FDEP Proposes Updated Financial Assurance Mechanisms for Florida Mitigation Banks
On December 9, 2025, the Florida Department of Environmental Protection (FDEP) hosted a public rule development workshop focused on updates to Chapter 62-342, F.A.C., which regulates mitigation banks across the state. The meeting, which included a presentation by Aon Investments USA Inc., introduced proposed changes to how perpetual maintenance funding for mitigation banks is structured and managed.
The primary focus of the workshop was the evaluation of long-term financial assurance mechanisms, with the goal of ensuring that mitigation banks have sustainable funding in place to support perpetual maintenance responsibilities after final success criteria are met.
A full copy of the AON presentation has been embedded below for stakeholders to review.
View the Full Presentation
Summary of Proposed Changes
Two Financial Assurance Options Proposed
FDEP is evaluating two distinct options for satisfying perpetual maintenance requirements:
- Endowment Option: Mitigation banks may partner with national nonprofit organizations experienced in endowment management. These accounts would be subject to the investment policy of the partner organization.
- Trust Option: Banks could establish individual trust accounts with investment oversight provided by designated trustees. These accounts would follow a standardized investment policy provided by FDEP, with a recommended allocation of 60% global equities and 40% bonds.
Revised Approach to Discount Rates and Cost Estimates
The new rule framework includes key changes to how funding requirements are calculated:
- The discount rate will be based on the expected real return (nominal return minus inflation), rather than historical averages.
- Administrative fees, investment management fees, and trustee expenses will now be incorporated into the annual cost estimate, not deducted from the discount rate.
- A mandatory 10% contingency will be included in all cost projections, following U.S. Army Corps of Engineers guidelines.
Funding Schedule Aligned with Credit Releases
To simplify compliance and planning, the proposed framework aligns funding contributions with credit release milestones over a 10-year “soak period”:
- 30% of funding at initiation
- 30% at Year 3
- 10% at Year 5
- 10% at Year 7
- 20% at Final Success (Year 10)
To account for market risk and volatility, a minimum 155% funded ratio will be required at the end of the soak period.
Investment Modeling and Tools
The workshop included detailed modeling of both the Endowment and Trust portfolios using forward-looking capital market assumptions:
- The Endowment Portfolio (which includes alternative assets like real estate, infrastructure, and hedge strategies) offers slightly higher returns with reduced volatility, achieving an 87% probability of full perpetual cost coverage.
- The 60/40 Trust Portfolio is more traditional and accessible but has slightly lower projected performance, with an 80% probability of success.
Aon will provide stakeholders with Excel-based tools to track funding ratios and update cost assumptions over time.
Key Takeaways for Mitigation Bank Owners and Investors
- Both financial assurance options are designed to ensure long-term funding for site maintenance, aligned with market-based assumptions and inflation.
- The Endowment Option offers increased diversification and lower volatility, but less control over investment strategy.
- The Trust Option offers more control and potentially lower fees but comes with higher administrative responsibility and increased market exposure.
- Both options move away from relying on historical data and instead focus on forward-looking, economically realistic assumptions.
Next Steps and Comment Period
Stakeholders are encouraged to review the proposed changes and provide written feedback by December 22, 2025.
Submit comments to:
Denia Campbell, FDEP
Email: Denia.Campbell@FloridaDEP.gov
MBG Commentary
The Mitigation Banking Group supports thoughtful policy updates that strengthen the long-term stability of mitigation banks and improve regulatory clarity. These proposed rule changes represent a significant shift in how financial assurance is calculated and managed in Florida.
MBG will continue to monitor this rule development process and advocate for solutions that support both ecological outcomes and economic practicality for landowners and bankers.
To discuss how these changes may impact your property or project, contact:
Victoria K. Bruce
CEO, The Mitigation Banking Group, Inc.
Email: victoria@mitigationbankinginc.com
Phone: (407) 808-2222
