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Home My WebLink About20201366 Ver 2_Neuse 04_UBI - Nutrient Offset_20220802Mitigation Project Information Upload ID#* 20201366 Version* 2 Select Reviewer: * Katie Merritt Initial Review Completed Date 08/03/2022 Mitigation Project Submittal - 8/2/2022 ............................................................................................................................................................................................ Is this a Prospectus, Technical Proposal or a New Site? * Type of Mitigation Project: * Stream Wetlands Buffer Nutrient Offset (Select all that apply) Project Contact Information Company/Owner: * Restoration Systems LLC Contact Name: * Barrett Jenkins Project Information Project Type: Project Name: Foy Farm County: Jones Document Information Mitigation Document Type: * Mitigation Bank Instrument File Upload: Signature ............................................ Print Name: * Signature:* DMS • Mitigation Bank Yes No Email Address: * bjenkins@restorationsystems.com Restoration Systems_Neuse 04_Umbrella Banking 372.52KB Instrument - Nutrient Offset_2022-08-02_.pdf Please upload only one PDF of the complete file that needs to be submitted... Raymond J Holz AGREEMENT TO ESTABLISH THE RESTORATION SYSTEMS' NEUSE 04 NUTRIENT OFFSET UMBRELLA BANKING INSTRUMENT IN THE NEUSE RIVER BASIN FOR NUTRIENT OFFSET CREDITS PURSUANT TO THE NEUSE NUTRIENT MANAGEMENT STRATEGY TABLE OF CONTENTS I. PREAMBLE 1 II. LOCATION AND GEOGRAPHIC SERVICE AREA 1 III. AUTHORITIES 2 IV. ESTABLISHMENT OF BANK PARCEL 2 V. BANK PARCEL DEVELOPMENT PACKAGE 4 VI. POST CONSTRUCTION DOCUMENTATION FOR THE BANK PARCEL 5 VII. CALCULATION OF CREDITS FOR THE BANK PARCEL 8 VIII. CREDIT RELEASE SCHEDULE 9 IX. PROCEDURE FOR DEBITING AND CREDITING 10 X. BANK PARCEL CLOSURE 11 XI. GENERAL PROVISIONS FOR THE BANK PARCEL 11 ATTACHMENTS A — Division of Water Resources Authority Document B — Ledger Templates C — Project Credit Table REFERENCES 1. Nutrient Offset Payment Rule 15A NCAC 02B .0703: http://reports.oah.state.nc.us/ncac/title%2015 a%20-%20environmental%20quality/chapter%2002%20- %20environmental%20m anagement/subchapter%20b/ 15 a%20nc ac%2002b%20.0703.pdf 2. Riparian Buffer Mitigation Rule 15A NCAC 02B .0295: http://reports.oah.state.nc.us/ncac/title%2015 a%20%20environmental%20quality/chapter%2002%20- %20environmental%20m anagement/subchapter%20b/ 15 a%20nc ac%2002b%20.0295.pdf 3. NC Session Law 2019-86 "Nutrient Offset Credits": https://ncleg.gov/EnactedLegislation/SessionLaws/HTML/2019-2020/SL2019-86.html 4. Buffer Interpretation/Clarification #2008-019 for diffuse flow: https://file s.nc.gov/ncdeq/Water%20Quality/Surface%20W ater%20Protection/401 /Buffer%20Clarificatio n%20Memos/Diffuse-Flow-for-Buffer-Mitigation-Sites-Buffer-Clarification-Memo-20080819.pdf 5. Clarified Procedures for Calculating Buffer Mitigation Credits and Nutrient Offset Credits (Nov 2019): https://file s.nc.gov/ncdeq/Water%20Quality/Surface%20W ater%20Protection/401 /Mitigation/Issues--- Resolutions-Ver-1.0-buffer-mitigation-nutrient-offset.pdf 6. NCDWR — Methodology and Calculations for Nutrient Reductions on the Bank Parcel: https://file s.nc.gov/ncdeq/Water%20Quality/Planning/NPU/Nutrient%20Offset%20Rule/Ag-Buffer- Credit.pdf I. PREAMBLE This Umbrella Nutrient Offset Banking Instrument ("Instrument") regarding the establishment, use, operation, and maintenance of the four Nutrient Offset Bank Parcels ("Bank Parcels"), further identified in Section II, is to provide Neuse Nutrient Strategy nutrient load reduction credits ("Nutrient Offset Credits"), is made and entered into by and among Restoration Systems, LLC 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 15A NCAC 02B .0295, see references. This instrument covers four individual bank parcels/sites, Saints Delight, Foy Farm, Musselshell, and Upper Musselshell. The purpose of the Bank is: A. To establish, restore and preserve riparian vegetation adjacent to streams and agricultural ditches with the intent to improve water quality along unnamed tributaries to the Neuse River within the Neuse River Basin. B. To convert agricultural land uses within riparian areas adjacent to streams and agricultural ditches into a dense and diverse hardwood vegetated state with the intent to significantly reduce nutrient loadings associated with agricultural practices into streams and ditches. C. To provide nutrient offset and sell any resulting Nutrient Offset Credits to third parties in the Neuse RiverBasin, 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 Nutrient Offset Credits for impacts requiring such mitigation or offset. B. All Bank Parcel are comprised of land in Craven and Jones Counties on several parcels of land The land is currently and has been historically utilized for agricultural production. C. The GSA for each Bank Parcel under this instrument is limited to the Neuse River Basin in the State of North Carolina, United States Geological Survey ("USGS") 8-digit Hydrologic Unit Code ("HUC") 03020204. D. Sale or transfer of Nutrient Offset Credits from the Bank Parcels shall be limited to the 8-digit HUC 03020204 in the Neuse River Basin, in accordance with 15A NCAC 02B .0703, unless otherwise authorized by the DWR in accordance with Session Law 2019-86. E. Table 1 provides site -specific details of the Bank Parcels proposed under this Instrument. 1 Table 1.0 —Bank Parcel Details Bank Parcel Name/DWR Project # County 8-Digit USGS Hydrologic Unit Code Project Location Named Receiving Stream Primary Land Use Saints Delight Craven 03020204 Bridgeton Morgan Swamp Agricultural Crops Foy Farm Jones 03020204 Trenton Trent River Agricultural Crops Musselshell Jones 03020204 Trenton Musselshell Creek Agricultural Crops Upper Musselshell Jones 03020204 Trenton Musselshell Creek Agricultural Crops III. AUTHORITIES A. The Bank will be used to provide 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 General Statutes (NCGS) and rules for the Neuse Nutrient Management Strategy. C. The selling of credits generated from the Bank Parcels approved under this Instrument, shall be consistent with approved State statutes and rules for the Neuse Nutrient Management Strategy. D. Nutrient offset activities proposed under this Instrument and corresponding Bank Parcel Development Packages (BPDPs) to generate Nutrient Offset Credits shall be consistent with State statutes and rules for the Neuse Nutrient Management Strategy that are in place at the time a complete BPDP is submitted to DWR. IV. ESTABLISHMENT OF BANK PARCEL A. In accordance with 15A NCAC 02B .0295 and 15A NCAC 02B .0703, DWR has provided a "Site Viability Letter" for each of the Bank Parcels proposed under this Instrument. The site viability letter is not an approval of the site to generate Riparian Buffer Credits 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 (streams, ditches, ponds, etc.) that meet general criteria to be suitable to generate Riparian Buffer Credits and Nutrient Offset Credits. Table 2.0 below outlines when the Site Viability Letter was issued by NCDWR for the Bank Parcels proposed under this instrument: Table 2.0 — Site Viability Letter Details Bank Parcel NC DWR Site Visit Viability Letter Received Viability Letter Expiration Date Saints Delight October 15, 2021 December 1, 2021 December 1, 2023 Foy Farm December 9, 2021 April, 16, 2021 March 30, 2023 Musselshell March 8, 2022 May 11, 2022 May 11, 2024 Upper Musselshell TBD TBD TBD B. A valid Site Viability Letter is required prior to submittal of each BPDP. Site Viability Letters will either expire on the dates listed above or upon the submittal of an individual As -Built Report to the 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. C. The four (4) Bank Parcels proposed for inclusion under this Instrument shall each require a BPDP be submitted to, and approved by, the DWR prior to use of the Bank Parcel for nutrient offset purposes or sale or transfer of any associated credits. The contents of the BPDP are provided in Section V. D. Each BPDP submitted under this instrument will be placed on public notice and made available for public commenting for 15 calendar days. E. In general, the Sponsor expects all Nutrient Offset Credits to be generated through riparian restoration. F. Nutrient Offset Credit on these four (4) Bank Parcels may be achieved through restoration of the riparian areas adjacent to viable streams and viable ditches where agriculture is the predominant land use as determined by DWR. Nutrient Offset Credits are only attainable if the width of the restored riparian areas are at least fifty (50) feet as measured perpendicular from tops of banks along viable streams and viable ditches. The width of the restoration area should begin at the most landward limit of the top of bank or the rooted herbaceous vegetation (if present along streams) and extends landward a minimum of 50 feet and a maximum of 200 feet on all sides of the surface waters. A conservation easement will be secured to include the tops of all stream channel and ditch banks and will extend out a maximum of 200 feet. The viability of features to generate nutrient offset credits is provided in the Site Viability Letters for the Bank Parcels and referenced in Table 2.0 of this Instrument. G. The Bank Parcels are expected to provide Nutrient Offset Credits as follows: 1. Converting agricultural land uses within riparian areas to non-agricultural land uses by placing a perpetual conservation easement around riparian areas along viable streams and viable ditches in accordance with 15A NCAC 02B .0703 (g). 2. Planting hardwood trees or trees and shrubs on a Restoration Site as defined in 15A NCAC 02B .0295 (b) adjacent to viable streams and viable ditches where agriculture has been determined by DWR to be the predominant land -use. 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, see reference 4. H. The total area of riparian restoration activities expected on each Bank Parcel are as follows: a. Saints Delight Bank Parcel - 32.179 acres b. Foy Farm Bank Parcel - 47.760 acres c. Musselshell - 50.477 acres d. Upper Musselshell — 20.000 acres V. BANK PARCEL DEVELOPMENT PACKAGE A. Each 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. Each BPDP will 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. Each 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 nutrient offset activities including a detailed vegetation plan; 4) monitoring and maintenance plans; 5) financial assurances; 6) a Project Credit Table (see Attachment C) showing associated nutrient credit calculations, which shall include credit generation, service area, and accounting as appropriate for each regulatory authority; 7) stream determination letter from DWR; 8) Site Viability Letter from DWR, 9) service area figure for each mitigation type proposed under this Instrument; and 10) all pertinent information including but not limited to permitting, bank stabilization, culvert removal, installation of any utilities indirectly or directly affecting the Bank Parcel, endangered or threatened species, presence of historical sites and an Environmental Data Resources (EDR) report to evaluate environmental risk associated with the land proposed for the Bank Parcel. B. The Sponsor will obtain all applicable federal, state, and local documentation, permits, or authorizations needed to construct and maintain each Bank Parcel. This Instrument does not qualify as, or substitute for, such documentation, permit, or authorization. C. Any restoration activities or proposed construction within stream channels, riparian buffers and other riparian areas on the Bank Parcel to produce 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 for the Bank Parcel E. Prior to the release of any credits, the Sponsor shall record permanent conservation easements at the appropriate county Register of Deed's office that is sufficient to ensure protection, operation and maintenance of restored riparian buffers and other riparian areas in perpetuity. 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 submittal of the Year 4 Monitoring Report. 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 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. In the event the Sponsor is also the owner of the underlying fee interest in the property, the conveyance of the conservation easement to a land trust or stewardship fund must be arranged at the outset of the approved BPDP. Financial Assurances for Bank Parcel Development J. Following approval of each Bank Parcels' 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, to construct the Bank Parcel, in its entirety, according to the approved BPDP. It is the Sponsor's responsibility to confirm that the surety company is rated no less than an "A-" with each annual bond renewal. K. The amount of the Performance Bond/s shall be 100% of the estimated cost for implementation of the riparian restoration activities and other related activities for the construction of the Bank Parcel as described in the approved BPDP. No bond shall be less than $150,000.00 to cover construction costs. Each Bank Parcel will be bonded individually. L. Alternatively, in lieu of posting Performance Bonds, the Sponsor may elect to construct the Bank Parcel, in its entirety, prior to the first credit release. M. Once DWR has released all credits for completion of all items listed below, then the Sponsor will be released from its performance obligations under the performance bond required in Item J and K of this section: 1. Instrument and BPDP Approved by DWR, Conservation Easement Recorded, Financial Assurance Posted; 2. All Riparian Earthwork, Planting, and Installation of Monitoring Devices Completed, easement boundaries adequately marked, all applicable permits obtained, site visit performed by DWR; 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 the Obligee on all performance bonds. VI. POST CONSTRUCTION DOCUMENTATION FOR EACH BANK PARCEL As -Built Report A. The Sponsor agrees to perform all necessary work, in accordance with the provisions of this Instrument and corresponding BPDP, 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. Within 30 calendar days after completing the establishment of the nutrient offset areas, the Sponsor will submit written notification to DWR documenting that all nutrient offset activities have been completed. Failure to submit written notification within 30 days may result in a modified credit release schedule or a delay in the issuance of credit releases. Notification shall include all the following: 1. Short summary of activities completed as required per the approved BPDP; 2. Figures representing all riparian restoration, riparian enhancement and riparian preservation activities where applicable; 3. Figures representing location of all monitoring plots installed; 4. Detailed planting plan- including type of species planted, density of species planted, and any modifications to the planting plan from what was approved in the BPDP; 5. Description of how the conservation easement boundaries were marked; Any major changes to the conservation easement boundary or to the amount of Nutrient Offset Credits from what was proposed in the approved BPDP. C. The Sponsor will submit an as -built plan and report for each Bank Parcel separately, after completing the establishment of the nutrient offset areas. Each As -built Report will be submitted to DWR and describe any deviation from the approved BPDP and will document all the following: 1. Riparian restoration and planting details, invasive species control, confirmation of fence installation if applicable, cattle exclusions if applicable, confirmation that all easement boundary markers are installed, monitoring device locations, vegetation plot locations and photo point locations as appropriate, and confirmation that all boundary markers are installed. 2. Boundary Survey of the conservation easement area, signed and sealed by a licensed surveyor, including an inventory of the final nutrient offset areas in both square feet and acres. 3. As -built map of the nutrient offset areas 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 riparian restoration activities approved in the BPDP. Financial Assurance for Bank Parcel Monitoring D. After completion of the riparian restoration activities and construction on each Bank Parcel, in its entirety, 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 for the site. 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 rated no less than an "A-" with each annual bond renewal. E. Each Performance/Maintenance Bond shall be secured each year for a minimum of five years, and until DWR has released all Nutrient Offset Credits to the 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 initially. F. Once DWR has released 100% of all credits for completion of all Bank Parcel milestones described in Table 3 of Section VIII and in the corresponding BPDP, the Sponsor will be released from its performance obligations under the performance bond required in "C-D" of this Section. G. To comply with this section, DWR must be the Obligee on all performance bonds. Monitoring and Maintenance Reports H. The Sponsor shall monitor each Bank Parcel, in its entirety, 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 for each Bank Parcel. I. Performance Standards for Vegetation: Native hardwood trees or native hardwood tree and shrub species should be planted at a density sufficient to provide 260 stems per acre after five years. A minimum of four (4) native hardwood trees or four (4) native hardwood tree and shrub species 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 each BPDP for approval. Some native hardwood tree volunteer species may be included to meet performance standards as determined by the DWR. J. A "stem" means a woody seedling, sapling, shrub or tree, no less than 10 centimeters in height and shall apply, on this Bank Parcel, as the minimum height that a planted tree or shrub shall be at initial planting. Volunteer stems that are less than 10 centimeters shall not be quantified and included in the annual vegetation data included with the monitoring reports. K. If the performance standards of the vegetation are not met for an individual Bank Parcel, supplemental plantings may be 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. L. Monitoring Reports for Nutrient Offset Credit: Reporting criteria of the vegetation 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 an annual monitoring report for each Bank Parcel no later than December 31 of each year for a minimum of five consecutive years after the first full growing season for each Bank Parcel under this Instrument. Vegetation data shall not be collected prior to late August of each year. 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 with supporting photos 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 and height data 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; 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). Contingency Plans/Remedial Actions M. In the event a Bank Parcel fails to achieve the performance criteria described in this Instrument and the approved BPDP, the 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. VII. CALCULATION OF CREDITS Nutrient Offset Credits A. The square footage of Nutrient Offset Credits on both Bank Parcels proposed under this Instrument is 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 (see references 5 and Attachment C respectively). All riparian areas proposed for Nutrient Offset Credits must be a minimum of fifty (50) feet from the top of the banks along viable streams and viable ditches on land noted in a Site Viability Letter as agriculture. B. Nutrient Abatement of Restored Riparian Area/Buffers on Agricultural lands: The Sponsor and DWR agree to the following: a. The pounds of nitrogen offset per acre of restored riparian areas/buffers shall be 2,273.02 pounds per acre or 19.16394 square feet per pound. b. The pounds of phosphorus offset per acre of restored riparian areas/buffers shall be 146.40 pounds per acre or 297.54099 square feet per pound. C. The Sponsor and DWR agree that the methodology and calculations for determining nitrogen and phosphorus reduction, associated with restoration of riparian areas on these four (4) Bank Parcels 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 Parcels. For further details on the approved method and calculations for determining nutrient reductions with the riparian restoration on this Bank Parcel, refer to the NCDWR — Methodology & Calculations for Nutrient Reductions on the Bank Parcel document found in reference 6. (Remainder of page intentionally left blank) VIII. CREDIT RELEASE SCHEDULE A. Upon submittal of all appropriate documentation by the Sponsor, and subsequent approval by DWR, it is agreed that Nutrient Offset Credits associated with each Bank Parcel will become available to sell to a third party in accordance with the Credit Release Schedule in Table 3.0. Table 3.0 - Credit Release Schedule for Nutrient Offset Credits Task Project Milestone % Credit Available for Sale 1 Instrument and BPDP Approved by DWR, Conservation Easement Recorded*, Financial Assurance Posted 20 2 All Riparian Earthwork, Planting and Installation of Monitoring Devices Completed, Easement Boundaries adequately marked, and all applicable permits obtained. A site visit by DWR is required for this task. 20 3 Monitoring Financial Assurance Posted and Approval of As -Built Report 10 4 Monitoring Report #1: Approved by the DWR** & financial assurance renewed 10 5 Monitoring Report #2: Approved by the DWR** & financial assurance renewed 10 6 Monitoring Report #3: Approved by the DWR** & financial assurance renewed 10 Item B (1) of Section X in this Instrument has been completed and approved by DWR. 5 No remaining credits will be released until the conservation easement has been assigned to an approved land trust or stewardship 8 Monitoring Report #4: Approved by the DWR** & financial assurance renewed 5 9 Monitoring Report #5: Approved by the DWR** and final site visit 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. Any major deviations to the Bank Parcel that were not authorized in writing by DWR prior to implementation may affect the amount of nutrient offset credits that will be generated by the Bank Parcel. IX. PROCEDURE FOR DEBITING AND CREDITING FOR EACH BANK PARCEL Credit Ledgers A. The Sponsor shall maintain one credit ledger for each mitigation type for each Bank Parcel proposed under this Instrument, unless otherwise instructed by DWR in the approved BPDP: Each Bank Parcel will have a separate credit ledger. Credit ledgers shall provide the accounting for 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 B of this Instrument or any updated versions to these templates as provided by DWR. Credit Processing C. Nutrient Offset Credits generated on each Bank Parcel will be used to offset nitrogen and phosphorus nutrient loads within the 8-digit HUC 03020204 of the Neuse River Basin in accordance with 15A NCAC 02B .0703. D. Credits must be calculated for each Bank Parcel using the most recent Project Credit Table template, see Attachment C, which is referenced in the guidance provided in the Clarified Procedures for Calculating buffer Mitigation Credits and Nutrient Offset Credits letter issued by the DWR, see reference 5. E. The Sponsor shall obtain written verification of nutrient offset need from a designated local government within the 03020204 HUC of the Neuse River Basin, or from DWR through an approved NPDES permit for wastewater nutrient sources, prior to debiting Nutrient Offset Credits from the Bank Parcels. F. All credit and debit transactions for the Bank Parcel under this Instrument shall be accurately depicted in the credit ledgers. The Sponsor shall provide DWR up-to-date credit ledgers for each Bank Parcel by the tenth (10t1i) of each month. At a minimum and upon request, DWR shall receive a hard copy of updated credit ledgers along with the corresponding Mitigation Credit Transfer Certificates ("Certificate") 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. Mitigation Credit Transfer Certificates G. 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: 1. Bank Details: (1) Sponsor Name, (2) Bank Parcel name as it appears in Table 1.0, (3) DWR project number for the BPDP as it appears in Table 1.0. 2. Credit Details: (1) date of receipt, (2) identify if full or partial payment, (3-when applicable) amount of nitrogen Nutrient Offset Credits purchased in pounds and confirmation from the designated local government or DWR of the amount required, and (4-when applicable) amount of phosphorus Nutrient Offset Credits purchased in pounds and confirmation from the designated local government or DWR of the amount required. 3. Permitted 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 project with impacts, (5 — when applicable) designated local government or DWR requiring Nutrient Offset Credits and (6) credit type and amount required for project. H. If the DWR determines that the Bank is operating at a deficit (e.g., the Sponsor is utilizing, selling, leasing and/or transferring credits that are not available), or the Bank is selling or transferring credits out of compliance with statutes, rules or this Agreement, the sale/transfer 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 for each Bank Parcel under this Instrument shall be identified as the event when the Sponsor is relieved of all its responsibilities to the Bank Parcel and there are no Nutrient Offset Credits left to sell. B. Bank Parcel Closure shall commence only after all the following events have occurred: 1. Transfer or assign the conservation easement and all its interests, in perpetuity, to a land trust or stewardship program as described in Section V of this Instrument. 2. All five years of monitoring completed, and all monitoring reports submitted and approved by DWR. 3. All credits have been released and debited and updated ledgers showing zero credit balances have been submitted and approved by DWR. XI. GENERAL PROVISIONS FOR EACH BANK PARCEL 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, and/or 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 according to 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 VIII, the Sponsor shall take remedial action to restore the property to its condition prior to the event, in a manner sufficient to provide adequate offset and 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, 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 and, 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 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, received via electronic mail, 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 Sponsor: If to DWR: Restoration Systems, LLC Attn: Barrett Jenkins 1101 Haynes Street, Suite 211 Raleigh, NC 27605 bj enkins@restorationsystems.com NC Division of Water Resources — 401 & Buffer Permitting Branch Attn: Nutrient Offset Banking Coordinator 1617 Mail Service Center Raleigh, NC 27699-1617 L. Applicable Law: This Agreement shall be construed under the laws of the State of North Carolina. RESTORATION SYSTEMS, LLC By: (Print) (Signature) Title: Date: NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY -DIVISION OF WATER RESOURCES By: (Print) Title: Director, Division of Water Resources Date: (Signature) ATTACHMENT A — Division of Water Resources Authority Document ATTACHMENT B — Ledger Templates 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 (Ib/ac/yr) Effectiveness in 30 yrs (Ib/ac) Benefit (1) 11.08 9.89 296.6 Benefit (2) 70.09 62.54 1876.1 Benefit (3) 3.75 3.35 100.4 Total 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(Ibs/Acre/Year) * 30 Years = Total Pounds of Nitorgen Removed from Riparian Buffer Project 1 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 (Ib/ac/yr) Effectiveness in 30 yrs (Ib/ac) Benefit (1) 1.73 51.90 Benefit (2) 3.15 94.50 Total 4.88 146.40 Phosphorus Benefit Descriptions and Assumptions: 1) Benefit is due to change land use'' 2 Export coefficient for agricultural land is 2.15 (Ib/ac/yr). Export coefficient for riparian buffer is 0.42 (Ib/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 Toad 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 ATTACHMENT C — Project Credit Table Template Restoration Systems, LLC - Neuse 04 Umbrella Nutrient Offset Banking Instrument Foy Farm Bank Parcel / Neuse 03020204 Nitrogen Offset Credit Ledger Date Last Updated: 00/00/0000 DWR # XXXX-XXXX Total Credits Released to Date: Date Paid Purchaser or UMBI Task Completed Project w/HUC # Credits ReleasetllAvailable to Bank Credits Debi edlSold from Bank Nutrient Credit Balance Local Gov't Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet 00/00/0000 0.00 0.00 0.00 00/00/0000 0.00 0.00 0.00 0.00 Restoration Systems, LLC - Neuse 04 Umbrella Nutrient Offset Banking Instrument Musselshell Bank Parcel / Neuse 03020204 Nitrogen Offset Credit Ledger Date Last Updated: 00/00/0000 DWR # XXXX-XXXX Total Credits Released to Date: Date Paid Purchaser or UMBI Task Completed Project w/HUC # Credits ReleasetllAvailable to Bank Credits Debi edlSold from Bank Nutrient Credit Balance Local Gov't Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet 00/00/0000 0.00 0.00 0.00 00/00/0000 0.00 0.00 0.00 0.00 Restoration Systems, LLC - Neuse 04 Umbrella Nutrient Offset Banking Instrument Saints Delight Bank Parcel / Neuse 03020204 Nitrogen Offset Credit Ledger Date Last Updated: 00/00/0000 DWR # XXXX-XXXX Total Credits Released to Date: Date Paid Purchaser or UMBI Task Completed Project w/HUC # Credits ReleasetllAvailable to Bank Credits Debi edlSold from Bank Nutrient Credit Balance Local Gov't Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet 00/00/0000 0.00 0.00 0.00 00/00/0000 0.00 0.00 0.00 0.00 Restoration Systems, LLC - Neuse 04 Umbrella Nutrient Offset Banking Instrument Upper Musselshell Bank Parcel / Neuse 03020204 Nitrogen Offset Credit Ledger Date Last Updated: 00/00/0000 DWR # XXXX-XXXX Total Credits Released to Date: Date Paid Purchaser or UMBI Task Completed Project w/HUC # Credits ReleasetllAvailable to Bank Credits Debi edlSold from Bank Nutrient Credit Balance Local Gov't Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet 00/00/0000 0.00 0.00 0.00 00/00/0000 0.00 0.00 0.00 0.00