Wetlands bill may penalize Raleigh

$1 million spent on buying sites

Staff WriterMay 1, 2011 

  • A News & Observer series, Washed Away, recently identified $140 million spent on restoration projects that are failing, long delayed or too far away to counter the effects of development.

    The roughly 80 projects identified by The N&O were largely built by the state. It has operated programs that allow developers and the N.C. Department of Transportation to pay fees based on how much damage their roads, shopping centers and subdivisions cause to streams and wetlands, and then the state becomes obligated to build restoration projects that counter those effects.

    There is no such program in many other states. The restoration is provided by businesses known as mitigation bankers, who find degraded streams and wetlands, restore them and then sell part or all of those sites to developers and road builders so their projects can move forward.

  • North Carolina is a lucrative market for mitigation banks because it is a fast-growing state with more stream miles than any other, according to one study. Roughly a dozen mitigation bankers in the state not only compete with the state program, they sometimes serve as a supplier.

— There has been a growing mantra among state lawmakers, environmentalists and others to privatize the production of restored streams and wetlands to offset the impacts of development.

They believe that private businesses in a market environment would produce better projects at less cost.

But for Raleigh residents new legislation aimed at furthering that goal could lead to the city eating more than $1 million spent on sites it has purchased for environmental projects. The legislation also would force the city to deal with what is now a monopoly - one business providing the pollution-reducing projects in the Raleigh area.

"I don't think the bill's sponsors realize some of the unintended consequences," said Kenneth Waldroup, Raleigh's assistant public utilities director.

The bill's chief sponsor, state Sen. Neal Hunt, a Raleigh Republican and former city council member, said he was unaware of the city's concerns. The council recently voted to oppose the legislation.

The legislation is the latest development in a continuing battle between the public and private sectors over what is the best way to produce restoration that protects the environment while keeping development and road building from slowing to a standstill. The federal Clean Water Act requires the damages from development be offset by restoration projects that improve water quality.

Waldroup said he generally agrees with a market-based approach to restoration, but says the market isn't in a position to work for Raleigh. There is only one mitigation bank providing stream and wetland restoration in the Neuse River sub-basin that includes the city.

It could be several years before a second enters the market, he said.

He also said it's unfair to exclude municipalities from buying restoration from the state, while allowing the state and federal governments to have access to it. The state Ecosystem Enhancement Program provides the restoration for a fee based on the amount of damage a road or development would create.

The city began developing its own restoration three years ago when state lawmakers first made a run at excluding municipalities from buying restoration from the state. The city has purchased conservation easements on two properties at a cost of $1.1 million that it plans to use to offset water quality losses caused by the construction of a new reservoir. The conservation can be used to offset development damages.

But that reservoir on the Little River may not get built. If that happens, under Hunt's bill Waldroup thinks the city would not have the option of selling the conservation to someone else.

One of the biggest mitigation bankers in the state is Restoration Systems, which is based in Raleigh. John Preyer, co-founder and chief operating officer, said he understood Waldroup's concerns, but private businesses such as his will struggle to survive if they have to compete against government programs not as focused on the bottom line.

He also predicted mitigation banks will quickly move into underserved areas in a competitive field. His company is looking to produce stream and wetland restoration that would serve Raleigh and the surrounding area.

Three years ago, he said his company began producing nitrogen-reduction projects locally to offset development-related pollution. Within a year another competitor jumped into the market and a third soon followed.

Hunt said he wants to nurture mitigation banks by taking away some of the government competition. His bill does not stop the state from producing restoration for its needs.

He said the businesses would be more accountable and efficient. If a project went bad, they would have to fix it on their own dime.

"They would be responsible and they'd have to go back and do it themselves," he said.

That hasn't been the case with many stream restorations done by the state that needed repairs. In a three-part series, "Washed Away," The News & Observer found more than 30, and in many cases issues were raised about the design or construction. But the state had only docked two contractors for construction problems.

State records suggest those who produce mitigation and then sell it to the state have a better track record. They have fewer erosion problems with stream restorations and performed slightly better than the state in a recent environmental audit of stream and wetland projects.

But that picture is dimmed by the fact that the state did not require private providers to report such repairs until two years ago.

Another question is the scientific research that questions whether stream restoration improves water quality. State legislative leaders say they are concerned about spending money on restoration without proof goals are being met.

Legislative leaders say Hunt's legislation is likely to become the vehicle to respond to concerns about the quality of stream and wetland projects. Hunt said he will listen to the city's concerns, and expects his bill will likely be reworked before it is heard in a legislative committee.

dan.kane@newsobserver.com or 919-829-4861

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service