Melvin Mark- Project Management Agreement

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MEMORANDUM TO: Dan Petrusich, Melvin Mark Development Co. FROM: Randy Curtis, Director SUBJECT: Management fee DATE: October l3, 1997 Following our recent discussions on your company's property development agreement, I expressed concern about the higher compensation fees for your services. You indicated that the higher fee was being considered because you under-estimated the work involved. While both parties seem to be avoiding further discussions on the NIlVIDC's fee until a balanced budget is available, we have taken notice of the $775,000 fee in the financial models. Your staff has provided us with valuable services in the last few months. These services, however, are consistent with our expectations when we prepared the RFP. We expected some increase in the fee based on the building commissioning services you would provide. However, given the fact that MMDC was one of the few companies that met with us to discuss the project and scope of work before the RFP proposals were due, I am surprised that you feel that you underestimated the scope of work and fee estimates. I appreciate that your company has been reluctant to finalize negotiations on the fee issue until final budget and design issues are resolved. However, I would like to reiterate some concerns that Mike and I shared with you on September 26th. They include: Dan Berrey's services were terminated because his fee was determined to be well above market @ 5% of hard cost. Independent research and proposals received indicate that market rates for project management services would be in the 1'/2 to 2'/2% range, based on estimated hard costs.