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20081268 Ver 4_Signed MBI -Tull Tooten III_20200930DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E ROY COOPER Governor MICHAEL S. REGAN Secretary S. DANIEL SMITH Director TO: Danny Smith Director FROM: Katie Merritt NORTH CAROLINA Environmental Quality September 28, 2020 Nutrient Offset & Buffer Banking Coordinator THROUGH: Paul Wojoski I�uJ Supervisor - 40 Buffer Permitting Branch SUBJECT: Division Approval of the Tull Wooten III Mitigation Banking Instrument for Riparian Buffer Mitigation and Nutrient Offset Credits pursuant to the Neuse Nutrient Management Strategy for EBX-Neuse 1, LLC. The attached final Mitigation Banking Instrument (MBI) between EBX-Neuse 1, LLC and the Division of Water Resources was placed on public notice and made available for public comments on September 10, 2020. The public comment period ended on September 25, 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 14 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: 038D60B1-414D-4A7D-A845-8F567F74C18E AGREEMENT TO ESTABLISH THE TULL WOOTEN III NHTIGATION BANKING INSTRUMENT IN THE NEUSE RIVER BASIN FOR RIPARIAN BUFFER NHTIGATION AND NUTRIENT OFFSET CREDITS PURSUANT TO THE NEUSE NUTRIENT NIANAGEMENT STRATEGY TABLE OF CONTENTS I. PREAMBLE....................................................................................................................... 2 IL LOCATION AND GEOGRAPHIC SERVICE AREA ...................................................... 2 III. AUTHORITIES.................................................................................................................. 3 IV. ESTABLISHMENT OF BANK PARCEL......................................................................... 3 V. BANK PARCEL DEVELOPMENT PACKAGE.............................................................. 4 VI. POST CONSTRUCTION DOCUMENTATION.............................................................. 6 VII. CALCULATION OF MITIGATION CREDITS............................................................... 8 VIII. CREDIT RELEASE SCHEDULE...................................................................................... 9 IX. PROCEDURE FOR DEBITING AND CREDITING...................................................... 10 X. BANK PARCEL CLOSURE............................................................................................ 1 I XI. GENERAL PROVISIONS............................................................................................... 12 ATTACHMENTS & REFERENCES Attachments A — Division of Water Resources Authority Document B — NCDWR — Methodology & Calculations for Nutrient Reductions on the Bank Parcel C — Ledger Templates References 1. Nutrient Offset Credit Trading Rule: http://ncrules.state.nc.us/ncac/title%2015a%20%20environmental%20gualit /�pter%2002%20- %20environmental%20m anagement/subchapter%20b/ 15 a%20ncac%2002b%20.0703.pdf 2. Riparian Buffer Mitigation Rule: h! p://reports.oah.state.nc.us/ncac/title%2015a%20- %20environmental%20gualit /�pter%2002%20- %20environmental%20m anagement/subchapter%20b/ 15 a%20ncac%2002b%20.0295.pdf 3. NC Session Law 2019-86 "Nutrient Offset Credits": https://ncleg.gov/EnactedLegislation/SessionLaws/HTML/2019- 2020/SL2019-86.htm1 4. Buffer Interpretation/Clarification 92008-019 for diffuse flow: hiips:Hfile s.nc. gov/ncdeg/Water%20Qualiiy/Surface%2OWater%2OProtection/401 /Buffer%2OClan fication%2OMemos/Di ffuse-Flow-for-Buffer-MitiRation- Sites-Buffer-Clarification-Memo-20080819.pdf 1 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E I. PREAMBLE This Mitigation Banking Instrument ("Instrument") regarding the establishment, use, operation, and maintenance of the Tull Wooten III Nutrient Offset and Riparian Buffer Mitigation Bank Parcel ("Bank Parcel"), identified in Section II, is to provide Neuse Riparian Buffer mitigation credits ("Riparian Buffer Credits") and Neuse Nutrient Strategy nutrient load reduction credit ("Nutrient Offset Credits") is made and entered into by and among EBX-Neuse I, 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 the Consolidated Mitigation Rule 15A NCAC 02B .0295, which became effective on November 1, 2015 and 15A NCAC 02B .0703, see references. The purpose of this Bank is: A. To restore and preserve riparian vegetation adjacent to mitigated streams and/or agricultural ditches with the intent to improve water quality within the Neuse River Basin (8-digit HUC 03020202). B. To convert agricultural land uses within riparian areas adjacent to mitigated streams and/or agricultural ditches into a dense, hardwood vegetated state with the intent to significantly reduce nutrient loadings associated with agricultural practices into streams and ditches. C. To provide mitigation and sell any resulting Riparian Buffer Credits and/or Nutrient Offset Credits to third parties in the Neuse River Basin, for development (both existing and proposed) or to offset NPDES- permitted wastewater nutrient sources requiring such mitigation or offset. IL LOCATION AND GEOGRAPHIC SERVICE AREA A. The Geographic Service Area ("GSA") is the designated area wherein the Bank can reasonably be expected to sell Riparian Buffer Credits and/or Nutrient Offset Credits for authorized impacts due to development activities. B. The GSA for 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") 03020202. C. Sale or transfer of Riparian Buffer Credits shall be limited to the Neuse River Basin (8-digit HUC 03020202), unless otherwise authorized by the DWR or delegated local government in accordance with 15A NCAC 02B .0295. D. Sale or transfer of Nutrient Offset Credits shall be limited to Neuse River Basin (8-digit HUC 03020202) in accordance with 15A NCAC 02B .0703 unless otherwise authorized by the DWR in accordance with Session Law (S.L.) 2019-86. E. The following table provides site -specific details of the Bank Parcel proposed under this Instrument, which is within the Neuse River Basin (8-digit HUC 03020202) excluding the Falls Lake Watershed; Table 1.0 — Site -specific Details Bank Parcel 8-Digit USGS DWR Project Named Name County Hydrologic Project # Location Receiving Primary Land Use/s Unit Code Stream Tull Wooten III Lenoir 03020202 20081268v4 35.255000, Neuse Mature natural forest -77.544000 River and agricultural fields 2 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E IILAUTHORITIES A. The Bank will be used to provide Riparian Buffer Credit and 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 the Neuse Nutrient Sensitive Waters Management Strategy. C. The selling of credits generated from the Bank Parcel approved under this Instrument, shall be consistent with approved State statutes and rules for the Neuse Nutrient Sensitive Waters Management 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 the Neuse Nutrient Sensitive Waters 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 the Bank Parcel proposed under this Instrument. The site viability letter is not an approval of the site to generate buffer mitigation or nutrient offset credits, but is a preliminary review of the Bank Parcel that details and confirms existing land -use conditions, defines the riparian zone sites (Preservation or Restoration), and identifies features (streams, ditches, ponds, etc.) that meet general criteria to be suitable to generate buffer mitigation and nutrient offset credits. The Site Viability Letter was issued by NCDWR on March 12, 2018 and will expire on March 12, 2020. B. A valid Site Viability Letter is required prior to submittal of the BPDP. Site Viability Letters will either expire upon the submittal of a BPDP to the DWR or on the dates listed above, 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 Bank Parcel proposed for inclusion under this Instrument shall require a Bank Parcel Development Package ("BPDP") be submitted to, and approved by, the DWR prior to use of the individual Bank Parcel for mitigation purposes or for any sale or transfer of any associated credits. The contents of the BPDP are provided in Section V. D. This Bank Parcel is also part of the Neu -Con Stream and Wetland Umbrella Mitigation Bank, Tull Wooten III, United States Army Corps of Engineers (USACE) Action ID #SAW-2017-00847. Comments from the Interagency Review Team (IRT) have been received on the draft mitigation plan and the final mitigation plan will be submitted promptly for review and approval. E. The BPDP submitted under this instrument will be placed on public notice and made available for public commenting for 15 calendar days. F. Most of the Riparian Buffer Credits on this Bank Parcel will be generated along mitigated stream channels that are proposed for stream mitigation. Stream Mitigation Plans will be submitted under the Neu -Con Stream and Wetland Umbrella Mitigation Bank referenced in "D" in this section. Additionally, all activities conducted within riparian buffers and adjacent riparian areas for purposes of generating Riparian 3 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E Buffer Credits will be conducted in concurrence with stream and wetland mitigation activities. Riparian Buffer Credit may be achieved through restoration and preservation of DWR riparian buffers as they are defined in 15A NCAC 02B .0714, and other riparian areas allowed per 15A NCAC 02B .0295 (n) and (o) on the Bank Parcel. Riparian Buffer Credits are only attainable if the width of the restoration site and preservation site is at least 20 feet from top of bank. G. 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 mitigated streams. 2. Maintaining a Preservation Site as defined in 15A NCAC 02B .0295 (o) by placing a conservation easement around riparian areas. 3. Diffused flow will be maintained onsite. The Buffer Interpretation/Clarification Memo 42008- 019 may be applied where maintenance of diffuse flow onsite is unattainable. H. Nutrient Offset Credit maybe achieved on this Bank Parcel through restoration of the riparian areas, where agriculture is the predominant land use. The width of the restoration area begins 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. I. The Bank Parcel is expected to provide Nutrient Offset Credits as follows: 1. Converting agricultural land uses within riparian areas to non-agricultural land uses. 2. Planting hardwood trees and shrubs on a Restoration Site as defined in 15A NCAC 02B .0295(b) adjacent to streams where agriculture has been determined to be the predominant land -use. J. The Bank Parcel submitted for review under this Instrument is anticipated to begin construction of stream and wetland mitigation activities in Winter 2020. V. BANK PARCEL DEVELOPMENT PACKAGE A. The Bank Parcel Development Package (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 mitigation/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, and 8) Site Viability Letter from DWR; 9) a figure depicting the proposed stream and wetland mitigation areas; and 10) service area figure for each mitigation type. 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 proposed construction within the 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 0 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E in a revised or reduced credit release schedule for the Bank Parcel. All restoration activities must be performed in concurrence with any stream mitigation activities and not before. 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. Properly 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 Lenoir 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 and USACE 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 prior to the end of the fourth -year monitoring period. A land trust must be certified under 501(c)(3) of the Internal Revenue Code. L 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 the Bank Parcel J. Following approval of the BPDP for the Bank Parcel, the Sponsor shall provide Performance/Maintenance Bonds from a surety company that is rated no less than an "A" as rated by A.M. Best, to construct the site 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 shall be 100% of the estimated cost for implementation of the riparian restoration and other 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 Performance Bonds, the Sponsor may elect to construct the projects prior to the first credit release. M. For the Bank Parcel, 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 and K of this section: 5 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E 1. Instrument and BPDP Approved by DWR, Conservation Easement Recorded, Financial Assurance Posted; 2. Mitigation Site Earthwork and 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 the Obligee on all performance bonds. VI. POST CONSTRUCTION DOCUMENTATION 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. When all stream, buffer and nutrient offset mitigation activities have commenced, the Sponsor will submit an as -built plan and report to the DWR for the Bank Parcel within 30 calendar days documenting the completion of the establishment of the buffer mitigation and nutrient offset areas. The as -built report will describe any deviation from the approved BPDP and will document the following: 1. Buffer restoration and planting details, invasive species control, confirmation of fence installation (if applicable), monitoring device locations, vegetation plot locations, photo point locations, surface and groundwater elevations, as appropriate. 2. Provide confirmation that the construction of all stream mitigation activities has been completed. 3. 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 credits and/or nutrient offset credits in both square feet and acres. 4. As -built map of the mitigation area showing where riparian restoration and preservation was performed and any deviations to the Bank Parcel from what was approved in the BPDP. 5. As -Built map of the stream mitigation areas. 6. Aerial map of the mitigation area that was included in the approved BPDP. Financial Assurance for Bank Parcel C. After completion of the riparian restoration and other activities on the Bank Parcel, 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 applicable 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 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 credits 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 initially, to cover monitoring and maintenance costs. E. For the Bank Parcel, once DWR has released 100% of all credits for completion of all Bank Parcel milestones described in Table 2 of Section VIII and in the corresponding BPDP, the Bank Sponsor will be released from its performance obligations under the performance bond required in C and D of this Section. 0 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E F. To comply with this section, DWR must be the Obligee on all performance bonds. Monitoring and Maintenance Reports 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 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 the BPDP for approval. Desirable native hardwood tree volunteer species may be included to meet performance standards as determined by the DWR. L 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 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 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 on 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 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 heights 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. 8. Proof of performance bond renewal to cover the next monitoring year (if applicable) Contingency Plans/Remedial Actions L. In the event the Bank Parcel fails to achieve the performance 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. 7 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E VII. CALCULATION OF NHTIGATION CREDITS Riparian Buffer Credits A. All Riparian Buffer Credits shall be determined based on the ratios and percentages provided in 15A NCAC 02B .0295 (m) and (n). B. Riparian buffer restoration on the Bank Parcel, as described in 15A NCAC 02B .0295 (n), and defined in 15A NCAC 02B .0295 (b) that is 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 preservation on the Bank Parcel, as described in 15A NCAC 02B .0295 (o) and defined in 15A NCAC 02B .0295 (b), can only be used for Riparian Buffer Credit. D. Riparian Buffer Credit is defined as one (1) buffer credit per one square foot or 43,560 buffer credits per one acre. E. Pursuant to 15A NCAC 02B .0295 (1)(6)(B), "Buffer mitigation credit shall not be generated within wetlands that provide mitigation credit required by 15A NCAC 02H .0506". Nutrient Offset Credits F. The square footage of Nutrient Offset Credits on the Bank Parcel submitted under this Instrument is determined by applying the applicable ratio as provided in 15A NCAC 02B .0295(m) for a Restoration Site. All riparian areas proposed for Nutrient Offset Credits must be a minimum of fifty (50) feet from the top of the stream or ditch banks on land noted in a Site Viability Letter as agriculture. G. Nutrient Offset Credits cannot be achieved through the preservation activities performed on this Bank Parcel. H. Nutrient Abatement of Restored Riparian Area/Buffers on agricultural land: The Sponsor and DWR agree to the following: 1. The pounds of nitrogen offset per acre of restored riparian areas/buffers shall be 2,273.02 pounds per acre. L The Sponsor and DWR agree the methodology and calculations for determining nitrogen reduction, associated with restoration and enhancement 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. The approved method and calculations for determining nutrient reductions associated with the riparian restoration on this Bank Parcel is provided in further detail in Attachment B. DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E VIII. CREDIT RELEASE SCHEDULE A. Upon submittal of all appropriate documentation by the Sponsor, and subsequent approval by DWR, it is agreed that the mitigation credits associated with the Bank Parcel will become available for sale to a third party in accordance with the Credit Release Schedule below in Table 2.0 below: Table 2.0 - Credit Release Schedule for Riparian Buffer Credits and Nutrient Offset Credits % Credit Task Project Milestone Available for Sale Instrument and BPDP Approved by DWR, Stream Mitigation Plan Approved by the IRT, 1 Conservation Easement Recorded* and Assigned according to Item B (1) of Section X in 25 this Instrument, and Financial Assurance Posted 2 All Stream, Buffer and Nutrient Offset Site Earthwork, Planting and Installation of 20 Monitoring Devices Completed, all applicable permits obtained 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 7 Monitoring Report #4: Approved by the DWR** & financial assurance renewed 5 8 Monitoring Report #5: Approved by the DWR** and final site visit by DWR has been 10 conducted Total 100% * For specification, please see Section V m this Instrument ** DWR Approval provided upon a determination that the site is meeting performance standards contained within the approved BPDP B. DWR may modify 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 the Bank Parcel based on the extent of change between current onsite conditions and proposed post construction conditions. D. The Sponsor must initiate implementation of the approved BPDP for the site under this Instrument in concurrence with all stream and/or wetland mitigation activities proposed in the approved Mitigation Plan referenced in Item D of Section IV of this Instrument. 9 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E IX. PROCEDURE FOR DEBITING AND CREDITING Credit Ledgers 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 Credit in square feet and acres, and Nutrient Offset Credits in pounds and square feet. B. Each credit ledger shall be submitted on a separate 8 1/tin X 1 lin 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. Credit Processing C. Riparian Buffer Credits generated on the Bank Parcel will be used to provide mitigation for authorized riparian buffer impacts within the Neuse River Basin according to 15A NCAC 02B .0295 (f) and (g). D. Nutrient Offset Credits generated on the Bank Parcel will be used to offset nitrogen nutrient loads within the 03020202 HUC of the Neuse River Basin in accordance with 15A NCAC 02B .0703. 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. The Bank Sponsor shall obtain written verification of nutrient offset need from a designated local government in HUC 03020202 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 Parcel. H. The Bank Sponsor shall obtain written verification of buffer mitigation required from the delegated local government in HUC 03020202 of the Neuse River Basin or DWR prior to debiting Riparian Buffer Credits from the Bank Parcel. L All credit and debit transactions for each Bank Parcel under this Instrument shall be accurately depicted in the credit ledgers. The Bank Sponsor shall provide DWR up-to-date credit ledgers for each Bank 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 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. 10 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E Mitigation Credit Transfer Certificates J. 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) Bank Sponsor Name, (2) Bank Parcel name as it appears in this Instrument, (3) DWR project number for the BPDP as it appears in Table 1.0. 2. Credit Details: (1) date of receipt, (2) identify if full or partial payment, and (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 Riparian Buffer Credits purchased in square feet and the confirmation from DWR or the local government of the amount required. 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 requiring Nutrient Offset Credits, and/or (6) DWR authorization number or delegated local government requiring Riparian Buffer Credits for this project. E. If the DWR determines that the Bank is operating at a deficit (e.g. the Sponsor is selling and/or transferring credit that is not available), or the Bank is selling or transferring credits out of compliance with State 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 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 Credits or Nutrient Offset Credits left to sell. K. Bank Parcel Closure shall commence only after all of the following events have occurred: 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. 2. All five years of monitoring completed and all monitoring reports submitted and approved by DWR. All credits have been released and debited and updated ledgers showing zero credit balances have been submitted and approved by DWR. 11 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E XI. GENERAL PROVISIONS FOR THE 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, or an authorized representative of the Director of DWR, to enter the property containing the Bank Parcel. B. Amendments: This Banking Instrument may be amended or modified only with written approval of all signatory parties, including the USACE if it is applicable to the amendment. 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 Maj eure: After 100% of all of 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, then 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 of 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 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. L 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. 12 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E 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 Bank Sponsor: EBX —Neuse I, LLC Attention: Kathleen Webber 3600 Glenwood Avenue, Suite 100 Raleigh, North Carolina 27612 Katie Webber KWebber@res.us If to DWR: NC Division of Water Resources — 401 & Buffer Permitting Branch Attn: Nutrient Offset and Buffer Banking Coordinator 1617 Mail Service Center Raleigh, NC 27699-1617 13 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E L. Applicable Law: This Agreement shall be construed wider the laws of the State of North Carolina. EBX-Neuse I, LLC Brad Breslow By: (Print) (Signature) Title: Regulatory Manager Date: 8/11 /2020 NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY -DIVISION OF WATER RESOURCES By: S. Da S9,Mitb (Print) (Signature) Title: Director 9/29/2020 Date: 14 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E Nutrient Offset Program & Buffer Mitigation Program Updated Authorities for Neuse Strategy MBI August 11, 2020 ATTACHMENT A Authorities pertaining to the Tull Wooten III 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 Neuse Nutrient Strategy Session Laws S.L. 2011-394 S.L. 1998-221 (Part I) S.L. 1995-572 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 .0710 Neuse Nutrient Strategy: Purpose and Scope 15A NCAC 02B .0711 Neuse Nutrient Strategy: Stormwater 15A NCAC 02B .0712 Neuse Nutrient Strategy: Agriculture 15A NCAC 02B .0713 Neuse Nutrient Strategy: Wastewater Discharge 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 DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E ATTACHMENT B 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 (lb/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 75.771 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: 038D60B1-414D-4A7D-A845-8F567F74C18E 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: 038D60B1-414D-4A7D-A845-8F567F74C18E ATTACHMENT C *Credits shown below are only for mitigation credits approved by the UMBI, BPDP, and As -Built. (Sponsor Name & Instrument Name) (Parcel Name w/ HUC #) Buffer Restoration Credit Ledger Date Last Updated: DWR Bank Parcel Project #: Total Credits Released To Date: Sale/ Release Date Purchaser or % Credit Release Project w/ HUC # Credits Released/Available to Bank Credits Debited/Sold From Bank Buffer Credit Balance Gov't Requiring Square Feet Acres Square Feet Acres SquareAcres Feet DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E *Credits shown below are only for mitigation credits approved by the UMBI, BPDP, and As -Built. (Sponsor Name & Instrument Name) (Parcel Name w/ HUC #) Buffer Preservation Credit Ledger Date Last Updated: DWR Bank Parcel Project #: Total Credits Released To Date: Sale/ Release Date Purchaser or % Credit Release Project w/ HUC # Credits Released/Available to Bank Credits Debited/Sold From Bank Buffer Credit Balance Gov't Requiring Square Feet Acres Square Feet Acres SquareAcres Feet DocuSign Envelope ID: 038D60B1-414D-4A7D-A845-8F567F74C18E *Credits shown below are only for mitigation credits approved by the UMBI, BPDP, and As -Built. (Sponsor name & Instrument name) (Parcel Name w/ HUC #) Nitrogen Credit Ledger Date Last Updated: DWR Bank Parcel Project #: Total Credits Released To Date: Sale/ Release Date Purchaser or % Credit Release Project w/HUC # Credits Released/Available to Bank Credits Debited/Sold From Bank Nutrient Credit Balance Gov't Requiring Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet Pounds of Nitrogen Square Feet