Interesting Financial Documents.
The Great Land Trust:
Interesting Financial Documents.
The Great Land Trust:
There was a presentation about the “Su-Knik Wetlands Mitigation Bank” at this week’s MSB Assembly meeting (April 17, 2018).
The Su-Knik Wetlands Mitigation Bank is a public-private partnership. It is sponsored by the MSB and Sustainable Environments LLC and/or Su-Knik Environments LLC. The MSB owns the land – which is public land – in fee simple; and the MSB and the private environmental company jointly own the wetland mitigation rights.
(Note: The name and ownership of the private environmental company is very confusing. See more at the end of this blog post.)
What is Wetlands Mitigation Banking? https://en.wikipedia.org/wiki/Mitigation_banking
A Wetland Mitigation Bank is a mitigation option that can be used when a developer requests a permit from the US Army Corps of Engineers to fill jurisdictional wetlands. Based on the amount and type of wetlands filled the developer is required to provide mitigation. The developer has three options for mitigation- on site mitigation, paying an in-lieu-fee or purchasing credits in a mitigation bank.
The Su-Knik presentation was given by Jerome Ryan. Mr. Ryan is an “Environmental Entrepreneur” from California who has a financial stake in the Su-Knik Mitigation Bank. He is a founding partner of “Su-Knik Environments LLC.” He also has stakes in several other for-profit “environmental” companies.
Mr. Ryan’s LinkedN : JeromeRyanProfile
(^ He seems to have invented the term “Eco-Asset Opportunities“!)
What prompted Mr. Ryan to travel from his base of operations in the San Francisco Bay area to Palmer Alaska right now?
Although Mr. Ryan’s presentation was framed as a “Let’s save our environment/Our wetlands!” pep talk to the Mat-Su Valley community, a more accurate title for his talk would be: SHOW ME THE MONEY!!!
The Donlin Gold Mine needs to do environmental mitigation for its proposed Crooked Creek Gold mining project. Mr. Ryan (and the MSB) want Donlin Gold LLC to buy mitigation credits from the Su-Knik Mitigation Bank. (See the March 8, 2018 letter from MSB Manager John Moosey in the presentation documents above. This was undoubtedly drafted by Mr. Ryan.) It is probably way too late for the the Su-Knik mitigation bank to get in on the Donlin gold-mining environmental mitigation action because The Alaska Mental Health Trust Authority has already announced that Donlin is buying 1,933 acres of wetlands from them for $1.5 million.
In any case, there are other potential projects out there that may require developers to purchase Wetlands Mitigation Bank credits. Mr. Ryan mentioned one of them – the Alaska Stand Alone Pipeline. And of course, there is the AGDC.
So, clearly, Mr. Ryan came up here to motivate the MSB to get busy promoting the Su-Knik Mitigation Bank and trying to sell our (mostly his!) MITIGATION CREDITS.
Why is the MSB financially tied up with Mr. Ryan in a Wetlands Mitigation Bank?
Back in the mid 2000s, Mr. Ryan and his partners – James B. “Jake” Hodge (an attorney now based in Jackson Hole, Wyoming) and Kevin Noon (an environmental scientist based in the Denver, Colorado area) – decided they wanted to do everything they could to save the environment up here in Alaska. Actually what really probably happened is that they realized that the new concept of “Wetlands Mitigation Banking” could be very profitable. So, they formed a company (“Sustainable Environments LLC” which later may have become “Su-Knik Environmentals LLC”) and “helped” the MSB set up a Wetlands Mitigation Bank.
Mr. Noon wrote this book:
The MSB Assembly voted in favor of this venture and placed 12,000 acres of undeveloped Borough-owned wetlands “into” this bank. Ryan, Hodge, and Noon contributed …well it is unclear exactly what they did beyond doing the paperwork to set up the Mitigation Bank and getting approval from ACE. (The MSB had already been spending a lot of grant money researching and mapping our wetlands.) But for their work of setting up and “managing” this bank, they are making a small fortune.
The Su-Knik Mitigation Bank was approved by the Army Corps of Engineers in 2009.
Note: The Su-Knik Mitigation Bank is not the only Wetlands Mitigation Bank in Alaska, but it was one of the first ones set up.
Further note: Jerome Ryan and his partners seem to be a bit confused about the location of the Mat-Su Valley. They used a Southeast Alaska Native symbol on their paperwork and they named their affiliated companies “SE Alaska LLC” and “Friends of SE Alaska LLC.” Um, we are in Southcentral Alaska, not Southeast Alaska.
Here is a copy of the “Umbrella Instrument” or the UMBI, which is the legal document establishing the Su-Knik Bank and listing the number and type of initial “credits” in the “bank”.
And here is an 2013 Amendment to the UMBI: Su-Knik Bank Modification Request 2013
What is the MSB’s financial agreement with Mr. Ryan’s company? What is the value of these Wetlands Bank mitigation credits? How much money has the Su-Knik Bank made?
During his presentation on Tuesday, Mr. Ryan revealed the terms of his agreement with the MSB. For every credit sold by the Su-Knik Wetlands Bank, his company receives 60% while the MSB receives 40%. WUT? Who negotiated this contract???? It is not as if these wetlands were owned by Mr. Ryan. They are public lands owned by the MSB!
Wetland mitigation credits in Southcentral Alaska can cost developers anywhere from $10,000 to $122,000 per credit. Of course, the price depends on supply and demand. The financial details of mitigation bank credit sales are mostly kept under wraps by the entities involved.
Mr. Ryan pointed out during his talk that the Su-Knik Mitigation Bank has not sold any credits since 2014. He explained that if the bank could sell the remaining credits (listed on our official federal ledger), the MSB stands to earn revenues of between $10 and $15 million (which means that Mr. Ryan and his partners stand to earn between $15 and $22.5 million.)
Here is the ledger (which does not contain financial info) on the Fed Government’s RIBITs site.
However, the business of buying and selling mitigation credits has been slowing down in recent years. The entrepreneurs (oops, I mean environmentalists) are complaining that the Army Corps of Engineers is not making developers buy their credits anymore.
This is all I could find on the MSB’s website about the Su-Knik Bank’s finances. It is from an Assembly meeting on Feb 19, 2013, dealing with how to appropriate $283K in revenues from the Su-Knik mitigation bank. I’m sure there must be more information some where, but the MSB makes it very difficult to find. I have asked the MSB for a full accounting for the Su-Knik bank (from its inception) but so far, I have not received any response.
I have also put in FOIA requests with the US ACE to find out more about the financials re: the Su-Knik Mitigation Bank (which is required to file yearly reports with the fed. gov’t) and have not yet received those documents.
Note: This is a page from the UMBI about Reporting and Accounting Procedures.
PIONEER RESERVE LAWSUIT:
There was a recent lawsuit between a private wetlands mitigation bank – Pioneer Reserve – which is located in Hatcher Pass – and the U.S. Army Corps of Engineers. This case was fascinating and revealed a lot about how mitigation banking in Alaska works.
The Plaintiffs (the owners of the private Pioneer Mitigation bank) complained that the Army Corps which authorized their “mitigation bank” promised to require the Alaska Railroad to purchase some credits from them (when the ARRC was building the Pt Mac Rail Spur)..but in the end, the ARRC (the Alaska Railroad Corp.) purchased most of its credits from Su-Knik. Pioneer claimed it missed out on a potential $12 million sale.
The federal court disagreed and Pioneer lost its lawsuit. (There were a series of cases and appeals in US District Court for Alaska and the Federal Court of Claims.)
It was revealed in the case that the ARRC bought its wetland mitigation credits from Su-Knik for $1,430,000.000. 143 credits at 10K per credit. The ARRC also bought another 16.92 credits from the Great Land Trust for $492,101.28 (at $29,084 per credit.)
Thus, the ARRC spent almost $2 million buying “wetlands mitigation credits” ! This money was State grant money for the rail spur. What a crazy MONEY SHUFFLE. This State grant money was originally given to the MSB – which gave it to the ARRC to build the rail spur construction project – and then ARRC gave some of it back to the MSB via buying credits from Su-Knik (after Mr. Ryan’s company took their cut of course.)
Math: If the Su-Knik bank received $1,430,000 from ARRC, then Mr. Ryan’s company’s share (60%) was approx. $852,000 and the MSB’s share (40%) was approx. $568,000. (The Su-Knik bank is required by the UMBI to set aside $700 for each credit sold for “management” of the lands in the bank so – about 100K from this sale – so I divided up only 1.42 million.)
Note: The ARRC must be tired of being a buyer instead of a seller of these mitigation credits. I noticed that they have recently issued a Mitigation Bank Prospectus trying to establish their own bank:
These pleadings set forth the facts of the case in detail:
This decision was affirmed by the U.S. Court of Appeals for the Fed Circuit on 6/12/17
MORE ABOUT HOW THE SU-KNIK BANK WORKS:
Here is an example of a credit sale. The City of Wasilla was required to purchase 3.4 credits from the Su-Knik bank in 2011 because the City filled in a little bit of wetlands at the Wasilla airport as part of a runway improvement project. The City paid $34,000 for these credits – using Fed grant money I believe. (So the MSB’s share may have been about 13K.) Notice how Mr. Ryan handles all the details of all sales and payments are directed to his company. Here are the documents which outline the process:
MORE ABOUT THE ESTABLISHMENT OF THE SU-KNIK MITIGATION BANK:
Ordinances 05-041 and 05-042 were passed by the MSB Assembly on April 19, 2005.
Ordinance 05-041 “accepted the final report of Critical Habitats, Inc. on Wetland Mitigation Banking of Borough-Owned land” and “establishing a new section in the Code creating a wetland mitigation bank.”
Did the MSB pay for this final report? With what funds? A Grant?
Kevin Noon is a longtime employee of Critical Habitats. I need to find out more – but I think what happened is – the MSB hired Critical Habitats to do some research for us re: wetlands and we paid them with grant money and then Kevin Noon somehow partnered up with Jerome Ryan and James Hodge to set up the Su-Knik Bank. I would like to know – did the MSB pay for all the necessary wetlands research and mapping out of grant money OR did Ryan, Hodge, and Noon pay anything out of their own pockets? Because if they did not front any costs, why are they getting a 60/40 split of the revenue? This deal really doesn’t seem equitable at all. The Su-Knik Bank is not a private mitigation bank. These environmental “investors” did not contribute privately-owned lands. The Su-Kink Mitigation Bank consists entirely of public lands.
Was this EPA grant money going towards the development of the Su-Knik Mitigation Bank? This Ordinance passed on Nov 21, 2006.
WHAT IS GOING ON WITH THE PRIVATE FOR-PROFIT ENVIRONMENTAL COMPANY THAT THE MSB HAS PARTNERED WITH IN OUR MITIGATION BANK? WHY WAS THE SU-KNIK BANK LISTED AS COLLATERAL IN A 2016 UCC FILING?
I cannot find any company by the name of “Sustainable Environments LLC” in the Alaska Corporations Database. “Sustainable Environments LLC” is the name of the company on the cover of the UMBI.
There is a company called “Su-Knik Environments LLC” which is registered (although currently in non compliance) in Alaska.
Su-Knik Environments LLC has changed its official Agent a few times. For a while, it was Tracy McDaniel, a MSB employee. Then it was Jerome Ryan. Now it is a paid corporate agent – C.T. Corporation System in Juneau.
Su-Knik Environments LLC is the name of the company that is listed as the official Seller of the Su-Knik Mitigation credits on the Sale Contracts. However, this signature page is very confusing. SE Alaskan LLC, yet another company, is the Managing Member of Su-Knik Environments.
Here is what I found out about SE Alaskan LLC:
It was incorporated in 2006 for the purpose of creating a Wetlands Mitigation Bank. Jerome Ryan was listed as the 33.3% owner. In a 2008 filing, Su-Knik Environments LLC was listed as a 1% owner/member. It was administratively dissolved in 2016.
Then there is another company that Jerome Ryan and the MSB are connected to – “Friends of SE Alaskan, LLC.” This company was also founded in 2006 and was administratively dissolved in 2016. Tracy McDaniel with the MSB Lands Office was its registered agent for a time. She is listed as the agent in the most recent (2014) Biennial Report, but now Jerome Ryan seems to be the agent. In the 2014 report, it is noted that this company is owned primarily by the HB Family Limited Partnership (41.6%) and the Fisher Family Trust (41.6%).
How this “Friends” company is tied into the Su-Knik Mitigation Bank and/or affiliated with the MSB (why were we acting as this company’s agent?) is a complete mystery.
Investing in Wetlands Mitigation Banking must be lucrative or potentially lucrative. Or maybe investing in “Eco-Assets” is simply “Virtue Signaling”.
The Fisher Family trust is listed as having an address of 460 Walsh Road in Atherton, CA. A house with that address sold for $10 million recently.
MYSTERIOUS UCC FILING
THE SU-KNIK MITIGATION BANK WAS LISTED AS COLLATERAL in a 2016 UCC FILING:
James Hodge filed a UCC financing statement with the Alaska’s Recorder’s Office on Sept 12, 2016, which declares that he is a creditor and the debtors are The Su-Knik Mitigation Bank (which is jointly owned by the MSB, so apparently, the MSB is also in debt to Mr. Hodge), Su-Knik Environments LLC, and SE Anchorage LLC.
This is very confusing because Mr. Hodge was partners with Mr. Ryan and Mr. Noon when the Su-Knik Mitigation Bank was formed.
What is this filing all about? Did Mr. Hodge sell out his share of the business? Why did he list the Su-Knik Mitigation Bank as a debtor? Did the MSB approve this?
IMPORTANT NOTE: This is from p. 3 of the UCC filing (above.) It explains that there is a written financial agreement between the MSB and Mr. Ryan and his partners. We need the MSB to disclose this agreement so we can see all the details, etc.
Note: SE Anchorage LLC is yet ANOTHER company that seems tied to the Su-Knik Mitigation Bank. Mr. Hodge lists this company’s address as 1028 Wilmington Way, Redwood City, CA.
Here is SE Anchorage LLC’s corporate filing:
By the way, who are G2F2, JCPoetsch Advisors, Inc, and MS Stapp Investments Inc?
I sent this email to the MSB Manager on April 16th but did not receive any response:
I have been researching the issue of Wetlands Mitigation Banking in Alaska for a few months now…even before I saw the item on this week’s Assembly meeting agenda.