails to take such action or to
prosecute such action in a timely manner, as determined in Glenborough's sole
discretion, Glenborough shall have the right to receive from General Partner and
General Partner shall deliver within seven (7) days after written request (given
by notice as provided in Section 24) an effective assignment of General
Partner's claim for such Distribution including the right to bring legal action
therefor.

                  b.       Rancon shall assign to Glenborough all of its right,
title and interest in the organizational; and transitional ("O&T") fee
receivable from Rancon Pacific Realty, L.P. by delivery to Glenborough at the
Closing of Rancon's executed assignment in the form attached hereto, marked
Exhibit "C."

                                       6



                  c.       Rancon and DLS shall deliver to Glenborough their
irrevocable and unconditional proxy, effective for a term of ten (10) years from
and after the Closing, granting to Glenborough the sole right to vote and
represent all limited partnership interests held by Rancon 'or DLS in any
Partnership in the form attached hereto marked Exhibit "D."

                  d.       DLS agrees not to compete with Glenborough in any
manner which affects the General Partner's interests or the Partnerships which
are the subject of this Agreement.

         4.       Partnership, Management, Administration and Consulting
Services. Each General Partner, on behalf of each Partnership for which it
serves as general partner, and not on behalf of any other Partnership, does
hereby agree at the Closing to enter into the Management, Administration and
Consulting Agreement in the form of Exhibit F hereto with Glenborough (the
"Management Agreement"), each such Management Agreement shall, be effective as
of the date of the Closing and provide for commencement of Glenborough's
services thereunder on the Closing Date.

         5.       Substitution of Glenborough as General Partner. The Parties
intend that Glenborough, or an affiliate of Glenborough, shall have the
opportunity, if and when Glenborough so requests and at its sole option and
discretion, to substitute as the general partner of each of the Limited
Partnerships and to substitute as general partner of each of the subsidiary
partnerships of the Limited Partnerships (the "Substitution") and thereby become
the

                                       7



sole general partner of each Limited Partnership in which such Substitution is
made. The Substitution shall, if approved, be made by transfer to Glenborough of
a one percent (1%) General Partner interest in the Partnership, which interest
shall be free and clear of any liability or obligation, (contingent or
otherwise), lien or encumbrance, including without limitation any and all
deficit capital account payment obligations. Such one percent (1%) interest may
be: (a) limited partnership Unit(s) converted to a 1% general partner interest
in the Partnership; (b) pursuant to an amendment, approved by the limited
partners, to the Limited Partnership Agreement involved reallocating and
amending the rights, preferences and privileges of the 1% general partner
interest, provided that interest is assigned and transferred to Glenborough free
and clear of all obligations as described above; or (c) all or a portion of the
general partner interest of the assigning General Partners constituting a 1%
general partner interest in the Partnership, provided such existing General
Partners' interests are assigned and transferred to Glenborough free and clear
of all obligations as described above. The one percent (1%) general partner
interest shall be assigned and transferred to Glenborough for no consideration
in addition to that provided for in this Agreement.

         The General Partners will cooperate fully with Glenborough with respect
to any Substitution that Glenborough may propose; provided Glenborough and any
such affiliate which is proposed for

                                       8



Substitution (a) are not in default under this Agreement or the Management
Agreement and the duties and responsibilities under the Management Agreement
have been performed in a commercially reasonable, competent and professional
manner and (b) the proposed substitute general partner is of good financial
standing and has the net worth requisite to assure that the Partnership will be
treated as a partnership under the applicable provisions of the Internal Revenue
Code. The Parties recognize that any Substitution will require the solicitation
and receipt of the consent of the limited partners in each of the Limited
Partnerships affected and that the consent with respect to all of the
Partnerships may not be obtained. If such consent is not obtained from a
Partnership, the provisions of this Agreement for payment of the Distributions
to Glenborough and any other post-Closing performance by the parties and the
effectiveness of the Management Agreement concerning the Partnership for which
the consent was not obtained shall not be affected, except that if the
Substitution is not effected for a Partnership by that date ten (10) years after
the closing Date, the Management Agreement may terminate as provided for below
in this Section 5.

         Upon receipt of the consent, the General Partners of the Partnership
from which the consent is obtain shall execute and deliver, to Glenborough a
written assignment of the one percent (1%) General Partners interest in the
Partnership described above, which shall be the sole general partner interest in
that

                                       9



Partnership as of the date of such assignment. The balance of the General
Partners' interest as a general partner in the Partnership, if any, shall be
converted to a limited partner interest effective on or before the date of such
assignment, or terminated in any other manner which results in the interest
assigned to Glenborough being the only general partner interest in the
Partnership as of and after the assignment. Should any General Partner's
interest be converted to a limited partner interest in the Partnership as
provided for in this Section 5, Glenborough shall be given a proxy in the form
of Exhibit "D" hereto, unconditional and irrevocable for a period of ten (10)
years, granting Glenborough the sole right to vote and represent the Units or
other converted limited partner interest. The parties recognize that, in
connection with any Substitution, Glenborough will require as a condition
thereto consent of the partners affected thereby to the amendment of the
agreements establishing the Partnership, affected thereby to change the
compensation of the general partner to substantially conform to the provisions
of the Management Agreement. The reasonable costs and expenses of each
solicitation of (Partnership consent to a Substitution shall be paid by the
Partnership. So long as there has not been a Substitution of general partner in
a Partnership, without the consent of the General Partners and Glenborough no
change will be made in the Distributions from that Partnership. The General
Partners shall be and remain responsible for any and all obligations, contingent
or otherwise, which they may have to

                                       10



the Partnership and/or to any third parties prior to the Substitution, including
without limitation any and all deficit capital account payment obligations, and
it is understood that Glenborough is not obligated to assume any liability or
obligation with respect thereto except as may otherwise be specifically provided
by the terms of this Agreement and the Management Agreement as a consequence of
the performance by Glenborough of the services assumed by it hereunder and under
the Management Agreement.

         The parties hereto intend that all Substitutions will occur on or
before January 2, 2005, each to occur within a reasonable time, not more than 60
days, after the respective General Partner receives written request from
Glenborough to seek consent of the subject Partnership. The January 2, 2005 date
for completion of the substitution may be extended upon the request of
Glenborough with the consent of Rancon, which consent shall not be unreasonably
withheld. If any Substitution does not occur within ten (10) years after the
Closing Date, the Management Agreement shall terminate as to the Partnership for
which the substitution was not obtained unless the Partnership Agreement for the
involved Partnership allows the General Partner to resign without dissolving the
Partnership, in which case the General Partner shall then resign and a new
General Partner be appointed as provided for in the subject Partnership
Agreement, and in such case the Management Agreement shall not terminate as to
that Partnership.

                                       11



         The General Partners each agree that, so long as the Management
Agreement is in effect as to any Partnership for which they are General Partner,
they will not take any action which would cause the Partnership to dissolve,
including resigning as General Partner if such act would cause dissolution.

         Nothing in this Agreement shall be interpreted as requiring Glenborough
to substitute as a General Partner in any Partnership, which it may do, or
request be done, if and when it so elects in its sole discretion.

         6.       Power of Attorney and Proxy.

                  a.       Grant of Power of Attorney and Proxy. To facilitate
the exercise of the powers granted Glenborough under this Agreement and under
the management Agreement, including the planned Substitution, each General
Partner hereby appoints and constitutes Glenborough as attorney-in-fact and
proxy holder (referred to herein in such capacities as the "Attorney-in-Fact"),
with power and authority to act in the best judgment of its officers, in the
name and on behalf of such General Partner (except as otherwise provided by law)
in the negotiation, execution, acknowledgement, verification, delivery,
recording and filing of documents to accomplish with respect to the Partnerships
hereto only the purposes of this Agreement and the Management Agreements, such
actions to include without limitation (i) the execution of any and all documents
including without limitation new partnership agreements, amendments of existing
partnership agreements, certificates of partnership,

                                       12



statements of partnership or other documents required to be filed or recorded,
consents, resolutions, affidavits, applications or proxies, and all contracts
and leases, authorized or otherwise permitted by the terms of this Agreement and
the Management Agreement, (ii) the attendance at meetings and casting of any
ballots or votes necessary to accomplish such purposes, (iii) the further
cooperation as necessary or desirable in the sole discretion of Glenborough to
obtain the consents of lenders or other parties including spouses, and (iv)
recommending the accomplishment of the purposes and mechanics of this Agreement
to the limited partners of the Limited Partnerships, to the California
Department of Corporations and other appropriate regulatory bodies and to such
other persons as may be deemed necessary or appropriate by Glenborough. Within
ten (10) business days of executing a document pursuant to the powers granted
under this Paragraph 6, (other than a contract or lease executed pursuant to the
Management Agreement which, by the terms thereof, does not require the prior
approval of a General Partner) Glenborough shall provide a copy of such document
to each General Partner holding an ownership Interest in the Partnership to
which the document relates. Notwithstanding the foregoing, no power or authority
is granted hereunder with respect to any of the matters specifically referenced
above that require the written consent or approval of a General Partner under
the provisions of the Management Agreement unless and until such consent or
approval shall have been given.

                                       13



         Where required, the General Partners will execute a power of attorney
in recordable form to facilitate the exercise by Glenborough of the powers
granted hereunder. Any power of attorney or proxy given pursuant to the terms of
this Section 6.a shall be consistent with the terms of the Partnership Agreement
of the Partnership involved.

                  b.       Incidents of Power of Attorney and Proxy. The Power
of Attorney and Proxy hereby granted by each General Partner to the
Attorney-in-Fact:

                           i.       Is a proxy and special power of attorney
coupled with an interest, is irrevocable and shall survive both the death of the
granting Party or any assignment by a Party of its ownership Interests;

                           ii.      May be exercised by the Attorney-in--Fact in
such form and manner as the Attorney-in-Fact reasonably deems appropriate
including without limitation by signature or facsimile signature of the
Attorney-in-Fact acting for any or all the General Partners; and

                           iii.     Includes the authority to take prudent
further action which shall be reasonably necessary or convenient in connection
with any of the powers granted to the Attorney-in-Fact pursuant to this
Paragraph, hereby giving the Attorney-in-Fact full power and authority to do and
perform each and every act necessary or appropriate, in the reasonable
discretion of the Attorney-in Fact, to be done to accomplish the purpose of this
Agreement as

                                       14



fully as a General Partner might or could do if personally present, and hereby
ratifying and confirming all that the Attorney-in-Fact shall lawfully do or
cause to be done by virtue hereof.

                           iv.      Notwithstanding any statement herein to the
contrary, may not be exercised during any period of time that Glenborough shall
be in default under any provision of this Agreement or the Management Agreement
and a General Partner shall have given Glenborough notice of such default and
such default shall remain uncured.

         7.       Indemnification.

                  a.       Indemnification by Glenborough. Glenborough hereby
agrees to save and hold DLS, Rancon, and those General Partners executing this
Agreement, and their respective officers, directors, shareholders and general
partners including, without limitation, Robert H.S. Kirkpatrick, Judy R.
Henrich, John M. Shaw, Leroy o. Storrasli, Robert T. Pace, Phil Sroccolo and
Robert Schmitt (collectively, "Related Parties") harmless and defend and
indemnify them from and against any claim which may be made against any of them
(including without limitation reasonable attorneys' fees and other costs and
expenses incident to any suit, action or proceeding) arising out of or resulting
from (i) the operation from and after the Effective Date of` each Partnership,
whether or not Glenborough is substituted as a general partner pursuant to
Paragraph 3 of this Agreement, to the extent caused by a grossly negligent act
or omission of Glenborough, expressly excluding,

                                       15



however, liability arising from acts or omissions of Rancon, DLS or the General
Partners, (ii) any wrongful use (that is, use for a purpose unrelated to the
Substitution of Glenborough as a general partner, the operation, or any other
activity, of one of the Partnerships) of the powers granted in Section 6 hereof.
Glenborough shall have the right to decide whether any suit, action or
proceeding is settled, tried or appealed and to select and supervise counsel in
connection with any such suit, action or proceeding provided it shall have given
written notice to the indemnitees and such indemnitees shall not have reasonably
objected to the proposed action within five (5) days after receipt of such
notice or Glenborough shall have received the consent of the indemnitees to the
proposed action, which consent will not be unreasonably withheld.

         Notwithstanding the foregoing or any other provision of this Agreement,
no representation, warranty, undertaking or indemnity is provided under this
Agreement by Glenborough to Rancon, DLS or any General Partner or their related
parties for matters occurring or arising from acts or failures to act prior to
the Effective Date and neither Glenborough nor any of its affiliates shall have
any liability to Rancon, DLS or any General Partner or their related parties
hereunder as a result of any fluctuation or reduction in the market or cash
value of any ownership Interest for any reason whatsoever other than gross
negligence or intentional misconduct committed by Glenborough or its affiliates.

                                       16



         8.       Indemnification by General Partners and Partnerships.
Rancon, DLS, DLS Trust, the Partnerships and each General Partner for itself
alone, and not on behalf of any other General Partner, each hereby agrees (each
an "Indemnitor" and collectively the "Indemnitors") to save and hold
Glenborough, its officers, directors, shareholders, employees and agents
("Indemnitees") harmless and defend and indemnify the Indemnitees from and
against any liability (including without limitation reasonable attorneys' fees
and other costs and expenses incident to any suit, action or proceeding) arising
out of or resulting from (a) any liability or obligation, contingent or
otherwise, including without limitation any deficit capital account payment
obligation, arising from the Partnership of which that Indemnitor was a partner,
or is in any way related by contract arising prior to the Effective Date; (b)
that Indemnitor's gross negligence or omission in regard to any Partnership
occurring or arising from acts or failures to act prior to the Effective Date;
(c) except that DIS shall not be an Indemnitor as to this Section 8. (c), the
presence or suspected presence in, on, or about any real property owned by any
Partnership or which any Partnership may have an interest in of any toxic or
hazardous substance, material or waste (as defined in any applicable Federal,
State or local law or regulation), including, but not being limited to, the
costs of investigation, containment, removal and/or clean-up, whether or not,
the presence, or alleged presence, of such toxic or hazardous substance,
material or waste

                                       17



constitutes a breach of any representation or warranty contained herein
provided, however, the Indemnitors shall have liability under this subparagraph
(c) only with respect to any incident involving toxic or hazardous substances
which occurred during the ownership of the property in question by a Partnership
at a time when such Indemnitor had an interest therein or which such Indemnitor
otherwise became aware of prior to the Closing and shall not apply to any
occurrence on or after the Effective Date, or which occurred prior to the time
the Indemnitor had an interest in the Partnership which owned the property in
question and such Indemnitor is not, as of the Closing, aware thereof, or (d)
any breach of this Agreement or the Management Agreement by such Indemnitor,
including, without limitation, the falsity of any representation or warranty
made herein by such Indemnitor. The Indemnitors shall have the right to decide
whether any suit, action or proceeding is settled, tried or appealed and to
select and supervise counsel in connection with any such suit, action or
proceeding provided they shall have given written notice to the Indemnitees and
such indemnitees shall not have reasonably objected to the proposed action
within five (5) days after receipt of such notice or the Indemnitors shall have
received the consent of the Indemnitees to the proposed action, which consent
will not be unreasonably withheld.

                                       18



         9.       Closing.

                  a.       The "Closing" provided for herein shall occur at the
offices of Glenborough Realty corporation, 400 South El Camino Real, Suite 1100,
San Mateo, CA 94402-1708 on January 3, 1995 at 11:00 a.m., (sometimes referred
to as the "Closing Date") or such other time or place that the parties hereto
may otherwise mutually agree, provided that, subject to completion of the
Closing, the Effective Date of this Agreement shall be January 1, 1995 and
performance by the parties under the management Agreement shall commence at
12:01 a.m. January 1, 1995.

                  b.       It shall be a condition precedent to the Closing that
all parties hereto have agreed to a Transition Agreement providing for the
payment of expenses of the respective parties thereto incurred during
transition, including without limitation provisions for the use of personnel and
assets of each party and the tasks to be completed by each party during a
transition period after the Closing.

         10.      Deliveries by Glenborough. At the Closing, Glenborough shall
deliver to the General Partners:

                  a.       Cash consideration in the sum of ONE MILLION EIGHT
HUNDRED THIRTEEN THOUSAND TWO HUNDRED FIFTY DOLLARS ($1,813,250) of which eight
hundred thirteen thousand two hundred fifty dollars ($813,250) shall be paid
directly to Rancon employees and one million dollars ($1,000,000) shall be paid
to the DLS Trust;

                                       19



                  b.       The original executed note to DLS Trust in the
original principal amount of ONE MILLION FIVE HUNDRED SIXTY-SIX THOUSAND DOLLARS
($1,566,000).

                  c.       An executed Assumption Agreement by which Glenborough
assumes the Mitsui Bank debt described in Section 2.a. from the DLS Trust:

                  d.       An executed copy of the Management Agreement; and

                  e.       An executed counterpart original of the Proxy
Agreement.

                  f.       Any other document necessary to complete performance
of the Closing obligations of Glenborough.

         11.      Deliveries by General Partners. At the Closing, Rancon, DIS,
the General Partners and the Partnerships shall deliver to Glenborough the
following:

                  a.       Certified resolutions of each General Partner
authorizing this Agreement and the transactions contemplated hereby;

                  b.       An executed copy of the Management Agreement signed
by all the General Partners and the Partnerships;

                  c.       An executed assignment to Glenborough of the Rancon
Pacific "O&T" fee payable to Rancon in the form attached hereto, marked Exhibit
"C"; and

                  d.       An executed counterparts original of the Proxy
Agreement.

                                       20



                  e.       Any other document necessary to complete performance
of the Closing obligations of Rancon, DLS and the General Partners.

         12.      Scope of Agreement. With respect to a given General Partner,
this Agreement is applicable solely to those Limited Partnerships in which such
General Partner has an Ownership Interest. This Agreement shall not under any
circumstances be construed as creating a partnership or any other relationship
between or among any of the Parties where no such relationship otherwise exists.

         13.      Effective Period. This Agreement and the power of attorney and
proxy granted pursuant to section 6 hereof shall be effective as of the
Effective Date and shall remain in effect, except as otherwise provided herein
or in the Management Agreement, as to each Partnership until the winding up,
termination or dissolution of such Partnership has been completed.

         14.      Representations and Warranties of General Partners. Rancon,
DLS and each General Partner, for itself alone and not on behalf of any other
General Partner, and each Partnership hereby represents and warrants to and
covenants with Glenborough as follows:

                  a.       Except as otherwise disclosed in Schedule 14.a
attached hereto, each is duly authorized' to execute this Agreement and the
Management Agreement in the opacities indicated: each General Partner owns the
General Partner's Ownership Interest held by it in each Partnership and its
right to the Distribution free

                                       21



and clear of all liens, encumbrances and adverse claims, has not encumbered,
assigned, transferred or otherwise impaired such General Partner's Ownership
Interest or right to Distributions from the Partnerships and is not in default
under any provision of the agreements establishing the Partnerships in which it
serves as General Partner;

                  b.       The execution and performance of this Agreement will
not materially violate any order, rule, judgment or decree to which such General
Partner or any Partnership is subject or breach any contract, agreement or
commitment by which he or it, or any Partnership, is bound;

                  c.       Reserved (intentionally deleted).

                  d.       Each General Partner is an individual or a
partnership, Rancon is a corporation and each of the Partnerships is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of its organization and is duly qualified to do business in the
State of California and is duly qualified in each other jurisdiction where the
failure to qualify would have a material adverse effect upon its business or
financial condition; and

                  e.       Each of the Partnerships in which each General
Partner has an Ownership Interest:

                           i.       Is duly organized, validly existing and in
good standing under the laws of the State of its organization, and is duly
qualified as a foreign partnership in each jurisdiction

                                       22



where the failure to so qualify would have a material adverse effect upon its
business or financial condition.

                           ii.      Except as otherwise disclosed in Schedule
14.e.ii and schedule 14.e.ix attached hereto, to the best of Rancon's, the
General Partners' and the Partnerships' knowledge, after due and diligent
inquiry, is in full compliance in all material respects with all Federal, State
and local laws, and regulations applicable to the conduct of its business,
including, but not being limited to, all reporting requirements under all
Federal and State securities laws, and all Federal, State and local laws and
regulations governing or in any way relating to the generation, handling,
manufacturing, treatment, storage, use, transportation, spillage, leakage,
dumping, discharge or disposal (whether accidental or intentional) of any toxic
or hazardous substances, materials or wastes, except to the extent that
violation of any such laws and regulations, individually or in the aggregate,
would not materially and adversely affect the financial condition, business
prospects, properties, assets or results of operations of such General Partner
and Partnership. Except as otherwise disclosed in Schedule 14.e.ii attached
hereto, neither Rancon, any Partnership, nor any General Partner, is aware of or
has received notice of any violation of any such law or regulation.

                           iii.     Except as otherwise disclosed in Schedule
14.e.ix attached hereto, there neither is, nor has been, any generation,
handling, manufacturing, treatment, storage, use,

                                       23



transportation, spillage, leaking, dumping, discharge or disposal (whether
accidental or intentional) of any toxic or hazardous substance, material or
waste on, over or in any of the parcels of real property which are described in
Exhibit I, hereto.

                           iv.      Except as otherwise disclosed in Schedule
14.e.iv attached hereto, is not a party to any pending, or to Rancon's, DLS's,
any General Partner's or any Partnership's actual knowledge, after reasonable
inquiry, any threatened litigation, including, but not being limited to, any
litigation arising out of the use, operation or ownership of any property in
which any such Partnership may have an interest that might materially affect the
use and operation of any such property, or any portion thereof, for its intended
purpose or might detrimentally affect the value thereof or result in a material
and adverse change in the business or financial condition of such Partnership.

                           v.       Except as disclosed in Schedule 14.e.v
attached hereto, is not in default with respect to the payment of any obligation
for money borrowed or any obligation which is secured by any property owned or
occupied by such Partnership or in which such Partnership has an interest,
including without limitation delinquent taxes and assessments.

                           vi.      Except as disclosed in Schedule 14.e.vi
attached hereto, save and except for leases entered into in the ordinary course
of business covering all or a portion of the property owned by such Partnership,
each such Partnership is not a

                                       24



party to any material contract or other commitment terminable on more than
thirty (30) days' notice, including, but not being limited to, any contract for
real estate brokerage services which provides for services with respect to the
sale or lease of any property, or any portion thereof, owned or occupied by such
Partnership, or in which such Partnership has an interest.

                           vii.     Except as disclosed in Schedule 14.e-vii
attached hereto, is not a party to any obligation for money borrowed which is
subject to recourse liability to the general assets of such Partnership or of
such General Partner.

                           viii.    Is not a party to or subject to any
financing or refinancing which is in material violation of any provision of the
agreements establishing such Partnership or any applicable rule of or
restriction imposed by the California Commissioner of Corporations.

                           ix.      Except as otherwise disclosed in Schedule
14.e.ix attached hereto, has no material liability, fixed or contingent, whether
recourse or non-recourse, including without limitation unpaid property taxes,
except for the liabilities set forth on or otherwise disclosed in the financial
statements of the Partnerships described on Exhibit H hereto, true and complete
copies of which have been delivered to Glenborough, or incurred in the ordinary
course of business after the date of the most recent balance sheet included on
such financial statements and except to the extent that any such liability,
individually or in the

                                       25



aggregate, would not materially and adversely affect the financial condition,
business, properties, assets or results of operations of such Partnership.

                           x.       Except as otherwise disclosed in Schedule
14.e.x, is not in material default under any lease to which it is a party and is
not a party to any lease covering more than Ten Thousand (10,000) square feet of
space wherein any party thereto is in default, except to the extent any such
default, individually or in the aggregate, would not materially and adversely
affect the financial condition, business, properties, assets, or results of
operations of such Partnership.

                           xi.      Except as otherwise expressly disclosed in
Schedule 14.e.xi attached hereto, is not a debtor in any proceeding under the
Bankruptcy Code or an assignee under an assignment for the benefit of creditors.

                           xii.     Is in substantial compliance with all
material covenants, conditions, restrictions and other agreements applicable to
any property owned by such Partnership, or in which such Partnership has an
interest, including, but not being limited to, the provisions of any applicable
association which holds rights in any common areas which form a part of any such
property except to the extent such failure to comply, individually or in the
aggregate, would not materially and adversely affect the financial condition,
business, properties, assets ar results of operations of such General Partner.

                                       26



                           xiii.    Except as expressly disclosed in Schedule
14.e.xiii attached hereto, to Rancon's, DLS's, each General Partner's and each
Partnerships' current, actual knowledge, without further inquiry, there is no
existing, proposed or contemplated plan, study or effort of any governmental
agency or authority which, in any way, would materially affect the use of any
property owned by such Partnership, or in which such Partnership may have an
interest, or any portion thereof, for its presently intended use.

                           xiv.     Owns the assets described on Exhibit I
hereto and, with respect to interests in real property (based solely upon such
title insurance as such Partnership may hold with respect thereto), such
Partnership holds marketable fee title thereto, and with respect to all personal
property and intangible assets, holds title free and clear of all liens,
encumbrances and adverse claims, except as otherwise disclosed in schedule
14.e.xiv attached hereto. All taxes assessed with respect to any interest in
real property owned by such Partnership are not delinquent as to payment.

                           xv.      That it or he has, disclosed to Glenborough
all material facts known to him or it affecting the value, legal and operational
condition of the Partnerships, the General Partner Distributions, the
Partnership and General Partner obligations, and the financial, legal and
physical condition of the Partnership investment assets known to him or it. For
purposes of this Section 14.e.xv, "material facts" shall be defined as those
which result in

                                       27



an effect on the Partnership, Distributions or assets in an amount or value of
more than $15,000.

         15.      Representations and Warranties of Glenborough. Glenborough
hereby represents and warrants as follows:

                  a.       Glenborough is a corporation duly organized, validly
existing and in good standing under the laws of the state of California and is
duly qualified in such other jurisdictions where the failure to so qualify would
have a material adverse effect upon its business or financial condition.

                  b.       Glenborough is duly authorized to execute this
Agreement. The execution and performance of this Agreement by Glenborough will
not violate any order, rule, judgment or decree to which Glenborough is subject
or breach any contract, agreement or commitment by which Glenborough is bound.

                  c.       The execution and delivery of this agreement and the
Management Agreement and the performance by Glenborough of its obligations
hereunder and thereunder will not conflict with or result in the breach or
violation of or constitute a default or an event of default under any law, rule
or regulation, or any judgment or order of any court or any of the terms or
provisions of the Articles of Incorporation or Bylaws or of any agreement or
contract to which Glenborough is a party or to which Glenborough is subject.

                  d.       Glenborough is not a party to any pending litigation
or regulatory action which would affect its ability to carry out its obligations
under this Agreement and the Management Agreement

                                       28



nor, to the best of the knowledge of Glenborough, is any such action or
proceeding currently threatened.

                  e.       Glenborough is in compliance with all applicable laws
and regulations applicable to the conduct of its business.

         16.      Entire agreement. This Agreement, the Management Agreement
contain the entire agreement of the Parties with respect to the transactions
contemplated hereby and shall not be modified or amended except by an instrument
signed by or on behalf of the Parties.

         17.      General Partners' Expenses. The expenses of the General
Partners prior to Substitution which are reimbursable under the Partnership
Agreements of the Partnerships, shall be reimbursed to the General Partner as
provided for in such Partnership Agreement.

         18.      Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

         19.      Governing-Law. This Agreement shall be governed by and
enforced in accordance with the laws of the State of California.

         20.      Attorneys' Fees. In any dispute between or among the Parties
relating to or arising out of the interpretation or breach of this Agreement,
the prevailing party or parties shall be entitled to recover from the other
party or parties all reasonable expenses including without limitation attorneys'
fees and court costs.

                                       29



         21.      Severability. If one or more of the provisions contained in
this Agreement shall, for-any reason, be held unenforceable in any respect, its
unenforceability shall not affect any other provisions, and the Agreement shall
be construed as if the unenforceable provision had not been included.

         22.      Other Acts. Glenborough and each General Partner covenants on
behalf of itself and its successors, heirs and assigns to execute, with
acknowledgement, verification or affidavit if required, any and all documents
and writings and to perform any and all other acts that may be deemed by any
such General Partner or Glenborough necessary or expedient in connection with
the creation of this Agreement (including the Management Agreement), the
achievement of its purposes or the consummation of any matter covered hereby.

         23.      Successors and Assigns. Glenborough shall have the right to
assign its rights and obligations under this Agreement and under the Management
Agreement to an affiliate, as hereinafter is defined in Section 150 of the
General Corporation Law of the State of California subject to the receipt of the
consent of the General Partner or the General Partners who have an interest in
the Partnerships which would be affected thereby, which consent will not be
unreasonably withheld. Any assignment by Glenborough to any other person of any
of its rights and obligations shall be subject to the consent of the General
Partner or General Partners who have interests in the Partnership affected
thereby, which consent may be

                                       30



withheld in the sole and absolute discretion of such General Partners. Subject
to the foregoing, the terms and conditions of this Agreement shall be binding
upon and inure to the benefit of the successors, heirs and assigns of the
respective Parties.

         24.      Guaranty. By his signature hereto, Guarantor hereby guarantees
the full, faithful and prompt payment and performance by Glenborough of all
obligations of Glenborough under this Agreement.

         25.      Notices. Any notices required or permitted to be given
hereunder shall be given in writing and sent by United States certified mail,
return receipt requested, addressed to the respective Parties as follows:

                                    Robert Batinovich
                  To Glenborough    Glenborough Inland Realty Corporation
                  and Guarantor:    400 S. El Camino Real San Mateo, CA 94402-
                                    1708

                  With Copy to:     Randall M. Faccinto, Esq.
                                    Zankel & McGrane
                                    One Embarcadero Center Suite 1200
                                    San Francisco, CA 94111

                  To Each of the    c/o Rancon Financial Corporation
                  Other Parties:    27720 Jefferson Avenue
                                    Temecula, CA 92590

                  With copy to:     Peter R. Pancione
                                    Gipson, Hoffman & Pancione
                                    1901 Avenue of the Stars
                                    Suite 1100
                                    Los Angeles, CA 90067-6002

or at such other address as any Party may designate by written notice to the
other Party. Notices shall be deemed given on the third calendar day following
deposit in the United States Mail as aforesaid.

                                       31



         26.      Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall,
together, constitute but one and the same instrument.

         27.      Exhibits. The following exhibits are attached to this
Agreement:

                  Exhibit A - General Partner Schedule

                  Exhibit B - Schedule of General Partner Distributions

                  Exhibit C - Assignment of "0&T" Fee Receivable

                  Exhibit D - Proxy Agreement

                  Exhibit E - (Intentionally Omitted)

                  Exhibit F - Management, Administration and Consulting
                              Agreement

                  Exhibit G - Intentionally Omitted

                  Exhibit H - Schedule of Financial Statements

                  Exhibit I - Schedule of Investment Assets

                  Schedule 14.a - General Partners' Ownership Interest
                                  Encumbrances

                  Schedule 14.e.ii - Legal Disclosures

                  Schedule 14.e.iv - Litigation Disclosure

                  Schedule 14.e.v - Default Disclosure

                  Schedule 14.e.vi - Contract Disclosure

                  Schedule 14.e.vii - Recourse Debt Disclosure

                  Schedule 14.e.ix - Material Liabilities/Hazardous Substance
                                     Disclosure

                  Schedule 14.e.x - Material Lease Defaults

                  Schedule 14.e.xi - Bankruptcy, Disclosure

                                       32



                  Schedule 14.e.xiii - Governmental Action Disclosure

                  Schedule 14.e.xiv - Liens Disclosure

                                       33



IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of
the date first written above.

GLENBOROUGH INLAND REALTY CORPORATION

By: /s/ROBERT BATINOVICH
    --------------------
    Robert Batinovich,
    President

RANCON FINANCIAL CORPORATION,
a California corporation

By: /s/ROBERT S. KIRKPATRICK
    ------------------------
    Its: President

DANIEL LEE STEPHENSON FAMILY
TRUST Dated December 10, 1987

By: /s/ DANIEL LEE STEPHENSON
    -------------------------
    Daniel Lee Stephenson,
    Trustee

/s/ DANIEL LEE STEPHENSON
- -------------------------
Daniel Lee Stephenson,
Individually

                                       34


GENERAL PARTNERS:

         The undersigned hereby join in the above agreement to the extend the
same is made applicable to them.

/s/ DANIEL LEE STEPHENSON
- -------------------------
DANIEL LEE STEPHENSON,
General Partner in
Rancon Realty Fund II, a California limited partnership,
Rancon Realty Fund III, a California limited partnership,
Rancon Realty Fund IV, a California limited partnership,
Rancon Realty Fund V, a California limited partnership, and
Rancon Realty Fund I, a California limited partnership.

RANCON FINANCIAL CORPORATION,
General Partner in
Rancon Realty Fund II, a California limited partnership,
Rancon Realty Fund III, a California limited partnership,
Rancon Realty Fund IV, a California limited partnership,
Rancon Realty Fund V, a California limited partnership, and
Rancon Realty Fund I, a California limited partnership.

By:  /s/ROBERT S. KIRKPATRICK
     ------------------------
Its: President

RC PACIFIC REALTY PARTNERS L.P.,
a Delaware limited partnership,
General Partner

By:  /s/ROBERT S. KIRKPATRICK
     ------------------------
Its: President of Rancon Pacific Realty Inc.
     The General Partner

                                       35


RANCON INCOME PARTNERS I, L.P.,
General Partner

By:  /s/ROBERT S. KIRKPATRICK
     ------------------------
Its: President of Rancon Financial Corporation
     The General Partner

RANCON DEVELOPMENT PARTNERS VI, L.P.,
General Partner

By:  /s/ROBERT S. KIRKPATRICK
     ------------------------
Its: President of Rancon Financial Corporation
     The General Partner

RANCON 11, L.P.,
General Partner

By:  /s/ROBERT S. KIRKPATRICK
     ------------------------
Its: President of Rancon Financial Corporation
     The General Partner

PARTNERSHIPS:

         The undersigned herby join in the above agreement to the extend the
same is made applicable to them.

RANCON REALTY FUND II,
a California limited partnership

By: /s/ DANIEL LEE STEPHENSON
    -------------------------
    Daniel L. Stephenson,
    General Partner

By: RANCON FINANCIAL CORPORATION,
    General Partner

By:  /s/ROBERT S. KIRKPATRICK
     ------------------------
Its: President

                                       36


RANCON PACIFIC REALTY L.P.,
a Delaware limited partnership

By: PC PACIFIC REALTY PARTNERS L.P.,
    General Partner

    By:  /s/ROBERT S. KIRKPATRICK
         -------------------------------
    Its: President of Rancon Realty Inc.
         The General Partner

RANCON REALTY FUND III,
a California limited partnership

By: /s/ DANIEL LEE STEPHENSON
    -------------------------
    Daniel L. Stephenson,
    General Partner

By: RANCON FINANCIAL CORPORATION,
    General Partner

    By: /s/ROBERT S. KIRKPATRICK
        ------------------------
    Its: President

RANCON INCOME FUND I,
a California limited partnership

By: RANCOM INCOME PARTNERS I, L.P.,
    General Partner

    By:  /s/ROBERT S. KIRKPATRICK
         ------------------------
    Its: President of Rancon Financial Corporation
         The General Partner

RANCON DEVELOPMENT FUND VI,
By: RANCOM INCOME PARTNERS IV, L.P.,
    General Partner

    By: /s/ROBERT S. KIRKPATRICK
    Its: President of Rancon Financial Corporation
         The General Partner

                                       37


RANCON REALTY FUND V,
a California limited partnership

By: /s/ DANIEL LEE STEPHENSON
    -------------------------
    Daniel L. Stephenson,
    General Partner

By: RANCON FINANCIAL CORPORATION,
    General Partner

    By:  /s/ROBERT S. KIRKPATRICK
         ------------------------
    Its: President

RANCON REALTY FUND IV,
a California limited partnership

By: /s/ DANIEL LEE STEPHENSON
    -------------------------
    Daniel L. Stephenson,
    General Partner

By: RANCON FINANCIAL CORPORATION,
    General Partner

    By:  /s/ROBERT S. KIRKPATRICK
         ------------------------
    Its: President

RANCON REALTY FUND I,
a California limited partnership

By: /s/ DANIEL LEE STEPHENSON
    -------------------------
    Daniel L. Stephenson,
    General Partner

By: RANCON FINANCIAL CORPORATION,
    General Partner

    By:  /s/ROBERT S. KIRKPATRICK
         ------------------------
    Its: President

                                       38


RANCON ONTARIO FREEWAY PROPERTIES FUND,
a California limited partnership

By: RANCON 11, L.P.
    General Partner

    By:  /s/ROBERT S. KIRKPATRICK
         -----------------------------
    Its: President of Rancon Financial
         The General Partners

                                       39


                                    EXHIBIT A

                            General Partner Schedule


                                         
Partnership General                         Partner
- -------------------                         -------

Rancon Realty Fund II, a                    Daniel, L. Stephenson and
California limited partnership              Rancon Financial Corporation

Rancon Pacific Realty L.P., a               RC Pacific Realty Partners
Delaware limited partnership                L.P., a Delaware limited partnership

Rancon Realty Fund III, a                   Daniel Lee Stephenson and
California limited partnership              Rancon Financial Corporation

Rancon Income Fund I, a                     Rancon Income Partners I, L.P.
California limited partnership

Rancon Development Fund VI, a               Rancon Development Partners
California limited partnership              VI, L.P.

Rancon Realty Fund V, a                     Daniel Lee Stephenson and
California limited partnership              Rancon Financial Corporation

Rancon Realty Fund IV, a                    Daniel Lee Stephenson and
California limited partnership              Rancon Financial Corporation

Rancon Realty Fund I, a                     Daniel Lee Stephenson and
California limited partnership              Rancon Financial Corporation

Rancon Ontario Freeway                      Rancon 11, L.P.
Properties Fund, a California
limited partnership




                                    Exhibit B
                    Schedule of General Partner Distributions
         (Section references refer to applicable Partnership Agreement)

Partnership                                  General Partner Distributions

Rancon Realty Fund I                -   2% of distributions of Cash Available
                                        for Distribution, pursuant to Paragraph
                                        8.1 (b)(2)

                                    -   20% of distributions from Sale or
                                        Refinancing Subordinated to a 15% per
                                        annum cumulative non-compounded return
                                        on adjusted capital contributions
                                        pursuant to Paragraph 8.2(b)

Rancon Realty Fund II               -   2% of distributions of Cash Available
                                        for Distribution. pursuant to Paragraph
                                        8.1 (b)(2)

                                    -   20% of distributions from Sale or
                                        Refinancing Subordinated to a 15% per
                                        annum cumulative non-compounded return
                                        on adjusted capital contributions
                                        pursuant to Paragraph 8.2(b)

Rancon Realty Fund III              -   2% of distribution of Cash From
                                        Operations pursuant to Paragraph 11.1

                                    -   2% of distributions of Cash Other Than
                                        Cash From Operations until the Waited
                                        Partners have received a 15% annual
                                        cumulative non-compounded return on
                                        adjusted invested capital: 20%
                                        thereafter, pursuant to Paragraphs
                                        11.2.1(i), (ii), (iii)

Rancon Realty Fund IV               -   10% of distribution of Cash From
                                        Operations pursuant to Paragraph 11.1

                                    -   1% of distribution of Cash Other Than
                                        Cash From Operations until adjusted
                                        invested capital is reduced to 0 and
                                        each Holder has received a 12% annual
                                        cumulative non-compounded return on his
                                        adjusted invested capital: 0% while
                                        special additional returns are paid to
                                        Holders based on date Units purchased:
                                        20% thereafter. pursuant to Paragraphs
                                        11.2.1(i),(ii),(iii),(iv),(v) and (vi)

Rancon Realty Fund V                -   10% of distribution of Cash From
                                        Operations pursuant to Paragraph 11.1

                                    -   1% of distributions of Cash Other Than
                                        Cash From Operations until adjusted
                                        invested capital is reduced to 0 plus 1
                                        12% per annum cumulative non-compounded
                                        return on the adjusted invested capital,
                                        plus any Holders limited incremental
                                        preferential return: 99% until
                                        distributions to the General Partner
                                        equal 20% of all prior distributions
                                        less prior distributions to the General
                                        Partner; 20% of the balance thereafter,
                                        pursuant to Paragraphs 11.2.1
                                        (i),(ii),(iii) and (iv)

Rancon Development                  -   10% of distribution of Cash From
Fund VI                                 Operations, pursuant to Paragraph 11.1

                                    -   1% of distributions of Cash Other Than
                                        Cash From Operations until adjusted
                                        invested capital is reduced to 0 plus a
                                        12% per annum cumulative non-compounded
                                        return on the adjusted invested capital,
                                        plus any Holder's limited incremental
                                        preferential returns; 99% until
                                        distributions to the General



                                        Partner equal 20% of all prior
                                        distributions less prior distributions
                                        to the General Partner; 20% of the
                                        balance thereafter, pursuant to
                                        Paragraphs 11.2.1(i), (ii), (iii), (iv),
                                        (vi) and (vii)

Rancon Income Fund I                 -  10% of distributions of Cash From
                                        Operations subordinated to the Limited
                                        Partners receiving an annual
                                        distribution of 6% per annum, pursuant
                                        to Paragraph 11.1 and Summary of
                                        Offering item defined as "Deferral by
                                        General Partner of Distributions of Cash
                                        From Operations"

                                    -   2% of distributions of Cash Other Than
                                        From Operations until the Limited
                                        Partners have received their adjusted
                                        invested capital plus a 10% preferential
                                        return plus any Holder incremental
                                        preferential return, 98% until the
                                        General Partner has received an amount
                                        equal to 15% of all prior distributions
                                        less previous distributions to the
                                        General Partner; 15% thereafter,
                                        pursuant to Paragraphs 11.2.1(i), (ii),
                                        (iii), (iv), (v), (vi) and (vii)

Rancon Pacific                      -   1% of cash distributions until the Unit
Realty                                  Holders of LP Preferred Units have been
                                        distributed $7.00 per Unit, and Unit
                                        Holders of Exchange Units until they
                                        have been distributed $10.00 per Unit;
                                        20% until the Preferred Unit Holders
                                        have been distributed an additional
                                        $3.00 per Unit; 20% thereafter pursuant
                                        to Paragraphs 11.1(a),(b),(c), (d)

Rancon Ontario                      -   1% of distributions of Cash From
Freeway Properties                      Operations pursuant to Paragraph 11.1

                                    -   1% of distributions of Cash Other Than
                                        From Operations until adjusted invested
                                        capital has been reduced to 0 plus a
                                        Holder Preferential Return equal to 10%
                                        per annum cumulative non-compounded on
                                        the adjusted invested capital; 100% to
                                        the General Partner until cumulative
                                        distributions to the General Partner are
                                        equal to 25% of net cash from sale or
                                        refinancing; 0% thereafter, pursuant to
                                        Paragraphs 11.2.1(i),(ii),(iii),(iv),
                                        (v) and (vi)



                                    EXHIBIT C

                         ASSIGNMENT OF RIGHT TO RECEIVE
                 ORGANIZATIONAL AND TRANSITIONAL MANAGEMENT FEE

         This Assignment of the right to receive an Organizational and
Transitional Management Fee ("O&T Fee") is made and entered into as of the 3rd
day of January, 1995 by and between Rancon Financial Corporation, a California
corporation ("Rancon") and Glenborough Inland Realty Corporation, a California
corporation ("Assignee").

         WHEREAS, Section 9.2 of that certain Agreement of Limited Partnership
(the "Partnership Agreement") of Rancon Pacific Realty L.P., a Delaware limited
partnership dated as of September 30, 1987 (the "Partnership") entitles Rancon
to receive an O&T Fee as defined in the Partnership Agreement; and

         WHEREAS, Rancon and Assignee have entered into that certain Agreement
as of the ___ day of December, 1994, wherein Rancon agreed to assign to Assignee
all of its right, title and interest in and to the O&T Fee.

         NOW, THEREFORE, in consideration of the above, the parties hereto agree
as follows:

         1.       Assignment. Rancon hereby sells, assigns and transfers to
Assignee all of its right, title and interest in and to the O&T Fee as defined
in Section 9.2 of the Partnership Agreement.

         2.       Payment to Assignee. Any distributions, proceeds or earnings
assigned under this Assignment received by Rancon shall be deemed to have been
received in trust for the benefit of Assignee and such distributions, proceeds
or earnings shall be paid by Rancon to Assignee as soon as practicable, but no
later than five days following receipt of same.

         3.       Notice to the Partnership. Rancon shall notify the Partnership
that Assignee is entitled to payment of the O&T Fee and authorize the payment of
such fee by the Partnership directly to Assignee.

         4.       Governing Law. This agreement shall be governed by the laws of
the State of California.



IN WITNESS WHEREOF, the parties have executed this Assignment as of the day and
year first above written.

                               RANCON FINANCIAL CORPORATION,
                               a California corporation

                               By: __________________________
                                   Robert H.S. Kirkpatrick

                               Its: _________________________
                                    President

                               GLENBOROUGH INLAND REALTY CORPORATION

                               By: __________________________

                               Its: _________________________
                                    Authorized Officer



                                    EXHIBIT D

                                      PROXY

         WHEREAS, Daniel Lee Stephenson ("Stephenson") is a general partner of
_______________________________________, a California limited partnership (the
"Partnership"); and

         WHEREAS, Glenborough Inland Realty' Corporation, a California
corporation ("Glenborough") desires to acquire certain of Stephenson's rights,
title and interest in the general partnership interests of the Partnership (the
"ownership Interests"); and

         WHEREAS, Stephenson also owns units of limited partnership interests
("Units') in the Partnership; and

         WHEREAS, Glenborough in acquiring the Ownership Interests desires that
Stephenson not retain, directly or indirectly, any voting rights as a limited
partner or Unit holder of the Partnership; and

         WHEREAS, Stephenson, to induce to Glenborough to acquire the Ownership
Interests of the Partnership, will grant this proxy to Glenborough.

         NOW, THEREFORE, in consideration or the purchase of the ownership
Interests by Glenborough, Stephenson [and Daniel Lee Stephenson and Family
Trust] as owner[s] of [__________] Units of the Partnership, revoke any previous
proxies and appoint Glenborough as my [our] proxy to attend all meetings of the
Partnership's limited partners and to vote, execute, consent and otherwise
represent those Units for me [us] in the same manner and with the same effect as
if I [we] was [were] personally present.

         This proxy is irrevocable until ten years from the date hereof or until
the date Stephenson sells his Units, whichever is earlier.

         Nothing contained in this proxy shall prohibit Stephenson from selling,
assigning, transferring, hypothecating, pledging or otherwise disposing of his
units or any interest therein.

         [This proxy is granted pursuant to Section 705(e) of the California
General Corporation Law and pursuant to Section 15637(j) of the Revised Limited
Partnership Act].

Dated: January 3, 1995

                               _________________________________________________
                               Daniel Lee Stephenson

                               _________________________________________________
                               Daniel Lee Stephenson, Trustee
                               Daniel Lee; Stephenson Family Trust



                                    EXHIBIT E

                             (Intentionally Omitted)



                                   EXHIBIT F

               Management Administration and Consulting Agreement



               MANAGEMENT, ADMINISTRATION AND CONSULTING AGREEMENT

         This Management, Administration and Consulting Agreement (the
"Agreement"), dated as of December 15, 1994 is made and entered into by and
between Glenborough Inland Realty Corporation, a California corporation
("Glenborough"), and each of those entities described on Exhibit A attached
hereto (the "General Partners") which constitute the general partners of the
limited partnerships described on Exhibit A attached hereto (the "Limited
Partnerships"), and the Limited Partnerships. The General Partners have entered
into this Agreement on behalf of each of the partnerships for which they serve
as general partners. Each of the Limited Partnerships is referred to herein as a
"Partnership."

                                    RECITALS

         A. The parties intend by this Agreement to provide the terms and
conditions whereby Glenborough will provide for the Partnership (i) property
management services for the properties owned, operated or managed, in whole or
in part, by the Partnerships; (ii) partnership administrative services which the
General Partners are obligated to perform for or render to the Partnerships; and
(iii) real estate brokerage services and/or consulting services concerning the
acquisition or disposition of property interests, including, without limitation,
leases.

         B. This Agreement is drafted as if it were made and entered into by and
between Glenborough and only one Partnership. However, notwithstanding the use
of the word "Partnership" in the singular form, each and every provision of this
Agreement applies to each and every Partnership listed on Exhibit A attached
hereto. Further, the provisions for the management, administration and
consulting services contained and defined herein shall apply to each Partnership
separately.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of their mutual covenants and
agreements set forth in this Agreement, the parties agree as follows:



                                    EXHIBIT G

                             (Intentionally Omitted)



                                    EXHIBIT H

                        SCHEDULE OF FINANCIAL STATEMENTS

PUBLIC PARTNERSHIPS



Partnership                        Form 10-K as of:          Form 10-Q as of:
- -----------                        ----------------          ----------------
                                                       
Rancon Realty Fund I               December 31, 1993         September 30, 1994

Rancon Realty Fund II              December 31, 1993         September 30, 1994

Rancon Realty Fund III             Draft - September         June 30, 1994
                                   30, 1994

Rancon Realty Fund IV              October 31, 1993          July 31, 1994

Rancon Realty Fund V               November 30, 1993         August 31, 1994

Rancon Development Fund VI         November 30, 1993         August 31, 1994

Rancon Income Fund I               November 30, 1993         August 31, 1994

Rancon Pacific Realty L.P.         December 31, 1993         September 30, 1994


PRIVATE PARTNERSHIPS

Rancon Ontario Freeway Properties - Unaudited financial statements as of
September 30, 1994 and December 31, 1993, as provided to the partners.

- ----------------
1- Consolidated financial statements include Six Otay Mesa L.P., Six Stoneridge,
    RC/RBC J.V., Pascoe L.P. and RC Inland Development.

2- Consolidated financial statements include Villa La Jolla Partners.



                                    EXHIBIT I

                          Schedule of Investment Assets

Partnership                         Investment Assets

                                    Fee simple title:

Rancon Realty
Fund I                              1.  Mountain View Plaza, Kern Co.
                                        16918 Hwy. 14, Mojave (PM 6115)
                                        Vacant: 2, 10, 11
                                        Improved: 1, 3, 4, 5, 9

                                    2.  Rancon Commerce Center, Temecula,
                                        Riverside, Co.
                                        Auto Center: 28696 & 28730 Via Montezuma
                                        Former Bowling Center: 28720 Via
                                        Montezuma
                                        Vacant Lots: Tract 16178-1: 8, 9, ptn.
                                                     10,
                                                     ptn.11-12
                                                     Tract 16178-2: 13,14
                                                     Tract 16178-3: 11

                                    Fee simple title to:

Rancor Realty
Fund II                             1.  Alta Murrieta, Murrieta, Riverside Co.
                                        (LLA #2778) 65 AC+/-in escrow to be
                                        sold: and, slopes not accepted by
                                        County/City

                                    Fee simple title to:
Rancon Realty
Fund III                            1.  GDV Property (N/W cor I-10 & Tippecanoe)
                                        San Bernardino Co.
                                        (9 AC+/-in Tract 2743 (38/47) + ptn.
                                        Lot 5, Blk 72, MB 7/2)

                                    2.  Rancon Center Rancho Cucamonga, San
                                        Bernardino Co.
                                        Civic Center II (3/8568) 8280 Utica
                                        Ave., R.C.
                                        Civic Center III (2/8568) 8300 Utica
                                        Ave., R.C.
                                        Vacant Lots: 3/10444         7.4 AC
                                                     3'+ ptn. 2/10696 33 AC
                                                     2/11236         1.8 AC

                                    Fee simple title to:

Rancon Realty
Fund IV                             1.  Lake Elsinore Square, Lake Elsinore,
                                        Riverside Co. (NW Cor I-15 + Central) 24
                                        AC+/-
                                    2.  Rancon Town Village, Temecula, Riverside
                                        Co. (2/23426) on Ynez Road 13.4 AC+/-
                                    3.  Shadowridge Woodbend Apartments 1500
                                        Shadowridge, Drive, Vista San Diego Co.
                                    4.  Rancon Perris Retail, Perris, Riverside
                                        Co. (17 AC SE Cor Hwy. 215 + Fourth St.)
                                    5.  Tri City Corporate Center, San
                                        Bernardino Co.

                                    (NE Cor I-10 + Waterman Ave)
                                    Vacant Lots:
                                    P.M. 11745          5: (Rmdr)       3.19 AC
                                    Tract 12034:        10              2.41 AC
                                                        11              2.80 AC
                                                        31 (Rmdr)       7.40 AC
                                                        32              7.20 AC
                                                        Ptn 34         12.93 AC

                                    P.M 14007:          4               0.39 AC



                                                        (vacant-575 E.
                                                        Hospitality)
                                                        6               0.25 AC
                                                        (vacant-525     E.
                                                                    Hospitality)
                                    P.M. 14126:         1               0.94 AC
                                                        A               13.48 AC
                                                                        Common
                                                                        Parking
                                                                        Area

                                    P.M. 14703 (Unbuilt Ptn. Promo. Retail Ctr)
                                                        4 - vacant
                                                        5 - Blockbuster Music
                                                        6 - Discovery Zone
                                                        A & B - Parking -
                                                                5.89 AC
                                    Improved:           33+Ptn 34/12034 5.32 AC:
                                                        630, 636 E. Brier
                                                         (Carnegie Bus. Ctr. #l)
                                                        1/12054: 301 Vanderbilt
                                                                        Way
                                                        2/12054: 303 Vanderbilt
                                                                        Way
                                                        4/12054: 420, 424
                                                                    Hospitality
                                                                    Lane (Retail
                                                                    Center)

                                    P.M. 14703:        Promotional Retail Center
                                                        l - 645 E. Hospitality
                                                        Lane ("Shops")
                                                        2 - 625 E. Hospitality
                                                        Lane (CompUSA)
                                                        3 - 595 E. Hospitality
                                                        Lane (PetSmart)

                                    Fee simple title to:
Rancon Realty
Fund V                              1.  Rancon Ontario Business Center, Ontario
                                        San Bernardino Co.
                                        Vacant: Ptn. Lot 1, Blk. 20,
                                        Tract 2244 - 35 AC+/-Improved
                                        P.M. 101898 (1-5)
                                           1 - 5576 Inland Empire Blvd.
                                           2 - 5556 Inland Empire Blvd.
                                           3 - 651 Barrington Ave.
                                           4 - 5555 Gibraltar
                                           5 - 5525 Gibraltar

                                    2.  Nuevo Business Park ("Perris 84"),
                                        Perris, Riverside Co. NW Cor. Hwy
                                        215+Nuevo Road - 56 AC+/-

                                    3.  Ethanac Road Commercial Center ("Perris
                                        24"), Perris, Riverside Co. 24 AC

                                    4.  Tri City Corporate Center
                                        Vacant:         1/11370 - 1.57 AC
                                                        14/12034 w/ Ptn. 13 + 12
                                                        - 5.2 AC

                                                        4/12902 - 0.58 AC
                                                        3/14703 - 0.46 Common
                                                                  Parking Area
                                                        A/14007 - 0.37 Common
                                                                  Parking Area

                                                        1/13910 - 0.63 AC
                                                        5/13910 - 1.07 AC
                                                        6/13910 - 0.31 AC
                                                        7/13910 - 0.74 AC
                                                        8/13910 - 0.86 AC
                                                        9/13910 - 1.26 AC
                                                        10/13910 - 0.33 AC
                                                        11/13910 - 0.54 AC
                                                        12/13910 - 0.81 AC
                                                        14/13910 - 0.80 AC
                                                        15/13910 - 0.27 AC
                                                        16/13910 - 0.58 AC
                                                        A & B/13910 - parking


                                    Improved:
                                                        12 + ptn 13/12034:
                                                        720+732 E. Carnegie
                                                        Ptn 13. 740 E. Carnegie
                                                        2/13910 "One Parkside" -
                                                        560 Hospitality Lane
                                                        3/13910 "Garden Office
                                                                #1" -
                                                       621 + 625 E. Carnegie Dr.
                                                        4/13910 "Garden Office
                                                                #2 -
                                                        685 E. Carnegie Drive
                                                        13/13910 "Lakeside
                                                                Tower" -
                                                        650 E. Hospitality Lane
                                                        C/33910 Lake

                                    Fee simple title to:

Rancon Development
Fund VI                             1. Menifee Ranch, Sun City, Riverside Co. -
                                       186 AC+/-
                                    2.  Deer Springs, San Marcos, San Diego Co.
                                        253 AC+/-

                                    Fee simple title held by Six Otay Mesa LP:

                                    3.  Rancon Otay Industrial, Otay Mesa, San
                                        Diego - 246 AC+/-

                                        GP: Property Six Management Corporation:
                                        0%
                                        LP: Rancon Development Fund VI: 100%

                                    Fee simple title held by Six Stoneridge LP:

                                    4.  Stoneridge I, Moreno Valley, Riverside
                                        Co.
                                        48 AC+/-(subject to settlement;
                                        discussions underway)



                                    5.  Stoneridge II, Moreno Valley, Riverside
                                        Co. 242 AC+/-

                                        GP: Property Six Management Corporation:
                                        0%
                                        LP: Rancor Development Fund VI: 100%

                                        Fee simple title held by Rancon Business
                                        Center/ Rancho California, joint
                                        venture:

                                    6.  Rancon Business Center, Murrieta,
                                        Riverside Co.
                                        Rmdr. 78 MB 8/359       7.8 AC
                                        PM 22318-1: 1-4, 8-10   9   AC+/-
                                        PM 24991: 1-4           93  AC (includes
                                                                        creek)
                                        PM 24991: Ptn 17        81.7 AC
                                        PM 21184-1: 8,9,19      3.0 AC
                                        Partners:    RCDF VI - 89.9%
                                                     Pascoe L,P. - 10.1% (GP:
                                                     RFC 1% & LP: RCDF' VI L.P.
                                                     99%)

                                        Fee simple title to:

Rancon Income
Fund I                              1.  Bristol Medical Center
                                        2720 + 2740 Bristol Street, Santa Ana,
                                        Orange Co.

                                    2.  Aztec Village Shopping Center
                                        6663 El Cajon Blvd., San Diego

                                    3.  Aham Tor
                                        27901 Front Street + 28715 Via Montezuma
                                        Temecula, Riverside Co.

                                    Fee simple title to:

Rancon Corporate
Center L.P.                         1.  Rancon Corporate Center,
                                        Murrieta, Riverside Co.
                                        PM 24382: 1-9     24 AC+/-

                                    Fee simple title to:

Rancon Ontario
Freeway Properties                  1.  Ontario 21, Ontario, San Bernardino Co.
                                        PM 6945: 1-7      21 AC+/-

                                    Fee simple title to:

Rancon Pacific
Realty, L.P.                        1.  Pacific Bay Club Apartments
                                    4070 Huerfana, San Diego (La Jolla)

                                    2.  La Jolla Canyon Apartments
                                    9515 Genessee Avenue, San Diego (La Jolla)



                                    Fee simple title held by Villa La Jolla
                                    Partners, J.V.

                                    3.  Villa La Jolla Condos 8540 Via Mal1orca,
                                        San Diego (La Jolla)

                                        Partners: Rancon Pacific Realty, L.P. -
                                                  88.73%
                                                  Transamerica La Jolla
                                                  Partners - 11.27%



                                  SCHEDULE 14.a

                    Liens/Encumbrances on Ownership Interests

         A.       Security Interests in Favor of CASC Corp.

         B.       Security Interests in Favor of Rancon Current Yield 12+, L.P.

         C.       Certain portions of the General Partner interests have been
                  assigned to individuals that would entitle them to a portion
                  of cash from operations distributions or distributions from
                  sales. These assignments are between Daniel Lee Stephenson and
                  the individuals. Recourse from them is to Daniel Lee
                  Stephenson and not the Partnership.



                                SCHEDULE 14.e.ii

                              Compliance With Laws

         A.       All Partnerships - Partnerships may not be in compliance with
                  certain States' (other than California) partnership
                  information return filing requirements.

         B.       Rancon Realty Fund IV - Waterman Landfill (discussions
                  underway).



                                SCHEDULE 14.e.iv

                               Pending Litigation

         A.       Rancon Realty Fund III - Imperial Thrift & Loan (by virtue of
                  Fund III's status as indemnitor in favor of Rancon Financial
                  Corporation and Dan Stephenson as guarantors of
                  Imperial/Sumarco loan).

         B.       Rancon Ontario Freeway Properties - Potential litigation by
                  investor Kassel. No formal claim asserted or action filed.
                  Correspondence only.

         C.       Rancon Development Fund VI/Stoneridge I - Litigation Pressiman
                  Family Trust. Ongoing settlement discussions.



                                 SCHEDULE 14.e.v

                                    Defaults

         A.       Rancon Development Fund VI - CASC Corp. Loan (Menifee
                  Property)

         B.       Rancon Realty Fund III - Civic Center III - Rancho Cucamonga
                  Mitsui Loan - Delinquent Property Taxes - 12/94 installment

         C.       Rancon Business Center - Capital Financial Loans - Delinquent
                  Property Taxes - 12/94 installment

         D.       Delinquent Property Taxes - (Schedule previously delivered to
                  Glenborough)



                                SCHEDULE 14.e.vi

                          Material Agreements/Contracts

AGREEMENTS

A.       Miscellaneous Agreements:

         1.       Regional Facilities Agreement
                  Fund IV & V - Redevelopment Agency, City of San Bernardino

         2.       Development Agreement
                  Fund IV & V - City of San Bernardino

         3.       Joint Sewer Development Agreement
                  Fund V/Rancon Ontario Freeway Properties - Santa Fe Pacific
                  Realty Corporation

         4.       Standard Sewer Facilities And/Or Service Agreement
                  Fund V - Eastern Municipal Water District of San Jacinto

         5.       Consulting Agreement
                  Fund V/Perris 17, 24, 83 - Meridian West Management Corp.
                  Fund IV & V - City of San Bernardino

         6.       School Mitigation Agreements
                  Fund VI -         Val Verde School District
                                    Perris Union High School District
                  Financing Agreement
                  Fund VI -         Nuview Union School District

         7.       License and Indemnity Agreement
                  Rancon Business Center - Rancho California Water District
         8.       Agreement to Pay Special Taxes
                  Rancon Business Center - Rancho California Water District
         9.       Various Indemnity Agreements - Title Companies, in connection
                  with Constructions Loans indemnifying against mechanics liens.

B.       Architectural Agreements:

         1.       The Nadel Partnerships/Blockbuster Discovery Zone
                  Build To Suit - Tri City
         2.       Gillis Iler & Clarke/Bally's Health Club
                  Build To Suit - Tri City
         3.       Hill Pinckert/Inland Counties Regional Center
                  Build To Suit - Tri City

C.       Real Estate Broker Agreements:

         1.       Income Fund I - Lee & Associates, expires 12-31-94
         2.       Realty Fund III - CB Commercial, expires 12-31-94
                  Grubb & Ellis, expires 10-31-95
                  Daum Commercial, expires 10-31-95
         3.       Realty Fund IV & V - Cushman & Wakefield, expires 12-31-94
         4.       Realty Fund V - Grubb & Ellis, expires 8-14-95



                                SCHEDULE 14.e.vi

                          Material Agreements/Contracts
                                   (Continued)

CONTRACTS

A.       Major Construction Contracts:

         1.       H.K. Merron/Blockbuster Discovery Zone
                  Build To Suit - Tri City
         2.       H.K. Merron/Bally's Health Club
                  Build To Suit - Tri City
         3.       Fulmer Construction/Inland Counties Regional Center
                  Build To Suit - Tri City

B.       Tenant Improvement Contracts:

                  Pacific Interior Design
                  South Coast Electric
                  Ontario Neon
                  Mike Shill Painting
                  Jim Spilman Plumbing
                  McKinley Equipment Corp
                  Apostle Glass
                  Thiem Mechanical Co. Inc.
                  Via Verde Drywall
                  Estrada Hardware
                  MSA Industries
                  Pyro Automatic Protection

C.       Property Management Contracts:

         1.       Advertising - R.C. Pacific Realty L.P.
         2.       Pay Telephone Agreement - Income Fund I
         3.       Security Agreements - Funds IV & V
         4.       Trash Pick-up - Rancon Realty Fund I
         5.       Elevator Contract - R.C. Pacific Realty L.P.
         6.       Association Management/East Otay Mesa Planning Area - Fund VI

D.       Various:

         Gas Monitoring Tri City Landfill - Funds IV & V



                                SCHEDULE 14.e.vii

                          Recourse and Guaranteed Debt

                                  RECOURSE DEBT



Borrower                               Lender              Initial Amount
- --------                               ------              --------------
                                                     
Rancon Development Fund VI        CASC Corp.                  $ 2,500,000

Rancon Business Ctr. JV           Capital Financial               400,000

Rancon Business Ctr. JV           Capital Financial               400,000

Rancon Fund IV                    Chino Valley                  2,700,480

Rancon Fund V                     Chino Valley                  2,800,000

Villa La Jolla Partners           Wells Fargo                  17,250,000


                                 GUARANTEED DEBT



Borrower                              Lender                Initial Amount
- --------                              ------                --------------
                                                      
Rancon Development Fund VI        CASC Corp.                  $ 2,500,000

Rancon Business Ctr. JV           Capital Financial               400,000

Rancon Business Ctr. JV           Capital Financial               400,000

Rancon Fund IV                    Chino Valley                  2,700,480

Rancon Fund V                     Chino Valley                  2,800,000

Rancon Fund III                   Imperial Bank                 1,560,000

Rancon Fund V                     Omaha Woodman                 6,000,000
                                  Life Ins. Co.



\
                                SCHEDULE 14.e.ix

               Material Liabilities/Hazardous Substance Disclosure

Rancon Realty Fund I                Mountain View Plaza, Kern Co. is adjacent to
                                    a municipal airport.

Rancon Realty Fund II               Alta Murrieta 65 acres in escrow has soils
                                    problems of alluvial/colluvial material and
                                    potentially poor compaction.

Rancon Realty Fund III              Rancon Center Rancho Cucamonga, vacant lots
                                    had historically been planted as a vineyard.

Rancon Realty Fund IV               Lake Elsinore Square was an old swap meet
                                    site. Rancon Perris 17 was farmland. Tri
                                    City was an old airport and a portion was a
                                    landfill.

Rancon Realty Fund V                Rancon Ontario Business Center was an old
                                    vineyard and is near the Kaiser facility
                                    east. Nuevo 84 was previously farmland.
                                    Ethanac 24 was previously farmland. Tri City
                                    Corporate Center was an old airport.

Rancon Development Fund VI          Menifee 186 was previously farmland. Rancon
                                    Otay Mesa was previously farmland, has
                                    vernal pools and archaeological site.
                                    StoneRidge I and II were both previously
                                    farmland.

Rancon Ontario Fwy.                 Potential impact from Kaiser facility to
Properties                          east.

Rancon Pacific                      Asbestos in all three apartment facilities.



                                 SCHEDULE 14.e.x

                                 Lease Defaults

A.       Rancon Realty Fund IV - Show Industries Inc. (Blockbuster Music) -
         Tenant alleged that Rancon defaulted construction schedule in building
         turnover date and is attempting to terminate lease. RRFIV has rejected
         claimed default and is currently reviewing alternatives.



                                SCHEDULE 14.e.xi

                                  Bankruptcies

A.       Rancon Development Fund VI - Six Stoneridge, L.P.



                               SCHEDULE 14.e.xiii

                               Government Actions

A.       Rancon Development Fund VI - Deer Springs Estates. Site under
         investigation by county of San Diego for possible use as a landfill -
         one year from April 94 - April 95.

B.       Rancon Development Fund VI - Otay Mesa. General Plan Amendment approved
         by the County of San Diego restricting approximately 50 acres from
         development.

C.       Rancon Realty Fund IV - Waterman Landfill.



                                SCHEDULE 14.e.xiv

                                Liens Disclosure

                            Delinquent Property Taxes



           Owner                        Project              Amount
           -----                        -------              ------
                                                      
Rancon Realty Fund II                 FC Murrieta           $281,445

Rancon Realty Fund III                GDV                   $ 14,554

Rancon Realty Fund III                RCRC                  $ 95,717

Rancon Development Fund VI            RBC/JV                $729,131

Six Otay                              Otay Mesa             $855,491

Rancon Development Fund VI            Menifee               $ 56,870

Six Stoneridge                        Stoneridge I          $ 27,533

Six Stoneridge                        Stoneridge II         $265,276

Rancon Development Fund VI            Deer Springs          $181,766


Note:    All amounts include December, 1994 installment, plus interest,
         penalties and redemption fees through December, 1994

EX-31.1

                                                                    EXHIBIT 31.1

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 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;

     3.   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 registrant as of, and for, the periods presented in this
          report;

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

          a)   designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under my
               supervision, 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 report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report my
               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 registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent fiscal quarter (the registrant's fourth
               fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonable likely to materially
               affect, the registrant's internal control over financial
               reporting; and

     5.   I have disclosed, based on my most recent evaluation of internal
          control over financial reporting, 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 and material weaknesses in the
               design or operation of internal control over financial reporting
               which are reasonably likely to adversely affect the registrant'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 registrant's
               internal control over financial reporting.

Date: November 14, 2003

/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.

EX-32.1

                                                                    EXHIBIT 32.1

                                  CERTIFICATION

         In connection with the periodic report of Rancon Income Fund I (the
"Partnership") on Form 10-Q for the period ended September 30, 2003 as filed
with the Securities and Exchange Commission (the "Report"), I, Daniel L.
Stephenson, General Partner of Rancon Income Partners I, L.P., which is General
Partner of the Partnership, hereby certify as of the date hereof, solely for
purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that I
perform the functions of chief executive officer and chief financial officer of
the Partnership and that, to the best of my knowledge:

         (1)      the Report fully complies with the requirements of Section
13(a) or 15(d), as applicable, 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 at the dates and for the periods indicated.

         A signed original of this written statement required by Section 906 has
been provided to the Partnership and will be retained by the Partnership and
furnished to the Securities and Exchange Commission or its staff upon request.

Date: November 14, 2003                          /s/ Daniel Stephenson
                                                 -------------------------------
                                                 Daniel Stephenson, General
                                                 Partner of Rancon Income
                                                 Partners I, L.P., General
                                                 Partner of Rancon Income Fund I