DATE: November 8, 2016
SUBJECT:
Title
INITIATE ENTITLEMENT PROCESS FOR POND 20, LOCATED IN THE SOUTHERNMOST PORTION OF SAN DIEGO BAY
A) RESOLUTION AUTHORIZING AN AGREEMENT WITH GREAT ECOLOGY IN THE AMOUNT OF $640,220 TO PREPARE 60% DESIGN DOCUMENTS AND SUBMIT MITIGATION BANKING PROSPECTUS DOCUMENTS TO THE ARMY CORPS OF ENGINEERS FOR A WETLANDS MITIGATION BANK
B) RESOLUTION COMMENCING ENVIRONMENTAL REVIEW FOR THE POND 20 SITE, INCLUDING THE ESTABLISHMENT OF THE MITIGATION BANK AND ASSIGNMENT OF LAND USE DESIGNATIONS FOR THE ADJACENT DEVELOPMENT PARCELS
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EXECUTIVE SUMMARY:
Pond 20 is a 95.13 acre undeveloped parcel of land located at the south end of San Diego Bay. Pond 20 is within the City of San Diego’s (San Diego) Otay Mesa-Nestor Community, it is included in the City of Imperial Beach’s (Imperial Beach) former Redevelopment Area and it is not currently included in the Port Master Plan. In July 2015, the Board directed staff to develop a Request for Proposals (RFP) for a mitigation bank and to continue to analyze the development of a mitigation bank on approximately 80 acres of Pond 20.
The District received six responses to the RFP for mitigation banking. The RFP was bifurcated into two categories: 1) consultants who would assist the District in developing and maintaining a mitigation bank and 2) third-party developers who would build their own mitigation bank. A decision analysis ranked Great Ecology as the top consultant proposal and Burns & McDonnell/Wildlands as the top developer proposal.
On December 8, 2015, no decision was made on the RFP. However, the Board directed staff to conduct due diligence, which included conducting a feasibility assessment which included an evaluation of the demand for mitigation credits, regulatory requirements for long-term maintenance, and conceptual designs and construction estimates.
On June 15, 2016, the Mitigation Ad-hoc committee was formed to continue the due diligence efforts to validate assumptions that a mitigation bank could be successful at this site and evaluating the strengths, risks, and uncertainties associated with creating a mitigation bank on Pond 20.
Based on the due diligence efforts, staff recommends selecting and entering into a consultant agreement with Great Ecology Environment and Design for $640,220 to prepare 60% design drawings and submit mitigation banking prospectus documents to the Army Corps of Engineers, and the Interagency Review Team. Additionally, staff is recommending commencement of Environmental Review and California Coastal Act review to assign land use designations for Pond 20 and the two adjacent parcels.
RECOMMENDATION:
Recommendation
Initiate entitlement process for Pond 20 including:
A) Adopt a resolution authorizing an agreement with Great Ecology Environment and Design to prepare 60% design and construction documents and submit mitigation banking prospectus documents to the U.S. Army Corps of Engineers for a Wetlands Mitigation Bank in the amount of $640,220.
B) Adopt a resolution commencing environmental review for the Pond 20 site, including the establishment of the mitigation bank and assignment of land use designations for the adjacent development parcels.
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FISCAL IMPACT:
The Planning & Green Port department has $300,000 from the Environmental Fund budgeted this fiscal year FY16/17 for mitigation banking and $130,000 for entitlements. Funding for FY 17/18 will be included in next year’s budget and is subject to Board approval.
Compass Strategic Goals:
By utilizing Pond 20 as a mitigation banking and assigning land uses to adjacent parcels will support the following Strategic Goals:
• A Port that the public understands and trusts.
• A vibrant waterfront destination where residents and visitors converge.
• A Port with a healthy and sustainable bay and its environment.
• A Port with a comprehensive vision for Port land and water uses integrated to regional plans.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
Brief History
Pond 20 was purchased by the District in October 1998 as a part of the 836-acre Western Salt land acquisition. Of the 836 acres, 722 acres were transferred to the state of California as offsite mitigation for the expansion of Lindbergh Field, and ultimately led to the creation of the South San Diego Bay National Wildlife Refuge. The remaining 114 acres were vested in the District for future development, subject to the Public Trust Doctrine. When the San Diego County Regional Airport Authority (Airport) became a separate agency, Senate Bill 1896 provided for the District to retain ownership of 95.13 acres, known as Pond 20, by reimbursing the Airport $3.33 million plus interest; the Airport retained the remaining acreage. Since acquiring Pond 20 in 1998, the District, in collaboration with the cities of Imperial Beach and San Diego, has conducted numerous public outreach processes, studies, and appraisals. In July 2015, the Board directed staff to develop an RFP for a mitigation bank and to continue to analyze the development of a mitigation bank on approximately 80 acres of Pond 20.
Request for Proposals Background
At its July 14, 2015 regular meeting the Board directed staff to issue a Request for Proposals (RFP) for mitigation banking on an approximately 80-acre parcel, while preserving the District’s ability to develop an agency managed mitigation bank. Furthermore, the Board directed staff to establish a Pond 20 Economic Development Fund Policy. BPC Policy No. 774 Pond 20: Economic Development Fund was adopted unanimously at the November 17, 2015 regular Board meeting.
The District received six responses to the RFP for mitigation banking. The RFP was bifurcated into two categories: 1) consulting firms that would assist the District in developing and maintaining a mitigation bank and 2) third-party developers who would build their own mitigation bank. A decision analysis was conducted and ranked Great Ecology as the top consultant proposal and Burns & McDonnell/Wildlands as the top third-party developer proposal.
At the December 8, 2015, regular Board meeting the Commissioners took no action on the RFP. However, the Board directed staff to conduct additional due diligence, which has been completed. This diligence included:
• Review of long-term maintenance and protection of the mitigation bank and related agency approvals.
• Market analysis of current demand for mitigation credits.
• Refined cost estimates including the use of excess soil generated from the mitigation bank for use on other District projects.
• Alternatives analysis including a smaller, District-built, pilot project.
Due Diligence
At the May 10, 2016, regular Board meeting staff presented the findings of the limited due diligence including the current demand for mitigation credits, long term maintenance requirements, construction estimates, placement of excess soil, legal protections and regulatory permitting. In addition, staff did not recommend phasing the project due to increased costs to berm each section of a phased development and to benefit future projects by reducing mitigation credits from 4:1 to 2:1, as the the habitat will be in place and functioning.
Mitigation Ad-hoc Committee
On June 15, 2016, a Mitigation Ad-hoc Committee (Committee) was formed to continue the due diligence efforts and to validate assumptions that a mitigation bank would be successful at Pond 20. The Committee met on three occasions to evaluate the strengths, risks, and uncertainties associated with creating a mitigation bank on Pond 20.
Finalize RFP
Based on recommendations by the Committee members staff proposes to move forward with an agreement with Great Ecology to prepare 60% design documents for the creation of wetlands at Pond 20. The Committee also recommended staff move forward with the entitlement process including environmental review and processing a Port Master Plan Amendment (PMPA) pursuant to the California Coastal Act, for all District land in and surrounding Pond 20 which include parcels A, B, and C. (Attachment A)
The new agreement with Great Ecology will advance the development of Pond 20 into a wetland mitigation bank with the specific goal of the scope of work: to document baseline conditions; further the design of the mitigation bank; prepare construction documents to the 60% completion level; and submit a Banking Prospectus to the U.S. Army Corps of Engineers (ACOE) and the Interagency Review Team (IRT). Finally, this scope of work will include the development of the draft Mitigation Banking Instrument, a regulatory document that codifies how mitigation credits are defined, sold, and secured.
Prior to advancing the project beyond the 60% design level, staff will return to the Board for further action.
Funding
Based on the due diligence, if the Port completes the development of a mitigation bank it will require a greater initial capital investment. Potential sources of funding could include the uncommitted reserves in the Environmental Fund and upfront sale of mitigation credits. Other financial benefits will likely include cost savings for future District construction projects with a reduction in mitigation ratios, environmental benefits, and reduced timelines to permit future projects.
Recommendation
Staff recommends advancing the project design of Pond 20 wetland mitigation bank by entering into an agreement with Great Ecology for $640,220 to complete design to 60% and submit mitigation banking documents and to initiate the entitlement process including commencing environmental review and California Coastal Act review for all District parcels in and around Pond 20. This work would lead to refined cost estimates to instill a higher level of confidence in the mitigation bank business model. This recommendation is based on a combined strategy to de-risk the project and maximize the return on investment to the District.
General Counsel’s Comments:
The Office of General Counsel reviewed this Agenda and the proposed agreement and approved them as to form and legality.
Environmental Review:
This item would authorize preparation of design documents for a mitigation banking prospectus and submittal of that prospectus to the ACOE, as well as authorize commencement of environmental review, pursuant to California Environmental Quality Act (CEQA), for the establishment of a mitigation bank on Pond 20 site and assignment of land use designations for the adjacent development parcels. The Board’s approvals and direction to staff do not constitute an “approval” of a “project” pursuant to CEQA Guidelines Sections 15387 and 15352. The approvals and direction to staff will not result in any direct or indirect physical changes to the environment. CEQA requires that the District adequately assess the environmental impacts of its projects. Further, while the Board may request certain project components be included or alternatives studied such direction to staff will not bind the District to a definite course of action prior to CEQA review. Full CEQA analysis and certification of a Port Master Plan Amendment with the California Coastal Commission will be completed prior to the approval of any entitlements, concept approval, or agreements necessary for the establishment of the mitigation bank and assignment of land use designations for the adjacent development parcels. Moreover, the Board reserves its discretion to adopt any and all feasible mitigation measures, alternatives to the project, including a no project alternative, a statement of overriding consideration, if applicable, and approve or disapprove the project and any permits or entitlements necessary for the same. Those decisions may be exercised in the sole and absolute discretion of the Board. Based on the totality of the circumstances and the entire record, the Board’s approvals do not commit the District to a definite course of action prior to CEQA review being conducted. Therefore, no further CEQA review is required.
In addition, the proposed Board actions and direction to staff allows for the District to implement its obligations under the Port Act and/or other laws. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the proposed Board action and direction to staff are consistent with the Public Trust Doctrine.
Finally, the proposed Board action and direction to staff do not allow for “development,” as defined in Section 30106 of the California Coastal Act, or “new development,” pursuant to Section 1.a. of the District’s Coastal Development Permit (CDP) Regulations because it will not result in, without limitation, a physical change, change in use or increase the intensity of uses. Therefore, issuance of a CDP or exclusion is not required. However, the District’s projects require processing under the District’s CDP Regulations. If the Project moves forward, the Board will consider approval of the Project and improvements after the certification of a Port Master Plan Amendment with the California Coastal Commission, and subsequently appropriate documentation under District’s CDP Regulations, have been completed and authorized by the Board, if necessary. The Board’s direction in no way limits the exercise of the District’s discretion under the District’s CDP Regulations.
Equal Opportunity Program:
Due to unknown subcontracting opportunities, no Small Business Enterprise (SBE) goal was established for this agreement. Great Ecology did identify SBE’s as part of their team.
PREPARED BY:
Eileen Maher
Principal, Environmental Conservation
Planning & Green Port
Philippe LeBlanc
Program Manager, Aquaculture & Blue Tech
Planning & Green Port
Attachment(s):
Attachment A: Pond 20 Site Plan
Attachment B: Agreement with Great Ecology