Published June 2004

Wetlands-banking firm offers tool for development, restoration of land

Photo courtesy of Habitat Bank LLC With the help of Stillaguamish Banksavers, a wetland nursery project of the Stillaguamish Tribe, 18,000 plants have been planted on the site of Habitat Bank’s proposed Snohomish Basin Mitigation Bank along the Snoqualmie River near Monroe and Duvall, said Habitat Bank founder Victor Woodward.

By Kimberly Hilden
SCBJ Assistant Editor

For cities facing a land crunch, developers suffering from wetlands headaches and conservationists concerned about land preservation, one Woodinville company believes it has a solution: commercial wetlands mitigation banking.

The practice enables one party to restore a damaged or sensitive land site and then sell “mitigation credits” to developers as a way for them to compensate for the impacts of development, said Steve Sego, a principal of Habitat Bank LLC.

The end result, he said, is that:

• Land once deemed unfit for development because of wetland issues is available for new projects, some of which could be commercial in nature, generating sales-tax revenues.
• Restoration done through the mitigation-bank firm is handled by environmental experts with an eye toward the long-term success of the site’s ecosystem.
• And sites that are restored are large enough to create a greater beneficial ecological impact than would smaller patches of on-site development mitigation.

“Mitigation banking is clearly a very effective tool for managing and supporting land-use planning,” Sego said.

And it has been gaining ground across the country, in places such as Florida, where Florida Wetlandsbank completed restoration of 450 acres of wetlands owned by the city of Pembroke Pines, successfully selling mitigation credits to developers of nearby projects in which on-site mitigation was not feasible.

Or in California, where Wildlands Inc. is restoring 315 acres of land north of Sacramento, offering compensatory mitigation for at least 10 varieties of wetlands habitat.

“It’s a thriving industry in California, Florida and New Jersey, but Washington has been a different story because of the many levels of regulation,” said Victor Woodward, a principal and founder of Habitat Bank. “In other areas, there are just state and federal agencies looking at the project. In Washington, local governments have more of an interest in (land-use) issues.”

A longtime high-tech entrepreneur, Woodward began researching mitigation-banking opportunities in Washington state four years ago. What he found was a handful of public-sector banks, such as the Wetland Bank Compensation program developed to mitigate airport construction at Paine Field and featuring on- and off-site mitigation banks, including the Narbeck Wetland Sanctuary.

But he didn’t find any entrepreneurial banks, so in 2001, Woodward, who holds a degree in environmental studies, left the high-tech field to focus on mitigation banking. A year later, he founded Habitat Bank and was soon joined by Sego, who brought more than 20 years of experience in public policy, land-use and public-affairs consulting.

It was decided that Habitat Bank’s first project would be establishing the Snohomish Basin Mitigation Bank (SBMB), more than 225 acres of land along the Snoqualmie River near Duvall and Monroe that would provide mitigation for projects within the Snohomish Basin. It’s a project that would serve areas as far north as Marysville and Granite Falls and south into King County, Woodward said.

Working with a mitigation bank review team comprising the U.S. Army Corps of Engineers, the state Department of Ecology, the U.S. Environmental Protection Agency as well as local municipalities within the SBMB, Habitat Bank has outlined a 10-year plan in which credits would be released by regulators as ecological benchmarks are met, Woodward said.

Habitat Bank expects to have the proposal finalized and approved within the next couple of months and begin selling its first credits in July or August, Sego said, noting that the cost could range from $50,000 to $150,000 per credit acre.

Under the mitigation-bank setup, a portion of the revenue generated from credit sales would be put into an escrow account to pay for the preservation and care of the land in perpetuity, Sego added. “After all the credits are sold, we turn maintenance of the land over to a third party.”

In this case, that third party would be the Cascade Land Conservancy, a private, nonprofit organization that works to preserve natural and open-space lands across King, Pierce and Snohomish counties.

“They will donate a conservation easement to the Cascade Land Conservancy, ... which will require that the property stay protected as conservation land forever and be managed for the purpose for which it was set up,” said Peggy Bill, Snohomish County senior conservation director for the Cascade Land Conservancy.

“It’s consistent with the kind of things that we do in terms of protecting property,” Bill added.

Along with the SBMB, Habitat Bank has been busy developing a second mitigation bank, the Sno-King Mitigation Bank, which would serve the Swamp Creek, North Creek, Sammamish River, Bear Creek and Lake Washington drainage areas. It is an area that includes Mill Creek, Lynnwood, Bothell, Kenmore and up into south Everett, Woodward said.

But unlike the SBMB, with its 225 acres, the Sno-King bank would contain smaller pieces of land, often in urban areas, and would operate as an “umbrella mitigation bank,” with an overarching agreement and a separate addendum for each tract, Woodward said.

It is the first mitigation bank of its kind in Washington state to wend its way through the regulatory process — and it is much needed, said Gail Terzi, an environmental analyst for the regulatory branch of the U.S. Army Corps of Engineers — Seattle District.

“It’s the only way we’ll get banks in urban environments, which is in dire need of happening,” Terzi said. “If we’re going to restore our salmon runs and wetlands, we’re going to have to get banks in urban environments.”

But mitigation banking, whether rural or urban, does not mean developers are given a green light to circumvent the environmental regulatory process, Terzi noted.

“If you come in the door, we’re first going to look at your proposal to make sure you have avoided and minimized your impacts. When you get to unavoidable impacts, that’s when you get to mitigation,” she said.

For developers, mitigation banks are a step in the right direction, said Scott Hildebrand, public policy director for the Master Builders Association of King and Snohomish Counties.

“Anything that encourages the kind of development that is called for in the Growth Management Act while preserving the open space, wetlands and rural lands called for in the GMA is a win-win situation for our industry and the people in the region,” he said.

Habitat Bank hopes to have an agreement in place and construction started on the Sno-King bank by late next spring and continues to look for other mitigation-banking opportunities in Western Washington, Woodward said.

“As private-sector investors, we’re looking ahead to where the opportunity is,” Sego added. “Mitigation banking deals with issues that unite all different interests.”

For more information on Habitat Bank, call Woodward at 425-785-8428, send e-mail to victorw@attbi.com or go online to www.habitatbank.com.

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