Neal T. Baker Enterprises, Inc. - Page 20

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          thereafter at the time of the exchange held the property for                
          investment.                                                                 
               In an attempt to show its later intent, petitioner points              
          out that only after purchasing the Beaumont Property did its                
          broker Mr. Mellor inform petitioner that it would not be able to            
          get the Beaumont Property rezoned.  It is argued that at this               
          point petitioner decided not to subdivide the Beaumont Property,            
          but instead, decided merely to process a tentative map to                   
          determine conditions for development of the property.  After                
          determining the conditions, petitioner would be able to analyze             
          the costs and feasibility of development.                                   
               According to petitioner, after obtaining approval of the               
          1980 tentative map (which contained conditions for development of           
          the property), it was decided that development of the Beaumont              
          Property was not feasible because the cost of off-site                      
          improvements was too high for the construction of entry-level               
          homes.  Petitioner asserts at this point it held "the property              
          without any specific plan of action."                                       
               Other evidence indicates that petitioner had an intent to              
          subdivide the property (such as the discussion with C.H. J.                 
          Materials Laboratory, Inc., regarding a soil investigation                  
          report).  On April 23, 1979, petitioner's Board of Directors                
          authorized the preparation and filing of an application to the              
          Real Estate Commissioner of the State of California for a Public            





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