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Mr. Bryan Bear April 15, 2022 Page 5 G:\.Clients All\Hugo\Proposals\Northstar Bank\LETTER_HUGO_NorthstarBank_041522_Final.docx indication that the wetland is performing well and there is no danger of not meeting performance standards in the future. Additionally, even though credits are released, they still need to be purchased for w etland replacement purposes. It is difficult to predict how long it will take for credits to be purchased or the rate at which they will be purchased. The sale of wetland credits and prices are market driven and do fluctuate based on the demands. Costs While there are multiple financial and other benefits associated with the development of a bank, there are definitive and substantial costs as well. General categories of costs include: • Permitting • Engineering and Design • Construction • Maintenance • Monitoring Each potential bank has individual costs unique to its location, size, characteristics, etc. Development of a cost estimate requires additional information outside the scope of this letter. However, for reference, a somewhat similar bank being proposed west of the potential Northstar Bank, which is slightly larger in size and complexity, is estimated to cost ~$970,000, with a majority (~$815,000) devoted to construction line items. This is an “all-in” cost to complete the project with engineering and design, construction, and a 5- year monitoring period. We assume that since the Northstar site is smaller and less complex, that overall costs may be less. Associated Risks A wetland bank should be considered a long-term investment; meaning that revenues generated from the bank can be realized over a long period based on the size of the bank and that there will be maintenance costs associated with maintaining the bank beyond the final certification. However, those costs can be minimized with proper planning and intelligent design. Performance standards will dictate the amount of credit that the bank receives. There are two (2) main categories: • Hydrology performance - does the bank provide the level of hydrology (saturation/inundation) that was planned and specified in the bank plan? Usually specific to measure above or below ground maximums and minimums. This can be mitigated through proper engineering and modeling. In the case of the Northstar Bank, the inclusion of gate valves to control the level of hydrology will be a tool to be utilized by the City to effectively manage hydrology. The presence of drainage ditches on the site indicate that the site should be able to provide the required amount of hydrology.