The URL can be used to link to this page

Home My WebLink About20200047 Ver 2_Signed MBI-Banished Bull_20201117DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 ROY COOPER Governor MICHAEL S. REGAN Secretary S. DANIEL SMITH Director TO: Danny Smith Director FROM: Katie Merritt NORTH CAROLINA Environmental Quality November 16, 2020 Nutrient Offset & Buffer Banking Coordinator THROUGH: Paul Wojoski I�uJ Supervisor - 401 Buffer Permitting Branch SUBJECT: Division Approval of the Banished Bull Mitigation Banking Instrument for Riparian Buffer Mitigation and Nutrient Offset Credits pursuant to the Falls Lake Water Supply Nutrient Management Strategy for Watershed Investments NC, LLC. The attached final Mitigation Banking Instrument (MBI) between Watershed Investments NC, LLC and the Division of Water Resources was placed on public notice and made available for public comments on October 27, 2020. The public comment period ended on November 11, 2020 and no comments were received on the draft MBI. DEQ Legal counsel assisted with and agrees with the final template for which all our MBI documents are drafted from. I have reviewed the attached MBI and it is ready for your approval. Please sign on page 16 and return the document to me for final execution. D E Qbi�� North Carolina Department of Environmental Quality I Division of Water Resources 512 North Salisbury Street 1 1611 Mail Service Center I Raleigh, North Carolina 27699-1611 vOry rN Cx:40:.itiA � o .—Io E�.w��a�:r� /� 919.707.9000 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 AGREEMENT TO ESTABLISH THE BANISHED BULL MITIGATION BANKING INSTRUMENT IN THE NEUSE RIVER BASIN FOR RIPARIAN BUFFER AND NUTRIENT OFFSET MITIGATION CREDITS PURSUANT TO THE FALLS LAKE WATER SUPPLY NUTRIENT STRATEGY TABLE OF CONTENT Contents PREAMBLE W, II. LOCATION AND GEOGRAPHIC SERVICE AREA....................................................................2 III. AUTHORITIES............................................................................................................................3 IV. ESTABLISHMENT OF BANISHED BULL BANK PARCEL.......................................................3 V. BANK PARCEL DEVELOPMENT PACKAGE........................................................................5 VI. POST CONSTRUCTION DOCUMENTATION FOR THE BANK PARCEL................................6 VII. CALCULATION OF MITIGATION CREDITS...............................................................................8 Vill. CREDIT RELEASE SCHEDULE................................................................................................10 IX. PROCEDURE FOR DEBITING AND CREDITING MITIGATION CREDITS .............................11 X. BANK PARCEL CLOSURE.......................................................................................................12 XI. GENERAL PROVISIONS.........................................................................................................13 ATTACHMENTS & REFERENCES A. Division of Water Resources Authority Document B. NCDWR Methodology & Calculations for Nutrient Reductions on the Bank Parcel C. Ledger Templates 1. Nutrient Offset Payment Rule: htto://reoorts.oah. state. nc. us/ncac/title%2015a%20%20environ mental%20a ual itv/ch aoter%2002%20 %20environmental%20management/subchapter%20b/15a%20ncac%2002b%20.0703.1)df 2. Riparian Buffer Mitigation Rule: http://reports.oah.state. nc. us/ncac/title%2015a%20-%20environmen tal%20guaIity/chapter%2002%20- %20environmental%20management/subchapter%20b/15a%20ncac%2002b%20.0295.pdf 3. NC Session Law 2019-86 "Nutrient Offset Credits": https://ncleg.qov/En acted Leg islation/Session Laws/HTML/2019-2020/SL2019-86. html 4. Buffer Interpretation/Clarification #2008-019 for diffuse flow: https://files.nc..qov/ncdeq/Water%20Quality/Surface%2OWater%2OProtection/401 /Buffer%20CIarification %20Memos/Diffuse-Flow-for-Buffer-M itigation-Sites-Buffer-Clarification-Memo-20080819. pdf 5. Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits (November 2019): https://files.nc.gov/ncdeq/Water%20QuaIity/Surface%20Water%20Protect ion /401/Mitigation/Issues--- Resolutions-Ver-1.0-buffer-mitigation-nutrient-offset. pdf 6. Methodology and Calculations for Nutrient Reductions on the Bank Parcel: https://files.nc.qov/ncdeq/Water%20QuaIity/Plan ning/NPU/Nutrient%200ffset%20Rule/Ag-Buffer-Cred it. 0f DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 PREAMBLE This Mitigation Banking Instrument ("Instrument") regarding the establishment, use, operation, and maintenance of the Banished Bull Nutrient Offset and Buffer Mitigation Bank Parcel ("Bank Parcel") to provide Neuse Riparian Buffer mitigation credit ("Riparian Buffer Credits") and Falls Lake Water Supply nutrient load reduction credit ("Nutrient Offset Credits") is made and entered into by and among Watershed Investments NC, LLC acting as the Bank Sponsor ("Sponsor"), and the North Carolina Department of Environmental Quality - Division of Water Resources ("DWR"). This Instrument is in accordance with 15A NCAC 02B .0703 and the Consolidated Mitigation Rule 15A NCAC 02B .0295, which became effective on November 1, 2015 (Reference Numbers 1 & 2). The purpose of the Bank is: A. To restore riparian vegetation adjacent to streams and/or agricultural ditches with the intent to improve water quality, reduce nutrient loads, enhance flood attenuation, and restore wildlife habitat along the unnamed Banished Bull mainstem and its ephemeral tributary. B. To convert agricultural land uses with riparian areas associated with streams and/or agricultural ditches into a fully stocked forested community with the intent to substantially reduce nutrient loadings into surface waters associated with agricultural land uses. C. To provide mitigation and sell any resulting Riparian Buffer Credits and/or Nutrient Offset Credits to third parties in specific areas within the Neuse River Basin and Falls Lake Watershed respectively, for development (both existing and proposed) or to offset NPDES-permitted wastewater nutrient sources requiring such mitigation or offset. II. LOCATION AND GEOGRAPHIC SERVICE AREA A. The Geographic Service Area ("GSA") is the designated area wherein a Bank can reasonably be expected to sell Riparian Buffer Credits and/or Nutrient Offset Credits for impacts due to development activities. B. The GSA for this Bank Parcel is limited to the Falls Lake Watershed of the Neuse River Basin in the State of North Carolina, United States Geological Survey ("USGS") 8-digit Hydrologic Unit Code ("HUC") 03020201. C. The Bank Parcel is comprised of land in Orange County, NC currently used for grazing cattle. The project is located in the Falls Lake Watershed at approximately 36.1500 N, 79.0461 W. D. Sale or transfer of Riparian Buffer Credits shall be limited to the 8-digit HUC 03020201 of the Neuse River Basin unless otherwise authorized by the DWR or delegated local government in accordance with 15A NCAC 02B .0295. E. Sale or transfer of Nutrient Offset Credits shall be limited to the Falls Lake Watershed, as defined in Rule 15A NCAC 02B .0276 and in accordance with 15A NCAC 02B .0703, unless otherwise authorized by DWR in accordance with Session Law 2019-86. F. The Project's two unnamed tributaries (UTs) to South Fork Little River and are the receiving bodies for stormwater runoff from this parcel. Where the UTs enter the South Fork Little River, the rive is 2 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 classified by DWR as Nutrient Sensitive Waters (NSW), High Quality Water (HQW), and a Water - Supply II (WS-II). III. AUTHORITIES A. The Bank will be used to provide Riparian Buffer Credit and/or Nutrient Offset Credit in accordance with the requirements in the DWR Authority document referenced herein as "Attachment A" and attached to this Instrument. B. Projects eligible for utilization of the credits are those requiring authorization under the requirements of Attachment A and any new approved North Carolina ("State") statutes and rules for both the Neuse Nutrient Sensitive Waters Management Strategy and the Falls Lake Water Supply Nutrient Strategy. C. The selling of mitigation credits generated from the Bank Parcel approved under this instrument shall be consistent with approved State statutes and rules for both the Neuse Nutrient Sensitive Waters Management Strategy and the Falls Lake Water Supply Nutrient Strategy. D. Mitigation activities proposed under this Instrument and corresponding Bank Parcel Development Package (BPDP) to generate Riparian Buffer Credits and Nutrient Offset Credits shall be consistent with State statutes and rules for both the Neuse Nutrient Sensitive Waters Management Strategy and Falls Lake Water Supply Nutrient Strategy that are in place at the time a complete BPDP is submitted to DWR. IV. ESTABLISHMENT OF BANISHED BULL BANK PARCEL A. In accordance with 15A NCAC 02B .0295 and 15 NCAC 02B .0703, DWR has provided a "Site Viability Letter" for the Bank Parcel proposed under this Instrument. The Site Viability Letter is not an approval of the site to generate Riparian Buffer and Nutrient Offset credits but is a preliminary review of the Bank Parcel that details and confirms existing land use conditions, defines the riparian sites (Enhancement, Preservation, or Restoration), and identifies features (stream, ditches, ponds, etc.) that meet general criteria to be suitable to generate Riparian Buffer and Nutrient Offset credits. Table 1 outlines the date a Site Viability letter was issued by DWR for the mitigation site proposed under this Instrument Table 1. Project Site Viability Summary. Bank Parcel DWR DWR Site Site Viability Viability Name Project # Visit Date Letter Issued Letter Expiration Banished 2020- Jan. 28, 2020 Feb. 19, 2020 Feb. 12, 2022 Bull 0047 B. A valid Site Viability Letter is required prior to submittal of each BPDP. Site Viability Letters will either expire on the dates listed in Table 1 or upon submittal of an individual As -Built Report to DWR, whichever comes first. If a Site Viability Letter expires prior to submittal of a complete BPDP as described in Section V to DWR, then the Sponsor must submit a formal request to DWR for a new Site Viability Letter for that Bank Parcel. 3 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 C. The Bank Parcel proposed for inclusion under this Instrument shall require a BPDP be submitted to, and approved by, the DWR prior to use of the Bank Parcel for mitigation purposes or sale or transfer of any associated credits. The contents of the BPDP are provided in Section V. D. The BPDP will be placed on public notice and made available for public commenting for 15 calendar days. E. Riparian Buffer Credit may be achieved through restoration of DWR riparian buffers as they are defined in 15A NCAC 02B . 0714, and other riparian areas as allowed per 15A NCAC 02B. 0295 (n) and (o) on the Bank Parcel. Riparian Buffer Credits are only attainable if the width of the riparian restoration site, enhancement site and preservation site is at least 20 feet from top of bank of streams and a minimum of 50' from top of bank along ditches. Riparian buffer credits are attainable to a maximum of 200 feet from tops of banks of streams and 50 feet from the tops of banks of viable ditches. F. The Bank Parcel is intended to provide Riparian Buffer Credits as follows: 1. Planting hardwood trees on a Restoration Site, as defined in 15A NCAC 02B .0295(b) adjacent to perennial streams; 2. Planting hardwood trees on a Restoration Site, as defined in 15A NCAC 02B .0295(o)(7) adjacent to ephemeral streams; 3. Diffused flow will be maintained onsite. The Buffer Interpretation/Clarification Memo #2008-019 may be applied where maintenance of diffuse flow onsite is unattainable. G. Nutrient Offset Credit on this Bank Parcel may be achieved through restoration of the riparian areas adjacent to the perennial stream and ephemeral channel where agriculture is the predominant land use. The width of the restoration area must begin at the most landward limit of the top of bank or the rooted herbaceous vegetation and extends landward a minimum of 50 feet and a maximum of 200 feet on all sides of the surface waters. H. The Bank Parcel is expected to provide Nutrient Offset Credits in accordance with 15A NCAC 02B .0703 and are expected to provide Nutrient Offset Credit as follows: 1. Converting agricultural land uses within riparian areas to non-agricultural land uses by place a conservation easement around riparian areas along streams; and 2. Planting hardwood trees on a Restoration Site, as defined in 15A NCAC 2B .0295(b) adjacent to streams where agriculture has been determined by DWR to be the predominant land use. 3. Placing a conservation easement around restored riparian areas along streams and a ditch in accordance with 15A NCAC 02B .0703(g). M DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 V. BANK PARCEL DEVELOPMENT PACKAGE A. The Banished Bull BPDP submitted under this Instrument shall be submitted to DWR for review and must be approved by DWR prior to any construction on the Bank Parcel. The BPDP must describe any changes that have occurred to the site between the date of the Site Viability Letter and the date the BPDP is submitted to DWR. The BPDP shall include detailed information consistent with the sections below concerning: 1) site location (8-digit HUC is required); 2) existing conditions with current photos; 3) proposed buffer mitigation and nutrient offset activities including a detailed vegetation plan; 4) monitoring and maintenance plans; 5) financial assurances; 6) associated buffer and nutrient credit calculations, which shall include credit generation, service area, and accounting as appropriate for each regulatory authority; 7) stream buffer determination letter from DWR; 8) Site Viability Letter from DWR; and 9) service area figure for each mitigation type proposed under this Instrument. B. The Sponsor will obtain all applicable federal, state, and local documentation, permits, or authorizations needed to construct and maintain the Bank Parcel. This Instrument does not qualify as, or substitute for, such documentation, permit, or authorization. C. Any restoration activities or construction within the stream, riparian buffers and other riparian areas on the Bank Parcel to produce Riparian Buffer Credit or Nutrient Offset Credit must be approved by DWR in writing prior to implementation. The failure of the Sponsor to comply with this requirement may result in a revised or reduced credit release schedule for the Bank Parcel D. Requests for deviation from the approved BPDP must be submitted to DWR in writing. Written approval from the DWR must be received prior to implementing any deviation from the approved BPDP. Property Disposition & Long -Term Management E. Prior to the release of any credits, the Sponsor shall record a permanent conservation easement at the Orange County Register of Deed's office that is sufficient to ensure protection, operation and maintenance of restored riparian buffers and other riparian areas for the duration specified in the approved BPDP. F. The form of the conservation easement shall be consistent with the standards employed by the State of North Carolina in the protection of restored riparian buffers and riparian areas and shall be approved by the DWR prior to the release of any credits. G. The Sponsor shall not grant additional easements, right of ways, or any other property interest in or to the project areas, without prior approval from the DWR. H. The Sponsor agrees to transfer or assign the conservation easement and its interests in perpetuity to a qualified holder under NC General Statute ("GS") 121-34 et seq. and 170(h) of the Internal Revenue Code prior to the first credit release. The holder shall be a land trust or stewardship program that will hold and enforce the conservation easement and the interests in perpetuity. The Sponsor shall choose a land trust or stewardship program that is accredited 5 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 by the Land Trust Accreditation Commission and/or has been approved by DWR. A land trust must be certified under 501(c)(3) of the Internal Revenue Code. I. The conveyance of the conservation easement to a land trust or stewardship fund must be arranged at the outset of the approved BPDP for this Bank Parcel. Financial Assurances J. Following approval of the BPDP, the Sponsor shall provide a Performance/Maintenance Bond from a surety company that is rated no less than an "A-" as rated by A.M. Best, and it is the Sponsor's responsibility to confirm that the surety company is still rated no less than an "A-" with each annual bond renewal. K. The Performance Bond amount shall be 100% of the estimated cost for implementation of the mitigation activities of the Bank Parcel as described in the approved BPDP. No bond shall be less than $150,000.00 to cover construction costs. L. Alternatively, in lieu of posting the Performance Bond, the Sponsor may elect to construct the project prior to the first credit release. M. Once DWR has released all credits for completion of all the items listed below, then the Bank Sponsor will be released from its performance obligations under the performance bond required in Item J-K of this section: 1. Instrument and BPDP approved by DWR, conservation easement recorded and assigned to an approved land trust or stewardship, financial assurance posted; 2. Mitigation site earthwork, planting and installation of monitoring devices completed; 3. As -Built Report as described in Section VI has been received by DWR; and 4. DWR has submitted a written approval of the As -Built Report. N. To comply with this section, DWR must be Obligee on all performance bonds. VI. POST CONSTRUCTION DOCUMENTATION FOR THE BANK PARCEL A. The Sponsor agrees to perform all necessary work, in accordance with the provisions of this Instrument, to establish, maintain, and monitor Neuse Riparian Buffers or other riparian areas until Item B (1) and (2) of Section X have been satisfied. B. The Sponsor will submit an as -built plan and report for the Bank Parcel within 30 calendar days after completing the establishment of the buffer area and nutrient offset area. The as -built report will describe any deviation from the approved BPDP and will document the following: 1. Buffer restoration: planting details, confirmation of fence installation, invasive species control, confirmation that boundary markers are installed, monitoring device locations, vegetation plot locations, and photo point locations. 6 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 2. Boundary Survey of the conservation easement area, signed and sealed by a licensed surveyor, including an inventory of the final mitigation areas for riparian buffer and/or nutrient offset mitigation credits in both square feet and acres. 3. As -built aerial map of the mitigation area showing where riparian restoration was performed and any deviations to the Bank Parcel from what was approved in the BPDP. 4. Aerial map of the mitigation that was included in the approved BPDP. C. After completion of the restoration activities, a separate Performance/Maintenance Bond will be secured for 100% of the estimated cost to implement the monitoring and maintenance plan as described in the approved BPDP and As -Built report. The Bond must be from a surety company that is rated no less than an "A-" as rated by A.M. Best, and it is the Sponsor's responsibility to confirm that the surety company is still rated no less than an "A-" with each annual bond renewal. D. A Performance/Maintenance Bond shall be secured each year for a minimum of five years, and until DWR has released all Riparian Buffer and Nutrient Offset credits to the Bank Sponsor. Upon DWR approval, the bond may be lowered each year based on the adjusted cost to complete the monitoring. No bond shall be less than $100,000 to cover monitoring and maintenance costs. E. Once DWR has released 100% of all credits for completion of all Bank Parcel milestones described in Table 2 of Section VIII, the Bank Sponsor can be released from its performance obligations under the performance bond required in items C and D of this Section. F. To comply with this section, DWR must be the Obligee on all performance bonds. G. The Sponsor shall monitor the Bank Parcel as described in the BPDP until such time as DWR determines that the performance standards described below have been met. The monitoring period shall be a minimum of five consecutive years. H. Performance Standards for Vegetation: Native hardwood trees should be planted at a density sufficient to provide 260 stems per acre after five years. A minimum of four (4) native hardwood trees must be planted. No one species shall be greater than 50% of the planted stems. A list of species for planting will be detailed in the BPDP for approval. Native hardwood tree volunteer species may be included to meet performance standards as determined by the DWR. I. A "stem" means a woody seedling, sapling, shrub or tree, no less than 10 centimeters in height. J. If the performance standards of the vegetation are not met, supplemental plantings may be 7 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 required. Supplemental plantings will be utilized until the required densities have been achieved and maintained for five years. Bank Parcel maintenance, such as ensuring diffuse flow, managing invasive species, and pest control will be included in the BPDP. K. Monitoring Reports for Riparian Buffer Credit or Nutrient Offset Credit: Reporting criteria of the riparian buffer restoration and enhancement shall be based on the Carolina Vegetation Survey (CVS) - EEP Protocol for Recording Vegetation Level 2 Plot Sampling Only Version 4.0 or any updated versions of this protocol in place at the date of acceptance of the BPDP. The Sponsor shall submit to the DWR an annual monitoring report no later than December 31 of each year for a minimum of five consecutive years after the first full growing season. This report will describe the conditions of the Bank Parcel, including an evaluation of the performance standards of the vegetation contained within the approved BPDP. Reports shall contain the following: 1. A U.S. Geological Survey map showing location of the Bank Parcel; 2. A detailed narrative summarizing the condition of the Bank Parcel along with any maintenance or remediation performed that year; and 3. A map, survey, or other figure showing locations of sampling plots, permanent photo points, location of transects, etc.; and 4. Monitoring data, including specific vegetative counts showing that the trees or tree and shrub species planted are meeting performance standards and updated photographs; and 5. A copy of the most recent Bank credit/debit ledgers upon request; and 6. Corresponding verification letters from designated local governments upon request; and 7. Corresponding Mitigation Transfer Certificates upon request; and 8. Proof of performance bond renewal to cover the next monitoring year (when applicable). L. In the event the Bank Parcel fails to achieve the success criteria described in this Instrument and the approved BPDP, the Bank Sponsor shall develop necessary contingency plans in coordination with the DWR and implement appropriate remedial actions for the Bank Parcel and the Bank. Depending on the degree of remedial actions required, the DWR may modify the monitoring period. VILCALCULATION OF MITIGATION CREDITS A. All Riparian Buffer Credits shall be determined based on the ratios and percentages provided in 15A NCAC 02B. 0295(m) and (n) following the guidance provided in the Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits letter issued by the DWR including the most recent Project Credit Table Template. B. Riparian buffer restoration on the Bank Parcel, as described in 15A NCAC 02B .0295(n) and 9 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 (o), defined in 15A NCAC 02B .0295(b) and performed on agriculture lands within the Bank Parcel, may be used for either Riparian Buffer Credit or Nutrient Offset Credit, but not both. C. Riparian Buffer Credit is defined as one (1) buffer credit per one square foot or 43,560 buffer credits per one acre. D. The square footage of Nutrient Offset Credits on the Bank Parcel will be determined by applying the applicable ratio as provided in 15A NCAC 02B .0295(m) for a Restoration Site following the guidance provided in the Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits issued by the DWR including the most recent Project Credit Table Template. All riparian areas proposed for Nutrient Offset Credit must be a minimum of 50 feet from the top of stream banks on land noted in the Site Viability Letter as agriculture. E. Nutrient Abatement of Restored Riparian Area/Buffers on agricultural lands: The Sponsor and DWR agree to the following: i. The pounds of nitrogen offset per acre of restored riparian areas/buffers on agricultural land shall be 2,273.02 pounds per acre or 19.16394 square feet per pound ii. The pounds of phosphorus offset per acre of restored riparian areas/buffers on agricultural land shall be 146.4 pounds per acre or 297.54099 square feet per pound. F. The Sponsor and DWR agree that the methodology and calculations for determining total nitrogen and total phosphorous reductions, associated with restoration of riparian areas as described in Section IV of this Instrument, shall be fixed as part of the approval of this Instrument, with the fixed amount not changing during the Bank Parcel Development or credit release schedule for the Bank Parcel. For further details on the approved method and calculations for determining nutrient reductions associated with the riparian restoration on this Bank Parcel refer to the NCDWR - Methodology & Calculations for Nutrient Reductions document found in Reference Number 6. This space left blank intentionally, do not add text to this space. E DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 VIII. CREDIT RELEASE SCHEDULE A. Upon submittal of all appropriate documentation by the Sponsor, and subsequent approval by DWR, it is agreed that the Riparian Buffer Credits and Nutrient Offset Credits associated with the Bank Parcel will become available for sale to a third party in accordance with the Credit Release Schedule in Table 2 below: Table 2 - Credit Release Schedule for Riparian Buffer and Nutrient Offset Credits % Credit Available for Task Project Milestone Sale MBI and BPDP Approved by DWR, Conservation Easement 1 Recorded* and assigned to an approved land trust or stewardship, 25 and Financial Assurance Posted Site Earthwork, Planting and Installation of Monitoring Devices 2 Completed 20 Monitoring Financial Assurance Posted and Approval of As -Built 3 Report 10 Monitoring Report #1: Approved by the DWR** and financial 4 assurance renewed 10 Monitoring Report #2: Approved by the DWR** and financial 5 assurance renewed 10 Monitoring Report #3: Approved by the DWR** and financial 6 assurance renewed 10 Monitoring Report #4: Approved by the DWR** and financial 7 assurance renewed 5 Monitoring Report #5: Approved by the DWR * * and final site visit 8 by DWR has been conducted 10 Total 100% * For specification, please see Section V in this Instrument * * DWR Approval provided upon a determination that the site is meeting success criteria contained within the approved BPDP B. DWR may modify the credit release schedule based on the information submitted or the order in which required information is received. DWR will notify the Sponsor of any modification to the credit release schedule. C. DWR may consider a Credit Release Schedule for a Bank Parcel based on the extent of change between current onsite conditions and proposed post construction conditions. 10 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 IX. PROCEDURE FOR DEBITING AND CREDITING MITIGATION CREDITS A. The Bank Sponsor shall maintain a credit ledger for each mitigation type for the Bank Parcel under this Instrument: Credit ledgers shall provide the accounting for Riparian Buffer Restoration Credits in square feet and Nutrient Offset Credits in pounds and square feet. B. Each credit ledger shall be submitted on a separate 8'/2 in X 11 in spreadsheet with legible font style and font size. All ledgers shall be submitted using the templates provided in Attachment C of this Instrument or any updated versions to these templates as provided by DWR. C. Riparian Buffer Credits generated on this Bank Parcel will be used to provide mitigation for authorized buffer impacts to offset impacts within the 03020201 HUC of the Neuse River Basin according to 15A NCAC 02B .0295(g).impacts within the Neuse River Basin according to 15A NCAC 02B .0295 (f) and (g). D. Nutrient Offset Credits generated on this Bank Parcel will used to offset nutrient loadings within the Upper and Lower Falls Watersheds. Impacted areas in the Upper Falls Watershed can only mitigate in the Upper Falls Watershed. Impacted areas in the Lower Falls Watershed can mitigate in any portion of the Falls Watershed per 15A NCAC 02B .0282 E. Available Riparian Buffer credits (credits that have been released by DWR, but not sold by the Sponsor) that are generated from riparian restoration and meet criteria for nutrient offset credits as outlined in Section VII of this Instrument, the Site Viability Letter, and the corresponding BPDP can be converted from Riparian Buffer Credits to Nutrient Offset Credits upon written approval from DWR. Once a credit has been converted to another credit type, the transaction is permanent and the credit cannot be converted again. F. Available Nutrient Offset Credits (credits that have been released by DWR, but not sold by the Sponsor) that are generated from riparian restoration within 0-100' from tops of banks and meet criteria for riparian buffer credits as outlined in Section VII of this Instrument, the Site Viability Letter, 15A NCAC 02B .0295 and the corresponding BPDP, can be converted from Nutrient Offset Credits to Riparian Buffer Credits upon written approval from DWR. Once a credit has been converted to another credit type, the transaction is permanent and the credit cannot be converted again. G. Credit conversions must be calculated using the guidance provided in the Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits letter issued by the DWR. H. The Bank Sponsor shall obtain written verification of nutrient offset need from a designated local government in the Falls Watershed, or from DWR through an approved NPDES permit for wastewater nutrient sources, prior to debiting Nutrient Offset Credits from the Bank Parcel. 11 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 I. The Bank Sponsor shall obtain written verification of buffer mitigation required from the delegated/designated local government in HUC 03020201 of the Neuse River Basin or DWR prior to debiting Riparian Buffer Credits from the Bank Parcel. J. All credit and debit transactions for each Bank Parcel under this Instrument shall be accurately depicted in the credit ledgers. The Sponsor shall submit accurate and up-to- date credit ledgers for each Bank Parcel by the tenth (loth) of each month. At a minimum and only upon request, DWR shall receive a hard copy of updated credit ledgers along with corresponding Mitigation Credit Transfer Certificates and all corresponding letters from the designated local governments or DWR where applicable once a year. Notification of all credit sales shall be provided to DWR until all credits that have been released have been sold. Mitiaation Credit Transfer Certificates K. All credit sales will include a Mitigation Credit Transfer Certificate ("Certificate") that is required to be provided to the buyer of Riparian Buffer and/or Nutrient Offset credits, that will include, at a minimum, the following information: Bank Details: (1) sponsor Name, (2) Bank Parcel name as it appears in this Instrument, (3) DWR project number for the BPDP as it appears in Table 1. ii. Credit Details: (1) date of receipt, (2) identify if full or partial payment, (3 - when applicable) amount of nitrogen and/or phosphorus credits purchased in pounds and confirmation from the designated local government or DWR of the amount required, (4 — when applicable) amount of Riparian Buffer Credits purchased in square feet and the confirmation from DWR or the local government of the amount required. iii. Project Details: (1) project name as it appears on DWR or local government permits and/or certifications, (2) 8-digit HUC, (3) river basin, (4) nutrient strategy applicable to the permitted project with impacts, (5- when applicable) designated local government or DWR requiring Nutrient Offset Credits, and/or (6) DWR authorization/ID number or delegated local government requiring Riparian Buffer Credits for this project. L. If the DWR determines that the Bank is operating at a deficit (e.g. the Sponsor is closing on sales and/or transferring credit that is not available), or the Bank is selling credits out of compliance with statutes, rules or this Agreement, the sale/transfer of credits will immediately cease, and the DWR, in consultation with the Sponsor, will determine what remedial actions are necessary. X. BANK PARCEL CLOSURE A. Bank Parcel Closure shall be identified as the event when the Sponsor is relieved of all of its responsibilities to the Bank Parcel and there are no Riparian Buffer or Nutrient Offset credits left to sell. B. Bank Parcel Closure shall commence only after all of the following events have occurred: 12 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 i. Transfer or assign the conservation easement and all of its interests, in perpetuity, to a land trust or stewardship program as described in Section V of this instrument. ii. All five years of monitoring completed and all monitoring reports submitted and approved by DWR. iii. All credits have been released and debited and updated ledgers showing zero credit balances have been submitted and approved by DWR. XI. GENERAL PROVISIONS A. Upon the presentation of proper credentials, and during normal business hours, the Sponsor and the landowner shall grant permission to the Director of DWR, an authorized representative of the Director of DWR, to enter the property containing the Bank Parcel(s). B. Amendments: This Banking Instrument may be amended or modified only with written approval of all signatory parties. C. Any transfer of the Sponsor's rights or obligations outlined in this Instrument or any other agreement referenced in this Instrument to a third party must be approved by DWR prior to the transfer. D. Force Majeure : After 100% of all the credits have been released in accordance with the credit release schedule in Section VIII and confirmation has been received by the DWR that the Conservation Easement has been successfully assigned in compliance with Item H of Section V, the sponsor will not be responsible for Bank failure that is attributed to natural catastrophes including but not limited to flood, drought, disease, regional pest infestation, etc. that are beyond the control of the Sponsor. E. However, if an event occurs before 100% of all the credits have been released according to the credit release schedule in Section VI I I, then the Sponsor shall take remedial action to restore the property to its condition prior to the event, in a manner sufficient to provide adequate mitigation to cover credits that were sold prior to the occurrence of the event. Such remedial action shall be taken by the Sponsor only to the extent necessary and appropriate, as determined by DWR and the Sponsor. DWR must concur in writing that a force majeure event has occurred for this provision to apply. F. Oversight: Actions taken by DWR may include, but are not limited to, the following: 1) Site visits. 2) Issuance of Site Viability Letters. 3) BPDP review and approval of items listed in Section V of this instrument. 4) As -Built Report review and approval of items listed in Section VI of this Instrument. 13 DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 5) Monitoring Report review and approval of items listed in Section VI of this instrument. 6) Credit Ledger review and approval of items listed in Section IX of this instrument. 7) Certificate review of items listed in Section IX of this instrument and cross analysis to credit ledgers. 8) Information requests, file reviews and audits Reports, ledgers, files and other information shall be made available to DWR upon request, unless otherwise specified in this or any other document. G. Validity of the Banking Instrument: This Instrument will become valid on the date of the last party's signature. H. Specific Language of this Banking Instrument Shall Be Controlling: To the extent that specific language in this document changes, modifies, or deletes terms and conditions contained in those documents that are incorporated into the Instrument by reference, and that are not legally binding, the specific language within the Instrument shall be controlling. I. Any disputes over decisions regarding this Instrument, shall be referred to the Director of DWR for a decision. The Director's decision is subject to review as provided in Articles 3 and 4 of G.S. 150B. J. This Agreement shall be binding upon the parties and is entered into knowingly, intelligently, and voluntarily. K. Notices: All notices and other communications which may be or are required to be given or made by any party to the other shall be in writing and shall be deemed to have been properly given and received on the date delivered in person or deposited in the United States mail, registered or certified, return receipt requested, to the addresses set out below, or at such other addresses as specified by written notice delivered in accordance herewith. If to Bank Sponsor: Watershed Investments NC, LLC Attn: Mike Herrmann 1630 Weatherford Circle Raleigh, NC 27604 If to DWR: NC Division of Water Resources - 401 & Buffer Permitting Branch Attn: Nutrient Offset & Buffer Banking Coordinator 1617 Mail Service Center Raleigh, NC 27699- 1617 14 DocuSign Envelope ID: 8D008BEB-88C4-4CAD-8CF1-7BE9B6877755 L. Applicable Law: This Agreement shall be construed under the laws of the State of North Carolina. WATERSHED INVESTMENTS NC, LLC By Michael Herrmann (Print) Title: Vice President Date: / �_7 NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY -DIVISION OF WATER RESOURCES By: S. Daniel Smith (Print) DocuSigned by: 98F7A67B5ccA425... (Signature) Title: Director, Division of Water Resources 11/17/2020 Date: it-1 DocuSign Envelope ID: 8D008BEB-88C4-4CAD-8CF1-7BE9B6877755 ATTACHMENT B NCDWR — Methodology & Calculations for Nutrient Reductions on the Bank Parcel DocuSign Envelope ID: 8DO08BEB-88C4-4CAD-8CF1-7BE9B6877755 Updated Nutrient Offset Program & Buffer Mitigation Program August 12, 2020 Authorities for Falls Lake WS MBI ATTACHMENT A Authorities pertaining to the Banished Bull Mitigation Banking Instrument All Basins General Statutes: G.S. § 143-214.11 Ecosystem Enhancement Program G.S. § 143-214.26 Nutrient Offset Credits G.S. § 143-214.20-24 Riparian Buffer Protection Program G.S. § 143-214.7 Stormwater runoff rules and programs G.S. § 143-215.8B Basinwide Water Quality Management Plans Session Laws S.L. 2019-86 (Amendment to G.S. § 143-214.26) S.L. 2016-94 S.L.2015-246 S.L.2015-149 S.L.2014-90 S.L.2014-120 S.L.2013-413 S.L.2013-121 S.L.2013-265 S.L. 2012-200 (Amendment to G.S. §143-214.23 and G.S. §143-215.1) S.L. 2011-343 (Amendment to G.S. §143-214.11) S.L. 2009- 337 (Amendment to G.S. § 143-214.11) Administrative Rules. 15A NCAC 02B .0202 Definitions 15A NCAC 02B .0223 Nutrient Sensitive Waters 15A NCAC 02B .0701 Nutrient Strategies Definitions 15A NCAC 02B .0703 Nutrient Offset Credit Trading 15A NCAC 02B .0295 Mitigation Program Requirements for Protection and Maintenance of Riparian Buffers Neuse River Basin Buffer and Falls Lake Nutrient Strategy General Statutes and Session Laws: G.S. § 143-214.5 Water Supply Watershed Protection S.L.2012-187 S.L. 2011-394 S.L. 2009-486 S.L. 1998-221 (Part I) Administrative Rules. 15A NCAC 02B .0610 Managing Activities within Riparian Buffers: Definitions 15A NCAC 02B .0611 Managing Activities within Riparian Buffers: Authorization Certificates 15A NCAC 02B .0612 Managing Activities within Riparian Buffers: Forest Harvesting Requirements 15A NCAC 02B .0714 Protection and Maintenance of Existing Riparian Buffers 15A NCAC 02B .0715 Delegation of Authority for the Protection and Maintenance of Existing Riparian Buffers 15A NCAC 02B .0275 Purpose and Scope 15A NCAC 02B .0276 Definitions 15A NCAC 02B .0277 Stormwater Management for New Development DocuSign Envelope ID: 8D008BEB-88C4-4CAD-8CF1-7BE9B6877755 15A NCAC 02B .0278 Stormwater Management for Existing Development 15A NCAC 02B .0279 Wastewater Discharge Requirements 15A NCAC 02B .0280 Agriculture 15A NCAC 02B .0281 Stormwater Requirements for State and Federal Entities 15A NCAC 02B .0282 Options for Offsetting Nutrient Loads DocuSign Envelope ID: 8D008BEB-88C4-4CAD-8CF1-7BE9B6877755 NC Division of Water Quality - Methodology and Calculations for determining Nutrient Reductions associated with Riparian Buffer Establishment Nitrogen Water Quality Benefits for Riparian Buffer Restoration 1). Benefit of Land Use Change 2). Benefit of Nutrient Removal from Nonpoint Source Runoff 3). Benefit of Nutrient Removal from Periodic Overbank Flood Nitrogen General Assumptions: 1. Life expectancy of Riparian Buffer is assumed to be 30 years. (Life expectancy for stormwater detention pond is 20 - 30 yrs) 2. Restored Riparian Buffer is assumed to be natural. Effectiveness of Riparian Buffer Annual Effectiveness (kg/ha/yr) Annual Effectiveness (lb/ac/yr) Effectiveness in 30 yrs (Ib/ac) Benefit 1 11.08 9.89 296.E Benefit 2 70.09 62.54 1876.1 Benefit 3 3.75 3.35 100.4 Total 1 84.92 75.77 2273.0 Nitrogen Benefit Descriptions and Assumptions: 1) Benefit is due to change land use. Assume existing land use export coefficient is a composite export coefficient with a value of 12.98 kg/ha (agriculture and urban). Wetland export coefficient is 1.9 kg/ha. The annual nutrient output is decreased by 11.08 kg/ha annually by land use changing. 2) Benefit is due to nitrogen removal from nonpoint source runoff. Nutrient contribution/buffer treatment area ratio is approximately 10.8 (based on studies examined by Gannon 1997). In flow loading is calculated by nutrient contribution area x composite export coefficient. In flow loading is 10.8 ha x 12.98 kg/ha = 140 kg/ha/yr. Nutrient removal due to this benefit is calculated by in flow loading x removal efficiency *Gannon, Richard. 1997. Effectiveness of Wetland Riparian Areas for Treatment of Agricultural Pollution Sources: A Literature Review. (Draft) The nitrogen removal efficiency is 50% based on various literature. * Kadlec, Robert H. and Robert L. Knight. 1996. Treatment Wetland * Moshiri, Gerald A.1993. Constructed Wetlands for Water Quality Improvement. Lewis Publi. * Mitsch, William J. 1994. Global Wetlands: Old world and New. Elsevier 3) Benefit is due to nitrogen removal from overbank flooding Nitrogen concentration is assumed to be 2.5 mg/L. Assume overboard is 1 ft. Flood frequency is assumed to be once every year. Nutrient removal due to this benefit is estimated by in flow concentration x area (1 ha) x overboard height x removal efficiency. Formula for Calculating Nitrogen Offset Reductions on Riparian Buffer Restoration Sites: Size (Acres) * 75.77(lbs/Acre/Year) * 30 Years = Total Pounds of Nitorgen Removed from Riparian Buffer Project DocuSign Envelope ID: 8D008BEB-88C4-4CAD-8CF1-7BE9B6877755 Phosphorus Water Quality Benefits for Riparian Buffer Restoration 1). Benefit of Land Use Change 2). Benefit of Nutrient Removal from Nonpoint Source Runoff Phosphorus General Assumptions: 1. Life expectancy of Riparian Buffer is assumed to be 30 years. Effectiveness of Riparian Buffer Annual Effectiveness (lb/ac/yr) Effectiveness in 30 yrs (lb/ac) Benefit (1) 1.73 51.90 Benefit 2 3.15 94.50 Total 4.881 146.40 Phosphorus Benefit Descriptions and Assumptions: 1) Benefit is due to change land use'2 Export coefficient for agricultural land is 2.15 (lb/ac/yr). Export coefficient for riparian buffer is 0.42 (lb/ac/yr). The annual total phosphorus (TP) output is decreased by 1.73 Ib/ac annually by land use changing. 2) Benefit is due to TP removal from nonpoint source runoff 3, 4 Mass load for TP reductions for buffer is estimated to be 3.15 Ib/ac/yr. Assumptions: Riparian buffer restorations only occur on agricultural lands. Width of restored riparian buffer is 50 feet, and with mixture of grass and forest. References: ' NC Division of Water Quality memo'Export Coefficients Revisited' (1996) 2 Comparison of Selected TP Loading Coefficients (Jim Blose, 2001) 3 Cost -Effectiveness Study of Selected Agricultural Best Management Practices in the Neuse and Tar -Pamlico River Basins (Todd Kennedy, 2001) 4 A Review of the Scientific Literature on Riparian Buffer Width, Extent and Vegetation. (Seth Wenger, 1999) Formula for Calculating Phosphorus Offset Reductions on Riparian Buffer Restoration Sites: Size (Acres) * 4.88(lbs/Acre/Year) * 30 Years = Total Pounds of Total Phosphorus Removed from Riparian Buffer Project Page 2 DocuSign Envelope ID: 8D008BEB-88C4-4CAD-8CF1-7BE9B6877755 Attachment C. Sample of Buffer and Nutrient Offset Ledgers Banished Bull Buffer and Nutrient Offset Bank (HUC 03020201) Buffer Restoration Credit Ledger DWR Project #2020-047 Date Last Updated Sale/Release Purchase or Credit Credits Released / Available to Credits Debited/ Sold From Buffer Credit Balance Gov't Date Release Project Name Bank Bank Authorization Square Feet Acres Sq.Ft I Acres Sq.Ft Acres DocuSign Envelope ID: 8D008BEB-88C4-4CAD-8CF1-7BE9B6877755 Banished Bull Buffer and Nutrient Offset Bank (HUC 03020201) Nitrogen Credit Ledger DWR Project #2020-047 Date Last Updated Sale/Release Purchase or Credit Credits Released /Available to Credits Debited/ Sold From Buffer Credit Balance Gov't Date Release Project Name Bank Bank Authorization Ibs of Nitro en Sq.Ft Ibs of Nitrogen Sq.Ft Ibs of Nitrogen Sq.Ft Tota Is