Advocates wary of Staten Island wetland project

Wall Street may be at the forefront of the finance industry, but there is one type of exchange New York City has been relatively late to embrace: wetland mitigation banking.

Under the mitigation banking structure, large-scale environmental projects generate credits. These credits function as a currency which can be used to meet environmental restoration obligations incurred by building on or near similar habitats.

The city plans to join the 28 states with mitigation banks and break ground on a pilot project in Staten Island as early as April. The $14.4 million initiative would revitalize nearly 69 acres of marshland surrounding the Saw Mill Creek in western Staten Island. The undertaking would create about 18 credits, which could be used to offset restoration work required of construction projects that intrude on nearby wetlands. City projects would not need to pay to use the credits, but private firms would need to purchase them. The city says the credit system would ensure the Saw Mill Creek project complies with federal and state laws stipulating that construction cannot result in a net loss of wetland.

New York City officials and the Real Estate Board of New York, the industry’s chief lobbying group, have praised mitigation banking as a way to streamline and strengthen oversight of restoration work. Some environmentalists, however, are philosophically opposed to such exchanges. And the U.S. Fish and Wildlife Service contends the Saw Mill Creek project would sink money into a virtually irredeemable site and may still result in a net loss of wetland. Environmental advocates’ ability to prevent the pilot project may be limited, however; the city Economic Development Corporation says all funding is in place, and it expects to receive the final permit needed to proceed from the U.S. Army Corps of Engineers by 2016.

The Economic Development Corporation named five state and federal agencies that vetted its calculations and agreed the work would amount to about 18 credits of environmental benefit. Because the size and type of restoration required would be different at each site, the Economic Development Corporation said it would be difficult to numerically describe how much environmental work a credit may encompass. Rather, regulators would assess each project and then decide on a ratio.

Economic Development Corporation President Maria Torres-Springer said mitigation banking would help bolster the industrial sector which has historically lined city shores. Such banks expedite waterfront development by streamlining the often cumbersome and expensive process of getting regulators to sign off on restoration work, the corporation said. It also said mitigation banking would improve oversight of environmental work by consolidating the number of projects regulators must monitor.

The Saw Mill Creek proposal’s financial impact is harder to gauge. It is unclear what portion of the 18 credits would fuel city-led development or how much each credit would be worth. But the Economic Development Corporation anticipates at least breaking even on credits that are sold, based on how much the city invested per credit. Credits go for $700,000 in New Jersey’s Meadowlands. And mitigation banking has grown into a $3 billion industry nationwide, the corporation said. The city is so confident in the five-year pilot project that it has already named its potential expansion: the MARSHES Initiative.

“Our MARSHES program is a real win-win, supporting the job-creating industrial development our city needs while also dramatically improving our environment,” Torres-Springer said in a statement. “The Saw Mill Creek pilot alone is estimated to revitalize nearly eight miles of waterfront in New York City, spur more than $575 million in waterfront infrastructure investment and help create 3,500 jobs for New Yorkers."

The Real Estate Board of New York has urged the city to create a mitigation bank for years and has lobbied the Economic Development Corporation and City Council staff on the matter at least three times since 2014. Richard Leland, a partner at Akerman LLP in the firm’s New York office, said shorefront zoning often requires developers to create public waterfront access. This can make it difficult to avoid tampering with aquatic habitat and having to undertake work to offset the construction, he said. Such work is also expensive. The average cost of restoration in New York City is about $2 million per acre, but can run as high as $10 million per acre, according to the Economic Development Corporation.

“From the developer’s perspective, the availability of mitigation credits – where there has already been an approval as to the location and maintenance of a wetland – saves an enormous amount of time and money, and allows the development process to continue,” Leland said. “There’s a very lengthy approval and regulatory process. So this (mitigation banking) is not some kind of quick fix that does not take into account environmental considerations.”

But that is precisely how some environmental advocates and Steve Mars, senior biologist at the U.S. Fish and Wildlife Service’s New Jersey field office, described the city’s plan. Mars maintains the Saw Mill Creek initiative could result in the overall loss of wetlands.

The project would involve unearthing seven acres of wetlands that have been filled in, as well as rehabilitating about 17 acres of wetlands and enhancing several more acres of tidal and forest habitat, according to the city’s environmental assessment. Meanwhile, the Economic Development Corporation said development on an acre of wetland could require anywhere from one to three credits to fulfill its mitigation obligations. Therefore, Mars argued, the project could result in 18 acres of development on marshland, while only adding seven, a net loss of about 11 acres.

Ratio aside, Mars said the “deal breaker” for the U.S. Fish and Wildlife Service is that the Saw Mill Creek is at a high risk of being recontaminated by the nearby Arthur Kill strait. He argued a revitalized Saw Mill Creek could attract fish and other wildlife, take in contaminated tides of water and then spread toxins up the food chain.

“This bank site is heavily contaminated,” Mars said. “It’s basically 100 years of man’s sins on this property. We have transformers that were abandoned; there’s been dumping, illegally, that contain PCBs (which) are toxic to many life organisms; there’s lead; there’s mercury, chromium, a suite of toxic compounds. We’d rather have it stay the way it is, wait until the sources are cleaned up, i.e., the Arthur Kill.”

The Economic Development Corporation said contamination levels have not reached hazardous levels near Saw Mill, and that the benefits of the project outweigh the concerns.

Mars said his agency is prepared to “elevate this in Washington, D.C.,” if the Economic Development Corporation receives the go-ahead from the Army Corps of Engineers. The U.S. Fish and Wildlife Service has also written the U.S. Department of Housing and Urban Development to urge it not to authorize the use of some $12 million in disaster relief grants for the project. The city said the $12 million was already “in place.” But a HUD spokesman said a final decision on the funding will be made after considering objections raised by the U.S. Fish and Wildlife Service. The spokesman noted the funding was “contingent on satisfactory completion of the environmental review process.”

Locally, City Councilman Steven Matteo has submitted a letter of support for the pilot project, citing the benefit to local wetlands. One Staten Island organization dedicated to preserving open spaces, the Protectors of Pine Oak Woods, has joined other environmental advocacy groups such as the Clean Air Campaign and the Sierra Club’s Atlantic Chapter in opposing the mitigation bank.

“The idea is we will create an artificial wetland, or in some cases take an area that was once a natural wetland that has degraded and we will restore it to being a natural wetland, and that will give us the right to destroy an actual natural wetland somewhere else,” said Jim Lane, secretary of the Sierra Club’s Atlantic Chapter. “And it just doesn’t work because the fake wetlands do not have a good track record of performing the same ecological benefits as real wetlands.”

Jeff Coltin contributed to this report.