Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8f
ACTION ITEM
Date of Meeting
June 11, 2024
DATE: May 21, 2024
TO: Stephen P. Metruck, Executive Director
FROM: Sarah Ogier, Director-Maritime Environment & Sustainability
Jon Sloan, Sr. Manager-Environmental Programs
Kathleen Hurley, Sr. Environmental Program Manager
SUBJECT: Request for Adoption of Resolution Authorizing the Sale of Surplus Mitigation Bank
Credits (Second Reading)
Amount of this request:
None
Total estimated project cost:
Expected positive cash flow $48 million
ACTION REQUESTED
Request Adoption of Resolution No. 3824: A Resolution to Determine 500 Mitigation Credits
from the Port’s Terminal 117 (T117) Mitigation Bank Site Are Surplus in Accordance with RCW
53.08.090 and EX-30; and to Authorize the Executive Director to Enter into a Purchase and Sale
Agreement to Sell Those Credits at Fair Market Value.
EXECUTIVE SUMMARY
This is the first transaction for the Port’s mitigation bank, which was designed to support creation
of important fish and wildlife habitat in the Green-Duwamish River Watershed. This will
ultimately result in approximately $48,000,000 cash flow that can support future restoration
actions within the Port’s Habitat Initiatives Line of Business.
In 2016, the Port developed its PORTfolio Restoration Plan and the Habitat Initiatives Line of
Business, with the expressed intent to restore and/or create high-functioning habitat in the
Green-Duwamish River Watershed and create a mitigation bank with marketable credits. The
PORTfolio Restoration Plan identified 16 initial habitat projects, including both past and future
restoration actions. In 2019, the Port further refined the PORTfolio Restoration Plan by preparing
the Joint Wetland Mitigation and Habitat Conservation Bank Prospectus, which was submitted to
Washington State Department of Ecology and the U.S. Army Corps of Engineers (the Agencies)
for review. The Prospectus included conceptual designs for three primary sites to be constructed
initially, including Terminal 117 and Terminal 25 under the Maritime Division portfolio, and the
COMMISSION AGENDA – Action Item No. 8f Page 2 of 6
Meeting Date: June 11, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Aviation-owned Auburn Site. The site selection process used criteria for size, connectivity,
distribution, and urgency to identify properties as appropriate for mitigation bank development;
it also considered existing resources or liabilities preventing other uses. In parallel, the Port
worked with the Elliott Bay Trustee Council to establish Terminal 117 as a Natural Resource
Damage (NRD) credit bank.
Construction of the restoration and improvements at the Terminal 117 Site, which is now known
as Duwamish River People’s Park and Shoreline Habitat, or DRPP, was completed in 2022.
JUSTIFICATION
This transaction will be the first for the Habitat Initiatives Line of Business and is consistent with
the Port’s mission to support economic development and its Century Agenda goal to restore 40
acres of habitat. Credits associated with the DRPP Site Mitigation Bank are surplus to the Port’s
own needs for mitigation. Proceeds from the transaction may support future habitat restoration
actions on Port properties. Finally, this transaction is consistent with the intent of the mitigation
bank and the Port’s Habitat Initiatives Line of Business and is consistent with Port Policy EX-30,
“Habitat and Mitigation Banking: Surplus Sales.”
Diversity in Contracting
No goal related to diversity in contracting was established because this item is related to the sale
of mitigation credits generated by the Port’s mitigation bank. The request does not involve
contracting of services.
DETAILS
The subject mitigation credits were generated at the Terminal 117 Site Mitigation Bank, which is
now known as Duwamish River People’s Park and Shoreline Habitat, or DRPP. The Site is under
a 10-year monitoring and maintenance plan and is protected by a conservation easement and
the Port’s commitment to provide stewardship in perpetuity. The proposed transaction includes
the sale of 500 NRD credits for a total of approximately $48 million to be paid in accordance with
the terms of the purchase and sale agreement. The Port will retain ownership of the DRPP site
and continue with use, maintenance and stewardship as currently planned.
Schedule
Activity
Commission meeting (first reading)
2024 Q2
Commission meeting (second reading)
2024 Q2
Execution of Purchase and Sale Agreement
2024 Q2/Q3
Initial Deposit
2024 Q3
First Payment
2025 Q1
Second Payment
2026 Q1
Final Payment
2027 Q1
COMMISSION AGENDA – Action Item No. 8f Page 3 of 6
Meeting Date: June 11, 2024
Template revised June 27, 2019 (Diversity in Contracting).
ALTERNATIVES AND IMPLICATIONS CONSIDERED
The alternatives considered for this action were to either proceed with the transaction to sell 500
mitigation credits or not to pursue the sale of the credits.
Alternative 1 – Proceed with the sale of 500 mitigation credits from the DRPP Mitigation Bank
Site.
Cost Implications: Generates approximately $48,000,000 in cash flow over a four-year period.
Pros:
(1) Demonstrates proof of concept for the Habitat Initiatives Line of Business and the Port
of Seattle would be the first port in Washington State to undertake this type of
transaction.
(2) This alternative would result in approximately $48,000,000 cash flow over a four-year
period.
(3) Cash flow can contribute towards additional restoration in the Duwamish Valley –
specifically at T25 allowing increased momentum and progress towards Century Agenda
goal #4 objective 12: to restore, create, and enhance 40 additional acres of habitat in
the Green/Duwamish
Cons:
(1) The sale of 500 mitigation credits would reduce the number of mitigation credits
available for other potential future use.
This is the recommended alternative.
Alternative 2 – Do not proceed with the sale of 500 mitigation credits from the DRPP Mitigation
Bank Site.
Cost Implications: No cash flow from sale. Retain asset for future use by Port or for sale to others.
Pros:
(1) Retain all DRPP mitigation credits for future sale to third parties or potential future use
by the Port to resolve a portion of its NRD liability.
Cons:
(1) Foregoing opportunity to generate approximately $48,000,000 cash flow over a four-
year period for the Port’s Habitat Initiatives Line of Business.
(2) Loss of cash flow that could impact future habitat restoration actions and achievement
of the Century Agenda habitat restoration goal. May result lower total number of acres
restored than Alternative 1.
(3) Soil cleanup and shoreline rehabilitation would still need to occur at Terminal 25.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 8f Page 4 of 6
Meeting Date: June 11, 2024
Template revised June 27, 2019 (Diversity in Contracting).
FINANCIAL IMPLICATIONS
The sale will result in approximately $48,000,000 cash flow over a four-year period. To ensure an
ongoing supply for Port use and/or future sales, additional mitigation credits will be developed
through projects at other sites within the mitigation bank (including Terminal 25 South).
ADDITIONAL BACKGROUND
The Port’s Century Agenda Goal 4, to be the greenest and most energy efficient port in North
America, includes Objective 12, to restore, create, and enhance 40 additional acres of habitat in
the Green/Duwamish Valley. In pursuit of this goal, in 2016, the Maritime Division established
the Habitat Initiatives Line of Business, including a mitigation bank, that would enable the Port
to restore habitat and sell the intangible “credits” generated by the Port’s restoration efforts.
A mitigation bank includes natural resource areas (often a wetland, stream, marine nearshore
area, or riparian zone) that have been created, re-established, rehabilitated, enhanced or, in
certain circumstances, preserved for the purpose of providing compensation for impacts to
natural resources. A Mitigation Bank can be, among other types, a “wetland mitigation bank,” a
“conservation mitigation bank,” or an “NRD bank,” within the context of current regulatory
markets. A “wetland mitigation bank” is a site established pursuant to Washington State
Department of Ecology guidelines where wetlands are created, re-established, rehabilitated,
enhanced, or preserved for the express purpose of providing compensatory mitigation in
advance of unavoidable impacts to wetlands or other aquatic resources. A “conservation
mitigation bank” is a site established pursuant to federal agency guidelines administered by the
National Marine Fisheries Service (NMFS) and/or United States Fish & Wildlife Service (USFWS),
that through legal instruments such as conservation easements permanently protects lands that
contain natural resource values for species that are endangered, threatened, candidates for
listing as endangered or threatened, or are otherwise species-at-risk under the federal
Endangered Species Act. An NRD bank is a site established through an agreement with the local
NRD Trustee Council (in the Port’s case, the Elliott Bay Trustee Council, comprised of
representatives of the federal government, state government, Muckleshoot Indian Tribe, and
Suquamish Tribe) to provide habitat restoration pursuant to an agreement with the Trustee
Council.
By establishing the Habitat Initiatives line of business, the Port is able to sponsor and promote a
multi-site, multi-benefit mitigation bank to restore fish and wildlife habitat in furtherance of
Century Agenda Goal 4. Through the sale of surplus credits, the Port may recover some or all of
the costs associated with the construction of such habitat and generate cash flow that can be
applied to future restoration work or other Port initiatives.
Development of the 14-acre Terminal 117 site (also known as the Duwamish River People’s Park
and Shoreline habitat, DRPP) occurred over almost two decades, from Port acquisition of the site
(2000) to cleanup of contamination (2012-2014), and construction of the habitat and public
access (2020-2022). The site incorporates public access via the fishing pier and overlook,
artwork, and interpretive signage alongside the restored habitat, consisting of riparian and
COMMISSION AGENDA – Action Item No. 8f Page 5 of 6
Meeting Date: June 11, 2024
Template revised June 27, 2019 (Diversity in Contracting).
marsh vegetation and intertidal and subtidal habitats. The DRPP site generates public and
environmental benefit in an environmental justice community.
The habitat components of the DRPP site generated 521.5 credits for compensation related to
Natural Resources Damages (NRD), known as dSAYs (discounted service acre years). The project
constitutes the Port’s first mitigation bank project, and we believe the Port of Seattle would be
the first port in Washington State to complete a transaction should this sale proceed. The Port
does not need these credits for its own settlement purposes.
Since the Habitat Initiatives Line of Business was established in 2016, Port staff have been
engaged in the mitigation bank market in Washington State, and, more locally in the Lower
Green-Duwamish River service area. The novelty of mitigation markets in this geography and
lack of predictability in regulatory timelines drive credit price uncertainty. However, based on
limited publicly available prices of similar available mitigation credits, recent mitigation credit
settlements, estimated costs to build new restoration sites within the service area, and market
conditions, Port staff have determined this transaction price reflects fair market value,
consistent with Port Policy EX-30. Furthermore, transaction of mitigation credits provides an
opportunity to generate benefits to the general public by expanding green space in a highly
urbanized area, providing important fish and wildlife habitat, while advancing the Port’s pursuit
of its Century Agenda and equity goals.
ATTACHMENTS TO THIS REQUEST
(1) Proposed Purchase and Sale Agreement
(2) Resolution 3824
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
1) May 28, 2024 – Staff introduced the first reading of the Resolution to Adoption of
Resolution Authorizing the Sale of Surplus Mitigation Bank Credits.
2) July 23, 2019 – Commission authorized procurement of General Contractor/Construction
Manager (GC/CM) for the Terminal 117 Habitat Restoration and Duwamish Shoreline
Access Project
3) March 26, 2013 – Commission authorized purchase of the southern portion of the South
Park Marina float structure to accommodate habitat restoration and complete permitting
and design for a public access viewpoint pier at T117.
4) June 7, 2011 - Commission authorized design and permitting for Terminal 117 Expanded
Habitat Design and execution of a professional services agreement to complete the design
and permitting.
5) July 7, 2009 – Commission adopted the Lower Duwamish River Habitat Restoration Plan,
an inventory of Port of Seattle Properties.
6) May 13, 2008 – Commission approved entering into a MOA with the Elliott Bay Trustee
Council for crediting habitat restoration projects in and near the LDW relating to future
settlement of natural resource damages claims: for execution of a professional services
COMMISSION AGENDA – Action Item No. 8f Page 6 of 6
Meeting Date: June 11, 2024
Template revised June 27, 2019 (Diversity in Contracting).
agreement for environmental review and application of permit authorizations; and to
prepare plans and specifications for design and permitting of a fish and wildlife habitat
restoration project at T-117 under the MOA.
