This information has been provided by Castle Pines North Metro District.

On January 26, 2010, the City of Castle Pines North (CPN) filed a petition in District Court to dissolve the Castle Pines North Metro District.

The Metro District exists primarily to deliver drinking water, wastewater and storm water services, and parks and open space management.

After months of working with City Council ato understand its rationale for filing the Petition for Dissolution and the associated costs, benefits and practical consequences for the people and properly values of Castle Pines North, we have a responsibility to disclose the following facts:

On March 25, 2010, Wells Fargo Bank issued the adjacent letter notifying the Metro District, that the City’s Petition for Dissolution constitutes a “Material Adverse Change” and an “Event of Default.”

Wells Fargo Bank is uncertain how the City of Castle Pines North (and ultimately the people of CPN) proposes to repay approximately $24,470,000 in existing water infrastructure-related debt.

Wells Fargo Bank has frozen Metro District assets, which has the effect of at least temporarily jeopardizing the Metro District’s AA Bond rating and its ability to secure renewable water supplies.

The City of Castle Pines North possesses no bond rating.

While we respectfully disagree with the City’s action, please know we will continue working in good faith with City leaders to problem-solve while honoring our fiduciary responsibility to you, the public. To that end, the Metro District recently issued a letter to the City, asking for the City’s plan to finance ongoing Metro District operations, repay existing debt, secure renewable water supplies and respond to the letter from Wells Fargo Bank.

Please contact Assistant District Manager, Dan Schmick, at contact by e-mail or 303-688-8550 with questions.

March 25, 2010

Castle Pines North Finance Corporation
c/o District Manager
7 404 Yorkshire Drive
Castle Pines North, Colorado 80104

Re: Reimbursement Agreement, dated as of August 1, 2008, between Wells Fargo Bank, National Association and Castle Pines North Finance Corporation (the “2008 Reimbursement Agreement) and Reimbursement Agreement, dated as of May I, 2009, between Wells Fargo Bank, National Association and Castle Pines North Finance Corporation (the “2009 Reimbursement Agreementî) (the 2008 Reimbursement Agreement and the 2009 Reimbursement Agreement are collectively referred to as theî Reimbursement Agreements”)

Gentlemen:

Wells Fargo Bank, National Association (the “Bank”) is the Credit Provider under the Reimbursement Agreements. Castle Pines North Finance Corporation (the “Corporation”) issued certificates of participation described in the Reimbursement Agreements and related Indentures. The Bank issued letters of credit securing the payment to holders of the certificates of participation to a proportionate share of certain revenues payable to the Corporation arising under the 2008 Lease Agreement, dated as of August 1, 2010, between the Corporation and the Castle Pines North Metropolitan District.

Enclosed is Application For Dissolution, filed by the City of Castle Pines North pursuant to Section 32-1-701(3), C.R.S., dated as of January 26, 2010, that purports to begin a process that will result in the dissolution of the Castle Pines North Metropolitan District.

Section 1.1 of the 2009 Reimbursement Agreement defines the term “Material Adverse Change” as follows:

“Material Adverse Change” means any material and adverse change, whether individually or in the aggregate, in the assets, business, results of operations, properties, assets, liabilities, prospects or condition, financial or otherwise, of the Corporation or the District that in the judgment of the Bank, affects the Corporation’s or District’s ability to make payments as and when due on all or any part of the Obligations or perform under the Related Documents.

Section 7.1 (0) of the 2009 Reimbursement Agreement provides that the occurrence of a Material Adverse Change is an Event of Default under the 2009 Reimbursement Agreement and by operation of a cross default provision results in an Event of Default under the 2008 Reimbursement Agreement.

In the judgment of the Bank, the dissolution of the District would be a Material Adverse Change. The Bank believes that the prospects of the District have been materially and adversely affected by the filing of the Application for Dissolution.

The Bank is not declaring an event of default under the Reimbursement Agreements at this time. However, the Bank requires clarification of the intentions of the City of Castle Pines with respect to the dissolution of the Castle Pines North Metropolitan District.

The Bank reserves all rights, remedies and claims.

Sincerely,

Ted R. Sikora II, Esq.
for
DAVIS GRAHAM & STUBBS LLP

TRS:jIl
cc: Tim R. David