1. 15660 Virginia Loop Rd. NE Poulsbo, WA 98370 Office: (206) 497-4947 Cell: (360) 626-3706
11/18/13
XYZ, LLC
Kingston, WA 98346
Attn: Investor
RE: Pierce County, WA, Notice of Enforcement Action/Notice and Order to Correct dated 6/28/12
Property Address: Gig Harbor, WA 98335
Dear Investor;
Per our agreement dated 11/12/13, I was engaged to meet with Pierce County personnel during the due
diligence period to determine extent and type of remediation required to implement the Notice and
Order to Correct which encumber subject property. I was also to meet with and obtain proposals from
engineering and contractor firms to perform site investigation and remediation work. This would help
us determine if it would still be a financially-viable project based on remediation estimates and the
amount of time required to implement those corrective actions.
The following is a summary of my work and findings to date. I’ve included estimates, bids and proposals
as supporting documentation. The Notice of Enforcement Action and Notice and Orders to Correct from
Pierce County Department of Planning and Land Services are also included.
Engineering/Geo-tech:
I met onsite with Keven Hoffman, Earth Solutions engineer on 11/6/13. We walked the site, took
photos, reviewed scope of work and estimated schedule. He sent a proposal with scope of services
which included subsurface exploration, soil samples testing, analyses and a geotechnical evaluation
letter. The subsurface exploration includes observing, logging, and sampling two borings using a mini-
track drill rig and operators. The borings will be to approximately 30’ and be completed for purposes
of characterizing subsurface soil conditions of the critical slope.
The engineering/geo-tech study would provide a description of subsurface soil/groundwater conditions
at the boring location including a conceptual site plan and boring logs. Also, an assessment would be
made of waste fill deposits atop native critical slope soils, including recommendations for mitigation
or removal where applicable. Finally, an evaluation of potential geologically hazardous areas
contained within the property boundaries and recommendations for mitigating hazards would be
provided where applicable. A fee of $5,500 was quoted for the scope of work in this proposal.
A similar engineering/geo-tech proposal received from Krazan & Associates covered similar investigative
procedures, drilling, sample-taking and analysis. Their final report would yield the same type of answers
as Earth Solutions for a fee of $5,055.
Henderson Partners, Contractor
Met onsite with Jon Wall of Henderson Partners, LLC, Gig Harbor, WA on Thursday, 11/14/13. We
inspected existing slope conditions, visible fill content and extent of work. The contractor and I
discussed several options for remediation and determined the least expensive one was simply removal

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15660 Virginia Loop Rd. NE Poulsbo, WA 98370 Office: (206) 497-4947 Cell: (360) 626-3706
of foreign fill to native material, application of jute matting for slope stabilization and hydro-
seeding. Jon and I discussed the need for erosion control and site stability precautions required by the
county during the excavation work. These precautions become especially important during the rainy
season when the work is performed in order to meet your schedule a spring 2014 sale and cannot be
estimated as to their full extent at this time. Another consideration to be monitored closely during the
work is maintaining the integrity of the septic system along the east side and at the bottom of the slope
to be excavated. Loose debris, falling branches and other material are a concern for damage and extra
care must be taken to protect the main line, d-box and active drain field.
As regards Henderson’s proposal, we believe $90,000 may be at the high end but the site does not lend
itself well to removal/export of materials in an efficient manner and dump fees per load are very
expensive. The high estimate is primarily due to the fact that the exported material must be taken to an
authorized dump site where fees will run as high as $1,000 per load. As regards the cost for onsite work,
there may be ways to lower costs and we can certainly obtain additional bids. But the site is a
dangerous one with a steep, unstable slope designated as a landslide zone. There is no easy or
inexpensive way to remediate this site.
Jeff Sharp, Pierce County Development Engineer
Met with Jeff Sharp, Development Engineer, Pierce County Planning and Land Services on Thursday,
11/14/13. We reviewed the project and the extensive files accumulated over the last ~1-1/2
years. Several items stood out as significant during our nearly 2 hour meeting.
Our meeting was about the 100th
discussion he has had with potential buyers for the property (his
estimation). He stated there was always a surge of calls/meetings when the seller reduced the price but
that once potential buyers heard about the issues facing the property regarding the violation and
required corrective actions, he never heard from them again. No other project has remained on his desk
this long.
We reviewed 3 different scenarios of corrective actions and each of them included removal of the illegal
fill. Consequently, site drilling would not be required and that cost could be eliminated. But it would be
replaced by engineering inspections to be done while excavation work was going on. One scenario was
to remove and replace existing fill after sifting. Remove and replace with new fill was another
scenario. But the one we both seemed to be leaning toward was remove the existing fill, install jute mat
on original slope and hydro-seed. We reviewed some figures compiled over the life of the project for
estimated cubic yards of fill brought in. It appeared that the estimate of 500 cubic yards from the
contractor may not have been too far off.
Application fees for temporary site work plans, geological/landslide assessments and environmental will
range from $4,670 - $5,475. This is for fees only and does not cover permits or professional engineering
charges to prepare documents. I do not have estimates for those charges because they will be obtained
in the next phase if the project moves forward.
Mary Van Haren, Pierce County Environmental Biologist
I discussed the Fish & Wildlife Notice of Enforcement Action with Mary Van Haren, Pierce County
Environmental Biologist. She advised that all that was needed was recordation of a specific document
from her department which I will be able to obtain later if this process moves forward. However, the
owner needs to sign and notarize the document and contact the county to coordinate a meeting to

3. 3
15660 Virginia Loop Rd. NE Poulsbo, WA 98370 Office: (206) 497-4947 Cell: (360) 626-3706
finalize the approval. Following approval, said document is then recorded at Pierce County Auditor’s
office, copied and sent to all parties as indicated on the original directive from Pierce County.
Estimated Costs:
Here is a rough estimate of costs we have discussed so far including some to be determined (TBD) that a
buyer may face to resolve the problems with this site.
• Geo-tech pre-engineering/site boring: Not required
• County application fees: $ 5,073 (est.)
• Contractor scope:
o Excavate, haul, dump: $ 90,000 (high end)
o Jute mat application, hydro-seed: TBD
o Site stabilization/temp. timbers: TBD
• PE fees for planning/geological assessment: TBD
• Engineering inspection on-site during project: TBD
• Pierce County inspection fees/permits: TBD
• Project management – RPSNW fee @ 6%: TBD
o Site visits/subcontract management
o Permit work/county mtgs./negotiations
o Engineer coordination/follow-up/mtgs.
o Document prep/review/finalization
• Project contingencies add minimum 10%: $ 9,507 (est.)
• Estimated total: $104,580 (est.)
There may be ways to do this work differently in order to save money. But that is a big challenge. The
required support for preparation, review and obtaining approvals of engineering submittal documents
will be expensive. And that does not take into account permits, field engineering and inspections. If you
are still interested in moving forward with purchasing the property, I suggest discussing with the seller a
deep discount in price commensurate with the risk you would be taking on to close this deal. An
alternative would be to ask if the seller would agree to pay you a lump sum as a credit out of their
closing costs to cover the expense of fixing these problems.
You will be assuming, upon purchase of this property, 100% of the liability for the problems if you want
to make it desirable to the typical buyer. This is the case unless you can get the seller to resolve them
which, in my experience, would be highly unlikely. The more likely scenarios are the ones presented
above where the seller realizes how really distressed the property is and becomes willing to either cut
the price or return proceeds from sale in order to gain some % of tax deduction for closing costs (but
that is still for their accountant to determine). RPSNW would be interested in further helping you with
this challenging project and we feel it could become a successful one. But the seller will have to come to
terms with a significant charge-off before any progress is made in your ongoing negotiations.
Please call me if you have and questions or comments.
Regards,
Dan Larsen
Principal Consultant
Real Property Solutions NW LLC

4. 4
15660 Virginia Loop Rd. NE Poulsbo, WA 98370 Office: (206) 497-4947 Cell: (360) 626-3706
Enclosures: Notice of Enforcement Action dated July 16, 2012
Notice and Order to Correct dated June 28, 2012
Fish & Wildlife Species/Habitat Area Approval
Krazan & Associates Geo-tech Proposal
Earth Solutions Geo-tech Proposal
Henderson Partners LLC Site Work Proposal
cc: Deb Townsend, Prudential Real Estate