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

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|_|     Preliminary Proxy Statement            |_| Confidential, for Use of the
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        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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                        PROMETHEUS DEVELOPMENT CO., INC.

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

July 3, 2002

To the Limited Partners:

By now, you should have  received our proxy  materials  relating to a meeting of
Prometheus  Income  Partners  to be held on July 24,  2002 to address a proposed
merger in which all of the outstanding  limited  partnership units of Prometheus
Income Partners would be acquired by PIP Partners-General,  LLC, an affiliate of
your general partner, in an all-cash transaction.  You may also have received or
may receive correspondence from two limited partners,  Everest Investors 12, LLC
and Everest Properties II, LLC, indicating their intention to solicit proxies in
opposition  to the proposed  merger and setting  forth their  reasons  therefor.
Before taking any action in response to Everest's  anticipated  opposition,  YOU
SHOULD KNOW THE FACTS.

We have  received a non-binding  letter of intent from Aspen Square  Management,
Inc. to acquire the Partnership's real estate properties. Their letter of intent
is not an offer or  contract  to buy and  contains  certain  contingencies  that
allows them to walk away at any time.  Several aspects of this letter of intent,
including the actual purchase price being  proposed,  are unclear and subject to
interpretation.  We have  made  numerous  attempts  to  contact  Aspen to obtain
clarification  of their letter of intent pursuant to the last paragraph of their
letter  dated June 24, 2002 as follows "... to clarify any aspects of this offer
that you feel need further  illumination".  To date,  Aspen has not responded to
our numerous  attempts to contact  them.  If Aspen  chooses to follow up on this
matter,  we will  apprise  you of the status of that  process  and the  economic
details  in advance  of the  meeting  so as to enable you to act in an  informed
manner.

In any case, you should be aware of the following:

               o      Aspen's  letter of intent is  subject to  significant  and
        substantial  conditions.  First,  the  letter of intent  is  subject  to
        Aspen's  completion  of due  diligence on the  properties.  Second,  the
        letter of intent  may be subject  to Aspen  being  able to  finance  the
        transaction in part through the assumption of the existing  mortgages on
        the  Partnership's  properties.  Third,  any purchase of the  properties
        would  be   subject   to  the   parties'   negotiation   of   definitive
        documentation.  As such, acceptance of Aspen's letter of intent would do
        little more than give Aspen an option to acquire these properties. There
        can be no  assurance  that  any  sale  of the  partnership's  properties
        pursuant  to this  letter of intent  would ever be  consummated.  As set
        forth in our proxy materials,  the merger, on the other hand, is subject
        to minimal conditions and, as of the date hereof, is fully financed.

               o      Even if consummated,  it is unlikely you would receive the
        proposed purchase price in full or in the immediate future.  Because the
        letter


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         of  intent  is  structured  as  an  acquisition  of  the  partnership's
         properties,  any  distribution  to you would remain  subject to, and be
         reduced  by,  the  liabilities  and  commitments  of  the  partnership,
         including any  contingent  liabilities  arising in connection  with the
         sale of the properties  itself.  Cash available for distribution to you
         would be reduced by these liabilities.  Further, distributions would be
         subject to reserves to satisfy these actual or contingent  liabilities.
         As such,  your final  distributions  would be delayed for a substantial
         period  of time and you  would  accrue  taxable  income  for  which the
         corresponding distributions would be deferred. The merger would provide
         you with a complete cash pay-out promptly following the meeting.

               o      A  sale  of  the   Partnership's   properties  would  take
        significant   time  to  complete.   Under  the  terms  of  your  limited
        partnership agreement, a sale of the properties requires the approval of
        the limited partners.  Accordingly,  such approval would require a proxy
        solicitation  to be commenced,  which  requires that proxy  materials be
        submitted for review to the Securities and Exchange Commission,  as well
        as rescheduling  of a meeting to approve any such  transaction at a date
        significantly later than the meeting scheduled to address the merger. If
        the merger is not  consummated,  you would  continue to bear the risk of
        loss in respect of the Partnership's properties.

We  believe  that  Everest  is  acting in what it  perceives  to be its own best
interests, which may not be consistent with those of the other limited partners.
Everest has made no proposal to us that would  benefit the  interests of all the
limited partners.

YOUR GENERAL PARTNER AND ITS AFFILIATED  PARTIES  CONTINUE TO RECOMMEND YOU VOTE
FOR THE  MERGER.  We refer you to, and  suggest  you read  carefully,  our proxy
materials,  including the sections under the caption "Liquidation"  beginning on
page 35 of our proxy  statement which address the pros and cons of a sale of the
Partnership's properties vis-a-vis the merger.

Of course,  there is no assurance that the proposed  merger will be consummated.
However, barring unforeseen material developments between now and the meeting on
July 24, we believe  the merger will be  consummated  if approved by the limited
partners. We will continue to attempt to engage Aspen with a view to determining
whether  Aspen is  prepared  to  present a deal more  favorable  to the  limited
partners  than the  merger.  We will  continue  to  apprise  you of any  further
developments in this regard.

We have previously advised you of our conclusion that the merger is in your best
interests.  To date,  there  does not appear to be an  alternative  that is more
favorable to the limited  partners.  On behalf of your general partner,  I thank
you for your reasoned consideration of this matter.

                                        Prometheus Development Co., Inc.,
                                           a California corporation

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


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