What You Need to Know About Water Mitigation
First of all, what is mitigation anyway? This is a fairly new issue being implemented by the EPA just a few years ago in 2008. This Act basically helps to protect wetland areas and to bring them back to their natural state.
This is the definition directly from the EPA's website:
The White House Council on Environmental Quality (CEQ) has defined mitigation in its implementing regulations for the National Environmental Policy Act to include avoiding, minimizing, rectifying, reducing over time, and compensating for impacts. The Clean Water Act Section 404(b)(1) Guidelines, developed by EPA in coordination with the U.S. Army Corps of Engineers and issued in 1980, establish substantive environmental criteria which must be met for activities to be permitted under Clean Water Act Section 404. The types of mitigation enumerated by CEQ are compatible with the requirements of the Guidelines; however, as a practical matter, they can be combined to form three general types of mitigation: avoidance, minimization, and compensatory mitigation.
Currently I have a large tract of land that borders approximately 3 miles of wetland, creek areas. The owner's of the land have been working on a feasibility study for a proposed Mitigation Bank for their property for the past 2 years. There are a lot of regulations, studies and hearings that take place to determine if a tract of land is eligible for a mitigation bank.
If a mitigation bank is awarded, credits are determined in which future developers, roadways, etc. must purchase depending on the size and scope of their project. If a tract of land is awarded a bank, as the area around the land develops, the owner's of the land can benefit from the sale of these credits. Some call this a legacy trust. The initial study my landowners have is 44 pages long.
Tracts of land that are full of wetlands or referred to as "bottom lands" in our area were once thought to be not very valuable. Historically, these types of lowlands sold for pennies on the dollar. Now of course, the value in owning these types of properties has changed due to the potential for a mitigation bank.
When selling a tract of land that has been awarded a mitigation bank will most certainly change the pricing of the land. Based on the number of credits awarded along with currently and future development in the area will need to be evaluated in determining a price for the property.
Mitigation banks are a complicated issue therefore, when dealing with this type of transaction it will be important to have legal representation with an attorney who is familiar with the mitigation banking process. There a lot of moving parts so having as much information and knowledge regarding wetlands is critical. Complicated but not impossible!
CHEVAUX Group is excited to be working on this type of transaction. We love selling land and enjoy getting involved in the not so everyday transaction! If you want to know more about us, feel free to give us a call today!