Eco-entrepreneurs offer wetland credits to area developers

Biologists Chris Kiilsgaard and Jeff Reams recently decided to try a new business - banking. Wetland banking, that is.

The pair are in the process of restoring a 108-acre commercial grass seed farm near Monroe to its historic function as a natural wetland. At the same time, they've also launched a new business venture, the Muddy Creek Mitigation Bank.

Wetland mitigation banks sell credits to developers to offset habitat loss due to construction projects.

"It's high risk, high reward," said Kiilsgaard, a 56-year-old Corvallis resident who has worked for the U.S. Forest Service and Oregon Department of Fish and Wildlife. "We're undoing about 100 years of manipulation meant to move water off the property," he said, referring to their efforts to fill drainage ditches and eliminate non-native grasses from the property.

Reams co-founded Turnstone Environmental Consultants and lives in Philomath.

Kiilsgaard and Reams have invested about $325,000 to purchase land for the project. They've spent at least $100,000 for consulting and restoration work on the property during the first two years of the project.

In essence, the pair are farming their land for conservation. They use farm equipment to remove unwanted plants and foster native vegetation.

"We looked for pieces of land that we could make work," Kiilsgaard said.

A large part of why they chose the property north of Monroe is because it is adjacent to restoration projects already under way in the Finley Wildlife Refuge area.

The refuge and its adjoining green spaces provide important habitat for plants such as the endangered Bradshaw's lomatium and threatened Nelson's checkermallow. Other threatened species such as Oregon chub and dusky Canada goose can also be found there.

Muddy Creek Mitigation Bank is expected to generate a total of 60 credits for sale in the next decade. Here's how it works: For every acre of wetland lost to development, the builder is required to buy one mitigation credit or develop restoration projects of their own.

The bank recently had its first seven credits approved for sale by the Oregon Department of State Lands and Army Corps of Engineers, the agencies that regulate the banks.

In the mid-Willamette valley, mitigation costs for developers average about $60,000 to $65,000 an acre. In the Portland area, prices can be as high as $175,000 an acre.

To be eligible to use the mitigation bank, construction projects that propose filling in wetlands must be located in the bank's service area. In the case of Muddy Creek, that includes the Willamette Valley floor from the Eugene area north to Albany.

Small- and medium-size developers in particular might appreciate the no-muss, no-fuss appeal of buying credits as opposed to developing restoration projects of their own.

Developers that opt to buy credits do not have to deal with the complicated process of creating an independent restoration project and monitoring it for the mandatory five years. Nor are they saddled with the responsibility of fixing a project that is found to be substandard. Those risks are taken on by the bankers, who must keep the restoration project up to the state's performance standards.

Muddy Creek is the 14th wetland mitigation bank approved in Oregon in the past 10 years. But there are seven mitigation bank proposals are in various stages of development.

"Wetland mitigation banking is really starting to blossom in western Oregon," said Department of State Lands mitigation specialist Dana Field.

Other banks in the Corvallis area include Oak Creek Bank near Lebanon, Frazier Creek Bank near Corvallis, Mid-Valley Bank near Adair and Evergreen Bank near Philomath. Only Muddy Creek and Evergreen have credits for sale. The other projects are sold out.

"My sense is that development is never going to stop, and the wetland laws aren't going away, so there is going to be a continual need," said Field.