Richard L' Stanford, P'E', DEE

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Wetlands Restoration and Mitigation Banking
Recognizing Collateral Value

• Richard L. Stanford, P.E., DEE
• ATR Associates, Inc.

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What Are Wetlands?

• "Wetlands are areas that are inundated or
  saturated by surface or ground water at a
  frequency and duration sufficient to support, and
  that under normal circumstances do support, a
  prevalence of vegetation typically adapted for
  life in saturated soil conditions. Wetlands
  generally include swamps, marshes, bogs, and
  similar areas."

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Huh?

• In other words
• Wetlands are areas where the frequent and
  prolonged presence of water at or near the soil
  surface drives the natural system meaning the
  kind of soils that form, the plants that grow,
  and the fish and/or wildlife communities that use
  the habitat.
• The USFWS definition includes, swamps
  freshwater, brackish water, and saltwater
  marshes bogs vernal pools, periodically
  inundated saltflats intertidal mudflats wet
  meadows wet pastures springs and seeps
  portions of lakes, ponds, rivers and streams and
  all other areas which are periodically or
  permanently covered by shallow water, or
  dominated by hydrophytic vegetation, or in which
  the soils are predominantly hydric in nature.

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Examples of Wetlands
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Why a Wetland Bank?

• Increases likelihood of successful mitigation
  because of
• Larger continuous areas
• Ability to bring greater resources and expertise
• Eliminates temporal losses
• Streamlines the permitting process
• May help attain national goal of no net loss of
  wetlands

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Types of Mitigation Banks

• Created wetlands
• Restored wetlands
• Enhanced wetlands
• Protected wetlands

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Establishing a Mitigation Bank

• Planning
• Set goals
• Select site
• Development
• Prospectus
• Banking Instrument
• Use
• Credits
• Service Area
• Long-term Operation and Maintenance

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Set Goals

• Type of wetlands functions to be mitigated
• Ancillary functions, e.g., education,
  recreation
• Character of wetlands and aquatic resources

Planning Development Use Long-term OM
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Select Site

• Identify Appropriate Property
• Ecological suitability with respect to physical,
  chemical and biological characteristics.
• Newly-created wetlands are the most valuable as
  bank generally prior-converted (or PC)
  farmlands, and floodplains are the best choice.
• Technical feasibility
• Integrate location with watershed planning
  initiatives
• Arrange purchase (or other agreement) with
  landowner

Planning Development Use Long-term OM
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Develop Prospectus

• Summary of objectives and operation of the bank
• Submitted to the Corps of Engineers or the
  Natural Resources Conservation Service
• Used to initiate the review process
• A pre-application discussion with regulators
  should precede development of the prospectus

Planning Development Use Long-term OM
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Initial Review

• If the preliminary application is approved, the
  COE will assemble a Mitigation Bank Review Team
  (MBRT) which generally consists of
• U.S. Army Corps of Engineers
• U.S. Fish and Wildlife Service
• Natural Resources Conservation Service
• The COE will serve as the principal contact for
  the review and development of the wetland bank

Planning Development Use Long-term OM
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Banking Instrument

• Addresses
• Types of credits to be offered
• Valuation technique
• Service Area of bank
• Design of bank ecosystem
• Performance requirements
• Method of disbursing credits
• Long-term exit strategy (e.g., O M, transfer to
  management entity, etc.)
• Reviewed and approved by the MBRT
• Operating manual made part of 404 permit (when
  appropriate)

Planning Development Use Long-term OM
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Service Area
Bank
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Construction

• Obtain property upon approval of the Banking
  Instrument
• Sell credits (generally limited at this stage to
  approximately 15 of the expected credits)
• Install hydrologic controls
• Sell credits (generally limited at this stage to
  approximately 15 of the expected credits)
• Install vegetation

Planning Development Use Long-term OM
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Disbursement of Credits

• Sell credits
• The remaining 70
• Place portion of revenue in escrow account
  (approximately 2 - 5) as credits are sold
• Mitigation ratio determined by functions rather
  than strictly by area

Planning Development Use Long-term OM
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Credit Market Value

• Tidewater Area
• Southern Watersheds 20,000
• Northern - Chesapeake Bay 55,000
• Richmond Area 55,000
• Northern Va. 85 - 125,000

Planning Development Use Long-term OM
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Long-term Operation Maintenance

• Often required for at least 5 years following
  sale of final credits
• Several alternatives
• Transfer property and escrow to land trust for
  long-term OM (or other exit strategy)
• Maintain property as public facility
• Performance bond is sometimes required

Planning Development Use Long-term OM
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Example Pro Forma

• Costs
• Develop banking instrument 100,000
• Design and construction 1,500,000
• Related costs (e.g., legal) 22,500
• Total costs 1,622,500
• Revenue
• Sale of credits (75 ac. _at_ 55,000/ac.)
  4,125,000
• Gross revenue (revenue costs) 2,502,500
• Escrow
• For long-term OM (5 of gross) 206,250
• Net revenue (gross revenue escrow) 2,296,250

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Additional Banking Opportunities

• A wetlands bank can provide credits for sale
  other than for wetland mitigation, these include
• Endangered Species credits
• Habitat Restoration credits
• Streambank Restoration credits
• Wetlands areas created to address Phase II (or
  other) stormwater requirements can be used to
  offset wetlands impacts (mitigation bank) to the
  extent that the wetland is overdesigned. That
  is, the functions that are not essential for
  stormwater control are available for banking.

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What to Look For

• Properties, or portions of properties at least 5
  acres in size
• Properties that were once wet, but have been
  drained
• Properties adjacent to wetlands, but which are
  not themselves wetlands and which are not
  significantly higher than the adjacent wetlands
• Properties with distressed wetlands
• Properties that dont perc