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Mr. Bryan Bear April 15, 2022 Page 3 G:\.Clients All\Hugo\Proposals\Northstar Bank\LETTER_HUGO_NorthstarBank_041522_Final.docx the bank area in Figure 2 is 9,772 feet. Using an average buffer width of 30 feet, the total area in buffer would be 6.73 acres. 25% of this is 1.68 acres eligible for credit; making the total potential credit area 51.68 acres. Activities required to accomplish this would most likely be filling old drainage ditches, breaking drain tile (if it exists), installing gate valves to control hydrology to meet performance standards and complete management activities, the work will involve removals of any non-native and/or invasive species, use of mechanical equipment such as mowers, targeted herbicide treatments, if necessary, and the use of prescribed burns to bring back the natural functions and values along with a more diverse vegetation population to the wetland ecosystem. Wetland Banking Process The wetland banking process includes multiple steps with various agencies. To increase the maximum value, the bank should be Wetland Conservation Act (WCA) and US Army Corps (USACOE) approved. This would result in two (2) separate yet coordinated permit processes. The WCA process involves: • Draft Prospectus • Prospectus • Mitigation (full) plan • Legal boundary survey • Title and easement recording • Project Construction • Project Certification • Project Monitoring • Application to deposit credits This process will most likely take a full year or more to complete. In addition to the WCA process, the US Army Corps, under section 404 of the Clean Water Act, will assemble an Interagency Review Team (IRT) to review the application and, if applicable, approve the bank under a Mitigation Banking Instrument (MBI). This process should run concurrent with WCA and may take over 12 months to complete. Benefits Multiple benefits may be realized through the development of a wetland bank for the City of Hugo, measured in terms of financial, ecological, and public perception. The potential bank described above falls within the minor watershed of Clearwater Creek, major watershed of Mississippi River-Twin Cities, and bank service area (BSA) 7. Using data from BWSR, the average cost of a full credit for BSA 7 in 2019 was $81,558.09. If we use the number of potential credits to be generated identified above (51.68), the total potenti al revenue from the sale of credits at 2019 prices would be $4,214,922. These credits could be sold to outside entities, sold to BWSR as part of the local road replacement program, or retained for City projects where credit is needed. In 2021, the City of Hugo was required to purchase 0.63 wetland credits from the City of Blaine at a cost of ~$80,000.