By: John Myers, Duluth News Tribune

A land exchange is in the works that would put the nation’s single largest wetland “bank” in the Sax-Zim Bog of St. Louis County, one of the state’s most important bird conservation areas.

Under the deal, a private wetland mitigation company would acquire and rehabilitate some 22,000 acres of former swampland in the Sax-Zim Bog area near Meadowlands to its original, pre-settlement condition before ditches drained the fields for farming.

In exchange, St. Louis County and the Minnesota Department of Natural Resources, which now manage the swampland, would get thousands of acres of upland forest land.

“This will be the largest wetland mitigation bank anywhere in the U.S. by several thousand acres,” said Nick Dilks, a managing partner in Baltimore-based Ecosystem Based Partners, a for-profit wetland mitigation company.

The deal is being brokered by The Conservation Fund, one of the nation’s largest land conservation organizations. No price tag has been put on the deal, since the private forest land has yet to be acquired, but those involved say it’s worth multiple millions of dollars.

The Conservation Fund would buy the forested land from private parties, trade it to the county and DNR for the swampland, and then sell the ditched swampland to Ecosystem Investment Partners.

The company would then restore the wetlands and recoup its costs by selling credits to developers, road builders, mining projects and other projects that have to replace wetlands lost in construction.

Included in the deal are some 6,000 acres of county-managed tax-forfeited land, along with 11,500 acres of state School Trust land. Ecosystem Investment Partners earlier this year bought 3,600 acres of private land in the Sax-Zim area.

All sides are working to have the deal concluded by the end of the year.

It’s not clear exactly how many acres of now-private forestland would be traded — that depends on appraisals for both sides of the real estate deal. The Conservation Fund already has found willing sellers for the forest land and has handshake deals with them, said Tom Duffus, the group’s Midwest vice president.

St. Louis County commissioners are set to approve their part of the deal Tuesday in Duluth, allowing the county land commissioner to continue negotiating for how much forest they would receive for the county’s 6,000 wetland acres. The DNR, which oversees School Trust land, also is expected to approve the arrangement. A legislative oversight group has already given its support.

Wildlife, taxpayers benefit

The deal is being billed as a win-win-win-win situation for taxpayers, wildlife, the forest-products industry and the state’s Permanent School Trust Fund, which receives any profits made from the DNR land involved. The fund currently gets no return on its Sax-Zim swampland, but it could begin to make money when it acquires forested land, with trees to sell to loggers, as part of the deal. All profits go to public school education in the state.

County taxpayers could have their financial burden eased with county acquisition of forested land from which to sell trees to loggers. And both the state and county forestland acquired in the deal would be open to public recreation, including hunting.

The swampland’s new owners would pay property taxes — in some cases, the first time this land has ever generated property tax revenue. The area was targeted for homesteaders in the early 1900s. In a failed effort to create farmland, hundreds of miles of ditches and dikes were built. But most areas remained too wet to homestead and have never been on the tax rolls, instead assigned to the School Trust. Other farms quickly failed and reverted to the county as tax-forfeited land.

Wildlife would benefit in two ways, supporters say: When water drained from the land through man-made ditches is instead retained, habitat will be created for native plants and animals that thrive in a peat bog environment. It’s not that the land has been dry, Dilks noted, but the company can restore more of the original function of a natural wetland.

And, under conservation easements, wetlands in the Sax-Zim Bog would be protected from any future development. The peat-land habitat would be more hospitable to bog lemmings, many species of shrews and voles, red squirrels and snowshoe hares. Migratory bird species bring special interest to the peat-lands in spring and summer breeding months. Their preferences for food and cover draw them to bog or fen habitats.

“These are drained wetlands that aren’t functioning as they should be, as they did before they were drained,” Dilks said. “We can go in and restore many of those functions. It’s not going to happen overnight, It’s a 20,000-year-old bog and it’s hard to bring all of that back in just a few years. But there’s a lot we can do.”

The wetland mitigation bank would be adjacent to, and nearly surrounding, the state’s Sax, Fermoy and Zim Wildlife Management Area complex of about 2,300 acres. That state land already is protected and managed for species like sharp-tail grouse and sandhill crane, said Jeff Hines, assistant state wildlife manager for the area for the DNR.

The restored wetlands would also benefit many plant communities and wildlife like moose, Connecticut warblers, great gray owls, northern harriers and more, Hines said.

“To have those areas that have been ditched restored to something like their original state is going to be a plus for several species,” Hines said. “We know moose are using those boglands to cool off, and spending time on birch and conifer islands in the bogs.”

Forest land consolidated

The Conservation Fund said another important result would be the DNR and County Lands and Minerals Department acquiring multiple, small tracts of private forestland next to larger blocks the agencies already manage. That would help consolidate forest ownership under agencies already certified to practice sustainable forestry, Duffus said.

The Fund has made it a national priority to battle the fragmentation of forests as blocks of land have been sold off for recreation and other development. Having large tracts of land in contiguous blocks managed by large, public agencies — undeveloped and open to public recreation — is better for wildlife like moose, wolves and owls.

It’s also more conducive to large-scale timber management and access for loggers that supply the region’s wood-products industry.

“Our primary interest in this is to consolidate ownership of the forestland,” Duffus said. “That’s what got us interested. But there are all sorts of benefits.”

Dilks said his partnership saw opportunity in the Lake Superior watershed, where “there are virtually zero mitigation banks available” for developers in need of mitigation credits for projects that destroy wetlands.

One likely customer would be the region’s mining industry, which is undergoing expansion that will require wetland credits. That includes the proposed PolyMet copper mine. But Dilks said the partnership has no pre-arranged deal with any specific developers or mining companies.

“We’re in this as a long-term investment, 10-plus years, and we know there is going to be a need in this part of the state for mitigation credits,” Dilks said. “Plus, we saw the chance to do some significant restoration in an important conservation area.”