The City of Flagstaff convened a special session of the council on Monday September 29, 2008 to hear comments and suggestions from the public on ways to assist in the completion of improvements for Presidio in the Pines. The developer / owner presented a plan that in cooperation with the city, the current bonding company holding a letter of credit, and the bank that currently holds approximately 3.5 million as collateral for the letter of credit, would give city’s approval of the release of the 3.5 million to go toward completion of public improvements in the timeliest fashion. After a long night and comments from several interested parties in support of the plan, the council, after an executive session with the City Attorney, agreed that the best way to move this project forward is to draft an agreement with the developer leading to the release of approximately 3.5 million with stipulations of City oversight that have yet to be determined. This agreement is to be voted on and hopefully adopted at the next City council meeting Tuesday October 7^th. Once the council approves this agreement, the developer / owner will have to submit it to the bankruptcy court for their approval. If the court approves this agreement, the understanding is that the 3.5 million could be released in a matter of days, allowing for site construction to resume almost immediately. This agreement has the effect of postponing a bankruptcy hearing that was scheduled for October 1^st until the afternoon of October 8^th, the day after the anticipated council approval. As well, the developer / owner reorganization plan was to have been submitted to the bankruptcy court on or before October 2^nd. The developer has asked the court for a continuance until after the city council approval of the agreement as this agreement will be an integral part of the overall business plan.

This negotiation and proposed action by the City of Flagstaff is a significant step in the process of reinitiating development activity on the site allowing construction of homes to begin as soon as possible.  We will continue to monitor the activity and report any changes or progress in the process.  We are providing two lenders with information on the existing lots owned by our buyers and we will be in direct contact with GMAC, in particular, as progress is being made with the Phase I improvements.