John, Sections 1C and 1D are one in the same. We only have 4% total for geotechnical engineering and testing. The math in your example works perfectly. My only comment is that the example does not address the geotechnical engineering and testing amount. If you like, we can remove the $150,000 and recalculate the numbers. This should not be an issue since UDR did not prefund the change orders. This number is probably what is causing the differences in the math. Please let me know how you would like to proceed. Thanks, Clay Barnett, P.E. Town Engineer Town of Addison 16801 Westgrove Drive Addison, TX 75001-2818 Office: (972) 450-2857 From: Ext_mail John Hill Sent: Friday, July 16, 2010 1:12 PM To: Clay Barnett Subject: Phase 1D Clay, I am still confused by the math (not surprising for a lawyer). My confusion is over how the amounts for Kleinfelder and for the construction management fee were determined. I’m also not clear on the additional $150,000 that you mentioned during our conversation. I’ve attached the revised draft of the Phase 1D construction management agreement. The only change is to Section 2. It appears that the $150,000 number has to somehow work itself into that provision (or the provision needs to be revised), because the original number for the amount owed by UDR the revised number is $150,000. After spending some time on this, I want to make sure that the language of the master facilities agreement matches up with how the math works. Below are pertinent provisions of the agreement regarding percentages for inspection services, geotechnical services, and construction management services. Would you please review and comment on whether or not the language matches the math? Thanks. Section 6.D. City can enter into a contract with an engineering firm (or other inspection firm) to provide inspection services relating to the construction of any Public Infrastructure Improvement(s). The cost of those services is to be paid through available funds (e.g., from Funding No. 1). The cost cannot exceed 4% of the actual construction cost (as may be adjusted by change orders) set forth in an executed construction contract unless agreed upon in writing by both the City and UDR. Section 6.C. City is to enter into a contract with a geotechnical engineering firm to provide soils testing services relating to the construction of Public Infrastructure Improvements. Costs for those services are to be paid through available funds (e.g., from Funding No. 1). The cost cannot exceed 2% of the actual construction cost (as may be adjusted by change orders) set forth in an executed construction contract unless agreed upon in writing by both the City and UDR. Section 6.B.(2)(c) UDR entitled to be paid eight (8%) percent of the total construction costs for the Improvements which are the subject of the construction contract (payment is made solely from Funding No. 1 or Funding No. 2, as applicable). However, UDR entitled to such payment only if the costs to design and construct the applicable Improvements do not exceed the amount to be paid for such Improvements from Funding No. 1 or Funding No. 2 (as applicable) as allocated in Exhibits “C-1”, “C-2”, and “D” attached hereto. For example: (i) as shown in the amended Exhibit “C-1” attached to this First Amendment, the amount allocated to the design and construction (including, without limitation, the construction management fee of 8% of the construction costs) of Phase 1E of the Phase I Infrastructure is $1,451,699. Assume that out of the $1,451,699, $100,000 of that amount is the design (e.g., engineering) cost, leaving a balance of $1,351,699. The balance of $1,351,699 will be used toward payment of the cost of construction (including the construction management fee of 8%), allocated as follows: $1,251,573 for the actual construction costs, and $100,126 (8% of $1,251,573) for the construction management fee. If the actual cost of a construction contract to construct the public infrastructure improvements included in Phase 1E is $1,351,173, UDR and the Property Owners shall pay the City the difference between $1,251,573 and the contracted cost of $1,351,573, or $100,000, prior to the City executing the Phase 1E construction contract. UDR will be entitled to payment of a construction management fee based on the amount allocated in the amended Exhibit “C-1” to actually construct the Phase 1E public infrastructure improvements (that is, 8% of $1,251,573, or $100,126), but is not entitled to payment of a construction management fee on the $100,000 paid by UDR.