Neal T. Baker Enterprises, Inc. - Page 23

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               Petitioner primarily relies on Mr. Baker's statements to               
          determine its intent at the time of the exchange.  In support of            
          its intent not to subdivide the Exchange Property, petitioner               
          lists several factors:  (1) Cost of off-site improvements,                  
          (2) lack of housing market, (3) other obstacles, and (4) health             
          concerns.  According to petitioner, the primary reasons for not             
          subdividing the Exchange Property were the cost of the off-site             
          improvements and its unsuccessful sales record in selling the 14            
          lots in Tract No. 10018-1.                                                  
               (1) Feasibility of Development (Off-Site Costs)                        
               Petitioner claims that the cost of off-site improvements               
          prohibited development of the 48 lots in the Exchange Property.             
          As a result, petitioner argues that it held the Exchange Property           
          for investment.  In regard to the Exchange Property, petitioner             
          received an estimate of off-site costs in 1987 in the amount of             
          $389,435.81, and received another estimate in 1988 in the amount            

               9(...continued)                                                        
               On behalf of our client Neal T. Baker Enterprises Inc. owner           
               of approved Tentative Tract No. 10018 we hereby request                
               permission to phase Tract 10018. Our client wishes to                  
               initially improve and build on lots adjacent to Pennsylvania           
               Avenue (Lots 1-14 as shown on the attached print of a copy             
               of the approved Tentative map from Tract 10018).                       
                    Although it is the owner's intent to phase this Tract             
               into two phases, defining the initial Tract by number 10018-           
               1; subsequent phases, if any, would be defined as Tract No.            
               10018-2, Tract No. 10018-3 etc., with the number 10018                 
               defining the last phase.  Improvement plans, street, sewer,            
               water grading etc. shall be modified to correspond and made            
               compatible for any and all phases to the satisfaction of the           
               city of Beaumont.                                                      




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