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Draw on Reserve or Default Report

Nevada County CFD No. 1990-1 Mello-Roos Community Facilities Districts

This report is based on unaudited information reported to the California Debt and Investment Advisory Commission pursuant to Government Code Section 53359.5(c) from sources considered to be reliable. The Commission is not liable for inadvertent errors or omissions that are reported as part of these reports.

Issuer: Nevada County CFD No. 1990-1
County: Nevada
Project: Capital Improvements, Wildwood Estates
Original Sale Date: 12/12/1990
CDIAC Number: 90-1180
Type of Event: Default
Date of Event: 3/1/2006
Amount of Default:
Contact: County Administrator�s Office
Phone Number: (530) 265-7040

Comments:
As of the date hereof, $4,820,000 principal amount of bonds remain outstanding. The last regularly scheduled principal or interest payment was made on March 1, 1997. As has also been described in prior information releases, it is not expected that regularly scheduled principal and interest payment will be resumed. As of March 1, 2006, the amount of delinquent interest on the bonds was $2,125,402.44.

Potential Solution to the Bond Default - Update On May 24, 2005 and March 6, 2006, the County distributed an information release to bondholders which described a potential solution to the bond default. Under a potential solution the bonds would be redeemed in full with proceeds of two series of refunding bonds to be issued by a new Community Facilities District formed on February 28, 2006.

The information release stated that on August 19, 2005, Wildwood Resolution LLC entered into an Agreement to Purchase and Sale of Real Property and Escrow Instruction with Centrex Homes, a Nevada general partnership. The March 5, 2006 information release further stated that closing of the Centex sales was a condition to issuance of refunding bonds, and that there could be no assurance that Centex would purchase the land pursuant to the land sale contract. The County has been informed by Wildwood that Centex has exercised its right to terminate the land sale contract. Therefore the issuance of refunding bonds and the redemption of the bonds as described in the May 24, 2005 and the March 6, 2006 Bondowner releases is no longer contemplated at this time.

Wildwood has also informed the County that it will need to obtain a �404 Permit� from the Army Corps of Engineers related to an approximately 1-acre wetlands site on the property. Before the Corps will issue the 404 Permit, the State Historic Preservation Officer will need to approve an Avoidance/Mitigation Plan for an approximately 2 to 5-acre archeologically sensitive site on the property. Although Wildwood does not anticipate any difficulties in obtaining the required permit, no grading can occur until such permit is received. Wildwood has informed the County that it will immediately start the process to complete an Avoidance/Mitigation Plan, obtain approval from the State Historic Preservation Officer and obtain the 404 Permit. Wildwood has further informed the County that once that process is underway, it will begin marketing the land to merchant builders.

Further information, or copies of previous information releases may be obtained by contacting the Nevada County Executive�s office.

Date Received: 5/18/2006
Date posted to this website: Tuesday, June 13, 2006

LITIGATION UPDATE

Background

Special Tax Bonds Series E-1990, Community Facilities District No. 1990-1 (Wildwood Estates), County of Nevada, California (the "Bonds") were issued by the County in 1990 in the principal amount of $9,070,000. As of the date hereof, $4,820,000 of Bonds remain outstanding. The Bonds are in payment default. The last regularly scheduled principal or interest payment was made on March 1,1997. On or about March 1, 2001, September 1, 2001 and March 1, 2002, Bond owners received certain limited payments of defaulted interest under a lot sale and Special Tax prepayment program. As described in the December 10, 2001 and the May 13, 2002 Information Releases to Bondholders, Special Tax prepayments have now been made on all but two of the Phase I parcels. Therefore, no further significant payments of defaulted interest to Bond owners are expected under the lot sale program. As has also been described in prior Information Releases, it is not expected that regularly scheduled principal and interest payments will be resumed.

Proposed Amendment to Bond Indenture; Validation Lawsuit Update

Proposed Fourth Amendment to Indenture. As described in the May 13, 2002 Information Release to Bondholders, on March 26, 2002, the Board of Supervisors of Nevada County (the "Board of Supervisors"), as the governing body of Community Facilities District No. 1990-1 (Wildwood Estates) (the "Mello-Roos District"), adopted Resolution No. 02-137 approved a proposed Fourth Amendment To Indenture (the "Fourth Amendment"). The proposed Fourth Amendment would give the County the ability to redeem the Bonds at a price of less than the principal amount thereof in an effort to finally resolve the Bond default. As described in the May 13, 2002 Information Release to Bondholders' the proposed Fourth Amendment, the actual redemption price, and the period during which such redemption price would apply would not be effective unless and until approved by Owners of at least 60% of the aggregate principal amount of the Bonds.

Court Validation Action. The May 13, 2002 Information Release also stated that the proposed Fourth Amendment would not be submitted to Bond owners for their approval until its validity was confirmed by a court in a validation proceeding. A validation proceeding is a special legal action authorized by California law for issuers of municipal securities. By filing a validation action, issuers, such as the County, may obtain a court judgment establishing the legality of a proposed transaction or interpretation of Bond owner rights. The judgment is binding on the Bond owners and all other interested parties. The County filed its validation action (the "Validation Proceeding") in the Nevada County Superior Court on May 13, 2002 (Case No. 67938). The Validation Proceeding asked the Court to determine, among other matters, that upon approval by the Owners of at least 60% of the aggregate principal amount of the Bonds outstanding, the Bonds could be redeemed at a price of less than 100 cents on the dollar. Although the County believes that the Second Amendment to Indenture, dated October 17, 1995, permits such action, the County filed the Validation Proceeding in the interest of finality and certainty.

Validation Deadline Has Expired. The deadline for Bond owners and other interested parties to appear and file a response in the Validation Proceeding was June 21, 2002. Although no answers were filed by that date, a single individual (Theodore M. Schall) communicated his intention to file: (a) an answer opposing the granting of the validation judgment; and (b) a cross-complaint alleging various causes of action. In an attempt to resolve matters with Mr. Schall, the County granted him several extensions to the June 21, 2002 deadline. Efforts to reach an agreement with Mr. Schall ultimately proved unsuccessful and on September 20, 2002, Mr. Schall filed his answer and a cross-complaint in the Validation Proceeding. See, "Theodore M. Schall Answer" and "Theodore M. Schall Cross-Complaint," below. Mr. Schall alleges in his Cross-Complaint that he is a Bond owner and that he is also the owner of a 53.5-acre parcel of undeveloped land adjacent to the Mello-Roos District.

Default Judgment Taken Against All Other Persons. Because no other persons filed a responsive pleading by June 21, 2002, and no extensions were provided to any person other than Mr. Schall, on August 30, 2002, the County filed with the Nevada County Superior Court Clerk its Request for Entry of Default of all persons other than Mr. Schall. On the same date, the clerk entered the requested default. Pursuant to the validation statutes and the default, all persons other than Mr. Schall are precluded from appearing in the Validation Proceeding.

Theodore M. Schall Answer. On September 20, 2002, Mr. Schall filed an answer in the Validation Proceeding. Mr. Schall's unverified answer purports to make a general denial under Section 431.30(d) of the California Code of Civil Procedure, denying "� generally and specifically each and every and all and singular the allegations in [the Validation Proceeding] Complaint and the whole thereof, including each and every cause of action contained therein." Mr. Schall's answer also asserts eight affirmative defenses and asks the Court to enter a judgment determining the Fourth Amendment, the resolution of the Board of Supervisors approving it, and the potential redemption of Bonds pursuant to authority contained in the Fourth Amendment, each be found and declared invalid. The eight affirmative defenses in the answer are entitled: (1) Failure to State a Claim, (2) Estoppel, (3) Unclean Hands, (4) Laches, (5) Misrepresentation or Omission of Material Facts, (6) Invalidity of Prior Actions, (7) Invalidity of Proposed Amendment, and (8) Reservation of Right to Assert Additional Defenses. Mr. Schall's answer also asks that his attorneys' fees and costs be paid.

Theodore M. Schall Cross-Complaint. On September 20, 2002, Mr. Schall also filed a Cross-Complaint (the "Cross-Complaint") naming the County, Stone & Youngberg LLC, S&Y Capital Group LLC, Wildwood Resolution, Inc, Lake Wildwood Association and Does 1 through 200, as cross-defendants. Stone and Youngberg LLC is a California investment banking firm which was a party to a professional services agreement with the County relating to developing and implementing a recovery plan to resolve the special tax delinquencies in the Mello-Roos District. The agreement expired on December 31, 1999. S&Y Capital Group LLC and Wildwood Resolution, Inc [sic, Wildwood Resolution, LLC] are affiliates of Stone & Youngberg. Wildwood Resolution, LLC is the current owner of all the land in the Mello-Roos District subject to special taxes securing the Bonds. Lake Wildwood Association is the homeowners association of the neighboring community of Lake Wildwood. Lake Wildwood is an established gated community of some 2,850 residential parcels adjacent to the Mello-Roos District. Mr. Schall states in the Cross-Complaint that he reserves the right to amend the cross-complaint to pursue a class action at a later time.

The Cross-Complaint asserts thirteen causes of action, nine of which include the County as a named defendant. Specifically, the Cross-Complaint asserts the following causes of action against the County: Breach of Contract, Accounting, Breach of Fiduciary Duties, Waste, Rescission and Nullification of Transfer of EDU's (see below) and Parcels, Rescission and Nullification of Cancellation of Tax Deficiencies, Declaratory Relief, Specific Performance, and Wrongful Business Practices. An "EDU" (equivalent dwelling unit) is a capacity right in the local wastewater treatment plant. In his Cross-Complaint, Mr. Schall states that in 1991 he applied for sewer capacity for his land, "without which he could not subdivide and develop the land as 53 separate residential parcels."

Timinq. The County can not predict how long the litigation will take. Pending the resolution of the litigation and the judicial validation of the Fourth Amendment, no further progress on the proposed Fourth Amendment to the Indenture, the workout of the Bond default, or payments to Bond owners can be expected.

Further Information

Copies of previous press releases and any Information Releases may be obtained by contacting the Nevada County Administrator's Office at (530) 265-7040; Fax: (530) 265-7042.

Date Received: 10/18/2002
Date posted to this website: Thursday, November 7, 2002

SPECIAL TAX BONDS, SERIES E-1990
COMMUNITY FACILITIES DISTRICT NO.1990-1 (WILDWOOD ESTATES)

Background

Special Tax Bonds Series E-1990, Community Facilities District No. 1990-1 (Wildwood Estates), County of Nevada, California (the "Bonds") were issued by the County in 1990 in the principal amount of $9,070,000. As of the date hereof, $4,820,000 of Bonds remain outstanding. The Bonds are in payment default. The last regularly scheduled principal or interest payment was made on March 1,1997. On or about March 1, 2001, September 1, 2001 and March 1, 2002, Bond Owners received certain limited payments of defaulted interest under a lot sale and Special Tax prepayment program. See "Other Recent Developments and Updates - Lot Sale Program", below. As described below and in the December 10, 2001 Information Release to Bondholders, Special Tax prepayments have now been made on all but two of the Phase I parcels. Therefore, no further significant payments of defaulted interest to Bond Owners are expected under the lot sale program. As has also been described in prior Information Releases, it is not expected that regularly scheduled principal and interest payments will be resumed.

Proposed Amendment to Bond Indenture; Validation Lawsuit

Proposed Fourth Amendment to Indenture.On March 26, 2002, the Board of Supervisors of Nevada County (the "Board of Supervisors"), as the governing body of Community Facilities District No. 1990-1 (Wildwood Estates) (the "Mello-Roos District"), adopted Resolution No. 02-137. Resolution No. 02-137 approved a proposed Fourth Amendment To Indenture (the "Fourth Amendment"). The proposed Fourth Amendment would give the County the right to redeem the Bonds at a price of less than the principal amount thereof, together with accrued and unpaid interest to the date of redemption. The Fourth Amendment, the actual redemption price, and the period during which such redemption price would apply will not be effective unless and until they are approved by Owners of at least 60% of the aggregate value of the Bonds.

The proposed Fourth Amendment would add a new Section 8.3.1 to the Bond Indenture to read as follows:

Section 8.3.1. Optional Redemption at Redemption Price of Less than Principal Amount.The bonds outstanding under this Indenture (the "Bonds") shall be subject to redemption, as a whole, at the option of the County, from funds derived by the County from any source, on any date during a period approved by the registered owners (the "Owners") of at least 60% of the aggregate principal amount of the Bonds outstanding, at a redemption price of less than the principal amount of the Bonds to be redeemed, which redemption price is approved by the Owners of at least 60% of the aggregate principal amount of the Bonds outstanding, plus accrued interest thereon to the date of redemption.

Reason For Proposed Fourth Amendment. The County is proposing the Fourth Amendment as a way to finally resolve the Bond default. Years of work to seek a resolution of the Bond default that would result in either (a) resumption of the regularly scheduled principal and interest payments on the Bonds, or (b) the Bonds being redeemed at full par value together with accrued interest, have been unsuccessful. Prior Information Releases provided information on such attempts; copies of such Information Releases are available from the County. See "Further Information," below.

Court Validation Action. The County believes that amendments to the Bond Indenture adopted in 1995 (the Second Amendment to Indenture, dated October 17, 1995) permit the adoption of the proposed Fourth Amendment with the approval of Owners of at least 60% of the aggregate principal amount of the Bonds outstanding. However, in the interest of finality and certainty, the County is seeking a judgment of the State of California Superior Court in and for the County of Nevada in what is called a "validation proceeding." A validation proceeding is a special legal action authorized by the California Code of Civil Procedure and available to issuers of municipal securities which enables such issuers to obtain a court judgment, binding on the bond owners and other interested parties, establishing the legality of a transaction. In this case, the County is asking the Court to validate that the County's resolution approving the Fourth Amendment and, upon approval by the Owners of at least 60% of the aggregate principal amount of the Bonds outstanding, the Fourth Amendment itself, are valid and legally binding.

The County filed the validation suit in the Nevada County Superior Court on May 13, 2002. Formal notice of the validation proceeding will be mailed to all registered Bond Owners and beneficial owners who have previously identified themselves in writing to the County. If you wish to receive a copy of the summons and complaint in the validation action, please send a written request to the Office of the County Counsel, 950 Maidu Avenue, Nevada City, CA 95959.

Bond Owner Consent. If the Court determines that the Fourth Amendment is valid and legally binding upon approval by the Owners of at least 60% of the aggregate value of the outstanding Bonds, then the County will solicit such Bond Owner approval. The County intends to solicit approval at a specific dollar (or percentage) redemption price, so that Bond Owners will have a clear choice as to whether they want to resolve the Bond default by having their Bonds redeemed at a price less than par or, alternatively, to withhold their support. That is, if the validation action is successful, the County expects to solicit Bond Owner consent to an amendment that will read something like the following:

"The bonds outstanding under this Indenture (the "Bonds") shall be subject to redemption, as a whole, at the option of the County, from funds derived by the County from any source, on any date from X to Y [which would be a specific period of up to 24 months, see "Timing," below], at a redemption price equal to Z% [which would be a specific number less than 100%] of the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption."

The County does not yet know what the proposed redemption price will be, other than that it will be less than 100 cents on the dollar. At the March 26, 2002 Board of Supervisors meeting at which the proposed Fourth Amendment was approved (subject to approval by the Owners of at least 60% of the aggregate value of the outstanding Bonds), the Board of Supervisors also approved the mailing of a Request For Proposals for a valuation consultant to help establish the proposed redemption price for the Bonds. The Request For Proposals seeks an independent valuation of the property in the Mello-Roos District, given the existing impediments to development and based on a development plan currently proposed by the property owner. The County expects that an explanation of how the redemption price was derived will be included in the solicitation materials for the Bond Owner consent to the Fourth Amendment. The due date for the proposals was April 30, 2002. Five responses were received, but a winning proposal has not yet been selected.

Timing. If no Bond Owners or other interested parties answer and join in the validation proceeding, a default judgment could be entered by the end of June, 2002. The appeal period for the judgment is 30 days following the entry of the judgment. If a Bond Owner or other interested party contests the judgment sought by the County, the action would need to be litigated prior to judgment. The County cannot predict how long this would take, or if the County would ultimately be successful.

Following receipt of a favorable validation judgment, and the report of the valuation consultant referred to above, the County would then solicit Bond Owner consent to a redemption of the Bonds at some specific price, as described above. Such solicitation could be expected no earlier than late Summer or Fall 2002. Obtaining Bond Owner consent is likely to take several months, and may not be successful.

Assuming the County does obtain a favorable validation judgment and the required 60% Bond Owner consent, the property owner would be expected to seek entitlements for the land consistent with the proposed plan under which the redemption price was derived (which entitlement process is expected to take 12 to 18 months from the time it is initiated). Following entitlement of the land, a new community facilities district would be formed covering the approximately 210 acres of raw land constituting Phases ll and lll of the prior development plan. New bonds under the Mello-Roos Act would be issued by such new district to generate the funds needed to redeem the existing Bonds. These new district bonds would be sold to new investors and the proceeds would be used to redeem the Bonds of the existing Bond Owners at the approved redemption price. The earliest such a redemption could be effected would be early 2004. Such a redemption would end the Bond default for the current Bond Owners.

Further Information Releases will be sent to Bond Owners throughout the process, and detailed information will be provided on any decisions or choices to be made.

Other Recent Developments and Updates

Lot Sale Program. As described in the November 14, 2000, February 22, 2001, August 31, 2001 and December 10, 2001 Information Releases to Bondholders, Wildwood Resolution LLC, the owner of all of the land which secures the Bonds, undertook a program to sell the 68 finished parcels which constituted Phase I of the prior development plan for the Mello-Roos District. The Special Tax liens on the parcels were prepaid in connection with such sales or anticipated sale. As of the date of this Information Release, the Special Tax has been prepaid on 66 of the 68 Phase I parcels. Wildwood Resolution has informed the County that it may not prepay the Special Tax on the remaining two Phase I parcels, as the parcels appear to have site constraints that will make it difficult or impossible to accommodate a home. Thus, the land presently securing the Bonds consists of four parcels, two seemingly undevelopable single family finished parcels in Phase I, and two parcels of raw land, with no development entitlements, aggregating approximately 210 acres (Phases II and lll of the prior development plan).

Under the Indenture for the Bonds, the prepaid Special Taxes on the 66 Phase I parcels were paid to Bond Owners in partial payment of their accrued and delinquent interest. Such payments to Bond Owners were made in three separate installments on or about the date of the last three regularly scheduled interest payment dates for the Bonds - March 1, 2001, September 1, 2001 and March 1, 2002. Such three payments aggregated to $1,512,757.62, or approximately 75% of the defaulted interest owed to Bond Owners from the September 1, 1997 payment default through the March 1, 2002 interest payment date. As described in the December 10, 2001 Information Release, because there are only two additional Phase I parcels for which Special Tax prepayments may be made, Bond Owners will not be receiving any significant further partial payments of delinquent interest under the lot sale program. That is, even if prepayments are ultimately made for the two remaining Phase I parcels, the additional defaulted interest to be paid to Bond Owners would be less than $70 per $5000 of Bonds owned. In addition, and as described in prior Information Releases, it is expected that the Bonds will remain in payment default, and that no further payments of the regularly scheduled interest or principal will be made, until the stalled development and Bond default is resolved.

Wildwood Resolution LLC, the owner of all of the land which secures the Bonds, will manage the entitlement process on the Phase II and lll property should it occur. Wildwood Resolution LLC is a Delaware limited liability company. Prior to December, 2001, the members of Wildwood Resolution LLC were S&Y Capital Group LLC and LaSalle Wildwood LLC. S&Y Capital Group LLC is an affiliate of Stone & Youngberg LLC, a California investment banking firm. LaSalle Wildwood LLC is an affiliate of Jones Lang LaSalle Americas, Inc., a multinational real estate services and investment management company. In December, 2001, LaSalle Wildwood LLC sold all of its interest in Wildwood Resolution LLC and the land securing the Bonds to S&Y Capital

Group LLC, which now remains as the sole member of Wildwood Resolution LLC. Jones Lang LaSalle Americas, Inc. has no further involvement in the workout attempt.

S & Y Capital Group LLC Tender Offer. S&Y Capital Group LLC made a tender offer for the Bonds which opened December 20, 2001 and closed February 8, 2002. The tender offer was a private tender offer by S&Y Capital Group LLC. The County had no involvement with the tender offer, but has been informed by S&Y Capital Group LLC that the tender offer resulted in $355,000 principal amount of Bonds being purchased by S&Y Capital Group LLC at an average price of 37% of par, with no allowance for accrued but unpaid interest. S&Y Capital Group LLC noted that approximately half of the purchase price (approximately 19.5% of par) was attributable to the partial payment of delinquent interest which they were to receive as Owners of the tendered Bonds on or about March 1, 2002. See "Lot Sale Program," above. Since the tendered Bonds were transferred to S&Y Capital Group LLC prior to the record date for the March 1, 2002 interest payment, S&Y Capital Group LLC was entitled to receive the March 1, 2002 payment of delinquent interest for Bonds that were purchased in the tender. Such payment was approximately $976 per $5,000 of Bonds maturing 2019 owned. The effect of the expected March 1, 2002 partial payment of delinquent interest (which has now been received by Bond Owners, including S&Y Capital Group LLC), was to enable S&Y Capital Group LLC to offer a price for the Bonds which anticipated their receipt of the March 1, 2002 payment.

S&Y Capital Group LLC and its affiliate Stone & Youngberg LLC have informed the County that, as of the date of this Information Release, they own an aggregate of $1,070,000 of Bonds, or 22.2% of the outstanding principal amount.

Phase II Infrastructure Performance Bond.The County currently holds $989,802 of Phase II infrastructure performance bond proceeds paid to the County in connection with a prior failed development plan for the property. Possible uses of the funds include interest or principal payments to Bond Owners (including Bond redemptions) or the building of public infrastructure if and when development plans for the property are approved. Since such funds may be a component of an ultimate workout of the Bond default, no final decision is expected concerning their use until a workout plan is adopted by the County, or a decision is made that no such workout is viable.

Further Information

As stated in prior Information Releases, although the County and Wildwood Resolution LLC continue to actively search for possible workout solutions, no assurance can be made that any resolution of the Bond default to the satisfaction of the County, Wildwood Resolution LLC and the Bond Owners will be reached. The County has no further information to disclose on the form or timing of any such workout at this time. Communications to Bond Owners regarding material developments will continue to be made as they arise. Copies of previous press releases and any Information Releases may be obtained by contacting the Nevada County Administrator's Office at (530) 265-7040; Fax: (530) 265-7042.

Date Received: 5/16/2002
Date posted to this website: Tuesday, June 18, 2002

Issuer: Nevada County CFD No. 1990-1
County: Nevada
Project: Multiple Capital Improvements, Wildwood Estates
Original Sale Date: 12/12/1990
CDIAC Number: 90-1180
Type of Event: Default
Date of Event: 9/1/2001
Amount Withdrawn/Not Paid: $1,247,610
Contact: County Administrator�s Office
Phone Number: (530) 265-7040

Comments:
Wildwood Resolution LLC began marketing the 68 finished lots in Phase l of the development to individuals and homebuilders in January 2001. Upon sale of a parcel, the Special Tax securing the Bonds is prepaid in accordance with the Special Tax Formula. Under the Indenture for the Bonds, the proceeds from a prepayment is required to be paid to Bondowners in partial payment of the defaulted interest on the Bonds. Since the dollar amount of prepayment per individual parcel is relatively small, it was decided to make the required payments to Bondowners on the semi-annual interest payment dates (March 1 and September 1) in the amount of the aggregate prepayments which had been made in the prior 6 months. Although these payments to Bondowners of the prepaid Special Taxes are being made on regularly scheduled interest payment dates, they do not represent, and are not in the amount of, the regularly scheduled interest payments. The regularly scheduled interest and principal payments have been in default since September 1997. The lot sale program being undertaken by Wildwood Resolution LLC will not result in the resumption of the regularly scheduled interest or principal payments on the Bonds. The regularly scheduled interest and principal payments due September 1, 2001 will not be made.

As a result of the above-mentioned Phase l lot sale program, the Special Tax obligations of 24 of the 68 finished Phase l lots have been prepaid and cancelled.

On or about September 1, 2001, Bondowners will be paid approximately $446,238 in defaulted interest, which represents the Special Tax prepayment on 21 Phase l lots for which the Special Tax has been prepaid to date.

Date Received: 9/4/2001
Date posted to this website: Tuesday, September 18, 2001

Issuer: Nevada County CFD No. 1990-1
County: Nevada
Project: Wildwood Estates
Original Sale Date: 12/12/1990
CDIAC Number: 90-1180
Type of Event: Default
Date of Event: 2/22/2001
Amount of Default: $1,742,189
Contact: David Brennan
Phone Number: (916) 265-7040

Comments:
The last scheduled interest payment made on the bond, March 1, 1997, was made from proceeds of a 1995 workout attempt. The Property was the subject of foreclosure sales in 1995 and 1998 under the Mello-Roos Act and Bond document covenants. The Property was also offered at a tax sale in 1998. No bids were received at either sale.
Between February 13, 2001 and the date hereof, Wildwood Resolution LLC closed sales on three Phase I parcels to individuals or home-builders. At the closing for each such Phase l parcel, Wildwood Resolution paid a "Release Price" of $20,263.69, which moneys were deposited with the fiscal agent for the Bonds (US Bank, N.A., St Paul, MN) to be applied in accordance with the indenture for the Bonds. The Release constitutes a prepayment, in full, of the Special Tax for a parcel. As Special Tax payments, the $20,263.69/per parcel payments (a total of $60,791.07 for the three parcels) will be paid to bond owners in partial payment of the defaulted interest now due to them.

Date Received: 2/26/2001
Date posted to this website: Thursday, April 12, 2001

On November 14, 2000, the Nevada County Board of Supervisors adopted three resolutions. The effect of the resolutions is to eliminate, or establish a mechanism to eliminate, certain of the debt, taxes, interest and penalties on Phase I Property so that Wildwood Resolution LLC may be able to sell some or all of the 68 Phase I finished parcels to individuals and homebuilders. Funds generated from such sales would be applied to: 1) make certain limited payments of defaulted interest to bond owners and 2) fund the past and continuing efforts for a comprehensive workout of the defaulted bonds and stalled development in the CFD. The actions reported herein will not result in the resumption of regularly scheduled interest and principal payments on the bonds

Date Received: 12/1/2000
Date posted to this website: Friday, January 5, 2001

Issuer: Nevada County CFD No. 1990-1
County: Nevada
Project: Multiple Capital Improvements, Wildwood Estates
Original Sale Date: 12/12/1990
CDIAC Number: 90-1180
Type of Event: Default
Date of Event: 3/1/2006
Amount of Default:
Contact: County Administrator�s Office
Phone Number: (530) 265-7040

Comments:
As of the date hereof, $4,820,000 principal amount of bonds remain outstanding. The bonds are in payment default. The last regularly scheduled principal or interest payment was made on March 1, 1997. On or about March 1, 2001, Sept. 1, 2001, and March 1, 2002, registered owners of the bonds received certain limited payments of defaulted interest under a Phase 1 lot sale and prepayment program. As previously disclosed to bond owners, no further payments of defaulted interest will be made under the lot sale program. As has also been described in prior information releases, it is not expected that regularly scheduled principal and interest payment will be resumed. As of March 1, 2006, the amount of delinquent interest on the bonds was $2,125,402.44.

The bonds were issued pursuant to an indenture of the Board of Supervisors of the County of Nevada providing for the form, execution and issuance of bonds dated December 20, 1990. The original indenture was amended and supplemented pursuant to Resolution No. 94-82, adopted by the Board of Supervisors on March 1, 1994, the Second Amendment to Indenture, dated October 17, 1995, and the Third Amendment to Indenture, dated April 23, 1996.

Potential Solution to the Bond Default - Update
On May 24, 2005, the County distributed an information release to bondholders which described a potential solution to the bond default. Under a potential solution the bonds would be redeemed in full in accordance with the Third Amended Indenture at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date with premium.

Further information, or copies of previous information releases may be obtained by contacting the Nevada County Executive�s office.

Date Received:
Date posted to this website: Friday, March 10, 2006

Litigation Update - Announcement of Settlement

SPECIAL TAX BONDS, SERIES E-1990
COMMUNITY FACILITIES DISTRICT NO.1990-1 (WILDWOOD ESTATES)

Background

Special Tax Bonds Series E-1990, Community Facilities District No. 1990-1 (Wildwood Estates), County of Nevada, California (the "Bonds") were issued by the County of Nevada (the "County") in 1990 in the principal amount of $9,070,000. As of the date hereof, $4,820,000 of Bonds remain outstanding. The Bonds are in payment default. The last regularly scheduled principal or interest payment was made on March 1, 1997. On or about March 1, 2001, September 1, 2001, and March 1, 2002, Bond Owners received certain limited payments of defaulted interest under a Phase l lot sale and Special Tax prepayment program. Special Tax prepayments have now been made on all of the Phase I parcels and no further payments of defaulted interest to Bond Owners are expected under the lot sale program. The lot sale program and the limited payments of defaulted interest are further described in the December 10, 2001 and the May 13, 2002 Information Releases to Bondholders. As has also been described in prior Information Releases, it is not expected that regularly scheduled principal and interest payments will be resumed.

Proposed Amendment to Bond Indenture; Validation Lawsuit Update
Proposed Fourth Amendment to Indenture. As described in the May 13, 2002 Information Release to Bondholders, on March 26, 2002, the Board of Supervisors of the County (the "Board of Supervisors"), as the governing body of Community Facilities District No. 1990-1 (Wildwood Estates) (the ''Mello-Roos District"), approved a proposed Fourth Amendment To Indenture (the "Fourth Amendment"). The proposed Fourth Amendment would give the County the ability to redeem the Bonds at a price of less than the principal amount thereof in an effort to finally resolve the Bond default. As described in the May 13, 2002 Information Release to Bondholders, the proposed Fourth Amendment, the actual redemption price, and the period during which such redemption price would apply will not be effective unless and until approved by Owners of at least 60% of the aggregate principal amount of the Bonds outstanding.

Court Validation Action. Although the County believed that the Second Amendment to indenture dated October 17, 1995, permitted approval of the Fourth Amendment by a vote of at least 60% of the aggregate principal amount of the Bonds outstanding, the May 13, 2002 Information Release stated that the proposed Fourth Amendment would not be submitted to Bond Owners for approval until its validity had been confirmed by court order in a validation proceeding. A validation proceeding is a special legal action authorized by California law to allow public entities, such as the County, involved in the issuance of securities to secure a court judgment establishing the legality of a proposed transaction or interpretation of bond owner rights with certainty before proceeding to act in reliance thereon. A judgment establishing validity in a validation proceeding is binding on the bond owners and "all persons interested", which in plain terms means the proposed transaction is thereafter beyond challenge by anyone.

The County filed its validation action (the "Validation Proceeding") on May 13, 2002, in Nevada County Superior Court (Case No. 67938). Therein it asked the Court to determine the validity of certain matters, including the ability to redeem Bonds at a price of less than 100 cents on the dollar upon approval of a proposal to do so by the Owners of at least 60% of the aggregate principal amount of the Bonds outstanding. On August 7, 2003, the Court entered a judgment in favor of the County, finding the proposed action to be legal. The lapse of time between filing and entry of the judgment was longer than anticipated because a neighboring property owner, who also owned a single $5,000 Bond, filed an answer contesting the Validation Proceeding and a cross-complaint against the County and other parties including other matters. (See Information Release to Bondholders dated October 17, 2002, for a description of that neighboring property owner's allegations and complaints.) No other Bond Owners filed any objections in the Validation Proceeding. On July 31, 2003, that one objecting person stipulated and consented to entry of the judgment of validity in County's favor in the Validation Proceeding. He did so as part of a comprehensive settlement of all of his claims, including those under the cross-complaint, which was also dismissed with prejudice on August 7, 2003, fully disposing of the entire matter.

Next Steps. Now that the Court has determined that the proposed Fourth Amendment will be valid and legally binding upon approval by the Owners of at least 60% of the aggregate principal amount of the outstanding Bonds, the County intends to solicit such Bond Owner approval. Such solicitation could be expected to occur no earlier than the first quarter of 2004. See "Timing," below. The County intends to solicit approval at a specific dollar (or percentage) redemption price, so that Bond Owners will have a clear choice as to whether they want to resolve the Bond default by having their Bonds redeemed at a specified price less than the principal amount thereof or, alternatively, to withhold their support. The County expects that the proposed redemption price will be a function of the independently determined market value of the taxable properly in the Mello-Roos District. Such value has not yet been determined and, therefore, the County does not yet know what the proposed redemption pace will be, other than that it will be less than 100 cents on the dollar.

At the March 26, 2002 Board of Supervisors meeting at which the proposed Fourth Amendment was approved (subject to approval by the Owners of at least 60% of the aggregate principal amount of the outstanding Bonds), the Board of Supervisors also approved the mailing of a Request For Proposals for a valuation consultant to provide an opinion as to the market value of the taxable property in the Mello-Roos District (which will be used to help establish the proposed redemption price for the Bonds). The Request For Proposals sought an independent valuation of the property in the Mello-Roos District, given the existing impediments to development and based on a development plan currently proposed by the property owner (Wildwood Resolution LLC). The County expects that an explanation of how the redemption price was derived will be included in the solicitation materials for the Bond Owner consent to the Fourth Amendment. Five responses were received to the Request for Proposals, and in September, 2002, the County entered into an agreement with Economic & Planning Systems, Inc. ("EPS"), of Sacramento, California to undertake the study.

According to material provided to the County by EPS, EPS is an economics consulting firm that specializes in real estate development, the financing of public infrastructure and government services, land use and conservation planning, and government organization. Founded in 1983, EPS serves public and private sector clients in California and throughout the United States. Clients include cities, counties, special districts, multi-jurisdictional authorities, property owners, developers, financial institutions, and land use attorneys. EPS presently has 50 employees and offices in Berkeley, Sacramento, and Denver. Each of EPS's three managing principals has over twenty years of professional experience. The professional staff includes specialists in public finance, real estate development, land use and transportation planning, government organization, and computer applications.

Because the value of the land in the Mello-Roos District is a central feature of the EPS analysis, EPS will work with Seevers � Jordan � Ziegenmeyer, a real estate appraisal firm, to provide such valuation information. According to material provided to the County by EPS, Seevers � Jordan � Ziegenmeyer has been involved in the appraisal of property within numerous assessment districts and community facilities districts. Seevers � Jordan � Ziegenmeyer's corporate offices are in the neighboring county to Nevada County, and recent appraisals have been completed for assessment districts and community facilities districts in a number of Northern California jurisdictions.

Timing. As indicated above, the earliest that Bond Owner approval is likely to be solicited for approval of the proposed Fourth Amendment and a proposed redemption price would be the first quarter of 2004. Such solicitation could possibly commence significantly later, or never at all. Obtaining Bond Owner consent is likely to take several months, and may not be successful. If such Bond Owner approval is obtained, the earliest an actual redemption could be expected to occur would be late 2005, and possibly significantly later. The long period between Bond Owner approval, if obtained, and an actual redemption results from the need to either structure and issue refunding bonds, or to structure and implement some other mechanism to generate the actual funds needed to redeem the Bonds at the Bond Owner approved price.

S&Y Capital Group LLC and its Affiliate Stone & Youngberq LLC Bond
Ownership/Tender Offer.

The owner of all of the land in the Mello-Roos District securing the Bonds is Wildwood Resolution LLC. Wildwood Resolution LLC, whose only significant asset is the land in the Mello-Roos District, is a Delaware limited liability company, having S&Y Capital Group LLC as its sole member. S&Y Capital Group LLC, a California limited liability company, is a private real estate investment and development firm formed in 2001. Its sole member is S&Y Management, Inc., a California corporation, owned by the Managing Directors of Stone & Youngberg LLC, a regional investment banking and municipal bond underwriting firm founded in 1931. Stone & Youngberg LLC was not the original underwriter of the Bonds. In January 1998, the County signed a professional services agreement with Stone & Youngberg LLC to develop and implement a plan to resolve the Bond default. That agreement has since expired. Wildwood Resolution LLC continues to negotiate with the County to resolve the Bond default.

S&Y Capital Group LLC and its affiliate Stone & Youngberg LLC have informed the County that, as of the date of this Information Release, they own an aggregate of $1,605,000 of Bonds, or approximately 33% of the outstanding principal amount. Thus, affiliates of the owner of all of the land in the Mello-Roos District (Wildwood Resolution LLC) presently own just over half the amount of Bonds needed to obtain the 60% Bond Owner approval of a below par redemption as contemplated by the proposed Fourth Amendment. If S&Y Capital Group LLC acquires the 27% (approximately) needed to reach the 60% ownership threshold, S&Y Capital Group's vote alone would be sufficient to redeem the outstanding Bonds at less than par.

In addition, on July 31, 2003, S&Y Capital Group LLC commenced a tender offer for the Bonds. The offer to purchase states that S&Y Capital Group LLC "is interested in buying a limited number of the above-referenced Bonds for a price of 55% 55 cents on the dollar) of the outstanding principal amount of the Bonds. As these Bonds are in default, no additional payment will be made with respect to delinquent interest."

The tender offer is a private tender offer by S&Y Capital Group LLC. The County has no involvement with the tender offer and makes no recommendation with respect thereto.

Further Information

Copies of previous press releases and any Information Releases may be obtained by contacting the Nevada County Administrator's Office at (530) 265-7040; Fax: (530) 265-7042.

Date Received:
Date posted to this website: Monday, September 22, 2003