Life Sciences Awards

Sam Taylor honored for

lifetime achievement
inside, 15

WHY THIS MAN

IS AFRAID OF

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LOSING

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ot

for

CEO Yuanqing Yang is obsessed

with making Lenovo the most
accessible brand in the world

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BY LAUREN OHNESORGE, PAGE 6-8

ine
Bu
s

on the beat

ity

Why your electric

bills are going up

amanda hoyle, 4

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headline goes in hereLY xx

Its the fifth and most ambitious

building for Dominion Realty Partners
at the west Raleigh office park.

an
C

A new report from the N.C.

Sustainable Energy Association
reveals that traditional energy sources
bear most of the blame for rising
costs. jeff jeffrey, 11

10-story building
coming to Wade Park

John West

Business profile

Saving the planet, one raindrop at a time 13

Public research
funding on the rise
Scientists in the UNC system are
seeing a bump in research funding,
and thats good news for the region.
jason debruyn, 5

Biz

Which Triangle General Contractor

ends up on the top? 27-28
TRIANGLE
BUSINESS JOURNAL
May 22, 2015
Vol. 30, No. 38, $3.00
3600 Glenwood Ave.
Suite 100
Raleigh, NC 27612

A visit to
capitol hill 3
Breaking news online
TriangleBusinessJournal.com
On smartphones and tablets
TriangleBusinessJournal.com/apps

email updates
TriangleBusinessJournal.com/email
L Daily

13

may 22, 2015

business profile: restoration systems LLC

A business that banks on regulations

Raleigh firm helps
mitigate effects of
development on
N.C. water supply
BY AMANDA HOYLE
ajhoyle@bizjournals.com
919-327-1018, @TBJrealestate

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Bu
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john west

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The Restoration Systems C-suite: Left to right, George Howard, CEO, John Preyer, COO, and Buzz Floyd, CFO.

Company: Restoration Systems LLC

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Business: Environment restoration

and mitigation banking
Headquarters: Raleigh

Am

Top executives: George Howard,

co-founder and CEO, John Preyer, cofounder and president; Buzz Floyd, CFO
Founded: 1998

riends since high school and

college, George Howard and John
Preyer are used to the confused
looks they often get when they explain
the business model of Restoration
Systems LLC, the company they started
together in 1998.
The company specializes in
environmental mitigation banking, a
field of business that didnt exist before
1995. That was the year that the federal
guidelines for mitigation banks were
established as a compromise option
under the Clean Water Act of 1973,
the federal governments primary law
governing water pollution.
Former U.S. Sen. Lauch Faircloth,
R-NC, then a member of the Committee
on Environment and Public Works,
helped craft the federal guidance for
mitigation banking. And John Preyer, at
the time, was serving as his legislative
director.
And to that, a niche industry and a
business plan for Restoration Systems
was born.
Mitigation banks offer a third
alternative that didnt exist before
for developers of roads, utilities and
buildings that might be doing damage
to a nearby water resource, such as a
stream or wetland.
If trying to qualify for an
environmental permit, a property
owner or developer must:
1) Avoid the protected property
altogether if possible;
2) Minimize the potential damage or
impact to the property; and
3) When all else fails, mitigate.
And in that order, Preyer says.
We come in at the end of the day,
after they have already worked to avoid
and minimize, he says. If you are
looking for a positive environmental
outcome, we are doing it.
Restoration Systems proactively
finds and buys conservation
easements from property owners for
the purpose of restoring streams and
wetlands or protecting threatened
species from the future encroachment
of development and growth. Once
a project has been signed off on by
both federal and state agencies, the
company sets up a mitigation bank, or
a system in which to sell credits or
pieces of a restored stream or wetland
to help make up for any damage that
might be done to a nearby water
resource from another construction

Employees: 10
2014 revenue: $20 million (includes
bank credits)

project. Credits can cost $14,000

each, or it might be cheaper if its
a large transaction. The company
also manages restoration projects
on behalf of government partners or
companies that dont have to be sold
through a mitigation bank.
Preferably, Howard says, the impacted
projects share the raindrop with the
stream or wetland property so that the
damaged and the improved property
impact the same body of water.
Mitigation banking is usually a lastditch option for builders, but its a
a growing industry that Restoration
Systems is helping take nationwide.
Its also one of the most-regulated
industries in the environmental

market, Howard says.

Developers dont want to have to
pay for credits. Conservation interests
dont want development there in
the first place. We have to answer to
everybody, he says. Its the good guys
and the bad guys these days, and we
like being the good guys.
Restoration Systems is currently
overseeing 50 mitigation banks and
restoration sites in nine states, with a
majority of them in North Carolina. It
has restoration sites within the Falls
Lake watershed in Raleigh and along
the Cape Fear River watershed in
southeastern counties.
In Texas, the company has partnered
with Morehead Capital Management, a
Raleigh-based hedge fund, and a Texas
land trust to restore more than 20 miles of
streams on the Katy Prairie near Houston.
The project is the largest permitted stream
mitigation bank in the U.S.
Restoration Systems is also a lead
partner in the sale of off-set credits to
companies in the wind, oil and energy
industries across the Southern Great
Plains.
Howard shows from a aerial map
the desolate lands in northern Texas,
Oklahoma and Kansas that Restoration
Systems has invested in to preserve
sufficient grassland habitats for the

lesser prairie chicken, a threatened

species whose population has dwindled
to around 17,000 birds in recent years.
This breed of bird is particularly
sensitive to things that are taller than
its grassy habitat like the oil rigs that
dot the landscape of the Southern
Great Plains.
They dont like anything over
three feet tall, or theyll stop mating,
Howard explains,
Since the company was founded,
the partners estimate the company
has sold about $110 million in credit
inventory in fits and starts over the
years. It brought in about $20 million
in revenue in 2014, mostly from the sale
of mitigation bank credits, which was
up from $6 million in revenue in 2012,
according to Chief Financial Officer
Buzz Floyd.
With these bigger projects, weve
caught the eye of national investment
firms, and the deals are getting more
sophisticated, Floyd says.
Their goal moving forward is to
smooth out that revenue stream and
keep a more stable inventory of credits
to sell in the parts of the country where
demand is expected to grow.
We are all about regulation in our
business, Howard says. It creates our
business.