An empty field in the northeast corner of Vancouver, one that looks ripe for a new subdivision, has become one construction firm’s asset precisely because it will never be developed.
The 113-acre former peat bog near the corner of Northeast Fourth Plain Boulevard and Northeast 162nd Avenue, is now known as Terrace Mitigation Bank. It will be rehabbed over the next decade and conserved for the foreseeable future.
Its owner, Terrace Mitigation Bank LLC, stands to generate millions in revenues by restoring it and selling those efforts as credits to local developers, whose projects may cause ecological damage.
“It’s very unique in that what we’re selling is not a good or service,” said Cornell Rotschy, co-owner of the bank and a co-owner of Rotschy Inc., a construction firm in Clark County.
Wetland banks like these are privately owned restoration efforts, overseen by the state Department of Ecology. As a wetland is restored, the agency doles out credits to be sold to public or private developers.
The value of the credits will fluctuate with the real estate market, Rotschy said. A credit today would cost around $190,000, he said, and the bank is expected to generate 81 credits in the end. At today’s value, that would be $15.2 million.
The demand is there, Rotschy said, especially during a construction boom like the one Clark County is currently experiencing.
“Throughout the prior years and construction booms, the high-and-dry flat ground has already been developed. The easiest stuff gets developed first. But there’s still a need for housing and business (construction) in the county,” he said.
Three weeks into its operation, Terrace Mitigation bank had made four sales amounting to almost one full credit, Rotschy said. One sale, for example, was 1/34,000 of a credit for an apartment building.
But it’s going to be a long process. Credits are administered by an interagency committee, with members from local, state and federal agencies. The credits are handed out based on performance, the results of which take months to determine.
“Agencies make sure that what you’re proposing is doable and successful,” said Karey Bock, a senior wetland biologist and principle with Ecological Land Services, the firm that helped Rotschy form Terrace Mitigation Bank.
To restore the land, Rotschy and Ecological Land Services will have to break up the old drainage tiles that originally turned the land from a peat bog into a mint farm, Bock said. Native plants will be replanted and invasive plants will be weeded.
That level of regulation is part of what is driving demand for the credits in the first place. Companies whose projects damage wetlands are required to restore a similar wetland, usually in the same watershed. And a 2008 federal rule mandated that companies, if they can’t avoid damaging a wetland, should first look to mitigation banks.
“Developers oftentimes didn’t, couldn’t care about the environment; they just wanted to build homes,” said Francis Naglich, founder of Ecological Land Services. “This actually brings incentive to Rotschy and others to do good mitigation.”
Rotschy Inc. as a construction firm does not develop projects from the ground up; and Terrace Mitigation Bank LLC will function autonomously from the construction firm, Rotschy said.
Naglich, who also owns a mitigation bank in Long Beach, said he’s heard criticism from people who think that banks like these will only make it easier for developers to run roughshod over wetlands.
“That couldn’t be farther from the truth,” he said. “You still have to go through the same process as they ever did.”
It will be a while before Terrace Mitigation Bank sees profits, Rotschy said. It took three years to form and required hiring multiple environmental engineering firms. He declined to disclose how those expenses stacked up against sales, though.
To form a mitigation bank, Rotschy will also be required to set up an endowment to monitor the site long term.
“It means that we have to have an investment fund by the time we sell our credits, (and have to) set aside the earnings to maintain and monitor the wetlands forever,” he said.
Terrace Mitigation Bank is the third of its kind in Clark County, including an 800-acre bank near the Lewis River, and the 17th in the state of Washington.