City Council - Public Works and Natural Resources Committee

all right I'm going to go ahead and call this meeting to order this is the um city of Bellingham city council meeting September 16th uh 2024 and we are going into our committee meetings this afternoon our first committee meeting is public works and natural resources that is chaired by council member Hannah Stone thank you very much president Hamill um good afternoon everyone I am joined on the public works and natural resources committee by council members Anderson and lillquist but we do have a full Council present this afternoon an important topic before us so we have one item on the agenda this afternoon it's agenda bill 24234 this is regarding Bellingham Wetland mitigation Bank update so the city of Bellingham is actively developing a new Wetland mitigation Bank the goals of the new mitigation Bank are to improve the success of wetland and stream mitigation projects achieve Regional restoration goals address temporal loss of aquatic resource functions address mitigation needs for a range of new Housing Development types as well as other public and private entities and streamline the mitigation process staff will present an update on the mitigation Bank approval process and discuss next steps um I also just wanted to mention the previous Council action which will be discussed but that in 2016 direction to pursue creating a mitigation bank took place and in 2018 there was property acquisition um both in May August and September of that year and then having had updat and um

other resolutions passed in 2020 for mitigation bank property management as well in 2023 the resolution affirming affordable housing and homelessness um as a Public Health crisis and so with this I know we have several staff members with us this afternoon um I guess I'll first turn to Joel fun who's the interim Public Works director uh good afternoon chair Stone and Council um so uh I am am joined here by annaise Burns who's our habitat restoration manager she's going to be giving the presentation and then also joined by Renee lacroy assistant director of natural resources and then we will be available to answer questions so I'll turn over to Analise right thank you again Analise Burns uh habitat and restoration manager public works so this is a presentation is meant as a status update for the mitigation Bellingham mitigation Bank um as was mentioned in the agenda bill it's been uh quite a long process and we're going to go through uh where we are today and your role so the presentation goals are to provide like I just said the status update uh and then also to prepare Council for some action in first quarter of 2025 so in case uh it has been a long time so if there's anyone who hasn't been following along or hasn't been here in some of the other presentations uh it's worth it to go back and just explain what we mean by a mitigation Bank in this context there are other kinds of mitigation Banks but in this context a mitigation bank is a site it's a physical location where

wetlands and streams are restored they're enhanced and or improved and uh and sorry and preserved as well and then um those site improvements then generate credits and those credits can offset permitted impacts to Wetlands and streams so um permitted impacts are still have to go through the regulatory process and in this case it would be the unavoidable impacts resulting from development they always have to mitigate for that and so these site improvements are just that type of mitigation um it's in the form of a credit that someone would buy so credits can be used by the bank sponsor when we're talking about the proposed Bellingham mitigation Bank the city of Bellingham would be the sponsor so the city could use uh those credits for development projects or the purchas uh developers in the private sector could purchase those credits uh as long as their project was located within what's called a service area and that uh way of uh administering the bank and how credits are uh released is formalized through what's called an inter agency agreement that's mitigation banking instrument and you're going to hear that term several times through this presentation it is abbreviated as MBI so why would we want to develop a mitigation Bank uh it's widely known and documented Nationwide that traditional mitigation uh results in high rates of sight failure low ecological value for the watersheds in our community inefficient land use and it results in delays of the development projects so we

embarked on uh trying to find an alternative way of doing mitigation for the city that would address some of these commonly known U shortfalls of traditional mitigation and when we say traditional mitigation uh what is typically done and is most commonly done definitely in our region is that an individual project developer will have unavoidable impacts and then they do their own small mitigation project to compensate for that one one versus one um uh impact to mitigation mitigation Bank consolidates mitigation into a larger project so the goals of the Bellingham mitigation Bank are as was mentioned in the agenda bill but just quickly I'll go through them again is to improve the ecological success of mitigation to consolidate mitigation like I said multiple projects buying in to uh achieve a larger more meaningful mitigation that achieves Regional restoration goals we're addressing temporal loss of aquatic resource functions because for Bank you have to build the improvements on the ground and prove that they're working before you can get a credit for sale so the impact happens after you've already had that ecological lift traditional mitigation you're allowed to have the impact and mitigation follows and eventually replaces those um lost functions uh the goal also is to provide mitigation for public and private developers that's always been the goal that we would have enough credits for both uh types of developers and that we are of course streamlining the permitting process

it's important to note that we're not changing the permitting process uh there still is what's called mitigation sequencing where developers have to minimize and avoid impacts first and the only thing that they're mitigating for is unavoidable impacts so it's keeping the the regulations in place so how is a bank approved that's one of the reasons why we're here um it's very it's a very tedious process um and we want to make sure that you understand the process because you do have a role in that process so now is the time and you'll see the timeline in a minute Now's the Time to dig a little deeper into the actual approval process so a bank is approved in a very formal process that's dictated by rules set in state and federal level so the city doesn't have any influence on that process it is what it is it is set by rule the approval is led by an in what's called an inter agency review team IRT and the co-chairs are the Washington department of ecology and the US Army Corps it's a fairly lengthy process Washington state is one of the most lengthy uh of all the areas in the United States historically in Washington state it's taken about 5 to 10 years to get through an approval process for a a mitigation bank and again the inter agency agreement that governs the operation of a bank is called that mitigation banking instrument or MBI and uh that is then it's an energy agency agreement so it's signed by the city sponsor or sorry the city who is the sponsor in this case it would be

the department of ecology and the US Army Corps of Engineers the co-chairs of the IR and then potentially if they want to the local regulatory agency so in our case that would be wam County so we're going to go through um part of the status update is to give you the mitigation Bank timeline and to show you where you have influence on the process where your role comes in so if you can see the light green those indicate the council involvement in this process so we began in 2016 with direction from Council and mayor to pursue a bank in 2018 we submitted what's called a prospectus it's like an application and we purchase properties with Council approval then in 2020 there was a formal comment period uh that was was issued by the federal and state governments uh and the prospectus or application was deemed complete the council approved the bank property protection resolution also in uh around that time then there is a period of time between 2021 and today that involves quite a lot of Technical and individual MBI submittal and we're going to go through that in a little bit more detail so you understand we are currently at where the yellow star is this is where we are in that about 5 to 10 year long process we're sitting at year eight um and where we're headed toward is signing the MBI and beginning the bank operations and sales so we're going to um move in a little bit more detail into this area in yellow this tech review of Technical and individual submitt um because you're going

to start to see the this ter the terms um as you move towards signing an MBI and also doing our own City enabling ordinance some of these terms are going to come up for you so it's um maybe helpful to understand and before we go through a detailed timeline of what we've done in that time period let's go through what an MBI means what what is it what makes up an MBI so mitigation banking instrument the components of it are everything in the gray box it's quite a lot it's prescribed um it's just a set of individual documents that you have to submit sequentially when it's all done it's called the mitigation banking instrument so um when it's all done the first kind of almost like a cover sheet would be the basic agreement that's your legal administrative part of the document and then there's a series of appendices um there's the general Bank information kind of about the site um appendex B is what your planning on doing to the site or what improvements are you going to be doing what kind of protection the basically the design document appendix C is the objectives and performance standards that will show that you're improving or protecting and that will um end up justifying how many credits you would get appendix C is or uh D is the credit generation and award schedule so based on the improvements in the performance standards from the previous appendices you would then have a certain number of credits that will be allocated over time as you meet your performance standards and

that would um that shows that award schedule in appendex D appendix e is a procedures for using those Bank credits what type of um impacts and would be allowed what is the service area AB Bendix f is the establishment period monitoring so there's about a 10-year monitoring period that's required to show that you are meeting your performance standards it outlines the reporting and the maintenance M and remedial actions that are required and then appendix G uh deals with the long-term management that's required Post 10 years so 10 years is that special time where you're really documenting that you are making an improvement and protection and it's working and then after that you go into kind of a per a perpetuity Land Management um long-term protection and management a lighter touch and appendix H is your financial assurances how are you assuring the agencies that you'll be able to uh pay for the work that you're promising and it's worth noting that in addition to all these pieces uh we also have to submit three required technical reports cultural resources report a critical areas assessment and a baseline conditions report again these are all prescribed we don't have any latitude in what we submit or in what order so we began that process of submitting all those documents in the required sequential order in 2021 uh we submitted some of our technical documents in 2022 our Baseline conditions report another technical document and in 2023 we began uh submitting our series of

appendices and we are submitting them in batches in 2024 um we're proud to have received a wam County major project permit uh an EDI and an EDI Grant Construction of the mitigation bank and we also are submitting U appendices D through H that's what we're um that's what we are doing right now and then if you fast forward once those have all been approved then we will have um a basic agreement that we submit and um and then we will come to you with a proposed mitigation Bank enabling ordinance so that the series of submittal is not something that the city has a lot of um influence on but the enabling ordinance is where Council has a role to play about how does the city want to um operate and manage this bank and a lot of those decisions are um outside the purview of the inter agency um review team it really is up to the city how they want to um assign credits and and um price credits and then uh eventually we will sign the MBI and we don't have a date on that because it's out of our control it is really dictated by the state and federal agencies in their review time so we've gone through the status update where we are and the steps of the process and now uh we want to make sure we understand um where we would be coming to council and what the next steps for Council are so it's exciting to be at this point where there actually can be some Council involvement in this very lengthy process we're at year eight and um chomping at the bit really to to be able to have you um be able

to review and have influence on your part which is the enabling ordinance and our plan is to come back to council with a draft in first quarter of 2025 and then after that when the uh inter agency review team is ready um we will then bring you the um signed or the mitigation banking instrument uh for authorization to sign so that's the end of my presentation um I'm here if you have any questions thank you anything else from staff before I turn the council okay council member list well first of all anise thank you for sticking with it all these years uh it's more work than I realized um when we talked about this years ago um we were talking generally about two kinds of customers who would need to buy the credits one of those is the city itself and then the other is the possibility of outside customers who would actually be cash paying customers right to the bank to help uh pay for the cost to create and and maintain and enhance um right now what are we talking about in terms of the customers and in other words how much of this mation Bank are we Imagining the city itself might need and how much do we think we might be open to other customers Renee lroy excuse me Renee lroy Public Works um I can start on that and analy can add to what I say um the we originally envisioned well when we started this work um we met with local developers to understand how much need was out there we also met with City staff to understand City projects um because the bank as analy said these Banks

typically take a long time to develop some of the city needs we've met in other ways and so that amount has diminished and do you remember the actual numbers Analise uh I I don't remember I do remember that the the city's estimated um proportion was less than 50% um and you know part of the developers that we were looking at was also wam County um utility providers um railroads so not not just um like single family home builders yeah city was a less than 50% we a little bit less than that now probably in in the near term Anderson thank you um a little bit curious as far as because it takes so long um and I'm trying to mentally map where the locations are I don't expect you to bring them up right now to show us where the mitigation banks are but or upcoming ones but I'm wondering um does the county also have a good stock because I know a location that everybody kind of used got maximized out on um the luming ation uh kind of the title flat area um I'm just kind of wondering are we going to start this process again soon in order to be able to purchase more and start the process to expand additional Banks or what will the capacity be especially if we're um having anybody outside of the city development being able to buy into it so what when we started the bank process we asked Watkin County if they wanted to co-sponsor with us and at the time they um it wasn't a good fit for them but as Analise said we met with um them and made sure that the bank could accommodate their projects

as well so they're welcome to use the bank um and the bank the first phase is located up around Northwest and Smith Road area uh and when those credits are sold we have an additional property um that's called The mccormac Creek area which is the headwaters of squad Creek and then we can start on phase two just wondering if there's an assessment um on not only our need but County need and how long will those two Banks be able to suffice that need especially as we're going into the county comp plan when it comes to how much development um each municipality is going to have to meet when we when we started the bank process we did that assessment like an said where we look asked wam County we looked at their development needs we also met with developers um City staff anybody that might be a potential user of the bank and we sized it accordingly um and at the time we did if I remember right it was a 20-year look forward of what people might need it was envisioned just to add on to that it was envisioned as a foresight bank so we were hoping to meet the 20-year projection with four sites um two of those sites the land owners have decided not to pursue um partnership with the city so we have right now we have two sites that we can pursue um we don't have a lot of um comparisons of how much demand this will be an option it won't be required for people to buy credits and so you know what has happened in the past we have one mitigation Bank as a comparison that's the Lumi mitigation

Bank um they have to publish a ledger about you when they sell and based on the historic records that they have um we would have several years of um potentially you know 3 to S years on our first bank site it depends on the demand it depends on who comes up um wanting credits but it gives us time to go ahead and start that second bank site um if we if we are running out of credits we can at that point decide if if there's something else that we want to pursue but it it gives us some time so quick followup I guess on council member Anderson's question noting that right this regulatory process you know typically takes five to 10 years and so just highlighting that we're not you know doing something wrong or you know that that delay is sort of outside of our control um but I guess with respect to council member Anderson's question I'm still unclear in that now if we have two sites if those are at right we'll say math capacity or all the credits are sold to expand the bank or add additional properties does that require a new MBI right starting over yeah if we um the way that it works is when you start this process you submit perspectus and we identified four sites in the perspectus and if we deviate from those four sites we need to start the whole process all over again and so as Al Le mentioned two of those sites the property owners have you know made other decisions about their their lambs so they're not willing to work with us anymore so we would have to start the whole 10

year process over again I will say though that we're at year eight and there's probably a good two years and a lot of you will remember this there was a good two years where the Army Corps and Department of ecology weren't staffed up appropriately and we lost about two years waiting for them to staff up appropriately so if if we were to start it all over again it would move faster as they have staffed up now and I think it's also uh worth noting that as Renee said if we added a different bank site that we've never talked about before we would start at the very beginning um every site even if it's in the perspectus so the second site that we've purchased that could become our second site we call it phase two um we do have to submit those technical documents and those appendices um for that site it's not a 10-year process we'd be starting about Midway through the process with that and as Renee said um the Staffing level has changed with the review agencies so we're hoping that um the next site would be a much faster review and we're starting about halfway through the timeline for that second site and just to confirm are we able to start if we foresaw right a need in the future that we're going to use of credits and development ongoing is that something that can be started sort of concurrently I mean while you're in the middle of right working on the current perspectives okay mayor I would just add to the conversation that um in my monthly check-ins with executive s do this is a

frequent topic of uh conversation and it the lengthy process that we're held to in Washington state I think that there's also been conversation about there's opportunity for us to Advocate at the state level to for some changes to the degree that that makes sense and be possible so um when we start a new of which I know that there is interest at the county to do that work is there a way that we could shave some time off of this in a way that makes sense and accomplishes everyone's goals and interests Council Mist two questions um one when it does come to the point of selling credits um how's that dollar value arrived at and and is it is it basically is it just cost recovery are you allowed to do a full cost recovery are you supposed to do full cost recovery so that's the first question and the second question is that uh in the agenda cover sheet it mentions the city council's resolution affirming affordable housing and homelessness or a Public Health crisis why was that included in here because there's presumably a housing connection here can you talk about that sure um sorry the first question was tell me again dollar value the dollar value so the because it's a bank the agencies you know this lengthy review process that we've talked about um the agencies care very much about making sure that we meet our ecological obligations they don't care much about how we price the credit so that's in something we have control over um we have always thought that it would at a minimum do

cost recovery so we have been tracking staff costs and consultant costs and land purchase costs up to this point so that we can make sure that our credit um minimum credit price would at least at a minimum recover our costs um and then in addition to that you know there's speculation that it might actually make money if we go at market rate um do you remember what the lumy nation market rate is right now for their Bank my understanding is the Lum Nation bank is currently closed they don't have credits available for for um public sale but the last time they were open I believe it was $400,000 a credit and then the um do you want to speak to the inclusion of that the housing well I think we all know that there's many Parcels in um even within Bellingham City Limits that are encumbered by wetlands and the setbacks that prevents the highest and best use for housing on some of those parcels and so this is one potential mechanism that would make um you know is we're all engaged in an active conversation about Statewide mandates for growth and this is a tool that we'll be able to employ to help facilitate and meet those mandates yeah I think one of the um goals of the mitigation bank if you remember was streamlining the permitting process so getting quick action on the ground is often a lot of the delay and projects tends to be the the encumbrances that are on that property and how are you um documenting and meeting those incumbrances and mitigation in particular wetlands and stream

mitigation it's getting increasingly difficult to find mitigation off of a piece of property so within an urban context we want to maximize the urban um environment within the city and oftentimes they're looking for a different parcel to mitigate on and it's it's very difficult to find that it's very expensive with our land value and so this would um provide a faster way to meeting the obligations while actually improving the ecological outcome of that project it's just one final question about um so this is an additional option for developers of the city to to utilize but individual they were called permit responsive right um responsible mitigation actions I mean that could still happen as a one off on particular projects okay know that this item was on the agenda this afternoon for information and discussion only and you mentioned that it will be probably early 2025 hopefully that we will have another report on the the status of the MBI so okay wonderful anything else from staff before we conclude okay if that's all for the committee um we will adjourn and I'll send it back to president Hamill thank you thank you uh it's 1 128 our next committee is committee of the whole and that begins at 1:30 so we have a two-minute break thanks