Development Fees > Sponsor Equity Contribution

We own a property where an adjacent site is being marketed for sale. We've had a few developers reach out to us interested in combining both sites (i.e. ours and the neighbors). Some proposals have given us the option to contribute our land as equity.

As I'm assessing this option, I've noticed that the development fee is significantly more than the GP/developers equity contribution--the dev fee is 3% which seem to be within market, but the gross dollar value of the fee is more that double the sponsors equity contributions. 

I understand that sponsors are limited as to how much they can fund, but my concern is about the alignment of interest--regardless of how to project performs, the developer will come out in the green. Given the current market, I'm hesitant to participate in a deal where there is limited downside for the sponsor, while at the same time recognizing that the developer deserves and needs the fee for all their work.

How should I be thinking about this?  I'd assume this is somewhat common on large projects where the fee exceeds what the sponsor can contribute as equity. How do LPs usually handle this? 

I apologize and admit I'm ignorant on the the topic of development. We do not usually invest in development deals so this is a one off.