Fred Gunther, CCIM

July 9, 2008

Mr. Owen Beitsch

Real Estate Research Consultants, Inc.

14 E. Washington Street, Suite 500

Orlando, FL 32801

RE: SELECTION OF MASTER DEVELOPER CANDIDATE

Mr. Beitsch:

I would like to start by saying that I am an avid supporter of the Vince Whibbs Sr. Community Maritime Park and I appreciate your commitment to making it a reality.

It has been exciting to follow the meetings and how you have dealt with the obstacles that have emerged during this process. I am impressed with the performance of the CMPA Board members and I believe they have addressed the issues before them in a thoughtful manner.

I also want you to know that I have become slightly concerned over the past few months, beginning with the announcements by Carter Real Estate and Hammes Company that they did not intend to participate further as Master Developer candidates. This news was disturbing to me because based on their past experience creating mixed use developments, they were the most qualified candidates in my opinion. I met the representatives for Carter and Hammes when they were in town to make their presentations, so on the day they announced their intention to withdraw, I called them to find out why they had come to this decision and see if anything could be done to dissuade them.

They had specific concerns and in my opinion, some if their concerns could have been addressed had there been better communication between the CMPA Board and the Master Developer candidates. I only mention this because it appeared to me that avoiding a possible delay in the timeline seemed to be a higher Board priority than making substantial efforts to discover why two of our Master Developer candidates decided to drop out after expending so much effort.

I believe that gathering all necessary information and reevaluating the process before moving along to the next stage is critical to the success of this project. As you know, you are scheduled to proceed with a major step at your next meeting, the evaluation and possible selection of the Master Developer in order to negotiate a development agreement. I would like to share my concerns with the proposals before this next step is taken.

My impression and that of many others throughout this process was that the Master Developer would agree to handle the public portions of the park and propose specific, substantial improvements on the parcels that are slated for private development. I understand that making a commitment to develop some of the private parcels is a risk that they would prefer not to take, but in my opinion, it is the most important benefit of hiring a Master Developer. Basically, I think you have to ask the question "Can you call them a Master Developer if they are not making a commitment to develop anything?"

The Phase I (public portion) of the park, i.e. - infrastructure, site work, multi-use facility and conference/education center will be completed by a General Contractor. A large part of this General Contractor's fee is compensation for managing the subcontractors in order to complete the project as required. Why pay a "Master Developer" to "manage" the General Contractor when you already intend to hire an Executive Director of the CMPA Board to handle this? I understand the Developer has proposed applying for New Market Tax Credits, grants and other sources of income, but the CMPA Board could certainly contract for these services as well.

Also, if you do feel the need to hire a Master Developer, it appears the Master Developer candidates are proposing to be compensated as a percentage of the total costs for Phase I. If this is the case, the developer compensation would increase in proportion to the cost, providing no incentive for the Master Developer to limit the project costs.

My other major concern is the proposal by one of the developers to control the parcels slated for private development. The actual proposal states "The Master Developer shall sub-lease from the CMPA those parcels utilized for Private Improvements at a lease rate equal to 6% per year of the appraised value of the unimproved property as of June 30, 2008." It is no secret that the appraised value of the unimproved maritime park property would be very low right now as it is merely a large vacant parcel and the current economic climate has significantly reduced the demand for developable vacant parcels. It is also reasonable to assume that the value of these parcels will skyrocket as the infrastructure/public portions of the maritime park are built and the local housing inventory is reduced. Allowing a "Master Developer" to control these private development parcels would be a huge and unnecessary giveaway.

In my opinion, it is in the best interest of the City of Pensacola and CMPA for these parcels to be subleased to the highest or most acceptable bidder as the public portions of the park are nearing completion. I believe we need to keep our options open, as the value added to the private development parcels through the development of the public portion of the park may be needed to eventually cover the costs of completing the project. For example, let us say that the development of the public portion of the park is seventy five percent complete and it becomes clear that Phase I of the project will be over budget. One obvious solution to this problem would be to sublease one or more of the private development parcels to cover this shortfall. If we allow a Master Developer to control these parcels and pay CMPA a below market rate for the parcels after they obtain a Certificate of Occupancy, it is going to make this option very difficult.

Also, how can an agreement be made to pay a "Master Developer" when you do not know if there will be enough funds to even pay for the public portion of the park? It seems that the prudent option would be to hire an Executive Director of the CMPA Board with substantial construction management experience and have them obtain multiple bids from qualified contractors to complete the public portions of the park. Once you have determined that the funds are available to complete the public portions, move forward. You could always bring in a "Master Developer" later to help manage the process.

I have no objection to the selection of a Master Developer if the Board feels the construction of the public portion of this project can not be managed by an Executive Director, but I felt compelled to write this letter as I believe a request for exorbitant supervision fees and the ability to control and unreasonably profit from the private development parcels is unacceptable.

I believe the CMPA Board has the following three options at this point:

1.) Negotiate a reasonable "Developer fee" with the existing Master Developer candidates.

2.) Issue another RFP for Master Developer Candidates, allowing bids that would provide for construction management only.

3.) Hire an Executive Director of the CMPA Board to manage the construction of the public portions of the park, followed by a sublease of the parcels slated for private development.

I appreciate your time and consideration. Please do not hesitate to contact me if you would like to discuss this matter further.

Sincerely,

Fred Gunther

cc: CMPA Board of Directors

Mr. Ed Spears