"Here we go!" exclaims Phoenix Mayor Thelda Williams, cutting a yellow ribbon and watching it flutter to her feet.

Ribbon cuttings come with the mayoral turf, but Williams' wielding of the ceremonial scissors last Saturday at a north Phoenix manufacturing plant was spiced with irony.

For the past six months, Williams had done everything she could to have a Continental Homes subdivision built right next door to the $8 million Arizona Precision Sheet Metal manufacturing plant she was now so proudly dedicating.

The Thul family, owners of the fabulous sheet-metal facility, spent more than $80,000 fighting Williams' subdivision proposal. The family feared homes would become a constant source of complaints over the noise generated by trucks and sheet-metal-stamping equipment.

Williams--who became temporary mayor in March after Paul Johnson resigned, and who will lose that title after an October 25 election--had made the proposed Continental subdivision one of her key agenda items. Continental had planned to buy 77 acres once the landowners had it rezoned from industrial to residential use.

In June, she convinced the council to override the planning commission, which voted against amending the general plan to allow residential development in an area planned for industrial uses.

Williams' strong support of the residential project soon raised the scorn of adjacent property owners, who feared a subdivision would diminish industrially zoned property values and make it difficult to operate.

Accusations that Williams was working on behalf of her close friend and political adviser, real estate broker Michael Longstreth, also surfaced. One area property owner even asked the county attorney to investigate, a request that was declined.

Longstreth, a longtime player in the Phoenix real estate market, was the broker for the sellers of the land. He stood to make a six-figure real estate commission if the industrially zoned land could be converted to residential. All Longstreth needed to finalize the deal was council approval of a site-specific zoning plan.

But the project hit a couple of last-minute snags. Publicity about the subdivision ("A Lame Duck in Hot Water," August 11)--along with a series of zoning stipulations requested by the Thuls and adopted by the planning commission--helped sink the proposal, at least for now.

"I think that story created a lot of problems in the sense that the planning and zoning commission felt sort of chagrined when the council decided to give the residential" planning amendment, says Jeanne Young Chanen, an attorney representing the owners of the property that Continental had hoped to buy. The landowners formally withdrew their request to rezone the land on August 30. Neither Longstreth nor Continental would comment on the withdrawal.

The change in circumstances didn't appear to bother Williams. There she was last Saturday. Smiling. Dancing a little jig after dedicating a manufacturing plant whose owners had battled her for six months.

Williams had nothing but kind words for the Thul family, and noted that the plant will be a magnet for future industrial development in the area north of Deer Valley Airport. "It will serve as a model for other corporations coming in," Williams told company employees and well-wishers.

But Williams, who will resume her duties as a councilmember representing north Phoenix after a new mayor is sworn in, hasn't given up hope for a subdivision on the adjacent land.

"If it's the right builder and they are quality homes, it's possible," she says.