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Home My WebLink About2020-10-22; El Camino Real Bluff Emergency Repair at Tamarack Avenue Update; Gomez, PazTo the members of the: CITY COUNCIL Date 1'>/µ.Jw CA __x__ cc __£_ CM .JL_ACM .:/_ DCM (3) .::!._ Oct. 22, 2020 Council Memorandum To: From: Honorable Mayor Hall and Members of the City Council Paz Gomez, Deputy City Manager, Pub~orks Via: Geoff Patnoe, Assistant City Manager ~ {cityof Carlsbad Memo ID #2020236 Re: El Camino Real Bluff Emergency Repair at Tamarack Avenue Update This memorandum provides an update to a previous memorandum to City Council on the El Camino Real Bluff Emergency Repair at Tamarack Avenue (Project) dated May 2, 2019 (Attachment A). Background On June 8, 2018, the San Diego Regional Water Quality Control Boar.d (San Diego Water Board) issued a Notice of Violation (NOV)/lnvestigative Order (10) for the Project. On April 23, 2019, staff submitted the proposal to the San Diego Water Board to satisfy the requirements for compensatory mitigation and to offset the impacts to non-wetland waters of the United States and/or the State of California associated with the Project. The proposed mitigation plan applied mitigation credits that the city held with the North County Habitat Bank. Staff has also worked with the U.S. Army Corps of Engineers (USACE) to fulfill the permit requirements defined within Section 404 of the Clean Water Act (404 Permit) for the Project. Discussion On May 28, 2019, staff provided the certification of mitigation credit from the North County Habitat Bank to the San Diego Water Board (Attachment B). On July 19, 2019, the San Diego Water Board approved the city's proposed mitigation plan and accepted the certification of mitigation credits (Attachment C). Since receiving the 404 Permit from the USACE on Oct. 29, 2018, the city has been actively maintaining the Project area by removing invasive species, hydroseeding and conducting environmental monitoring. To satisfy the 404 Permit requirements, hydroseeding placement was completed within the Project footprint on Aug. 19, 2019. In accordance with the404 Permit, maintenance and monitoring of the site are required for two years after placement of the hydroseeding, provided that no more than 10% of the Project be vegetated with non-native or invasive species. Staff anticipates completing this maintenance arid monitoring by Aug. 19, 2021. Public Works Branch Transportation Department 1635 Faraday Avenue I Carlsbad, CA 92008 I 760-602-2730 t Council Memo -El Camino Real Bluff Emergency Repair at Tamarack Avenue Update Oct. 22, 2020 Page 2 In addition to these monitoring and maintenance efforts, staff is currently preparing a Request for Qualifications (RFQ) for engineering and environmental services to support the design of Drainage Project BFB-U. Funding for the project was identified in the 2008 Carlsbad Drainage Master Plan as coming from the Planned Local Drainage Area fee program. The project involves restoration and enhancement of a sparsely vegetated tributary that originates 1,500 feet south of Chestnut Avenue and extends for approximately 3,000 feet along the east side of El Camino Real. Water flow through this tributary causes minor to severe erosion around its perimeter, which includes the El Camino Real road embankment near the intersection of Tamarack Avenue. The proposed enhancements will help reduce erosive velocities within the conveyance channel and aid in the reduction of sediment transport towards the Agua Hedionda Creek. Next Steps Staff will continue to maintain and monitor the area associated with the Project, in accordance with the requirements stipulated in the 404 Permit, until an anticipated completion date of Aug. 19, 2021. Staff will also prepare an RFQ for engineering and environmental services to support the design of Drainage Project BFB-U, which is expected to be released in mid-2021. Attachments: A. Council Memorandum dated May 2, 2019 (due to the size of this attachment, a hardcopy is available for review in the City Council Office) B. North County Habitat Bank Acknowledgement of Sale of Mitigation Credits dated May 21, 2019 C. San Diego Water Board letter of July 19, 2019 cc: Scott Chadwick, City Manager Celia Brewer, City Attorney Laura Rocha, Deputy City Manager, Administrative Services Robby Contreras, Assistant City Attorney Tom Frank, Transportation Director James Wood, Environmental Manager Hossein Ajideh, Engineering Manager Scott Lyle, Senior Engineer Brandon Miles, Associate Engineer Attachment A Council Memorandum regarding El Camino Real Bluff Emergency Repair at Tamarack Avenue (dated May 2, 2019) To the members of ,Jj CITY COUNCIL 'J -Date~ /~lltt·c-A-_.st ec CM.¥=.COQ__.Jb-DCM-(3) May 2, 2019 Council Memorandum, To: From: Via: Honorable Mayor Hall and Members of the City Council Paz Gomez, Deputy City Manager, Publ~ W~rks {city of Carlsbad Re: Elaine Lukey, Chief Qperations Officer t--1 El Camino Real B1.uff Emergency Repair at Tamarack Avenue This memorandum provides information related to the El Camino Real Bluff Emergency Repair at Tamarack Avenue (Project) and a Notice of Violation (NOV)/lnvestigative Order (10) issued by the San Diego Regional Water Quality Control Board (San Diego Water Board) on June 8, 2018 for the Project (Attachment A). For a visual representation, Attachment B includes photographs showing the pre-and post-repair conditions of the Project site. Background On Jan. 91 2018, an intense rainfall event occurred which caused major damage to an existing roadway slope along the east side of El Camino Real, north of Tamarack Avenue. Water flowing in the typically dry streambed, which runs generally parallel to El Camino Real, deviated from its original location and ca used significant erosion on the slope at the back of a sidewalk, thereby j eopardizing the integrity of public infrastructure, including existing utility systems, a bus stop and a sidewalk along El Camino Real. On J~n. 11, 2018, city staff notified the San Diego.Water Board, U.S. Fish and Wildlife Service, California Department of Fish and Wildlife, and U.S. Army co·rps of Engineers (US~CE) regarding site conditions and proposed a repair project. City staff also applied for required permits from the resource agencies to complete emergency repairs. The city received authorization to work from the U.S. Fish and Wildlife Service, California Department of Fish and Wildlife and USACE; however, the USACE permit was co.ntingent upon .issuance of a Clean Water Act Section 401 Water Quality Certification (401 Certification) from the San Diego Water Board. To satisfy the USACE permit contingency, the city submitted a 401 Certification application to the San Diego Water Board on Feb. 12, 2018. With more intense rain in the forecast, major roadway slope damage occurring, and impending· public health and safety concerns, the city assessed the risks to the public that would result fro_m failed infrastructure, expedited completion of the emergency repair project and stabilized the embankment to protect the public. Consequently, on June 8, 2018, the San Diego Water Board issued an NOV /10 because a 401 Certification was not issued prior to start of construction. Public Works Branch Faraday Center 1635 Faraday Avenue I Carlsbad, CA 92008 I 760-602-2730 Honorable Mayor Hall and Members of the City Council May 2, 2019 Page 2 Discussion As part of the NOV /10, the San Diego Water Board requested additional information regarding the work completed at the El Camino Real slope failure, north of Tamarack Avenue. On July 9, 2018, the city provided the requested information and analyses to the San Diego Water Board. Additiqnal ihformation was provided via email on Sept. 111 2018 with a technical report that was prepared by a consultant for the city. Due to the size of these correspondence, they are not attached to this memo, but are available at the City Clerk's office. On Nov. 21 2018, the San Diego Water Board sent a letter asking for further clarification of the information that had been provided in the technical report. On Nov. 20, 2018, City staff and the consultant met with San Diego Water Board staff to better understand their questions and concerns. The city responded to the San Diego Water Board letter on Dec. 6, 2018. On Jan. 28, 20191 the San Diego Water Board concurred with the city's determination of 0.055 acres of Project impacts to non-wetland waters of the United States and requested that the city submit a compensatory mitigation proposal to offset the impacts associated with the emergency Project. On March 14, 2019, city staff submitted a mitigation proposal to offset the impacts to non-wetland waters of the United States and/or State associated with the emergency repair Project (see Attachment C). On March 27, 2019, the San Diego Water Board responded to the city's proposed mitigation plan requiring higher compensatory mitjgation. The city submitted a letter dated April 23, 2019 with a revised mitigation proposal to the San Diego Water Board to satisfy the requirement for higher compensatory mitigation (see Attachment D). The proposed mitigation plan applies mitigation credits that the city currently holds with the North County Habitat Bank. City staff is currently awaiting final approval of the revised mitigation proposal from the San Diego Water Board. Next Steps The city continues to work with the San Diego Water Board by providing information and analyses as requested. The city has submitted a revised mitigation proposal to satisfy the requirement for higher compensatory mitigation to the San Diego Water Board and is awaiting their final approval. Once a mitigation plan is approved, city staff will submit a request to th-e North County Habitat Bank to deduct the necessary credits from the mitigation credits the city currently holds and will submit a certification of mitigation credit to the San Diego Water Board. The city will then provide the certification. of mitigation to the USACE to satisfy the permit requirements and proceed with hydroseeding and monitoring the area. Attachments: A. Notice of Violation (NOV)/lnvestigative Order (10) issued by the San Diego Water Board for the El Camino Real Bluff Emergency Repair Project B. Photographs Showing Pre-and Post-Repair Conditions of the Project Site Honorab,le Mayor Hall and Members of the City Council May 2, 2019 Page 3 C. City of_ Carlsbad's Prior Mitigation Proposal to the San Diego Water Board, Dated March 14, 2019 D. City of Carlsbad's Revised M itigation Proposal to the San Diego Water Board, Dated April 23,. 2019 cc: Scott Chadwick, City Manager Celia Brewer, City Attorney Paz Gomez, Deputy City Manager, Public Works Marshall Plantz, Transpor_tation Director Amanda Guy, Deputy City Attorney James Wood, Environmental Manager Hossein Ajideh, Engineering Manager Honorable Mayor Hall and Members of the City Council May 2, 2019 Page 4 ATTACHMENT A Notice of Violation {NOV)/lnvestigative Order {10) issued by the San Diego Water Board for the El Camino Real Bluff Emergency Repair Project Mr. Elaine Lukey 10 R9-2018-0081 Cleanup and Abatement Order Page 2 June 8, 2018 Section 13304 Administrative Civil Liability Sections 13261, 13265, 13350 and13385 Referral to the Attorney General - Referral to the District Attorney - The San Diego Water Board reserves the right to take any enforcement action authorized by law. In making the determination of whether and how to proceed with further enforcement action, the San Diego Water Board will consider the severity and effect of the violation, the level of cooperation, the time it takes to correct the identified violations, and the sufficiency of the corrections. Investigative Order No. RS-2018-0081 Under the authority of Water Code section 13267, the San Diego Water Board herby directs the City to submit the following technical information by 5:00 pm on July 9, 2018. 1. A technical report including a. a description of all work completed at the site b. a determination of the area that was graded, dredged, and filled within waters of the United States and/or State in both acres and linear feet and c. the amount and type of vegetation that was cleared. 2. The dates of commencement and completion of the unauthorized work. 3. All internal and external communication records regarding this project including but not limited to correspondence about the project plans, change in project plans, and directions regarding commencement of project. All information provided in response to this Investigative Order must include the following signed certification statement: ' 11 certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system, or those persons directly responsible for gathering the information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations." The technical report and correspondence records under this Investigative Order are needed to investigate the magnitude and extent of unauthorized impacts to water quality and beneficial uses, and to inform the San Diego Water Board in making a determination on the appropriate corrective actions warranted. The burden, including costs, of these reports bears a reasonable relationship to the need for the reports and benefits to be obtained from the reports. Mr. Elaine lukey 10 R9-2018-0081 Page 3 June 8, 2018 All reports, plans, and documents required under this Investigative Order must be prepared under the direction of appropriately qualified professionals. A statement of qualifications and license numbers, if applicable, of the responsible lead professional and all professionals making significant and/or substantive contributions must be included in the report submitted. The lead professional performing the engineering and geologic evaluations and judgements must sign and affix their professional geologist or civil engineer registration stamp to all plans, technical reports, or documents submitted to the San Diego Water Board. Please submit all responses and information to this NOV in electronic format via e-mail to SanDiego@waterboards.ca.gov with the following identification numbers in the header or subject line: R9-2018-0081 :844932:ngergans. Documents over 50 megabytes will not be accepted via e-mail and must be placed on a disc and delivered to the San Diego Water Board, 2375 Northside Drive, Suite 100, San Diego, CA 92108. Each electronic document must be submitted as a single file, in Portable Document Format {PDF) format, and converted to text searchable format using Optical Character Recognition (OCR). All electronic· documents must include scanned copies of all signature pages; electronic signatures will not be accepted. For questions pertaining to the subject matter, please contact Nicole Gergans at (619) 521-3969 at 619-521-3969 or nicole.gergans@waterboards.ca.gov. Respectfully, ~~ ~L-f-~ David Barker P. E. Supervising WRC Engineer San Diego Regional Water Quality Control Board DB:EB:ng Enclosures: Notice of Violation No. R9-2018-0080 Inspection Report Figure 1 Mr. Elaine Lukey 10 R9-2018-0081 CC (by email with enclosures): Jonah Reenders U.S. Army Corps of Engineers Jonah.Reenders@usace.army.mil Kelly Fisher California Department of Fish and Game Kelly .Fisher@wildlife.ca.gov David Barker San Diego Water Board David.Barker@waterboards.ca.gov Eric Becker San Diego Water Board eric.becker@waterboards.ca.gov U.S. EPA, OWOW, Region 9 R9-WTR8-Mailbox@epa.gov Page4 State Water Resources Control Board, Division of Water Quality 401 Water Quality Certification and Wetlands Unit Stateboard401@waterboards.ca.gov Tech Staff Info & Use Notice of Violation No. R9-2018-0080 WDID 9000003269 Reg. Measure ID 419570 Place ID 844932 Party ID 554051 Violation ID 1043386 Investigative Order No. R9-2018-0081 June 8, 2018 City of Carlsbad, Public Works NOV No. R9-2018-0080 A. Background June 8, 2018 -2 - January 25, 2018: The California Regional Water Quality Control Board, San Diego Region (San Diego Water Board} received an Emergency Notification Form for coverage under United States Army Corps of Engineers (ACOE), Regional General Permit 63 (RGP 63) from the City of Carlsbad (City) for the El Camino Real Bluff Failure Project (Project) at El Camino Real and Tamarack Ave in Carlsbad, California signed by Mr. Brandon Miles, Engineer for the City of Carlsbad. The Project proposed to repair eroded material and install rip-rap at the toe of the slope. January 29, 2018: Mr. Alan Monji of the San Diego Water Board emailed Mr. Miles with clarifying questions including a request for the contact at the ACOE managing the Project. February 5, 2018: Mr. Miles emailed Mr. Monji to notify the San Diego Water Board that Mr. Jonah Reenders at the ACOE had been assigned to the RGP 63 application. February 8, 2018: Mr. Reenders emailed Mr. Monji notifying the San Diego Water Board that the repair did not quality for coverage under RGP 63 and that the project would be enrolled under a ACOE Nationwide Permit 13 (NWP 13) for Bank Stabilization (NWP 13). Mr. ReeAders had previously corresponded with Mr. Miles about the matter. In addition, Mr. Monji emailed Mr. Miles informing the City that the ACOE had determined that proposed impacts of the Project did not qualify for coverage under RGP 63 and that the Project would instead be covered under NWP 13. Mr.Monji also clarified in the email that the City was required to apply for a Clean Water Act Section 401 Water Quality Certification (section 401 Certification) for the Project as NWP 13 was not pre- certified with the State of California. February 12, 2018: Mr. Miles submitted a section 401 water quality certification application to the San Diego Water Board. Mr. Monji reviewed the submittal and emailed Mr. Miles to notify the City that substantial parts of the application were missing and that the City should re-submit the application with more detail and fill in all applicable sections. Mr. Monji also attached written guidance for completing the section 401 Certification application and advised the City should consider seeking assistance from one of the City's consultants. February 15, 2018: The San Diego Water Board received an updated 401 Certification application from the City that proposed placement of 200 cubic yards of rip-rap in 3 locations consisting of 60 linear feet (Figure 1 attached) to an unnamed tributary to Agua Hedionda Lagoon. March 5, 2018: The San Diego Water Board issued a Jetter notifying the City the application was incomplete and requesting additional information regarding the project impacts and miti.gation. City of Carlsbad, Public Works NOV No. R9-2018-0080 -3 - June 8, 2018 March 6, 2018: The City submitted additional information to the San Diego Water Board. March 22, 2018: Mr. Monji notified the City that the San Diego Water Board would not be able to issue a water quality certification in order for the City to begin work on the Project the following week. Mr. Monji also notified the City that proceeding with work without a section 401 Certification would put the City at risk of enforcement actions from the San Diego Water Board. Mr. Monji also requested a copy the ACOE conditional NWP 13 Verification for the Project. March 23, 2018: Mr. Miles emailed a copy of the ACOE conditional NWP Verification to Mr. Monji. March 29, 2018: Ms. Nicole Gergans of the San Diego Water Board reviewed the City's responses from March 6, 2018 and determined that the responses were insufficient and that the section 401 Certification application was still incomplete. Ms. Gergans sent an email to the City asking for further clarification of the City's March 6, 2018 response. Ms. Gergans also noted in the email that although the Project was not classified as an emergency, the San Diego Water Board understood the urgency of the project and was making it a priority. Prior to sending the email, Ms. Gergans spoke with Mr. Miles over the phone to assist in clarifying details of the Project in regard to compensatory mitigation. April 16, 2018: The City provided additional written responses to Ms. Gergans. April 18, 2018: Mr. Miles sent a photo exhibit of rip-rap to Ms. Gergans and requested confirmation about purchasing compensatory mitigation credits. Ms. Gergans replied to Mr. Miles noting that the San Diego Water Board does not recommended purchasing mitigation credits until the section 401 Certification is issued. Ms. Gergans did not review the attached exhibit at that time. April 20, 2018: Ms. Gergans reviewed the City's additional response from April 16, 2018 and sent a follow up email regarding further clarification of impacts and compensatory mitigation. Ms. Gergans also reviewed the City's April 18, 2018 email and attachment that contained an exhibit of rip-rap in a graded area. Ms. Gergans emailed the City asking for clarification regarding the content of the photograph of the rip-rap in a graded area. Mr. Miles confirmed that work had been performed at the location stating that the work was able to be completed without placing rip rap on the slope, but that a small amount of rip rap was added to slow velocity. Ms. Gergans asked for clarification on whether the City went forward with performing work even though a section 401 Certification had not been issued. Ms. Gergans then followed up with another email noting that the San Diego Water Board is unable to issue a section 401 Certification for unpermitted work that has already been performed. City of Carlsbad, Public Works NOV No. R9-2018-0080 -4 - June 8, 2018 On April 241 2018: Ms. Gergans conducted an inspection of the Project site to investigate and evaluate if an unauthorized discharge of dredged or fill material had been conducted by the City. B. San Diego Water Board Alleged Violations: Dredging, filling, or excavation within surface waters constitutes a discharge of waste to waters of the United States and/or State, and prospective dischargers are required to apply for and obtain a section 401 Certification and/or waste discharge requirement from the appropriate Regional Water Quality Control Board. The City discharged dredged or fill material into an unnamed tributary to Agua Hedionda Lagoon, a water of the United States and/or State without first submitting a complete application and obtaining a section 401 Certification and/or waste discharge requirement. The activities of the City resulted in the unauthorized discharge of dredged or fill material to waters of the United States and/or State in violation of sections 301 and 401 of the Clean Water Act (33 U.S.C. §§ 1311 and 1341) and Water Code sections 13260, 13264, and 13376. Observation On April 24, 2018, the San Diego Water Board conducted an inspection of the Project site and noted that that roughly 300 linear feet of the unnamed tributary had been graded, dredged, widened, and partially filled with rip rap. An inspection report is attached documenting these findings. The City of Carlsbad was aware of the requirements to obtain the appropriate permits prior to conducting dredge and fill operations and was aware of the fact that no permit had been granted by the San Diego Water Board. Nevertheless, the City elected to proceed to discharge dredged or fill material waste to waters of the United States and or State without obtaining a section 401 Certification and/or waste discharge requirements. Summary of Potential Enforcement Options The City may be subject to administrative civil liability pursuant to Water Code sections 13261, 13265, 13350 and 13385 for failing to obtain a section 401 Certification and/or waste discharge requirements, and for the unauthorized discharge of dredged or fill material to waters of the United States and/or State. In addition to administrative civil liability, the City may also be subject to the following enforcement actions: Other Potential Enforcement Applicable Water Code Options Section(s) Technical or Investigative Order Sections 13267 Cleanup and Abatement Order Section 13304 Cease and Desist Order Sections 13301-13303 Time Schedule Order Sections 13300, 13308 CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD -SAN DIEGO REGION SECTION 401 WATER QUALITY CERTIFICATION INSPECTION REPORT FACILITY: El Camino Real Bluff Failure INSPECTION DATE/TIME: 04/24/2018: 10:30AM SITE WDID No.: 9 000003269 REPRESENTATIVE($) PRESENT DURING INSPECTION: Nicole Gergans (SDRWQCB). Director of Public Works. City of Carlsbad NAME OF OWNER, AGENCY OR PARTY RESPONSIBLE FOR DISCHARGE CIWQS Place ID No.: ""'84..:.4.:.,:9=3=-2 ____ _ 1635 Farady Avenue. Carlsbad, CA 92008 OWNER MAILING ADDRESS Tamarack Ave and El Camino Real, Carlsbad, CA FACILITY ADDRESS Elaine Lukey, Director of Public Works OWNER CONTACT NAME AND PHONE# APPLICABLE WATER QUALITY LICENSING REQUIREMENTS: 0 MS4 URBAN RUNOFF REQUIREMENTS 0 CONSTRUCTION GENERAL PERMIT 0 CAL TRANS GENERAL PERMIT 0 INDUSTRIAL GENERAL PERMIT INSPECTION TYPE (Check One): 0 GENERAL OR INDIVIDUAL WASTE DISCHARGE REQUIREMENTS OR NPDES 0 GENERAL OR INDIVIDUAL WAIVER OF WASTE DISCHARGE REQUIREMENTS 181 SECTION 401 WATER QUAUTY CERTIFICATION 0 ewe SECTION 13264 0 "A'' TYPE COMPLIANCE-COMPREHENSIVE INSPECTION IN WHICH SAMPLES ARE TAKEN. (EPA TYPES) 18J '1B" lYPE COMPLIANCE-A ROUTINE NONSAMPLING INSPECTION. {EPA TYPE C) 0 NONCOMPLIANCE FOLLOW-UP-INSPECTION MADE TO VERIFY CORRECTION OF A PREVIOUSLY IDENTIFIED VIOLATION. 0 ENFORCEMENT FOLLOW-UP-INSPECTION MADE TO VERIFY THAT CONDlTlONS OF AN ENFORCEMENT ACTION ARE BEING MET. 0 COMPLAINT -INSPECTION MADE IN RESPONSE TO A COMPLAINT. 0 PRE-REQUIREMENT--INSPECTION MADE TO GATHER INFO. RELATIVE TO PREPARING, MODIFYING, OR RESCINDING REQUIREMENTS. 0 COMPLIANCE ASSISTANCE INSPECTION -OUTREACH INSPECTION DUE TO DISCHARGER'S REQUEST FOR COMPLIANCE ASSISTANCE, INSPECTION FINDINGS: ~ WERE VIOLATIONS NOTED DURING THIS INSPECTION? {YES/NO/PENDING SAMPLE RESULTS) CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD-SAN DIEGO REGION Facility: Inspection Date: El Camino Real Bluff Failure 04/24/2018 I. COMPLIANCE HISTORY/ PURPOSE OF INSPECTION Page 2 of 13 January 25, 2018: The California Regional Water Quality Control Board, San Diego Region (San Diego Water Board) received an Emergency Notification Form for coverage under United States Army Corps of Engineers (ACOE), Regional General Permit 63 (RGP 63) from the City of Carlsbad (City) for the El Camino Real Bluff Failure Project (Project) at El Camino Real and Tamarack Ave in Carlsbad, California signed by Mr, Brandon Miles, Engineer for the City of Carlsbad. The Project proposed to repair eroded material and install rip-rap at the toe of the slope. January 29, 2018: Mr. Alan Monji of the San Diego Water Board emailed Mr. Miles with clarifying questions including a request for the contact at the ACOE managing the Project. February 5, 2018: Mr. Miles emailed Mr. Monji to notify the San Diego Water Board that Mr. Jonah Reenders at the ACOE had been assigned to the RGP 63 application. February 8, 2018: Mr. Reenders emailed Mr. Monji notifying the San Diego Water Board that the repair did not quality for coverage under RGP 63 and that the project would be enrolled under a ACOE Nationwide Permit 13 (NWP 13) for Bank Stabilization (NWP 13). Mr. Reenders had previously corresponded with Mr. Miles about the matter. In addition, Mr. Monji emailed Mr. Miles informing the City that the ACOE had determined that proposed impacts of the Project did not qualify for coverage under RGP 63 and that the Project would instead be covered under NWP 13. Mr.Monji also clarified in the email that the City was required to apply for a Clean Water Act Section 401 Water Quality Certification (section 401 Certification) for the Project as NWP 13 was not pre- certified with the State of California. February 12, 2018: Mr. Miles submitted a section 401 water quality certification application to the San Diego Water Board. Mr. Monji reviewed the submittal and emailed Mr. Miles to notify the City that substantial parts of the application were missing and that the City should re-submit the application with more detail and fill in all applicable sections. Mr. Monji also attached written guidance for completing the section 401 Certification application and advised the City should consider seeking assistance from one of the City's consultants. February 15, 2018: The San Diego Water Board received an updated 401 Certification application from the City that proposed piacement of 200 cubic yards of rip-rap in 3 locations consisting of 60 linear feet (Figure 1 attached) to an unnamed tributary to Agua Hedionda Lagoon. March 5, 2018: The San Diego Water Board issued a letter notifying the City the application was incomplete and requesting additional information regarding the project impacts and mitigation. March 6, 2018: The City submitted additional information to the San Diego Water Board. CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD-SAN DIEGO REGION Facility: Inspection Date: El Camino Real Bluff Failure 04/24/2018 Page 3 of 13 March 22, 2018: Mr. Monji notified the City that the San Diego Water Board would not be able to issue a water quality certification in order for the City to begin work on the Project the following week. Mr. Monji also notified the City that proceeding with work without a section 401 Certification would put the City at risk of enforcement actions from the San Diego Water Board. Mr. Monji also requested a copy the ACOE conditional NWP 13 Verification for the Project. March 23, 2018: Mr. Miles emailed a copy of the ACOE conditional NWP Verification to Mr. Monji. March 29, 2018: Ms. Nicole Gergans of the San Diego Water Board reviewed the City's responses from March 6, 2018 and determined that the responses were insufficient and that the section 401 Certification application was still incomplete. Ms. Gergans sent an email to the City asking for further clarification of the City's March 6, 2018 response. Ms. Gergans also noted in the email that although the Project was not classified as an emergency, the San Diego Water Board understood the urgency of the project and was making it a priority. Prior to sending the email, Ms. Gergans spoke with Mr. Miles over the phone to assist in clarifying details of the Project in regard to compensatory mitigation. April 16, 2018: The City provided additional written responses to Ms. Gergans. April 18, 2018: Mr. Miles sent a photo exhibit of rip-rap to Ms. Gergans and requested confirmation about purchasing compensatory mitigation credits. Ms. Gergans replied to Mr. Miles noting that the San Diego Water Board does not recommended purchasing mitigation credits until the section 401 Certification is issued. Ms. Gergans did not review the attached exhibit at that time. April 20, 2018: Ms. Gergans reviewed the City's additional response from April 16, 2018 and sent a follow up email regarding further clarification of impacts and compensatory mitigation. Ms. Gergans also reviewed the City's April 18, 2018 email and attachment that contained an exhibit of rip-rap in a graded area. Ms. Gergans emailed the City asking for clarification regarding the content of the photograph of the rip-rap in a graded area. Mr. Miles confirmed that work had been performed at the location stating that the work was able to be completed without placing rip rap on the slope, but that a small amount of rip rap was added to slow velocity. Ms. Gergans asked for clarification on whether the City went forward with performing work even though a section 401 Certification had not been issued. Ms. Gergans then followed up with another email noting that the San Diego Water Board is unable to issue a section 401 Certification for unpermitted work that has already been performed. On April 24, 2018: Ms. Gergans conducted an inspection of the Project site to investigate and evaluate if an unauthorized discharge of dredged or fill material had been conducted by the City. CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD-SAN DIEGO REGION Facllity: Inspection Date: II. FINDINGS El Camino Real Bluff Failure 04/2.4/2018 Page 4 of 13 1. At approximately 10:30 AM on April 24, 2018, San Diego Water Board inspector Ms. Gergans arrived at the Site. 2. Ms. Gergans inspected the Site and took photographs to document the areas in which unauthorized fill and impacts to waters of the United States and/or State had occurred. 3. Ms. Gergans observed that the proposed project impacts detailed in Figure 1 (attached) of the February 15, 2018 application submittal were not completed according to proposed plans. Instead a different project with much larger impacts was already completed at the site. Rather than placing rip rap in the locations shown in Figure 1, roughly 300 linear feet of stream was graded, straightened, and widened (Photos 2, 3, 6, 7, and 8). The area immediately downstream of where the work occurred shows channel conditions that are in a natural state compared to the impacted area in Photos 11-14. Loose rip-rap was placed as partial check dams in three locations rather than as stabilization along the banks near the roadway as proposed (Photos 1,3,4, 5, 9, and 10). All vegetation with the exception of a few large trees had been cleared from the stream and surrounding area and the area showed evidence of recent cuttings Photos 14 and 15. 4. San Diego Water Board staff did not verify the exact footprint of the unauthorized fill. However, the impact appears to have occurred over roughly 300 linear feet in (contiguous) stream length. In some places the area of grading appeared to up to 30 feet wide from top of bank to top of bank (Photo 3). 5. The current stream conditions have been altered causing erosion (Photo 5). The rip-rap installed in the stream could cause further erosion and bank destabilization by redirecting flows. No erosion or sediment control Best Management Practices have been installed at the site (Photos 2-6). 6. The City of Carlsbad was aware of the requirements to obtain a 401 Certification permits, and was aware of the fact that no 401 Certification had been issued by the San Diego Water Board. Nevertheless, the City elected to proceed to discharge dredge and fill waste to Waters of the United States and or State without a 401 certification and/or Waste Discharge Requirements. 7. The unauthorized dredge and discharge of fill into an unnamed tributary are illegal discharges of waste to waters of the United States and/or State in violation of Water Code sections 13260 and 13376 and waste discharge prohibitions contained in the Basin Plan. Honorable Mayor Hall and Members of the City Council May 2, 2019 Page 5 ATTACHMENT B Photographs Showing Pre-and Post-Repair Conditions of the Project Site Honorable Mayor Hall and Members of the City Council April 26, 2019 Page 9 ATTACHMENT C City of Carlsbad's Prior Mitigation Proposal to the San Diego Water Board, Dated March 14, 2019 { City of Carlsbad March 14, 2019 Mr. David Barker Supervising Water Resources Control Engiheer Attn: Ms. Nicole Gergans California Regional Water Quality Control Board San Diego Region 2375 Northside Drive, Suite 100 San Diego, CA 92108 RE: R9-2018-0081:844932:ngergans Attachment C www.carlsbadca.gov Notice of Violation (NOV) No. R9-2018-0080 and Investigative Order (10) No. R9-2018-0081 In response to the Nov. 2, 2018 letter from the San Diego Regional Water Quality Control Board (San Diego Water Board) regarding the subject NOV and 10 for the El Camino Real Bluff Emergency Repair at Tamarack Avenue (Project), the City of Carlsbad (city) submitted a technical report dated Dec. 61 2018 assessing the permanent impact to non-wetland waters of the United States and/or State associated with the emergency Project. On Jan. 28, 2019, the city received an email from the San Diego Water Board concurring with the city's determination of 0.055 acres of permanent impacts to non-wetland waters of the United States and/or State resulting from emergency repair activities. The San Diego Water Board also requested that the city provide a compensatory mitigation proposal to offset the permanent impact to non- wetland waters of the United States and/or State. In response to the San Diego Water Board's Jan. 28, 2019 email, the city obtained services from LSA Associates, Inc. and Mccollum Associates to determine appropriate mitigation measures to satisfy the San Diego Water Board. As further described below, the city's proposal utilizes created/restored wetland habitat from the North County Habitat Bank (NCHB) to offset the impact to non-wetland waters of the United States and/or State resulting from the Project. The proposal reflects a 10:1 mitigation ratio that requires 0.55 acres of mitigation to offset the 0.055 acres of impact. At our Nov. 20, 2018 meeting, the San Diego Water Board and the city discussed the possibility of applying an 8:1 mitigation ratio when wetland mitigation is utilized (due to the higher value of wetland mitigation); however, in the interest of resolving this matter as quickly as possible, the city proposes applying a 10:1 wetland mitigation ratio when the proposed created/restored mitigation at the NCHB is used, The city's proposal applies mitigation credits that it currently holds with the NCHB. In 2007, the city purchased the equivalent of 1.67 acres of created/restored wetland/riparian mitigation credits from the NCHB at a price of $1,125,000. For your reference, copies of the purchase agreement and subsequent amendment are attached as Attachments 1 and 2, respectively. To establish the bank, the property owner, Westmark, entered into a Bank Enabling Instrument (BEi) with the resource agencies in 2007 (Attachment 3). The U.S. Fish & Wildlife Service, California Department of Fish & Game, U.S. Army Corps of Engineers, and U.S. Environmental Protection Agency approved the establishment, use, operation and maintenance of the NCHB. The city acknowledges that the San Diego Water Board was not a signatory to the BEi for the NCHB; however, it is the city's understanding that the San Diego Water Board was involved in the creation of the NCHB and has indicated that it may accept mitigation credits to fulfill Section 401 Certification conditions (as stated in the 2007 internal memorandum included in the city Agenda Bill #19110, 07 /24/04, presented in Attachment 4 ). According to the NCHB, it has sold credits for over 20 permit actions, and at least 15 of them had a certification requirement that the San Diego Water Board deemed to have peen met by the credits purchased from the NCHB. The city can facilitate further discussion with the NCHB, if necessary, regarding evaluation of the city's mitigation credits. ( City of Carlsbad ATTACHMENT 1 www.carlsbadca.gov 2007 MITIGATION CREDIT PURCHASE AGREEMENT AND ACKNOWLEDGMENT FOR THE NCHB Attachment 1 e,{otfh County (~~~z ~ Habitat Bank MITIGATION CREDIT PURCHASE AGREEMENT AND ACKNOWLEDGMENT THIS MITIGATION CREDIT PURCHASE AGREEMENT AND ACKNOWLEDGMENT ( 11Agreement") is entered into this a7-t:;. day of~~ , 2007 by and between WESTMARK DEVELOPMENT CORPORA TI , a evada corporation ("Seller") and CITY OF CARLSBAD, a municipal corporation of the State of California (''Buyer"). RECITALS A. Pursuant to that certain Banking Establishment Instrument regarding the Establishment, Operation and Use of the North County Habitat Bank dated May 23, 2007 (the "BEi"), by and among Westmark Development Corporation; the California Department of Fish and Garne ("CDFG"); the United States Fish and. Wildlife Service (''USFWS"); the United State Environmental Protection Agency ("USEPA"), and the United States Army Corps of Engineers ("USACOE") (CDFG, USFWS, USEPA and USACOE are referred to collectively hereinafter &S the "Agencies"). The Agencies have acknowledged the creation of the North County Habitat Bank (the "Mitigation Bank") and the right of Seller to sell "Mitigation Credits11 to mitigate for the loss of wetlands and habitat as provided therein. B. Buyer desires to mitigate the loss of certain wetland/riparian or upland habitat values on real property located in San Diego County California as determined by the City and the MBRT (the "Buyer's Property") to satisfy Buyer's obligations with respect to wetland/riparian or upland habitat on Buyer's Property and to obtain permits and approvals to develop Buyer's Property. C. Buyer has agreed to purchase from Seller,.and Seller has agreed to sell to Buyer 5.0 credits of created Wetland/Riparian Mitigation Credits as defined in the BEi (the "Conveyed Credits") from the Mitigation Bank on the tenns and conditions set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the agreements and acknowledgments set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree and acknowledge as follows: North County Habitat Bank Mitigation Credit Purchase Agreement !:'age l ofS 03207629-609-CGI Y.062607 I (p 1. Purchase Price. The purchase price for the5.0 Wetland/Riparian Mitigation Credits shall be $1,125,000.00. Toe Purchase Price shall be paid in good funds on the Closing Date. 2. Acknowledgment of Sale. On the Closing Date, Seller shall deliver a fully executed original of the Acknowledgment of Sale of Mitigation Credits ("Acknowledgment"), in form and content as Exhibit A attached hereto and such other documents and instruments as may be required by any of the Agencies to evidence and recognize the transfer of the Conveyed Credits to Buyer. Moreover, Seller agrees that to the extent such have not been provided to Buyer at the closing, then if requested by Buyer subsequent to the closing, Seller will provide such documents and instruments as may be required by any of the Agencies to evidence and recognize the transfer of the Conveyed Credits within ten ( 10) days following Buyer's request. The provisions of this Paragraph2 shall survive the closing and termination of this Agreement. 3. Closing. Buyer shall deliver to Seller this executed purchase agreement on or before July 31, 2007. Funds equal to the Purchase Price shall be delivered to Seller on or before August JO, 2007 which shall be deemed the "Closing Date". The closing shall mean the date that the Purchase Price is delivered to Seller and the fully executed Acknowledgment of Sale of Mitigation Credits is delivered to Buyer. Notwithstanding the foregoing, Buyer may accelerate the Closing Pate. 4. AS-IS Sale. Buyer acknowledges and agrees that: (a) it is the Buyer's sole responsibility to determine the acceptance of the Conveyed Credits by the Agencies as mitigation for impacts to wetland/riparian values, and any completed sale of any Conveyed Credits shall be final; (b) the purchase and sale of the Conveyed Credits shall be made on an "AS IS, WHERE IS, WITH ALL FAULTS" basis as provided for in the BEI; and c) no representations or warranties have been.roade or are made and no responsibility has been or is assumed by Seller or by any officer, agent, affiliate, attorney, or representative acting or purporting to act on behalf of Seller as to (l) the mitigation value of the property conveyed to the Agencies in establishing the Mitigation Banlc; (ii) the mitigation value or mitigation requirements of Buyer's Property, (iii) the acceptance of the Conveyed Credits by the Agencies or any other governmental agency as mitigation for the loss of habitat values associated with Buyer's Property, or (iv) any other fact or circumstances which might affect the Mitigation Bank, the Buyer's Property, or the Conveyed Credits. 5. Termination. Time is of the essence in this Agreement. In the event the closing does not occur by the Closing Date, Seller, at its election, and in its sole and absolute discretion, by written notice to Buyer, may terminate this Agreement and neither party shall have any further obligations hereunder except as provided in Paragraph 6 below. 6. Brokers. Buyer represents to the Seller that it has not had any other contract., Nonh County Habitat Bank Mitigation Credit Plll'llhasc Agreement Page2 of 5 03207629-609,CG I v,062607 ( 7 agreement or dealings regarding the Conveyed Credits with, nor any communication in connection with the subject matter of this transaction through, any consultant, broker, agent, finder or other person who can claim a right to a consultant fee, commission or finder's fee from the Seller in coMection with the sale contemplated herein. In the event that a consultant, broker or finder makes a claim for a consultant fee or commission or finder's fee based upon any such contract, agreement, dealings or communication, the party through whom such claim is made shall be solely responsible for and shall indemnify, defend, and hold harmless the other party from and against said commission or fee and al1 costs and expenses (including without limitation reasonable attorneys' fees) incurred by the other party in defending against such claim. The provisions of this Paragraph 6 shall survive the termination of this Agreement. 7. Integration. Buyer and Seller agree that all negotiations, discussions, understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Exhibit attached hereto, and this written Agreement alone fully and completely expresses their agreement with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties relating to the subject matter of this Agreement. Buyer and Seller further agree that Buyer has no responsibilities or obligations whatsoever regarding the Conveyed Credits or the BEI except as are expressly stated in this Agreement. 8. Notices. All deposits and any notice required or permitted to be made or given under this Agreement shall be made and delivered to the parties at the addresses set forth below each party's respective signature. All notices shall be in writing and shall be deemed to have been given when delivered by courier, when transmitted by facsimile (upon confirmation of successfully completed transmission), or upon the expiration of two (2) business days after the date of deposit of such notice in the United States mail, registered or certified mail, postage prepaid. 9. Attorneys' Fees. This Agteement shall be governed and construed in accordance with the laws of the State of California and interpreted as if prepared by both parties hereto. In the event a dispute arises concerning the meaning or interpretation of any provision of this Agreement, or in the event of any litigation arising out of or related to this Agreement, the party not prevailing in such dispute or litigation shall pay any and all costs and expenses inclll1'ed by the other party in establishing or defending its rights hereunder, including, without limitation, court costs, expert witness fees, and reasonable attorneys' fees. 10. Limited Representations and Warranties. Seller is a corporation duly formed, presently existing and in good standing under the laws of the State of Nevada, is qualified to transact business in the State of California, and has the power and authority to own, and does own, the Mitigation Credits, and the power and authority to con_summate the sale of North County Habitat Bank Mitigation Credit Purchase Agreement PageJ of5 03207629-609-CG I v,062607 { 3 Conveyed Credits as contemplated by this Agreement, and the person executing this Agreement has the full authority to bind Seller. This Agreement and all instruments, including assignment and/or conveyance documents to be executed by Seller in connection herewith are or when delivered to Buyer will be duly authorized, executed and delivered by Seller and will be valid, binding and enforceable obligations of Seller, Neither this Agreement nor any instrument, including assignment and/or conveyance documents to be executed by Seller in connection herewith does now or will hereafter constitute a breach or default or invalidate, make inoperative or interfere with any contract, agreement, right or interest affecting or relating in any manner to the Conveyed Credits. The Conveyed Credits shall be assigned/conveyed to Buyer at the closing free and clear of all liens or other encumbrances of any type, monetary or non-monetary. 11. Counterparts. This Agreement may be executed and delivered in any number of identical counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. North County Habitat Bank Mitigation Credit Purchase Agreement Page4 of 5 03207629-609-CG I v.062607 ( City of Carlsbad ATTACHMENT 2 www.carlsbadca.gov 2009 AMENDED MITIGATION CREDIT PURCHASE OPTION AGREEMENT AND ACKNOWLEDGMENT FOR THE NCHB tl<;rth County ~Jf-Habitat Bank MITIGATION CREDIT Attachment 2 PURCHASE OPTION AGREEMENT AND ACKNOWLEDGMENT TIIIS MITIGATION CREDIT PURCHASE OPTION AGREEMENT AND ACKNOWLEDGMENT ("Agreement") is entered into this :[o"-f'-'day of l'Jde.!f:,E/!... • 2009 by and between WESTMARK DEVELOPMENT CORPORATION, a Nevada corporation ("Seller") and CITY OF CARLSl3AD, a municipal corporation of the State of California ("Buyer"). RECITALS A. Pursuant to that certain Banking Establishment Instrument regarding the Establishment, Operation and Use of the North County Habitat Bank dated May 23, 2007 (the "BEi"), by and among Westmark Development Corporation; the California Department of Fish and Game; the United States Fish and Wildlife Service; the United States Environmental Protection Agency, and the United St.ates Army Corps of Engineers (referred to collectively hereinafter as the '1 Agencies"), the Agencies have acknowledged the creation of the North County Habitat Bank (the ''Mitigation Bank") and the· right of Seller to sell "Mitigation Credits11 to mitigate for the loss of wetlands and habitat as provided therein. B. Buyer desires to mitigate the loss of certain wetland/riparian or upland habitat values on real property located in San Diego County California commonly known as Emergency Channel Dredging for Agua Hedionda Creek (the "Buyer's Property") to satisfy Buyer's obligations with respect to wetland/riparian or upland habitat on Buyer's Property and to obtain permits and approvals to develop Buyer's Property. - C. Buyer has agreed to purchase from. Seller, and Seller has agreed to sell to Buyer 1.138 credits oflJnited State& Army Corps of Engineers/California Department of Fish and Game Enhanced Wetland/Riparian Mitigation and 2.422 credits of California Department of Fish and Game Enhanced Wetland/Riparian Mitigation as defined in the BEi (the °Conveyed Credits") from the Mitigation Bank on the tenns and conditions set forth herein. 3.56 Credits equal 3.56 acres of Wetland/Riparian Enhancement. D. Buyer acknowledges that Buyer understood and concurred that Buyer's previous purchase of 5.0 credits of crel\ted Wetland/Riparian Mitigation Credits represented 1.67 acres North county HabJtal Bank Mitigation Credit Purchase Agreement P.age 1 of 5 03207629.$09-CG 1 v.100309 of US. Army Corps of Engineers and California Department of Fish and Game created/restored mitigation habitat consistent with the BEi. AGREEMENT 4 NOW, THEREFORE, in considerat~on of the agreements and acknowledgments set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowle4ged, Seller aod Buyer hereby agree and acknowledge as follows: 1. Purchase Price. The purchase price for the 1.138 credits of United States AJ·my Corps of En~ineers/California Department of Fish and Game Enhanced Wetland/Riparian Mitigation and 2.422 credits of California Department of Fish and Game Enhanced Wetland/Riparian Mitigation shall be $150,000.00. The Purchase Price shall be paid in good funds on the Closing Date. These terms shall expire if this contract is not executed on or before October JO, 2009. 2. Acknowledgment of Sale. Ot1 the Closing Date, Sel.ler shalt deliver a fully executed original of the Acknowledgment of Sale of Mitigation Credits (" Acknowledgment"), in form and content as Exhibit A attached. hereto and such other documents and instruments as may be required by any oftbe Agencies t.o evidence and recognize the transfer of the Conveyed Credits to Buyer. Moreover, Seller agrees that to the extent such have rtot been provided to Buyer'at the closing, then if requested by Buyer subsequent to the closing, Seller will provide such documents and instruments as may be required by any of the Agencies to evidence and recognire the transfer of the Conveyed Credits within ten (10) days following Buyer's request The provisions of this Paragraph 2 shall survive the closing and termination of this Agreement. 3. Acknowledgement. By signing this Agreement, B4yer acknowledges that Buyer understood and concurred that Buyer's l)Cevious purchase of 5.0 credits of created Wetland/Riparian Mitigation Credits repr&ented 1. 67 acres of U.S. Anny Corps of Engineers and California Department of Fish and Game created/restored mitigation habitat 4. Option Period On the date Buyer presents such Agreement t.o the Seller, such action shall constitute Buyer entering into an Option Period for purchase of the 1.138 credits of United States AJ-my Corps of Engineers/C~ifornia Departme.nt of Fish and Game Enhanced Wetland/Riparian Mitig~tion and 2.422 credits of California Department of Fish and Game Enhanced Wetland/Riparian Mitigation for a period of 60 days. Oa or before the 60th day of said Option. Buyer shall deliver funds equal to the Purchase Price t.o Seller. If Buyer fails to deliver the Purchase Price t.o Seller by the 60th day of the Option Period, and this Agreement is not amen.ded t.o the contrary, this Agreement shall be nu1l and void. 5. Closing. The date of delivery of the Purchase Price shall be deemed the "Closing Date1'. The closing shall mean the date that the Purchase Price is delivered to Seller and the North County Habitat Ba.nk Mitigation Credit Purchase Agreement Page 2 of5 03207$29-609--CG1 v.100309 fully executed Acknowledgment of Sale of Mitigation Crediis is delivered to Buyer. Notwithstanding the foregoing, Buyer may accelerate the Closing Date . . 6. AS-IS Sale. Buyer acknowledges and agrees that: (a) it is the Buyer's sole responsibility to detennine the acceptance of the Conveyed Credits by the Agencies as mitigation for impacts to wetland/riparian va1ues, and any completed sale of any Conveyed Credits shall be final; (b) the purchase and sale of the Conveyed Credits shall be made on an "AS IS, WHERE IS, WITH ALL FAULTS" basis as provided for in the BEI; and c) no representations or warra11ties have been made or are made and no responsibility has been or is assumed by Sel1er or by any officer, agent, affiliate, attorney, or representative acting or purporting to act on behalf of Seller as to (I) the mitigation value of the property conveyed to the Agencies in establishing the Mitigation Bank; (ii) the mitigation value or mitigation requirements of Buyer's Property, (iii) the acceptance of the Conveyed Credits by the Agencies or any other governmental agency as mitigation for the loss of habitat values associated with Buyer's Property, or (iv) any other fact or circumstances which might affect the Mitigation Bank, the Buyer's Property, or the Conveyed Credits. 7. Termination. Time is of the essence in this Agre~ment. In the event the closing does not occur by the Closing Date, ~eller. at its election, and in its sole and absolute discretion, by written notice to .Buyer, may terminate this Agreement and neither party shall have any further obligations hereunder except as provided in Paragraph 8 below. 8. Brokers. Buyer represents to the Seller that it has not had any other contract, agreement or dealings regarding the Conveyed Credits with, nor any communication in connection with the subject matter of this transaction through, any consultant, broker, agent, finder or other person who can claim a right to a consultant fee, commission or finder's fee from the Seller in connection with the sale contemplated herein In the event that a consultant, broker or finder makes a claim for a consultant fee or commission or finder's fee based upon any such contract, agreement, dealings or communication, the party through whom such claim is made shall be solely responsible for and shall indemnify, defend, and hold harmless the other party from and against said commission or fee and all costs and expenses (including without limitation reasonable attorneys' fees) incurred by the other party in defending against such claim. The provisions of this Paragraph 8 shall survive the termination of this Agreement. 9. Integration. Buyer and Seller agree that all negotiations, discussions, understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Exhibit attached hereto, and this written Agreement alone folly and completely expresses their agreement with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties relating to the subject matter of this Agreement. Buyer and Seller further agree that Buyer has no North County Habitat Bank Millgatton Credit Purchas" Agreement Page 3 of5 0320762~09-001 v.100309 responsibilities or obligations whatsoever regarding the Conveyed Credits or the BEI except as a,e expressly stated in this Agreement . . 10. Notices. All deposits and any notice required or permitted to be made or given under this Agreement shall be made and delivered to the parties at the addresses set fonh below each party's respective signature. All notices shall be in writing and shall be deetned to have been given when delivered by courier, when transmitted by facsimile (upon confinnation of successfully completed transmission), or upon the expiration of two (2) business days after the date of deposit of such notice in the United States mail registered or certified mail, postage prepaid. 11 . Attorneys' Fees. This Agreement sba11 be governed and construed in accordance with the laws of the State of California and interpreted as if prepared by both parties hereto. In the event a dispute arises concerning the meaning or interpretation of any provision of this Agreement, or in the event of any litigation arising out of or related to this Agreement, the party not prevailing in such. dispute or litigation shall pay any and all costs and ex.penses incurred by the other party in establishing or defending its rights hereunder, including, without limitation, court costs, expert witness fees, and reasonable attomeys' fees. 1Z. · Limited Representations and Warranties. Seller is a corporation duly formed, presently existing and in good standing under the laws of the State of Nevada, is qualified to transact business in the State of California, and has the power and authority to own, and does own, the Mitigation Credits, and the power and authority to consummate the sale of Conveyed Credits as contemplated by this Agreement, and the person executing th.is Agreement has the full authority to bind Seller. This Agreement and all instruments, including assignment and/or conveyance documentS-to be executed by Seller in connection herewith are or when delivered to Buyer will be duly authorized, executed and delivered by Seller and will be valid, binding !lnd enforceable obligations of Seller. Neither this Agreement nor any instrument, including assignment and/or conveyance docwnents to be executed by Seller in connection herewith does now or will hereafter constitute a breach or default or invalidate, make inoperative or interfere with any contract, agreement, right or interest affecting or relating in any manner to the Conveyed Credits. The Conveyed Credits shall be assigned/conveyed to Buyer at the closing free and clear of all liens or other encwnbrances of any type, monetary or non-monetary. 13. Counterparts. This Agreement may be executed and delivered in any number of identical counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. North County Habitat Bank Mitigation CredH Purc:hasa Agreement Paga 4 of5 03207629.S09-CG1 v,100309 ( City of Carlsbad ATTACHMENT 3 2007 BANK ENABLING INSTRUMENT FOR THE NCHB www.carlsbadca.gov 03/26/2016 04:48 FAX Attachment 3 . _). JIANK ENABLING INSTRUMENT _ for the : NORm COUNTY HABITAT BANK Carlsbad, San Diego Coupty, California April 30, 2007 This Bank Enabling Instrument {"BEi") made this 1,,1_ day of~ 2007, regarding tho establishment; use, operation, and maintenance of the North County Mitigation/ Conservation Bank (''Bank') is made and entered into by and among Westmark Development Corporation {''Bank Sponsor'' IIJld "Property Owner"), the Los Angeles District ofthe U.S. AnnyCol'Jls ofEng"ineers ("USACE"), Region IX of the U.S. Environmental Protection Agency ("USEPA"), the Carlsbad field office of the U.S. Fish & Wildlife Service ("USFWS''), and the S01.1th Coast !legion (i.e., Region S) of the California Department of Fish & Gamo ("CDFG"). The state and federal agencies named above comprise "8d arc ref erred to jointly as lhe Mitigation Bank Review team ("MBRT"), and the Bank Sponsor and the MBRT are hereinafter referred to jointly as the "Parties.,. Recitals A. The Bank Spons~r is the person or entit)' responsible for estabUshlna and operatine the Bank. 8. The Property Owner is the owner ofreaJ property containing approximately 18.7' acres (the ."Property''), located just south of Palomar Airport tload In the City of Carlsbad, San Diego County, State ofC~ifomia, designated Assessor's ,Parcel No. 211-040-33. The Property is generally shown and legaily descnbed in Exhibit A (Barde Location Maps) and in Exhibit E-1 (Preliminary Title Report, Legal Description, and Parcel Maps) atta0hed hereto. Westmark Development Corporation, as Bank S'ponsor and Property Owner, desires to create a mitigation/conservation bank over ll 15.7-acre p0rtion of the Property (the "Bank Property"). The Bank Property is generally shown in Exhibit A and described in 8xh.t,1>it C (llestoration Plan). . C. The CDFG has jurisdiction over the conservation, protection, and manag111nent of fl.sh, wildlife. native plants, and the habitat necessary for biologically sustainable poP,ulatlons of these species pursuant to Fish and Game Code sec. 1802; and other provisions of state law. D. The USFWS, an agency within the United Sfales Department of the Interior, has jurisdlctioJI over the conservati.011. protection, restoration and management of fish. wildlife, native plants, and the habitat.necessary for biologically sustainable populations ot'ahese specie:. within the United States pursuant to the Endangered Sl)C(lies Act, 16 U.S.C. §1531, et .!'eq., die Flsh and.Wildlife Coordination Act, 16 U.S.C. §.661-666c,tbc Fish. and Wildlife Act of 1956, l6'U.S.C. § 742(t), et seq., and other provisions of federal law. . E. The USEPA and USACE have jurisdiction 011cr waters oftbe United States, pursuant 10 the Clean Water Ao, 33 µ.s .c. § 1251 et seq. Waters of the United States includes jurisdictional wetlands . _..., ____________ ., ____________ ---________ ............. --•---------~ ---·-·· F. The MBRT is an interagency group which oversees the establishmeot, use, operation, and maintenance of the Bank. G . The goals and objectives for the Bank are set forth in Exhibit C (Restoration Plan) and Exhibit D (Long Term Management Plan). H. The Bank Property, formerly used for ranching and farming, is bisected longitudinally by Encinas Creek, with the southeastern corner of the site sloping up from the creek, and with portions of the site heavily infested with pampas grass (Cortaderia selloana). The site is within the Encinas Creek floodplain and provides groundwater recharge, filtration of surface and sub-surface flows, habitat that supports wildlife, and sediment transport. A general baseline description of Bank resources is provided in Exhibit H (Biological Resources Survey) and Exhibit 1 (Wetland Delineation Verification Letter). NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration~ the receipt and sufficiency of which is hereby acknowledged, the Parties agree to the following. I. PURPOSE AND AUTHORITIES A. Purpose. The purpose of this BEI is to establish guidelines and responsibilities for the establishment, use, operation, and maintenance of the BanJc to compensate, conserve, and protect Waters of the United States and Covered Habitat. The Bank Sponsor and Property Owner shall preserve, create, restore, and/or enhance and then manage and maintain Waters of the United States and Covered Habitat in accordance with the Restoration Plan and Long Term Management Plan. B. Authorities. The Bank is available to be used for off-site compensatory mitigation or conservation for unavoidable impacts to waters of the United States and Covered Habitat, governed by the following regulations, policies, and guidance. I. Federal: a. Clean Water Act("CWA") (33 USC§ 1251 et seq.); b.Riv ers and Harbors Act (33 USC 403); c. NatfonaJ Environmental Policy Act ("NEPA") ( 42 USC § 4321 et seq.); d.Fish a nd Wildlife Coordination Act (16 USC§ 661 et seq.); e. Endangered Species Act {''ESA") ( 16 USC § 1531 et seq.), particularly including impacts to federal listed threatened or endangered species under sections 7 and 10 of the Endangered Species Act and/or occupied habitat; f. Executive Order 11990, Protection of Wetlands; Page2o/25 2 BEi for the North County Mitigation Bonk, Carlsbad ----·-....... -·~--.. ----··~ ---------.. -- g.E xecutive Order 11988, Floodplain Management; h.Reg ulatory Programs of the Corps of Engineers, Final Rule (33 CFR Parts 320-331 ); i. Guidelines for Specification of Disposal Sites for Dredged and Fill Material (40 CFR Part 230); j. Memorandum of Agreement between the Environmental Protection Agency and the Department of the Army concerning the Detennination of Mitigation Under the Clean Water Act, Section 404 (b)(l) Guidelines (February 6, 1990); k.Federal Guidance for the Establishment, Use, and Operation of Mitigation Banl<s (60 F.R. 58605 et seq.) (November 28, 1995); I. Guidance for the Establishment, Use and Operation of Conservation Banks (United States Department of Interior Memorandum, dated May 2, 2003); and m. Regulatory Guidance Letter 02·2, dated December 24, 2002, titled "Guidance on Compensatory Mitigation Projects for Aquatic Resource Impacts under the Corps Regulatory Program Pursuant to Section 404 of the Clean Water Act and Section JO of the Rivers and Harbors Act of 1899 ." 2. State: a. California Environmental Quality Act ("CEQA") (Public Resources Code Section 21000 et seq) and State CEQA Guidelines (Tit. 14 Cal. Code Regs., Chapter 3); b.Calif ornia Endangered Species Act ("CESA") (Fish & Game Code Section 2050 et seq.); c. California Natural Community Conservation Planning ("NCCP") Act (Fish & Game Code Section 2800 et seq.); a.Fish & Game Code Section 1600 et seq (Fish and Wildlife Protection and Conservation); and e. Official Policy on Conservation Banks, April 7, 1995, by California Resources Agency and California Environmental Protection Agency, jointly. II. DEFINITIONS The initially capitalized terms used and not defined elsewhere in this BEi are defined as set forth below, A. "Bank Closure Plan," means a plan designed to ensure that the Bank is managed and maintained, in perpetuity, consistent with the purpose of the Bank. The Bank Closure Plan is comprised of the Section in the Restoration Plan entitled Bank Closure, and Section X in this BEi. The Bank Closure Page3 o/25 3 BET/or lite North Coiml)I Mitigation Bank, Carlsbad ----------------------·-·-·-·-·-~~--· Plan describes actions required to close the Bank following the sale of the last authorized Credit and identifies and describes the long-tenn proposals for and responsibilities of the Bank Sponsor, Property Owner, Bank Manager, endowment holder, and beneficiaries. B. "Bank Establishment Date" means the date when (a) this BEi is signed by all Parties (i.e., the Effective Date of this BEl) and (b) the Conservation Easement over the Bank Property bas been recorded or the owner has provided to CDFG an executed Conservation Easement in a form approved by the MBRT along with all supporting documentation. C. "Bank Manager" or "Long-Term Manager" is any person or public or private entity responsible for managing the Bank and its habitat in perpetuity using the annual interest payments from the Endowment Fund as capital. The Bank Manager assumes responsibility for long-tenn management upon Bank closure. The Bank Manager may become the Property Owner before Bank closure under Section Xlll.F.ofthis BEI. D. "Bank Property" is a site where a specified number of acres of Waters of the United States and Covered Habitat are created, restored, enhanced, and, in certain circumstances, preserved. Based on the specified acreage, the Bank accrues Credits available for compensatory mitigation in advance of authorized impacts to similar resources. A Conservation Easement (Exhibit E-4) will protect the Bank Property. E. "Bank Sponsor" means any person or public or private entity responsible for establishi.n,g and operating the Bank. At the time of Bank establishment, and until transfer of the Bank Property under the terms of this BEi, the Property Owner is the Bank Sponsor. F. "BEI" means Bank Enabling Instrument, which is this document and all Exhibits, incorporated by reference. G. "Catastrophic Event" shall mean an event, such as a spill of hazardous or toxic substance, the impact of a vehicle or falling aircraft, or a fire, which has a material and detrimental impact on the quality of native vegetation, soils, or wildlife on tbe Bank Property and over which the Bank Sponsor or Property Owner has no control. H. "CEQA" means the California Environmental Quality Act (California Public Resources Code Sections 21000 et seq.; guidelines for implementation at California Public Resources Code Sections 15000 et .seq.), including all regulations promulgated pursuant to that Act. I. "CESA'' means the California Endangered Species Act (California Fish and Game Code Sections 2050 et seq.), including all regulations promulgated pursuant to that Act. Page4o/2J 4 BEi/or the Nor//, County Mitigation Bank, Corlsbod ------------------•J-••· 11'1: • --·-·--, .. ~-..... -· .. ---,---·-~-,.-.,. ........ -- J. "CNLM'' means the Center for Natural Lands Management, the Long-Term Manager of the property, K. "Conservation Easement" means a perpetual conservation easement, as defined by California Civil Code§ 815.1, in the form of Exhibit E-4. L. "Contingency Fund" means a fund (in a form acceptable to the MBRT) established by the Bank Sponsor for any required remediation as outlined in Sections V.A.2 and VIII. M. ''Covered Habitat'' means: (i) riparian and wetland habitat and (ii) those additional habitats, if any, within the Service Area(s), the loss of which the MBRT determines can be adequately mitigated for by acquisition of Credits from the Bank. Covered Habitat includes the CDFG Credits listed in Table 1. N. "Credit" is a unit of measure representing the accrual of acres of created, restored, enhanced, or preserved Waters of the US or Covered Habitat on the Bank Property; one Credit here is equivalent to one acre or as otherwise defined in the Restoration Plan. Credits in the Bank serve as mitigation or conservation for agency-approved projects within the Service Area. The minimum Credit unit that may be sold or obligated is 0.1 Credit. 0. "Endowment Deposit" is money to be deposited in the Endowment Fund in order to fully fund the endowment principal. P. "Endowment Fund" means an investment fund maintained in trust by the Center for Natural Lands Management e'CNLM"). The Endowment Fund shall be non-wasting; that is, the principal amount shall not decrease in value through expenditure, inflation, or investment strategy, and therefore, using an appropriate inflation adjustment, such as the Consumer Price Index, a portion of the interest and earnings on the principal balance shall be re-invested into the endowment principal to account for inflation. The remaining interest and earnings on the principal balance shall be used exclusively for the management of the Bank Property after Bank closure and in accordance with the terms of the BEI and Management Plan. Q. "Force Majeure" shall mean war, insurrection, riot or other civil disorders, flood, earthquake, disease, fire, governmental restriction or the failure by authority, or any injunction, which bas a material and detrimental impact on the Bank Property, provided, however, that: (i) a riot or other civil disorder shall constitute an event ofForce Majeure only if the event has broad regional impacts and is not endemic to the Bank and its immediate locale; (ii) a flood shall be considered an event of Force Majeure only if it is greater than a presently projected 100-year flood, where "flood" refers to a runoff event; (iii) an earthquake shall constitute an event of Poree Majeure only if the ground motion it generates at the Bank is greater than that presently _ projected from an earthquake with a return period of 475 years; (iv) disease Page5 o/25 5 BEi for the North County Mitiga/ion Bank. Carlsbad ______________________ ,.,. __ ,...,_, ____ -------.............. ___________ _ shall constitute an event of Force Majeure only if such event has broad regional impact and is not·endemic to the Bank and its immediate locale; and (v) governmental restriction or the failure by any governmental agency to issue any requisite permit or authority, or any injunction or other enforceable order of any court of competent jurisdiction, shall not constitute an event of Force Majeure unless there is no other feasible means of remediation. R. "Habitat Creation" is the establishment of wetland and/or other aquatic resources in an area that does not provide wetland hydrology or support wetland habitat, but will be physically modified and vegetated to do so. S. "Habitat Enhancement" is a set of activities conducted in existing resources which increases one or more biological function; here, enhancement will increase the biological value of the native riparian habitat which currently supports some native species (25 to 75 percent total native species cover) but is otherwise infested with non-native species. T. "Habitat Preservation" is the protection of existing habitat through placement of a Conservation Easement and providing long-term management funded by the Endowment Fund. Preservation may include protection of upland areas adjacent to wetlands as necessary to ensure protection and/or enhancement of the riparian and aquatic ecosystem. Preservation Credits are assigned on the basis of specific values as described in Exhibit C. U. "Habitat Restoratjon" is the re-establishment of habitat resource characteristics and functions in areas where they have ceased to exist or exist in a substantially degraded state. Habitat Restoration on the Bank Property shall occur through the removal of non-native species (e.g.1 pampas grass). Because none of the areas occupied by pampas grass are considered USACE wetlands, the USACE will consider its removal as creation. CDFG will consider the removal of pampas grass as restoration; and when appropriate, on a case~by-case basis, will allow the use of restoration Credits to meet the State's no-net-loss requirement. Created/Restored wetlands will be fully assessed as described in Exhibit C. V. ''Long-tenn Management Period" means the period of management beginning after the Restoration Phase and in perpetuity pursuant to the approved Management Plan and the Property Analysis Record defined below. W. "Long-term Management Plan" ("Management Plan") means the plan developed for implementation to ensure tbat the Bank is managed and maintained, in perpetuity, consistent with the purpose of the Bank, attached as Exhibit D-2. X. "MBRT'' means Mitigation Bank Review Team, an interagency group of Page 6 o/25 6 BEi for the North Co,mty Mitigation Barrie, Carlsbad ---------......... -----•---·----. ··--· _, _________ _ federal, state and /or local agency representatives which oversee the establishment, use, and operation of the Bank. Y. ''NCCP" is a Natural Community Conservation Plan created pursuant to Fish and Game Code, Section 2801, el seq. An NCCP is a plan developed in accordance with the NCCP Act, which provides comprehensive managenrent and conservation of multiple habitats and plant and wildlife species, and which identifies and provides for the regional or area-wide protection and perpetuation of natural diversity while allowing compatible and appropriate development and growth. Z. "Perpetuity" means an indefinite period of time; forever. AA. "Preservation" means the protection of existing ecologically important habitat or other ecosystem resources in perpetuity. BB. "Property Analysis Record" ("PAR") is an analysis that, based on assumptions it identifies, determines the amount of money to be placed in the Endowment Fund; it also provides a schedule for funding, and for utilizing available earnings from, the Endowment Fund. The PAR, developed by CNLM, contains the transaction dates for payment and release of the financial assurances and shows the amount estimated to be provided from the Endowment Fund, shown as an annual amount for every year of long-term management funding into the future, including at least the minimum number of years necessary to show at least one cycle of replacement for all capital expenditures. CC. ''Property Assessment and Warranty" means a written and signed evaluation, legal description and depiction, and the number of acres of the Bank Property. This Property Assessment shall describe any recorded or unrecorded rights-of-way, recorded or unrecorded easements, and recorded or unrecorded liens or other encumbrances that may prevent establishment of a Conservation Easement on the Bank Property in accordance with California Civil Code Section 815 and this BEL Plat maps depicting encumbrances and improvements are included as part of this Property Assessment. DD. "Property Owner" means the legal owner of the Bank Property in fee simple; at the time of Bank establishment, and until transfer of the Bank Property under the terms of this BEi, the Property Owner is the Bank Sponsor. EE. "Remediation" means corrective measures taken to ameliorate damage to or impact on the Bank Property or fencing around it, or non-conformance to the Restoration Plan, Management Plan, Conservation Easement. or any other portion of this BBi. FF. "Restoration Phase" means the period of time prior to full fund.in~ of the Page 7of15 7 BEi for 1/ie Nur//1 Ccu1t1y Miligolion Ba,ik, Carubad ·--------~,~·--... -.. ., ... ,_.,__ -------· _ ... -.......... Endowment Fund plus one year for interest accrual or the time required to meet five-year success criteria, whichever is greater. During this period, the short-term management, monitoring, and reporting activities will be implemented as described in the Restoration Plan. GG. ''Restoration Plan" means the document that describes the proposed activities conducted during the Restoration Phase of the Bank to establish the Credits. The Restoration Plan describes the creation, restoration, and enhancement of habitat (i.e., the schedule, planting scheme, plant palette, and monitoring procedures), the habitat establishment period, the success criteria to obtain successful habitat establishment, monitoring to evaluate the success, and reporting. The Restoration Plan also includes the provisions for interim management and monitoring. HH. "Restoration Specialist" is the person or entity, employed and directed by the Bank Sponsor, with requisite professional credentials, to implement the Restoration Plan. II. "Service Area'' means the geographic area(s) within which impacts that occur to Waters of the United States or Covered Habitat may be mitigated through the acquisition of Credits in accordance with this BEl. JJ. "Unlawful Act'' shall mean the unlawful act of another and shall include an event or series of events, such as the intentional dumping within the Bank, or any connected watercourse, of a hazardous toxic substance, or the discharge of such a substance by any person or entity other than the Property Owner or Bank Sponsor in violation of a statute, ordinance, regulation or permit, which event or series of events has a material and detrimental impact on the water quality, native vegetation, soils, fish, or wildlife of the Bank Property. ID. STIPULATIONS A. Baseline Conditions. The current condition of the Bank Property is described in the Restoration Plan (Exhibit C) and Biological 'Resources Survey (Exhibit H). B. Disclaimer. This BEJ does not in any manner limit the statutory authorities or responsibilities of the MBRT, but is, instead, an implementation of such statutory authorities and responsibilities. C. Exhibits and Appendices. The following exhibits, and all subsequent revisions and addenda to the Exhibits hereto, are attachments incorporated by reference into this BEL Exhibit A -Bank Location Maps Exhibit B -Service Area Map Exhibit C -Restoration Plan Exhibit D -Bank Management and Operation D-1 Property Analysis Record (PAR) Page8of25 8 ---~·---------·----" . BEi for 1he North CouHty Mitigation Bank, Corlsbod ---------'"'""'--"- 32 D-2 Long-Term Management Plan (Management Plan), including the Bank Closure Plan ExbibitE -Real Estate Records and Assurances E-1 Preliminary Title Report, Legal Description, and Parcel Maps E-2 Bank Property Assessment and Warranty E-3 Plat Maps E-4 Approved-as-to-form Conservation Easement E-S Title Insurance policy Exhibit F -Bank Crediting and Credit Sales F-1 Credit Table F-2 Credit Sale Ledger F-3 Credit Purchase Agreements F-4 Credit Purchase Payment Receipt Exhibit G -Phase I Environmental Site Assessment Exhibit H -Biological Resources Survey Exhibit I-Wetland Delineation Verification Letter IV. EVALUATION, ACCEPTANCE, and ESTABLISHMENT OF THE BANK Representatives of the MBRT have inspected and evaluated the Waters oftbe United States and Covered Habitats on the Bank Property, and have agreed upon the assignment of Credits based on the Bank Property's biological, chemical, and physical functions as described in Section VI and detailed in Exhibits C and H. A. Bank Sponsor's Performance. The Bank Sponsor agrees to perform all necessary work, in accordance with the provisions of this BEI, to establish the 15.7 acres of Waters of the United States and Covered Habitats, as proposed in Exhibit C, until it is demonstrated to the satisfaction of the MBRT that the Bank comp Lies in all respects with all conditions contained herein. The Bank Sponsor agrees to be responsible for all costs associated with the establishment of the Bank, including but not limited to construction, remediation, documentation, maintenance, management, monitoring, and reporting, until one year after the Endowment Fund is fully funded and all success criteria are met. B. The Bank will be considered established and Credit sales may begin only upon completion of the following: l. Signature of the BEl by all Parties; and 2. Recordation of the Conservation Easement or the owner has provided to CDFG an executed Conservation Easement in a form approved by the MBRT along with all supporting documentation. C. Modification of the Restoration Plan. Creation, restoration, and enhancement of habitat on the Bank Property will be perfonned as described in Exhibit C, and the Credits will become available in accordance with the schedule specified in Section VI of this BB.I. 1n the event that the Bank Sponsor determines that modifications must be made in the Restoration Plan to ensure successful establishment of habitat on the Bank Property, or in order to comply with specific permits or other authorizations needed to establish the Bank, the Bank Sponsor shall submit a written request for such modifications to the MBRT. Page 9 of25 9 BBi for the North Co11nty Ml//[:t1tiOn Bank. Carlsbt:/11 -----·------~---------·----~-···--·"--·------------ V. FINANCIAL ASSURANCE REQUIREMENTS A. The Bank Sponsor is responsible for providing financial assurances for all Bank establishment, management, monitoring, and remediation. The Bank Sponsor agrees to provide the following assurances for the work described in this BE!. Page /0af25 1.Cons truction Security. Because all specified grading and related implementation work has been completed prior to the release and sale of Credits, no Construction Security is requfred. 2.Conting ency Fund. A sum ofnot less than $250,000 shall be deposited in an interest-bearing escrow account to be termed "Contingency Fund." The funds are to be used by the Bank Sponsor, or by a third party to be designated by the USACE and CDFG, to rectify failures, as detennined by the MBRT, by the Bank Sponsor to comply with one or more tenns of this BEL The Contingency Fund shall be funded by depositing 15 percent of the gross proceeds of each Credit sale into the interest-bearing account, up to the $250,000 Contingency Fund total. Contingency Funds shall be released to the.Bank Sponsor, under the direction of the USACE, and in consultation with the MBRT, in $50,000 increments based on meeting yearly success criteria, with releases not to deplete the fund below the amount determined by the MBRT to be necessary to rectify unforeseen events. In the event that the remaining Contingency Funds are not used after five years from the Bank Establishment Date, and the MBRT determines the Bank bas achieved the success criteria, the funds shall be returned to the Bank Sponsor. 3.L ong-term Management Endowment Fund. A sum of not less than $499,356 will be placed in an interest-bearing escrow account to be known as the "Endowment Fund" to be used for the in-perpetuity management of the Bank Property. The amount to be deposited into the Endowment Fund was calculated using a PAR. The Endowment Fund shall be funded through the sale of Credits from the Bank, with 25 percent of the gross proceeds of each Credit sale to be deposited into the Fun!} until it is fully funded. The Fund shall also meet funding benchmarks before each new Credit release. The Bank Sponsor shall fund any shortfall between the amount provided through Credit sales and the benchmark to be funded through additional endowment deposits before each new Credit release, according to the following schedule. a. A minimum of25 percent of the Endowment shall be funded prior to the second Credit release. b. A minimum of 60 percent of the Endowment shall be funded prior 10 BEi for the Norlh County MllfgoJ/on Bank. Carlsbad ---~------------·-····•--·-·-~---4 ---·---·----~------- 34 to the third Credit release. c. One hundred percent of the endowment shall be funded after three years from the Bank Establfshme,nt Date or prior to the release of the last Credit, whichever occurs first. d. The Bank Sponsor shall notify each member of the MBRT of each Endowment Deposit made, concurrent with tbe notification of Credit sales in Section IX.C. of this BEI. 4. After the Fund is fully funded, and at the time the Bank Property is transferred to the Long-Term Manager, the Endowment Fund shall be transferred to the Long-Term Manager solely for managing and maintaining the Bank Property in perpetuity. 5. The cost oflong-teon management of the Bank Property may be adjusted based on actual annual cost of maintenance that will be provided by the Bank Sponsor in the monitoring reports. The USACE, CDFG, the Long Term Manager, and the Bank Sponsor must mutually agree upon any adjustments before they are made. VI. BANK HABITAT ESTABLISHMENT ASSESSMENT METHODOLOGY, SUCCESS CRITERIA, AND CREDIT RELEASE SCHEDULE. A. Summary of Anticipated Credits. The Bank Sponsor will establish and/or enhance 12.85 acres of aquatic and riparian habitat in accordance with the provisions of th is BEi, and shall then maintain the Bank Property in such condition until the 5- year success criteria have been met in accordance with the ~ank Closure Plan or until all Credits are sold, whichever is later. As presented in Table 1 and Exhibit C, the Bank Property shall consist ofa total oft 5.7 acres and include conserved habitats totaling 6.78 acres of riparian forest (includes 0.21 acre of mule fat scrub), 1.0 I acres of Diegan coastal sage scrub, J .38 acres of sage scrub chaparral, and 0.45 acres of non-native grassland, and created habitats totaling 6.07 acres of riparian forest. lt is anticipated that a minimum of 4.0 of the 6.07 acres of creation/restoration Credits will meet the USACE wetland definition when the restoration is completed. Additionally, based on increased wetland hydrology resulting from the removal of pampas grass, it ls anticipated that at least 3.0 acres of the preservation/enhancement Credits will meet the USACE wetland definition. AlJ of the 6.07 acres of wetland creation/restoration Credits and 6.78 acres of riparian enhancement Credits will meet the CDFG Waters of the State definition. Riparian areas not considered Waters of the U.S. may, at VSACE discretion, be given mitigation credit as vegetated buffers to Waters of the U.S. B. Assessment Methodology. Credits will be assigned based on the type of mitigation (creation, restoration, enhancement, and preservation) and timing of the mitigation implementation. Page 11 o/25 11 BE/for the North County Mitigation Bank, Carlsbad Table 1 Mitif!ation Credits (acres) Credit Type USACE and CDFG CDFG CDFG Upland Wetland Creation/Restoration 4.0 2.07 Enhancement Riparian (CDFG)/ 6.78* Vegetated Buffer (USACB) *(3 USACE wetland) Preservation 2.84 Table 2 summarizes the mitigation type and associated ratio based on meetiQg success criteria for a given year in the five-year monitoring period. Table 2 Mitigation Type Mitigation Credit Ratio Year 1+ Year2+ Year 3+ , Year4+ Year 5-t Creation 0.4:1 0.6:1 0.8:1 · 0.9:1 1:1 Restoration 0.4:1 0.6:I 0.8:1 0.9:1 1:1 Enhancement 0.4:1 0.6:1 0.8:1 0.9:1 1:1 Preservation 0.5:l 0.5:I 0.5:1 0.5:1 0.5:l ' Represents meeting that year s success criteria The mitigation Credit ratio will determine mitigation needs for a given project. For example, if a project impacts 1.0 acre of habitat, it would be required to purchase 2.5 Credits that have met first-year success criteria (2.5 Credits x 0.4:1 = l acre). 1.25 Credits would need to be purchased if the third-year success criteria had been met (1.25 Credits x 0.8: l = l acre). If the Bank has met five-year success criteria, acquisition in the Bank would result in no net loss of habitat functions and values, and as a result 1 acre of Credit would be required for each acre impacted. Final project mitigation ratios will be determined on a case-by- case basis by the pennitting agency(ies). Under this methodology, the number of Credits available will be fixed at 15.7 Credits. The "value" of those Credits will be determined based on the methodology described above. A J: 1 mitigation Credit ratio will be given for habitats that have been fully restored and meet five-year success criteria. Because some or all of the Credits may be sold prior to completion of the five-year monitoring effort, the full value of the Bank may not be achieved, although the full biological value of the Bank will be achieved, regardless, at the completion of the five-year monitoring effort, or when five-year success criteria have been met. Upland Credits shall be available at a l : 1 ratio fo r eacb acre of mitigation required. C. Success Criteria. The success criteria listed in Tables 3 and 4 shall be used to assess project success, and may be met in less than the five-year ti.me frame upon the pennitting agencies' approval and concurrence by the MBRT. When all Page 12 o/25 12 BEi for the North County Mit/gatior, Bofl}c, Carlsbad ____ ..,_ _____________ , ... , _ __.._ ---~--------··-·--·· .... ~ ...... ------~ ........ -·~- success criteria are met, the creation, restoration, and enhancement efforts on the Bank Property shall be deemed complete. Table 3 Plant Species Diversitv Milestones for Riparian Woodland Success Criterion Year 3 I 4 I 5 Plant Species Diversity 6 I 8 I 10 Table 4 Ve2etative Success Criteria (oercent) Habitat/Parameter Year 3 4 5 Freshwater marsh Total cover 60 70 80 Riparian forest Total cover 60 70 80 Tree cover 35 55 65 Shrub cover 30 40 50 Herb cover 50 40 30 Mule fat scrub Total cover 55 65 75 Shrub/tree cover 30 45 60 Herb cover 50 40 30 All habitats Weed cover 10 10+ 8 / o+ 510+ + T here shall be zero tolerance for the most invasive species listed by the California Invasive Plant Council (e.g., pampas irrass). D. Release of Habitat Creation, Restoration, and Enhancement Credits 1. Habitat Creation, Restoration, and Enhancement Credits, including both Waters of the United States Credits and Covered Habitat Credits, shall be released, as described below, based upon attainment of the success criteria summarized above and more fully described in Exhibit C. No subsequent Credit releases may occur until the prior Credit release has occurred. Credit releases shall occur according to the following schedule. Page JJo/25 a. 25 percent of the Credits upon the Bank Establishment Date; b. 35 percent of the Credits upon attainment of Year Two success criteria; c. 20 percent of the credits upon attainment of Year Four success criteria and recordation of the approved Conservation Easement; 13 BE/for the North County Mitigation Bank, Carlsbad -----,--•~-"'"'"'""------• .. ·-··-·--------- 37 d. Balance of the credits upon attainment of Year Five success criteria. 2. Each Credit release, with the exception of the first, is subject to the BanJc Sponsor's submission of a yearly monitoring report in accordance with Section IX. A., a site visit by the MBRT at the appropriate time of year, and approval by the MBRT. 3. Failure to meet success criteria will reduce the number of Credits available for release. The Bank Sponsor shall revise Table l accordingly, as directed by the MBRT. E. Upland Preservation Credit Release All Preservation Credits shall be immediately available for release upon establishment of the Bank. VII. OPERATION OF THE BANK A. Service Area. The Bank is established to provide mitigation to compensate for impacts to Waters of the United States as well as Covered Habitat, occurring in the cities of Oceanside, Vista, San Marcos, Carlsbad, Encinitas and the western portions of the unincorporated portions of the County of San Diego as· shown in Exhibit B. B. Projects Eligible to Use the Bank. In general, it is agreed that projects requiring-the following mitigation for impacts within the Service Area shall typically he eligible to use the Bank: • Mitigation required by Nationwide 404 permits; • Mitigation required by Individual 404 pennits when the applicant has minimized impacts to wetlands to the maximum extent practicable; • Mitigation required by Section 1602 Agreements; • Mitigation required by any government agency within the Service Area for upland impacts; and • Mitigation for other projects as deemed appropriate by the USACE, USBPA, USFWS, or CDFG, provided the Bank meets alJ requirements applicable for the mitigation required for a particular project and that mitigation through use of a Bank is authorized by the appropriate authority. C. Credit Sales I . Credit sales by the BanJc Sponsor may begin once Credits are released pursuant to Section VI.D and E. Subject to Bank Sponsor's obligations under this BEi, Bank Sponsor shall have the exclusive right to detennine the price for any and all Credits offered for sale or use at this Bank. 2. In no case shall the Credits sold or obligated by Bank Sponsor exceed the total number of Credits that have been released pursuant to Section VI. D and E. Page 14 o/15 14 BEi fort/le North County Mitigation Danie. Carlsbad ---------•·--,~-•--· 3. Decisions related to use of Credits in the Service Area (e.g., determination of the appropriate mitigation ratios), will be made by the appropriate MBRT agencies on a case-by-case basis in accordance with applicable law, regulations, and guidance. 4. The Bank Sponsor shall notify all members of the MBRT upon completion of any Credit sale, as described in the reporting section of this BEL D. Conditions on Debiting. Any Credits debited before achieving the five-year success criteria shall require posting sufficient financial assurance (see V.A.2. above) to cover contingency actions in the event of partial or total failure. Upon meeting yearly success criteria as determined by the MBRT, the Contingency Fund shall be released to the Sponsor according to the schedule described in Section V .A.2. vm. MAINTENANCE AND MONITORING OF THE BANK A. Interim Maintenance Provisions: The Bank Sponsor and Property Owner agree to perform all necessary work to maintain the Bank Property consistent with the maintenance requirements articulated in the Restoration Plan until achievement of the 5-year success criteria, full funding of the Endowment Fund for one year, and closure of the Bank. B. Interim Monitoring Provisions: The Bank Sponsor and Property Owner shall perform all work necessary to monitor the Bank Property in accordance with the monitoring proceduTes set forth in the Restoration Plan, activities wh ich shall remain in effect until achievement of the 5-year success criteria, full funding of the Endowment Fund for one year, and closure oftbe Bank. Monitoring will be carried out under the direction of a restoration specialist who will direct maintenance activities (maintenance monitoring) and assess the progress (technical monitoring) of the restoration effort. Maintenance monitoring will rely on visual observations of plant establishment and growth and other site conditions (e.g., soil stability). C. Contingency Plans/Remedial Actions: Page 15 o/25 1. In the event the MBRT reasonably detennines that portions of the Bank Property have been damaged subsequent to the Bank Establishment Date, and the effect of such activity has materially impaired habitat functions and values on the Bank Property, and neither the Bank Sponsor nor Property Owner has reasonably restored habitat functions and values to the damaged portions or provided the MBRT with Teasonable evidence that habitat functions and values will be restored, the MBRT may, at its discretion, suspend Credjt sales and/or reduce the number of Credits allocated to the Bank equivalent to the decrease in functions and values of the 15 BEi for the Nnrth County Mitigation Bank, Carlsbad ............. ,._._......._ -----·-·· .. •-··· ---------- Pagd6of25 Bank Property. 2. The :MBRT shall be notified upon discovery by any Party of any fajJure to achleve the success criteria described in Section Vl.C. of this BEi. The MBRT shall require, in writing, that the Bank Sponsor develop a remediation plan. Within 60 days of receiving such written notification from the MBRT, the Bank Sponsor shall develop a remediation plan and submit it to the MBRT for review and approval. The remediation plan will include proposed remedial actions and a schedule within which the Bank Sponsor will implement the actions. The Bank Sponsor shall, at Bank Sponsor's expense, implement the necessary and appropriate remedial actions as approved by the MBRT. All remediation efforts and an evaluation of their effectiveness shall be incorporated into the annual monitoring report set forth in Section IX.A. of this BEi. In the event the Bank Sponsor or Property Owner fails to implement such remedial actions approved by the MBRT, the MBRT will notify the Bank Sponsor, in writing, that the Bank Sponsor is in default and identify corrective measures the MBRT believes to be necessary in order to cure the default. If conditions do not improve or if they continue to deteriorate, within one year (unless otherwise negotiated among the Bank Sponsor, Property Owner, and the MBRT) from the date that the specific corrective measures were first identified in writing to the Bank Sponsor by the MBRT, a demand on the Contingency Fund will be made by CDFG or USACE, as appropriate, to ensure the corrective measures are implemented as approved by the MBRT. 3. If the MBRT determines that the Bank is operating at a Credit deficit, the Bank Sponsor shall be notified in writing, whereupon Credit sales and debiting of Credits will immediately cease. The MBRT shaU detennine what corrective actions are necessary to correct the Credit deficit. Bank Sponsor shall develop and implement a remediation plan in accordance with Section VIII.C.2. As determined by the Chair of the MBRT, in coordination with the MBRT and the Bank Sponsor, if conditions at the Bank Property do not improve or if they continue to deteriorate, within one year (unless otherwise negotiated among the Bank Sponsor, Property Owner, and the MBRT) from the date that the specific corrective actions were first identified in writing to the Sponsor by the Chair of the MBRT, a demand on the Contingency Funds and the Endowment Fund shall be made by CDFG or the USACE, as appropriate, to ensure corrective 16 BE/for rhe Norrh C-0uril)I Mitigarion Bank. Carlsbad ·~------~---~----~---------· measures are implemented as approved by the MBRT. 4. At the request of the Bank Sponsor, the MBRT will perform a final compliance visit to determine whether all success criteria have been satisfied. Upon satisfaction of the success criteria, any remaining contingency funds will be released to the Sponsor. D. Long-Term Management, Once the five-year success criteria in the Restoration Plan and this BEl have been met and the Endowment Fund is fully funded for one year; long-term management of the Bank Property shall be implemented according to the Management Plan. The Property Owner shall be obligated to manage the Bank Property in perpetuity to preserve its habitat and conservation values in accordance with the terms of this BEi, the Conservation Easement, and the Management Plan, as funded through the Endowment Fund. The Management Plan shall provide the basis for the implementation and prioritization of the management tasks. The Property Owner and the MBRT shall meet and confer, upon the request of any one of them, to consider revisions to the Management Plan to better conserve the values of the Bank Property. E. Long Term Monitoring. Long-term monitoring shall be performed as described in the Management Plan, The Property Owner shall be responsible for annual reporting to the MBRT as described in Section IX of this BEi. F. Conservation Easement Monitoring. Bank Sponsor's and Property Owner's obligations shall include using reasonable efforts to prevent uses of the Bank Property not pennitted under this BEI or the Conservation Basement. IX. REPORTING A. Annual Reporting. Sponsor shall submit a report to the USACB as Chair oftbe MBRT, for distribution to the other members of the MBRT, on or before November I 5th of each year, with the first report due after the end of the first full growing season. The annual report shall address or provide the following, as appropriate: 1. All elements set forth in the Restoration Plan and/or Management Plan; 2. All remediation efforts and an evaluation of their effectiveness; 3. A copy of all Contingency Fund and/or Endowment Fund deposits; and 4. A record of all disbursements made from the Contingency Fund and/or the Endowment Fund for Bank activities. B. As-bui It Report. The Bank Sponsor shall submit to the USA CE, for distribution to the other members of the MBRT, an as-built report for the Bank Property not more than 60 days after the Effective Date of this BEL C. Accounting Procedure. The Bank Sponsor shall notify the MBRT upon the sale of each and every Credit and approval of each and every additional Credit. Sponsor shall send a full and complete updated ledger (Exhibit F-2) to each Page 17o/2S 17 BE/for th"North Corml)i Mitigo//(ln Bank, Carlsbad ___ , ________ __,_ __ --------,, -r"••--.. -•---~----------...c 41 member of the MBRT within 10 days of each Credit sale. D. Bank Sponsor and Property Owner must maintain accurate records of costs·, in accordance with Generally Accepted Accounting Principles, and shall retain said records throughout the tenn of this BEL During such time, the Bank Sponsor and Property Owner shall make said records available for review at the request of the MBRT. ln addition, Bank Sponsor and Property Owner must have accounts audited upon request of and with results provided to the MBRT, not more than annually. If the Property Owner becomes the holder of the Endowment Fund, the Conservation Easement shall be amended to include an endowment and auditing provision approved by the MBRT. X. PROCEDURES FOR BANK CLOSURE Once the success criteria in the Restoration Plan have been met, long term maintenance and monitoring of the Bank Property shall be carried out according to the Management Plan as required by Section vm. The implementation of the Management Plan shall be assured pursuant to t he closure provisions in this BEI and in the Management Plan. A. Bank Site and Bank Closure. The Bank shall be deemed closed, and the Sponsor's obligations complete, upon all of the following: 1. All success criteria have been met consistent with the Restoration PJan; 2. The Bank Sponsor has implemented the Bank Closure Plan included within the Management Plan, including the implementation of Bank closure reporting and accounting activities; 3. All financial responsibilities have been met, including full funding of the Endowment Fund for not less than one year; and 4, Either: (a) The last authorized Credit has been sold or used; ot (b) The Sponsor requests bank closure by written notice to the MBRT, and MBRT provides written approval of the closure. 5. Upon Bank closure, Credit sales shall immediately cease. 6. All responsibilities and obligations for Bank monitoring and maintenance in perpetuity are transferred to the Property Owner upon Bank closure. XI. BANK SPONSOR AND PROPERTY OWNER DUTIES A. The Bank Sponsor agrees to perform all necessary work in accordance with the provisions of this BEi. B. The Bank Sponsor agrees to be responsible for all costs associated with the establishment of the Bank, including but not limited to construction, remediation1 documentation, maintenance, management, monitoring, and Page 18 o/25 18 BE/for rhe North County Mitigation Ba11k, Carlsbad ------·--·-·----··-· ... ---~- l/ 2 reporting, until one year after the Endowment Fund is fully funded and all success criteria are met. C. Real Estate Provisions. The Property Owner has recorded a Conservation Easement on the Bank. The Conservation Easement shall preserve the Bank Property as Waters of the United States and wildlife/riparian habitat (i.e., Covered Habitat) in perpetuity. D. the Bank Sponsor agrees to submit an as-built report for the Bank to the MBRT within 60 days after the Effective Date of this BEL The as-built report shall include as-built drawings, with accurate maps showing the finish grades of the Bank Property. The maps shall clearly distinguish among the preserved habitats and the created, restored, and enhanced wetlands and Covered Habitats. The as- built drawings and any attachments will describe in detail any deviation from the proposal described in the Restoration Plan. E. The Bank Sponsor or Property Owner, as appropriate, agrees to have accounts audited using General Accepted Accounting Principles performed by a qualified, independent accounting organization upon request of the MBRT, not more frequently than annually, and submit the results of the audits to the MBRT. F. The Bank Sponsor and Property Owner shall not discharge or release to tbe Bank Property, or permit others to discharge or release to the Bank Property, any material or substance deemed hazardous or toxic under any federal, state, or local environmental law. G. The Property Owner shall not create any encumbrance to the title of the Bank Property other than those set forth in Exhibit E and accounted for in the Property Assessment in Exhibit E, and Property Owner shall not execute, renew, or extend any lien, license, or similar interest without the prior written consent of the MBRT. H. Neither the Bank Sponsor nor Property Owner shall construct any structure or engage in any activity or use of the Bank Property, including mineral exploration, excavating, draining, dredging, or other alteration of the Bank Property, that is not necessary for execution of the Restoration Plan without the. prior written consent of the MBRT. 1. The Bank Sponsor and Property Owner shall ensure that the Bank Property is maintained to ensure its suitability as a Bank consistent and in accordance with this BEI. J. The Bank Sponsor and Property Owner shall allow, or otherwise provide for, access to the site by all signatory Parties, as necessary, for the purpose of inspection and compliance monitoring consistent with the terms and conditions of this BEI. Inspecting Parties shall provide reasonable notice to tbe Property Owner during normal business hours and not less than 24 hours prior to Page 19ef25 19 lJEJjor' the North County Mltigotion Bank, Carlsbad '"-·~-·---"·"·--··. ---·-------- L/3 inspection of the Bank Property. K. The Bank Sponsor shall obtain a11 appropriate environmental documentation, permits or other authorizations needed to establish and maintain the Bank. This BEi does not fulfill or substitute for such authorization. L. The Property Owner shall grant all necessary authority and shall not limit Bank Sponsor's ability to carry out Bank Sponsor's responsibilities and obligations under this BEL xn. RESPONSIBILITIES OF THE MBRT A. The agencies represented on the MBRT agree to provide appropriate oversight in carrying out provisions of this BEi. B. The agencies represented on the MBRT agree to review and provide comments on ali project plans, annual monitoring reports, Credit review reports, contingency plans, and necessary permits for the Ban1c in a timely manner. Comments on the monitoring reports, Credit review reports, and contingency plans will be provided within 60 calendar days from the date of receipt of complete submittal, except for good cause. C. The agencies represented on the MBRT agree to review and concur with reports on evaluation of success criteria prior to approving Credits in the Bank. D. The agencies represented on the MBRT shall conduct compliance inspections, as necessary, as determined in consultation with the Bank Sponsor, to: 1. verify Credits available in the Bank; 2. confirm implementation of remedial actions; 3. recommend corrective measures (if any), until the tenns and conditions of this BEi have been determined to be fully satisfied or until all Credits have been sold, whichever is later; and 4. inspect for any other purpose detennined by the MBRT as necessary to assure compliance with this BEi. XDl. OTHER PROVISIONS A. Force Majeure. The Bank Sponsor and Property Owner shall be responsible to maintain and remediate the Bank Property except for damage or non-compliance caused by Catastrophic Events, events of Force Majeure, or Unlawful Acts. In case of occurrence, the Sponsor or Property Owner and MBRT shall meet to discuss the future course of action for and m.anagement of the Bank Property and sha11 continue their obligations to the extent practicable. In order for such exception to apply, Bank Sponsor and Property Owner shall bear the burden of demonstrating: Page 10 oj2S a. that the damage or non-compliance was caused by circumstances beyond the control of the Bank Sponsor, Property Owner, and/or any person or entity under the direction or control of the Bank Sponsor or 20 BEi for th• North County MitigaJion Bank. Carlsbad --------------------------~-----•◄ ................ ___ ·- 4_Lf Property Owner, includfog its employees, agents, contractors, and consultants; b. that neither the Bank Sponsor/Property Owner, nor any entity controlled by it, including contractors and consultants, could have reasonably foreseen and prevented such damage or non-compliance; and c. the duration of damage or non-compliance was caused by such circumstances beyond the Sponsor's or and Property Owner's control. B. Dispute Resolution l .The Parties agree that, in the event of a dispute, the Parties shall use their best efforts to resolve the dispute in an informal fashion through consultation and communication involving ascending levels of management within each Party's organization, or other fonns ofnon-binding alternative dispute resolution mutually acceptable to the Parties. 2. Resolution of disputes about application of this BEI as between members of the MBRT shall be in accordance with those stated in the Federal Guidance for the Establishment, Use, and Operation of Mitigation Banks (60 P.R. 58605 et seq., November 28, 1995). C. Modification and Termination of the BEI. This BEi may be amended or modified with the written approval of all signatory Parties. Any of the MBRT members may termjnate their participation upon written notification to all signatory Parties. Participation of the MBRT members will terminate 30 days after written notification. D. Specific Language in the BEi Shall Be Controlling. To the extent that specific language in this document changes, modifies, or deletes terms and conditions contained in those documents which the BEi incorporates by reference, and that are not legally binding, the specific language within the BEi shall be controlling. E. Entire Agreement. This BEI, and all exhibits, appendices, schedules, and agreements referred to in this BEi, constitute the final, complete, and exclusive statement of the terms of the agreement between and among the MBRT and the Bank Sponsor and Property Owner pertaining to the Bank, and supersede all prior and contemporaneous discussions, negotiations, understandings, or agreements of the Parties. No other agreement, statement or promise made by the Parties that is not contained in this BEI shall be binding or valid. No alteration or variation of this BEi shall be valid or binding unless contained in an amendment in accordance with Section XIII.C. Each party acknowledges that no representation, inducement, promise, or agreement, oral or otherwise, has been made by any other Party or anyone acting on behalf of any party unless the same has been embodied herein. F. Transfer. Page 21 o/25 1. Transfer of Property Owner's Interests The Property Owner shall have the right to sell or convey its interest in the Bank Property at any time. Provided, however, that any such sale or 21 BEi for the North Counry Mitigation Ba11k, Car/shad .~--------· .. ·----·-·--............ ,.._, ... ____ ------ Sponsor, Property Owner, or the MBRT disagrees with any detennination covered by this provision and reasonably request the reasons for that determination. the determining party shall furnish its reason in writing and in reasonable detail within thirty (30) days following the request. H. Successors and Assigns. This BEi and each of its covenants and conditions shall be binding on and shall inure to the benefit of the Parties and their respective successors and assigns, subject to the limitations on transfer set forth in this BEL I. Partial Invalidity. If a court of competent jurisdiction holds any term or provision of this BEi to be invalid or unenforceable, in whole or in part, for any reason, the validity and enforceability of the remaining terms and provisions, or portions of them, shall not be affected unless an essential purpose of this BEI would be defeated by the loss of the invalid or unenforceable provision. J. Notices. All notices (including requests, demands, approvals or other communications) under this BEr shall be in writing. Each Notice the Bank Sponsor or the MBRT desires to give to the other shall be in writing, shall clearly identify the name of the Bank and the subject of the Notice on its first page, and shall be personally delivered or sent by facsimile to the persons set forth below or shall be deemed delivered five (5) days after deposit in the United States mail, certified and postage prepaid, return receipt requested, and addressed as follows. MBRTChair: MBRT Members: Poge 13 o/25 District Counsel U.S. Army Corps of Engineers Los Angeles District 915 Wilshire Boulevard, Room 1535 Los Angeles, California 90017-3401 FAX: 213-452-4217 Regional Manager Department ofFish and Game Region 5 4949 Viewridge Avenue San Diego, California 92123 FAX: 858-467-4299 Carlsbad Office Manager U.S. Fish and Wildlife Service 6010 Hidden Valley Road Carlsbad, California 92011 FAX: 760-431-5901 23 BEJ for Jhe North Cou11ty Mitigation Bank, Cqrlsbad ----~------"" .... .-.........-.. L/7 Bank Sponsor: Director, Water Division U.S. Environmental Protection Agency, Region 9 75 Hawthorne Street Sacramento, Caljfomia 94105 FAX: 415-744-1078 Westmark Development Corporation 3375 Pepper Lane, No. 102 Las Vegas, Nevada 89120 Attn: John D. Lee, Esq. FAX: 702-898-9538 The P&rties agree to accept facsimile signed documents and agree to rely upon such documents as if they bore original signatures. Each Party agrees to provide to the other Parties, within seventy-two (72) hours after transmission of such a facsimile, the original documents that bear the original signatures. Either Party may change its address or fax number by giving the other Party notice of the change in any manner pennitted by this section. K. Counterparts. This BEI may be executed in multiple counterparts, and each such executed counterpart shall be deemed an original, all of which together shall constitute a single executed agreement. L. No Third Party Beneficiaries. This BEl shall not create any third party beneficiary hereto, nor shall it authorize anyone not a party hereto to maintain a suit for personal injuries, property damages or enforcement pursuant to the provisiohs of this BEi. The duties, obligations, and responsibilities of the Parties to this BEI with respect to third parties shall remain as otherwise provided by law, M. Availability of Funds. Implementation of this BEJ by the MBRT is subject to the requirements oftbe Anti-Deficiency Act, 31 U.S.C. § 1341, and the availability of appropriated funds. Nothing in this BEI may be construed to require the obligation, appropriation, or expenditure of any money from the U.S. Treasury or the California State Treasury. No agency of the MBRT is req4ired under thls BEl to expend any appropriated funds unlei;s and until an authorized official affinnatively acts to commit to such expenditures as evidenced in writing. XIV. EFFECTIVE DATE This BEi shaJI become effective on the date of the signature by the last Party to sign this BEL PageUo/25 24 BEi for the North Courtty Mitigation Bank. Carlsbad .. --~•-1 __ , ..... , ., .. -··---wi, ____ _ L\8 ( City of Carlsbad ATTACHMENT 4 2007 CITY INTERNAL MEMORANDUM www.carlsbadca.gov DATE: TO: FROM: RE: MEMORANDUM June 28, 2007 Glenn Pruim, Public Works Director "· -~ David Hauser, Deputy City Engineer (ljJ/f NORTH COUNTY HABITAT BANK Attachment 4 Since February 2004, Mark Rohrlick and Michael Mccollum at Westmark Development Corporation (Westmark) have been working to establish the North County Habitat Bank (NCHB), and to obtain approvals from 1he various resource agencies in the Mitigation Bank Review Team (MBRT) for a Banking Establishment Instrument (BEi) regarding the establishment, operation and use of the NCHB. The BEi agreement was recently approved by the U.S. Fish & Wildlife Service (USFWS), the California Department of Fish & Game (CDFG), the U.S. Army Corps of Engineers (USACE) and the U.S. Environmental Protection Agency (USEPA). The Regional Water Quality Control Board (RWQCB}, while not a signatory to the BEi, has been actively involved in the creation of the NCHB, and has indicated that it will accept mitigation credits to fulfill Section 401 Certification conditions. Westmark is now actively marketing the mitigation credits established in the NCHB. Wetland mitigation is required in two different forms -creation/restoration and enhancemenVpreservation. Creation/restoration (USACE/CDFG) mitigation is newly created wetland habitat made by converting land with no habitat or some other habitat into wetland habitat. Enhancement/preservation (USACE/CDFG) mitigation is taking current degraded wetlands habitat and enhancing it to improve its habitat value. There are a number of factors governing required mitigation ratios, but for good quality habitat, it is common to see 2:1 creation/restoration and 1: 1 enhancement/preservation ratios. The NCHB was approved for approximately 4 acres of wetland enhahcement/preservation mitigation (at a 1 :1 ratio this translates to approximately 4 acres of enhancement mitigation credits) and, 4 acres of wetland creation/restoration mitigation (at a 3: 1 ratio this translates to approximately12 acres of creation mitigation credits). The City has a need for approximately 0. 96 acres of wetland creation mitigation acreage to complete the wetland creation mitigation requirement for the Agua Hedionda Channel Emergency Dredge Project . The asking price per acre of mitigation credit in the NCHB is $250,000. The price is the same for both creation and enhancement wetland mitigation credits. Westmark is offering to sell mitigation credits to the City at the discounted price of $225,000 provided we purchase in quantity (over about five acres. See discussion below). The City's cost to create an acre of wetland is slightly over $300,000 per acre excluding land value. Land values for non- developable wetland property are approximately $25,000 per acre. The NCHB is able to sell credits at a lower price per acre than the cost to create the acre because the agencies have establrshed policies which view established habitat as having more 2 2 value than proposed habitat. That is to say, the agencies typically require an agency to tnitigate (after the impact have occurred) at a 3:1 ratio which includes a 2:1 creation component and a 1:1 enhancement component. The theory behind this requirement is that not all the newly created habitat will survive so additional land must be created to end up with a one for one replacement. The additional 1 :1 enhancement component is presumably needed to provide habitat value while the new habitat is being created. Project applicants that are able to pre-mitigate for impacts to wetland habitat need only meet a 1 : 1 mitigation ratio. Therefore, a pre-mitigated acre of created habitat has the same value as two acres of new habitat creation and one acre of habitat enhancement when such mitigation takes· place after the habitat impacts occur. The establishment of a mitigation bank allows the bank owner to recoup the cost of their per acre investment up to three times over once they meet all agency success criteria for a five year period. The NCHB has already met its four year success criteria and is currently seeking permission from the agencies to market the full value of the banked credits. We are not proposing at this time to purchase any wetland enhancement credits from the NCHB for the Emergency Dredge, project. Our estimated cost of wetland enhancement at th~ Lake Calavera and other City sites is between $60,000 and $150,000 per acre depending upon the type of enhancement required. Since the Lake Calavera site only has the ability to accommodate approximately 0.63 acres of wetland enhancement out of the 3.54 acres of wetland enhancement required by the agencies, the City must find an additional 2.91 acres of enhancement elsewhere. Currently, we are exploring other options for providing the additional enhancement requirement. The NCHB has additional mitigation credits available which affords the City a unique opportunity to purchase additional creation mitigation credits at a discounted price. The City has numerous projects in the pfpeline that will require wetland mitigation (see table below). Estimated Acres of -Project Wetland Mitigation Required Agua Hedionda and Calavera Creek Channel Dredge Project (non-6 emerqency work) Miscellaneous Drainage Master Plan Projects (Future Citi constructed 5 PLDA projects) Proposed Five-year Drainage Facility Maintenance Program 3 Total 14 Additional mitigation acreage may be necessary for other non-drainage City projects such as the Vista/Carlsbad sewer line replacement along the Buena Vista Creek. The proposed Five- year Drainage Facility Maintenance Program (DFMP) listed above includes only a fraction of the drainage facilities requiring maintenance in the City. The total wetland mitigation needs to implement the DFMP for all City drainage facilities are estimated to require an additional 15 to 25 acres of mitigation land. The NCHB is located within the Coastal Zone. The California Coastal Commission (CCC) typically requires that mitigation for impacts to wetlands within the Coastal Zone occur within the Coastal Zone. There is very limited mitigation area available within the Coastal Zone making the credits that much more valuable to the City. Westmark indicated their willingness to make any remaining credits available to the City at 1he discounted asking price of $225,000 per acre. Although Westmark offered the City first right of refusal on the additional acreage, it is their intent to sell these credits as quickly as possible. For the reasons stated above, I recommend that the City purchase a minimum of 4.0 acres of additional mitigation credits from the NCHB for use on future City projects and maintenance activtties. The total cost to purchase the 5.96 acres of mitigation credits at $225,000 is $1,341,000. The purchase price for the Emergency Dredge project mitigation would be funded by PLDA fees ($216,000). It is my recommendation to equally split the purchase price for the additional 5.0 acres in mitigation credits between the PLDA Fund and the General Fund ($562,500 from each fund). If the City decides not to purchase the additional 5.0 acres in mitigation credits, then the cost for the Emergency Dredge project mitigatioh credit purchase would be $250,000 per acre or a total of $447,500. C Community Development Director Finance Director Administrative Services Director Acting City Engineer Planning Director Consultant Project Engineer, Glen Van Peskl 24 ( City of Carlsbad ATTACHMENT 5 www.carlsbadca.gov \ DRAFT ACKNOWLEDGMENT OF SALE OF MITIGATION CREDITS FROM THE NCHB Honorable Mayor Hall and Members of the City Council April 26, 2019 Page 10 ATTACHMENT D City of Carlsbad's Revised Mitigation Proposal to the San Diego Water Board, Dated April 23, 2019 {_ City of Carlsbad April. 23, 2019 Mr. David Barker Supervising Water Resources Control Engineer Attn: Ms. Nicole Gergans California Regional Water Quality Control Board San Diego Region 2375 Northside Drive, Suite 100 San Diego, CA 92108 RE: R9-2018-0081:844932:ngergans Attachment D www.carlsbadca.gov Notice of Violation (NOV) No. R9-2018-0080 and Investigative Order (10) No. R9-2018-0081 In response to the March 27, 2019 email from the San Diego Regional Water Quality Control Board (San Diego Water Board) regarding the compensatory mitigation proposal (sul;>mltted on March 14, 2019) for the El Camino Real Bluff Emergency Repair at Tamarack Avenue (Project), the City of Carlsbad (city) is submitting the attached draft Acknowledgment of Sale of Mitigation Credits (Attachment 1), as a revised mitigation proposal to offset the permanent impact to non-wetland waters of the United States and/or State. The city's revised mitigation proposal utilizes created/restored wetland credits from the North County Habitat Bank (NCHB) to offset the impact resulting from the Project. As required by the San Diego Water Board, the revised proposal app11es 0.55 wetland mitigation credits reflecting a 10:1 mitigation ratio to offset the 0.055 acres of impact. Once approved by the San Diego Water Board, the city will provide the final Acknowledgment of Sale of Mitigation Credits from the NCHB. This proposal supersedes the city's prior proposal, as described in the city's letter, dated March 14, 2019 (Attachment 2). That letter also provided an overview of the communications between city staff and the San Diego Water Board related to this subject. I certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system, or those persons directly responsible for gathering the information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations. Please let me know if we can provide any additional information or support at paz.gomez@carlsbadca.gov or 760-602- 2751. We are eager to work with the San Diego Water Board to resolve this matter as expeditiously as possible. Thank you. Sincerely, '---1 (, . ~ n? I /7.;i:; IL Pa, Go,1'° ,, PE, CEM, GBE ~ Deputy City Manager,{Rl@.!E lijorks Attachments: 1. Draft Acknowledgment of Sale of Mitigation Credits from the NCHB (Revised) 2. City of Carlsbad's Prior Mitigation Pr~posal, dated March 14, 2019 Cc: Eric Becker, Senior Water Resources Control Engineer Scott Chadwick, City Manager Mr. David Barker, Supervising Water Resources Control Engineer April 231 2019 Page 2 Elaine Lukey, Chief Operations Officer Amanda Guy, Deputy City Attorney Marshall Plantz, Transportation Director James Wood, Environmental Manager Hossein Ajideh, Engineering Manager Brandon Miles, Associate Engineer Mr. David Barker, Supervising Water Resources Control Engineer April 23, 2019 Page 3 ATTACHMENT 1 DRAFT ACKNOWLEDGMENT OF SALE OF MITIGATION CREDITS FROM THE NCHB Mr. David Barker, Supervising Water Resources Control Engineer April 23, 2019 Page4 ATTACHMENT 2 CITY OF CARLSBAD'S PRIOR MITIGATION PROPOSAL, DATED MARCH 14, 2019 l_ City of Carlsbad March 14, 2019 Mr. David Barker Supervising Water Resources Control Engjneer Attn: Ms. Nicole Gergans California Regional Water Quality Control Board San Diego Region 2375 Northside Drive, Suite 100 San Diego, CA 92108 RE: R9-2018-0081:844932:ngergans Attachment 2 www.carlsbadca.gov Notice of Violation (NOV) No. R9-2018-0080 and Investigative Order (10) No. R9-2018-0081 In response to the Nov. 2, 2018 letter from the San Diego Regional Water Quality Control Board (San Diego Water Board) regarding the subject NOV and 10 for the El Camino Real Bluff Emergency Repair at Tamarack Avenue (Project), the City of Carlsbad (city) submitted a technical report dated Dec. 6, 2018 assessing the permanent impact to non-wetland waters of the United States and/or State associated with the emergency Project. On Jan. 28, 2019, the city received an email from the San Diego Water Board concurring with the city's determination of 0.055 acres of permanent Impacts to non-wetland waters of the United States and/or State resulting from emergency repair activities. The San Diego Water Board also requested that the city provide a compensatory mitigation proposal to offset the permanent impact to non- wetland waters of the United States aod/or State. In response to the San Diego Water Board's Jan. 28, 2019 email, the city obtained services from LSA Associates, Inc. and Mccollum Associates to determine appropriate mitigation measures to satisfy the San Diego Water Board. As further described below, the city's proposal utilizes created/restored wetland habitat from the North County Habitat Bank (NCHB) to offset the impact to non-wetland waters of the United States and/or State resulting from the Project. The proposal reflects a 10:1 mitigation ratio that requires 0.55 acres of mitigatipn to offset the 0.055 acres of impact. At our Nov, 20, 2018 meeting, the San Diego Water Board and the city discussed the possibility of applying an 8:1 mitigation ratio when wetland mitigation is utilized (due to the higher value of wetland mitigation); however, In the interest of resolving this matter as quickly as possible, the city proposes applying a 10:1 wetland mitigation ratio when the proposed created/restored mitigation at the NCHB is used. The city's proposal applies mitigation credits that it currently holds with the NCHB. In 2007, the city purchased the equivalent of 1.67 acres of created/restored wetland/riparian mitigation credits from the NCHB at a price of $1,125,000. For your reference, copies of the purchase agreement and subsequent amendment are attached as Attachments 1 and 2, respectively. To establish the bank, the property owner, Westmark, entered Into a Bank Enabling Instrument (BEi) with the resource agencies in 2007 (Attachment 3). The U.S. Fish & Wildlife Service, California Department of Fish & Game, U.S. Army Corps of Engineers, and U.S, Environmental Protection Agency approved the establishment, use, operation and maintenance of the NCHB. The city acknowledges that the San Diego Water Board was not a signatory to the BEi for the NCHB; however, it is the city's understanding that the San Diego Water Board was involved in the creation of the NCHB and has indicated that it may accept mitigation credits to fulfill Section 401 Certification conditions (as stated in the 2007 internal memorandum Included in the city Agenda Bill #19110, 07 /24/04, presented in Attachment 4). According to the NCHB, it has sold credits for over 20 permit actions, and at least 15 of them had a certification requirement that the San Diego Water Board deemed to have been met by the credits purchased from the NCHB. The city can facilitate further discussion with the NCHB, if necessary, regarding evaluation of the city's mitigation credits. { City of Carlsbad ATTACHMENT 1 www.carlsbadca.gov 2007 MITIGATION CREDIT PURCHASE AGREEMENT AND ACKNOWLEDGMENT FOR THE NCHB Attachment 1 ~ot:fh County If.Habitat Bank MITIGATION CREDIT PURCHASE AGREEMENT AND ACKNOWLEDGMENT THIS MITIGATION CREDIT PURCHASE AGREEMENT AND ACKNOWLEDGMENT ("Agreement") is entered into thiso27-t day of ~:t:fe , 2007 by and between. WESTMARK DEVELOPMENT CORPORATI , a evada corporation ("Seller") and CITY OF CARLSBAD, a municipal corporation of the State of California ("Buyer"). RECITALS A. Pursuant to that certain Banking Establishment Instrument regarding the Establishment, Operation and Use of the North County Habitat Bank dated May 23, 2007 (the "BEI"), by and among Westmark Development Corporation; the California Department of Fish and Gatne ("CDFG"); the United States Fish and.Wildlife Service ("USFWS"); the United State Environmental Protection Agency ("USEPA"), and the United States Army Corps of Engineers ("USACOE") (CDFG, USFWS, USEPA and USACOE are referred to collectively hereinafter as the "Agencies"). The Agencies ha:ve acknowledged the creation of the North County Habitat Bank (the "Mitigation Bank") and the right of Seller to sell "Mitigation Credits" to mitigate for the loss of wetlands and habitat as provided therein. B. Buyer desires to mitigate the loss of certain wetland/riparian or upland habitat values on real property located in San Diego County California as determined by the City and the MBRT (the "Buyer's Property") to satisfy Buyer's obligations with respect to wetland/riparian or upland habitat on Buyer's Property and to obtain permits and approvals to develop Buyer's Property. C. Buyer has agreed to purchase from Seller,,and Seller has agreed to sell to Buyer 5.0 credits of created Wetland/Riparian Mitigation Credits as defined in the BEi (the "Conveyed Credits'') from the Mitigation Bank on the terms and conditions set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the agreements and acknowledgments set forth herein and for other good and valuable c~nsideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree and ac~owledge as follows: North County Habitat Banlt Mitigation Credit Purcl,ase Agreement Page 1 ofS 03207629-609-CG) v.062607 I (p 1. Purchase Price. The purchase price for the 5 .0 Wetland/Riparian Mitigation Credits shall be $1,125,000.00. The Purchase Price shall be paid in good funds on the Closing Date. 2. Acknowledgment of Sale. On the Closing Date, Seller shall deliver a fully executed original of the Acknowledgment of Sale of Mitigation Credits ("Acknowledgment"), in fonn and content as Exhibit A attached hereto and such other documents and instruments as may be required by any of the Agencies to evidence and recognize the transfer of the Conveyed Credits to Buyer. Moreover, Seller agrees that to the extent such have not been provided to Buyer at the closing, then if requested by Buyer subsequent to the closing, Seller will ptovide such documents and instruments as may be required by any oftbe Agencies to evidence and recognize the transfer of the Conveyed Credits within ten (10) days following Buyer's request. The provisions of this Paragraph2 shall survive the closing and tennination of this Agreement. 3. · Closing. Buyer shall deliver to Seller this executed purchase agreement on or before July 31, 2007. Funds equal to the Purchase Price shall be delivered to Seller on or before August 10, 2007 which shall be deemed the "Closing Date". The closing shall mean the date that the Purchase Price is delivered to Seller and the fully executed Acknowledgment of Sale of Mitigation Credits is delivered to Buyer. Notwithstanding the foregoing, Buyer may accelerate the Closing Pate. 4. AS-IS Sale. Buyer acknowledges and agrees that: (a) it is the Buyer's sole responsibility to determine the acceptance of the Conveyed Credits by the Agencies as mitigation for impacts to wetland/riparian values, and any completed sale of any Conveyed Credits shall be final; (b) the pw·chase and sale of the Conveyed Credits shall be made on an "AS IS, WHERE IS, WITH ALL FAULTS" basis as provided for in the BEI; and c) no representations or warranties have beenmade or are made and no responsibilitfhas been or is assumed by Seller or by any officer, agent, affiliate, attorney, or representative acting or purporting to act on behalf of Seller as to (I) the mitigation value of the property conveyed to the Agencies in establishing the Mitigation Batik; (ii) the mitigation value or mitigation requirements of Buyer's Property, (iii) the acceptance of the Conveyed Credits by the Agencies or any other governmental agency as mitigation fortbe loss of habitat values associated with Buyer's Property, or (iv) any other fact or circumstances which might affect the Mitigation Banlc, the Buyer's Property, or the Conveyed Credits. 5. Tennination. Time is of the essence in this Agreement In the event the closing does not occur by the Closing Date, Seller, at its election, and in its sole and absolute discretion> by written notice to Buyer, may tenninate this Agreement and neither party shall have any further obligations hereunder except as provided in Paragraph 6 below. 6. Brokers. Buyer represents to the Seller that it has not had any other contract, North County Hnbilat Bank Milig~tion Credit Purohasc Agre.omen! PHge2ofS 0)207629-609-CG I v.062607 ,7 ------------------------ agreement or dealings regarding the Conveyed Credits with, nor any communication in connection with the subject matter of this transaction through, any consultant, broker, agent, -finder or other person who can claim a right to a consultant fee, commission or finder's fee from the Seller in connection with the sale contemplated herein. In the event that a consultant, broker or finder makes a claim.for a consultant fee or commission or finder's fee based upon any such contract, agreement, dealings or communication, the party through whom such claim is made shall be solely responsible for and shall indemnify, defend, and hold harmless the other party from and against said commission or fee and all costs and expenses (including without limitation reasonable attorneys' fees) incurred by the other party in defending against such claim. The provisions of this Paragraph 6 shall survive the termination of th.is Agreement. 7. Integration. Buyer and Seller agree that all negotiations, discussions, understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Exhibit attached hereto, and this written Agreement alone fully and completely expresses their agreement with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties relating to the subject matter of this Agreement. Buyer and Seller further agree that Buyer has no responsibilities or obligations whatsoever regarding the Conveyed Credits or the BEi except as are expressly stated in this Agreement. 8. Notices. All deposits and any notice required or permitted to be made or given under thls Agreement shall be made and delivered to the parties at the addresses set forth below each party's respective signature. All notices shall be in writing and shall be deemed to have been given when delivered by courier, when transmitted by facsimile (upon confinnation of successfully completed transmission), or upon the expiration of two (2) business days after the date of deposit of such notice in the United States mail, registered or certified mail, postage prepaid. 9. Attorneys' Fees. This Agreement shall be governed and construed in accordance with the laws of the State of California and interpreted as if prepared by both parties hereto. In the event a dispute arises concerning the meaning or interpretation of any provision of this Agreement, or in the event of any litigation arising out of or related to this Agreement, the party not prevailing in such dispute or litigation shall pay any and all costs and expenses incurred by the other party in establishing or defending its rights hereunder, including, without limitation, court costs, expert witness fees, and reasonable attorneys' fees. 10. Limited Representations and Warranties. Seller is a corporation duly formed, presently existing and in good standing under the laws of the State of Nevada, is qualified to transact business in the State of California, and has the power and authority to own, and does own, the Mitigation Credits, and the power and authority to consummate the sale of North County Habitat Bank Mitigation Credit Purchase Agreement Page 3 ofS 03207629-609-CG l Y.062607 { City of Carlsbad ATTACHMEJ\!T 2 www.carlsbadca.gov 2009 AMENDED MITl~ATI0N CRED.IT PURC.H.ASE 0PTf0N AGREEMENT AND ACl<NOWLEDGMENT FQR THE; NCHB (t/orth Coun(y '/ .,) ,): ,:~1.•,f~ u. /ie,~"'1,t 8 k ·;f~~J, n8v1u;, · ,an Attachment 2 MITIGATION CREDIT PURCHASE OPTION AGREEMENT AND ACKNOWLEDGMENT nns MITIGATION CREDIT PURCI!ASE OPTION AGRE~NT AND ACKNOWLEDGMENT ("Agreement'') is entered into this~ 'day of {)C:i°c~ , 2009 by and between WESTMARK DEVELOPMENT CORPORATION, a Nevada corporation ("Seller'') and CITY OF CARLSBAD1 a municipal corporation of the State of California ("Buyer"). RECITALS A. Pursuant to that certain Banking Establishment I~trument regarding the Es1abfishment, Operation and Use of the North County Habitat Bank dated May 23, 2007 (the "BEI"), by and among Westmark Development Corporation; the California Department of Fish.and Game; the United States Fish and Wildlife Sexvice; the United States Environmental Protection Agency, and the United States Anny Coxps ofEnginee,rs (referred to coUectively hereinafter as the "Agencies"), the Agencies have acknowledged the creation of the North County Habitat Bank (the ''Mitigation Bank") and the right of Seller to sell. ;,Mitigation Qedits11 to mitigate for the los~ of wetlands and habitat as provided therein. B. Buyer desires ro mitigate•the loss_ of certain wetland/riparian or upland habitat values on real property located in San Diego County California commonly known as Emergency Channel Dredging for Agua Hedionda Creek (the "Buyer's 'Property") to satisfy Buyer's obligations with respect to wetland/riparian or upiand habitat on Buyer1s Property and 1,o obtain permits and approvals to develop Buyer's Property. C. Buyer has agreed to pur<;hase from Seller, and Seller has agr~d to sell to Buyer 1.138 credits of United States Army Co1·ps of;IEngineers/CaliforniaDepartment of Fish and &ame Enhanced Wetland/Riparian Mitiaation and 2,422 credits of California Department of Fish and Gam(' Enhanced Wetland/lUparian.Mitigati.on as defined in the BEI (the 11Conveyed Credits") from the Mitigation Bank on the terms and conditions set forth herein. l 56 Credits equal 3.56 acres of Wetland/Riparian Enhancement D. Buyer acknowledges that Buyer understood and concurred that Buyer's previous purchase of 5.o·credits of created Wetland/Riparian Mitigation Credits represented 1.67 acres North County Ha bilat Bank Mit~tlon Credlt Purchase Agraamont Page 1 of5 03201629-609-CG1 v.100309 ofU.S. Army Co;rps of Engibeer.s an<! Califoroia..Departroent QfFish and Game create(l/.restoood mitigation babitat consis~nt with the BEi. • NOW, TaEREFOIIB, in c6nsideratiqtt-ofthe agt~eri:tents and· ackpowledrpnents ~effortµ 1'e~irl. ~d·.fot otber go.od-and:-wtluable c~i4~ation, t:Ji~ teQeipt m.id' suffi~fenoy of ,w.hic;h i~ heteby·acltnowlec.Jge(( Sell~t ~a,Burerh~t~Q~ agree and acknow..l~ge ~ fb,t9ws: l. Pui'CQ@S~ Price. rM·,pUi'cfias~price/~r. flie 1.138 credi~ ofi,tnitoo. ~tates Army ¢qrp~ of EilgiO:~.r~/Califo1:ni.a,De,p~r~e~t of Pish anci Game li!nllftn~ · Wedan4/l'.tipar~~ Mitig3tiQn.~d-~A22 credits of California Depaittrte4t:,ofFish all\! Game,Enh~ced Wetfattd!Riparlan Mitigaf.ion,shall be $150,000,0~ Thd'.urohase Pric~ shall be paid in,~oe>dfunqs_,Qn tb~,ClosiUg :Patt. Tl,iese terms shal1 expire ffthiscontt~ct is not ~ecuted··on. or before Octobw J.O~ 2009. Z. Aclmowledgnient of"Sale. Q.rt th¢ Cl6sing Da~. $e11et shalt detiver a. fully· execmed orig#ial of.the Acknowl~~ept of Sitle of Miugt\lion Credits· (i' Aclmo~ledginettt"), inf oriri and content as Bxhibii A ait4che_d qereto and su~h otber-docmnents and, ins1:rtllliems as inay be i:equired by any of the Agen~s :to evidence and recognize the transfer of the Conyeyed Ctr;di,tsat.Q·_Buyet: Mot~:vet,_ SeJler, agrees :t:Q!i,t to the extent, such· hav~ not b'een.-provided to Buyer· atthe clos4J.g, then if teqQe$ted by Bµyer subsequent to the closing, Sell~·will pro~de sµch documents and irist:ruments AS l,ilay hi) r~quir~µ by aJ).y of the Agencies to evidence and recognize the n.nsfe.i: of the Cpnv.ey,~ C,~ts within ten (lO) days foUowing Buyer's requ~t. The provisions of t})iS:Paragraph 2 sballsurvive th.e.tlo~ing a.n&tenninati.on of this- A~eement 3. Acknowledgement By signjngthis. Agr.~inent, Buyer acktJ.owl~ge.s-that Buyer, .understood and: c,e>11cuued that Buy et' s PfWi'~~ -p4rcbas~ of 5.'. 0 et:edi'fs"· of created We~ancVRip~Mitigation CJetµts r~pre~ented U j7 ~es ofU:S, Army.-Corps-o( Engineers; and Califorru~ D~Jiartm¢n.t:of Fis~ tµ1d _Gai.tw ct~t~restored mjftgatioti habi,tat, 4. Option Period On the ~at~ ~Uye( pre,sen.t$ s~ch, Agreement tQ the S~ll~. 1?t1:ch acti'on shalk constitut~ Buyer entering-in,to an.Qptlon J_>etiod for p9rchase of the 1.13.8 credits; of United: States A:nµy Corps of Engmeet&/Ca.Iifomia pepattme.nt of Fish and Gam.e Enhanced WetlaQd/Riparian Mitigation and'l.422.cre4lts of'Caljfornia DepiU'tment of Fish and Qatne Enba,nced W etlan'4/Riparian Miµgation foq. peri~d· of 60. days. 0n or before the 60th day ·of said Option, Buyer shall deliv~r fund~ equal fu the·Purcbase Price t.o· Selim\ If Buye.r fails to deliver the Purc~e Price to Sell~ ,by-the 60t!i day of th~ Option Period, and this Agreement is not arntinded to the• coiit.r:.ur, 1 t4is Agreement shall be nuil._~nd-void. 5,. ClQsiµg, The~te of deliyerjrQf ~h~.Pqrcha:s.ePtjce ~liaJl be deemed the 1'Closm~ Date". The closing--shall.mea11 the date th&i the Pu_rcha¢.Price is. delivered to Seller aM the North CoUhly'Habltat Bank MltilJiltl!)n c rec\ll.Purchas'! Agreement P~ga 2of 5 032.0162~-609-QGi v,'1ooooa fully el!:ecuted Ackno_wledgment of Sa]e-Qf Mitiga#on Credits is delivered to Buyer. Notwithstanding th~ fo~~g9ing, Buyer may aCQelerate the Closing Date . • 6: AS-IS Sale. Buyet acknowledges and agrees that; (a) it is ihe Buy~r's sole responsibility to detennine the acceptance of the Conveyed Credits by the Agencies_ as mitigation for impacts to wetland/ripatfil.n values, and any completed sale ofany CoITVeyed Credits shall be final; (b) the purchase and sale of the Conveyed Credits shall be made on art "AS IS, WHERE IS, WITH AIL FAULTS" basis as provided for in the BEi; and c) no representations or wa1Tanties have bee,n made or are.made and no responsibility has been or is assutned by Seller or by any officer, lfgent, affili.aic,; attorney, or representative acting or pwporting to act on behalf of Seller as to (I) the mitigation value of the property conveyed to the Agencies in ~b1ishing the Mitigation B.ank; (ii) the mitigatjon value gr mitigation requirements of Buyer's Property, (iii) the acceptance of the Conveyed Credits by-the Agencies or any other governmental agency as mitigation for the loss of habitat values associated with Buyer's Property, or (iv) any other fact or circumstances which might affect the Mitigation Bank, the Buyer's Property, or the Conveyed Credits. 7. Termi.nati~n. Time is of the oosence in this Agr~ment In the event the cloi;lng does not OCCl.ll" by the Closins Date, Seller, a;t its election. and in its sole and absolute discretion, by written notice to Buyer, may termii:tate this Agreement and 'tieither party shall have any further obligations hereunder except-as provided in Paragraph & below. 8. Brokers. Buyer repres.ents to the Seller that it has not had any other contract, agreement.or dealings regarding ~e Conveyed Credits with, nor any communication in connection with the subjectmatt~r of this tr~ction through. any consultant, bro~er, agent, finder or other person who can claim a right t.o a consultant fee, commission or finder's fee from the Seller in co!lllection with ihe sale cohtemphµed herein. In the event that a. consultant. bi:oker or finder makes a claim for a consultant fee or commission or finder's fee based upon any such contract, agreement, dealings or communication, the party thtough whom such claim is made shall be solely responsible for and sbal}incleµioify, defend, and bold harmless the other party from and a;gainst said commis$iotl or fee iw.d all costs and expenses (including without limitation reasonable att.6rt1eys' fees) incurred by the other party in defending against such claim. The prpvisions of this Paragraph 8 sh~U survive the termination of this Agreement. 9. Integration. Buyer and Seller agree that all negotiations, discussions, understandings and agreements heretofore made between them or their respective agents or repfesentatives are merged in this Agreement and the E-imibit attached hereto, and this written Agreement alone fully and completely e,i:p('esses their agreemC}nt with respect to the subject.matter he,reof and supersedes all pri'or agreeµients:and ~derstandings between the parties relating to the subject matter of this Agreement. Buyer and Seller further agree that Buyer has no North-Count)' Habitat !lank Mil/g.floJl Credij Purchase Agreement Page30rs 0'3207629-609·C01 v. 10()309 { City of Carlsbad ATTACHMfNT 3 2007 BANl< ENABUN.G JNSlRllMENTFOR.THE NCtfB www.carlsbadca.gov 05/26/2016 04 :48 FAX Attachment 3 .. ). BANK ENABLING INSTRUMENT fortbe : N()Rffl COUNTY HABITAT BANK Carlsbad, San Diego County, Californi• April 30, 2007 ThJs BankEnabJingJnstnament ("BEi'? made this t1_ day of~ 20!)7, regar:ding the establishment, use, operation, and maintet;lll)oe of the North County Mitigation/ Conservation Bank (''Bankj is made iirtd entered into by and among Westmark Development Corporation (''Bank Sponsor" lJJld "Property Owner,, the Los· Angeles District of the U.S. Army·Corps of Engineers ("USACB''), Region IX of the U.S. Environmental Protection Agency ("USEPA''), the Carlsbad field office of the U.S. Fish &. Wildli& Service ("USJ:'WS'1, "1!d the Soi.th Coast Region (i.e., Region 5) of the Califotni:t Department of Fish & Game (uCDFG''). The state and feder.J agencies named above comprise <lfld arc referred to Jointly !IS the ~itigation B~ Review team ("MBRT"), and the Bank Sponsor and the MBRT are hereinafter referred to jointly as the ''Parties." Recitals A. Tho Bonk Sponsor Is the person or entit)' responsible for cstablishlnJ. and operatinJ the Bail!<. · . B. Th,e Pt'Opcrty Owner ls r:he owner of rcaJ property contafning approximatcl)' 18.7' acres (th~ ~'Property"), located just south of Palomar Airport lload In. tho Cily of Carlsbad, San Diego County. State ofCaliforoia, designated Assessor's .Paicel No. 211--040-33, The Property is generally shown-and lcp!ly descra'bed in Bxhiblt A (Bank Location Mapg) and in Exhibit E-L (Prelimib41;)' Title Report, Legal Description, and Parcel Map$) attached hereto. WestmarkI>ev~Iopment Corporation, as Bank Spon5or and Property Owner, desires to crca~ ~ mltigatlon/conservation -bank over & 15.7-acre portion of the Property (the "Billllc Property'')( ~e B'ank Property i~ genCJ'IIIJy shown in Exhibit A and dcllbribed in Exlu'blt C (Restoration Plan). . ' , C. The Ci:>FO has Jurfsdiction over the conservation, protection, and rnanageme11t of fish, wildlife~ native plants, and the habitat necessary fur bfologlca,ily s~,tamabl_e popufatlons of these species pursuant to Fisb and Game Code sec. 1802; and other provisions of $tate law. D. The US?WS, an agency within the United S1wos Departmint of the Interior, bas jurisdfotio.11 over the cooservatiol!f ptoteotton. restoration and managemont of fish, wildlife, native pl\\Qls, and tho habitat_necessa,y for b!ologically sustainable populations of those sj>ecie:s within the United States pu~uant io the 'Endangered Species Act, 16 tr.s.c. §1531, et seq., the FislJ and°WHdlife Coordination Act, 16 u.s.c. §.66I-666c, the Fislund Wlldnrc Act of 1956, 16·U.S.c. § 742(f), "' seq., a11d other provisions of federal law. , E. The USBPA and USACE have jurisdiction over waters oftbe Uni~ States; pursuan; to tltc ClcanW~r Act, 33 µ.s .c. § 1251 et SBq. W:tters ofifie l!aiteid States includes jurlsdlotional wetiands. • ___,_,.,,..,,.. __ ~-----.-..-cro•-•----------~--~.............._ ___ ...,.. ________ --·· g.E xecutive Order 11'988, Floodplain Management; h.Reg ulatory Programs of the Corps of Engineers, Final Rule (33 CFR Parts 320~331); i. Guidelines for Specification of Disposal Sites for Dredged and Fill Material ( 40 CFRPart 230); J. Memora:n<fum of Agreement between the Environmental Protection Agency and the Department of the Anny concerning the Detenninatipn of Mitigation Under the: Clean Water Act, Section 404 (b)CJ) Guidelines (February 6, 1990); k.Federal Guidance fqr the.Establishment, Use, and Operation ofMit~gatiort Banks (p0 F.R 58605 et seq_.) (November 28, 1995}; L Guidance for the Establishment, Use and Operation of Conservation Banl<s (United States Department of Interior Memorandum, dated May 2, 2003); and m. Regulatory Gwdance Letter 02-2, dated December 24, 2002,. titled "Ouida.nee on Compensatory Mitigation Proje"cts for Aquatic Resow:ce Impacts under the Corps Regulatory Program Pursuant to Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act of 1899." 2. State: a. California Environmental Quality. A..ct ("CEQA") (Public Resources Code Section 21000 et seq) and State CEQA Guidelin~ (Tit. 14 CaL Code Regs., Chapter 3); b.Calif ornia Endangered Species Act C'CESA") (fish & Game Code Section 2050 et seq,.); c. taHfornia Natural CQtnmunity Conservation Planning ("NCCP") Act (l1ish & Game.Code Section 2800 et seq.); cl.Fish & Gam-e Code Section 1600 ~t seq (Fish and Wildlife Protection and Conservation); and e, Official Policy on Conservation Banks, A-pril 7, 1995, by California Resources Agency and California Environmental Protection Agency, jointly. Il, DJFINITIONS The initially capitalize~ terms use<! and nbt defined elsewhere in this BEi are defined as set forth below. A. "Bank Closure PJan." means a plan designed to ensure that the Bank is man,aged and m~tained, in perpetuity, consistent with the purpose of the Bank. The Bank Closure Plan is comprised of the Section in the Restoration Plan entitled Bank Closure, and Section X in this BEL The Bank Closure PageJo/25 3 BE!for lho-Norlh Co,mty Mi.tlgafir;m-Bm,/(, Carlsbad ,~..._...,._..,._ .......... ~·---,~----------------·• ----•-=--:--•-. Plan dc.scriht:;s actions reql,lited tQ closetne,Ba,rik following the s~le. of the las_t ~utbori~ed 9r~clit_ and identlfici$ and describes tb.e lon~-tem~ proposals for at)~ resp-ortsj~ilities of the Baµk Sponsor,. Property Owner, Bank M~agert en4t1wmentlrolder; a~d benef:i~i~res. B. , "Bank Establishm.ent Oafe'' .m~ans 'ttw date When (a) this BEt is signed by aij-P~~es (i.e., the Effecttve Date oftbis BEi). at)d (b) tile Conservation . Easement-o,ver the Bank Property h~ been: recorded orJbe·,owner has- p,rovided t~ CPFO an exec4ted Eonserv'~ti.6~ Easement in a form approved b.y the ~RT along with. a.11 sµpporting documentation. C. ''Bank.Man~g¢r"· or-''Long-Tetin Manager1' i's any perso.n. ~rpublic or: px;i vate: ¢n'tity respqnsible for man.ag~g-theBank and 'it,s ltabii:at in Pvq>etuity usiJig the annqal ip.tei:est pay,:tnents·fl\o!P, the.Endowment Fund as capital. r,he Bank Ma,t1ager ~sum.es. responsibility· for long-term management upon Bank ~loswe_. The l3~ M"itnager may beQome the.P,;operty OWn~r before Bank Glosure 'tmder Section XllI,F,.of this-BEL D, -''Bank~fop~ro·"·is.a ~ite-wheri, a specified t,minber ofacr.es qfWat~rs Qf the Unitetl-State~ aµd Covered.Hl,\.b~@t are crea~~. restored,; enpance~, aµd, ·in certain circum:stances, preserved,, Based on the-specified acrea:g~; the Bank a~prue-s Ctedifs available _fot coll_lpensato,ry mitigation in advance of authorized impacts to sim'ilar resources. A Conservatfon Easement (Exhibit E--4) will ptotect the B~nk Prop(}rty. · E. ''Ba1_1k Spt;in&or,-, means any person or p~blio or private· entity fespoitsible for estabUsliing and operating the Ban{(. A:t the tim~1of Bank establishment; and until transfer_ of1:h:°e Bank Property upderth'e terms ofthis-BEI, the Property Owner i"s th~ Bank-Sponsor, F. f'BEI'' mean~• Bank En1>:~ling Instru:rr!~n,t; which is this:dociJment and all Exhibits; fo_corporated byteference. · G. "Caw.strbphic Bvent" shall mean arr eve11t, su~b l!S a, spin Pfbl\Zar<f~ms Qr toxic substance, the-ip:lpae.t of a vehicl~ Qr-falling aircraft, or ii fµ'e,. which has a material 11hd detrimental impi,.ct tm the quality• ef µative·vegetation, soils, or wUdlifo-on the Bank Property and: over which the Bank Sponsor or PrQpirly Owntr has no C1?ilwol. · H. j'OEQN' n.ieans. t{ie C~{ifol'nia .E,nyironmental Quality A!-t (Califon:i,i_a Public Re$'o_or¢e•s.Code·Sections 21.000 et seq.; guidelines. for· implem~ritation ~i-C~!ifornia Pnbli9,R~ouic~s Coi;le Se~lc;i~s 15900; e~ $eq.), including ail regulations pron1.utiated putsu_ant to that Act. · 1. "CES'A:" m~ the Californfa·,End:mgere.d Species Act (Califqrn,ia Fish and ~e Co:dc· S_ec.tions. 20S.O et seq.); includ~g ~ll re~lations P,rorou!g!ited pursuant to that AQt · 1'ar,s,f_of2J 4 J, "CNLM" means the Center for Natural Lands Management, the Long-Term Manager of the property. K. "Conservation Easel'.llent'' means a perpetual conservation eas¢ment, as defined by California Civil Code§ 815.1, in the form of Exhibit E-4. L. "Contingency Fund" ~eans a fund (in a form acceptable to tl:ie .MBRT) established by the Bank Sponsor for any required remediatioo as outlined in Sections V.A..2 and vttr. M. 1'Covered Habitat'; means: (i) rip~ian and wetland habitat and (ii) those additional habitats, if.any; within the Service Area(s), the Joss ofwhich the MBRT determines can be a_dequately mitigate9 for by acquisition of Credits from the Bank. Covered.Habitat includes the CDFG Credits listed in Table I. N. "Credit0 is a unit of measure representing the accrual of acres of creat~ restored, enhanced, or preserved Waters of the US or Covered Habitat on the Bank Property; one Credit here is equivalent to one acre or as otherwise de.fined in the Restoration Plan. Credits in the Ba11k serve as mitigation 'or conservati,on fo_r agency-approved projects within the Service Area.' The minimum. Credit unit that may be sold or obligated is 0.1 Credit. 0. "Endowment Deposit'' is money to be deposited in the Endowment Fund in order to fuily fund the endowment principal. • P. "Endowment Fund" Q'}.ean~ .an mvestment tupd maintained in trust by tlie Center for Natural Lands Management ("CNLM"). The Endowment Fund shall be non-wasting; tbat is, the principal amount shall not decrease in value through expenditure, inflation, Qr investment strategy, and therefore, using an appropriate i~ation adjustment, such as the Consumer Price Index, a portion of the interest and earnings on the principal balance shall be re-invested into the endowment principal to account for inflatiqn. The remaining interest and eamings on the principal balance sha!J be used exclusively for 1he management of the Bank Property after Bank closure and in accordance with the terms of the BEI and Management Plan. Q. ''Force Majeure"·shall mean war-, insilrre·ction, riot OF other civil disorders, flood, earthquake, disease, fire, governmental restriction or the failure by authority, or any injunction, which has a material and detrimental impact on the Bank Pmperty, provided, however, that: (i) a riot or other civil disorder shall constitute au event of Force Majeure only if the event has broad _ regional impacts and is not endemic to the Bank and its immediate locale; (ii) a flood shall be considered an event of Poree Majeu.re only ifit is gre.a:ter than a presently projected I 00-year flood, where "flood" refers to a runoff event; (iii) lin earthquake shall c,ollcStitl,rte an event of Force Majeure only if the ground motion it generates at the Banlc is greater than that presently projected frorn an earthquake with a return period of 475 yef\l's; (iv) cµsease PageSo/25 5 BE/for the Nonh Comity Mitigatio11 B<m/c, Carlsbpd ------•"Ir---''"'''" ___ _,___._,.,.,,,,.._,1.1, ..... j.-..,-•--------~--- federal, stat~ and /or local ag~cy-representatives which oversee the establishment; use, and operation of the Banlc. Y. ''NCCP" is a Natural Community Conservatjon Plan, created pursuant to Fish and GaJne Code, Section 2801, et seq. An NCCP is a plan developed in accordance with the NCCP Act, which provides comprehensive management and conservation ofmultiple habitats and plant and wildlife species, and which identifies and provides for th·e regional or area-wide protection and perpetuation of natural diversity while alJowing compatible and appropriate development and growth. Z. "Perpetuity" means an indefinite period of time; forever. AA. "Preservation" means the .protection of existing ecologically important habitat or other eco$)1stem resources in perpetuity. BB. "Property Analysis Record" ("P Nl") is an analy~is th.at, based on assumptions it identifies, determines the amount of money to be placed in the Endowment Fund; it also provides ~ schedule for funding, and for utilizing available earnings from, the Endowment Fund. The PAR, developed by CNLM, contains the transaction dates for payme.nt and release of the financial assurances and shows the amount estimated to be provided from 1he Endowment Fuod1 shown as an annual amount for every year of long-term management funding into the future, includjng at least the minitnum number of years necessary to show at least one cycle of replacement for all capital expenditures. CC. "Property Assessment and Warranty" means a written apd signed ev11luation, leg,al ~escription and depiction, and the number of acres of the Ban1c Property. This Property Assessment shall describe any recorded or unrecorded rights-of-way, recorded or unrecorded easements, and recorded or unrecorded liens or other enctµ11brances that may prevent est&blishment of a Conservation Basement on Uie B!lllk Property in accordance with California Civil Code Section 815 and this BEL Plat ma.ps depicting encumbrances and improvements are included as part of this. Property Assessment. DO. "Property Owner"means the legal owner of the B~n1c Property in fee simple; at the time ofl;lank ~lishrnent, and until transfer of the Bank Property under the tenns of this BEi, the Property Owner is the Bank Sponsor. EE. 'IR_emedi_ation" ni.eans corrective measures. taken to ameliorate damage to or · impact on the Bank Property or fencing around it, or non-conformance to the Restoration Plan, Management Plan, Conservation Easement, or any other portion of this BEI. FF. f'Restoration Phase" means the period of time prior to full funding of the Page1of2cS 7 8£1 for the Nori!, County MiligQtion Bank; Cai'l,batf 3 1 Endowment Fund plus one year f6_r interest accrual or the. tune required to m~tfive-yeat success criteria, Which~vet is gtea~¢r1 Durirtg-tpis,period, the. short-term management, monitori1,1g, ,iµid.reP.of'ting· activities_will be impleme_nted ~ descrfbect ii) .the Restoration Plan. GG, "Restoration Plan" nieans"the-docum.ent that describes-th~ proposed ac,tivities cQnductecl d4tirtg tlie Rest9.rii,tion Phase of the B~nk to estiµ>JJsh the Ci't:dits. The Resfo~ion Plan describes th_e crea.tion,, restoration, arid enhaIJ,c~ment of habitat (i.¢., the sche4i4e, plilnting--sch¢me; pla_nt palette, and mqnitoting pr<>cediJtts), the habitat establishment perio~ the success criteria to obtaih:suc,cessful hapttaU:stablishment, monitoring to e~~lµate the success, and reporting. The Restor~on P-lan also includes the provisions for in~erim manage.ment and monitoring, HH. "Restoration Special.ist" is the p_erson· Qr entity, ~pJoyep: and direqted by the.BWJk Sp9nsor~-with requisite professional crede11tia,l's, to implem_ehtthe R~stor~tion Plan. · II._ 11$er:vice A.tei1. meiµ1s -the geogtaphic-area( s) witliJn which imp~~ts that occur to Wate,r:s of the United S_tatesor Cov.etedlla]Jitat rnaf be tnitigated tmo.ugh the· acqu(s~tion _of Credits ili ijceiorgance ~ith this nm. JJ. '1.JnlawfulAct'; shaU mean the qnlaWful act.of another .and sh~IUriclude:an event or series of events, sud.; as·the intentio~al dumpitig within the Bank, or any cpnnected watercourse; ofa hazardiJus toxic substanpe, or· the di~charge of such a substance by any pel.'$QU or e_ntity othe_r than the Pr9perty Owner qr Banlc Sponsor in violation of a statute, ordinal)ce, reg4Jation pr permit1 whi_bh event or series of events has a material and de~t~l_iropact bn (be water quality, native vegetation, soils, fish, or -wildlife ofth~ Bank Property. m STIPULATIONS A. Baseline Cqnditions. The current c.orrdition of t1ie Bank Property is ~escti!:>ed in the-Restoration Plaq @x:1,ljbit C) anc:i &iol9gicai Resources Sqrvey (Exhibit H). ' R Disclaimer. This Bpl cloys not -ih ·imy ril1UU1~-Jimjt-the statutory authorities: or responsibilities of -the MBRT, bui is, instead, ~ implem¢ntation. of such statutory authorities and responsilnl~ies. C. Exhibits and Appendices. The following exhiblts, an4 all subsequ~ntrevisions and ~ddenda to the Exhibits hereto, are attachments incorpor~ted oy reference intd fhjs BEI. Exltibit A .... n~nk iocatiQU Maps Exhibit }3-·Serv\ie A1·ea Map Exhibit C-= Restoration Pfan Ei-filbJt D -Bank Malia~em~Iit and Opetl\tion' l>.J Property Analysis Record (PAR) ,Pag~Bo/25 8 1JE!for 1JicNortkC()_l!111)1 MilfgartbnB,,,,k, forlsbbd D-2 Long-Term Management Plan (Management Plan), including the Banll CJosqre Plan Exhibit E -Real Estate Records and Assurances E-1 Preliminary Title Report, Leg11l D_escription, and Parcel Maps E-2 Bank Property &sessmeot and Warranty E-3 Plat Maps . E-4 Approved-as-w-form Conservation Easement E-5 Title lnsuran~ policy Exhibit F -Bank (:;rediti_ng and Credit Sales F-1 Credit Table F-2 Credit Sale Le~ger F-3 Credit Purchase Agreements F-4 Credit Purchase Payment Receipt Exhibit G -Phase I Environmental Site Assessment Exhibit H -Biological Resources Survey Exhibit J.-WetllU)d Delin~ation Veritlcation Letter iv. EVALUATION, ACCEPTANCE, and ESTABLISHMENT OF THE BANK Representatives of the MBRThave inspected and evaluated the Waters of the United States and Covered Habitats on the Bank Property1 and have agreed upon the assignment of Credits based_ oil the Bank Property's biological, chemical, and physical functions as described i_n Section VI and detailed in Exhlbits C and H. A. Bank Sponsor's Performance. The Bank Sponsor agrees to perfonn all necessary work, in-accordance with the provisions of this BEi, to establish the 15.7 acres.of Waters of the United States and Covered Habitats, as proposeg in ExhibitC, until it is demonstrated to the satisfaction of the _MBRT that t)le Bank cqmplies in all respects with all conditions contai~ed hefein. The Bank Sponsor agrees to be responsible for all costs associated with the establishmeo_t of the Bank, including but not li.mi(ed to0construction, remediation, documentation, maintenance, management, monitorihg, and reporting, until one year after the Eridovyment Fund is fully funded and all success criteria are met. ' B. The Bank will be considered established and Credit sales may begin only upon completion of~he following: 1. Signature of the BEi ,by a.ll Parties; and 2, Recordation of the Conservation Easement or the owner has provided to CDFG ~ executed Conservatio_n Easement in a fonn approved by the MBR,T aJong with all supporting j1ocumentat_ion. C. Modific~tion of the Restoration Plan. Creation, restoration., and enhancement of haJ,itat on the Bank Property will be pi::rformed as described in Exhibit C, and the Credits will become available-in accordance with the schedule specified in .S.ection Vi of this BEI. fn the event that the Bank Sponsor determi.iles that modific:ations mU$tbe made in the-Restoration Plan to ensure succ.essful estab)jshment of nabitat on the Bank Property, or in order to cc,mply with specific permits or other authorizations needed to establish the Bank, the· Bank Spons'or shall submit ii written request for such modifications to the MBRT. Pqge9of:JS 9 BE/for the North Coun,y Mll/gafion Bank, C,,,Lrb<!d ____ h___...,,..__. •• ,.. .. ..,.~-_.-,~------.,.,..__.......,_,,.._,_ success criteria are met, the creation, restoration, and enhancement efforts on the Bank Property shall be deemed complete. Table3 Plant Soecies Diversitv Milestones .(or Rioarian Wo.odland Success Criterion Year 3 I 4 I 5 Plant Soecies Diversit','. 6 I 8 I 10 Table4 Veeet~tive Success Criter)a {oercent)· llabita.t/Parameter Year 3 4 5 Freshwater marsh Total cover 60 70 80 Rioariari forest Total cover 60 70 80 Tree cover 35 55 65 Shrub cover 30 40 50 _Herb _cover 50' 40 30 Mule·fat scrub Total cover 55 65 75 Shrub/tree cover 30 45 60 .Herb cover 50 40 30 All habitats Weed cover _ro 10 ... 8/0+ 5/0+ + There shall be zero tolerance fot the· most invasive species listed by the California Invasive Plant Council (e.g., oamoas grass). P, Release of Hllbitat Creation, Restoration, and Enhancement Credits l. Habitat Creation, Restoration, and Enhancement Credits, including both Waters of the United States Credits and Covered Habitat Credits, shall be released, as described below, based upon attainment of the success criteria summarized above and more fully described in Exhibit C. No subsequent Credit releases may occur until the prior Credit release has occurred. Credit releases shall occur according to the following schedule. Page/3of15 ~ i~ percent of the Cr~dit~ upon the Bank Establishment Date; b. 35 percent of the Credits upon attainment of Year Two success c;;riteria; c. 20 percent of the credits upon attainment of Year Four success criterta and recor4atiqIJ of the approved Conservation Easement; 13 BEi for the NorJ/1 Counl)I M/t/grmi,11 /Jrul/<, C,orlsbad --~-..... ------~~·---------~---· ··-·· ... -·--· .. •-.. -~ ........ _,..,,_ ·- 3. Decisions related to use of Credits in t1ie Sei;vice Area (e.g., determination of the appropriate mitigation ratios), vyill be. made by the appro~iate MBRT agencies on a case-by-case basis in accordance with applicable law, regulations, and guidance, 4. The.1;3ank Sponsor shall notify all r.nembers oftbe l\1BRT upon completii:m of any Credit sale, as described ii1 the reporting section of this BEf. D. ConditiQns on Debiting. Any Credits debited before achieving the five-year success criteria shall require posting sufficient-tinancial assurance (see V.A.2. ~bove) to cover co1;1tingency actions in the event of panial or total failure. Upon meeting yearly success criteria as determined by the MBRT, the Contingency Fund shall be released to the Sponsor according to the schedule-described in Section V.A.2. VID. MAINTENANCE AND MONITORiNG OF THE BANK A. Interim Maintenance P·rovisions: Tµe Bank ~ponsor and Property Owner agree to perfoi:m all necessary work to maintain the Bank Property consistent with the maintenance requirements articulated in the Restoration PJ11n until achievement of the 5-year success criteria, full nlt!ding ofth~ Endowment Fund for one year, and closure of the Bank. B. fnterim MQnitoring Provisions: The Bank S1mnsor and Property Owner shall perfonn all work necessary to monitor the Bank Property in accordance with the monitoring proc~dures set forth it) the Restoration Plan, activities which shall remain in effect until achievement of the 5-year success criteria, full funding of the Endowment Fund :for one year, and closure of the.Ba~. Monitoring will be carried out under the direction of a restoration specialist who will direct maintenance activities (maintenance monitoring) and assess the progress (technical monitoring) of the restoration effort. Mainteuance monitoring wilJ rely on visual observations of plant establishment and growth and other site conditions (e.g., soil stability). C. Contingency Plans/Remedial Actions: 1. ln the event the _M,BRT reasonably detennines that portions of the Bank Property have been damaged subsequent to the Bank Establishment Date, and the effect of such activity has ~aterially impaired habitat functions and values on the Bank Property, and neither the Bank Sponsor nor Property Owner has reasonably restored habitat functions and values to the damaged portions or' provided the MBRT with reasonable evidence that habitat functions and values wiJl be restored, the MBRT may,.at its qii;cretion, sµspend Credit sales and/or reduce the number of Credits allocated to. the Bank equivalent to the decrease in fu.octions and values of the JS BEi /of 1/te North Cou7J/)I Miligalion Bank, Carlsbad -·"'"'·------------·---............ ,._4 ___ .J:~••~---.... , .......... , . ..-,---.,,--------·--- measures are .implemented as approved by the MBRT. 4. At the request of the Bank Sl)onsor, the MBRT will perform a final compliance visit to det~ne whether all success criteria have been satisfied. Upon satisfaction of the success criteria, any remaining contingency funds will be released to the Sponsor. D. Long-Term Management. O_nce the five-year sµccess criteria in the R~storation Plan and this BEI have been met and the Endowment Fund is fully funded for one year, long-tenn management of the Banlc Propei;ty shall be implemented aqcording to the Management Flan. The Property Owner shall be obligated to manage the Bank Property in perpetuity to, preserve its habitat and conservation values in accordance with the terms of this BEI; the Conservation Basemen~ and the Management Plan, as funded through the Endowment Fund. The Management Plan shall provide the basis for the implementation and prioritization of the management tasks. The Property Owner and the MBRT shall meet and confer. upon the request of any one of them, to consider revisions to the Management Plan to better conservethe values of the Bank Property. E. Long Term Monitoring. Lo_ng-tenn monitoring shall be performed as described ?I the Management Plan. The Property Owner shall be responsible for annual reporting to the MBRT as described in Section IX of this BEL P. Conservation Easement Monitoring. Bank Sponsor's and Property Owner's obligations shall include using reasonable efforts to prevent uses of the Bank Property not permitted under this BEI or the Conservation Easement. IX. REPORTING A Annmd Reporting. Sponsor shall submit a report to ibe USA CE as Chair of the MBRT, for distribution t-0 the other members of the MBRT, on or before November 15th of each year, with the first report due after the end of the first full growing season. The annual report shall address or provide the following, as approptiate: 1. All elements set forth in the Restoration Plan and/or Management Plan; 2. All remediation efforts and an evaluation of their effectiveness; 3. A copy ofa!J Contingency Fund and/or Endowment Fund deposits; and 4. A record of all disbursements mage from the Contingency Fund and/or the Endowment Fund for Bank activities. B. As-built Report. The Bank Sponsor _shall submit to the USACE, for distribution to the. other members of the MBRT, an as-built report for the Bank Property not more than 60 days after the Effective Date of this BEL C. Accounting Procedure. The Bank Sponsor shall notify the MBRT upon the sale of each and every Credit and approval of each and e\,'ecy additional Credit. Sponsor shall send a fµll and complete updated ledger (Exhibit F-2) to each fggo i7of15 17 BE/for tit~ Nor/Ji Cour,/JI Mitigation Bank, Carl,bad ' ,.. __ ........-:;<--...~·----------,w----·---- 41 reporting, until one year after the Endowment Fund is fully funded and all success c;ritetia are met. C. Real Estate Provisions-. The Property Owner bas recorded a Conservation Easement on the Bank, The Conservation Easement shall preserve the Bank Property as Waters of the United States and wildlife/riparian habitat (i.e., Covered Habitat) in perpetuity. D. The Bank Sponsor ~ees to submit an as-built report for the Bank t9 the MBRT within 60 days after the Effective Date of this BEI. The. as-built report shall inclµde as-built drawings, with accurate maps showing the finish grades of the Bank Property. The maps shaJI clearly distinguisq among the preserved habitats and the created, restored, and enh~ced wetlands and Covered Habitats. The as~ built drawings and any attachments will describe in detail any deviation from the proposal described in the Restoration Plan. E. The Bank Sponsor or Property Owner, as appropriate, agrees to have accounts audited using General Ac~pted Acco1,.mting Principles performed by a qualified, ind.ependent accounting organization upon request of the MBRT, not more frequently than annually, and submit the results of the audits to the MBRT. F. The Bank Sponsor and Property Owner shall not discharge or release to the Bank Property, or permit others to discharge or releas·e to the Bank Property, any _rµ~rial or substance deemed hazardous or toxic under any federal, state, or local environmental law. G. The Property Owner shall not create any encumbrance to the title of the Bank Property 0ther th.an those set forth in Exhibit E and accounted for in the Property Assessment in Exhibit E, and Property Owner shall not execute, renew, or extend any lien, license. or similar interest without the prior written consent of the .MBRT. · H. Neither the Bank Sponsor nor Property Owner shall construct any structure or engage in any activity or use of the Banlc Property, including mineral exploration, excavating, draining, dredging, or other alteration of the Bank Property, that is.not necessary for execution of the Restoration Plan without the prior written consent of the MBRT. I. The Bank Sponsor and Property Owner shall ensure that the Bank Property is maintained to ensure its suitabillty as a Bank consistent and in accordance with this BEI. J. The Bank Sponsor and Property Owner shall allow, or otherwise provide for, access to tlie site by all signatory Parties, as necessary, for the purpose of inspection and compliance monitoring consistent with the terms and co.qc!.i.tions of this BEi. Inspecting Parties Shall provide reasonable notice to the Property Owner during normal business hours and not less than 24 hours prior to Page /9of25 19 BE/for the North Coun/)1 Mlliga(lon Ban/(, Carlsbad ._.. __ • .....,.__,.,_.,. •• __..._,.. ••••• ••---•--~---"--~-•••---... I Property Owner, including its employees, agents, contractors, and consultants; b. that neither the Bank Sponsor/Property Owner, nor any entity controlled by it, including contractors and consultants, could have reasonably foreseen and prevented such damage or non-compliance; and c. the duration of damage or non-compliance was caused by such circumstances beyond the Sponsor's or and Property Owner's control. B. Dispute Resolution I .The Parties agree that, in the event of a dispute, the Parties sha11 use their best efforts to resolve the dispute in an informal fashion through consultation and communication involving ascending levels of management within each Party's organization, or other fonns of non-binding alternative dispute resolution mutually acceptable to the Parties. 2. Resolution of disputes about application of this BEi as between members of the MBRT shall be in accordance with those stated in the Federal Guidance for the Establishment, Use, and Operation ofMitigation Banks (60 F.R. 58605 et seq., November 28, 1995). C. Modification and Termination of the BEI. This BEI may be amended or modified with the written approval of all signatory Parties. Any of the MBRT members may terminate their participation upon written notification to all signatory Parties. Participation of the MBRTmembers will terminate 30 days after written notification. D. Specific Language in the BEI Shall Be Controlling. To the extent that specific language in this document cnanges, modifies, or deletes terms and conditions contained in those documents which the BEI incorporates by reference, and that are not legally binding, the specific Janguage within the BEi sba11 be controlling. E. Entire Agreement. This BEI, and all exhibits, appendices, schedules, and agreements referred to in this BEI, constitute the final, complete, and exclusive statement of the terms of the agreement between and among the MBRT and the Bank Sponsor and Property Owner pertainmgto tbe Bank. and supersede all prior and contemporaneous discussions, negotiations1 understandings, or agreements of the Parties. No other agreement, statement or promise made by the Parties that is not contained in this BEI shall be binding or valid. No alteration or variation of this BEI shall be valid or binding unless contained in an amendment in accordance with Section XIIT.C. Each party acknowledges that no representation, inducement, promise, or agreement, oral or otherwise, has been made by any other Party or anyone acting on behalf of any party unless the same has been embodied herein. F. Transfer. Page.21 o/25 1. Transfer of Property Owner's Interests The Property Owner shall have the right to sell or convey its interest in the Bank Property at any time. Provided, however, that any such sale or 21 BE/for lhe Nor/h CDun,y Mitigation Bmok, Carlsbad -------,.-------,.,., -"1'••------• .. -•~--.•i-.---A•-.._-_,. ••-•••~•-•--~------~-----_,._- Sponsor, Property Owner, or the MBRT disagrees with any detennination covered by this provision and reasonably request the reasons for that determination, the determining party shall furnish its reason in writing and in reasonable detail within thirty (30) days following the request. H. Successors and Assigns. This BEi and each ofits covenants and conditions shall be binding on and shall inure to the benefit of the Parties and their respective successors and assigns, subject to the limitations on transfer set forth in this BEi. I. Partial Invalidity. If a court of competent jurisdiction holds any term or provision of this BEi to be invalid or unenforceable, in whole or in part, for any reason, the validity and enforceability of the remaining terms and provisions, or portions of them, shall not be affected unless an essential purpose of this BEI would be defeated by the loss of the invalid or unenforceable provision. J. Notices. All notices (including requests, demands, approvals or other communications) under this BEi shall be in writing. Each Notice the Bank Sponsor or the MBRT desires to give to the other shall be in writing, shall clearly identify the name of the Bank and the subject of the Notice on its first page, and shall be personally delivered or sent by facsimile to the persons set forth below or shall be deemed delivered five (5) days after deposit in the United States mail, certified and postage prepaid, return receipt requested, and addressed as follows. MBRTChair: MBRT Members: Page"i3a/2J District Counsel U.S. Army Corps ofEngineers Los Angeles District 915 Wilshire Boulevard, Room 1535 Los Angeles, California 90017-3401 FAX: 213-452-4217 Regional Manager Department of Fish and Game Region 5 4949 Viewridge A venue San Diego, California 92123 FAX: 858-467--4299 Carlsbad Office Manager U.S. Fish and Wildlife Service 60IO Hidden Valley Road Carlsbad, California 9201 I FAX: 760-431-590 J 23 IJEJ for lit• North Co11nty Mltlgarron Bank, Car/shad 47 Bank Sponsor: Director, Water Division U.S. Environmental Protection Agency, Region 9 75 Hawthorne Street Sacramento, California 94105 FAX: 415-744-1078 Westmark Development Corporation 3375 Pepper Lane, No. 102 Las Vegas, Nevada 89120 Attn: John D. Lee, Esq. FAX: 702-898-9538 The Parties agree to accept facsimile signed documents and agree to rely upon such documents as if they bore original signatures. Each Party agrees to provide to the other Parties, within seventy-two (72) hours after transmission of such a facsimile, the original documents that bear the original signatures. Either Party may change its address or fax number by giving the other Party notice of the change in any manner permitted by this section. K. Counterparts. This BEi may be executed in multiple counterparts, and each such executed counterpart shall be deemed an original, all of which together shall constitute a single executed agreement. L. No Third Party Beneficiaries. This BEI shall not create any third party beneficiary hereto, nor shall it authorize anyone not a party hereto to maintain a suit for personal injuries, property damages or enforcement pursuant to the provisions of this BEi. The duties, obligations, and responsibilities of the Parties to this BEi with respect to third parties shall remain as otherwise provided by law. M. Availability of Funds. Implementation of this BEi by the MBRT is subject to the requirements of the Anti-Deficiency Act, 31 U.S.C. § 1341, and the availability of appropriated funds. Nothing in this BEi may be construed to require the obligation, appropriation, or expenditure of any money from the U.S. Treasury or the California State Treasury. No agency of the MBRT is required under this BEI to expend any appropriated funds unless and until an authorized official affirmatively acts to commit to such expenditures as evidenced in writing. XIV. EFFECTIVE DATE This BEi shall become effective on the date of the signature by the last Party to sign this BEL PageUo/25 24 BE/for the North County Mitigation Bwrk, Carlsbad ., ____ ._._,,_..., ____ --...---------~--·---.... --·•~-"i'l---------. ... ______ 1_ .. ,, .... -••• ...----~ .... ---..... ,,---·--- ( City of Carlsbad ATTACHMENT 4 2007 CITY INTERNAL MEMORANDUM www.carlsbadca.gov DATE: TO: FROM: RE: MEMORANDUM June 28, 2007 Glenn Pruim, Public Works Director ,-,.. . A/ David Hauser, Deputy City Engineer l1Jl/l NORTH COUNTY HABITAT BANK Attachment 4 Since February 2004, Mark Rohrlick and Michael McCollum at Westmark Development Corporation (Westmark) have been working to establish the North County Habitat Bank (NCHB), and to obtain approvals from the various resource agencies in the Mitigation Bank Review Team (MBRT) for a Banking Establishment Instrument (BEi) regarding the establishment, operation and use of the NCHB. The BEi agreement was recently approved by · the U.S. Fish & Wildlife Service (USFWS), the California Department of Fish & Game (CDFG), the U.S. Army Corps of Engineers (USACE) and the U.S. Environmental Protection Agency (USEPA). The Regional Water Quality Control Board (RWQCB), while not a signatory to the BEi, has been actively involved in the creation of the NCHB, and has indicated that it will accept mitigation credits to fulfill Section 401 Certification conditions. Westmark is now actively marketing the mitigation credits established in the NCHB. Wetland mitigation is required In two different forms -creation/restoration and enhancement/preservation. Creation/restoration (USACE/CDFG) mitigation is newly created wetland habitat made by converting land with no habitat or some other habitat into wetland habitat. Enhancement/preservation (USACE/CDFG) mitigation is taking current degraded wetlands habitat and enhancing it to improve its habitat valu~. There are a number of factors governing required mitigation ratios, but for good quality habitat, it is common to see 2:1 creation/restoration and 1:1 enhancement/pres·ervation ratios. The NCHB was approved for approximately 4 acres of wetland enhancement/preservation mitigation (at a 1: 1 ratio this translates to approximately 4 acres of enhancement mitigation credits) and, 4 acres of wetland creation/restoration mitigation (at a 3: 1 ratio this translates to approximately12 acres of creation mitigation credits). The City has a need for approximately 0.96 acres of wetland creation mitigation acreage to complete the wetland creation mitigation requirement for the Agua Hedionda Channel Emergency Dredge Project . The asking price per acre of mitigation credit In the NCHB is $250,000. The price is the same for both creation and enhancement wetland mitigation credits. Westmark is offering to sell mitigation credits to the City at the discounted price of $225,000 provided we purchase in quantity (over about five acres. See discussion below). The City's cost to create an acre of wetland is slightly over $300,000 per acre excluding land value. Land values for non- developable wetland property are approximately $25,000 per acre. The NCHB is able to sell credits at a lower price per acre than the cost to create the acre because the agencies have established policies which view established habitat as having more ---··•-··-··-···· value than proposed habitat. That is to say, the agencies typically require an agency to mitigate (after the impact have occurred) at a 3:1 ratio which includes a 2:1 creation component and a 1:1 enhancement component. The theory behind this requirement is that not all the newly created habitat will survive so additional land must be createtj to end up with a one for one replacement. The additional 1 :1 enhancement component is presumably needed to provide habitat valu_e while the new habitat Is being created. Project applicants that are able to pre-mitigate for impacts to wetland habitat need only meet a 1: 1 mitigation ratio. Therefore, a pre-mitigated acre of created habitat has the same value as two acres of new habitat creation and one acre of habitat enhancement when such mitigation takes·place after the habitat impacts occur. The establishment of a mitigation bank allows the bank owner to recoup the cost of their per acre investment up to three times over once they meet all agency success criteria for a five year period. The NCHB has already met its four year success criteria and is currently seeking permission from the agencies to market the full value of the banked credits. We are not proposing at this time to purchase any wetland enhancement credits from the NCHB for the Emergency Dredge project. Our estimated cost of wetland enhancement at th~ Lake Calavera and other City sites is between $60,000 and $150,000 per acre depending upon the type of enhancement required. Since the Lake Calavera site only has the ability to accommodate approximately 0.63 acres of wetland enhancement out of the 3.54 acres of wetland enhancement required by the agencies, the City must find an additional 2.91 acres of enhancement elsewhere. Currently, we are exploring other options for providing the additional enhancement requirement. The NCHB has additional mitigation credits available which affords the City a unique opportunity to purchase add,itional creation mitigation credits at a discounted price. The City has numerous projects In the pipeline that will require wetland mitigation (see table below). Estimated Acres of Project Wetland Mitigation Required Agua Hedionda and Calavera Creek Channel Dredge Project (non-6 emernency work) Miscellaneous Drainage Master Plan Projects (Future City constructed PLDA orolects) 5 Prooosed Five-vear Dralnaoe Facility Maintenance ProQram 3 Total 14 Additional mitigation acreage may be necessary for other non-drainage City projects such as the Vista/Carlsbad sewer line replacement along the Buena Vista Creek. The proposed Five- year Drainage Facility Maintenance Program (DFMP) listed above includes only a fraction of the drainage facilities requiring maintenance in the City. The total wetland mitigation needs to implement the DFMP for all City drainage facilities are estimated to require an additional 15 to 25 acres of mitigation land. · The NCHB is located within the Coastal Zone. The California Coastal Commission (CCC) typically requires that mitigation for impacts to wetlands within the Coastal Zone occur within the Coastal Zone. There is very limited mitigation area av13ilable within the Coastal Zone making the credits that much more valuable to the City. ( City of Carlsbad ATTACHMENT 5 www.carlsbadca.gov DRAFT ACKNOWLEDGMENT OF SALE OF MITIGATION CREDITS FROM THE NCHB Attachment B Certification of mitigation credit from the North County Habitat Bank to the San Diego Water Board North County Habitat Bank EXHIBIT A ACKNOWLEDGMENT OF SALE OF MITIGATION CREDITS The undersigned seller hereby acknowledges that it has debited 0.550 created/restored wetland/riparian Credit from the North County Habitat Bank to offset impacts resulting from the CITY OF CARLSBAD El Camino Real Bluff Failure at Tamarack Avenue - Notice of Violation No. R9-2018-0080 project. This Credit is debited from the total 1.67 Credits held in reserve by the CITY OF CARLSBAD for future use. The Seller shall update the official North County Habitat Bank ledger reflecting this conveyance and provide the updated ledger to the Mitigation Bank Review Team. All terms of this conveyance shall be governed by the provisions of the Mitigation Credit Purchase Agreement and Acknowledgment between Buyer and the Bank Sponsor, Westmark Development Corporation, dated July 27, 2007, and amended on October 20, 2009. North County Habitat Bank c/o McCollum Associates 8336 Alpine Laurel Way Sacramento, CA 95829 Telephone: (916) 688-2040 Fax:(916) 688-7436 Email: mccollum@mccollum.com By: __________________________________ Name: Michael McCollum Date: May 21, 2019 Attachment C The San Diego Water Board’s approval of the city’s compensatory mitigation plan Ms. Gomez -2 - Deputy City Manager City of Carlsbad cc: Email Only Scott Chadwick, City of Carlsbad Mr. Sean Haeri, City of Carlsbad Brandon Miles, City of Carlsbad Eric Becker, San Diego Water Board Nicole Gergans, San Diego Water Board Susie Loscutoff, State Water Resources Control Board Tech Staff Info & Use Violation ID 1043386 Inspection ID 32502212 Place ID 844932 Partv ID 554051 July 19, 2019