pre14a

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)

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Davidson Diversified Real Estate I, L.P.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
c/o The Altman Group, Inc.
1200 Wall Street
3rd Floor
Lyndhurst, NJ 07071
(800) 217) 9608

October ___, 2007

Dear Limited Partner:

We are soliciting your consent to an amendment (the “Amendment”) to the Partnership Agreement (as amended, the “Partnership Agreement”) of Davidson Diversified Real Estate I, L.P., a Delaware limited partnership (your “Partnership”), to extend the term of your Partnership from December 31, 2007 to December 31, 2023.

On September 21, 2007, your Partnership refinanced its mortgage indebtedness (the “Mortgage Indebtedness”) secured by Versailles on the Lake Apartments, a 156-unit apartment complex located in Ft. Wayne, Indiana, which your Partnership owns (the “Property”). The mortgage was refinanced to take advantage of more favorable financing rates and terms, and because the existing mortgage note contained a balloon payment due on September 30, 2007. The Partnership’s Mortgage Indebtedness matures on October 1, 2010 with the right to two one-year extensions. The lender can exercise remedies, which include accelerating the maturity of the Mortgage Indebtedness and foreclosing on the Property, if the Partnership is dissolved in accordance with the terms of the Partnership Agreement. If the Partnership does not adopt the Amendment, the Partnership will terminate and dissolve on December 31, 2007, and the managing general partner of the Partnership will liquidate the assets of the Partnership.

Because the Partnership currently does not believe it is in the best interests of the partners to sell Versailles on the Lake Apartments at this time, the Partnership desires to amend the Partnership Agreement to extend the term until December 31, 2023.

Davidson Diversified Properties, Inc., the managing general partner of the Partnership (the “Managing General Partner”), has conflicts of interest with respect to the Amendment. Continuation of the Partnership beyond 2007 will result in the Managing General Partner and its affiliates continuing to receive management fees from the Partnership. These fees would not continue to be payable beyond 2007 if the Amendment is not adopted.

Pursuant to the Partnership Agreement, the consent of the limited partners who own more than 50% of all outstanding units of limited partnership interest in the Partnership (“Units”) is required to approve the Amendment. As of , 2007, 751.59 Units were issued and outstanding. As of , 2007, an affiliate of the managing general partner, Aimco Properties, L.P. (“Aimco Properties”), and its affiliates, own 339.45, or approximately 45.16% of the outstanding Units. Aimco Properties and its affiliates have indicated that they will vote their Units in favor of the Amendment. Accordingly, if Limited Partners owning at least 36.42, or approximately 4.85%, of the outstanding Units consent to the Amendment, the term of your Partnership will be extended. We are providing the attached Consent Solicitation Statement in order to notify you of the background and terms of the Amendment and to solicit your vote approving the Amendment.

If the Amendment is approved by the limited partners, the Amendment will become effective when the Managing General Partner executes the Amendment.

This Consent Solicitation Statement and the accompanying Consent of Limited Partner are first being mailed on or about , 2007 to limited partners of record as of the close of business on , 2007.

Your participation is very important. Please review this Consent Solicitation Statement and return the enclosed Consent of Limited Partner in accordance with the instructions in this Consent Solicitation Statement. Please note that this solicitation will expire on , 2007, unless extended. Pursuant to the terms of the Partnership Agreement, if the accompanying Consent of Limited Partner is not received by the Managing

DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
c/o The Altman Group, Inc.
1200 Wall Street
3rd Floor
Lyndhurst, NJ 07071
(800) 217) 9608

October ___, 2007

CONSENT SOLICITATION STATEMENT

This Consent Solicitation Statement is being furnished to the limited partners (the “Limited Partners”) of record as of the close of business on , 2007 (the “Record Date”) of Davidson Diversified Real Estate I, L.P., a Delaware limited partnership (the “Partnership”), in connection with the solicitation of the consent of the Limited Partners to approve an amendment (the “Amendment”) to the Partnership’s Partnership Agreement (as amended, the “Partnership Agreement”) to extend the term of the Partnership from December 31, 2007 to December 31, 2023.

This Consent Solicitation Statement and the accompanying Consent of Limited Partner are first being mailed on or about , 2007 to limited partners of record as of the close of business on , 2007, and the Solicitation will expire on , 2007, unless extended. Pursuant to the terms of the Partnership Agreement, if the accompanying Consent of Limited Partner is not received by the managing general partner prior to , 2007, the managing general partner will treat the Limited Partner as having consented to the Amendment in accordance with the managing general partner’s recommendation.

On September 21, 2007, your Partnership refinanced its mortgage indebtedness (the “Mortgage Indebtedness”) secured by Versailles on the Lake Apartments, a 156-unit apartment complex located in Ft. Wayne, Indiana, which your Partnership owns (the “Property”). The mortgage was refinanced to take advantage of more favorable financing rates and terms and because the existing mortgage note contained a balloon payment due on September 30, 2007. The Partnership’s Mortgage Indebtedness matures on October 1, 2010 with the right to two one-year extensions. The lender can exercise remedies, which include accelerating the maturity of the Mortgage Indebtedness and foreclosing on the Property, if the Partnership is dissolved in accordance with the terms of the Partnership Agreement prior to the Mortgage Indebtedness’ maturity date. If the Partnership does not adopt the Amendment, the Partnership will terminate and dissolve on December 31, 2007 and the managing general partner of the Partnership will liquidate the assets of the Partnership.

Because the Partnership currently does not believe it is in the best interests of the partners to sell the Property at this time, the Partnership desires to amend the Partnership Agreement to extend the term until December 31, 2023. However, if the Partnership does not adopt the Amendment, the Partnership will liquidate on December 31, 2007 and will attempt to sell the Property in connection with such liquidation.

Davidson Diversified Properties, Inc., the Managing General Partner of the Partnership (the “Managing General Partner”), has conflicts of interest with respect to the Amendment. Continuation of the Partnership beyond 2007 will result in the Managing General Partner and its affiliates continuing to receive management fees from the Partnership. These fees would not continue to be payable beyond 2007 if the Amendment is not adopted.

The Partnership Agreement requires that an amendment of the Partnership Agreement and an extension of the term of the Partnership require the consent of the Limited Partners who own more than 50% of all outstanding units of limited partnership interest in the Partnership (“Units”). As of , 2007, 751.59 Units were issued and outstanding. As of , 2007, an affiliate of the managing general partner, Aimco Properties, L.P. (“Aimco Properties”), and its affiliates, own 339.45, or approximately 45.16%, of the outstanding Units. Aimco Properties and its affiliates have indicated that they will vote their Units in favor of the Amendment. Accordingly, if Limited Partners owning at least 36.42, or approximately 4.85%, of the outstanding Units consent to the Amendment, the term of your Partnership will be extended. We are providing the attached Consent Solicitation Statement in order to notify you of the background and terms of the Amendment and to solicit your vote approving the Amendment.

If the Amendment is approved by the Limited Partners, the Amendment will become effective when the Managing General Partner executes the Amendment.

Questions may be directed to the Solicitation Agent, The Altman Group, Inc., at 1200 Wall Street, 3rd Floor, Lyndhurst, New Jersey 07071, telephone (800) 217-9608, facsimile (201) 430-0050.

RISK FACTORS

There are risks associated with the Amendment. In addition, the Managing General Partner is an affiliate of Apartment Investment and Management Company, a publicly traded real estate investment trust (“Aimco”), which, together with its other affiliates, may have interests that conflict with the interests of the Limited Partners. You should consider the following risks carefully:

Risks of the Amendment

Continuation of the Partnership; No Definite Time Frame Regarding Sale of Property. The Managing General Partner is proposing to continue to operate the Partnership until December 31, 2023 and not to attempt to liquidate it at the present time. If the Partnership’s term is not extended and the Property is sold in the near future in connection with the Partnership’s liquidation, it is possible that the sale price received for the Property could be higher than the sale price received at some future time. We do not know when the Property may be sold. The Managing General Partner considers whether a property should be sold or otherwise disposed of after consideration of relevant factors, including prevailing economic conditions, availability of favorable financing and tax considerations, with a view to achieving maximum capital appreciation for the Partnership. In particular, the Managing General Partner considers changes in the local rental market, the potential for appreciation in the value of a property and the tax consequences to you on a sale of property. The market for Units is illiquid, and it may be difficult or impossible to sell your investment in the Partnership in the future. In addition, while the Managing General Partner is considering a sale of the Property, the Property is not listed publicly for sale, and the Managing General Partner may ultimately decide that a sale of the Property is not in the best interests of the Partnership at this time or may be unable to sell the Property at a price it views in the best interests of the Partnership.

If the Amendment is approved, you may not be able to exit from the Partnership until a termination of the Partnership on December 31, 2023, or if the termination date is further extended, until that extended date.

Aimco Properties and its Affiliates May Increase Their Control Over Your Partnership. Decisions with respect to the day-to-day management of your Partnership, including a refinancing of the Partnership’s Mortgage Indebtedness, are the responsibility of the Managing General Partner. The Managing General Partner is indirectly owned by Aimco. In addition, affiliates of the Managing General Partner hold 339.45, or approximately 45.16%, of the outstanding Units. Pursuant to the Partnership Agreement, Limited Partners holding a majority of the outstanding Units must approve certain transactions, including certain amendments to the Partnership Agreement and certain sales of all or substantially all of the Partnership’s assets. The Managing General Partner and its affiliates can significantly influence, and may have the ability to control under certain circumstances, many voting decisions with respect to the Partnership.

A number of the Units held by affiliates of the Managing General Partner were acquired pursuant to tender offers made by affiliates of Aimco. It is possible that Aimco or its affiliates will acquire additional Units in the Partnership in exchange for cash or a combination of cash and units in Aimco Properties, either through private purchases or tender offers. The Amendment provides additional time for Aimco Properties and its affiliates to purchase additional Units in the future, thereby increasing the influence Aimco Properties and its affiliates have over the voting decisions of the Partnership. Accordingly, the Amendment may result in increased control of the Partnership by Aimco Properties and its affiliates.

Affiliates of the Managing General Partner Will Continue to Receive Fees. The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. Affiliates of the Managing General Partner provide property management services to the Partnership. The Partnership Agreement provides for payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.

Affiliates of the Managing General Partner receive 5% of gross receipts from the Partnership’s property as compensation for providing property management services. The Partnership paid approximately $25,000 for the six months ended June 30, 2007, and approximately $50,000 and $48,000 for the years ended December 31, 2006 and 2005, respectively, to affiliates of the Managing General Partner.

Affiliates of the Managing General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $35,000 for the six months ended June 30, 2007, and approximately $84,000 and $56,000 for the years ended December 31, 2006 and 2005, respectively. A portion of these reimbursements are construction management services provided by an affiliate of the Managing General Partner of approximately $13,000 for the six months ended June 30, 2007 and approximately $50,000 and $16,000 for the years ended December 31, 2006 and 2005, respectively. At June 30, 2007, approximately $89,000 was owed to affiliates of the Managing General Partner for unpaid reimbursements. Approximately $99,000 was used to pay the amount owed as of June 30, 2007, as well as to pay additional reimbursements charged after June 30, 2007.

In accordance with the Partnership Agreement, during the six months ended June 30, 2007 and the years ended December 31, 2006 and 2005, an affiliate of the Managing General Partner advanced the Partnership approximately $162,000, $363,000 and $84,000, respectively, to fund operating expenses and capital improvements at Versailles on the Lake Apartments. Interest is charged at the prime rate plus 1% (9.25% as of June 30, 2007). Interest expense on advances from an affiliate of the Managing General Partner was approximately $36,000 for the six months ended June 30, 2007 and was approximately $40,000 and $16,000 for the years ended December 31, 2006 and 2005, respectively. At June 30, 2007, the amount of the outstanding advances and accrued interest was approximately $884,000. Subsequent to June 30, 2007, an affiliate of the Managing General Partner advanced the Partnership approximately $14,000 to fund operating expenses at the Property.

The Partnership is liable to an affiliate of the Managing General Partner for real estate commissions in the amounts of approximately $125,000 for Revere Village Apartments and approximately $196,000 for Essex Apartments, both of which were sold in previous years. Payment of the commissions will not be made to the affiliate until the Limited Partners have received distributions equal to their original invested capital, plus 8% per annum cumulative non-compounded on their adjusted invested capital commencing on the last day of the calendar quarter in which each Limited Partner was admitted to the Partnership through the date of payment.

The Partnership insures its property up to certain limits through coverage provided by Aimco, which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its Property above the Aimco limits through insurance policies obtained by Aimco from insurers unaffiliated with the Managing General Partner. During the years ended December 31, 2006 and 2005, the Partnership was charged by Aimco and its affiliates approximately $26,000 and $16,000, respectively, for insurance coverage and fees associated with policy claims administration. During the six months ended June 30, 2007, the Partnership was charged approximately $34,000 by Aimco and its affiliates for comparable coverage. Additional charges will be incurred by the Partnership during 2007 as other insurance policies renew later in the year.

The adoption of the Amendment and extension of the Partnership’s term will result in similar fees continuing to be paid for a longer period than would be the case if the term of the Partnership expired in 2007. Therefore, the interests of the Managing General Partner and its affiliates in continuing the Partnership may be different than those of any Limited Partners who desire to have the Partnership earlier dissolved and liquidated. See “Security Ownership of Certain Beneficial Owners and Management.”

There Is No Active Trading Market for Your Units. Although the Units are registered with the Securities and Exchange Commission (the “SEC”), there is no active trading market for the Units. There may be a limited number of prospective buyers for your Units in the future, and you may find it difficult or impossible to liquidate your investment at a price that exceeds the amounts you might receive on the liquidation and dissolution of the Partnership. If the Amendment is not approved, your Partnership will terminate on December 31, 2007; if the Amendment is approved, you may not be able to exit from the Partnership until December 31, 2023, or if this termination date is further extended, until such extended date.

You May Be Required to Hold Your Units Indefinitely. The Managing General Partner is proposing to continue to operate the Partnership until December 31, 2023 and not to attempt to liquidate it at the present time.

Therefore, there may not be any way to liquidate your investment in the Partnership until the Property is sold and your Partnership is liquidated.

The Value of the Property May Decline, and Your Investment Will Continue to Be at Risk. Until its Property is sold, the Partnership will continue to bear the investment risk associated with the continued ownership of the Property. The Partnership’s future success will depend upon many factors beyond the Managing General Partner’s control, including competitive activity, the need for capital expenditures, prevailing economic and market conditions and financial, business and other factors. These factors, and others, may cause the value of the Property and the Partnership to decline.

Your Cumulative Returns Accrue at a Simple Interest Rate. Pursuant to the Partnership Agreement, each Limited Partner is entitled to certain cumulative returns with respect to distributions resulting from sales, refinancings, and other dispositions of properties to the extent cash is available for this purpose. Those cumulative returns are not compounded and are computed on a simple interest basis. After the Limited Partners receive their cumulative returns plus an amount equal to their original invested capital, the General Partners are entitled to a portion of the available distributable proceeds. If the Partnership does not adopt the Amendment and liquidates in 2007, Limited Partners may be able to invest the liquidating distributions, if any, in other investments that provide a compounded return on their investment as opposed to the simple interest returns to which they are entitled pursuant to the Partnership Agreement. Although your Managing General Partner regularly evaluates whether the Property should be sold, if the term of the Partnership is extended, the Managing General Partner may not be required to sell the property until the end of the extended term, depending on, among other things, the Partnership’s financial condition, prevailing conditions in the real estate and capital markets, availability of favorable financing, and tax considerations.

Risks if the Amendment is Not Adopted

The Lender May Be Able to Exercise Remedies Against the Partnership if the Amendment Is Not Adopted. The financing agreements between the Partnership and the lender provide that a dissolution of the Partnership would cause the loan to be in default. If the loan is in default, the lender can exercise remedies, which include accelerating the maturity of the Mortgage Indebtedness and foreclosing on Partnership property.

The Partnership May Be Required to Wind Up. If the Amendment is not adopted, the Partnership’s term will expire on December 31, 2007. If the Partnership’s term expires on December 31, 2007, the Partnership generally will be required to wind up and to dispose of the Property. The Managing General Partner is of the opinion that the Partnership’s negotiating leverage will be enhanced, and the net proceeds to the Partnership and the Limited Partners from the sale of the Property could be increased, if the Partnership has greater flexibility with respect to the timing of the sale of the Property. There can be no assurance, however, that the Partnership’s negotiating leverage will in fact be enhanced, or that the net sales proceeds from the sale of the Property will be increased, by an extension of the Partnership’s term or that the Partnership will ultimately sell the Property prior to the new term’s expiration.

You Are Likely to Recognize Gain On a Disposition of the Property, Including by Foreclosure. Any sale, exchange or other disposition of the Property by the Partnership, including by foreclosure, would likely result in the recognition of gain or loss by the Partnership equal to the difference between (i) the amount realized for the Property and (ii) the Partnership’s tax basis (which has been reduced because of prior years’ depreciation deductions) in the Property. The amount realized for the Property would be the selling price for the Property, less any expenses of sale, plus any liabilities assumed by the purchaser of the Property or liabilities that the purchaser takes the Property subject to. Any taxable gain or loss recognized by the Partnership will pass through to the partners of the Partnership. A partner also will recognize gain or loss on the liquidation of its interest in the Partnership to the extent of the difference between: (i) the sum of the amount of cash (including a deemed distribution of cash equal to the partner’s share, under applicable tax principles, of the liabilities of the Partnership) distributed to the partner by the Partnership and other property distributed to the partner by the Partnership; and (ii) the partner’s adjusted basis in his or her Partnership interest after adjustment for such partner’s share of any gain or loss from the Partnership. See “Material U.S. Federal Income Tax Consequences” below. Even if the Amendment is adopted, the tax consequences described in this paragraph would likely result on a disposition of the Property, including by foreclosure. However, if the Amendment is adopted, the disposition of the Property, and therefore the taxable events, may take place in a later taxable year than if the Amendment is not adopted. However, there is no guarantee that a disposition of the Property and the resulting the tax consequences will be deferred if the Amendment is adopted.

Distributions from Your Partnership May Not Be Sufficient to Cover Current Tax Liabilities of the Partners. As noted above, if the Property is sold or lost through the exercise of remedies by the lender, the Partnership will recognize taxable income from the disposition of the Property equal to the difference between the proceeds amount realized, if any, and the Partnership’s basis in the property. Any taxable income recognized by the Partnership would pass through to partners of the Partnership. Depending on the purchase price and related sales costs, and because the amount realized may include liabilities assumed by the purchaser of the Property, or liabilities that the purchaser takes the Property subject to, there may be a significant tax liability in excess of the funds available on a sale for distribution to the partners, if any. Because the amount realized includes liabilities assumed by the purchaser of the Property, or liabilities that the purchaser takes the Property subject to, there may be a significant tax liability in excess of the funds available on a sale. Similarly, in the case of a foreclosure, the amount realized would generally include the full amount of the debt. In addition, the Partnership may also recognize taxable income due to cancellation of indebtedness, which also may create a significant risk of a tax liability in excess of the funds available for distribution to the partners. Any taxable income would be allocated to partners. A partner also will recognize gain or loss on the liquidation of its interest in the Partnership to the extent of the difference between: (i) the sum of the amount of cash (including a deemed distribution of cash equal to the partner’s share, under applicable tax principles, of the liabilities of the Partnership) and other property distributed to the partner by the Partnership; and (ii) the partner’s adjusted basis in his or her Partnership interest after adjustment for such partner’s share of any gain or loss from the Partnership. As noted above, the tax consequences of disposing of the Property would likely result at some time regardless of whether the Amendment is adopted, but may result earlier if the Amendment is not adopted.

FORWARD LOOKING STATEMENTS

The discussion set forth in this Consent Solicitation Statement regarding the Partnership’s alternatives, estimated use of reserves, estimated distributions to Limited Partners and other parties, estimates of indebtedness and the terms and amount thereof, estimates of fees and reimbursements to be received by the General Partners and certain of their affiliates, estimates of the Partnership’s debt service coverage ratio in certain circumstances, estimates of renewal terms of governmental subsidy contracts, estimates of the tax liabilities of Limited Partners under different scenarios, estimates of the comparability of property rents to market rents, estimates or projections of future property income, cash flow, and debt service, and estimates of future results of property and Partnership operations, are forward-looking information developed by the General Partners. This information incorporates various assumptions, including without limitation original principal amounts of indebtedness and interest thereon and the terms thereof, transaction costs, revenue (including occupancy rates), government subsidy contract renewals and the terms thereof, various operating expenses, general and administrative expenses, depreciation expenses, capital expenditures, working capital levels, transaction timing, federal appropriations, internal and external HUD policies, and actions taken or to be taken by other parties. Although the General Partners deemed such assumptions to be reasonable and valid at the date made, there is no assurance that the assumed facts will be validated or that the results will actually occur. Any estimate of the future performance of a business, such as the Partnership’s business or that of the Property, is forward-looking and based on assumptions, some of which inevitably will prove to be incorrect.

THE AMENDMENT

The Amendment amends and restates Article 4 of the Partnership Agreement in its entirety as follows:

“The Partnership commenced as of the 14^th day of January, 1983, and shall continue until the 31^st day of December 2023, unless previously terminated in accordance with the provisions of this Partnership Agreement.”

Effectiveness

If approved by the Limited Partners, the Amendment will become effective when the General Partner executes the Amendment.

Reasons for the Amendment

On September 21, 2007, your Partnership refinanced its Mortgage Indebtedness secured by Versailles on the Lake Apartments, a 156-unit apartment complex located in Ft. Wayne, Indiana, which your Partnership owns. The mortgage was refinanced to take advantage of more favorable financing rates and terms, and because the

existing mortgage note contained a balloon payment due on September 30, 2007. The Partnership’s Mortgage Indebtedness matures on October 1, 2010 with the right to two one-year extensions that can be exercised by Aimco Properties. The lender can exercise remedies, which include accelerating the maturity of the Mortgage Indebtedness and foreclosing on the Property, if the Partnership is dissolved in accordance with the terms of the Partnership Agreement. If the Partnership does not adopt the Amendment, the Partnership will terminate and dissolve on December 31, 2007, and the Managing General Partner of the Partnership will liquidate the assets of the Partnership.

Because the Partnership currently does not believe it is in the best interest of the partners to sell the Property at this time, the Partnership desires to amend the Partnership Agreement to extend the term until December 31, 2023. The recommended length of extension provides the Partnership flexibility for additional refinancings of the Property. The Partnership anticipates that after the original three-year term plus the two years of extensions, a refinancing with a ten-year term could provide the most favorable terms to the Partnership, and most lenders that provide ten-year loans require the partnership’s term to extend one additional year beyond the loan’s maturity.

Alternatives to the Amendment

The Managing General Partner also considered a sale of the Property but believes that a sale of the Property at the current time would not be advantageous given current economic conditions, the local and sub-market conditions where the Proper is located, the expectation that these economic conditions and the Property’s operating performance will improve in the long term and the tax consequences of a sale to the Limited Partners (including the likelihood that proceeds will not be sufficient to enable Limited Partners to pay their resulting tax liability). In particular, the Managing General Partner considered the potential for future appreciation in the value of the Property, the change in the local rental market, and the tax consequences to the Limited Partners of a sale of the Property. Moreover, the Managing General Partner recognized that the Amendment would not prohibit or unduly restrict the Partnership’s ability to sell the Property in the future prior to the expiration of the extended term of the Partnership.

THE CONSENT SOLICITATION

Approval of the Amendment; Consents Required

The Managing General Partner, on behalf of the Partnership, is soliciting consents from Limited Partners to approve the Amendment to the Partnership Agreement to extend the term of your Partnership from December 31, 2007 to December 31, 2023. If the Amendment is approved, the Amendment will become effective as soon as the Managing General Partner signs the Amendment. If the Amendments are not approved, the Partnership will dissolve on December 31, 2007.

The Partnership Agreement requires that an amendment of the Partnership Agreement and an extension of the term of the Partnership require the consent of Limited Partners who own more than 50% of all outstanding Units of the Partnership.

As of , 2007, the Partnership had approximately 544 limited partners who collectively own 751.59 Units. Each Unit represents approximately 0.13% of the outstanding limited partnership interest. Aimco Properties and its affiliates currently own 339.45, or approximately 45.16%, of the outstanding Units. These affiliates will consent to the Amendment. Accordingly, if Limited Partners, owning at least 36.42, or approximately 4.85%, of the outstanding Units consent to the Amendment, the Amendment will be approved and the term of your Partnership will be extended.

Record Date

The Partnership has fixed , 2007 as the Record Date for determining the Limited Partners entitled to consent to the Amendment. Only Limited Partners of record on the Record Date may execute and deliver a Consent Form.

Pursuant to the terms of the Partnership Agreement, if the accompanying Consent of Limited Partner is not received by the Managing General Partner prior to , 2007, the Managing General Partner will treat the Limited Partner as having consented to the Amendment in accordance with the Managing General Partner’s recommendation.

Solicitation of Consents

This solicitation is being made by Davidson Diversified Properties, Inc., the Managing General Partner, on behalf of the Partnership. Consents will be solicited by mail, telephone, e-mail and in person. Solicitations may be made by our representatives, none of whom will receive additional compensation for such solicitations. The cost of preparing, assembling, printing and mailing this Consent Solicitation Statement and the enclosed Consent Form will be borne by the Partnership. We have retained The Altman Group, Inc. to act as its Solicitation Agent in connection with this consent solicitation. The fees and expenses of the Solicitation Agent will be paid by the Partnership.

Solicitation Period

The solicitation period will begin upon our mailing of this Consent Solicitation Statement and end on the Expiration Date, or such later date as we may indicate by a future written notice of extension of the solicitation period. The Managing General Partner expressly reserves the right, in its discretion, at any time and from time to time, to extend the period of time during which consents are solicited hereunder. Notice of any such extension will promptly be disseminated to Limited Partners in a manner reasonably designed to inform Limited Partners of such extension.

Consent Procedures

Limited Partners who desire to consent to the Amendment should do so by marking the appropriate box on the included Consent Form and by signing, dating and delivering the Consent Form to the Solicitation Agent by hand, mail, overnight courier or facsimile at the address or facsimile number set forth on the Consent Form, all in accordance with the instructions contained herein and therein.

All Consent Forms that are properly completed, signed and delivered to the Solicitation Agent and not properly revoked (See “Revocation of Instructions” below) prior to the Expiration Date, will be given effect in accordance with the specifications thereof. If you abstain from voting on the Amendment, your abstention will have no effect on the Amendment. IF A CONSENT FORM IS DELIVERED AND NEITHER THE “CONSENTS,” THE “WITHHOLDS CONSENT” NOR THE “ABSTAINS” BOX IS MARKED WITH RESPECT TO THE PROPOSAL, BUT THE CONSENT FORM IS OTHERWISE PROPERLY COMPLETED AND SIGNED, THE LIMITED PARTNER WILL BE DEEMED TO HAVE CONSENTED TO THE PROPOSAL.

PURSUANT TO THE TERMS OF THE PARTNERSHIP AGREEMENT, IF THE ACCOMPANYING CONSENT OF LIMITED PARTNER IS NOT RECEIVED BY THE MANAGING GENERAL PARTNER PRIOR TO , 2007, THE MANAGING GENERAL PARTNER WILL TREAT THE LIMITED PARTNER AS HAVING CONSENTED TO THE AMENDMENT IN ACCORDANCE WITH THE MANAGING GENERAL PARTNER’S RECOMMENDATION.

Consent Forms must be executed in exactly the same manner as the name(s) in which ownership of the limited partnership units is registered. If the limited partnership units to which a Consent Form relates are held by two or more joint holders, all such holders should sign the Consent Form. If a Consent Form is signed by a trustee, partner, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary, agency or representative capacity, such person must so indicate when signing and submit with the Consent Form evidence satisfactory to the Partnership of authority to execute the Consent Form.

The execution and delivery of a Consent Form will not affect a Limited Partner’s right to sell or transfer the Units. All Consent Forms received by the Solicitation Agent prior to the Expiration Date will be effective notwithstanding a record transfer of such limited partnership units subsequent to the Record Date, unless the Limited Partner revokes such Consent Form prior to 5:00 p.m., New York City time, on the Expiration Date by following the procedures set forth under “Revocation of Instructions” below.

All questions as to the validity, form and eligibility (including time of receipt) regarding consent procedures will be determined by us in our sole discretion, which determination will be conclusive and binding. The Partnership reserves the right to reject any or all Consent Forms that are not in proper form. The Partnership also reserves the right to waive any defects, irregularities or conditions of delivery as to particular Consent Forms. Unless waived, all such defects or irregularities in connection with the deliveries of Consent Forms must be cured within

such time as we determine. Neither we nor any of our affiliates or any other persons shall be under any duty to give any notification of any such defects, irregularities or waivers, nor shall any of them incur any liability for failure to give such notification. Deliveries of Consent Forms will not be deemed to have been made until any irregularities or defects therein have been cured or waived. The interpretations of the terms and conditions of this solicitation by us shall be conclusive and binding.

Revocation of Instructions

Any Limited Partner who has delivered a Consent Form to the Solicitation Agent may revoke the instructions set forth in such Consent Form by delivering to the Solicitation Agent a written notice of revocation prior to 5:00 p.m., New York City time, on the Expiration Date. In order to be effective, a notice of revocation of the instructions set forth in a Consent Form must (i) contain the name of the person who delivered the Consent Form, (ii) be in the form of a subsequent Consent Form marked either as “Consents,” “Withholds Consent” or “Abstains,” as the case may be, for either proposal, or in a writing delivered to us stating that the prior Consent Form is revoked, (iii) be signed by the Limited Partner in the same manner as the original signature on the Consent Form, and (iv) be received by the Solicitation Agent prior to 5:00 p.m., New York City time, on the Expiration Date at one of its addresses or facsimile number set forth on the Consent Form. A purported notice of revocation that lacks any of the required information, is dispatched to an improper address or telephone number or is not received in a timely manner will not be effective to revoke the instructions set forth in a Consent Form previously given. A revocation of the instructions set forth in a Consent Form can only be accomplished in accordance with the foregoing procedures. NO LIMITED PARTNER MAY REVOKE THE INSTRUCTIONS SET FORTH IN A CONSENT FORM AFTER 5:00 PM, NEW YORK CITY TIME, ON THE EXPIRATION DATE.

CONFLICTS OF INTEREST

The Managing General Partner is an affiliate of Aimco. Aimco and its affiliates, including the Managing General Partner, may have interests that conflict with the interests of the Limited Partners.

Affiliates of the Managing General Partner Will Continue to Receive Fees.

The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. Affiliates of the Managing General Partner provide property management services to the Partnership. The Partnership Agreement provides for payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.

The Partnership insures its property up to certain limits through coverage provided by Aimco which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its Property above the Aimco limits through insurance policies obtained by Aimco from insurers unaffiliated with the Managing General Partner. During the years ended December 31, 2006 and 2005, the Partnership was charged by Aimco and its affiliates approximately $26,000 and $16,000, respectively, for insurance coverage and fees associated with policy claims administration. During the six months ended June 30, 2007, the Partnership was charged approximately $34,000 by Aimco and its affiliates for comparable coverage. Additional charges will be incurred by the Partnership during 2007 as other insurance policies renew later in the year.

Aimco Properties May Buy Units in Future Tender Offers.

Aimco Properties and its affiliates hold 339.45, or approximately 45.16%, of the outstanding Units. A number of these Units were acquired pursuant to tender offers made by Aimco or its affiliates. It is possible that affiliates of Aimco will acquire additional Units in the Partnership in exchange for cash or a combination of cash and units in Aimco Properties, either through private purchases or tender offers. The Amendment provides additional time for Aimco Properties and its affiliates to purchase additional Units in the future, thereby increasing the influence Aimco Properties and its affiliates have over the voting decisions of the Partnership. Accordingly, the Amendment may result in increased control of the Partnership by Aimco Properties and its affiliates.

NO APPRAISAL RIGHTS

Limited Partners are not entitled to dissenters’ appraisal rights under Delaware law or the Partnership Agreement in connection with the Amendment.

INFORMATION ABOUT YOUR PARTNERSHIP

Davidson Diversified Real Estate I, L.P. is a limited partnership organized under the laws of the State of Delaware on January 14, 1983, for the purpose of acquiring, managing, and ultimately selling income-producing real properties. The Managing General Partner of your Partnership is Davidson Diversified Properties, Inc., a Tennessee corporation, and an indirect, wholly owned subsidiary of Aimco, a publicly traded real estate investment trust. In addition to the Managing General Partner, the other general partners of your Partnership are Diversified Equities, Limited, a Tennessee limited partnership, and David W. Talley. Your Partnership’s principal executive offices are located at 55 Beattie Place, P.O. Box 1089, Greenville, South Carolina 29602, and its telephone number is (864) 239-1000.

The Partnership does not have any employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities.

Additional Information.

Your Partnership, Aimco and Aimco Properties are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, file reports and other information with the SEC relating to the business, financial condition and other matters of each of the foregoing entities. Such reports and other information may be inspected at the public reference facility maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Room of the SEC in Washington, D.C. at prescribed rates. The SEC also maintains a site on the World Wide Web at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.

RECOMMENDATION OF THE MANAGING GENERAL PARTNER

The Managing General Partner recommends that Limited Partners consent to the Amendment. If the Partnership does not adopt the Amendment, the Partnership will terminate and dissolve on December 31, 2007 and the managing general partner of the Partnership will liquidate the assets of the Partnership. Because the Partnership does not believe it is in the best interest of the partners to sell Versailles on the Lake Apartments at this time, the Partnership desires to amend the Partnership Agreement to extend the term until December 31, 2023.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following summary of the material U.S. Federal income tax consequences is based upon current U.S. Federal tax law which is subject to change, possibly with retroactive effect. This summary is for general information only and does not address all aspects of U.S. Federal income taxation that may be relevant in the particular circumstances of each Limited Partner or to Limited Partners subject to special treatment under the Internal Revenue Code (the “Code”). In addition, this summary does not address any state, local or foreign tax consequences.

There will be no Federal or state income tax consequences resulting solely from the approval of the Amendment. If the Partnership is required to sell the Property, or the lender forecloses on the Property, the Partnership likely would recognize gain or loss, which would pass through to the partners of the Partnership.

Tax Consequences of Sale of Partnership Property or Foreclosure

The description set forth below is a general description of the tax consequences that a partner of the Partnership may incur as a result of a sale of any of the property or a foreclosure by the lender in the future, assuming that the applicable tax rates and tax laws remain unchanged from those in existence for the 2006 tax year. Each partner should consult with his or her own tax advisor to determine his or her particular tax consequences.

A sale, exchange or other disposition of any property by the Partnership would likely result in the recognition of gain or loss by the Partnership equal to the difference between (i) the amount realized for the property and (ii) the Partnership’s tax basis (which has been reduced because of prior years’ depreciation deductions) in the property. The amount realized for the property would be the selling price for the property, less any expenses of sale, plus any liabilities assumed by the purchaser of the property or liabilities that the purchaser takes the property subject to. In addition, the Partnership may recognize cancellation of indebtedness income to the extent it is unable to satisfy other Partnership indebtedness that is not assumed by the purchaser of the property. Any taxable gain or loss and cancellation of indebtedness income recognized by the Partnership will pass through to the partners of the Partnership.

Any gain or loss recognized as a result of the transfer of any property may be characterized for taxation purposes as ordinary or capital, or a combination of both. To the extent that any part of a property being sold consists of depreciable personal property under Code Section 1245 or depreciable real property under Code Section 1250, some or all gain recognized on a transfer of such property may be treated as ordinary income. Some portion of any capital gain recognized on the property may be considered “unrecaptured section 1250 gain” that is taxable at a maximum Federal individual rate of 25%. Generally, the unrecaptured section 1250 gain tax rate applies only to individuals and certain other noncorporate taxpayers. Gain in excess of Code Section 1245 and Code Section 1250 gain and unrecaptured section 1250 gain generally will be taxed as Code Section 1231 gain, which may be taxed at capital gain rates (currently, the maximum capital gains tax rate applicable to individuals and certain other noncorporate taxpayers is 15%) depending upon your individual tax circumstances. Any loss from a disposition of the property may be characterized as ordinary loss, subject to certain rules that may require a partner to re-characterize the loss as capital loss. Any cancellation of indebtedness income would be taxable as ordinary income at a maximum Federal individual rate of 35.0%. The rates set forth above are the Federal tax rates that currently are in effect for 2006.

The proceeds available for distribution to the partners of the Partnership in the event of a sale of the property or a foreclosure by the lender may be less than any tax liabilities resulting from such sale or foreclosure. Any taxable income recognized by the Partnership would be allocated pass through to partners. Accordingly, a Limited Partner may need to use funds from other sources to satisfy any such tax liabilities. Because the amount realized on a sale includes liabilities assumed by the purchaser of the Property, or liabilities that the purchaser takes the Property subject to, there may be a significant tax liability in excess of the funds available. Similarly, on a

foreclosure the amount realized would generally include the full amount of the debt. In addition, the Partnership may also recognize taxable income due to cancellation of indebtedness, which also may create a significant risk of a tax liability in excess of the funds available. Any taxable income would be allocated pass through to partners. As noted above, the tax consequences of disposing of property would likely result at some time regardless of whether the Amendment is adopted, but may result earlier if the Amendment is not adopted.

A partner also will recognize gain or loss on the liquidation of its interest in the Partnership to the extent of the difference between: (i) the sum of the amount of cash (including a deemed distribution of cash equal to the partner’s share, under applicable tax principles, of the liabilities of the Partnership) and other property distributed to the partner by the Partnership; and (ii) the partner’s adjusted basis in his or her Partnership interest after adjustment for such partner’s share of any gain or loss from the Partnership.

If a partner possesses suspended tax losses, tax credits, or other items of tax benefit, a partner may be able to use such items to reduce any tax liability that arises with respect to the sale of the property or a foreclosure by the lenders, and the liquidation of the partner’s interest in the Partnership.

THE TAX CONSEQUENCES TO A PARTICULAR PARTNER ARE DEPENDENT IN PART ON FACTS THAT ARE UNIQUE TO EACH PARTNER. EACH PARTNER IS URGED TO CONSULT HIS OR HER TAX ADVISORS AS TO THE EXACT CONSEQUENCES TO HIM OR HER OF SUCH ACTIONS, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as noted below, no person or entity was known by the Managing General Partner to be the beneficial owner of more than 5% of the Units of the Partnership as of , 2007.


Entity	Number of Units		Percentage
Aimco Properties, L.P. (an affiliate of Aimco)		235.05		31.27	%

Cooper River Properties, L.L.C. (an affiliate of Aimco)		85.65		11.40	%

Aimco IPLP, L.P. (an affiliate of Aimco)		18.50		2.46	%

Davidson Diversified Properties, Inc. (an affiliate of Aimco)		0.25		0.03	%

Cooper River Properties, L.L.C., Aimco IPLP, L.P. and Davidson Diversified Properties, Inc. are indirectly ultimately owned by Aimco. Their business address is 55 Beattie Place, Greenville, SC 29602.

Aimco Properties, L.P. is indirectly ultimately controlled by Aimco. Its business address is 4582 S. Ulster St. Parkway, Suite 1100, Denver, CO 80237.

As of , 2007, no director or officer of the Managing General Partner owns, nor do the directors or officers as a group own any of the Partnership’s Units. No such director or officer had any right to acquire beneficial ownership of additional Units of the Partnership.

EXPENSES

The cost of preparing, assembling, printing and mailing this Consent Solicitation Statement will be borne by the Partnership. The Fees and expenses of the Solicitation Agent are expected to be $5,000 and will be borne by the partnership.

DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
CONSENT OF LIMITED PARTNER

This consent is solicited by Davidson Diversified Properties, Inc., a Tennessee corporation and the managing general partner (the “Managing General Partner”) of Davidson Diversified Real Estate I, L.P., a Delaware limited partnership (the “Partnership”). THE MANAGING GENERAL PARTNER RECOMMENDS THAT THE LIMITED PARTNERS CONSENT TO THE AMENDMENT, ON THE TERMS DESCRIBED IN THE CONSENT SOLICITATION STATEMENT. IF NO ELECTION IS SPECIFIED WITH RESPECT TO THE PROPOSAL, ANY OTHERWISE PROPERLY COMPLETED AND SIGNED CONSENT FORM WILL BE DEEMED TO BE A CONSENT TO THE PROPOSAL.

The undersigned limited partner of the Partnership, acting with respect to all limited partnership units held of record by the undersigned on , 2007, hereby consents, withholds consent or abstains, with respect to the proposal specified below and more fully described in the Consent Solicitation Statement, dated , 2007 (the “Consent Solicitation Statement”). All capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in the Consent Solicitation Statement.


PROPOSAL:	Approval of Amendment to the Partnership Agreement to extend the term of Partnership until the 31^st day of December, 2023.

	o	Consent

	o	Withhold Consent

	o	Abstain

The undersigned hereby constitutes and appoints the Managing General Partner of the Partnership as his or her attorney-in-fact for the purposes of executing any and all documents and taking any and all actions necessary to implement the actions set forth above.

Date:



		Type or Print Name or Individual or Entity

		By:
				Signature


		Type or Print Name of Person Signing


		Capacity


		Tax Identification or Social Security Number


		Telephone Number


By Mail, Overnight Courier or Hand:	By Facsimile:	For Information please call:

1200 Wall Street 3rd Floor Lyndhurst, NJ 07071	(201) 460-0050	TOLL FREE (800) 217-9608


By Mail, Overnight Courier or Hand:	By Facsimile:	For Information please call:

1200 Wall Street 3rd Floor Lyndhurst, NJ 07071	(201) 460-0050	TOLL FREE (800) 217-9608

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	PAGE
RISK FACTORS		2
FORWARD LOOKING STATEMENTS		5
THE AMENDMENT		5
THE CONSENT SOLICITATION		6
CONFLICTS OF INTEREST		8
NO APPRAISAL RIGHTS		9
INFORMATION ABOUT YOUR PARTNERSHIP		9
RECOMMENDATION OF THE MANAGING GENERAL PARTNER		10
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES		10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		11
EXPENSES		11