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.-- <br />' M; <br />K ?~ <br />}~'' <br />' M; <br />` . <br />WEW Mitigation Bank is dependent on a larger market than would be supported solely by <br />projects within the UGB. <br />Issue 3: Should the City increase the price for wetland mitigation credits <br />At present, the WEW Mitigation Bank charges a flat rate of $50,000 per credit. This is the lowest <br />listed credit price in the Willamette Valley among the 15 other existing mitigation banks. <br />According to information gathered by DSL, the average current credit rate is $84,500 with prices <br />ranging from $50,000 to $175,000. The WEW Bank's current price was established in 2002 and <br />has not been updated since then. <br />The current credit price is based on a balanced budget model with credit sales funding ongoing <br />operations and capital expenditures. However, it does not include a long term funding mechanism <br />(i.e., surety bond or endowment) to guarantee that mitigation sites have basic maintenance funding <br />in perpetuity, which is required through our existing MOA. We estimate that in order to maintain <br />the existing City-owned mitigation sites in perpetuity would require an endowment of <br />approximately $600,0002. To build this endowment, we propose adding $7,500 to the price of each <br />of the 82 credits available to the WEW Mitigation Bank. <br />Similarly, the current credit price does not include funding for future land purchases. After <br />restoration is complete at Coyote Prairie, the City will need to acquire additional land if the <br />mitigation bank is to continue operation. Land prices for grass/hay producing agricultural land <br />outside of the urban growth boundary are currently averaging between $10,000 and $15,000 per <br />acre. To generate one credit in the bank requires two acres of restoration. Thus, replacement costs <br />of land should be accounted at $20,000 to $30,000 per credit. If this cost is added to the remaining <br />82 credits available for sale by the WEW Bank, it could generate a reserve of $1,520,000 to <br />$2,280,000. This reserve would be adequate to purchase 164 acres of agricultural land for the next <br />phase of the WEW Bank. It is possible that this funding could be leveraged with a grant, <br />partnership, or other funding tool to purchase a larger parcel. We propose adding $20,000 to the <br />price of each of the remaining available credits. <br />Recommendation: Yes, the City should increase the price for wetland mitigation credits to <br />$77,500. <br />Rationale: Current credit prices will not.sustain the future viability of the WEW mitigation <br />bank since long term maintenance costs and future land acquisition costs are not included in <br />the current price. <br />Endorsement <br />We have a meeting to discuss these issues with you on Friday, September 26t" from 10:00 - 11:00 <br />to discuss these issues. Our goal for this meeting is to provide additional background about these <br />policy issues, answer any questions you may have, and get your endorsement of our <br />recommendations or guidance for alternative paths of action you would like us to take. <br />2 This is based on an average of 5% interest which would generate $31,500 per year. <br />Page 3 <br />