Adjustment to Development Fee Clause Samples
The Adjustment to Development Fee clause defines how and when the agreed-upon fee for development services may be modified during the course of a project. Typically, this clause outlines specific circumstances—such as changes in project scope, unforeseen costs, or delays—that could trigger a revision of the original fee, and it may set forth procedures for requesting and approving such adjustments. Its core practical function is to provide a clear mechanism for addressing changes in project requirements or costs, thereby reducing disputes and ensuring both parties are fairly compensated or charged as the project evolves.
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Adjustment to Development Fee. Prior to the final payment described in paragraph 1, a determination shall be made as to whether the Development Fee should be reduced, as follows:
(a) If the Controllable Construction Costs actually incurred to complete the project exceed the Controllable Construction Costs set forth in the final Development Budget for the project plus the Budget Adjustments, then the Development Fee shall be reduced by the lesser of (i) the amount by which incurred Controllable Construction Costs exceed the Controllable Construction Costs set forth in the Development Budget, or (ii) one percent (1%) of the incurred Controllable Construction Costs; and
(b) If the date of Completion is more than sixty (60) days after the date of Completion projected in the Project Schedule (as adjusted for Force Majeure) and delays resulting from Tenant delay, then the Development Fee shall be reduced in the following manner: (A) if the date of Completion occurs more than thirty (30) days after the projected date of Completion but not later than forty five (45) days after the projected Date of Completion, then the Development Fee shall be reduced by .125% of Controllable Construction Costs; (B) if the date of Completion occurs more than forty five (45) days after the projected date of Completion but not later than sixty (60) days after the projected Date of Completion, then the Development Fee shall be reduced by .25% of Controllable Construction Costs; (C) if the date of Completion occurs more than sixty (60) days after the projected date of Completion but not later than seventy five (75) days after the projected Date of Completion, then the Development Fee shall be reduced by ..375% of Controllable Construction Costs; and (D) if the date of Completion occurs more than seventy five (75) days after the projected Date of Completion, then the Development Fee shall be reduced by .5% of Controllable Construction Costs.
(c) Notwithstanding the foregoing provisions of this paragraph 3, in no event shall the aggregate decrease in the Development Fee pursuant to subparagraph 3(a) and (b) above exceed one percent (1%) of Controllable Construction Costs.
Adjustment to Development Fee. Owner and Developer have agreed that seventy percent (70%) of the Development Fee shall be funded in accordance with the provisions of Exhibit G and that thirty percent (30%) of the Development Fee (the “Retained Development Fee”) shall be retained by Owner pending Completion and shall be subject to loss by Developer in accordance with the provisions of this Section 3.2. Upon the date of Completion, a determination shall be made as to whether the Development Fee should be reduced as follows:
(a) If the Designated Construction Costs incurred to complete the Subject Phase exceed the Designated Construction Costs set forth in the Final Development Budget, then the Development Fee shall be reduced by the lesser of (i) the amount by which incurred Designated Construction Costs exceed the Designated Construction Costs set forth in the Final Development Budget, or (ii) one hundred percent (100%) of the Retained Development Fee.
(b) If the actual date of Completion extends more than thirty (30) days beyond the date of Completion as projected in the Final Schedule (excluding delays caused by Force Majeure Events, delays requested by the General Contractor and approved by Owner, and delays resulting from change orders otherwise approved in writing by Owner), then the Development Fee shall be reduced by an amount equal to one hundred percent (100%) of the Retained Development Fee.
(c) Notwithstanding the foregoing provisions of this Section 3.2, in no event shall the aggregate decrease in the Development Fee pursuant to Sections 3.2(a) and
Adjustment to Development Fee. Upon the date of Completion, a determination shall be made as to whether the Development Fee should be reduced. If the Designated Construction Costs incurred to complete the Project exceed the Designated Construction Costs set forth in the Final Development Budget, or if the date of Completion is later than the date of Completion projected in the Final Project Schedule (excluding delays caused by Force Majeure Events, delays requested by the General Contractor and approved by Owner, and delays resulting from change orders initiated by Owner), then the Development Fee shall be reduced in the manner set forth in Exhibit G attached hereto and made a part hereof.