Introduction and Scope

Plaza 600 Building 600 Stewart Street, Suite 1700 Seattle, Washington 98101 206.728.2674 January 25, 2010 Equinox Condominium, LLC c/o Schnitzer West, LLC 818 Stewart Street, Suite 700 Seattle, Washington 98101 Attention: Luis Adan Subject: Phase I Environmental Site Assessment Update M5 Site – 910 5th Avenue and 505 Madison Street Seattle, Washington File No. 1460-041-04 INTRODUCTION AND SCOPE This letter presents our Phase I Environmental Site Assessment Update (ESA) update for the M5 Site located at 910 5th Avenue and 505 Madison Street in Seattle, Washington. The purpose of this ESA Update is to evaluate the potential for recognized environmental conditions since our previous ESA, titled ―Phase I Environmental Site Assessment, 910 5th Avenue and 505 Madison Street, and Phase II Environmental Site Assessment, 910 5th Avenue, Seattle, Washington‖ and dated March 21, 2006. The M5 Site contains two multi-story office buildings on two parcels that have generally not changed use since our Phase I ESA was completed in 2006. For the purposes of this report, the two parcels are collectively identified as the ―subject property,‖ and the 910 5th Avenue and 505 Madison Street parcels are individually identified as the South Parcel and North Parcel, respectively. We understand that Equinox Condominium, LLC is financing the subject property and that this update will be used to evaluate potential environmental liabilities that may have arisen since the time of our 2006 ESA. Our scope of services for this update consisted of the following: 1. Review our past Phase I ESA study and utilize (by reference) information contained in that report consistent with ASTM E1527-05 Sections 4.6 and 4.7. 2. Conduct a visual reconnaissance of the subject property and adjacent properties to identify visible evidence of RECs since our 2006 study. 3. Review the results of a federal, state, local and tribal environmental database search provided by an outside environmental data service for listings of properties with known or suspected environmental concerns on or near the subject property within the search distances specified by Phase I Environmental Site Assessment Update | January 25, 2010 Page 2 ASTM. Our database and file review search will include a check for and review of publications or reports on EPA and Washington State Department of Ecology (Ecology) websites concerning areawide soil and groundwater contamination on or adjacent to the subject property. Compare the database findings to the 2006 findings. 4. Interview key site managers and/or occupants with specific knowledge of site use since the 2006 study. 5. Identify data gaps relative to the Phase I ESA - Update study findings. 6. Provide a written summary of the Phase I ESA - Update results and identified RECs along with our opinion and recommendations regarding the potential for contamination by hazardous substances at the subject property and the significance of any data gaps identified. Since the ASTM Standard changed between the time of the 2006 study and this update, this update addresses standards that have changed since that time; namely, this update was completed by an ―environmental professional‖ as defined by ASTM; updates the site reconnaissance, interviews, regulatory list review to document current conditions; and identifies data gaps and significance of any recognized environmental conditions1 (RECs) identified since 2006. All other information contained in the 2006 study is utilized in this update (by reference) consistent with ASTM E1527-05 including Sections 4.6 and 4.7. These sections outline the elements necessary to maintain continued viability of past environmental assessments and the use of prior information. Our scope of services is therefore in general accordance with American Society for Testing and Materials (ASTM) Standard E 1527-05 for Phase I ESAs and the U.S. Environmental Protection Agency’s (EPA’s) Federal Standard 40 CFR Part 312 ―Standards and Practices for All Appropriate Inquiries (AAI).‖ SITE DESCRIPTION AND PREVIOUS STUDIES GeoEngineers completed a Phase I ESA report for the M5 Site located at 910 5th Avenue and 505 Madison Street in Seattle, Washington in March 2006. Concurrently with the Phase I ESA, GeoEngineers also completed a Phase II ESA at the 910 5th Avenue parcel (South Parcel). The 2006 Phase I ESA report was conducted in general accordance with ASTM E 1527-00. The subject site of the previous ESA was the two subject property parcels containing two buildings; the multi-story College Club building at 505 Madison Street on the North Parcel, and the multi-story office building at 910 5th Avenue on the South Parcel. At the time of the 2006 ESA, the College Club building was used as a social club meeting space with offices and apartments, and the office building was in use by ABC Legal Messengers Inc. Also at the time of the 2006 ESA, Schnitzer did not yet have a Purchase and Sale 1 Recognized Environmental Conditions are defined in ASTM E1527-05 as ―the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws. The term is not intended to include de minimis conditions that generally do not present a material risk of harm to public health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies.‖ File No. 0000-001-00 File No. 1460-041-04 Phase I Environmental Site Assessment Update | January 25, 2010 Page 3 Agreement in place with the owners of the North Parcel, and as a result, access was not provided to us for a site reconnaissance of the North Parcel, nor was a key person identified for interviews regarding the North Parcel. As part of the 2010 ESA, we were able to access the North Parcel and conduct an interview to satisfy this data gap from the 2006 study. The following are excerpts from the conclusions section of the 2006 Phase I ESA that identify key environmental issues based on the study findings in 2006: ■ ―Historic use of both the North and South Parcels as gasoline/service stations. Three generations of service stations existed on the North Parcel and one service station existed on the South Parcel in the past. It is likely that subsurface contamination could have occurred due to the historic use of these properties as gas stations, and the documented presence of USTs, fuel dispensers and underground hydraulic hoists. In many areas of urban downtown Seattle, soil has been removed to construct buildings. However, based on the site grades on the North and South Parcels, it does not appear that a significant volume of soil was removed during the construction of these two buildings; specifically along 5th Avenue where the historic service stations and facilities were located. As a result, it is possible that petroleum-contaminated soil and groundwater may be present beneath these properties. Additionally, it is also possible that historic USTs (from the former service stations and/or residences that occupied these parcels before the service stations) may be encountered during redevelopment.‖ ■ ―The potential for impacts to the subject property from off-site sources of contamination, specifically related to the former service stations located south of the Site across Marion Street. In our opinion, the potential for this site to impact the subject property is low because (a) the Bank of America tower site is located down, or crossgradient from the subject property and (b) was constructed with below grade levels and it is likely that petroleum-contaminated soil (if any) was removed thereby eliminating the contaminant source.‖ ■ ―Based on our key person interview with the South Property representative, asbestos is present in the walls of the 910 5th Avenue building (South Parcel). As a result, an asbestos evaluation and abatement plan would be needed as a part of redevelopment.‖ To help address the environmental concerns on the South Parcel, a Phase II ESA was completed in accessible areas. Access to the North Parcel was not provided to GeoEngineers for Phase II ESA explorations. Soil samples were obtained during March 2006 from four explorations completed on the South Parcel. Exploration locations were limited to accessible locations in the South Parcel’s court yard parking lot, alley and along the sidewalk of 5th Avenue. Petroleum hydrocarbons, VOCs and metals were not detected in soil samples obtained from the borings based on our field screening and chemical analytical results, with the exception of one low detection of heavy oil (120 mg/kg) in one soil sample from exploration B-2. The MTCA Method A cleanup level for heavy oil is 2,000 mg/kg. Groundwater was not encountered in any of the completed borings to depths down to 120 feet bgs. Based on the results of the 2006 study, it was our opinion that the potential for widespread contamination at the South Parcel was low, however, it is always possible that contamination exists in areas that were not explored, sampled or analyzed. File No. 0000-001-00 File No. 1460-041-04 Phase I Environmental Site Assessment Update | January 25, 2010 Page 4 Because we were unable to explore within the footprint of the existing building on the South Parcel where the former USTs and service station were located, we recommended in our 2006 report that a contingency for the removal, handling and treatment/disposal of potentially contaminated soil be included in the construction budget in the event that localized zones of contamination are encountered during construction excavation on the South Parcel.

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