Is this Development Fee Fair to Other Partners? Development Fee

[David Friedman]

Background:

Three friends of mine own adjacent commercial land in San Bernardino, CA. All together, its a little over 3 acres and we hope to build a mixed-use project with ground-floor retail and 3 - 4 stories of housing above. 2 of the property owners operate two separate restaurants on their lots and want me to tear down their old buildings and build them brand new restaurants as part of the development. They are being reasonable as far as what they value their properties at. I am trying to figure out my equity split for taking on the developer role of the project. I have experience developing retail and housing projects for my own company, but never for another group. I estimate this project will be around $30,000,000 to develop.

Questions:

What is a fair equity split if I complete the following development services for this group? Originally, I was thinking 30% equity for my development company based off of what a mentor told me, but I'm not sure if that makes sense.

• - Our team will be heavily involved in ensuring the project’s success through our established government, development vendor (Architects, engineers, GC, etc.) and tenant relationships
• - We will additionally identify and apply for any available grant funding that may offset the cost of the project for all involved parties
• - We will obtain contracts with any other necessary land owners that we deem necessary to the success of the project
• - We will supplement the project’s capital contributions as necessary through debt or equity offerings.
• - We will secure construction financing from a commercial bank and refinance once the asset is stabilized.

I would also like to invest in this project as a show of good faith, but I'm not sure how much or what is fair. I was originally thinking that I could invest $25,000 to assist in hiring the architect and creating the initial marketing package and then additional capital once the project had entitlements and construction permits.

Is there anything else that I should be thinking about? I have a good real estate attorney, but I'm not sure if this makes the most since as a JV, or GP/LP type of structure. I will also be asking the attorney for advice. If anybody knows of any attorneys who they would recommend for this type of project, I am very open. I want to get this development started on the right foot and having a solid contract that is understood by all parties makes the most sense as a starting point.

Thank you for your time and wisdom!