In the past several years, an exciting opportunity has emerged for public park and recreation agencies to participate in advanced land conservation strategies through participation in formal mitigation projects, particularly wetland and stream mitigation projects. The practice of replacing or restoring natural resources in one area to offset the loss or damage to similar resources in another area through mitigation has long been acknowledged as one of the best practical solutions to the loss of valuable natural resources that results from development.

In practice, mitigation is the formal process of requiring compensatory actions for the loss of aquatic resources as required by the Clean Water Act and other state and federal laws. Mitigation has resulted in the conservation of hundreds of thousands of acres of natural lands and thousands of miles of streams across the nation that otherwise would have not been protected.

What is new in the mitigation landscape is that park and recreation agencies, already respected as long-term stewards of public lands, are being viewed by mitigation project sponsors as ideal potential partners for the creation and development of new mitigation banks, particularly those focused on restoring and protecting smaller streams and waterways. New mitigation banks, privately built on public lands, can allow park and recreation agencies to achieve multiple restoration goals simultaneously, including restoring environmentally damaged lands for which no funding would otherwise be available, permanently protecting such lands from future damage through perpetual conservation easements and gaining new revenues for management, conservation and education from royalties gained on the sale of mitigation credits. One of the most attractive features to public landowners is that all of the restoration can be achieved at no cost to taxpayers. In fact, some mitigation banks can generate significant revenues for park and recreation agencies that can be used for management of other conservation lands, education or other public purposes.

Recognizing the potential for public park and recreation agencies nationwide, NRPA began a pilot demonstration program, “Parks for Mitigation,” in 2012 in partnership with a number of NRPA member agencies in the Maryland-Virginia-District of Columbia region in cooperation with an environmental design and construction firm, Angler Environmental, which is based in Manassas, Virginia. The goal of the pilot demonstration program is to assist the participating agencies to successfully permit, develop and manage demonstration mitigation banks, and in the process, use the lessons learned to create the tools, resources and training for other park and recreation agencies across the country to develop their own stream mitigation banks in their own parks.

This is revolutionary thinking for parks and recreation. If successful, it holds the potential to be an entirely new way for agencies to permanently conserve environmentally damaged or threatened natural streams and floodplains in parks while fully paying the cost of restoration and providing new funds for long-term management and stewardship.

Mitigation Banking 101
As the American landscape has been fragmented and developed at an astonishing pace over the last 25 years for residential, commercial and industrial purposes, as well as by the development of roads, bridges, utilities and other infrastructure, there has been a concentrated federal and state effort to protect the quality and character of remaining aquatic natural resources and to replace those that are damaged or lost in the development process. This long-term effort, guided by landmark federal legislation such as the Clean Water Act, the Rivers and Harbors Act, and other laws has led to the development of a number of creative methods of protecting riparian forests, wetlands and stream valleys. Today, there are about 1,000 mitigation banks protecting just over one million acres of wetlands, riparian forest buffers and streams.

In 2008, the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (USACE) issued a new rule concerning “Compensatory Mitigation for Losses of Aquatic Resources.” According to the National Mitigation Banking Association, this rule laid the groundwork for national consistency in the establishment, use and operational criteria for all forms of compensatory mitigation, including mitigation banking. While the expanded rule was intended to improve the planning, implementation and management of compensatory mitigation projects for the loss of aquatic resources in critical watersheds, it also opened the way for expansion of the use of stream mitigation banks as a means of providing such compensation. Part of the reasoning behind the rule was that larger-scale mitigation projects produced greater ecological benefits than small piecemeal mitigation projects at each development site.

Once a stream mitigation bank is proposed, the USACE and other federal and state agencies rigorously examine the design plan through an interagency review team process (IRT). The IRT establishes the number of “credits” that each bank earns, which then may be sold by bank sponsors to permittees on an open market. Credits are based on linear feet of streams restored or other units of measure, based on a functional assessment of the restoration and preservation that will occur. Such credits may vary widely in monetary value, depending on the complexity and benefits of the mitigation work performed. Bank sponsors then pay landowners and investors a set percentage of the credit sales as they are sold.

In order to gain a permit from federal and state agencies, stream and wetland mitigation banks require a perpetual conservation easement or other similar deed restrictions on the land to be protected. Bank sponsors must also set aside a certain amount of funds in escrow for active management of the bank during the first 10 years — to repair storm damage, for example — and a lesser amount of funding for long-term care and stewardship of the bank.

The conservation easement ensures the permanent protection of the restored stream or wetland and includes a minimum riparian buffer area along streams to ensure that the streams themselves remain protected. Easements must be carefully drawn, however, since they are perpetual and transfer with the deed from landowner to landowner. With forethought, easements and deed restrictions can and do allow for future public use, and can allow for trails, bridges and even utility crossings. The greatest value of conservation easements is that they ensure the land will never be developed and will always remain in a conservation status.

Prince William County Environmental Bank: Early Success
The poster child for success of stream mitigation banks on public parklands is the Prince William Environmental Bank (PWEB), a cooperative project between the Prince William County Park Authority (now an agency of Prince William County, Virginia) and Angler Environmental. First envisioned in 2007, this stream mitigation bank was proposed to be constructed entirely on public park lands, with Angler assuming all costs, liabilities and risks for the success of the bank. PWEB included a number of streams to be restored and permanently protected, encompassing more than 120,000 linear feet — well over 20 miles of streams and riparian buffers in 10 different parks. The bank is expected to generate between 30,000 and 40,000 mitigation credits, the sale of which will pay for needed restoration work and provide royalty payments to the county estimated at $3.5 million in the first 10 years of operation.  

Debbie Andrew, formerly operations manager for Prince William County Park Authority and now director of parks and recreation for Prince William County, reflects on the stream mitigation project that began nearly five years ago. “I think it has been really worthwhile for the citizens of our county. County residents have seen the direct benefits to their parks,” she says. “The streams are being repaired at no cost to the taxpayer and we are realizing new revenues to augment our conservation and operations funding.”

Andrew describes the condition of streams in their parks back in the mid-2000s: “Much of our county parkland came from developer donations. A large percentage of these new park lands contained already degraded streams. At the time we didn’t have any funding to do any restoration — we could only watch the continued deterioration taking place. In some streams, there was as much as a 15-foot vertical drop from the top of the bank to the stream bed. The stream banks were being cut away and then big trees started toppling — it was a mess.”

Around this time, the Prince William County Watershed Services department performed a comprehensive survey of streams and found that a number of them were significantly impaired. When a local environmental design and construction firm, Angler Environmental, made an unsolicited proposal to permanently restore a significant portion of these streams at no cost to the public, the proposal proved to be exactly the right idea at just the right moment. At that time, Andrew says, there were no mitigation banks in the county — any credits purchased by developers were purchased elsewhere, far away, and sometimes not even in the same watershed.

Eventually, after considering the proposal, the county issued a formal request for proposals. After a review of qualifications of all the proposals received, they eventually chose Angler as the bank sponsor. Negotiating the details of this first-of-its-kind contract was a challenge for the county, but all actual and potential obstacles, such as ensuring long-term protection, determining a payment schedule and many other issues, were eventually specified in a Public Private Partnership Agreement (PPEA) that was approved by the agency and the county.

The first completed segment of Prince William Environmental Bank was dedicated by the county last summer with a large sense of satisfaction and completion. “The condition of these streams has been so much improved, and our residents truly appreciate it,” Andrew says. “And it has proven to be a great opportunity for environmental education. James Long High School is directly adjacent to one of the bank sites, and it has proven to be an excellent way to involve students and citizens in understanding the long-term benefits of stream restoration.”

Lessons Learned, Challenges Faced
Even under the best of circumstances, bringing a stream mitigation bank from concept stage to completion is a long process, in some cases taking up to three years. Nonetheless, agencies participating in the pilot of Parks for Mitigation are willingly taking the long view, recognizing that the benefits will be worth the investment of time. Among the agencies that have expressed initial interest or have already begun work on proposals to develop a stream mitigation bank are:
• City of Fairfax Department of Parks and Recreation, Virginia
• Arlington County Department of Parks and Recreation, Virginia
• City of Alexandria Department of Parks and Recreation, Virginia
• Northern Virginia Regional Park Authority, six local jurisdictions in northern Virginia
• Maryland-National Capital Park and Planning Commission, Department of Parks and Recreation, Prince George’s County, Maryland
• Howard County Department of Parks and Recreation, Maryland

One of the reasons that mitigation banks have rapidly become a preferred alternative to payment of in-lieu fees or onsite mitigation actions is that banks are a very cost-effective method of mitigation and they have a proven track record of success. In contrast, onsite alternatives may or may not be successful over the long haul because they can require continual monitoring and management for years, something a developer wants to avoid.

Another reason that public park lands might be such an attractive option is that banks on public lands are likely to be located very near impact areas. Permittees, such as corporations or real estate developers, may much prefer to be linked to restoration of environmentally damaged streams in parks near their development activity rather than just paying an in-lieu fee for outright destruction of aquatic resources during their project. Finally, parks are great stewards of conservation lands. Public park and recreation agencies have an excellent track record of long-term, conservation-focused land ownership, and parks agencies are highly likely to honor commitments for perpetual conservation as required for mitigation banks.

What Makes a Good Mitigation Bank
It is a maxim of Don Seaborn, a principal of Angler Environmental, that, “A good environmental restoration project does not necessarily make a good mitigation bank.” Many factors determine an ideal mitigation bank site, not just the need for stream restoration. Optimal stream mitigation bank sites are not likely to be found on rivers or large tributary streams, mostly because the regulatory agencies prefer “in-kind” mitigation, i.e., the streams that are restored in banks should be similar in size and in type to those that were originally impacted, and larger tributaries or river sites are less likely to gain regulatory approval.

In addition, economic demand plays a part as well. The most successful banks are usually located relatively near the impact areas that they are intended to mitigate. However, highly urbanized areas may not be best candidates to qualify for mitigation projects since they have so many prior restrictions on land use, such as utility easements, and they lack the required land for buffers.

Nonetheless, however attractive the idea of mitigation banks might be to many park and recreation agencies, we found during the rollout of the pilot project that not all agencies were as equally interested in pursuing the idea of a stream mitigation bank in their parks, even though they might have had excellent candidates for bank sites and many needs for restoration. For some, the bar might have been too high to enter into a mitigation banking agreement through a complex public/private partnership agreement, and at least one agency thought that their appointed or elected governing boards might not be willing to approve perpetual conservation easements on their parklands. Other agencies had no problems with the idea of permanent conservation easements, and said they regularly placed easements on their highest value natural parks to ensure long-term protection. One agency indicated the potential revenue from credit sales was not their highest priority and, in fact, they might not even want direct revenues. Instead, because they had so many restoration needs in their park system, they wanted proceeds from credit sales to go toward more restoration work to repair environmentally damaged streams.

Procurement has proved to be a thorny issue for public-private banks. Virtually all public agencies must follow specific procedures for contracting, including issuing formal requests for proposals and awarding contracts to the lowest qualified bidder, a procurement process that may not necessarily achieve the best results for highly specialized environmental restoration in sensitive natural areas. Nonetheless, there are solid solutions to procurement challenges, as the Prince William Environmental Bank has demonstrated, and which other agencies in the Parks for Mitigation pilot program are proving as well.

Some established mitigation bankers claim that mitigation banks on public lands appear to be giving bank sponsors an unfair advantage because the land on which the bank sits was paid for by taxpayer funds rather than purchased from a private landowner. This has not proven to be the case. Whether a bank is on private land or public land, the bank sponsor is a private, independent entity who is taking the same risks and investing the same capital they would as if the land were owned privately. The bank sponsor takes the risk and reaps the rewards, whether the bank is on private land or public land.

Next Steps, New Opportunities
At the 2013 National Mitigation and Ecosystem Banking conference in New Orleans this May, more than 175 people attended a session on Parks for Mitigation, and the incredible amount of questions during the session confirmed the keen interest on the part of mitigation bankers, financial institutions, regulators and public-agency personnel about the exciting prospects of stream mitigation banks in parks.

While the pilot continues, NRPA will use the knowledge gained from on-the-ground experiences to develop tools and resources for the field of parks and recreation, and to provide these resources to NRPA members and agencies who are interested in mitigation banking.

If your agency may be interested in mitigation banking, mark your calendar and make plans to attend a session at the 2013 Congress on the Parks for Mitigation program titled “Mitigation Banking: Promote Conservation and Produce Revenue for Parks,” on Tuesday, October 8, 4:45–5:30 p.m.; check the final Congress program for room location.

As Debbie Andrew of Prince William County says about her five years of experience with the Prince William Environmental Bank so far, “This is important work. You really see what a difference you can make.”


Richard J. Dolesh is NRPA’s Vice President of Conservation and Parks.