(Sierra Pacific Development Fund)
                                                       (File Number:  000-11068)

SIERRA PACIFIC

770 Irvine Center Drive, Suite 770
Irvine, California 92618
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SPDF o SPDFII o SPDFIII o SPPI '84 o SIP V



March 1, 2000


To the Limited Partners of Sierra Pacific Funds

         We want to inform you of a proposed  future  transaction  involving the
Partnership,  which  we  believe  could  benefit  the  limited  partners  of the
Partnership.

         CGS Real Estate  Company,  Inc.  ("CGS"),  an affiliate of the managing
general  partner of the  Partnership,  is in the  process of  developing  a plan
pursuant to which the properties owned by the Partnership would be combined with
the  properties  of  other  real  estate  partnerships  managed  by CGS  and its
affiliates.  These  limited  partnerships  own  office  properties,   industrial
properties,  shopping  centers,  and  residential  apartment  properties.  It is
expected  that  the  acquiror  would  in the  future  qualify  as a real  estate
investment  trust.  Limited partners would receive shares of common stock in the
acquiror,  which would be listed on a national securities exchange or the NASDAQ
national market system.

         The  purpose  of  the  transaction  is to  combine  the  assets  of the
partnerships  and CGS in a new entity,  which will be able to raise  capital and
acquire additional properties. In addition, limited partners, as shareholders in
the real estate  investment  trust,  would hold a security  freely tradable on a
stock exchange.

         The  Partnership's  participation in this plan will require the consent
of the limited  partners.  The plan and the benefits  and risks  thereof will be
described in detail in a registration  statement  filed under the Securities Act
of 1933  and  solicitation  material  to be  provided  to  limited  partners  in
connection with the  solicitation of the consent of the limited  partners.  This
notice does not constitute an offer of any securities for sale.

         All limited partners are strongly urged to read the relevant  documents
which will be filed with the Securities  Exchange  Commission in connection with
the  above  described  transaction.   These  documents  will  contain  important
information  and you may obtain them free of charge on the  Securities  Exchange
Commission's website at www.sec.gov.

         All limited  partners should recognize that the plan described above is
in the  preliminary  stages  and  the  managing  general  partner  can  make  no
assurances that such plan will be consummated.

Very Truly yours,
S-P Properties, Inc.












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