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Department. The tentative map for the unit 10 property was
approved on April 6, 1988.
On May 5, 1988, the board investigated the advantages
inherent in having Ridgemark perform as the subdivider of unit 10
as compared with selling the property to Construction and having
it act as the subdivider. The board determined that the
development of unit 10 by Construction would be preferable.
On August 2, 1988, Joseph Drosihn (Drosihn), a
representative of Y.L. Shen (Shen), contacted Ridgemark regarding
the purchase of all the developable land owned by Ridgemark.
Drosihn and Paullus agreed that land that had been formerly
conveyed to Financial would be reconveyed to Ridgemark and
included within its assets upon sale.
On August 8, 1988, Ridgemark represented that it intended to
subdivide land that was covered under prior agreements with the
local water utility. Consequently, the unit 10 property needed
sewer and water service installed. Ridgemark was referred to as
“Subdivider” in the agreement and agreed to pay $290,465 for
installation of water facilities and $282,559 for the
installation of sewerage facilities.
On August 12, 1988, Ridgemark’s board of directors met to
discuss the offer by Shen. The minutes of the meeting state:
The President [Paullus] advised the meeting that his
legal and tax advisors are developing a transaction
structure to include a tax free exchange in the sale of
the Corporation and the purchase of the Paicines Ranch,
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