SCHEDULE 14A INFORMATION
           Proxy Statement Pursuant to Section 14(a) of the Securities
                              Exchange Act of 1934

Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|

Check the appropriate box:
                                             
|_|     Preliminary Proxy Statement             |_|   Confidential, for Use of the
|_|     Definitive Proxy Statement                    Commission Only (as permitted by Rule
|_|     Definitive Additional Materials               14a-6(e)(2))
|X|     Soliciting Material Pursuant to Rule
        14a-11(c) or Rule 14a-12


          PROMETHEUS INCOME PARTNERS, a California limited partnership
                (Name of Registrant as Specified in Its Charter)

           PROMETHEUS DEVELOPMENT CO., INC., a California corporation
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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|X|     No fee required.

|_|     Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

        (1)    Title of each class of securities to which transaction applies:


        (2)    Aggregate number of securities to which transaction applies:


        (3)    Per unit price or other underlying value of transaction  computed
               pursuant to Exchange Act Rule 0-11 (set forth the amount on which
               the filing fee is calculated and state how it was determined):



        (4)    Proposed maximum aggregate value of transaction:


        (5)    Total Fee Paid:


|_|     Fee paid previously with preliminary materials:

|_|     Check box if any part of the fee is offset as provided  by Exchange  Act
        Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
        paid previously.  Identify the previous filing by registration statement
        number, or the form or schedule and the date of its filing.

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                           PROMETHEUS INCOME PARTNERS

                               350 Bridge Parkway
                           Redwood City, CA 94065-1517
                                 (650) 596-5393

October 17, 2001

To the Limited Partners:

The General  Partner is pleased to announce  that it has now reached  settlement
with  all  parties  in  the  Alderwood  and  Timberleaf   hardboard  siding  and
construction  defects  litigation.  In total,  from all Alderwood and Timberleaf
settlements,  defendants  have agreed to pay  Prometheus  Income  Partners  (the
Partnership) an aggregate of $14.6 million. Of this amount, the Partnership will
receive a net amount of approximately $10.8 million.

As you know,  throughout  the summer  the  Partnership  continued  to pursue the
previously announced acquisition of the outstanding limited partner units by PIP
Partners-General,  LLC, (PIP Partners) an affiliate of the general partner.  The
agreement as to the proposed merger expired on August 31, 2001. Since that time,
the Partnership  and PIP Partners have been  evaluating  options with respect to
providing  limited  partners  with the  liquidity  many of you have  sought in a
transaction  that  is  both  fair  to  the  limited  partners  and  commercially
acceptable  to PIP  Partners.  In  light  of new  appraisals  obtained  and  the
settlements of the litigation,  PIP Partners has indicated its intention to make
a new proposal for an all cash merger.  To better  evaluate this  proposal,  the
Partnership  is now  consulting  with an  investment  banker  to  determine  the
fairness of any firm offer PIP Partners makes.  As of this writing,  barring any
material  changes in  circumstances,  it is  anticipated  that PIP Partners will
propose a merger transaction in which the consideration to be offered in respect
of each limited partner unit will be in excess of the minimum cash consideration
previously  proposed.  This is, of course, only a statement of present intention
and is  subject to change  due to any  number of  developments.  There can be no
assurance that such a transaction will be proposed or that any such transaction,
if proposed, will be consummated.

If able to reach agreement on a revised merger  proposal,  the Partnership  will
file  revised  preliminary  proxy  materials  with the  Securities  and Exchange
Commission.  You will be able to obtain the revised  preliminary  version of the
proxy statement,  and any other relevant  documents,  for free at the Securities
and Exchange Commission's website at www.sec.gov.

Once a definitive  proxy statement  relating to a proposed  transaction has been
filed with the  Securities  and Exchange  Commission,  it will be distributed to
limited  partners.  In such event,  read the definitive proxy statement when you
receive it because it will contain  important  information that expands upon and
clarifies the information contained in this letter, including a detailed list of
participants  in the proxy  solicitation,  as well as their  direct and indirect
interests in the  Partnership.  Upon request,  once they become  available,  the
general  partner will provide you for free with a  definitive  proxy  statement,
partnership Annual Report on Form 10-K for the year ended December 31, 2000, and
our Quarterly  Reports on Form 10-Q for the quarters ended March 31, 2001,  June
30, 2001 and September 30, 2001.

On behalf of the General  Partner,  I thank you and appreciate your patience and
consideration of these matters.

                                  Prometheus Development Co., Inc., a California
                                  corporation

                                        /s/ John Murphy
                            -----------------------------------
                                  By:        John J. Murphy
                                  Title:    Vice President