T H E C A B I N E T
S T A T E O F F L O R I D A
Representing:
FINANCIAL MANAGEMENT INFORMATION BOARD
STATE BOARD OF ADMINISTRATION
DIVISION OF BOND FINANCE
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
STATE BOARD OF EDUCATION
VOLUME I
The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush
presiding, in the Cabinet Meeting Room, LL-03,
The Capitol, Tallahassee, Florida, on
Tuesday,February 6, 2001, commencing at approximately
9:18 a.m.
Reported by:
LAURIE L. GILBERT
Registered Professional Reporter
Certified Court Reporter
Certified Realtime Reporter
Registered Merit Reporter
Notary Public in and for
the State of Florida at Large
ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FLORIDA 32301
850/878-2221
2
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
TERRY L. RHODES
Commissioner of Agriculture
BOB MILLIGAN
Comptroller
KATHERINE HARRIS
Secretary of State
BOB BUTTERWORTH
Attorney General
TOM GALLAGHER
Treasurer
CHARLIE CRIST
Commissioner of Education
* * *
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February 6, 2001
I N D E X
ITEM ACTION PAGE
FINANCIAL MANAGEMENT INFORMATION BOARD:
(Presented by Martin L. Young,
Financial Administrator)
1 Approved 6
2 Approved 7
3 Withdrawn 46
STATE BOARD OF ADMINISTRATION:
(Presented by Tom Herndon,
Executive Director)
1 Approved 48
2 Withdrawn 48
3 Approved 49
4 Withdrawn 49
5 Approved 50
6 Approved 51
7 Approved 51
8 Approved 72
9 Approved 75
10 Withdrawn 102
11 Approved 113, 120
12 Approved 122
13 Approved 122
14 Approved 123
DIVISION OF BOND FINANCE:
(Presented by J. Ben Watkins, III,
Director)
1 Approved 125
2 Approved 125, 137
3 Approved 137
4 Approved 138
CERTIFICATE OF REPORTER 139
* * *
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February 6, 2001
1 P R O C E E D I N G S
2 (The agenda items commenced at 10:28 a.m.)
3 GOVERNOR BUSH: Financial Management
4 Information Board.
5 MR. MARTIN L. YOUNG: Good morning.
6 I'm Martin Young, Secretary to the
7 Financial Management Information Board.
8 Item 1 is request approval of the minutes
9 of the March 28th, 2000, Board meeting.
10 COMPTROLLER MILLIGAN: Move approval.
11 GOVERNOR BUSH: Who's on this, by the way?
12 Is it all of us?
13 COMPTROLLER MILLIGAN: No. The --
14 TREASURER GALLAGHER: It's the Governor --
15 COMPTROLLER MILLIGAN: -- Treasurer,
16 myself, and yourself.
17 GOVERNOR BUSH: Thank you. Sorry.
18 Is there a second, Treasurer?
19 MR. MARTIN L. YOUNG: Second on the motion
20 --
21 COMPTROLLER MILLIGAN: -- realize you
22 and --
23 MR. MARTIN L. YOUNG: -- for the minutes --
24 COMPTROLLER MILLIGAN: -- I on this Board.
25 GOVERNOR BUSH: No, I don't think so.
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1 That's why I --
2 TREASURER GALLAGHER: What am I supposed to
3 be doing?
4 GOVERNOR BUSH: You -- we're on the
5 Financial Management Information Board. You're
6 a member of it.
7 TREASURER GALLAGHER: Oh, thank you.
8 Here I am.
9 GOVERNOR BUSH: There's a motion, and --
10 and we're looking for a second.
11 TREASURER GALLAGHER: I will second -- was
12 that for the minutes?
13 COMPTROLLER MILLIGAN: Minutes.
14 GOVERNOR BUSH: Yes.
15 TREASURER GALLAGHER: I must be happy to
16 second that.
17 GOVERNOR BUSH: Moved and seconded.
18 Without objection, it's approved.
19 MR. MARTIN L. YOUNG: All right.
20 GOVERNOR BUSH: We got through that. That
21 was good.
22 TREASURER GALLAGHER: It's tough. Usually
23 I make the motions for that, but I was --
24 MR. MARTIN L. YOUNG: Item 2 is a report on
25 the Human Resource Outsourcing Initiative.
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1 After the report, there will be some comments
2 and a presentation on the Human Resources
3 Outsourcing Initiative by Secretary Henderson;
4 Department of Management Services; and by the
5 State's consultant, the MEVATEC Corporation.
6 After the presentation, there will be an
7 opportunity for questions and answers.
8 GOVERNOR BUSH: Oh, good.
9 MR. MARTIN L. YOUNG: On January 22nd -- on
10 January 22nd, the Coordinating Council heard a
11 presentation on the Human Resources Outsourcing
12 Project. The presentation addressed the scope,
13 approach, methodology, procurement process, and
14 time line for the outsourcing of the
15 human resources and benefits of the State.
16 After the presentation, the
17 Coordinating Council unanimously approved a
18 motion which permits the Human Resources
19 Outsourcing Initiative to proceed with the
20 development of the business case analysis, the
21 other documentation materials, and the
22 procurement process that was explained during
23 the presentation.
24 The motion allows for the
25 Coordinating Council to be provided an
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1 opportunity to review the business based
2 analysis materials, and the other procurement
3 process documents before execution of a
4 contract with a vendor.
5 At this point, we'd like
6 Secretary Henderson to have some comments; and
7 also for the MEVATEC Corporation, the
8 consultant, to give us a presentation on the
9 Human Resource Outsourcing Initiative.
10 Secretary Henderson.
11 MS. HENDERSON: Thank you.
12 Thank you.
13 Good morning, everybody.
14 GOVERNOR BUSH: Good morning.
15 COMMISSIONER CRIST: Good morning.
16 MR. HERNDON: As we go through our new
17 initiatives in this state, we feel how it
18 impacts our employees. And the best way we
19 know to address that is communication.
20 So we're here today to start a
21 communication plan with the famous Board. But
22 first I'd like to read something, kind of set a
23 tone.
24 Nature teaches that change is a vital part
25 of life. Seeds change, seasons change, weather
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1 changes, people change. We're a part of a
2 dynamic growing, ever-changing environment.
3 Through change we create better --
4 (Secretary Harris exited the room.)
5 MS. HENDERSON: -- better organizations,
6 more productive teams, more harmonious
7 families, better selves.
8 The problem comes when we try to create
9 change as though we live in a static
10 environment, we try to fix people, install
11 programs, or repair relationships as though
12 they were isolated broken parts in some
13 mechanical hole.
14 But the whole, the business, the community,
15 the family, or even the individual is a
16 complex, highly interrelated ecological system.
17 Each part has a living attachment to each other
18 part. Change in any part affects all parts.
19 When we learn to see leadership problems in
20 terms of living systems, it dramatically
21 changes the way we deal with them.
22 For the effective leader, change is a
23 friend, a companion, a powerful tool, a basis
24 of growth. Creating positive change is what
25 leadership's about.
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1 Like MEVATEC to come up and explain to us
2 the great process that we've been going
3 through, as we look forward to the HR
4 outsourcing.
5 MR. GOODNIGHT: Good morning, Governor,
6 members of the Cabinet. My name is
7 Glenn Goodnight.
8 I head our Senior Management --
9 excuse me -- I head our Management Services
10 Group within the company.
11 And with me is Denise Cline. She's going
12 to actually run you through the presentation.
13 And Secretary Henderson asked me to say a few
14 words before Denise started going through to
15 kind of set the tone for what is happening that
16 we see from a large, 40,000 foot view, down at
17 the various Federal, State, and municipal,
18 and -- and commercial organizations that we
19 work with.
20 I've been working with the State now for
21 about two-and-a-half months. And -- and
22 there's two terms that I would like to
23 make clarify -- clarify before Denise gets
24 started.
25 One is privatization, and the other one is
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1 outsourcing. There's a big difference.
2 Privatization is basically the shift of
3 responsibility from a function that is
4 performed by the government at one point, and
5 then will be going to private industry.
6 Outsourcing, on the other hand, is the
7 shift of the process while retaining control or
8 responsibility for the function.
9 The process that we're going to be talking
10 about with -- with HR, payroll, and benefits is
11 an outsourcing function. It is not going to be
12 privatized. And we would not recommend it be
13 privatized.
14 The outsourcing industry and private
15 industry today is a -- is a hugely growing --
16 vastly growing market. At the Federal level,
17 for example, the Department of Defense is
18 outsourcing hundreds of thousands of civilian
19 positions. They started off looking at
20 peripheral functions such as janitorial
21 service, ground maintenance.
22 Now they're involving (sic) into things.
23 For example, passport processing right now,
24 things that were at one point considered
25 functions that only the government could
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1 perform, now they're going to be done by
2 contractor -- they're actually being done by a
3 contractor in some cases.
4 Also states have been following this --
5 initially they started off with very peripheral
6 functions, too, and now they're working towards
7 much more -- more important, more visible
8 functions.
9 States such as Texas, Virginia, Michigan,
10 Georgia, have all developed -- or all have
11 vigorous programs when outsourcing in
12 privatization, with impressive results.
13 For example, Massachusetts, a 57 percent
14 savings in the millageville war veterans home,
15 also reporting improved care; New York, a
16 70 percent savings on physical security in most
17 military facilities.
18 Virginia, child support enforcement,
19 60 percent savings, a 42 percent savings in
20 wastewater services, a 28 percent savings in
21 airport management.
22 All this is done through the concept of
23 leverage which I'll talk about in just a few --
24 a few --
25 (Secretary Harris entered the room.)
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1 MR. GOODNIGHT: -- minutes.
2 The important thing to remember is -- for
3 the state is is that the degree of savings that
4 you enjoy is going to be based on the level of
5 competition that you have in the requirement
6 and the extent to which you apply leverage,
7 which I'll also talk about in a minute.
8 Today outsourcing -- or really back --
9 going back, outsourcing used to be done to
10 reduce costs. But right now, and commercially,
11 people are seeing it more and more, that it is
12 also a -- an improvement issue.
13 According -- one outsourcing journal in
14 September of 2000: Today technology is the
15 main driver changing the face of outsourcing.
16 Technology is a key to survival in the new
17 world order.
18 Companies can't keep up with the Mach speed
19 rate of change in the I-2 world themselves.
20 Certainly we believe that Florida is going to
21 receive a powerful 1-2 punch, one in terms of
22 savings or cost avoidance, which will -- Denise
23 will talk about. But also in the improved
24 service that you'll get from a system that's
25 available on the market today.
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1 We've talked about leverage. Let me just
2 talk about leverage a few seconds. One,
3 leverage is simply using the investment and
4 capital and resources that have been made by
5 these service providers to free up your
6 resources.
7 It's much like a dam, especially with --
8 with HR, payroll, benefits, it's much like a
9 dam. Once you've built the dam, the operation
10 of the dam varies very little the costs,
11 whether the dam is full, or whether there is
12 very little water in it. So the concept is,
13 fill up the dam. Don't make your own dam, fill
14 up the dam.
15 As such, we would strongly recommend that
16 you try to leverage and scope out, include as
17 many functions as you possibly can, to get the
18 maximum competition, and the maximum leverage
19 from their investments.
20 Finally, we recognize that outsourcing can
21 be a tough issue for -- for organizations to
22 deal with, particularly because of the employee
23 issues. We certainly recognize that, and we
24 respect that opinion, and we respect that
25 deeply.
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1 It's a very big concern of MEVATEC's;
2 certainly mine, too. We also have to realize
3 that these service providers also understand
4 that, and they've come up with some very, very
5 unique ways to offset the employee issues that
6 are associated with outsourcing.
7 As Denise will point out, what we've done
8 in the RFP, or what we're recommending in the
9 ITN -- excuse me, I'm not quite used to the
10 Florida procurement yet -- the ITN is to making
11 the evaluation factors -- one of the critical
12 evaluation factors is their creativity in
13 handling the Florida workforce as they move
14 over.
15 We believe that'll strongly aid in fair
16 treatment for the employees as they're moved to
17 a service provider.
18 At that point, I'm going to turn it over to
19 Denise. She's going to run you through our
20 approach, our methodology, and then we'll be
21 available for any questions.
22 GOVERNOR BUSH: Thank you.
23 MS. CLINE: Good morning.
24 We have a copy of the briefing package in
25 the front of you. I know you have a lot of
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1 things on your agenda this morning, so I'm
2 going to go through this briefing -- some of
3 the slides relatively quick. But I'll be glad
4 to answer any questions you have on the slides.
5 The main objective is to explain to you the
6 business case methodology that we apply to
7 outsourcing.
8 And if you look on view graph 3, when you
9 look at outsourcing, outsourcing is one of
10 three options available to you.
11 The first option is to stay as you are if
12 you continue performing services as you are,
13 which you've already deemed is -- is not
14 acceptable.
15 The second option, which you've already
16 studied, is to replace the software and
17 hardware, but retain the services in-house.
18 Then the third option, which is what we're
19 doing research on, is outsourcing. When you
20 make an outsourcing decision, you make it for
21 economic reasons, and that's what the business
22 case is all about.
23 When you look at the scope of this study,
24 we're impacting almost 1400 positions, and
25 we're including the functions of HR, payroll,
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1 and benefits.
2 That number does not include any numbers in
3 BOSP, or payroll production.
4 Next slide.
5 Actually this slide.
6 When you look at the benefits of
7 outsourcing --
8 GOVERNOR BUSH: What is BOSP, I'm sorry?
9 MS. CLINE: Excuse me?
10 GOVERNOR BUSH: What's this acronym, BOSP?
11 MS. CLINE: That's your --
12 MR. MARTIN L. YOUNG: Bureau of State
13 Payroll.
14 MS. CLINE: Bureau --
15 MR. MARTIN L. YOUNG: It's Bureau of State
16 Payroll.
17 MS. CLINE: Bureau of State --
18 MR. MARTIN L. YOUNG: Bureau of State
19 Payroll.
20 GOVERNOR BUSH: Thank you.
21 COMPTROLLER MILLIGAN: That's me.
22 GOVERNOR BUSH: Okay. Thanks.
23 COMPTROLLER MILLIGAN: That's the payroll
24 production function. And accountability
25 function.
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1 MS. CLINE: Okay.
2 GOVERNOR BUSH: Go ahead.
3 MS. CLINE: When you -- when you look at
4 the benefits of outsourcing, the FFMIS report
5 performed by the -- the study performed by
6 KPMG, they determined that you would expect the
7 costs, a little bit over 213 million dollars,
8 to replace the system, the software and the
9 hardware.
10 It was extrapolated that the HR payroll
11 benefits portion of that was about 86 --
12 86 million dollars.
13 So you consider the business case analysis,
14 you have to look at cost avoidance, as well as
15 the dollars you would save because of the
16 efficiencies gained or the technology replaced.
17 The outsourcing decision, the business case
18 analysis, would also include the benefits you
19 received by improving the services that your
20 current systems don't perform, or perform
21 poorly.
22 The next slide shows you the scope of
23 services. Again, note that right now, our
24 scope does not include payroll production.
25 If you look at industry not including
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1 payroll production cuts the process before it's
2 finished. When you look at efficiencies and
3 outsourcing, you're going to look at the entire
4 process, and that should be the scope of
5 services.
6 We would not expect a reduction in costs
7 for the outsourcing decision in the event
8 payroll production does not include it.
9 COMPTROLLER MILLIGAN: Could I ask a
10 question, please?
11 MS. CLINE: Yes.
12 COMPTROLLER MILLIGAN: The -- in your
13 baseline, you don't include apparently the
14 university system?
15 MS. CLINE: That's true, yes, sir.
16 COMPTROLLER MILLIGAN: And in the
17 86 million figure that you just tossed out
18 there on the preceding page, did that include
19 the university system?
20 MS. CLINE: No, sir.
21 COMPTROLLER MILLIGAN: Okay.
22 MS. CLINE: No, sir.
23 If you look on view graph number 6, the
24 very first step is to determine the scope of
25 the services, and we've been working on that
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1 for the last couple weeks. The second step is
2 to establish the business case foundation.
3 We're about 85 percent complete with that.
4 That's an as-is cost, and the -- the scope
5 of services currently costs a little bit over
6 80 million dollars. So that becomes your as-is
7 cost that you use for your business case
8 analysis.
9 We then conduct an acquisition process.
10 And the thing that you need to remember about
11 an outsourcing study is, you're not committed
12 to a decision until the very end. You're not
13 committed to a decision until the very end.
14 So you can get all the way through the
15 process, and decide that the business case
16 doesn't support the change.
17 GOVERNOR BUSH: Can I ask you a question
18 about the cost avoidance of the 86 million
19 dollars?
20 There's an underlying assumption here
21 that -- that it is a foregone conclusion that
22 we need to make that investment, or at least
23 avoid making it by outsourcing. I just wanted
24 to confirm, is that the consensus of everybody
25 that's been dealing with this on our advisory
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1 group, that the Legacy system we have is --
2 needs to be --
3 MS. HENDERSON: Yes, it is, Governor.
4 GOVERNOR BUSH: -- post-modernize, if the
5 word -- if that's the right word, and connected
6 to the other systems that we have.
7 I mean, the general ledger, the
8 procurement, the other things that we're
9 going --
10 MS. HENDERSON: Correct. It's the COPES
11 system, the personnel system right now that is
12 termed as broken and needing replacement, or
13 needing replacement for -- for the -- so the
14 different systems can all talk with one
15 another, and we can get consistent information.
16 LAS PBS gives different numbers than the
17 personnel system, so we need consistency of
18 information. And that number was derived from
19 the KPMG --
20 GOVERNOR BUSH: So irrespective of whether
21 we -- we go through this -- make a decision
22 after the business case study is complete,
23 we're going to need to make that investment.
24 MS. HENDERSON: Yes, sir.
25 COMPTROLLER MILLIGAN: Shouldn't --
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1 shouldn't we -- this is a good line here,
2 because I think this is kind of the crux of
3 what I'm trying to sort out.
4 The -- we're kind of comparing a system
5 that is -- that you referred to I think later
6 in your presentation as-is.
7 And you're comparing that as-is system to
8 a -- a -- a different approach, namely a
9 centralized personnel system along with a
10 replacement for COPES.
11 That -- we -- it looks like we're comparing
12 apples and oranges. That it would appear to me
13 that the government, you know, in this business
14 of --
15 (Commissioner Crist exited the room.)
16 COMPTROLLER MILLIGAN: -- outsourcing, or,
17 as was referred to earlier, what the Department
18 of Defense has been doing, or Federal
19 government's been doing in -- in terms of the
20 commercial -- commercial affairs, or
21 commercialization of affairs, I guess -- what
22 the name is. But the -- the term is -- escapes
23 me right now.
24 But -- but you ought to be comparing like
25 functions. And if you're comparing as-is to
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1 the new approach, which is a centralized
2 approach, it doesn't appear to me that you're
3 really making the right comparison to do a fair
4 cost benefit analysis, or -- or business case.
5 MS. HENDERSON: I understand your concerns.
6 But if I can frame it in this way. We
7 have -- there's two costs. There's cost
8 savings of what you do when you create
9 efficiency within the State government and how
10 it operates. That number will be determined
11 after we get the actual proposals in and can
12 get a firm price.
13 We've looked at the number. The estimates
14 so far are about 25 million, or more.
15 But we will have to get a firm number after
16 the proposals. We base that based on general
17 industry costs, which we think we can do better
18 with larger.
19 The second component is the cost avoidance
20 of replacing the system. The 80 to 86 million
21 that was part of the KPMG study provided to the
22 FFMIS Board years -- several years ago talked
23 about buying a new system.
24 What we're talking about is buying a
25 service, not a system. We're not talking about
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1 buying a replacement COPES system, we're
2 talking about the vendor providing us technical
3 information which will change over the years.
4 Our requirements will change as you get your
5 new general ledger, and those data requirements
6 change, the data codes change, we will have the
7 system interfaced to both the existing system
8 that you have in the Bureau of State Payroll,
9 and the new system that'll be created when you
10 do your general --
11 COMPTROLLER MILLIGAN: That will be done by
12 the vendor or done by the State?
13 MS. HENDERSON: By the vendor. The
14 interfaces --
15 COMPTROLLER MILLIGAN: Okay.
16 MS. HENDERSON: -- it will have to come
17 forward --
18 COMPTROLLER MILLIGAN: Which was another
19 one of my questions that I had.
20 But I still don't see where we're comparing
21 apples to apples here.
22 GOVERNOR BUSH: Because if -- if the -- if
23 the question is we have to move forward, either
24 under the current -- we could either -- we
25 could centralize the HR function.
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1 COMPTROLLER MILLIGAN: Sure.
2 GOVERNOR BUSH: We could do that, but we're
3 going to have to invest, if we do that, and
4 keep it in the confines of State government,
5 we're going to have to invest the 80 to
6 86 million dollars.
7 So that option needs to be compared with
8 avoiding that investment of 86 million,
9 although there may be -- I mean, I can't
10 believe it's not a penny extra money.
11 But let's assume for a moment what you said
12 is -- it never works out that -- quite that
13 way.
14 But assume for a moment that we can avoid
15 that cost, and they're factoring those --
16 they -- whoever this -- whoever they is, has a
17 computer system already in place that can
18 accommodate us, and so they have economies of
19 scale, and they would price their -- their
20 service to us already with that investment
21 factored in.
22 So it is a fair comparison if you assume
23 that we can't -- we can't continue with what we
24 have.
25 COMPTROLLER MILLIGAN: I won't argue that
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1 point. COPES dear-- you know, dearly needs
2 some attention.
3 The question I have really is, are we
4 comparing a similar personnel approach. Are we
5 comparing a centralized to a decentralized?
6 Or should we be comparing if we're going to
7 compete the State as you do in a commercial
8 activities business? If you're going to
9 compete the State government against
10 outsourcing, it ought to be as close a
11 competition as you can make it --
12 GOVERNOR BUSH: Well, I agree with that.
13 COMPTROLLER MILLIGAN: -- in terms of
14 like -- like performance or function.
15 GOVERNOR BUSH: Here -- absolutely.
16 COMPTROLLER MILLIGAN: And so I'm -- I'm
17 looking forward to seeing that. And I haven't
18 seen it yet. And -- and my question is: Will
19 I see that?
20 Or will I see a comparison between as-is,
21 and what is being proposed to be outsourced?
22 GOVERNOR BUSH: The -- the challenge,
23 General, it seems to me is what do you do with
24 the 86 million?
25 In other words, we can -- they could go
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1 through a pro forma, as you're pres--
2 proposing, and I think that does make sense to
3 show a -- a different approach in-- inside of
4 government may yield a more cost effective way
5 of doing this.
6 But what are we going to do with
7 86 million?
8 COMPTROLLER MILLIGAN: I -- I might suggest
9 that you -- you could outsource the COPES
10 function, and not outsource the personnel
11 function, for example. As -- I mean, that's a
12 possibility.
13 MS. HENDERSON: Two points.
14 That is what we are talking about is
15 outsourcing the COPES system. And --
16 (Commissioner Crist entered the room.)
17 MS. HENDERSON: -- and what the information
18 that goes into that system is, and have the
19 vendor take that information and put it in the
20 format that goes to your office.
21 But the second important point that I
22 learned about through --
23 COMPTROLLER MILLIGAN: Well, there's a --
24 there's a lot more to personnel than the
25 personnel function, and the computer support
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1 system.
2 MS. HENDERSON: Yes, sir. And I'm getting
3 to that.
4 COMPTROLLER MILLIGAN: Okay.
5 MS. HENDERSON: The -- the second part I
6 learned about from talking with the
7 Coordinating Council and some members of the
8 Governor's staff is that we did actually try to
9 undergo an enterprise concept for personnel
10 several -- I think it was about two years ago,
11 and unfortunately as hard as they tried, it --
12 it didn't work.
13 There was a lot of resistance to the
14 creating enterprise system for personnel. So
15 that has been tried within the State
16 government, and was not successful.
17 GOVERNOR BUSH: But we could show that on
18 a --
19 COMPTROLLER MILLIGAN: I --
20 GOVERNOR BUSH: -- as a business base --
21 COMPTROLLER MILLIGAN: -- would just
22 like -- I would just hope that their business
23 case will compare apples to apples.
24 I mean, if -- if it doesn't, then I don't
25 know how we as a state can make a -- a
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1 clear-cut decision with, you know, confidence.
2 And as long as it compares apples to
3 apples, and I ultimately see the business
4 case -- which I haven't seen yet. I've got a
5 draft of some pieces of it here apparently on
6 my -- on my dais. But I'm looking forward to
7 that.
8 And, you know, I -- I think it needs to be
9 perfectly clear that, in the six years I've
10 been involved in this business, and for that
11 matter, the years that I did with doing
12 commercial activities, I think it's a great way
13 to go, if it is competed properly and it is a
14 clear, equal to, or savings to the way the
15 government does it. And -- and done a lot of
16 it. And -- and certainly support it.
17 But I think it's got to be clearly a
18 competitive, on the same playing field, between
19 the Government and the -- and the -- and the
20 outsourcing activity.
21 GOVERNOR BUSH: That's more than fair.
22 MS. CLINE: And, sir, you're absolutely
23 correct. That's what the business case
24 analysis is all about --
25 GOVERNOR BUSH: So you're going to include
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1 what he's -- what he's suggesting, which --
2 MS. CLINE: Yes, sir.
3 GOVERNOR BUSH: Okay.
4 MS. CLINE: Yes, sir.
5 GOVERNOR BUSH: Very good.
6 MS. CLINE: In order to make a sound
7 business decision, you need to look at all the
8 different options on the table. It's not just
9 the as-is costs, but the as-is cost is where we
10 always start in these outsourcing areas.
11 But you're absolutely correct, those are
12 things that need to be looked at in the
13 final --
14 COMPTROLLER MILLIGAN: Okay. And I'm --
15 I'm just looking forward to that. And I hope
16 that one of the taskings that we should be
17 giving to the Council here is to review that
18 for us, and -- and give us an appropriate
19 feedback once that business case is finalized.
20 MS. CLINE: That's why it's very important
21 that the entire process is looked at, so that
22 the business case is complete and accurate.
23 COMPTROLLER MILLIGAN: Absolutely.
24 MS. CLINE: So that we can make a -- y'all
25 can make a sound --
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1 COMPTROLLER MILLIGAN: No -- no argument at
2 all.
3 MS. CLINE: Okay.
4 TREASURER GALLAGHER: Well, I -- I --
5 If I may.
6 GOVERNOR BUSH: Yeah. Please.
7 TREASURER GALLAGHER: The -- the key is the
8 scope of the study.
9 MS. CLINE: Yes, sir.
10 TREASURER GALLAGHER: So as long as the
11 scope covers everything, you're going to get
12 the right business case foundation.
13 So the key is, I think, General, we make
14 sure that the scope's correct.
15 COMPTROLLER MILLIGAN: Absolutely.
16 And -- and I couldn't agree with you more.
17 I was captured by the as-is comments which --
18 since -- since we got on this comparative
19 analysis, the as-is that we will see here
20 shortly in this briefing.
21 MS. CLINE: Well, and -- and the as-is is
22 important. I mean, that's a baseline.
23 Let me go ahead and -- go ahead, next
24 view graph.
25 When we look at the acquisition, one of the
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1 fundamental acquisition strategy decisions is
2 to rely on what industry innovation provides
3 us. And so we would recommend using a
4 statement of objectives, which is a very high
5 level statement of work.
6 Industry comes back with what their
7 approach would be, and then we have to have a
8 systematic evaluation on who's giving us the
9 best approach; who's met the critical,
10 essential, and desired requirements of the
11 State.
12 Next view graph.
13 That's an example of a statement of
14 objectives. The next view graph gives you the
15 milestones that we have in place.
16 The next view graph gives you service
17 customers. And this one's important because
18 this addresses the issues that we just
19 discussed.
20 When you look at the service base of this
21 outsourcing decision right now, you can look at
22 it from the standpoint of who would be impacted
23 if COPES was replaced, versus who would also be
24 impacted if payroll production was included.
25 When you look at who's impacted when Scopes
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1 is replaced, we have 30 agencies that are
2 confirmed within the scope of this study.
3 And then we have three other groups, the
4 county health departments, the state courts,
5 JAC, who are all undergoing transitions into
6 different systems that they would likely be a
7 player, but not at this time. The timing's not
8 correct, but in the future, they would consider
9 it.
10 If we include the payroll production, and
11 so this is what you had asked earlier -- that's
12 when the State University System, the
13 Legislature, the Auditor General would need to
14 be included in the scope because of -- of how
15 they're -- how their HR information, their
16 payroll information gets to payroll production.
17 So when you look at Scope, in order to
18 develop a solid business case, we have to make
19 an early decision on what's included. You can
20 always take things out if it doesn't make
21 sense.
22 But you start with the whole picture, and
23 then you get to the end to make a decision.
24 The next one gives you an overview of the
25 business case analysis, again starting with the
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1 as-is costs. But actually the business case
2 analysis in this case is three-pronged: Your
3 as-is costs, the information that we've -- that
4 we've learned about just replacing the
5 software, and then the cost of outsourcing.
6 We've based the business case analysis on a
7 DOD methodology, and also one that's been used
8 by the State of Virginia, but customized for
9 the State of Florida. There isn't anything cut
10 in stone about the business case, other than we
11 want to make sure that it looks at the entire
12 picture of costs so you can make a decision.
13 GOVERNOR BUSH: Well, have -- are you all
14 looking at the elements that are unique to
15 State government that we're -- our core
16 competencies are going to be required, maybe
17 some statute that needs to be implemented in a
18 way, or some -- there -- where there's a --
19 where it's -- it's clear that it is not a
20 standard process that can be competitively bid,
21 are we -- are we -- are you identifying those,
22 which we've begun to do internally asking
23 our -- our coworkers to identify the unique
24 things that we do.
25 But is that going to be part of this?
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1 MS. CLINE: Absolutely. Absolutely.
2 It's -- it's part of it in two ways. One is
3 during the acquisition, we want people -- the
4 vendors to tell us what our State -- State
5 unique requirements, because then we can assess
6 what their knowledge is.
7 And then, too, it becomes an evaluation
8 criteria, how complete were they. But it
9 becomes a critical requirement that they have
10 to be able to meet the State unique
11 requirements.
12 GOVERNOR BUSH: Well, I'm not sure the
13 vendors are going to be able to tell us --
14 COMPTROLLER MILLIGAN: No.
15 GOVERNOR BUSH: -- what we should carve
16 out.
17 MS. CLINE: Oh, I'm sorry.
18 GOVERNOR BUSH: I think we should tell them
19 what we should carve out, shouldn't we?
20 MS. CLINE: You're talking about the
21 residual organization.
22 GOVERNOR BUSH: Yes.
23 MS. CLINE: Yes, sir.
24 That --
25 COMPTROLLER MILLIGAN: And -- and, frankly,
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1 that's why payroll production has been taken
2 off the table. It is considered too critical
3 to State-functioning to be outsourced. And
4 it's off the table.
5 TREASURER GALLAGHER: Well --
6 COMPTROLLER MILLIGAN: So you're welcome
7 to --
8 TREASURER GALLAGHER: How do you --
9 COMPTROLLER MILLIGAN: -- continue to play
10 in this drill. But at this point in --
11 GOVERNOR BUSH: Well, for the same reason
12 that, you know, as-is, isn't the right way to
13 look at it. If there's a better way of doing
14 things in general, I think everything ought to
15 be on the table.
16 But if for -- based on your -- you know,
17 you have constitutional concerns as well --
18 COMPTROLLER MILLIGAN: That -- that's
19 exactly right.
20 GOVERNOR BUSH: So -- but -- but this will
21 be a healthy exercise for all of us,
22 irrespective of what the end result would be,
23 don't you think?
24 COMPTROLLER MILLIGAN: Well, I -- I don't
25 have any problem with them doing whatever they
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1 may want to do. It may be useful as we move
2 into the general ledger business, and replacing
3 it, and help us really identify how we can best
4 handle that payroll production function of the
5 general ledger and the accountability side of
6 it.
7 So I -- I mean, I don't -- it's off the
8 table though as far as outsourcing is
9 concerned.
10 I -- I might add, you know, I've heard a
11 lot of comments about what other states were
12 doing, and I -- I just had a poll of the -- of
13 the states done, just to see if other states
14 are outsourcing payroll function.
15 And the number I came up with was zero for
16 all the same reasons that I -- that I say.
17 TREASURER GALLAGHER: So the Virginia thing
18 is not payroll?
19 COMPTROLLER MILLIGAN: No.
20 MS. CLINE: No.
21 MR. GOODNIGHT: They did -- they did their
22 HR, I believe. They did not do --
23 COMPTROLLER MILLIGAN: Well, I believe if
24 you check with Virginia, you'll find they did
25 some pieces of their HR, not their entire HR,
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1 and none of their payroll.
2 You -- Maryland is often cited as being one
3 of those that's very aggressive right now in --
4 in outsourcing. And they are -- they have an
5 RFP, or whatever they may call it, on the
6 street that excludes payroll.
7 It is a -- it is an accounting function
8 that is -- is critical. It's just like again
9 in the -- in the commercial activities business
10 in Federal government, there are some things
11 that, you know, are appropriate to outsource --
12 GOVERNOR BUSH: That's why we're --
13 COMPTROLLER MILLIGAN: -- some are not.
14 GOVERNOR BUSH: -- going to go through this
15 process.
16 I mean --
17 COMPTROLLER MILLIGAN: Yes. And I -- I
18 support it. And I am a supporter of it.
19 TREASURER GALLAGHER: Let me just ask a
20 question here.
21 And I've been in some businesses other than
22 government a couple times in my life.
23 GOVERNOR BUSH: Brief -- brief windows.
24 TREASURER GALLAGHER: And there are --
25 Yeah. There are some few open windows
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1 there I managed myself looking for a job.
2 The use of, say, ADP, as a business person,
3 you -- they pretty much do a -- a part of your
4 human resources, and they, you know, provide
5 all the accounting you need and everything else
6 for your payroll, they make sure your taxes are
7 paid, and all those kind of things.
8 That's -- that, to me, was a really good
9 convenience, and rather reasonable when you
10 consider what it --
11 COMPTROLLER MILLIGAN: Uh-hum.
12 TREASURER GALLAGHER: -- costs you to do it
13 yourself, especially a small business.
14 Now, I guess the bigger you get, it --
15 COMPTROLLER MILLIGAN: I'll give you --
16 TREASURER GALLAGHER: -- it's as easy to do
17 it yourself.
18 COMPTROLLER MILLIGAN: -- you're -- you're
19 the perfect person to give an example to.
20 When -- when Andrew struck, and there were
21 numerous warrants destroyed in post offices, in
22 mail boxes, in homes, and -- and people were
23 really strapped to get their pay.
24 There was an extraordinary effort done by
25 the same people who do the routine payrolls to
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1 take care of that.
2 Now, as you know, they went down there and
3 hand delivered those payrolls.
4 TREASURER GALLAGHER: Then the only problem
5 was, there weren't any banks open to cash them.
6 But --
7 COMPTROLLER MILLIGAN: Well, then we put a
8 bank in there, too, with the other hat on.
9 TREASURER GALLAGHER: It was --
10 COMPTROLLER MILLIGAN: But --
11 TREASURER GALLAGHER: -- it was tough.
12 COMPTROLLER MILLIGAN: Yeah.
13 But nevertheless, a fine example of some of
14 the really tremendous surges that we experience
15 in this state function that we have.
16 I -- OPPAGA just finished a -- about a
17 six-month review of the financial system, and
18 on -- promoted by anyone, made a very clear and
19 precise statement that outsourcing of the
20 payroll was not something to do.
21 So I -- I'm very comfortable with taking
22 payroll off the table. At the same time, I'm
23 comfortable getting any information that may
24 help us as we do the general ledger program to
25 improve all of the functions, including the --
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1 the payroll function.
2 MS. CLINE: When you --
3 GOVERNOR BUSH: Well, I think this report,
4 and this -- and this process, is going to yield
5 for the policymakers, accurate apples to apples
6 data that you can compare for us to make
7 decisions on short-term possibilities to
8 free up money to spend on the priorities of the
9 state, which is the whole objective here.
10 And -- and, secondly, long-term, as we move
11 to -- to modernize our entire computer -- or
12 technology platform, it'll create other
13 opportunities as well down the road.
14 If it's structured right, it'll yield that,
15 and it'll be done in a fair way that people can
16 look at, and it'll be clear.
17 I mean, this is not going to be -- in my
18 opinion, this won't be that complicated. The
19 information will be -- my concern is to make
20 sure that we carve out things that are clearly
21 by statute, or by -- by best practice that
22 we've developed ourselves, we -- we carve those
23 things out in a way -- and you've brought up
24 one, it's in your department.
25 I've got -- I know you're not neutral on
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1 the payroll thing. I got that clear. It's --
2 there may be others that we carve out. And --
3 and we do this in a thoughtful way.
4 But we don't just -- because no one else
5 has done -- I mean, I -- every -- the -- the
6 editorial boards I go around, I think almost
7 all of the newspapers have outsourced their
8 payroll, and they've outsourced their
9 HR function, you know.
10 So I'm sure editorially they'll be
11 sympathetic to us because they've done it
12 themselves.
13 COMMISSIONER CRIST: Governor --
14 GOVERNOR BUSH: Most businesses, large
15 businesses, are now either looking at this, or
16 have already done it, and done it very
17 effectively.
18 Yeah.
19 COMMISSIONER CRIST: Just a question.
20 I mean, I know I don't have a vote on this
21 Board apparently, but -- on this particular
22 issue.
23 But it seems to me that on the payroll
24 issue --
25 And I'm sensitive to your -- your comments,
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1 General. But it seems to me that just because
2 nobody else in the country does it --
3 COMPTROLLER MILLIGAN: Well, I didn't --
4 COMMISSIONER CRIST: -- isn't a reason --
5 COMPTROLLER MILLIGAN: -- I didn't -- I
6 didn't cite it for that reason. I cited it
7 be-- the other side because it was clearly
8 pointed out that other states have done the
9 human resource thing, and, therefore, it's a
10 good thing.
11 Well, I was just pointing out, no one has
12 done it on the payroll. That's all.
13 COMMISSIONER CRIST: Maybe we could be a
14 leader.
15 COMPTROLLER MILLIGAN: I think -- I think
16 we are leaders. And thanks to Governor Bush's
17 leadership in My Florida and other IT
18 initiatives, we are leaders.
19 COMMISSIONER CRIST: Yes, sir.
20 COMPTROLLER MILLIGAN: But I also concur
21 fully with his comments, that there are some
22 things that you have to look at very carefully
23 to decide whether they are core functions that
24 are being performed by the State --
25 COMMISSIONER CRIST: Certainly.
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1 COMPTROLLER MILLIGAN: -- and should -- by
2 government, and should not be outsourced.
3 And -- and that's where I am.
4 COMMISSIONER CRIST: Sure. Sure.
5 Thank you.
6 GOVERNOR BUSH: Any -- do you want to
7 continue on, or are we --
8 COMPTROLLER MILLIGAN: I think -- I think
9 we probably have -- we've got a long schedule
10 today, and -- and I -- and I, one, appreciate
11 the -- the briefing, and thank you very much
12 personally for it.
13 I would -- I would ask that the Board have
14 the Council, when they -- when they get the
15 final product, or as they move along toward the
16 final product of the business case and the real
17 analysis of -- of apples to apples, and what is
18 the best decision to make, that it be provided
19 to the Council. And we get a report back from
20 the Council.
21 MS. HENDERSON: We will be glad to give you
22 a report. The jurisdiction of the Council and
23 the Board is to ensure the data codes are
24 correct, technology information is there, not
25 to approve the business case study, and moving
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1 forward.
2 GOVERNOR BUSH: But we're going to -- it's
3 going to come back to us.
4 MS. HENDERSON: For final review, to ensure
5 consistency with the data. Basically to make
6 sure that we're not creating --
7 COMPTROLLER MILLIGAN: Well --
8 MS. HENDERSON: -- another system that
9 doesn't talk to one another.
10 COMPTROLLER MILLIGAN: -- yes. I agree
11 with you that the real reason why the Council
12 is interested is the data interface with flare.
13 But I think we're all interested in making
14 sure that we have the best analysis and -- and
15 objective view of this thing. I wouldn't think
16 you'd have any problem with the Council
17 reviewing it and providing a report to
18 the Board.
19 MS. HENDERSON: We would --
20 GOVERNOR BUSH: Ultimately the decisions
21 will be made by the --
22 MS. HENDERSON: By --
23 GOVERNOR BUSH: -- Legislature.
24 COMPTROLLER MILLIGAN: That's correct.
25 GOVERNOR BUSH: Yeah. Okay.
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February 6, 2001
1 MR. MARTIN L. YOUNG: Moving on to Item 3,
2 we want to withdraw this item.
3 COMPTROLLER MILLIGAN: Move withdrawal.
4 TREASURER GALLAGHER: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without dissension, the item --
7 MR. MARTIN L. YOUNG: All right.
8 GOVERNOR BUSH: -- is withdrawn.
9 Thank you very much.
10 MR. MARTIN L. YOUNG: All right.
11 Thank you.
12 GOVERNOR BUSH: Well done.
13 SECRETARY HARRIS: Governor.
14 GOVERNOR BUSH: Yes.
15 SECRETARY HARRIS: We have some special
16 guests.
17 GOVERNOR BUSH: Oh, yes.
18 SECRETARY HARRIS: We have ten members from
19 Parliament from the country of Mongolia, and we
20 want to welcome them. They're here with the
21 United States State Department and the
22 International Visitors Program. And they're
23 interested in learning more about the
24 United States, both our Federal and State
25 Government.
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February 6, 2001
1 So they're here to view State policy at
2 work, at the Cabinet, and our transparent
3 sunshine laws.
4 And we would like to welcome them. Most of
5 these members are -- are newly elected as the
6 Parliament in Mongolia is relatively new as
7 well. So we want to invite you for a
8 photograph, and thank you for joining us this
9 morning in the great State of Florida.
10 (Applause.)
11 (Discussion off the record.)
12 (The Financial Management Information Board
13 Agenda was concluded.)
14 * * *
15
16
17
18
19
20
21
22
23
24
25
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STATE BOARD OF ADMINISTRATION 47
February 6, 2001
1 GOVERNOR BUSH: All right.
2 Maybe a Capital for a Day in Mongolia, Tom,
3 what do you think?
4 Maybe not.
5 State Board of Administration.
6 (Commissioner Crist exited the room.)
7 MR. HERNDON: Good morning, Governor, and
8 members of the Trustees.
9 TREASURER GALLAGHER: Motion on the
10 minutes.
11 MR. HERNDON: As corrected.
12 TREASURER GALLAGHER: As corrected.
13 COMPTROLLER MILLIGAN: And I'll second them
14 as amended.
15 GOVERNOR BUSH: Moved and second.
16 Without objection, it's approved.
17 MR. HERNDON: Item Number 2 is an interest
18 rate exception of the Florida Housing Finance
19 Corporation's request to be withdrawn.
20 COMPTROLLER MILLIGAN: Move withdrawal.
21 TREASURER GALLAGHER: Second.
22 GOVERNOR BUSH: There's a motion to
23 withdraw and a second.
24 Without objection, it's approved.
25 MR. HERNDON: Item Number 3 is an interest
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February 6, 2001
1 rate exception pursuant to Chapter 215.84 for
2 the Walkabout Community Development District
3 that is still viable. And there was a
4 correction submitted at the request of the
5 Housing Finance Agency to change the interest
6 rate from 8.15, to 8.20; and for the month of
7 January, to change it to February.
8 TREASURER GALLAGHER: A motion on 3, with
9 the exceptions.
10 COMPTROLLER MILLIGAN: Second.
11 GOVERNOR BUSH: Moved and seconded.
12 Without objection, it's approved.
13 MR. HERNDON: Item Number 4 is also an
14 interest rate exception that the Housing
15 Finance Corporation has requested to be
16 withdrawn.
17 COMPTROLLER MILLIGAN: Move withdrawal.
18 TREASURER GALLAGHER: Second.
19 GOVERNOR BUSH: There's a motion to
20 withdraw, and a second.
21 Without objection, it's approved.
22 MR. HERNDON: Item Number 5 is approval of
23 a fiscal sufficiency, not exceeding 210 million
24 dollars, State of Florida, Department of
25 Environmental Protection, Preservation 2000
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February 6, 2001
1 Revenue Refunding Bond.
2 COMPTROLLER MILLIGAN: Move approval.
3 TREASURER GALLAGHER: Second.
4 GOVERNOR BUSH: Moved and seconded.
5 Without objection, it's approved.
6 What is a refunding bond?
7 (Commissioner Crist entered the room.)
8 TREASURER GALLAGHER: It's when you
9 refinance, you get a lower interest rate.
10 GOVERNOR BUSH: So these are bonds that are
11 already been --
12 TREASURER GALLAGHER: You get --
13 MR. HERNDON: They're being refinanced.
14 TREASURER GALLAGHER: -- a lower interest
15 rate saves millions of dollars.
16 GOVERNOR BUSH: Is Ben here, or maybe you
17 could answer this.
18 MR. HERNDON: He is here --
19 COMPTROLLER MILLIGAN: Well, he's in the
20 wings, actually.
21 GOVERNOR BUSH: Oh, you have the next --
22 oh, I'll -- I have a question I'm going to ask
23 you --
24 (Commissioner Rhodes exited the room.)
25 GOVERNOR BUSH: -- later.
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February 6, 2001
1 Go ahead.
2 MR. HERNDON: Okay. Item Number 6 is
3 approval of fiscal determination of an amount
4 not exceeding twelve million eight hundred and
5 eighty thousand dollar tax exempt, Florida
6 Housing Finance Corporation Housing Revenue
7 Bond 2001 series for the River Run Apartments.
8 TREASURER GALLAGHER: Motion on 6.
9 COMPTROLLER MILLIGAN: Second.
10 GOVERNOR BUSH: Moved and seconded.
11 Without objection, it's approved.
12 MR. HERNDON: Item Number 7 is approval of
13 a fiscal determination of an amount not
14 exceeding twenty-seven million four hundred and
15 fifty-five thousand dollar tax exempt, Florida
16 Housing and Finance Corporation Housing Revenue
17 Bond, 2001 series, for Pembroke Village
18 Apartments.
19 COMPTROLLER MILLIGAN: Move Item 7.
20 TREASURER GALLAGHER: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Without objection, it's approved.
23 MR. HERNDON: Item Number 8 begins the
24 first in a series of several items related to
25 the new defined contribution program.
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February 6, 2001
1 Governor, as you'll recall, we are moving
2 forward on several fronts simultaneously, and
3 it so happens that the first major milestone
4 that we're bringing to your attention today,
5 and requesting your approval, is the
6 concurrence in the recommendation that we
7 select a third party administrator, or
8 recordkeeper for the program.
9 I'm going to ask Coleman Stipanovich, who
10 is one of the Co-Chairs of the selection
11 committee, to come up and give you a brief
12 orientation to how we got to this point, and
13 then Mr. Jim Phalen, who is the CEO and
14 President of CitiStreet, the recommended
15 vendor, is here, and would also like to make a
16 few remarks before you take any action.
17 So if Coleman could come up?
18 GOVERNOR BUSH: Welcome, Coleman.
19 MR. STIPANOVICH: Thank you, Governor.
20 Thank you, Tom.
21 (Commissioner Rhodes entered the room.)
22 MR. STIPANOVICH: Good morning, members,
23 and Trustees.
24 I thought I would start out by really kind
25 of summarizing the recommendation on -- on
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1 today's agenda. You're being asked to select a
2 TPA for the Public Employees Optional
3 Retirement Program.
4 This recommendation for you is -- it comes
5 as a unanimous choice from the Public Employees
6 Optional Retirement Program Advisory Committee.
7 As you know, this committee was created by
8 the Legislature to make a recommendation to the
9 Trustees for the selection of a TPA for PEORP;
10 otherwise, known as the defined contribution
11 plan.
12 In addition to the PEORPAC recommendation,
13 the Investment Advisory Council, your council,
14 was also unanimous in its recommendation that
15 the Trustees select CitiStreet.
16 Also the Third Party Implementation Group,
17 and the TPA evaluation team, was unanimous in
18 its recommendation to put forth CitiStreet as
19 the recommended TPA to the PEORPAC and IAC,
20 again, which they unanimously confirmed.
21 Finally, the outside independent
22 consultant, William M. Mercer, that was
23 involved in the evaluation and selection
24 development of criteria, enthusiastically also
25 supports the CitiStreet recommendation.
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1 That pretty much is the outcome of the
2 process. Governor, if it's your pleasure and
3 the Trustees, I can take maybe 5 minutes or
4 less, and summarize a memorandum -- a 6-page
5 memorandum, which goes into some detail that
6 you have in your handouts today; or do nothing
7 more.
8 GOVERNOR BUSH: We can -- would you like to
9 hear it?
10 COMPTROLLER MILLIGAN: Well, I'm satisfied,
11 having read the material, and, in fact, sat in
12 on the briefing to the IAC and the PEORP. I'm
13 satisfied with it, Governor.
14 MR. STIPANOVICH: The General was there for
15 the entire presentation. It was about a --
16 about an hour and 40 minute presentation, of
17 which it was a joint committee of PEORPAC and
18 the IAC. And --
19 COMPTROLLER MILLIGAN: And, in fact, I --
20 I think we owe some thanks to the people who
21 participated in the selection and the
22 evaluation team. They worked through the
23 holidays, including I think Christmas Eve and
24 New Year's Eve --
25 MR. STIPANOVICH: Yes, sir.
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1 COMPTROLLER MILLIGAN: And put in a
2 tremendous amount of time and effort to -- to
3 meet the deadline.
4 GOVERNOR BUSH: Treasurer Gallagher, you
5 got any questions?
6 Could I --
7 MR. STIPANOVICH: Governor, you did -- all
8 the Trustees had representation on the TPAIG --
9 what we call the TP-- Third Party
10 Administration Implement--
11 GOVERNOR BUSH: English.
12 MR. STIPANOVICH: -- Implementation Group.
13 GOVERNOR BUSH: English.
14 MR. STIPANOVICH: I used -- Governor, I
15 filled in the acronym.
16 GOVERNOR BUSH: TPAIG and PEORP and --
17 TREASURER GALLAGHER: Jeb.
18 COMPTROLLER MILLIGAN: Yeah.
19 SECRETARY HARRIS: Jeb.
20 MR. HERNDON: Tooth Decay.
21 MR. STIPANOVICH: But there was a -- there
22 was a -- that -- that group was eleven people,
23 and --
24 GOVERNOR BUSH: Means different --
25 MR. STIPANOVICH: -- people from around --
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1 GOVERNOR BUSH: -- things to different
2 people.
3 MR. STIPANOVICH: -- the state. But you
4 did have represen-- representation on that
5 group, and y'all were, you know --
6 GOVERNOR BUSH: Can I ask about a -- what
7 the pricing is, what the fee structure is; and
8 how that came up, how that matched to what your
9 estimations were when we --
10 MR. STIPANOVICH: Okay.
11 GOVERNOR BUSH: -- launched this a year
12 ago?
13 MR. STIPANOVICH: That was probably our
14 most difficult challenge, was trying to put our
15 arms around the costs aspect of the overall
16 evaluation, which received about an
17 eighteen-and-a-half percent weighting of the
18 seven broad categories, and 20 subcategories
19 that were evaluated independently by this group
20 of evaluators.
21 There are really four components of the
22 price, and that would be a part-- per
23 participant cost. And we really tried to, as
24 much as we could, roll all the costs up into a
25 per participant cost so that we could do an
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1 apples to apples comparison.
2 In addition to that, you have some
3 implementation costs. And that was pretty much
4 all across the board, and that's money that
5 would be spent up front prior to the July 1 of
6 2002.
7 Then you have the fulfillment costs, which
8 literally are mailing costs, the 800 telephone
9 lines, and -- and so on, so forth.
10 And then you have the custodian costs. The
11 best that we could ascertain -- and we actually
12 ended going back out after the RFI with a
13 second request for clarification on costs, and
14 worked with our consultant very closely and the
15 members of the evaluation team, and -- and got
16 back a pretty good response.
17 And it looks like, the best we can
18 ascertain, and we expect to fully negotiate
19 this contract, and we would expect less, not
20 more. And we kind of used the range of
21 250,000, 300,000 number. You have to have some
22 kind of model to work from in terms of the
23 anticipation.
24 If you look in your materials, you can see
25 that it's broken down, you know, like the first
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1 hundred thousand, it'd be this cost; a hundred
2 to two hundred and fifty thousand, it'd be this
3 cost. And so we move right on up to the total
4 of two hundred -- 650,000 I do believe.
5 But using kind of the 250,000 to 300,000
6 estimate, Governor, it looks like it's going to
7 be $39 per participant.
8 And if you use the number of 300,000
9 participants, then --
10 GOVERNOR BUSH: $39 --
11 TREASURER GALLAGHER: Per year?
12 GOVERNOR BUSH: -- per year?
13 MR. STIPANOVICH: Yes, sir.
14 TREASURER GALLAGHER: Per year.
15 MR. STIPANOVICH: Yes, sir.
16 GOVERNOR BUSH: And -- and you're --
17 TREASURER GALLAGHER: $3 plus --
18 GOVERNOR BUSH: -- out of --
19 TREASURER GALLAGHER: -- a month.
20 GOVERNOR BUSH: -- out of 750,000 --
21 MR. STIPANOVICH: Right.
22 GOVERNOR BUSH: -- or whatever?
23 MR. STIPANOVICH: Yeah. And again, we
24 think that number, at -- at the end of the day
25 is going to be much closer to 35, maybe on the
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1 low side of that -- but more -- I think 35 may
2 be closer to the number, Commissioner, yes.
3 GOVERNOR BUSH: That -- that's I assume --
4 TREASURER GALLAGHER: Now --
5 GOVERNOR BUSH: -- if we checked, we would
6 find large plans that have third party
7 administrators are in that ballpark? We
8 won't --
9 MR. STIPANOVICH: Well, the first thing
10 that we did, and -- and really started back
11 when Mr. Herndon put together the PEORP
12 organization that we were going to operate
13 under, one of the first things we did as a
14 staff, and then very early on with the
15 appointment of the Third Party Administration
16 Implementation Group, we did benchmarking.
17 We looked at and researched and came up
18 with about 30 states and large corporations
19 that similar -- had been -- somewhat been there
20 and done that.
21 And so we ended up out of those 30
22 benchmarking and visiting with five. So we --
23 we have spent a great deal of time trying to --
24 GOVERNOR BUSH: That was my question really
25 is where do we stand --
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1 TREASURER GALLAGHER: What's their price?
2 GOVERNOR BUSH: -- compared to what we
3 anticipated by that process last summer, or
4 whenever it was?
5 MR. STIPANOVICH: We're a little bit --
6 little bit lower. And again, it's kind of hard
7 to compare apples to apples. Every program's
8 different.
9 So depending on the complexity of the
10 program, the costs vary. You know,
11 for example, do -- does the TPA -- do we use
12 DOR as a single remitter, or does the TPA
13 interface with all 800 employers?
14 So -- and do you have the one bundled
15 provider, or no bundled providers, or five
16 bundled providers? So it's as complex as the
17 program gets.
18 I mean, do the -- does -- does the --
19 should you have a bundled provider, do they do
20 recordkeeping? If you do, that reduces the
21 number that the TPA might be recordkeeping,
22 therefore, the costs would go up.
23 The best we can ascertained -- again, it's
24 a very complex question, is kind of the numbers
25 we were seeing were about $42. And we're --
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1 we're around 38, 39, and we think we can get it
2 down to around 35.
3 TREASURER GALLAGHER: Now, when we had a
4 little meeting on this last, it's my
5 understanding that they -- the third party
6 administrator and the contract allows them to
7 track individual bundled providers in the
8 breakout of those particular funds so that an
9 employee would have the flexibility, the
10 choice, and option to move between different
11 bundled providers if they choose to. I think
12 it's an important thing to give that kind of a
13 choice.
14 If we choose four or five different options
15 from three different bundled providers, and so
16 we'd end up with maybe 15 separate funds that
17 people could put their money in, and one wanted
18 to move in between one of those --
19 GOVERNOR BUSH: There we go.
20 MR. STIPANOVICH: Uh-hum.
21 TREASURER GALLAGHER: -- that third party
22 administrator is going to have to be -- be the
23 person that does that now. So that's figured
24 in this.
25 MR. STIPANOVICH: Yes, sir. There's
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1 actually a separate cost. For example,
2 CitiStreet estimated $65,000 additional costs
3 for a bundled provider.
4 We base that on what the -- the current
5 Investment Policy Statement allowed for. We
6 didn't get beyond that. So I don't know
7 whether you could assume that for every bundled
8 provider, there'd be an extra $65,000 costs.
9 I will say --
10 TREASURER GALLAGHER: One time --
11 MR. STIPANOVICH: -- that we --
12 TREASURER GALLAGHER: -- or annual?
13 MR. STIPANOVICH: That would be annual,
14 yes, sir.
15 TREASURER GALLAGHER: In order to do what,
16 to watch what the bundled provider's doing, or
17 to do what the bundled provider --
18 MR. STIPANOVICH: To interface -- interface
19 and do the various activities that would be
20 involved, having -- and a bundled provider
21 involved in the program, the fact that they
22 would have to interface with them and do their
23 various activities in terms of, you know,
24 handing off and recordkeeping, there would be
25 some duplicate recordkeeping most likely. Some
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1 manpower requirement in terms of talking to
2 those people in the back office and so and
3 so forth.
4 TREASURER GALLAGHER: Well, if you add that
5 up, then maybe it's -- there's an advantage for
6 the bundled providers that it may be less than
7 that.
8 We don't know I guess till we get bids.
9 MR. STIPANOVICH: And we don't know.
10 I think once we finish our work on the
11 unbundled and bundled side, we'll be able to do
12 those kind of cost comparisons.
13 And that's why I think that we're going to
14 probably be moving fairly slowly on contract
15 negotiations with the TPA, because until we
16 know what the program design looks like and
17 what it entails, it's going to be really hard
18 to have a concrete contract, because there are
19 going to be those variable costs.
20 COMPTROLLER MILLIGAN: Coleman, those costs
21 would be similar, regardless of what TPA was
22 selected, right?
23 MR. STIPANOVICH: Yes, sir.
24 COMPTROLLER MILLIGAN: Yeah. So we're --
25 we're not really worried too much about getting
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1 some huge break from some other third party
2 administrator. You've looked at that, and this
3 is the best opportunity.
4 MR. STIPANOVICH: Yes.
5 TREASURER GALLAGHER: What -- what you're
6 saying is that it's going to -- if you have
7 bundled providers, it's going to be $65,000 for
8 whichever provider -- for TPA.
9 MR. STIPANOVICH: For this particular --
10 should you choose CitiStreet as the TPA, that
11 was the cost estimate that they gave us.
12 This is rolled up in -- by the way, into
13 that $39 estimate that we have per participant,
14 that is factored in that $39.
15 TREASURER GALLAGHER: Oh, okay.
16 MR. STIPANOVICH: Yes.
17 TREASURER GALLAGHER: But -- but others did
18 the same thing. Similar.
19 MR. STIPANOVICH: Well, we had one that
20 kind of did an all-inclusive -- they did not
21 break it out. And then we had another one,
22 which was, like, $350,000 plus $100,000, and
23 again, it got much --
24 TREASURER GALLAGHER: But --
25 MR. STIPANOVICH: -- more complicated. But
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1 it's more expensive.
2 TREASURER GALLAGHER: All of the people
3 that reviewed and went over it, recommended
4 this -- this vendor -- I mean, it was pretty
5 much unanimous across-the-board.
6 MR. STIPANOVICH: Oh, absolutely.
7 That's --
8 TREASURER GALLAGHER: To get the most
9 points, they got the most recommendations,
10 they've got --
11 MR. STIPANOVICH: Commissioner Gallagher,
12 they were -- they -- in -- in the RFIs that
13 went out and the written responses that were
14 quantified and evaluated independently, they
15 were ranked. They actually ended up being
16 number one in the written responses.
17 After -- then that short list of folks were
18 invited to oral interviews, you had oral
19 interviews, and then on-site visits.
20 And then came back and there was an
21 independent ranking of the finalists, and they
22 again were ranked number one.
23 And then beyond that, in the presentation
24 to PEORPAC and the IAC, again, they were both
25 unanimous by both of those bodies. And then
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1 enthusiastically endorsed by the consultant.
2 And we're satisfied that --
3 TREASURER GALLAGHER: It sounds strong.
4 MR. STIPANOVICH: -- the TPA that we have
5 has the ability, should they be bundled
6 providers, to interface with these bundled
7 providers to provide recordkeeping.
8 We were pretty -- that was part of Tom's
9 work in terms of the negotiations in making the
10 RFI more neutral, to allow for that kind of
11 activity.
12 TREASURER GALLAGHER: Okay.
13 GOVERNOR BUSH: One little side bar benefit
14 is that this company has a large operation in
15 Jacksonville.
16 COMPTROLLER MILLIGAN: Yes.
17 MR. HERNDON: Yes, it does.
18 MR. STIPANOVICH: Seven hundred and fifty
19 employed there.
20 MR. HERNDON: And let me just stress the
21 point in response to -- to all of your
22 questions.
23 As you know, we're trying to move forward
24 simultaneously on several different fronts.
25 And as a consequence, some of the key decisions
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1 that will influence contract terms, price
2 specifications, the final price specifications,
3 are still unknown at this point.
4 Nevertheless, we feel very good about the
5 fact that CitiStreet has the infrastructure and
6 the raw capability to do the job and do it
7 quite well.
8 Let me at this point take a moment and ask
9 Jim Phalen, who's the CEO from CitiStreet, to
10 come up and make a few comments.
11 He represented that he wanted to come down
12 here and assure you that they were going to do
13 the job well.
14 I think, frankly, he wanted to get out of
15 the snowstorms in Boston. But in any case.
16 MR. PHALEN: Good morning, Governor, and
17 Trustees.
18 My name is Jim Phalen. I'm the Chairman
19 and CEO of CitiStreet, and it's a pleasure and
20 honor to be here with the Trustees today at a
21 historic time for both the employees of the
22 State and of local governments, and -- and the
23 school districts throughout Florida.
24 We were honored that CitiStreet has been
25 recommended as trustees for selection -- for
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1 your selection as third party administrator for
2 the Public Employee Optional Retirement
3 Program.
4 I'm here today to pledge from CitiStreet's
5 perspective, as well as from my own personal
6 perspective, our commitment to basically
7 building a world class retirement program for
8 the State employees.
9 CitiStreet will deliver the highest quality
10 of services for public employees, optional
11 retirement programs, and help ensure their
12 retirement security.
13 CitiStreet's commitment to this program,
14 through our Jacksonville operation -- and,
15 Governor, as you mentioned, and the service
16 center, under the leadership of Jim Murphy,
17 who's also with me today, is a tangible sign of
18 our corporate investment in Florida.
19 We have over 750 employees in our
20 Jacksonville facility today, and -- which is
21 pretty much evenly divided between technology
22 people, as well as service people.
23 And it's our fastest growing, actually,
24 office within our -- within our company today,
25 and expect to have well over 1,000 employees
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1 over the next 12 to 18 months.
2 CitiStreet is the second largest provider
3 of defined contribution services, with
4 5 million plus participants that we're
5 servicing in plans. We have the capacity and
6 financial security and experience to provide
7 the service that your members need.
8 Clearly the Florida plan will be among one
9 of the largest plans in the country, and it's
10 important clearly I think that somebody that
11 has the --
12 GOVERNOR BUSH: We won't be --
13 MR. PHALEN: -- experience --
14 GOVERNOR BUSH: -- the largest?
15 MR. PHALEN: You will be our largest if you
16 look at the eligible base. If it was 650,000,
17 that two hundred and fifty to three hundred
18 thousand, you would be among one of the largest
19 plans that we have. We have a number of
20 corporate plans that size, but you would be the
21 largest state plan that we have that size.
22 Thank you very much.
23 TREASURER GALLAGHER: Thank you.
24 Are you planning on running this system
25 here in Florida?
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1 MR. PHALEN: Running it?
2 TREASURER GALLAGHER: Yeah. I mean, the
3 hardware operation, software here in the
4 Jacksonville office --
5 MR. PHALEN: Our -- we have basically our
6 hardware -- in this business, what we have is
7 we have operations in Boston; East Brunswick,
8 New Jersey; and Jacksonville.
9 And what they -- what we have is technology
10 in all three of those shops. So to the extent
11 we loose because of a snowstorm last night in
12 Boston, and the call center in Boston can't
13 operate, all the calls roll to Jacksonville.
14 We do the same thing as if we have a
15 hurricane of some problem in Jacksonville that
16 the State employees will be serviced no matter
17 where it is.
18 So we have -- but the Jacksonville facility
19 is a full service facility, with, as I said,
20 about half the people employed there are in the
21 technology side.
22 In other words, developing the new
23 technologies that your State members will be
24 using as we're building new feature and
25 function to the system.
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1 And the others are the service people that
2 will be answering the calls and doing the
3 servicing for the members in the plan.
4 TREASURER GALLAGHER: Are -- are you -- are
5 you Internet-based access for the State
6 employees at this point in other places?
7 MR. PHALEN: Yes, we are.
8 Ninety-five percent of our participants all
9 have available to them Internet access. The
10 only ones that don't are where, either a plan
11 sponsor elected not to, for some reason, or is
12 in the process of rolling that out.
13 TREASURER GALLAGHER: So that'll be an easy
14 thing for us.
15 MR. PHALEN: Absolutely.
16 TREASURER GALLAGHER: Great.
17 GOVERNOR BUSH: Yes, Charlie.
18 COMMISSIONER CRIST: I -- I think maybe the
19 Commissioner's point -- I don't want to speak
20 for him, but certainly my perspective would be
21 to encourage you to do more in Florida, and --
22 and have more of your operation here.
23 I presume you have just -- are about to
24 enter a -- a nice thing for your company. And
25 if you could shine on Florida a little bit,
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1 we'd appreciate it.
2 MR. PHALEN: Well, it's been a great --
3 even before the award, obviously we made the
4 decision about six years ago to move our -- a
5 large facility here --
6 GOVERNOR BUSH: This was the State
7 Street --
8 MR. PHALEN: Yes, it --
9 GOVERNOR BUSH: -- back then?
10 MR. PHALEN: Yes, it was. And it's been a
11 tremendous success for us, and that's why it's
12 been growing at even a faster rate, as I said,
13 than our other facilities.
14 COMMISSIONER CRIST: Great. Thank you
15 very much.
16 MR. PHALEN: Thank you.
17 COMPTROLLER MILLIGAN: I will make a --
18 GOVERNOR BUSH: Any other discussion --
19 There's a motion.
20 TREASURER GALLAGHER: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Without objection, it's approved.
23 We're delighted you're here.
24 Stay down for awhile.
25 MR. PHALEN: Thanks.
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1 TREASURER GALLAGHER: Play golf where you
2 can see the ball.
3 MR. HERNDON: Item Number 9 is review and
4 approval of the time lines for the unbundled
5 and bundled investment products. We've been
6 wrestling with this issue, as you know, for
7 quite some time.
8 And what we wanted to bring to your
9 attention today was the fact that we are trying
10 to integrate and coordinate the schedules of
11 both of these search processes so that they
12 essentially culminate at the same time. And
13 right now we're forecasted to complete both of
14 the search processes around September 11th
15 Cabinet meeting.
16 Having said that, with the expectation that
17 a number of the searches for the unbundled
18 products will begin and will be moving along,
19 and then we'll get the bundled products search
20 process moving along as well, and they'll be
21 essentially running on parallel tracks, with
22 the expectation that they'll conclude, more or
23 less, at the same time in September.
24 I don't want to give you the impression
25 this morning that this is fixed in stone. But
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1 the intent here was to try and demonstrate our
2 intentions to all the parties that the search
3 process would unfold on more or less a parallel
4 and congruent track.
5 COMPTROLLER MILLIGAN: Someone raised the
6 issue, Tom, that if we approve this, it means
7 that, if you make changes, you've got to bring
8 it back every time.
9 MR. HERNDON: Well, and that's why I think
10 providing it to you for your information and --
11 and awareness is sufficient. I think that
12 point is well-taken.
13 And we wouldn't necessarily ask for your
14 approval this morning, but --
15 COMPTROLLER MILLIGAN: Uh-hum.
16 MR. HERNDON: -- but your recognition of
17 these proposed time tables.
18 And the -- what that allows us to do is at
19 least to represent that these time tables have
20 been reviewed by the Trustees, and -- and so
21 they are the official ones, if you will, for
22 publications purposes.
23 TREASURER GALLAGHER: In other words, we're
24 basically setting the goals, and --
25 MR. HERNDON: That's -- that's correct.
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1 TREASURER GALLAGHER: And when you have a
2 problem meeting them, you'll let us know,
3 not --
4 MR. HERNDON: That's --
5 TREASURER GALLAGHER: -- in a formal
6 meeting, but just keep us informed.
7 MR. HERNDON: That's a very fair
8 characterization.
9 TREASURER GALLAGHER: Motion.
10 COMPTROLLER MILLIGAN: Second.
11 GOVERNOR BUSH: Moved and seconded.
12 Without objection, it's approved.
13 MR. HERNDON: Item Number 10 is a
14 presentation and discussion of the Investment
15 Policy Statement.
16 As you know, this is the -- the crux of the
17 matter in many respects because we are moving
18 forward, as you've just done, on the third
19 party administrator.
20 We just closed on the bid submission for
21 the transition broker last Friday. We got nine
22 firms -- very distinguished large investment
23 banks, world renowned organizations.
24 And last night, we closed on the major
25 component of the education advice RFI. And we
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1 have ten firms that have bid on that, and we'll
2 be getting that list out to you. Again, a very
3 distinguished group of organizations.
4 The major unresolved question is the
5 Investment Policy Statement, and how the
6 investment choices are going to be structured.
7 And that's the guts of this -- of this
8 Investment Policy Statement.
9 You had endorsed on a preliminary basis a
10 version of this at your Capital or the Day
11 meeting in Panama City.
12 Since that time, of course, it's been
13 challenged by a number of parties, and we have
14 had a variety of -- of protests filed against
15 it.
16 What I wanted to encourage this morning was
17 your consideration of our recommendation to
18 withdraw this Investment Policy Statement. The
19 Administrative Law Judge a week ago Friday
20 ruled that -- that we could not as staff to the
21 Trustees bifurcate the proposed Investment
22 Policy Statement as we were suggesting, that
23 instead you had to make that decision.
24 We could ask you to go ahead and allow us
25 to bifurcate this rule. But quite frankly, we
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1 are going to propose a number of amendments.
2 And rather than go through an amendment process
3 on a piece-meal basis, it seemed to us to make
4 more sense to withdraw it, come back to you at
5 the Capital for a Day meeting, Governor, in
6 Tampa, which ought to be an interesting one.
7 We'll do something for the Tampa economy, as we
8 did for the Panama City economy --
9 GOVERNOR BUSH: It's the SuperBowl.
10 MR. HERNDON: -- we'll bring the -- the
11 industry representatives there to discuss the
12 Investment Policy Statement.
13 It would be my intent, as staff to the
14 Trustees, to put in the Investment Policy
15 Statement the latest and greatest version of
16 the settlement discussions that we have
17 underway with the parties.
18 That -- that would be in the text of the
19 Investment Policy Statement as a recommendation
20 to you. We may or may not be able to come to a
21 final resolution with the litigants. I'm --
22 I'm optimistic that we can make a lot of
23 progress. Whether we can make complete
24 progress is still not completely clear.
25 But nevertheless the parties would then
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1 have an opportunity before you in Tampa to
2 debate for your review those remaining
3 unresolved items.
4 We have been able to eliminate a number of
5 contentious items, and I'm hopeful that we can
6 eliminate all of them.
7 TREASURER GALLAGHER: Well --
8 MR. HERNDON: And all --
9 TREASURER GALLAGHER: Your -- if I may.
10 Your goal is to come back with an
11 investment policy that we have buy-in by
12 providers.
13 MR. HERNDON: That -- I'm sorry. I missed
14 the --
15 TREASURER GALLAGHER: We have buy-in by the
16 providers.
17 MR. HERNDON: Absolutely.
18 TREASURER GALLAGHER: Primarily --
19 MR. HERNDON: Yes.
20 TREASURER GALLAGHER: -- the bundled
21 providers that have had --
22 MR. HERNDON: And we had -- we had
23 identified about a dozen disputed issues, some
24 minor, some major. And we have worked through
25 those to the point now where we're down to one
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1 or two that we haven't been able to quite
2 resolve.
3 And we may still resolve those remaining
4 items. But we may, in fact, bring them to you
5 with a staff recommendation and an industry
6 position on those remaining couple of items,
7 and let you hear those discussions in the
8 meeting in Tampa.
9 TREASURER GALLAGHER: Well, one or two is a
10 lot better than 12 --
11 MR. HERNDON: Indeed.
12 TREASURER GALLAGHER: -- for us --
13 MR. HERNDON: Indeed, it is. And we have
14 made good progress, and I think everybody's
15 going to work very faithly in that regard.
16 There are some speakers here this morning
17 who want to speak on the Investment Policy
18 Statement and the philosophy. And I don't -- I
19 don't think they're speaking so much to the
20 withdrawal or the bifurcation so much, but they
21 are here. And I don't have an order
22 particularly. But Mrs. Porter with the
23 Leon County School Board.
24 GOVERNOR BUSH: As they're coming up, Tom,
25 I would urge you to -- and the -- and the folks
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1 on the other side, that -- to get -- if you can
2 get this done by February 27th, or whatever the
3 next meeting is, it'd be wonderful.
4 Because the Legislature's starting the next
5 week, and this ought to be -- we ought to work
6 this out.
7 MS. PORTER: Good morning.
8 Thank you for allowing me a few moments of
9 your time. And I'll be brief. I'm
10 Diane Porter. And --
11 GOVERNOR BUSH: Welcome, Diane.
12 MS. PORTER: -- I'm a teacher right here.
13 Thank you.
14 I'm a teacher here in Tallahassee, Florida,
15 veteran teacher. I'm concerned about the
16 future of the Florida Retirement System. The
17 Public Employees Optional Retirement Plan, or
18 the PEORP, began as a very great concept.
19 And now I'm concerned that the PEORP may
20 offer me only limited sources, and that the
21 State is creating its own mutual fund company.
22 The Legislature did not intend for the
23 State to create its own mutual fund company.
24 (Attorney General Butterworth exited the
25 room.)
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1 MS. PORTER: The State should be, as I
2 would say, the watchdog, not the provider.
3 And please listen as I tell you what I'm
4 asking for, and that I think others that I
5 represent are expecting from this. We simply
6 want to select from several full service
7 companies that are nationally recognized.
8 We want the companies to have the same
9 benefits and options available that higher
10 education has had for the last 15 years. And
11 the issue of the one-on-one education piece,
12 the investment advice, is very, very important
13 to the members of the education community, and
14 I'm sure to the State workers overall.
15 I know that some of my colleagues are very
16 financially savvy in these matters, and
17 probably need very little assistance. But
18 I think the vast majority of my educational
19 colleagues probably do want to be able to
20 select from a number of well-known companies
21 for their individual retirement accounts under
22 PEORP, and to gain some advice from them.
23 We want to know if these companies are
24 experienced, and we want to be able to review
25 their track records.
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1 Now, the SBA staff says it must offer the
2 least expensive program. Why, is my question?
3 Why must we be saddled with the cheapest
4 option?
5 Why can't we have a choice of several
6 nationally recognized companies who offer
7 various levels of service?
8 After all, it's our money. And if we want
9 to pay for a higher level of service, then
10 I believe we should be allowed to do that.
11 Please let me --
12 GOVERNOR BUSH: You got my vote.
13 MS. PORTER: -- close.
14 GOVERNOR BUSH: You got my --
15 MS. PORTER: Yes, Governor.
16 GOVERNOR BUSH: You have my vote.
17 MS. PORTER: Oh, good. Great.
18 GOVERNOR BUSH: I hope that's part of the
19 investment policy.
20 MS. PORTER: I appreciate that.
21 Please let me close by saying that I think
22 PEORP could be just terrific -- a terrific
23 program, and everything we intended it to
24 become.
25 And we've waited -- we've waited a very
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1 long time for this. But we would rather see it
2 delayed another year, than to have it developed
3 in a way that will not accommodate our needs to
4 benefit from it.
5 And I appreciate you listening.
6 Thank you.
7 GOVERNOR BUSH: Thank you very much for
8 coming.
9 MS. PORTER: You're welcome.
10 GOVERNOR BUSH: So you -- can I ask you one
11 question?
12 MS. PORTER: Yes.
13 GOVERNOR BUSH: You'd be willing to pay
14 more for the extra services, that's what you
15 said.
16 MS. PORTER: I believe so.
17 GOVERNOR BUSH: Great.
18 MS. PORTER: I kind of equate it with the
19 health insurance programs right now. In
20 regards to there are so many needs, we're so
21 diverse out there, and some of us are willing
22 to pay more for those needs than others.
23 GOVERNOR BUSH: Yeah.
24 TREASURER GALLAGHER: So let me ask a
25 question.
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1 When you want to pay for it, the State is
2 going to provide it free to begin with for
3 education. Then if you wanted to have a
4 financial advisor -- I mean, you always have
5 that option to pay for it, or if you would have
6 a bundled provider want to give you that, and
7 they would charge you for that service after
8 you chose that bundled provider.
9 Is that what you're talking about?
10 MS. PORTER: I'm not just real sure how all
11 that would work. My -- my biggest emphasis
12 here is service for -- for our educational
13 employees, and for all State workers.
14 And I would hope that this -- as you're
15 speaking of, Mr. Gallagher, could be worked out
16 so that it would be, of course, at least a cost
17 as possible.
18 But here again, going back to our
19 number one point, I just don't think the State
20 should be the mutual fund company. And kind of
21 like the -- the fox watching out for the hen
22 house here. And you just want some --
23 TREASURER GALLAGHER: Well --
24 MS. PORTER: -- companies to choose from,
25 and provide the best services possible to us.
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1 TREASURER GALLAGHER: For that -- for
2 whatever it's -- for whatever it's worth, the
3 State in the last few years has taken a program
4 that was actuarially unsound, and turned it
5 around to have us -- an excess.
6 MS. PORTER: True.
7 TREASURER GALLAGHER: So I think we've done
8 a pretty good job in managing it. And now
9 the -- there's a great advantage to the
10 employees, because using some -- they can
11 pick -- the State can continue to manage their
12 money in a fund that they may want with an
13 outside expert, or they should be able to go to
14 known funds that they would want to pick out
15 that we would find would be good -- good
16 options for --
17 MS. PORTER: Uh-hum.
18 TREASURER GALLAGHER: -- them. And I --
19 I think there's some bundled providers that
20 have -- represent some great funds, and I think
21 the State employees should have the opportunity
22 to go into those funds and move between those
23 funds --
24 MS. PORTER: Uh-hum.
25 TREASURER GALLAGHER: -- if they choose --
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1 MS. PORTER: Uh-hum.
2 TREASURER GALLAGHER: -- to make a
3 difference. Give them all the choices that we
4 can. And that's what --
5 MS. PORTER: The --
6 TREASURER GALLAGHER: -- I think you're
7 going to see.
8 MS. PORTER: Are you speaking of the
9 example of the higher ed program? You know,
10 they've -- they've been successful for the last
11 15 years.
12 TREASURER GALLAGHER: Sure.
13 But one of the things with the higher ed
14 program is that it's -- once you're in a place,
15 you can't get out and move to another one.
16 MS. PORTER: Uh-hum.
17 TREASURER GALLAGHER: And there's, like,
18 four different vendors there --
19 MS. PORTER: Yeah. I think about --
20 TREASURER GALLAGHER: I think --
21 MS. PORTER: -- five, right.
22 TREASURER GALLAGHER: -- I think our
23 employees should be able to move between
24 vendors.
25 MS. PORTER: Uh-hum. Uh-hum.
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1 TREASURER GALLAGHER: Without a -- without
2 a big cost, and save them money. And that's
3 what I hope will be -- will allow them to do.
4 MS. PORTER: All right. Thank you for your
5 support on this.
6 GOVERNOR BUSH: You ought to be hired maybe
7 by one of these guys. You're very effective.
8 MR. HERNDON: Ms. Bisceglia. Is that the
9 right pronunciation?
10 MS. BISCEGLIA: Good morning,
11 Governor Bush, and distinguished Cabinet
12 members.
13 I would first like to commend
14 Mr. Tom Herndon. I have not had the honor of
15 meeting him, but we have heard that he is most
16 competent in his work in Florida.
17 And so we are --
18 (Attorney General Butterworth entered the
19 room.)
20 MS. BISCEGLIA: -- here as friends in the
21 process.
22 Florida business leaders and top government
23 officials have acknowledged the need for a
24 change in the optional retirement plan, and we
25 really thank you for that.
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1 I flew up from the Florida Keys today as a
2 K-8 principal of one of the only two AA rated
3 schools in Florida under Jeb Bush's A+ plan --
4 GOVERNOR BUSH: AA rated.
5 MS. BISCEGLIA: That's right.
6 GOVERNOR BUSH: I didn't even know we had
7 that grading system.
8 COMMISSIONER CRIST: A++.
9 GOVERNOR BUSH: That's better than A.
10 MS. BISCEGLIA: Such a good school, I can
11 leave once in awhile and -- and discuss other
12 issues.
13 As you know, that there's a national policy
14 commitment that's emerging on the topic of
15 optional retirement plans. And it's because
16 people have three or four careers within their
17 lifetimes and they change jobs many times, and
18 the nature of the national economy and the
19 international economy has changed.
20 We have 700 plus payroll employer units in
21 our state. And we know that what our employees
22 wanted under this legislation in the optional
23 retirement plan is high touch personalized
24 services through established financial firms.
25 We wanted real reform, and an opportunity
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1 for at least five diverse companies such as
2 higher ed the utilization of experts already in
3 the field of financial planning who are already
4 committed, have great track records, and who
5 are driven by customer service and can absorb
6 many of the operational costs. The best of the
7 best.
8 We would like the State to be the watch dog
9 in this process since it is a new process.
10 We have waited a long time for an
11 alternative retirement plan, and we know that
12 the State Board of Administration wants to
13 offer the most cost effective plan to
14 employees.
15 Yet we also know that free market
16 established financial specialists will be the
17 key to keeping the costs down.
18 So in conclusion, because Florida's the
19 fourth largest state, we would like our state
20 to be a model state, just as we are in other
21 areas of education, and tell the Florida story
22 in the optional retirement plan arena for the
23 rest of the nation. We want it to go really
24 well, as I know you do.
25 So let's make it the kind of program that
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1 employees want and need, and one in which the
2 role of State government is an overseer. Since
3 the bundled approach, which Tom Gallagher had
4 been referring to with the last speaker, is
5 considered to be the gold standard for which
6 defined contribution plans work around the
7 nation.
8 Thank you.
9 GOVERNOR BUSH: Thank you very much.
10 What part of the Keys are you from?
11 MS. BISCEGLIA: I live in Islamorada. I'm
12 at Plantation Key School.
13 And you've been down in our area. So
14 thank you for recognizing us as part of the
15 United States.
16 TREASURER GALLAGHER: Well, it was you all
17 that wanted to pull out, you know, it wasn't
18 us.
19 MS. BISCEGLIA: We try occasionally.
20 GOVERNOR BUSH: We're not letting you go.
21 MR. HERNDON: The next speaker I think was
22 Mr. Munford. He did not -- was not able to
23 make it.
24 I'm not sure whether Mr. Campbell wanted to
25 make some comments at this juncture, or not.
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1 Perhaps did.
2 GOVERNOR BUSH: Back by popular demand.
3 MR. CAMPBELL: I'm Malcolm Campbell the
4 Teachers Insurance and Annuity Association,
5 College Retirement Equities Funds --
6 Tom, I don't want to read your secret notes
7 here -- but you left them there.
8 TIAA-CREF, for short.
9 I'm -- very briefly, I just wanted to
10 applaud the recommendation made by staff to
11 withdraw the IPS, and -- the Investment Policy
12 Statement --
13 Excuse me, Governor, for using an
14 acronym -- and -- and reissuing it, in very
15 short order. I think that the issues have been
16 narrowed extraordinarily. We're almost there.
17 And -- and I think that perhaps by the time
18 that you see the next draft of the IPS,
19 hopefully at the Tampa -- Tampa meeting, that
20 we will be able to say that this is an
21 extraordinary document that embraces not only
22 the best in class, and institutional funds, as
23 has been suggested in the unbundled part of the
24 IPS, but also the best in class in bundled
25 providers, as has been recommended by the two
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1 previous speakers.
2 And I just wanted to say that, with respect
3 to the higher education ORP in the state, we
4 happen to be one of the providers at the
5 university level.
6 We are very proud of the service we've been
7 able to provide to those people. We have
8 8200 college and university faculty who are
9 participants in TIAA-CREF.
10 They have with us something in the order of
11 525 million dollars in assets that we manage
12 for them. Fully 30 percent of those assets are
13 directed to the guaranteed account. And that's
14 what I spoke to you about in Panama City, if
15 you recall.
16 I mentioned then that we had hoped that, as
17 part of the Tier IV investment options, that's
18 where the bundled provider fits in in the
19 investment policy statement, that a guaranteed
20 annuity would be permitted in that.
21 And I'm hopeful that the other employees in
22 the State would have the opportunity to have
23 the same kind of great returns that a
24 guaranteed annuity provides, some
25 300 basis points over money market accounts.
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1 Over a 30-year career, an individual has --
2 is risk averse and is putting --
3 (Commissioner Crist exited the room.)
4 MR.CAMPBELL: -- money into a -- into a --
5 just the money market fund, which is provided
6 for in the -- in the Public Employees Optional
7 Retirement Plan, he or she is -- is losing the
8 possibility of having that money doubled by a
9 dint of the kind of offering that's available
10 at the university system.
11 And so we hope to be able to continue to
12 work with the SBA staff on that, and -- and see
13 you in -- in Tampa.
14 GOVERNOR BUSH: Can --
15 TREASURER GALLAGHER: Let me -- may I ask a
16 question?
17 GOVERNOR BUSH: Yeah. Please.
18 TREASURER GALLAGHER: I have a -- a
19 concern. And it -- it comes from an experience
20 that I had when I was in this job before. As
21 you know, we oversee the employees deferred
22 compensation plan.
23 And there was a vendor that had a -- a -- a
24 very high yielding program. And quite a few
25 employees chose it.
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1 At the same time, just as you have said
2 here, if you removed your money, you would pay
3 a penalty. And that was part of the -- getting
4 involved in the long-term type investment.
5 And most of the people that went in, went
6 in figuring they're going to be there for a
7 long time, and they're going to, you know, get
8 that higher yield.
9 We had a tremendous number of complaints
10 about how much money it cost them when they
11 wanted their money out. And so I started
12 wondering about who we're serving and how well
13 we're serving to get this many complaints.
14 So we did a poll, and found out, about
15 90 percent of the people were taking their
16 money out early in the deferred comp plan.
17 And so they were getting a much lesser
18 yield than all the other plans offered that
19 were with the money market plans --
20 MR. CAMPBELL: Uh-hum.
21 TREASURER GALLAGHER: -- because, in fact,
22 they never got that high yield.
23 MR. CAMPBELL: Uh-hum. Uh-hum.
24 TREASURER GALLAGHER: They -- because they
25 never kept their money in.
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1 So I had to make a decision on, if
2 90 percent of the people are going to take
3 their money out, allowing a plan that's going
4 to keep them from getting a decent yield, even
5 though 10 percent might do well, 10 percent may
6 want to put their money somewhere else, we had
7 to make that decision so that the people
8 weren't -- that we had a -- 90 percent of the
9 people were happy instead of unhappy every time
10 they pulled out.
11 And so I just want you to know, that's a
12 concern I have here.
13 MR. CAMPBELL: I -- I understand that's a
14 concern, and, Mr. Treasurer, and -- and,
15 Commissioner -- since I represent an insurance
16 company, I'll call you that as well.
17 -- we -- we think that the plan that has --
18 worked so well at the university system by top
19 rated companies -- that's part of the process
20 is choosing a top rated company, and with
21 conservative investment kinds of parameters
22 will provide the folks in Florida with -- with
23 great returns without those kinds of concerns.
24 Now, I -- I just call your attention to the
25 Watson Wyatt survey that was done last spring
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1 by the House of Representatives on some 3500
2 Florida FRS participants.
3 Among the survey results -- and this was
4 while the House was considering the PEORP
5 legislation -- among the survey results was
6 that only 20 percent of the individuals wanted
7 the ability to take out money early, as
8 compared to the 90 percent in that particular
9 case. You know, that -- that was just --
10 TREASURER GALLAGHER: Well, you see --
11 GOVERNOR BUSH: They'll want to --
12 TREASURER GALLAGHER: -- the problem --
13 GOVERNOR BUSH: -- take it out until they
14 need to.
15 TREASURER GALLAGHER: Yeah.
16 Going in, none of them thought they were
17 going to take their money out.
18 GOVERNOR BUSH: Yeah.
19 TREASURER GALLAGHER: This was -- this was
20 deferred compensation --
21 GOVERNOR BUSH: Don't believe --
22 TREASURER GALLAGHER: -- for retirement.
23 GOVERNOR BUSH: -- in polls. We learned
24 that election, right?
25 TREASURER GALLAGHER: The problem is --
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1 Yeah. Don't pay attention to the polls.
2 The problem is that that's not in -- what
3 in actuality happened. And that's why we had
4 to deal with -- what -- not what people
5 perceived going in, but what actually happened
6 on the going out.
7 (Commissioner Crist entered the room.)
8 TREASURER GALLAGHER: And that's my
9 concern.
10 MR.CAMPBELL: Well, I -- I don't want to --
11 it's up to you. I -- I would assume that at
12 the Tampa meeting, we might have an opportunity
13 to discuss this further. I can tell you that
14 in terms of the -- our loan company, we have
15 something in the order of 3 billion dollars
16 invested --
17 (Commissioner Rhodes exited the room.)
18 MR.CAMPBELL: -- in Florida backing the
19 promise to pay the guaranteed annuity for
20 individuals who choose it. And -- and our --
21 our company, TIAA has a general accountant
22 that's a -- north of 100 billion dollars, of
23 which 3 billion dollars is invested here in
24 Florida.
25 GOVERNOR BUSH: Can I -- can I ask a
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1 question?
2 Commissioner Gallagher, last meeting and
3 this meeting, Treasurer Gallagher brought up
4 the option of employees being able to invest
5 between bundled providers. And I think you
6 confirmed that that's -- that's --
7 MR. CAMPBELL: I -- I did, indeed,
8 Governor, and --
9 GOVERNOR BUSH: I just want to make sure
10 you do it again.
11 MR. CAMPBELL: Absolutely.
12 GOVERNOR BUSH: All right. It's --
13 MR. CAMPBELL: -- you could do that now at
14 the State University --
15 GOVERNOR BUSH: What percentage --
16 MR. CAMPBELL: -- System ORP.
17 GOVERNOR BUSH: -- of your -- of your
18 4800 -- or what number --
19 MR. CAMPBELL: I said -- I think it was
20 8200 --
21 GOVERNOR BUSH: What percentage are also
22 investing in other bundled provider options?
23 MR. CAMPBELL: Only a small percentage do.
24 But there are those who do have it with either
25 VALIC or one of the other companies as well.
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1 They split their bonds.
2 GOVERNOR BUSH: And they have two --
3 TREASURER GALLAGHER: Now, can they --
4 in -- within your fund, annually or sometime,
5 they can make a decision to maybe move more
6 money into an annuity, or less money -- more
7 money into a mon-- money market that you may
8 have?
9 MR.CAMPBELL: They -- they -- they can move
10 all of the -- we've got funds. Eight of them
11 are variable funds, and equity funds, and the
12 like. And they can move as frequently as they
13 want to with respect to those funds.
14 TREASURER GALLAGHER: With no penalty.
15 MR. CAMPBELL: With no penalty.
16 And even with respect to the -- the money
17 market, they can move without any -- any -- any
18 penalty.
19 It's only with respect to the guaranteed
20 traditional annuity where you are -- I mean,
21 it's the equivalent of a --
22 TREASURER GALLAGHER: Do a --
23 MR. CAMPBELL: -- 5-year certificate of
24 deposit.
25 TREASURER GALLAGHER: That's in the --
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1 MR. CAMPBELL: You know, a CD.
2 TREASURER GALLAGHER: -- that's in the
3 step 5, according to the law.
4 MR. CAMPBELL: It's like --
5 TREASURER GALLAGHER: We're not --
6 MR. CAMPBELL: No. I'm talking about in --
7 in the accumulation stage -- this is what
8 we're -- we're suggesting that in Tier IV, in
9 the accumulation stage, that people be allowed
10 to have part of their accumulations go into a
11 fixed annuity, which will provide them with
12 superior returns, not of the go-go kind that
13 may have been that other company that you
14 talked about, but by a company that has been
15 around for --
16 (Commissioner Rhodes entered the room.)
17 TREASURER GALLAGHER: No. They've been
18 around --
19 MR. CAMPBELL: -- ages.
20 TREASURER GALLAGHER: -- they're a good
21 company. It's just a matter of they have a --
22 they have a penalty for taking the money out.
23 And that's -- that's a -- been a big
24 problem.
25 MR. CAMPBELL: It's -- it's -- all right.
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1 Then what we're talking about is a
2 philosophical issue as to whether or not some
3 people ought to have the choice to make that
4 decision as to whether or not I know that I do
5 not need liquidity with respect to 100 percent
6 of my money.
7 I know that for 10 percent of my money,
8 15 percent of my money, 20 percent of my money,
9 I would like to be able to get the superior
10 returns that real estate --
11 And by the way, we applaud the decision by
12 the SBA staff to possibly include real estate
13 as a category for investment within --
14 GOVERNOR BUSH: They haven't come to us
15 yet.
16 MR. CAMPBELL: -- within -- within the
17 Investment Policy Statement.
18 As a matter of fact, Governor, I --
19 GOVERNOR BUSH: That was my business. I'm
20 not sure that that's --
21 MR. CAMPBELL: It's countercyclical, as you
22 know, Governor, and --
23 GOVERNOR BUSH: All right. We'll --
24 MR. CAMPBELL: -- and it's --
25 GOVERNOR BUSH: Talk about that later.
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1 MR. CAMPBELL: Just -- just one plug. This
2 past year, 10 -- 10.5 percent return on that
3 particular real estate account, which is
4 available on the university campuses today.
5 Clearly do not put all your money in it. But
6 it was a -- it was a winner this past year.
7 Thank you very much.
8 GOVERNOR BUSH: Thank you.
9 MR. HERNDON: I think that's all the
10 speakers that I have to speak on the Investment
11 Policy Statement, and the recommended
12 withdrawal.
13 This will pull it all back -- we'll bring
14 it back to you at the meeting on the 27th in a
15 rewritten form.
16 TREASURER GALLAGHER: Motion.
17 COMPTROLLER MILLIGAN: Second.
18 GOVERNOR BUSH: There's a motion to
19 withdraw and a second.
20 Without objection, it's approved.
21 Good progress, Tom.
22 MR. HERNDON: Governor, we're -- we're
23 inching forward, slowly but surely. And we're
24 I -- I think a good recommendation to you for
25 the meeting on the 27th.
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1 The -- the next agenda item is a
2 presentation and discussion of the report on
3 surplus management and the 2000 actuarial
4 evaluation.
5 You'll recall back in late November,
6 General Milligan wrote to us as a staff, and
7 requested an analysis of the practices that the
8 FRS, the State Board pursued as it relates to
9 managing any surpluses that might exist.
10 And our response to him was we would
11 certainly be happy to do that. We recommended
12 a three-phase analysis, the first to look at
13 the legal issues associated with how surpluses
14 could be used; the second, to get some
15 perspective on what is being done in other
16 jurisdictions around the country, just to give
17 us a little bit of the flavor of -- of
18 practice; and then, finally, to make some
19 recommendations as it relates, not only to the
20 actuarial report that was completed for this
21 year, which the SBA Trustees are charged by law
22 with commenting on -- with reviewing and
23 commenting on, but also in -- in the context of
24 the Florida government practice.
25 To summarize the results of those
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1 recommendations and those analyses, let me just
2 say this: Firstly, you have essentially three
3 different choices about how you manage
4 surpluses in the retirement system. You can do
5 nothing, and let them continue to accumulate
6 some indefinite period of time; you can reduce
7 contribution rates on a prospective basis to --
8 essentially to zero. It's difficult to go much
9 below that.
10 And, finally, you can use some of the
11 surplus to compensate employees, both active
12 and retired.
13 And you can do some combination of those
14 three things. But that's all you can do. You
15 can't, as -- as the lawyers have opined, we
16 have both our internal council, and our -- and
17 an external fiduciary counsel, you can't build
18 a bridge with it, you can't put the money into
19 water and sewer systems.
20 The money, once it passes that membrane of
21 the retirement system, is in the retirement
22 system, and it cannot be taken out, as long as
23 the retirement system is actively functioning
24 as a retirement system.
25 And that's a summary of -- of what the
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1 legal opinion is.
2 We then looked at what is being done in
3 other jurisdictions. First I want to say at
4 the outset that there's not a whole lot of
5 experience in those jurisdictions in dealing
6 with surpluses, because, quite frankly, it's a
7 brand new phenomenon.
8 And I want to thank Commissioner Gallagher
9 for the kind remarks about the progress that
10 the FRS has made. The fact of the matter is,
11 that up until about four years ago, the notion
12 of a surplus in a retirement system by public
13 standards was almost an alien thought.
14 Today, according to the latest actuarial
15 analysis, we are at 118 percent on an actuarial
16 basis, and the market value of the fund,
17 of course, is higher than that. And were you
18 to calculate it on that basis, you'd probably
19 be another 10 or 12 or 15 percent higher.
20 So there isn't any common practice that is
21 engaged in in other jurisdictions.
22 However, there are other jurisdictions
23 where states typically have looked at this
24 question, and tried to wrestle with what made
25 the best sense.
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1 And typically, they have evolved to the
2 point where some entity in government, whether
3 it's an advisory body, it's the pension board,
4 it's the Board that's responsible for
5 management of the retirement system, or some
6 combination of those things, has looked at the
7 question of the surplus, and made some
8 decisions based -- typically on a needs
9 assessment, or something like that about how
10 those surpluses should be -- should be
11 disbursed.
12 As you know, last year, you adopted,
13 recommended to the Legislature, a rate
14 stabilization mechanism, which I think the
15 Legislature embraced wholeheartedly. That sets
16 aside a portion of any surplus for the
17 rainy day that we know is out there on the
18 horizon, and would influence contribution rates
19 on the part of -- of local governments.
20 You can certainly mimic what is being done
21 in some of these other jurisdictions, and
22 create some entity in government, or as an
23 adjunct to government that gives you
24 recommendations about what to do with the
25 surpluses.
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1 But, frankly, our view is, you have the
2 Division of Retirement; you have the State
3 Board of Administration staff; you have a forum
4 right here, as we've seen this morning, that is
5 perfect for soliciting input, not only from the
6 constituency groups, but from the labor unions,
7 and from the other parties that speak for
8 employees and the employers, and everything
9 else.
10 So our recommendation as it relates to a
11 mechanism to undertake this kind of analysis is
12 that you all represent the best mechanism, that
13 the State Board of Administration, the Trustees
14 represent the best forum to hear these kinds of
15 discussions.
16 And each year, as the actuarial report is
17 completed, and the statutorily required
18 assessment that you do takes place, it gives
19 you, I think, that perfect opportunity to say,
20 all right, we have a projected surplus of X,
21 we're satisfied with the actuarial report and
22 the analysis that was done, we can either take
23 some testimony or do some analysis of needs, or
24 whatever methodology you might like, and then
25 you as a -- as a collective body of three
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1 Trustees would pass those recommendations on to
2 the Legislature, and any other decision making
3 body.
4 And I think that certainly gives the public
5 all the access in the world that they could
6 reasonably need, and we can, in conjunction
7 with the Division of Retirement staff and the
8 OPB staff, and -- and other bodies, do whatever
9 research you might be comfortable with as you
10 look at -- at how to use these surpluses in the
11 future.
12 So that's the short version of the surplus,
13 Governor. There were a couple of organizations
14 that wanted to speak. I'm not sure if they
15 still do. I know Mr. Neimeiser one time was
16 interested --
17 Do you still -- did you want to make any
18 comment?
19 MR. NEIMEISER: Yes.
20 GOVERNOR BUSH: Good morning.
21 MR. NEIMEISER: Good morning. I'm
22 Mark Neimeiser. I'm with the American
23 Federation of State, County, Municipal
24 Employees.
25 Governor, I had a very long comment to --
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1 to provide to you all today. Instead, I think
2 I'll take a different tact, simply because it
3 will make y'all happy, and -- and -- and be
4 as -- as brief as I can be and laudatory.
5 I would -- I would submit to you that
6 there's always a lot of discussion about
7 privatization, and, you know, do we outsource,
8 you just went through that discussion.
9 Your employees at the State Board of
10 Administration staff, that is, have been
11 exemplary in looking at issues and bringing
12 them forward.
13 I would submit to you that -- that in the
14 case of surpluses, where everybody should be
15 happy, last year not necessarily everyone was
16 happy.
17 And perhaps what was missing was a more
18 deliberative -- not, gee, we have money and how
19 we're going to spend it or hold it, or
20 whatever. But what's necessary is a more
21 deliberative process.
22 And I think the -- the staff has proposed
23 such a process -- or at least the study,
24 creating such a process. And I -- and I would
25 submit that -- that I've heard each one of you,
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1 and -- and -- and the Cabinet as a whole, talk
2 about recruitment and -- and retention as -- as
3 needs of developing the -- the resources of
4 government -- the -- the workers themselves.
5 And to that extent, I -- I would say to you
6 that I think, if you read through that mountain
7 of material that Tom provided, what you'll see
8 is that there is a way to do that, to use any
9 surplus, to improve retention, to improve
10 recruitment, and to make sure that the system
11 remains sounds. And -- and I -- and I just
12 think this is the best of government that --
13 that you've seen at least in this part of your
14 meeting.
15 Thank you.
16 GOVERNOR BUSH: Thank you.
17 Any other speakers?
18 MR. HERNDON: Governor, the Association of
19 Counties and School Superintendents Association
20 both indicate their very strong interest in
21 being participants in the process of making
22 decisions about the management of any
23 surpluses.
24 They both declined to comment this morning.
25 But -- in the interest of time. But both
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1 I think applaud the -- the interest that you
2 have in involving them as representatives of
3 their organizations, both as employers and as
4 spokesperson on behalf of their employees.
5 So --
6 COMPTROLLER MILLIGAN: Yes. I have a few
7 comments, if I may.
8 GOVERNOR BUSH: Yeah. Please. I was --
9 COMPTROLLER MILLIGAN: Really it's two
10 issues. And -- and one is a little easier to
11 handle than -- than the other. And I'll start
12 with it, and that's really what we do this year
13 in terms of handling the surplus.
14 And not in your Trustees' hat, Governor,
15 but in your Governor's hat, I know in your
16 budget, you have used the formula that was
17 developed last year, and identified the surplus
18 that could be available for use, and made a
19 recommendation that -- to the Legislature in
20 your budget that monies be used to reduce the
21 contribution rate. In other words, a dividend
22 to the employers this year.
23 And I have no problem with that. I think
24 that's the appropriate thing to do. I'm not
25 even in a position to -- or -- or feel
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1 obligated to try to figure out how much that
2 should be.
3 I know you've worked at that very hard, and
4 your staff worked at that very hard. And I --
5 I think we as a body should either approve or
6 support that the contribution rate be the
7 approach this year, and make that
8 recommendation to the Legislature.
9 Basically in support of your other hat
10 as -- as the Governor, in using the -- this
11 surplus -- this dividend, and it really has to
12 be viewed, as the report clearly points out, as
13 a dividend this year, and a reduction in the
14 surplus to I think 7.6 percent I think is what
15 you came up with, and -- and that -- that does
16 help the employers.
17 And so I would first move that we as
18 Trustees support the use of a contribution rate
19 reduction this year in terms of how we address
20 the available surplus.
21 TREASURER GALLAGHER: I don't have a
22 problem with that. Second.
23 GOVERNOR BUSH: There's a motion and a
24 second.
25 Any more discussion?
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1 Without objection, it's approved.
2 COMPTROLLER MILLIGAN: The -- the second
3 item is a little more complex, and that is what
4 happens next year.
5 With defined contribution coming into play
6 starting 1 July, if the contribution rate is
7 less than the rates that have been set in
8 legislation for those people opting in the
9 defined contribution, there will be a dividend
10 that will come to the people in the defined
11 contribution side, a dividend that will be --
12 have to be -- have to be paid out of the
13 defined benefit side.
14 And so I'm concerned in how we handle that
15 as Trustees so that what we do on the defined
16 contribution side doesn't adversely impact on
17 the defined benefit side.
18 And that if there is a dividend that winds
19 up going to defined contribution, then we
20 probably need to look at some dividend to the
21 employees on the defined benefit side. Or at
22 least have that whole analysis done.
23 And that's really what I'm asking is that
24 we ask the SBA, Tom and his folks, and whoever
25 else he needs to bring on board, to really look
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1 at that really unique aspect of what's going to
2 happen next year as we try to deal with the
3 surplus, and we have in law, rates that need to
4 be provided to people on the defined
5 contribution side.
6 TREASURER GALLAGHER: If I may ask a
7 question here.
8 What is the dividends that go to the
9 defined contribution, is that the costs in
10 setting it up, the PEORP --
11 COMPTROLLER MILLIGAN: Well, no, no. I'll
12 give you an example.
13 The effective rate for 1 July 2002 in law
14 for employer -- employers is 9.0. Employees
15 can get anywhere from 20.0 to 11.35 to 13.40 in
16 terms of money that they have available to them
17 for investment.
18 TREASURER GALLAGHER: Is this percentages?
19 COMPTROLLER MILLIGAN: These are
20 percentages, yes.
21 TREASURER GALLAGHER: So what you're saying
22 is that 9 percent of the salary to employees is
23 the employers' legislated contribution.
24 COMPTROLLER MILLIGAN: Yes. For -- for
25 2002, July 2002.
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1 TREASURER GALLAGHER: Now, is this -- is
2 this set to go on, or is this just done yearly?
3 COMPTROLLER MILLIGAN: Well, as -- as it
4 stands right now --
5 TREASURER GALLAGHER: And something --
6 COMPTROLLER MILLIGAN: -- it is --
7 TREASURER GALLAGHER: -- that goes into
8 this is expecting this for the rest of their
9 employment.
10 COMPTROLLER MILLIGAN: As it stands right
11 now, it is specified in -- in law that that's
12 what it'll be.
13 They obviously can change it. But
14 regardless of whether they change it or not, as
15 long as it is less -- as long as the employers'
16 contribution rate is less than the rate that is
17 being given to those in the defined
18 contribution, the defined contribution people
19 are receiving a dividend.
20 And that dividend has to be paid out of the
21 FRS. And that means it is to the expense of --
22 disadvantage of -- of the defined benefit
23 people.
24 GOVERNOR BUSH: Wouldn't it be taken out --
25 TREASURER GALLAGHER: Well --
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1 GOVERNOR BUSH: -- of the surplus --
2 TREASURER GALLAGHER: Wait a minute.
3 GOVERNOR BUSH: -- though?
4 TREASURER GALLAGHER: If -- let me ask you
5 a question though. How -- if I -- if I'm on
6 the defined benefit, the State has the
7 obligation, no matter how much money's
8 put in there or not --
9 COMPTROLLER MILLIGAN: Uh-hum.
10 TREASURER GALLAGHER: -- to give me my
11 benefit, that's my agreement.
12 When the State switches, and they say
13 9 percent, they've got to put the 9 percent, if
14 I'm on the defined contribution.
15 COMPTROLLER MILLIGAN: Uh-hum.
16 TREASURER GALLAGHER: I make that choice,
17 which way I go. Why should we on the
18 defined benefit get more money than I --
19 than -- than I originally agreed to get?
20 COMPTROLLER MILLIGAN: Well, again, it's --
21 the dividend will come out of the surplus to
22 the defined contribution. And -- and we have a
23 responsibility to treat all of the members of
24 the FRS on an equal basis.
25 TREASURER GALLAGHER: Well, but -- but we
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1 are. We're giving them an equal choice on
2 which they want to do. And if they choose to
3 go to defined contribution, they're --
4 COMPTROLLER MILLIGAN: Well, I -- let me --
5 let me put it this way, Tom. I -- I don't know
6 what the answer is. It is a question that I
7 have tried to wrestle with for quite awhile
8 now, ever since I read this report.
9 TREASURER GALLAGHER: Okay.
10 COMPTROLLER MILLIGAN: And -- and I don't
11 know what the answer is, and I'm not suggesting
12 what the answer is.
13 I'm suggesting that we as Trustees, and our
14 responsibilities under law, are not to
15 adversely impact on any --
16 TREASURER GALLAGHER: Well, I think --
17 COMPTROLLER MILLIGAN: -- of our
18 employees --
19 TREASURER GALLAGHER: -- I think we have
20 somebody tell us that --
21 COMPTROLLER MILLIGAN: That we look at --
22 TREASURER GALLAGHER: -- my gut feeling is
23 that --
24 COMPTROLLER MILLIGAN: And I appreciate
25 your gut feeling, and -- and I hope you
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1 appreciate mine. And I -- and I think it needs
2 to be looked at.
3 And I think it needs to be looked at in
4 terms of ensuring that we are -- as Trustees,
5 doing what is best by the employees.
6 GOVERNOR BUSH: That there's the big
7 difference in that one is a guaranteed
8 return --
9 TREASURER GALLAGHER: Yeah.
10 GOVERNOR BUSH: -- to the retirees, and the
11 other is the flexibility of making choices
12 yourself, where there's going to be ups and
13 downs. So --
14 TREASURER GALLAGHER: And potentially have
15 a lot higher return.
16 GOVERNOR BUSH: But -- but having said
17 that, I think what's in front of us is a -- a
18 forum or a process that could --
19 COMPTROLLER MILLIGAN: Exactly.
20 GOVERNOR BUSH: -- go through to analyze
21 this issue, and any other issues. And I -- the
22 recommendation, as I understand it, is that
23 the -- the State Board of Administration be
24 that entity, which I wholeheartedly support,
25 and that --
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1 TREASURER GALLAGHER: Exactly --
2 GOVERNOR BUSH: -- your -- your staff --
3 you -- you staff us, as you always do. I mean,
4 I think -- and if you need to hire consultants,
5 as you do, to determine the actuarial surplus
6 that -- that is available for the policy
7 discussion, then you do that.
8 And if there are legal issues that need to
9 be looked at, you provide that, just as you've
10 done so -- so well.
11 So if that is the -- is that the only item
12 in front of us is to -- to --
13 MR. HERNDON: That --
14 GOVERNOR BUSH: -- a policy recommendation?
15 MR. HERNDON: That is the policy
16 recommendation. The General's already raised
17 the question about what comment you would make
18 with respect to this year's distribution of the
19 surplus --
20 COMPTROLLER MILLIGAN: Right.
21 MR. HERNDON: -- that's resolved.
22 Going forward, the question is: Are you
23 comfortable accepting that recommendation that
24 you be the forum for our future deliberations?
25 And I -- the only addendum, Governor, would
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1 be, we certainly would like the help of the
2 Division of Retirement and their actuaries, and
3 so forth, and they work for you, of course.
4 But I know they're cooperat--
5 GOVERNOR BUSH: There's a motion.
6 TREASURER GALLAGHER: I -- yeah. We -- I
7 did a motion.
8 I -- I just want to say one other thing
9 that just sort of came to my mind that may
10 not -- that may be an equal thing that should
11 be thrown into the mix, is if in a defined
12 benefit plan, obviously I don't have an option
13 to put any money in, to add to my future
14 benefit.
15 But in the defined contribution plan, I do,
16 if I would choose it.
17 So isn't -- is it -- should there be some
18 equity in being able to put more money into a
19 defined benefit plan?
20 COMPTROLLER MILLIGAN: Well, we're -- we're
21 really dealing with the surplus here, and --
22 and really dividends of that surplus.
23 And this raised the question of a dividend
24 in reference to the differential between what
25 might be the contribution rate, and -- and the
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1 rate that --
2 TREASURER GALLAGHER: I see.
3 COMPTROLLER MILLIGAN: -- the
4 defined contribution people --
5 TREASURER GALLAGHER: Okay.
6 COMPTROLLER MILLIGAN: -- are receiving.
7 TREASURER GALLAGHER: All right.
8 COMPTROLLER MILLIGAN: And so that's really
9 the --
10 GOVERNOR BUSH: That's an interesting -- I
11 haven't even thought of that --
12 TREASURER GALLAGHER: That's an --
13 GOVERNOR BUSH: -- concept.
14 TREASURER GALLAGHER: -- interesting
15 concept.
16 GOVERNOR BUSH: It is. I mean, I --
17 TREASURER GALLAGHER: And it's one that
18 should be looked at for sure.
19 GOVERNOR BUSH: Yeah.
20 So there's a motion and a second.
21 Any more discussion?
22 Without objection, it's approved.
23 MR. HERNDON: Item Number 12 is appointment
24 of an Investment Advisory Council, since
25 Commissioner Gallagher's appointment to replace
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1 a previous member that has left the Commission
2 is Mr. Jim Dahl, who's a businessman from
3 Jacksonville, and President and CEO of Rock
4 Creek Capital, which is a venture firm in
5 Jacksonville.
6 A very long distinguished career in the
7 finance business. And, Commissioner Gallagher,
8 do you want to make any comments about Jim's --
9 TREASURER GALLAGHER: I'll move his
10 acceptance.
11 COMPTROLLER MILLIGAN: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 MR. HERNDON: Item 13 is the Florida
15 Hurricane Catastrophe Fund requesting approval
16 of two rules for notice of proposed rulemaking.
17 And they are both fairly straightforward, the
18 first having to do with the provisions of the
19 contract that is used; and the second having to
20 do with the data call that'll be submitted to
21 the industry for information research data.
22 COMPTROLLER MILLIGAN: Move approval.
23 TREASURER GALLAGHER: Second.
24 GOVERNOR BUSH: Moved and seconded.
25 Without objection, it's approved.
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1 MR. HERNDON: And Item Number 14, and the
2 last item, Governor, is a report on corporate
3 governance that the Board prepares each year --
4 the Board staff prepares each year and submits
5 to you for your information.
6 This details how we voted on the several
7 thousand proxy votes that come to us, and how
8 we've dealt with northern Ireland, and Cuba,
9 and some of the other issues that come before
10 us on corporate governance matters.
11 COMPTROLLER MILLIGAN: Move approval.
12 TREASURER GALLAGHER: Second.
13 GOVERNOR BUSH: Moved and seconded.
14 Without objection, it's approved.
15 TREASURER GALLAGHER: Before we leave this
16 agenda, could I make a -- maybe sort of a
17 suggestion, that when we have a -- an agenda
18 that's this long, could we maybe save it till
19 the end of the meeting, and let everybody else
20 go do their business?
21 I mean, when it's normally 30 seconds, it
22 doesn't matter. But --
23 GOVERNOR BUSH: That's fair.
24 TREASURER GALLAGHER: -- having sat in two
25 chairs here, I --
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1 COMPTROLLER MILLIGAN: I have --
2 TREASURER GALLAGHER: -- sitting there --
3 COMPTROLLER MILLIGAN: -- no problem with
4 adjusting the schedule. And we're in the
5 sunshine no matter who's here. So that's fine.
6 GOVERNOR BUSH: Great idea. Dynamic
7 innovation.
8 State government at it's best.
9 Here we go.
10 MR. HERNDON: Thank you, Governor.
11 GOVERNOR BUSH: And I know that there are
12 Cabinet members that appreciate your
13 suggestion.
14 TREASURER GALLAGHER: Well, you know,
15 sitting over there, I realized it. Sitting
16 here, you don't realize it. So --
17 GOVERNOR BUSH: There's another thing we
18 need to work on for the guy who runs the
19 meeting, and that's the restroom break. But
20 we'll worry about that in about an hour.
21 (The State Board of Administration Agenda
22 was concluded.)
23 * * *
24
25
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February 6, 2001
1 TREASURER GALLAGHER: Motion on the minutes
2 for Division of Bond Finance.
3 MR. WATKINS: Item Number 1 is approval of
4 the minutes for the January 23rd meeting.
5 GOVERNOR BUSH: Is there a second?
6 ATTORNEY GENERAL BUTTERWORTH: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's approved.
9 MR. WATKINS: Item Number 2 is a resolution
10 authorizing the issuance and competitive sale
11 of up to 210 million dollars of
12 Preservation 2000 refunding bonds.
13 TREASURER GALLAGHER: Motion.
14 SECRETARY HARRIS: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 Could I ask Eva Armstrong to come to talk
18 about one item about this, because this is a --
19 that's come up, and I wanted to bring some
20 clarity to the -- how much money do we have
21 outstanding in previous bond programs where
22 we're having to pay the arbitrage on the --
23 you know, the interest income, pay the tax on
24 that?
25 Are we -- are we getting -- are we matching
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1 the 300 million a year with the -- the land?
2 Are we teeing up the land in the proper way so
3 that we're not having a backlog of unused debt?
4 MS. ARMSTRONG: Yes, sir. You asked --
5 GOVERNOR BUSH: Good answer.
6 MS. ARMSTRONTG: -- a lot. So -- let me
7 clarify a couple things for you.
8 One is that as of Dec-- literally on the
9 money, as of December 31st, the money in the
10 bank that was literally yet to be encumbered --
11 and I use the word encumbered. It's important,
12 because when we go negotiate on a deal, we
13 negotiate for you.
14 And when we get a contract for them, we
15 consider that amount of money encumbered.
16 Because we've made a commitment to those
17 people --
18 GOVERNOR BUSH: Not funded, but encumbered.
19 MS. ARMSTRONG: Correct.
20 And so once you've removed everything we've
21 got, already in closing, everything we've
22 already spent, and those we have encumbered,
23 there was, as of December 31st, about
24 300 million dollars left.
25 Now, of that amount to be clear -- and I'm
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1 going to focus on the CARL program, because
2 it's the one I know best.
3 Of our amount this year, we got
4 150 million dollars. As of December 31st, we
5 had 89 million left. We had gone through the
6 money to that date, plus some from the previous
7 year.
8 We've been --
9 GOVERNOR BUSH: That's not just --
10 MS. ARMSTRONG: -- playing some catch-up.
11 GOVERNOR BUSH: -- so how much is
12 encumbered, how much is closed? Do you know
13 the -- which --
14 MS. ARMSTRONG: Of 150 million we get a
15 year, 89 million is left. So subtract that in
16 my head --
17 GOVERNOR BUSH: No. I mean that's --
18 MS. CHAPMAN: -- there's sixty left.
19 GOVERNOR BUSH: No. That's what's been --
20 how much is encumbered? You said encumber is
21 not the same thing as the -- in this case, the
22 60 million --
23 MS. ARMSTRONG: Right. Then -- then take
24 it back the other way. Take the 150 million
25 for us, subtract what -- what we have left,
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1 which is ninety.
2 We have encumbered in this year's money,
3 70 million dollars.
4 GOVERNOR BUSH: It's all encumbered?
5 TREASURER GALLAGHER: So you had 20 left.
6 MS. ARMSTRONG: Correct.
7 GOVERNOR BUSH: So you --
8 MS. ARMSTRONG: That's with contracts in
9 hand or closed, okay?
10 GOVERNOR BUSH: So -- so --
11 TREASURER GALLAGHER: Twenty million left.
12 COMPTROLLER MILLIGAN: No.
13 MS. ARMSTRONG: No. Seventy.
14 We get 150 -- on July 1st, we get
15 150 million. We have encumbered or actually
16 handed people checks for 70 million dollars.
17 We -- as of December 31st, we had 90 million
18 for CARL still sitting in the bank.
19 (Attorney General Butterworth exited the
20 room.)
21 MS. ARMSTRONG: In the time period since
22 December 31st, we have encumbered, entered into
23 contracts for another 34 million dollars --
24 GOVERNOR BUSH: Now you're starting to see
25 why --
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February 6, 2001
1 TREASURER GALLAGHER: So you take --
2 MS. ARMSTRONG: Yes. It's very confusing.
3 Absolutely.
4 TREASURER GALLAGHER: So thirty-four from
5 seven --
6 GOVERNOR BUSH: It's not confusing.
7 It's --
8 MS. ARMSTRONG: Right.
9 GOVERNOR BUSH: -- it's a -- it's the
10 standard problem we have in government. Which
11 is that --
12 TREASURER GALLAGHER: Thirty-six million
13 left.
14 GOVERNOR BUSH: -- the money's -- the
15 spending side is not necessarily coordinated
16 with the -- with the bond selling side. And --
17 MS. ARMSTRONG: Oh.
18 GOVERNOR BUSH: -- I'd be curious to know
19 how much money we spend on interest arbitrage
20 because we can't match the -- the -- you know,
21 we just did one --
22 TREASURER GALLAGHER: Well, sometimes it's
23 positive --
24 GOVERNOR BUSH: -- two hundred and --
25 TREASURER GALLAGHER: -- sometimes it's
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1 negative.
2 GOVERNOR BUSH: Well, I think there's more
3 outstanding un-- unspent bond money that has
4 been sold in the marketplace a lot more than --
5 I mean, you don't have it the other way --
6 TREASURER GALLAGHER: We invest that,
7 and -- and many times it's a positive
8 arbitrage. I mean, the cash is invested,
9 and -- and we get a higher return than we're
10 paying for the bonds --
11 GOVERNOR BUSH: You have to pay taxes on
12 it --
13 TREASURER GALLAGHER: And we have to pay
14 tax on it. But we're not losing any money.
15 GOVERNOR BUSH: You think it would be wiser
16 to -- is it -- is it wiser to try to match your
17 asset with your liabilities, or is it --
18 TREASURER GALLAGHER: Well --
19 GOVERNOR BUSH: -- that's my point. I
20 don't know how much coordination there is --
21 TREASURER GALLAGHER: The problem is you
22 have --
23 GOVERNOR BUSH: -- maybe you could answer
24 this.
25 MS. ARMSTRONG: Okay. Let me help you with
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1 this.
2 GOVERNOR BUSH: And the reason why I bring
3 it up is the Legislature's interested in this.
4 MS. ARMSTRONG: Right. Understand.
5 GOVERNOR BUSH: And I'm -- I'm interested
6 in these programs being funded adequately. And
7 any -- any misstep here will make it harder for
8 us to continue a great tradition in our state.
9 That's --
10 (Attorney General Butterworth entered the
11 room.)
12 MS. ARMSTRONG: Sure.
13 GOVERNOR BUSH: -- why --
14 COMPTROLLER MILLIGAN: It -- it will also
15 be, Governor, a factor as we get to Gatsby 34
16 and really have to look at liabilities versus
17 capital assets in hand.
18 GOVERNOR BUSH: Oh, you bet.
19 COMPTROLLER MILLIGAN: And so I -- I -- and
20 I think Ben has some thoughts on how we can
21 improve this process.
22 And I think we need -- need to move forward
23 in trying to avoid this situation. Even though
24 we get -- we may get a little return in terms
25 of where you are in dealing with the financial
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1 state of the State, it could cause some more
2 problems, not --
3 TREASURER GALLAGHER: Well, you can -- you
4 can know -- you -- we should know better
5 what -- I mean, we have a CARL list. We know
6 what -- what's on there, and we have pretty
7 good ideas what we can close when. And so you
8 time the bonds better to do --
9 COMPTROLLER MILLIGAN: I don't want to put
10 Ben on the spot. Maybe he wants to talk about
11 it, maybe he doesn't right now. But it's
12 something that needs to be talked about.
13 MR. WATKINS: Well, to give you a
14 perspective on this, a couple of years ago when
15 the Legislature was formulating the Florida
16 Forever Program, we made some suggestions to
17 address the accumulation of cash in the
18 trust fund.
19 And there was really a two-pronged
20 approach: One is to streamline the acquisition
21 process. On the expenditure side of the
22 evaluation.
23 And then on managing the borrowing side of
24 the equation, we suggested that -- that we
25 do -- that we execute bond issues based on
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1 projected needs, rather than 300 million a
2 year, to address the accumulation of cash,
3 unencumbered cash.
4 And so the Department has done a -- done a
5 magnificent job over the last two years
6 bringing down those balances by streamlining
7 their acquisition --
8 GOVERNOR BUSH: Wasn't it a half a billion
9 dollars, wasn't it, at some point?
10 MR. WATKINS: It -- yes, it has been as
11 high --
12 GOVERNOR BUSH: So to give credit to the
13 Department, I think we -- I'd love to learn
14 more about this -- it's an -- you know, this is
15 a lot of money, we -- we are aggressively
16 indebting ourselves to think long-term and
17 invest in long-term things, and we'd better do
18 it as efficiently as anybody else can do it.
19 I mean, it's -- or we're going to lose the
20 confidence with the policymakers. That's --
21 that's all -- all I'm saying. I just want to
22 make sure it's done right.
23 So maybe you can educate me on how we do
24 it, and -- and -- this wasn't on the agenda,
25 but I -- the devil made me do it, as usual.
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1 I'd love to learn more about how we do
2 this, and if there are things that we can do
3 that require legislative change perhaps.
4 I mean, let's do it this year, if it -- if
5 there are encumbrances to -- to -- to make it
6 harder to -- because I -- you know, I just --
7 the -- the nine -- 150 in the CARL program, a
8 chunk of it's still in now -- you know, how
9 long will it take to get that out, and is this
10 done over an entire year. Maybe we should have
11 this stuff done prospectively. You know, I
12 don't know.
13 Start tying closings together at the same
14 time.
15 TREASURER GALLAGHER: That's --
16 GOVERNOR BUSH: We're the only buyer for
17 most of this land, as everbody comes when they
18 come here. I mean, it's --
19 TREASURER GALLAGHER: We pay top --
20 GOVERNOR BUSH: -- not like --
21 TREASURER GALLAGHER: -- dollar.
22 GOVERNOR BUSH: And we pay top dollar.
23 TREASURER GALLAGHER: No doubt about that.
24 GOVERNOR BUSH: There's why they come. It
25 seems like we could control a little bit of
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1 some of the timings of the closings. So --
2 Secretary Struhs, do you have anything to
3 add to this, or should we move on to the agenda
4 that is long, and people have come --
5 MR. STRUHS: Why don't we do that?
6 GOVERNOR BUSH: Okay.
7 COMPTROLLER MILLIGAN: Well -- well, now,
8 we probably ought to -- we ought -- probably
9 ought to ask him to come back with something --
10 GOVERNOR BUSH: Yeah.
11 COMPTROLLER MILLIGAN: -- pretty quick,
12 and --
13 GOVERNOR BUSH: Come back and --
14 TREASURER GALLAGHER: Well, I think
15 between -- between he and Bond Finance, they
16 ought to look at some kind of a program.
17 COMPTROLLER MILLIGAN: Well, they've been
18 working.
19 MR. STRUHS: Between -- between
20 Ms. Armstrong and Mr. Watkins and myself, we
21 will give you a -- a full briefing.
22 But if I can do just a short --
23 GOVERNOR BUSH: Okay.
24 MR. STRUHS: -- 30-second commercial.
25 If you recognize the -- the P-2000 program
ACCURATE STENOTYPE REPORTERS, INC.
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1 is now coming to a close. There's 65 million
2 dollars left in the P-2000 CARL program.
3 If you look at our projected needs, in
4 terms of contracts expected to be signed
5 between now and June 30th, the need is
6 92 million.
7 That's good news, because what it means is
8 that the timing is exactly right for the new
9 P-2000 dollars to kick in -- for the
10 Florida Forever dollars to kick in.
11 So really in terms of the -- the timing for
12 the first bond issuance --
13 GOVERNOR BUSH: And the other half of the
14 projects are similar in terms of their
15 effectiveness --
16 MR. STRUHS: Unfortunately -- unfortunately
17 I don't have that in front of me --
18 GOVERNOR BUSH: Well, maybe you could come
19 back and give us --
20 MR. STRUHS: I will.
21 GOVERNOR BUSH: -- as --
22 MR. STRUHS: -- but the CARL program, as
23 you know, is 50 percent of the program.
24 GOVERNOR BUSH: Right.
25 MR. STRUHS: Thank you.
ACCURATE STENOTYPE REPORTERS, INC.
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February 6, 2001
1 GOVERNOR BUSH: Thank you.
2 Where were we, Ben?
3 MR. WATKINS: Did we approve -- did we have
4 a motion on Item 2?
5 COMPTROLLER MILLIGAN: I -- I think we --
6 we did. But if --
7 TREASURER GALLAGHER: Two's done.
8 COMPTROLLER MILLIGAN: -- we didn't, I
9 certainly second --
10 GOVERNOR BUSH: Moved and seconded.
11 Without objection, it's approved.
12 MR. WATKINS: Item Number 3 is a resolution
13 amending and restating the lottery bond
14 resolution to reflect the creation of a trust
15 fund by the Legislature for --
16 TREASURER GALLAGHER: Motion on 3.
17 MR. WATKINS: -- that program.
18 ATTORNEY GENERAL BUTTERWORTH: Second.
19 GOVERNOR BUSH: Moved and seconded.
20 Without objection, it's approved.
21 MR. WATKINS: Item Number 4 -- 4 is the
22 report of award on the competitive sale of
23 three hundred and forty-one million five
24 hundred and forty thousand dollars in PECO
25 refunding bonds. The bonds were awarded to the
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1 low bidder at a true interest cost of
2 approximately 4.89 percent.
3 And this transaction generated gross
4 savings -- gross debt service savings for the
5 State of approximately 29 million; and on a
6 present value basis, savings of about
7 17.4 million.
8 GOVERNOR BUSH: Excellent.
9 COMPTROLLER MILLIGAN: Move approval.
10 TREASURER GALLAGHER: Second.
11 GOVERNOR BUSH: Moved and seconded.
12 Without objection, it's approved.
13 Are we going to see a lot more
14 refinancings?
15 MR. WATKINS: We have -- we were fortunate
16 enough to have 650 million dollars of
17 authorization from February of '99. And so we
18 were in a position to take advantage of
19 interest rates early in January.
20 This P-2000 refunding is not yet --
21 interest rates are not yet low enough for us to
22 achieve the level of savings where we need to
23 be. So it is in anticipation of further
24 improvement in the market, and puts us in a
25 posture to move quickly to take advantage of
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1 that.
2 So if interest rates continue to improve,
3 we'll be ready, Governor.
4 GOVERNOR BUSH: Great.
5 (The Division of Bond Finance Agenda was
6 concluded.)
7 * * *
8
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ACCURATE STENOTYPE REPORTERS, INC.
139
February 6, 2001
1 CERTIFICATE OF REPORTER
2
3
4
5 STATE OF FLORIDA:
6 COUNTY OF LEON:
7 I, LAURIE L. GILBERT, do hereby certify that
8 the foregoing proceedings were taken before me at the
9 time and place therein designated; that my shorthand
10 notes were thereafter translated; and the foregoing
11 pages numbered 1 through 138 are a true and correct
12 record of the aforesaid proceedings.
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties,
15 nor relative or employee of such attorney or counsel,
16 or financially interested in the foregoing action.
17 DATED THIS 19TH day of FEBRUARY, 2001.
18
19
20
21 LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
22 Tallahassee, Florida 32301
850/878-2221
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
T H E C A B I N E T
S T A T E O F F L O R I D A
Representing:
FINANCIAL MANAGEMENT INFORMATION BOARD
STATE BOARD OF ADMINISTRATION
DIVISION OF BOND FINANCE
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
STATE BOARD OF EDUCATION
VOLUME II
The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush
presiding, in the Cabinet Meeting Room, LL-03,
The Capitol, Tallahassee, Florida, on
Tuesday,February 6, 2001, commencing at approximately
9:18 a.m.
Reported by:
LAURIE L. GILBERT
Registered Professional Reporter
Certified Court Reporter
Certified Realtime Reporter
Registered Merit Reporter
Notary Public in and for
the State of Florida at Large
ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FLORIDA 32301
850/878-2221
141
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
TERRY L. RHODES
Commissioner of Agriculture
BOB MILLIGAN
Comptroller
KATHERINE HARRIS
Secretary of State
BOB BUTTERWORTH
Attorney General
TOM GALLAGHER
Treasurer
CHARLIE CRIST
Commissioner of Education
* * *
ACCURATE STENOTYPE REPORTERS, INC.
142
February 6, 2001
I N D E X
ITEM ACTION PAGE
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND:
(Presented by David B. Struhs,
Secretary)
1 Deferred 143
Substitute 2 Deferred 143
Substitute 3 Approved 150
Substitute 4 Deferred 152
Substitute 5 Approved 153
Substitute
Additional 6 Withdrawn 323
STATE BOARD OF EDUCATION:
(Presented by Wayne V. Pierson,
Deputy Commissioner)
1 Approved 351
2 Approved 372
3 and 4 Deferred 373
CERTIFICATE OF REPORTER 374
* * *
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February 6, 2001
1 P R O C E E D I N G S
2 (The agenda items commenced at 10:28 a.m.)
3 GOVERNOR BUSH: Board of Trustees.
4 TREASURER GALLAGHER: Motion to defer
5 Item 1 to the March 13th, 2001, meeting.
6 GOVERNOR BUSH: Is there a second?
7 COMMISSIONER RHODES: Second.
8 GOVERNOR BUSH: Motion to defer and a
9 second.
10 Without objection, it's approved.
11 TREASURER GALLAGHER: Motion to --
12 GOVERNOR BUSH: There are no minutes?
13 TREASURER GALLAGHER: No, no minutes. But
14 Item 2, I'd like to also defer to March 13th.
15 GOVERNOR BUSH: Is there a second?
16 COMPTROLLER MILLIGAN: Second.
17 GOVERNOR BUSH: Moved and seconded.
18 Without objection, the motion is deferred.
19 MR. STRUHS: Governor, Item 3, Mayor
20 John Delaney from Jacksonville, who was the
21 Chairman of the Florida Forever Advisory
22 Council, is here to present briefly their
23 report.
24 GOVERNOR BUSH: Welcome, Mayor.
25 MR. DELANEY: Thank you, Governor.
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1 GOVERNOR BUSH: Nice article in the news--
2 your local newspaper.
3 MR. DELANEY: Yeah. All that means is
4 they'll get even with you next time. So it --
5 it bala-- they have a habit of balancing that
6 out.
7 Appreciate being with you this morning,
8 and -- and am pleased to present to you,
9 Governor, and to the members of the Cabinet,
10 the -- the first report from the Florida
11 Forever Advisory Council.
12 I know you've had a very long agenda, so
13 I'll try to summarize this in -- in about a
14 minute-and-a-half or 2 minutes.
15 I will say that it was a pleasure to work
16 with the Commissioners, and also the staff of
17 the DEP, and from the -- the members from
18 OPPAGA who coordinated very well with the items
19 I'm going to mention in just a moment.
20 They were a great and diverse group of
21 appointees, as is your -- your want, Governor.
22 And we made huge progress at each meeting, a
23 great spirit of cooperation.
24 I don't think we took one vote in the
25 course of the last year. Everything was done
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1 by consensus.
2 Florida is, of course, as you just were
3 discussing, a national leader in land
4 preservation since 1990. With the P-2000
5 program, we're just now just under 3 billion
6 dollars has been spent in land acquisition.
7 In the year 2000, the administration, the
8 Legislature took what was a great bill, and
9 made it even better.
10 There still was concerns expressed that I
11 have seen in the Cabinet in -- in my
12 appearances in the past that the State, if it's
13 going to spend 3 billion dollars, is making
14 sure that we're buying the best land.
15 There was a sense that the purchases
16 weren't done in a particularly cogent manner
17 towards a larger good, that they weren't
18 integrated, that there was some need for
19 performance measures, to make sure that the
20 land was being evaluated properly with some
21 accountability. And, of course, the Governor's
22 concern about the value of the land that was
23 actually being paid for.
24 The Advisory Council was charged
25 essentially to reevaluate the same two,
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1 three dozen that were in the statute.
2 There is a -- a wide array of goals that
3 were the objectives of how this money should be
4 spent to create some measures to make sure that
5 they're moving towards those goals in some sort
6 of a cogent fashion, and to look at the funding
7 allocation formula across the various agencies.
8 I personally began with a view that we
9 could develop an objective scoring system that
10 would be a series of templates or overlays, and
11 found very quickly that there is no best land,
12 there's no single best methodology.
13 For example, habitat for bears is
14 completely different from habitat for manatees.
15 Some parcels of lands may have only one, but
16 very significant redeeming factor, say, the
17 Miami Circle in Miami, which doesn't have any
18 environmental value, but obviously apparently
19 the Cabinet felt, had some archeological value.
20 In the Southwest Florida Water Management
21 District, they actually have two --
22 TREASURER GALLAGHER: He's already been
23 here --
24 MR. DELANEY: -- different systems --
25 Yeah. Still going to drag that one back up
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1 again, Mr. --
2 TREASURER GALLAGHER: Please don't.
3 GOVERNOR BUSH: Thanks for sharing, Mayor.
4 Thanks for sharing.
5 TREASURER GALLAGHER: Some things you just
6 sort of let ride on.
7 MR. DELANEY: Yeah.
8 Still we obviously need some accountability
9 and some clear justification. The bulk of the
10 time Council spent, and the staff actually,
11 with some experts from a number of agencies,
12 and in the private sector, to develop -- to
13 take the three dozen measures, wrap them down
14 to eight sort of bite-sized ones, and then
15 establish a series of baselines in each of
16 those. Then we could tell that we have too
17 much bear habitat; or too much manatee, or not
18 enough manatee, whatever it happened to be; not
19 enough water resource.
20 All those baselines are numbers that are
21 available and accessible. A key concern that
22 came out of the Commission was a concern about
23 access of the public to the land.
24 And, Commissioner Gallagher, you brought
25 that in one of the items that had where we --
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1 we were purchasing something in less than fee.
2 As most public policy issues, it's more
3 complicated than it seems. We did make a key
4 recommendation that the State agencies present
5 a plan to the Governor and the Legislature for
6 maximum openness of the land, and for
7 justification for why the parcels are closed.
8 Some are closed parts of the day, parts of the
9 year, some to certain functions, fishing or
10 hunting.
11 And sometimes there's good explanations,
12 and some we were not particularly satisified
13 with.
14 In conclusion, we sort of had a -- a
15 running joke about the cost of the Everglades
16 project, which may also not be funny to the
17 Cabinet.
18 But the -- clearly we recognize that, with
19 the pressing budget needs across-the-board,
20 that there will be pressure to shift funds that
21 were committed to Florida Forever elsewhere, or
22 perhaps to even shift it within to pay for the
23 Everglades.
24 The Florida Forever Program is really a key
25 growth management tool that the -- the major
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1 urban counties and regions are using. And a
2 healthy public policy question that, Governor,
3 you and I have mentioned briefly, and the
4 Secretary, is that, if we're going to spend
5 10 billion dollars of public environmental
6 money on the Everglades, would you put all that
7 money into one place?
8 The rest of the state is, to a great
9 extent, still saveable. And we do believe, and
10 I do believe, it would be dangerous to pull
11 that out and shift it to someplace else at this
12 stage.
13 We've got an opportunity here to do
14 something that the name of this program really
15 exemplifies, which is Florida Forever.
16 Buildings will go, museums will go, arenas will
17 go, baseball stadiums, football stadiums will
18 go.
19 But the land that the State is purchasing
20 and set-aside obviously will be there
21 permanently.
22 And with that, I very gratefully submit to
23 you the report.
24 Thank you for your attention.
25 GOVERNOR BUSH: Any questions, comments?
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1 I'd like to commend the Mayor for, not only
2 being a great Chairman for this Council, but
3 also being a great partner in this.
4 Duval County and Jacksonville has really taken
5 the lead to -- to use their own resources to
6 protect endangered lands from either
7 development, or from -- you know, for
8 restoration and other things.
9 So you -- you really are kind of a
10 leader --
11 MR. DELANEY: Appreciate it, Governor.
12 GOVERNOR BUSH: -- in many ways.
13 MR. DELANEY: Well, we have been leveraging
14 the State's money, you know, at -- at anywhere
15 from a 2 to 4 to 1 ratio. And I think eight
16 other counties passed a similar -- a similar
17 proposal to leverage the State -- the State
18 monies to make sure that that -- the land
19 acquisition dollars go further.
20 But appreciate it. Appreciate your
21 interest in it.
22 TREASURER GALLAGHER: Move approval.
23 COMMISSIONER CRIST: Second.
24 GOVERNOR BUSH: Moved and seconded.
25 Without objection, it's approved.
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1 MR. STRUHS: Thank you.
2 Governor, the next item is -- we're
3 recommending a deferral in the interest of
4 time.
5 But I would like to point out that one of
6 the reasons we were successful over the last
7 two years in getting rid of that half a billion
8 dollar backlog is because we've reduced the
9 average time to close.
10 And that is one of the things that we will
11 present to you when we bring this back to you
12 on a -- on a future agenda.
13 We're real proud of the fact that we've
14 reduced the average closing time by 32 percent
15 over the last 18 months. And that's part of
16 what has reduced the backlog.
17 But we'll give you a full report at some
18 point in the future, and we will incorporate
19 the additional questions from earlier.
20 GOVERNOR BUSH: Excellent.
21 TREASURER GALLAGHER: Motion to defer.
22 ATTORNEY GENERAL BUTTERWORTH: Second.
23 COMPTROLLER MILLIGAN: Second.
24 GOVERNOR BUSH: Moved and seconded, the
25 motion to defer.
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1 Without objection, it's approved.
2 MR. STRUHS: Governor, the next item, as
3 you know, is -- is particularly complicated,
4 and we've got a large number of individuals
5 here today who are interested in it.
6 And I felt it would be worthwhile to spend
7 just a minute up front, and give a brief
8 overview so we all begin at the same starting
9 point.
10 GOVERNOR BUSH: Which --
11 MR. STRUHS: And that is --
12 GOVERNOR BUSH: I'm sorry. What item are
13 we on?
14 TREASURER GALLAGHER: Five.
15 MR. STRUHS: This is Item 5.
16 GOVERNOR BUSH: Item 5?
17 MR. STRUHS: Oh, I'm sorry --
18 GOVERNOR BUSH: Is this the complicated
19 one, or the next one?
20 MR. STRUHS: I jumped ahead. I was jump--
21 jumping to 6 in anticipation.
22 TREASURER GALLAGHER: I'll -- I'll move --
23 GOVERNOR BUSH: Why don't we go to Item 5
24 first? Try that one first, and see how that
25 goes --
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1 MR. STRUHS: We're recommending approval on
2 Item 5.
3 TREASURER GALLAGHER: Move -- it's a
4 eminent domain authorization.
5 I'll move it.
6 ATTORNEY GENERAL BUTTERWORTH: Second.
7 SECRETARY HARRIS: Second.
8 GOVERNOR BUSH: Moved and seconded.
9 Without objection, approved.
10 MR. STRUHS: Thank you.
11 Sorry for the misstep.
12 TREASURER GALLAGHER: Now you can --
13 MR. STRUHS: Now Item 6. This is a
14 complicated item, and there are a large number
15 of individuals who want to speak to it.
16 And in the interest of making it efficient,
17 I'd like to --
18 (Governor Bush exited the room.)
19 MR. STRUHS: -- just lay out a few simple
20 facts so we all have the same starting point,
21 and speak as much to the visitors and residents
22 as anyone.
23 And that is to make it clear that what we
24 have before us is an item that presents a
25 choice to the Board, and they have two options.
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1 One is to pursue litigation to appeal an
2 earlier loss by the State and District Court
3 for alternatively to enter into a settle--
4 settlement agreement with the current landowner
5 and developer to -- which would seek to resolve
6 some of the State's outstanding concerns.
7 And what I would suggest to all who have
8 examined this particular item, that these are
9 among the most difficult choices that you have
10 to make in government, because you're operating
11 with some uncertainty.
12 If the case is settled, we will never know
13 what a court might have ruled. If, on the
14 other hand, we wait for the Court to rule, this
15 settlement opportunity will no longer be
16 available.
17 And it's clear that reasonable people will
18 evaluate these options differently. There's no
19 clearly right or clearly wrong answer.
20 But I would state, especially to our -- our
21 visitors from downstate that this is a very
22 transparent process, and you will see the
23 deliberations occur as we go forward.
24 I'd say further that this issue is
25 complicated by the fact that there are actually
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1 two different legal questions on appeal, if,
2 indeed, the litigation goes forward.
3 One is, who owns the land that's under
4 water in this parcel; and, two, what are the
5 exact boundaries --
6 (Governor Bush entered the room.)
7 MR. STRUHS: -- of that parcel?
8 And obviously in term rates, at least four
9 different possible outcomes in the event that
10 litigation should be pursued. I'm not going to
11 detail those various scenarios, because I'm
12 sure it's an analysis you've all done already.
13 (Treasurer Gallagher exited the room.)
14 MR. STRUHS: But this brings me to I think
15 another important observation before we begin
16 the -- the public discussion.
17 And that is the inherent -- some of it is
18 inherent to any kind of settlement negotiation
19 process, which is what I call the effect of the
20 courthouse steps.
21 As time passes, and as court dates draw
22 closer, the parties seek to make sure that they
23 put forward their very best possible proposal.
24 And, in fact, we have seen some of that
25 occurring as late as this morning.
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1 This is a normal part of the negotiation
2 and settlement process. And while clearly it
3 is disconcerting to some, it's -- it's
4 important to make sure that everybody has an
5 opportunity to hear from the developer as to
6 what their current and leanest proposal
7 actually is.
8 Just as important, we're making it
9 abundantly clear that the residents and public
10 officials from that part of the state who have
11 advice and -- and opinions on this, have the
12 adequate amount of time to present their
13 opinions to you.
14 In that vein, what we'd like to propose is
15 dividing up the time roughly into equal
16 allocations of 45 minutes apiece, and to begin
17 by allowing the representatives of Lost Tree
18 Village Corporation to come forward and present
19 their -- their latest settlement proposal; to
20 then invite Monica Reimer, Assistant
21 Attorney General, up to present the analysis of
22 that, as your counselor; and then to hear from
23 the residence within that neighborhood; and
24 then to hear from environmental groups; and,
25 finally, in closing, allowing Lost Tree Village
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1 one more chance at the microphone to present
2 their final -- their final pitch.
3 I would like to proceed, and if you don't
4 have any questions of me, I'd like to begin.
5 I would also point out that we do have all
6 the technical and legal experts that we could
7 possibly muster, from both our department and
8 DCA, that are available to answer any questions
9 along the way.
10 GOVERNOR BUSH: All right.
11 MR. STRUHS: So with that, if the
12 representatives from Lost Tree Village would --
13 would approach, Linda Shelley and Ernie Cox.
14 (Treasuere Gallagher entered the room.)
15 MS. SHELLEY: Thank you, Governor, and
16 members of the Cabinet.
17 I'd like to take an opportunity first to go
18 over briefly -- I know you have been advised by
19 your Aides, what is in the current agreement;
20 and then to talk about why we believe the
21 agreement is in the best interest of the
22 Trustees and Lost Tree.
23 As the Secretary mentioned, the primary
24 goal of this settlement agreement is to settle
25 the litigation. And I think that it is
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1 important to understand that this is only the
2 first step in settling not just this
3 litigation, but other related litigation.
4 Lost Tree has been in litigation with regard to
5 this property for over a decade with the
6 State of Florida, only two years on the quiet
7 title case.
8 The related litigation -- and Cari Roth is
9 here from the Department of Community Affairs,
10 arises from land use issues that came out of
11 comprehensive plans adopted in the late '80s
12 and early '90s, and which has been in various
13 stages of start and stop as the other aspects
14 of the case have moved forward.
15 The particular proposal that is before you
16 today -- and I apologize for the various
17 acreages that you may have heard is involved.
18 But in -- in due fairness to the
19 Department, the property has not been surveyed
20 for this purpose, and so the -- the changes in
21 the acreages are just honest differences of
22 upland and submerged land issues.
23 And I will use low numbers so that people
24 won't think that I'm -- I'm trying to
25 exaggerate the acreages that are involved.
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1 The settlement would involve the transfer
2 from Lost Tree. And the reason for the
3 transfer coming from Lost Tree is that under
4 the current state of the lawsuit, a circuit
5 judge has ruled in Lost Tree's favor on the
6 quiet title case.
7 So we would quitclaim our interest in
8 property to the Trustees, and you in exchange
9 would agree to dismiss the appeal. And that
10 sets the tone and the framework for the
11 agreement.
12 We would transfer to the Trustees
13 approximately 260, 270 -- I've heard up to
14 302 acres -- around 260, let's use that, as a
15 fair number, acres of both submerged land and
16 upland acres. Some right around what we refer
17 to as the inner islands --
18 Do we have that map? Can we get that up
19 here?
20 -- both the inner islands and the outer
21 islands, as well as acreage that is in he
22 vicinity of that property that is also owned by
23 Lost Tree that they would like to transfer to
24 the Trustees in consideration for this
25 settlement.
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1 The totals are about 180 acres of submerged
2 lands, and about 80 acres of upland property.
3 Part of that upland property is referred to
4 as McCuller.
5 These are the inner islands, and these are
6 the outer islands.
7 And this up here is McCuller's Point. And
8 part of the agreement has us conveying our
9 interest in McCuller's Point, to the Trustees.
10 And in addition to transferring the title to
11 you, to restore that, to remove the exotic
12 vegetation, and also to make the mosquito works
13 there actually work.
14 There is a mechanism for flooding and
15 culverts opening and closing, and it doesn't
16 work. And our -- it would be at our expense to
17 restore McCuller's Point so that it is
18 functioning, and it would be deeded to the
19 State.
20 We would also -- there -- there is a part
21 of this that you will hear a lot about called
22 the subaqueous line or the subaqueous line.
23 And that is -- it is not at all in dispute that
24 the land in between the inner islands and the
25 outer islands was not conveyed by the Trustees
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1 to Lost Tree. That is sovereign submerged
2 lands.
3 And as part of this agreement, we asked
4 that the Trustees deed to Lost Tree a 3 foot
5 subaqueous line -- or we would put in a
6 subaqueous line, you would give us 3 feet so
7 that we could do so, out to the outer islands
8 for the purpose only of bringing water to the
9 outer islands.
10 In exchange for that, we would agree that
11 we would limit development to golf course
12 purposes, which is defined in the agreement.
13 And the golf course purposes would include,
14 I think maybe tennis courts or a clubhouse or
15 something like that.
16 But the point of it is, there -- there
17 would be no residential development on the
18 outer islands. And so -- that we think that
19 that was a very important aspect of it.
20 And the last part of the settlement would
21 call on Lost Tree to pay for an upgrade for the
22 49 homes that are -- and it's called
23 Silver Shores subdivision. And it's around
24 here. They are now on septic tanks, and we
25 would pay to install sewer lines up and down
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1 those streets at our expense.
2 There has been some confusion about whether
3 or not we pay to connect the person to that
4 line. We are not legally authorized to require
5 somebody to connect to a sewer. We're running
6 the lines --
7 TREASURER GALLAGHER: What now -- the
8 question is, would you pay for them to connect,
9 not whether you're authorized to --
10 MS. SHELLEY: I would be glad to ask my
11 client if they would pay for people who are
12 willing to connect. That has just not been
13 part of it.
14 We are -- I think you can look at it,
15 Commissioner, as we are paying what the local
16 government would normally pay in one of these
17 arrangements, and -- and that is running the
18 line.
19 That is an additional expense that
20 Lost Tree would not otherwise incur in running
21 the water and sewer lines to the island.
22 Now what those --
23 TREASURER GALLAGHER: The reason I --
24 SECRETARY HARRIS: How much --
25 TREASURER GALLAGHER: -- brought it up --
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1 MS. SHELLEY: Sure.
2 TREASURER GALLAGHER: -- is I think it was
3 misleading in what some people were saying that
4 they were going to be hooked up to it, as
5 opposed to what the City does is run a line
6 down, and you pay your own --
7 MS. SHELLEY: Yes, sir. We have been very
8 careful to talk about running sewer lines, and
9 we apologize if there has been a
10 misunderstanding --
11 TREASURER GALLAGHER: The we -- I don't
12 know who the we is.
13 MS. SHELLEY: Okay.
14 TREASURER GALLAGHER: I would say the we is
15 anybody that's representing Lost Tree.
16 MS. SHELLEY: Okay.
17 TREASURER GALLAGHER: And I think some of
18 the we were not truly informed correctly.
19 MS. SHELLEY: I apologize for that. But I
20 will say to you, if that is an important aspect
21 to the Trustees, that we would -- we,
22 Lost Tree, would be glad to talk to you further
23 about that aspect.
24 SECRETARY HARRIS: And how much would --
25 how much would that actually be? I mean,
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1 usually local government would incur that cost.
2 How much --
3 MS. SHELLEY: We have --
4 SECRETARY HARRIS: -- are you projecting to
5 run those lines, that that would actually cost?
6 MS. SHELLEY: Lost Tree estimates the
7 additional expense to them of what they have
8 offered to be approximately $500,000.
9 GOVERNOR BUSH: On this -- just on the
10 sewer --
11 MS. SHELLEY: On the sewer.
12 TREASURER GALLAGHER: And you -- and you're
13 going to -- and you can add about -- depending
14 on how long the lines are, five to eight
15 hundred dollars easy to --
16 MS. SHELLEY: Each house.
17 TREASURER GALLAGHER: -- to each person per
18 house.
19 MS. SHELLEY: If that were part of the
20 agreement. And I think, sir, that it would
21 have to be optional on the part of the
22 homeowner. I -- I don't --
23 TREASURER GALLAGHER: Well, obviously, if
24 you've got to -- he's got to give you
25 permission to dig up his yard and --
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1 MS. SHELLEY: That's right.
2 TREASURER GALLAGHER: -- hook up to it.
3 MS. SHELLEY: That's correct.
4 SECRETARY HARRIS: And one last question.
5 How -- how will you be accommodating on the
6 islands, what type -- will it -- will there be
7 another package plant?
8 How will you handle that on the islands in
9 the development?
10 MS. SHELLEY: It's anticipated that the
11 inner islands, which are the only ones that
12 would be developed, would be also on a sewer
13 system.
14 And does anybody have the specifics of how
15 they would do the treatment?
16 Be connected to the City, and however the
17 City does the treatment. I do not --
18 SECRETARY HARRIS: Would that require
19 lines, too, subaqueous --
20 MS. SHELLEY: That would go through the
21 bridge. No, not subaqueous.
22 That would go through the bridge.
23 ATTORNEY GENERAL BUTTERWORTH: Okay.
24 TREASURER GALLAGHER: Right.
25 Pumped through the bridge.
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1 MS. SHELLEY: I guess so.
2 Now, that is what is the parameters of it.
3 And I would --
4 Yes, ma'am.
5 SECRETARY HARRIS: Would there be -- but
6 what -- there would be -- have to be some
7 accommodation on the golf and tennis side,
8 something to be able to address those issues as
9 well?
10 MS. SHELLEY: We have committed -- there
11 has been no development permit sought for the
12 outer islands. We have committed to doing
13 the -- whatever it was that a permitting agency
14 would say was the most environmentally
15 appropriate for that kind of property.
16 SECRETARY HARRIS: So that there won't be a
17 bridge though, obviously there can't be sewer
18 lines over to --
19 MS. SHELLEY: There won't be --
20 SECRETARY HARRIS: -- the outer --
21 MS. SHELLEY: -- there absolutely will
22 not --
23 SECRETARY HARRIS: So there -- perhaps
24 I guess other septic tanks on the outer
25 islands.
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1 MS. SHELLEY: I'm sure that there are
2 people working on the best way to do this.
3 Florida has had traditionally a problem with
4 septic tanks, and we don't want to add to that
5 problem.
6 So whatever is the best way to do it would
7 be how the outer islands would be done.
8 SECRETARY HARRIS: Okay. And one last
9 question on the development. Sorry.
10 You have these different islands, and
11 you're talking about -- and each had been
12 approved. You've been through the permitting
13 process, they would be developed.
14 Regardless of whether we settle or not on
15 this lawsuit, the settlement, or we go forward
16 with the lawsuit, you have the ability to
17 develop the islands, correct?
18 With or without a bridge. But you have the
19 ability to develop them.
20 MS. SHELLEY: We do not currently have the
21 permits to do any development on any of the
22 islands. And that's what I meant when I said,
23 this would be the first step.
24 What -- the process we anticipate would be
25 that -- is that if the Trustees help us resolve
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1 the title, there is an ERP permit pending at
2 the Water Management District that needs only
3 that question resolved before it can move
4 forward.
5 But the land use issue has not been
6 resolved.
7 GOVERNOR BUSH: So how -- how does that
8 work?
9 MS. SHELLEY: Pardon me?
10 GOVERNOR BUSH: I mean, we make a
11 commitment here on the DEP side of this, to
12 settle the lawsuit, the DCA side is ongoing?
13 MS. SHELLEY: The DCA and Lost Tree have a
14 letter of agreement, which has been distributed
15 to you as of last Friday, I hope you got --
16 GOVERNOR BUSH: Can you describe that to
17 us?
18 MS. SHELLEY: And I can tell you -- and
19 Cari can be here to give you any other
20 perspective, General Counsel of DCA -- that DCA
21 has agreed that up to 64 units may occur on the
22 inner islands, and they -- and the
23 outer islands would be used for golf course
24 purposes only.
25 SECRETARY HARRIS: Is it correct that --
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1 and I could be wrong -- but I thought when I
2 was being briefed that a total of 64 units
3 could be used across-the-board, but what you'll
4 do is to concentrate them all on the -- on the
5 inner islands.
6 MS. SHELLEY: We have agreed to forego
7 development on the outer islands. We are
8 transferring development rights from the other
9 property, like on McCuller's Point, to the
10 inner islands.
11 You could transfer development rights from
12 the outer islands to the inner islands, but --
13 and -- or you can look at it like that they
14 will being extinguished.
15 But the density with those transferable
16 developments rights to the inner islands --
17 SECRETARY HARRIS: Is --
18 MS. SHELLEY: -- is decreased.
19 SECRETARY HARRIS: -- very low.
20 But -- but it's more now on the inner
21 island than previously you consolidated the
22 development on the inner islands --
23 MS. SHELLEY: Yes.
24 SECRETARY HARRIS: -- correct?
25 MS. SHELLEY: Yes, ma'am. In a previous
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1 settlement, which was not approved by DCA, but
2 which was approved by the town of Indian Shores
3 and the City of Vero Beach, there was 145 units
4 of development, both mixed in between the inner
5 and outer islands and the golf course mixed in
6 as well.
7 DCA said no to that. We are now at less
8 than half that density, and DCA is comfortable
9 that they can approve that in a compliance
10 agreement.
11 Now, still that would have to go back to
12 the local governments. And this -- this will
13 be -- that's an important thing to understand
14 because there are some issues that will be
15 raised -- that we anticipate will be raised
16 that we are between a rock and a hard place.
17 We would like to make an agreement with
18 you, but we also know that the local
19 governments who have land use jurisdiction over
20 this, they have to have a public hearing, they
21 have to say okay also.
22 And their concerns may not match. And --
23 and just to be up front about what -- what am I
24 talking about? We have heard that there is a
25 concern about the bridge, and maybe the bridge
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1 isn't high enough.
2 But we know, because we live there, too, or
3 our folks live there, that the neighborhoods
4 don't want some big high bridge that they have
5 to look at all the time.
6 And so -- that we are suggesting to you
7 that we don't care as much about how high the
8 bridge is as maybe others do.
9 So -- so I just give that as an example of
10 the sequential nature of the process.
11 ATTORNEY GENERAL BUTTERWORTH: Yes.
12 Ms. Shelley, how many units will be built on
13 these inner islands, what will be the maximum
14 number of units we're looking at?
15 MS. SHELLEY: Up to 64.
16 ATTORNEY GENERAL BUTTERWORTH: Total units,
17 that's all?
18 MS. SHELLEY: Yes.
19 ATTORNEY GENERAL BUTTERWORTH: And how many
20 acres are there?
21 MS. SHELLEY: There are currently I think
22 90 upland acres on the inner islands. There's
23 another 70 or so on McCuller's Point. So the
24 density, once the transfer occurs, is about
25 1 unit per 4 acres.
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1 TREASURER GALLAGHER: $100,000 houses.
2 SECRETARY HARRIS: How much --
3 Right.
4 On McCuller's Point though, as you transfer
5 the density from McCuller's Point to the --
6 MS. SHELLEY: And the -- and the other
7 property.
8 SECRETARY HARRIS: -- inner islands, and
9 the other property to the inner islands,
10 then -- then is it correct you'll -- you'll
11 restore McCuller's Point, and all those type --
12 is that for mitigation so that you're going to
13 use those mitigation issues on other
14 developable properties?
15 I mean, that's kind of the trade-off for
16 the State. You're doing that in exchange for
17 mitigation.
18 MS. SHELLEY: The agreement says that we
19 may be able to use the McCuller's Point
20 restoration as mitigation. We may not -- and a
21 permitting agency may say, I don't want that as
22 mitigation, that doesn't do it for me. Or they
23 may say, we approve that.
24 And we may not need it for mitigation. We
25 are taking the -- the guesswork out of that.
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1 In this agreement, we're saying whether or not
2 we need it for any mitigation, we're going to
3 restore it.
4 And we hope we will be able to use it for
5 mitigation credits. But if we never need the
6 mitigation credits, it's still restored.
7 GOVERNOR BUSH: Linda, can -- I'm a little
8 confused. Maybe you could clear this up for
9 me. You -- you brought up a timing issue --
10 MS. SHELLEY: Yes.
11 GOVERNOR BUSH: -- related to land use on
12 the one hand, sovereign submerged lands and the
13 issue in front of us on -- on the other.
14 The land use issue, irrespective of a
15 settlement with the Department of
16 Community Affairs, still has to be resolved at
17 the local level.
18 MS. SHELLEY: Yes, it does.
19 GOVERNOR BUSH: Just the question comes to
20 mind, why are we here -- why wouldn't that be
21 the first step so that we wouldn't -- is that
22 a -- I mean, because no matter what we do,
23 you're still going to have to deal with the --
24 the issues --
25 MS. SHELLEY: I appreciate that.
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1 It is -- it is viewed by your staff that
2 your action should not be contingent on the
3 actions of another unit of government.
4 And yet our -- our discussions with the
5 local government assumes that we will be able
6 to solve this bridge problem.
7 If I can just tell you a tiny bit about the
8 land use dispute. Essentially one local
9 government said, you cannot use our
10 right-of-way to connect to a bridge --
11 GOVERNOR BUSH: Can you -- which -- which
12 local government? Help me out here.
13 MS. SHELLEY: The City of Vero Beach said,
14 you cannot use our right-of-way on
15 Silver Shores Road to go -- to use for a bridge
16 to go to your islands.
17 The town said you cannot develop the
18 islands at all if you don't --
19 GOVERNOR BUSH: The town is --
20 MS. SHELLEY: -- have a bridge.
21 GOVERNOR BUSH: -- the town of --
22 MS. SHELLEY: Indian River Shores.
23 The City of Vero Beach is to --
24 GOVERNOR BUSH: Goes to -- right. Okay.
25 South of --
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1 Okay.
2 Thanks.
3 MS. SHELLEY: And this is the town. And
4 this Silver Shores Road, right down the middle,
5 they own it on --
6 TREASURER GALLAGHER: Cut it in half.
7 MS. SHELLEY: -- on -- on that's -- in each
8 of their jurisdictions.
9 GOVERNOR BUSH: It's always got to be that
10 way.
11 MS. SHELLEY: Isn't that great?
12 And so --
13 TREASURER GALLAGHER: So easy.
14 MS. SHELLEY: So one said, you can't use
15 that road to connect to a bridge; and the other
16 one said, you can't develop at all without a
17 bridge.
18 TREASURER GALLAGHER: So they can -- the
19 one-half, they can drive out there, they just
20 can't drive back.
21 MS. SHELLEY: I think that's a skinny
22 bridge.
23 TREASURER GALLAGHER: Well, maybe they can
24 come back, and they can't get --
25 MS. SHELLEY: Every other one gets to go or
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1 come. Well, there could be some way to resolve
2 this that we haven't thought of.
3 I --
4 TREASURER GALLAGHER: Have a bridge.
5 ATTORNEY GENERAL BUTTERWORTH: There are a
6 lot of problems here.
7 MS. SHELLEY: I want to not go on and on
8 about -- too much about the remainder of the
9 issues, because we're going to save some time
10 for rebuttal.
11 I -- I did want to say that the three
12 primary arguments --
13 GOVERNOR BUSH: Could you -- could I ask
14 another question?
15 MS. SHELLEY: Yes, sir.
16 GOVERNOR BUSH: I'm sorry that this --
17 because I think this is going to come up as
18 well.
19 How would you describe the property in
20 question in terms of it's environmental --
21 MS. SHELLEY: I think it would be pretty to
22 look at, because it's green. From the pictures
23 that I have seen of it, and -- and
24 Charles Lee's going to show you some that he
25 took, and -- and he took them. So -- got a new
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1 camera --
2 GOVERNOR BUSH: We're looking forward to
3 that then.
4 MS. SHELLEY: That's right.
5 And there -- they're primar-- they were at
6 once natural islands that have been spoiled on
7 over the years. Because this is a -- this is
8 the inland waterway, there's dredging going on
9 a lot around here, and -- and it has also been
10 one of our habits in Florida to get rid of
11 mosquitos is that we dredge sand and put them
12 on top of islands where mosquitos are growing.
13 And so originally these were islands --
14 GOVERNOR BUSH: Barrier isl--
15 MS. SHELLEY: -- and then we --
16 TREASURER GALLAGHER: Fill.
17 MS. SHELLEY: -- filled them out.
18 GOVERNOR BUSH: So there's no mangroves,
19 there's -- these are --
20 MS. SHELLEY: There's some mangroves.
21 There's some mangroves, and as part of our
22 EERP permit, we have agreed to do a lot more
23 vegetation of mangrove fringe around the
24 islands. They are not in terrific health, and
25 we have agreed to --
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1 GOVERNOR BUSH: The mangroves on the outer
2 islands and inner islands are up in the --
3 MS. SHELLEY: Both I think.
4 GOVERNOR BUSH: Okay.
5 MS. SHELLEY: We can --
6 GOVERNOR BUSH: It's just I've -- the only
7 map I've seen is this one, and it's hard as
8 heck to see what --
9 MS. SHELLEY: That's not really what you
10 notice when you look at them. You see
11 Australian Pine and Brazilian pepper --
12 GOVERNOR BUSH: Okay.
13 MS. SHELLEY: -- mostly.
14 Three arguments that I think we have heard.
15 Keep -- keep up the fight. You -- you'll win,
16 you'll do great. And you've already been
17 briefed by your staff, this is what you win if
18 you win, this is what you lose if you win, and
19 vice versa.
20 So I won't go too much further on that.
21 You'll also hear, this agreement doesn't
22 give you anything that the Court wouldn't give
23 you anyway. And I think that we have already
24 talked about several features of this
25 settlement that that's not the case.
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1 Yes, ma'am.
2 SECRETARY HARRIS: I have a question.
3 And I -- I think the -- the most troubling
4 to me is -- is this specific issue. You said
5 it doesn't give anything the Court wouldn't
6 have given.
7 And it -- for aquatic preserves, since the
8 Trustees are -- we're to protect them, when
9 they're sovereign submerged lands, we -- and
10 you've said that the central waterway is not
11 under dispute.
12 The pipeline -- I mean, it was my
13 understanding that we are specifically
14 prohibited for providing any type of -- of
15 pipeline for a public access or private -- for
16 water supply to islands that it didn't
17 previously exist.
18 So I don't see how we have any
19 jurisdiction. I mean, it reads prohibited.
20 MS. SHELLEY: Yes, sir.
21 SECRETARY HARRIS: I don't understand how
22 we can do that.
23 MS. SHELLEY: Your actual rule, and I think
24 it would be fair to say that the rule itself --
25 it's right here, says that no application to
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1 use sovereignty submerged lands, et cetera.
2 The staff and Lost Tree agreed that this
3 wasn't an application to use it, this is a
4 settlement of a lawsuit, and, therefore, that
5 that rule doesn't specifically apply.
6 SECRETARY HARRIS: But you just said that
7 the settlement wouldn't give us anything that
8 the lawsuit --
9 MS. SHELLEY: No, ma'am.
10 SECRETARY HARRIS: -- would or wouldn't
11 give.
12 MS. SHELLEY: I -- I've said one of the
13 arguments that you will hear is, don't do the
14 settlement, because you can either win or lose
15 the same thing in court.
16 We don't agree with that. We think there
17 are things in the settlement that the Trustees
18 get -- there is certainly something that under
19 the proposal that is in front of you, Lost Tree
20 would get, and that's the subaqueous line.
21 But there has been a lot of discussion
22 about that. As the Secretary said, as recently
23 as this morning. And including about the
24 subaqueous line.
25 At -- after you have heard all of the
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1 testimony about the various issues, and whether
2 that sets a bad precedent, and something, I --
3 I'd like to just take a few minutes to give you
4 our impression of --
5 GOVERNOR BUSH: Just to be specific --
6 MS. SHELLEY: -- where we may go. Yes.
7 GOVERNOR BUSH: -- because you didn't --
8 you didn't use -- if -- if we do continue in
9 the lawsuit, and we win, we lose certain
10 things. That's -- that's a --
11 MS. SHELLEY: Yes.
12 GOVERNOR BUSH: -- that have been
13 negotiated.
14 MS. SHELLEY: Yes. That's --
15 GOVERNOR BUSH: We lose the -- the sewer
16 connections -- or maybe not the sewer
17 connections -- the sewer line, excuse me --
18 MS. SHELLEY: The sewer line.
19 GOVERNOR BUSH: That -- someone from --
20 someone gave me wrong information here -- and
21 the -- and the restoration of McCuller's Point,
22 correct?
23 MS. SHELLEY: And the golf course is being
24 a restricted purpose on outer islands. You --
25 you have no way to restrict the development
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1 to --
2 GOVERNOR BUSH: Well --
3 MS. SHELLEY: -- golf courses purposes, if
4 you wanted to.
5 GOVERNOR BUSH: We had the other -- that's
6 the other side of the coin at DCA. That --
7 that's not in play here, I don't think. I --
8 MS. SHELLEY: That's right.
9 GOVERNOR BUSH: -- but -- but there are
10 things that we would lose. I mean, that's
11 clear. I don't see how there could be anything
12 to argue about that.
13 Now, there are things we'd win, too.
14 SECRETARY HARRIS: Well, I -- and also
15 I guess it would also --
16 TREASURER GALLAGHER: No development --
17 SECRETARY HARRIS: -- be --
18 TREASURER GALLAGHER: -- at all.
19 SECRETARY HARRIS: -- Lost Tree might be
20 required, under other circumstances, to
21 mitigate on McCuller's, even if -- even if we
22 lost. And -- and it seemed -- and the local
23 governments, I suppose, could always do the --
24 the septic tanks, sewer connections, too, if
25 it's a half million dollars.
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1 MS. SHELLEY: That's right.
2 And I think the only fair thing to say is
3 that there are no other current plans by anyone
4 else to do either of those things.
5 At this time, I would like to introduce
6 Mrs. Helen Stone, who is the owner of Lost Tree
7 Village, and who is the Chairman of the Board
8 of Directors.
9 And she would like to briefly address you
10 at this time.
11 MS. STONE: Good afternoon, Governor, and
12 members of the Cabinet.
13 I am Helen Stone, the owner and Chairman of
14 the Board of Lost Tree Village Corporation.
15 I appreciate this opportunity to be able to
16 address you concerning this proposed amendment
17 between Lost Tree and the Board of Trustees.
18 Lost Tree has owned the property which
19 the -- is the subject of disagreement and this
20 controversy since 1974. We have owned, and do
21 currently own, a number of other parcels in
22 this area as well.
23 My company's interest in this beautiful
24 area of Florida goes back many years. I
25 personally have resided in Indian River County
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1 for more than 25 years. I live in nearby
2 Johns Island, another project built by
3 Lost Tree, started by my father, and continued
4 by me.
5 I believe Johns Island has been developed
6 with an appreciation of this unique natural
7 area of the State, and with sensitivity to the
8 environmental resources which we all treasure.
9 As a resident, I care about the
10 environment, and the natural resources of the
11 place where I live. I have been an active
12 supporter of both stringent environmental
13 standards for the lagoon, as well as a sponsor
14 and ongoing supporter of some very important
15 environmental educational efforts that have
16 been undertaken for many years in our area.
17 I want to reassure you, Governor, and
18 members of the Cabinet, that Lost Tree will be
19 a good steward of this property and a good
20 neighbor to the adjacent residents of Town of
21 Indian River Shores and the City of Vero Beach.
22 We have a long history of building
23 successful environmentally sensitive
24 communities in this area, and this project will
25 be in keeping with that tradition.
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1 I thank you.
2 GOVERNOR BUSH: Thank you very much.
3 COMMISSIONER CRIST: Governor.
4 GOVERNOR BUSH: Yeah. Charlie.
5 COMMISSIONER CRIST: Ms. Stone, I wonder if
6 I could ask you a question whenever you get
7 your notes together.
8 What do they do, make you sign something?
9 TREASURER GALLAGHER: Name and address for
10 the record.
11 MS. STONE: Excuse me.
12 COMMISSIONER CRIST: Sure. Hi.
13 TREASURER GALLAGHER: Question.
14 COMMISSIONER CRIST: I just wanted to --
15 MS. STONE: Oh, I'm sorry.
16 COMMISSIONER CRIST: -- chat with you a
17 minute.
18 You say you live on -- you reside on
19 Johns Island?
20 MS. STONE: Yes, I do.
21 COMMISSIONER CRIST: How far is that from
22 the property we're talking about now?
23 MS. STONE: Maybe about 3 miles.
24 COMMISSIONER CRIST: And when was that
25 originally developed?
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1 MS. STONE: We started developing
2 Johns Island in 1969. And it is completed now.
3 And that is why we're in the process of this --
4 development of this property.
5 COMMISSIONER CRIST: Okay. Thank you.
6 SECRETARY HARRIS: I have a question.
7 So -- I didn't realize -- that wasn't in
8 the background information. Your company
9 developed Johns Island?
10 MS. STONE: Yes.
11 SECRETARY HARRIS: It's very, very
12 beautiful. It's a very nice job.
13 MS. STONE: Thank you.
14 COMMISSIONER CRIST: Yes, it is.
15 MS. STONE: Any other questions?
16 GOVERNOR BUSH: Thank you very much.
17 MR. SORENSEN: Yes.
18 Good afternoon, Governor Bush, esteemed
19 members of the Cabinet. My name is
20 Dale Sorensen. I reside at 4556 Pebble Bay
21 South in -- in Indian River Shores. It's also
22 lot 34 of Pebble Bay South.
23 And if you don't mind, I'll point it out to
24 you.
25 It happens to be this piece of property
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1 there, which is the westerly most lot of
2 Pebble Bay -- Pebble Bay South. And perhaps
3 has the -- would have the most impact as far as
4 development of the inner islands, or a concern.
5 Our lot is a very wide lot and faces out over
6 that entire area.
7 Needless to say, a number of years ago,
8 when the opportunity arose for the County of
9 Indian River to purchase these islands, we were
10 very much interested, and we were very, very
11 disappointed that that did not occur.
12 Subsequent to that, there was an agreement
13 between the City of Vero Beach and the town of
14 Indian River Shores, which was explained to
15 you, which would have allowed in excess of
16 140 lots, which was not very pleasing to us,
17 because it would have been a very, in our
18 opinion, high density.
19 Now, this settlement that has been worked
20 out has limited that to what we consider -- I
21 consider a -- a very reasonable number.
22 I look at this settlement as -- as a -- a
23 win-win situation. It's a win-win situation
24 because it resolves a situation involving
25 submerged land, which is a very crucial
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1 situation; it limits the amount of development
2 that can be done on these inner islands, and it
3 limits them severely so that the impact --
4 certainly the visual impact and the impact on
5 the surrounding neighborhood is -- is -- is
6 minimal.
7 And it's a win-win situation because we
8 have a developer that I have been acquainted
9 with since 1967 that has a proven track record,
10 that has perhaps created, if not the finest
11 development of its type in the state of
12 Florida, certainly one of the top three.
13 And what better situation can you have if
14 you have a piece of property, from my
15 standpoint, that is in the absolute immediate
16 vicinity with high impact?
17 I have lived in Indian River County and
18 Vero Beach for over 35 years. And for
19 virtually all of those 35 years, I've had the
20 opportunity, along with my children for part of
21 that time, to fish in the river.
22 I fish it continually. And it's gone from
23 varying stages, and right now it's quite
24 productive.
25 I will say to you, and I commend whatever
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1 department created this settlement of the
2 state, and I commend them for their efforts in
3 opening up McCuller's Point, because this is a
4 major impact, and will be a major impact in
5 the -- the fishing situation, the ecological
6 situation of that particular area.
7 And that particular area is basically up
8 here. And if you look closely at that map, you
9 will see that there's a very shallow flat area
10 all along McCuller's Point. Right now, that's
11 not a great area.
12 When I want to fish and -- and really catch
13 fish, I go up to John's Island. The opening of
14 McCuller's Point is going to be a very, very
15 important factor in the ability to fish this
16 area, and the productivity of it. So I do
17 commend those who -- who worked out this
18 agreement for that.
19 Thank you very much for your time.
20 GOVERNOR BUSH: Thank you very much for
21 coming up.
22 COMMISSIONER CRIST: What kind of fish do
23 you catch there?
24 MR. SORENSEN: Well, on -- on Saturday, I
25 caught a 10 pound redfish right off
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1 Johns Island. And then my son caught a 5-pound
2 trout off one of the docks at Johns Island. So
3 we had a good day.
4 GOVERNOR BUSH: We are -- we're -- we're
5 going to have 45 minutes of pro side -- are we
6 counting Linda's part of that?
7 David, that's --
8 MR. STRUHS: Yes.
9 GOVERNOR BUSH: Okay. So we're -- we're
10 halfway through it about. And then we'll have
11 45 minutes on the other side.
12 And we've got a new innovation here, which
13 is -- Jose has brought this with him. He
14 bought it at Radio Shack.
15 It is -- it's green right now, but it turns
16 red when people talk longer than --
17 MR. BOSCAN: The 45 minutes.
18 GOVERNOR BUSH: Oh, just 45 minutes? So
19 you're not breaking it up by 3 minutes?
20 TREASURER GALLAGHER: Sir, could I ask you
21 a question?
22 COMMISSIONER CRIST: Mr. Sorensen.
23 TREASURER GALLAGHER: Mr. Sorensen.
24 I have a -- could I ask you a question?
25 MR. SORENSEN: Sure.
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1 TREASURER GALLAGHER: Is -- there are a
2 number of homes and lots with homes on them
3 I think that are part of this survey that
4 includes the bottom that would --
5 MR. SORENSEN: Yes.
6 TREASURER GALLAGHER: -- all this -- is
7 your home one of those?
8 MR. SORENSEN: Yes.
9 TREASURER GALLAGHER: Now -- so what
10 happens -- how about filling me in on what
11 happens to you?
12 So now we all of a sudden agree with the
13 Court, say, this is the survey. That survey
14 was around before you got your home, I would
15 gather, 1930.
16 MR. SORENSEN: Right.
17 TREASURER GALLAGHER: You got a
18 title policy, what's going to happen? They --
19 they tell you they're going to buy your
20 property from you, or buy it back, or they
21 already own it, or they're going --
22 MR. SORENSEN: I --
23 TREASURER GALLAGHER: -- to let you rent?
24 What's going to happen?
25 MR. SORENSEN: -- I don't know the answer
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1 to that. But I would imagine that that's going
2 to be a very expensive process if we ever get
3 to that point.
4 But it's my understanding is that this
5 settlement resolves that. That goes away.
6 TREASURER GALLAGHER: So you keep your
7 property.
8 MR. SORENSEN: That's correct.
9 TREASURER GALLAGHER: Company doesn't have
10 to cover you.
11 MR. SORENSEN: Well, someone doesn't.
12 I mean, someone's obviously -- it's not my
13 mistake, so somebody's going to have to pay for
14 that mistake at some point in time.
15 TREASURER GALLAGHER: Well, if you have a
16 title policy, somebody's --
17 MR. SORENSEN: Well, maybe someone else.
18 I mean, somebody approved that subdivision
19 in -- in the state that it's in, it went
20 through the whole approval process. And
21 somebody signed off on it, some governmental
22 agency.
23 GOVERNOR BUSH: Linda, do you want to
24 comment on that?
25 MS. SHELLEY: I just want to reassure the
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1 Trustees on that point.
2 GOVERNOR BUSH: That's an important --
3 MS. SHELLEY: That is very important.
4 Lost Tree --
5 GOVERNOR BUSH: -- with respect to this --
6 MS. SHELLEY: -- has not ever, and will not
7 ever make any claim to title of any of the
8 upland property, and will record whatever deeds
9 of quitclaim or other legal instruments are
10 necessary to make sure that there is no cloud
11 on the titles of the adjacent property owners,
12 at our expense.
13 SECRETARY HARRIS: And I have one question
14 to clarify with you, Linda.
15 He said that it limits development.
16 I mean, isn't it the lawsuit -- prior to the
17 lawsuit, prior to this proposed settlement, it
18 still is 64 units; is that correct?
19 MS. SHELLEY: It's up to 64 units.
20 SECRETARY HARRIS: Up to 64 units. So
21 regardless of the settlement, or the lawsuit,
22 whatever, it's 64 units -- up to 64 units,
23 period?
24 MS. SHELLEY: That -- that land use
25 resolution has been only approved by the
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1 Department of Community Affairs. It has not
2 been approved by the local governments yet.
3 That is the proposal that is on the table.
4 SECRETARY HARRIS: But -- so, in other
5 words, I mean, it's not necessarily -- it's
6 limiting it?
7 I don't understand. Because I -- I mean,
8 it's my understanding, it's 64, and that -- it
9 still needs to be approved, but -- but
10 regardless, it's going to be up to 64.
11 MS. SHELLEY: No, ma'am. This agreement --
12 if this is approved, then that will allow
13 Lost Tree to go forward to resolve -- to try to
14 resolve the litigation that's going on in the
15 land use arena.
16 It's the local governments who have the
17 jurisdiction to say yes or no to the level of
18 development. We have agreed it will not exceed
19 64 units.
20 SECRETARY HARRIS: Okay. Better question.
21 The 64 -- up to 64 units --
22 MS. SHELLEY: Uh-hum. Yes, ma'am.
23 SECRETARY HARRIS: -- if we don't settle,
24 that's still where you are, up to 64 units; is
25 that correct?
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1 MS. SHELLEY: We don't have a settlement
2 with the Department of Community Affairs if we
3 don't have a settlement with the Trustees. Our
4 settlement with them is contingent on your
5 settlement.
6 So I guess we're nowhere is --
7 MR. JORDAN: Good afternoon, Governor, and
8 distinguished members of the Cabinet. My name
9 is Bill Jordan from Vero Beach, Florida, where
10 I've resided for most of my life, over
11 50 years.
12 My family's been there, we've owned
13 property there for many years. Bought my first
14 house there over 40 years ago.
15 I served on the Vero Beach City Council for
16 six years, one year as Vice Mayor, one year as
17 Mayor.
18 During that time, I was in favor of buying
19 the islands. I still would like to see that
20 done, but understand that's not a possibility
21 anymore.
22 We tried everything I know of to try to get
23 this land done, we tried to redo it, only to
24 have it go up to DCA, and things got bogged
25 down. So that might be the reason they're
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1 going to DCA first, and then coming back to the
2 City.
3 The City has passed it twice. Didn't work.
4 I think we've had enough litigation to last
5 us a lifetime over this property. I would like
6 to see this passed. I urge you to do so.
7 And I -- I -- more than that, I beg you to
8 do so. Because we're -- and I think I can
9 speak for many, many people -- have had enough.
10 We didn't ever want to see the islands
11 developed, but that seems to be as good a deal
12 as we're ever going to get is what's before you
13 now.
14 So again, I ask you to pass it.
15 Thank you.
16 TREASURER GALLAGHER: Can I ask a question?
17 MR. JORDAN: Yes.
18 TREASURER GALLAGHER: You say this -- the
19 City -- we're talking about the City of
20 Vero Beach --
21 MR. JORDAN: Yes.
22 TREASURER GALLAGHER: -- approved
23 development on these islands twice?
24 MR. JORDAN: We approved two different
25 things. I don't -- I have my motion that I
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1 made when I was on the Council.
2 We -- we voted to approve it, changing the
3 acreage from 5 units to the acre to one unit
4 per two acres, and hoped that that would
5 settle. We had an agreement on that.
6 After that, the City came back, and they
7 voted to approve a settlement to allow a
8 development of one unit per two acres, and a
9 golf course -- always with a golf course.
10 Now, this proposal that's before you would
11 be no units in the City of Vero Beach, and only
12 a golf course. And I think this is the best
13 situation for the City.
14 TREASURER GALLAGHER: Well now, let me --
15 is -- so you're telling me that the City of
16 Vero --
17 GOVERNOR BUSH: -- by the DCA.
18 TREASURER GALLAGHER: -- Beach, that
19 outside island that's going to be a golf course
20 is part of the City of Vero Beach?
21 MR. JORDAN: It's my understanding that
22 part of it is.
23 TREASURER GALLAGHER: Well, are -- you're
24 aware that the City of Vero Beach had a special
25 meeting last night, the night before last?
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1 Last week I guess it was.
2 MR. JORDAN: I did not attend the meeting,
3 no.
4 TREASURER GALLAGHER: Well, they had a
5 special meeting, and they met, and sent a
6 letter up here to whom it may concern.
7 Is there anybody here from Vero Beach?
8 MR. JORDAN: I think there's several people
9 here --
10 TREASURER GALLAGHER: I don't need to be
11 reading that letter.
12 MR. JORDAN: Okay.
13 TREASURER GALLAGHER: Sorry.
14 MR. JORDAN: There are a bunch of them. I
15 just wanted to show you that there are some
16 that are -- that represents the other side.
17 Thank you.
18 GOVERNOR BUSH: Good afternoon.
19 MR. BUNNELL: Good afternoon, Governor, and
20 Cabinet.
21 My name is George Bunnell, and I'm the --
22 retired from a bunch of things, one of which is
23 a 14-year stint as Councilman for the Town of
24 Indian River Shores, and another 12 years as a
25 Commissioner for Florida Inland Navigation
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1 District, FIND.
2 And in those roles, I've had a lot to do
3 with the Lost Tree Village organization. I'm
4 not here to pro or con their -- their proposal.
5 But I think it's important to you, as it
6 was to me, as a watchdog, to have a sense of
7 the credibility and the integrity of the people
8 in principle on either end of the issue.
9 And all -- in all the years that I dealt
10 with Lost Tree, and passed some, and turned
11 some down, but I -- never occurred to me to
12 be -- to -- to question the integrity or
13 credibility of that organization.
14 And now the quality of the work that they
15 do, and have done, brings credit to Mrs. Stone,
16 and to her company, and to our community. And
17 I think that it's important that you have a
18 sense of the kind of an operation you're
19 dealing with.
20 Thank you.
21 GOVERNOR BUSH: Thank you very much for
22 coming.
23 MR. STRUHS: Governor, and members of the
24 Cabinet, we're going to shift gears now, and
25 you'll hear from Assistant Attorney General
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1 Monica Reimer, of whom all know, and has been
2 serving as your counsel in the ongoing
3 litigation.
4 She'll give you a --
5 (Commissioner Crist exited the room.)
6 MR. STRUHS: -- status report on that.
7 Is she here?
8 GOVERNOR BUSH: She's here.
9 Getting dressed up.
10 MR. STRUHS: Oh, I see her.
11 GOVERNOR BUSH: Good afternoon.
12 MS. REIMER: Good afternoon.
13 Okay.
14 As Mr. Struhs explained, I'm Monica Reimer.
15 I'm Assistant Attorney General with the
16 Attorney General's Office. I have been under
17 contract with DEP to represent the Board of
18 Trustees in this litigation.
19 Where I'd like to start is just sort of a
20 brief history of how we got to litigation to
21 begin with.
22 It really sort of begins back in 1989 when
23 this Board passed a moratorium on applications
24 to use sovereignty submerged lands to build
25 bridges, to undergo the coastal barrier
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1 islands.
2 That moratorium was challenged by Lost Tree
3 in 1989, and it went up to the First DCA. The
4 moratorium was upheld.
5 The Board then passed the rule, which is in
6 your current rules, which is known as the
7 Coastal Barrier Island Rule, which prohibits
8 use of sovereignty submerged lands for the use
9 of building bridges or running utility lines to
10 undeveloped barrier islands.
11 The idea was this is your land, and you
12 simply did not want to have your land used to
13 promote development.
14 That rule was also challenged by Lost Tree
15 Village. They lost, and they --
16 (Commissioner Crist entered the room.)
17 MS. REIMER: -- lost in the First --
18 First District Court of Appeal. That was in
19 1997.
20 In 1998, Lost Tree applied to the Water
21 Management District for a permit to build the
22 bridge, which you have been hearing a lot
23 about. In their application, they asserted
24 that they owned the lands beneath where the
25 bridge would be crossing.
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1 The Water Management District sent a letter
2 to the Board of Trustees, and they said, is it
3 true that Lost Tree Village owns this property?
4 And the Trustees send back a letter that
5 said, no, it's not true, they don't. This is
6 sovereignty submerged lands, and they are,
7 you know, impermissibly claiming it as private
8 lands.
9 At that point, Lost Tree Village sued the
10 Board of Trustees, and claimed that they owned
11 this land.
12 I will, you know, not go through all the
13 historical sort of investigation we had to get
14 to to figure out what was really going on with
15 the deeds that Lost Tree got from its
16 predecessor in interest when it bought this
17 land back in 1975.
18 But the case is actually very simple, and
19 it involves two main issues. Lost Tree got a
20 deed -- well, actually Lost Tree's predecessor
21 in interest, a gentleman named Mr. Tuerk, got a
22 deed back in 19-- well, back in the 1950s, to
23 purchase sovereignty submerged lands.
24 Okay. He applied to purchase them. And if
25 you look in your agenda item at attachment --
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1 it's the first page of the attachment.
2 It's the map. It's easiest to do this by
3 looking at things.
4 GOVERNOR BUSH: Where'd you go?
5 Oh.
6 MS. REIMER: This is a problem.
7 GOVERNOR BUSH: Disappearing act.
8 Fell in a hole.
9 Stay up. Don't -- don't do that again.
10 TREASURER GALLAGHER: She got submerged.
11 GOVERNOR BUSH: Exactly.
12 MS. REIMER: Okay. It is additional
13 attachment 6, page 1.
14 These are examples of the tracts of land
15 that Mr. Tuerk purchased. Back in the 1950s,
16 y'all actually had permission from the
17 Legislature and -- and, you know, under the
18 State Constitution to sell sovereignty
19 submerged lands of this kind of character.
20 Okay. The issues in the lawsuit -- the
21 first issue was the deed on its face says
22 571 gross acres, only 365 net acres were
23 purchased.
24 And the question is, is does that deed
25 convey the gross acreage, which after some
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1 historical investigation looking at Trustees
2 records, we determined gross acreage is the
3 equivalent of submerged lands, and islands,
4 okay?
5 So gross acreage would be everything within
6 this sort of outside line around the tracts.
7 Net acreage is the islands, and only the
8 islands.
9 As it turns out, Lost Tree's predecessor in
10 interest applied to purchase, contracted to
11 purchase, and paid to purchase only the
12 islands. Okay.
13 So the question before the Court was, how
14 do you interpret this deed?
15 Does it convey the submerged lands as well
16 as the islands, or does it convey only the
17 islands? That was the first issue.
18 The second issue is the location of the
19 tracts.
20 And I'm going to disappear again.
21 GOVERNOR BUSH: It's so funny looking.
22 MS. REIMER: I'm going to give you warning
23 from now on.
24 GOVERNOR BUSH: Oh, thank you. I
25 appreciate that.
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1 MS. REIMER: I've got --
2 GOVERNOR BUSH: I'm watching carefully now.
3 TREASURER GALLAGHER: Charlie gets real
4 nervous when the -- testify and disappear.
5 COMMISSIONER CRIST: That's strange.
6 MS. REIMER: I have an exhibit because this
7 will short-circuit me having to explain
8 verbally what the location of the tracts issue
9 is. I think --
10 Diana -- there may -- you want to give one
11 to everybody.
12 This is a transparency that I made to fit
13 over page 1.
14 What is shown on page 1 underneath is
15 actually a reducement of a survey that was
16 provided to the Trustees by Lost Tree's
17 predecessor in interest in 1956. This is where
18 everybody believed these tracts to be located
19 at the time that the deed was issued.
20 As you will see, and if you'll note -- and
21 where the bridge is that we'll be crossing from
22 the main barrier island over to the first of
23 the inner islands, if you'll look at just the
24 1930 map, you will see that there is, in fact,
25 some submerged lands between that eastern tract
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1 line of tract 25 around the inner island, and
2 the main barrier island.
3 Okay? There is a -- you know, like a
4 channel of sovereignty submerged lands that
5 remained, that were not sold as part of the
6 deed according to the survey.
7 If you put the transparency over, you will
8 see that it has -- tract line has shifted over
9 to the east with the result that if Lost Tree
10 owns the submerged lands, there are now no
11 longer submerged lands.
12 Okay. They would not need to come to the
13 Trustees for a bridge if this survey is
14 correct.
15 The issue before the Court was, should it
16 be located according to the 1930 survey, or
17 should it be located according to this new
18 survey that was produced by Lost Tree in 1998.
19 Okay. The trial judge ruled that the deed
20 was clear and unambiguous as to both of these
21 issues, and he ruled that 571 gross acres, the
22 islands in the submerged lands, were conveyed.
23 He said if the deed wasn't clear -- and he
24 looked at all this other evidence, letters,
25 maps, whatever -- on the first issue, he still
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1 thought it conveyed 571 acres.
2 His rationale was, it says that the
3 Trustees can sell these lands, and I think it's
4 okay for the price to be zero.
5 I think that's incorrect. I don't think
6 the Trustees have ever had authority from the
7 Legislature to make gifts to individuals of
8 sovereignty submerged lands, and that's what my
9 argument is on appeal.
10 Okay. Simply, it's a straight statutory
11 interpretation argument.
12 On a second issue, he ruled that the tracts
13 should be as located by this new survey, which
14 moves the tract line over there on top of the
15 main barrier island.
16 However, he said --
17 COMMISSIONER CRIST: Question.
18 GOVERNOR BUSH: Yeah. Please.
19 MS. REIMER: Yes.
20 COMMISSIONER CRIST: So on that last point
21 you just made --
22 MS. REIMER: Uh-hum.
23 COMMISSIONER CRIST: -- you don't think the
24 Trustees have what? The authority to --
25 MS. REIMER: The --
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1 COMMISSIONER CRIST: -- do this --
2 MS. REIMER: -- question is is the way that
3 the judge interpreted the deed, the actual
4 statutory authorization provided by the
5 Trustees to sell State lands, which obviously
6 you have to have from the Legislature, is
7 actually incorporated by reference into the
8 deed.
9 And under that deed, and under those
10 provisions, the Trustees are given authority to
11 convey and sell at prices and terms as they see
12 fit.
13 COMMISSIONER CRIST: Is it fair to say that
14 you and the DEP differ on that issue?
15 MS. REIMER: No. DEP is my client. Y'all
16 are the Trustees. And you are my client.
17 There is no difference between --
18 COMMISSIONER CRIST: I'm sorry. Who --
19 MS. REIMER: -- DEP and --
20 COMMISSIONER CRIST: -- do you --
21 MS. REIMER: -- you.
22 COMMISSIONER CRIST: -- work for?
23 Who -- who do you work for?
24 TREASURER GALLAGHER: Assistant Attorney
25 General --
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1 MS. REIMER: I work for the Trustees of the
2 Internal Improvement Fund.
3 COMMISSIONER CRIST: Okay.
4 GOVERNOR BUSH: Jose, what are you doing
5 there, pal?
6 COMMISSIONER CRIST: Your light's going
7 off.
8 Okay. So you work for the
9 Attorney General?
10 MS. REIMER: I am employed by the
11 Attorney General's Office.
12 COMMISSIONER CRIST: Yes, ma'am.
13 MS. REIMER: My client is y'all. Each one
14 of you individually, and sitting as a Board. I
15 represented the Board of Trustees, I did not
16 represent my office.
17 I represented the Board of Trustees.
18 COMMISSIONER CRIST: Okay.
19 MS. REIMER: And there is no difference of
20 opinion between DEP and the Board of Trustees
21 in this litigation.
22 COMMISSIONER CRIST: Go ahead.
23 MS. REIMER: That has been the same
24 throughout.
25 COMMISSIONER CRIST: Okay.
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1 SECRETARY HARRIS: So you said in the first
2 case that there was an amount paid for the
3 uplands, the total amount that was for the
4 acreage for the uplands, and the amount paid,
5 if, indeed, it included the sovereignty
6 submerged lands --
7 MS. REIMER: Right.
8 SECRETARY HARRIS: -- was zero.
9 MS. REIMER: Right.
10 SECRETARY HARRIS: So -- okay.
11 MS. REIMER: And so the -- the issue is
12 very simply do the Trustees actually -- can you
13 interpret a Trustees deed, which on its face
14 says only 365 acres was purchased, as conveying
15 571 acres, which means that Tuerk would be
16 getting a gift of 206 acres. Straight
17 statutory interpretation argument.
18 Okay.
19 On the --
20 GOVERNOR BUSH: But the judge disagreed,
21 huh?
22 MS. REIMER: Judge disagreed. But it is an
23 issue of law, which means that, when it goes to
24 the Fourth District Court of Appeal, what the
25 lower district court ruled is basically --
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1 nor -- this is like in your Holmes case where
2 the -- the judge ruled against you on the
3 constitutionality of the voucher statute.
4 And the District Court can simply
5 completely ignore what the judge said. There's
6 no deference that's going to be given to the
7 judge on this legal ruling.
8 SECRETARY HARRIS: Can you explain --
9 COMMISSIONER CRIST: But they could not
10 ignore him, too, right?
11 MS. REIMER: Pardon?
12 COMMISSIONER CRIST: They could not ignore
13 him, too.
14 MS. REIMER: I'm sorry.
15 COMMISSIONER CRIST: They could not
16 ignore --
17 MS. REIMER: Oh, absolutely.
18 COMMISSIONER CRIST: -- him, too.
19 MS. REIMER: Absolutely.
20 COMMISSIONER CRIST: Okay.
21 MS. REIMER: I'm not going to sit here and
22 tell you that any court's going to rule one way
23 or another. I'm simply --
24 COMMISSIONER CRIST: But you just did.
25 MS. REIMER: -- giving you --
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1 No, I did not.
2 COMMISSIONER CRIST: Okay. Okay.
3 SECRETARY HARRIS: I have --
4 COMMISSIONER CRIST: I appreciate that
5 clarification.
6 MS. REIMER: Okay.
7 SECRETARY HARRIS: I have a question.
8 MS. REIMER: Uh-hum.
9 SECRETARY HARRIS: Can you explain -- I'm
10 not an attorney.
11 Can you explain the judge that ruled, why
12 he ruled alternative ruling? Can you explain
13 that, what that means?
14 MS. REIMER: It actually is a great
15 benefit.
16 SECRETARY HARRIS: I'm sorry?
17 MS. REIMER: What the judge did was he
18 looked at all the evidence that was -- that was
19 put forward by both Lost Tree and by the
20 Trustees.
21 He provided the alternative ruling so that
22 if he is reversed by the Fourth District Court,
23 they have his ruling to adopt. We will never
24 have to go back for another trial on this
25 issue.
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1 And the judge made the alternative rulings
2 for the specific purpose that, when the
3 Fourth District Court rules, it will be final,
4 there will be no remand, no having to try this
5 case again looking at all this other evidence.
6 It will be over.
7 He has --
8 SECRETARY HARRIS: Right --
9 MS. REIMER: -- in fact, done this before
10 in another case. His legal ruling was
11 reversed, and the Fourth District adopted his
12 alternative ruling. He has actually done this
13 before.
14 SECRETARY HARRIS: Why do -- I'm sorry --
15 I'm not an attorney.
16 Why do judges -- what's the purpose of an
17 alternative ruling?
18 MS. REIMER: It is judicial economy.
19 And also I think so that we did not have to
20 bear the cost of trying this case again if he
21 is determined to have been wrong, as a matter
22 of law by the Fourth District.
23 So the case has been tried, it won't be
24 tried again. Won't need to be --
25 ATTORNEY GENERAL BUTTERWORTH: Monica --
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1 MS. REIMER: -- tried again.
2 ATTORNEY GENERAL BUTTERWORTH: -- to
3 understand that, did the judge make any
4 reference as to why he did that? This is very
5 unusual for a judge to -- to do an alternative
6 ruling. There has to be a reason. He's
7 obviously trying to send a message to the
8 appellate court.
9 Did he say anything --
10 MS. REIMER: Well, what he said was,
11 number one, he didn't want to have to try this
12 case again. That was number one.
13 Number two, he didn't want to put us
14 through the expense of trying it again.
15 But also I believe that it is a flag for
16 the Fourth District Court. What he's saying
17 is, is, look, this is important, if I'm wrong
18 as a matter of law, there should be a
19 completely different decision that's reached,
20 and here it is, and I'm going to make all these
21 findings for you so that you can see what I've
22 determined.
23 ATTORNEY GENERAL BUTTERWORTH: Where does
24 that case stand now?
25 MS. REIMER: My initial brief has been
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1 filed. Lost Tree's answer brief is due in
2 about two weeks. And then my reply brief would
3 be due a couple weeks after that.
4 So it's --
5 ATTORNEY GENERAL BUTTERWORTH: Have you
6 requested oral argument in this case --
7 MS. REIMER: Yes, I have requested oral
8 argument.
9 ATTORNEY GENERAL BUTTERWORTH: Is there any
10 idea as to how long it would take before this
11 would actually be taken up by the Fourth --
12 the --
13 MS. REIMER: I --
14 ATTORNEY GENERAL BUTTERWORTH: -- if,
15 in fact, they give you oral argument?
16 MS. REIMER: I do not -- have not practiced
17 before the Fourth District before, but there
18 was an attorney who testified at the
19 Cabinet Aides meeting. He simply came up here
20 as a private individual.
21 And this issue got raised during the
22 Cabinet Aides meeting, and he apparently does
23 practice in front of the Fourth District a lot.
24 And he said that they rule very quickly,
25 and that we should expect a ruling before the
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1 end of the year, that the whole thing would be
2 over, you would have a final judgment.
3 SECRETARY HARRIS: I have another
4 question --
5 MS. REIMER: Uh-hum.
6 SECRETARY HARRIS: -- in -- sorry.
7 Just in terms of expense, if we were to
8 settle now, obviously there wouldn't be
9 additional attorney's fees, things like this.
10 What type of expense are we looking at as -- as
11 we prolong this?
12 MS. REIMER: Actually, I did see a
13 handout -- I don't know who it was provided for
14 by, but it did list the attorney's fees issue.
15 There are no attorney's fees in this case.
16 For there to be attorney's fees awarded, there
17 has to be, under Florida statute, some statute
18 or contractual provision that would provide for
19 attorney's fees to be awarded.
20 There are -- there is no such provision,
21 and Lost Tree did not ask or seek attorney's
22 fees. So you don't have to worry about an
23 attorney's fees hit in this case.
24 Lost Tree -- there are costs which are
25 generally awarded to a prevailing party.
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1 Lost Tree, the day before the Cabinet Aides
2 meeting, did file a motion to tax costs that
3 had a total of $88,000.
4 I have filed a motion to strike that motion
5 on three bases: The first one is it needs to
6 be verified, and it's not verified; the second
7 is the costs need to be itemized, they are not
8 itemized; and the third is that approximately
9 90 percent of the costs that they're claiming
10 are prohibited by statute or rule or the
11 guidelines.
12 I -- my best guess on the costs is probably
13 going to be somewhere in the neighborhood of --
14 of eight to ten thousand dollars.
15 And besides that, it would be my costs in
16 traveling down to the oral argument.
17 SECRETARY HARRIS: Can I -- can I ask you a
18 question about these concessions, because I --
19 I don't know, maybe you're the right person,
20 maybe Secretary Struhs is.
21 In terms of -- I guess when you're trying
22 to reach a settlement, you're both moving
23 towards the middle to come up with something
24 that you agree on, so there are concessions.
25 Is one of the issues -- one thing that's
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1 striking me when you're saying that these
2 sovereign submerged lands could be the
3 Trustees, then that would sort of negate the
4 idea about the 180 acres that they were giving
5 to us, if -- if, indeed, they already were the
6 Trustees.
7 MS. REIMER: I would -- and, first, I would
8 just like to point out that I believe the way
9 the -- the -- Lost Tree was characterizing
10 where we are in this lawsuit as far as who owns
11 what is really not quite legally accurate.
12 The State has been given the benefit by
13 statute of final judgments being stayed until
14 the appeals court rules, or if, you know, the
15 case is dismissed.
16 What that means is is that final judgment
17 is not in effect. Right now, those lands
18 continue to be under the Trustees' position in
19 this lawsuit. Y'all's position is that this is
20 sovereignty submerged lands, and they still
21 continue to be.
22 In fact, the Water Management District has
23 refused to continue to process their permits
24 because these are sovereignty submerged lands,
25 and that issue has to be resolved before
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1 they're continued.
2 Lost Tree filed a motion to abate that
3 stay, in other words, to get rid of that stay.
4 They also tried to get y'all to have to put up
5 a 12 million dollar bond in order to continue
6 having the stay in effect.
7 We had a hearing on that, and that motion
8 was defeated. So the stay is in effect, there
9 is no bond that's imposed upon you. So --
10 SECRETARY HARRIS: Last question.
11 Can we legally permit a water pipeline that
12 goes across an aquatic preserve? I thought
13 that on State-owned lands --
14 TREASURER GALLAGHER: It's not State-owned
15 land.
16 SECRETARY HARRIS: No. On the -- the
17 aquatic preserve is State-owned across the
18 major arterial.
19 It says that for the purpose of providing
20 private or public water supply to islands
21 which -- or such water supply did not
22 previously exist shall be prohibited.
23 I just don't know if we're being asked to
24 do something that legally we're prohibited from
25 doing.
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1 MS. REIMER: I, as your lawyer, do not want
2 to give you an answer on the record as to my
3 opinion about whether or not that is prohibited
4 activity.
5 I just don't think that's wise of me as
6 your attorney.
7 What I will tell you is that you will be
8 sued over the settlement agreement. If the
9 settlement agreement is adopted with that
10 pipeline in effect on the theory that that
11 pipeline -- your authorization of that pipeline
12 would be a violation of the Trustees' rules.
13 SECRETARY HARRIS: It says that there --
14 there are no exceptions. But I didn't know,
15 and I just want to make sure we're acting --
16 MS. REIMER: There is certainly an issue
17 there, and the -- the settlement agreement, I
18 have been told, by the attorneys that it will
19 be challenged in court on that basis. And
20 that's --
21 COMMISSIONER CRIST: They're threatening
22 us, aren't they?
23 MS. REIMER: Pardon?
24 GOVERNOR BUSH: Yeah. General.
25 COMPTROLLER MILLIGAN: Could I ask the
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1 Attorney General for some counsel?
2 MS. REIMER: Sure.
3 COMPTROLLER MILLIGAN: The -- there have
4 been a number of efforts over the recent years
5 to take over State-owned submerged lands, both
6 in the courts -- worked in the courts, and --
7 and clearly some efforts here in recent years
8 in the Legislature to really get after
9 State-owned submerged lands.
10 If we were to agree to this settlement,
11 what would that do to our standing in the other
12 discussions in reference to State-owned
13 submerged lands?
14 ATTORNEY GENERAL BUTTERWORTH: I'm not
15 sure. Obviously, it would be used against us
16 as an argument.
17 This case is a little bit different,
18 because I don't think there's any doubt --
19 there's no doubt about these being sovereignty
20 submerged lands.
21 I mean -- and the -- the upland owner
22 doesn't claim that they are, and the DEP
23 believes that they are. The whole thing -- the
24 whole thing comes down to the interpretation of
25 the deed.
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1 And the judge has ruled one way, and
2 sent -- it's being appealed now.
3 I think what we have to do, which if --
4 I think the internal thing, then would be to
5 undo the Court ruling, or basically to -- to
6 not appeal the issue. And if we as a Board do
7 not appeal the issue on State sovereignty
8 lands, I think that is what really can --
9 COMPTROLLER MILLIGAN: I guess that's what
10 I'm getting at.
11 If we were to go to the settlement, then we
12 really are not pursuing the appeal, and we
13 really are raising a red herring as far as
14 future --
15 GOVERNOR BUSH: How could it -- how
16 could -- how could this be -- if this is a
17 question of title, and the difference --
18 you know, the -- the strange thing that
19 occurred where the judge ruled that the more
20 recent definition of the survey I guess was the
21 legitimate one, how can this alter policy as it
22 relates to sovereign submerged lands?
23 I mean, I don't -- you can't have it both
24 ways.
25 ATTORNEY GENERAL BUTTERWORTH: No. I'm
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1 just saying, it could be used against us as an
2 argument. And if I was arguing this, I would
3 also. And when -- whether that weakens our
4 position or not I guess depends upon the way
5 the person feels that's -- that's listening to
6 the arguments.
7 But we -- even a judge -- from what I
8 understand from Monica, was that the judge said
9 that at that time, the Board of Trustees could
10 give away sovereignty submerged lands, which
11 is -- I guess what he said, that the person
12 paid for X number of acres, and ended up
13 getting a couple hundred free acres, if the
14 judge is correct.
15 Which I don't -- I don't know if he is or
16 not. I think the appeal is well-founded. I'd
17 be interested in how much time it was going to
18 take from -- the rest of the local people have
19 to say also.
20 I think -- I think their's is the -- they
21 seem to be offended by what's happening.
22 SECRETARY HARRIS: Well, one last question
23 of the Attorney General, Governor.
24 And that is: I'm -- I agree with the
25 Governor about why would this -- you know, that
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1 it wouldn't really affect -- perhaps it
2 wouldn't affect future, because this is an
3 issue about the lines.
4 But I am very concerned about our
5 responsibility as Trustees. We've been
6 elected -- given that public trust on this
7 issue of the pipeline. Because I keep reading
8 everywhere that it says it's prohibited.
9 Is that going to set a precedent if,
10 indeed, we -- we as Trustees do something that
11 says that it's --
12 ATTORNEY GENERAL BUTTERWORTH: Well --
13 SECRETARY HARRIS: -- specifically it's
14 prohibited.
15 ATTORNEY GENERAL BUTTERWORTH: -- if that's
16 a problem, what about the bridge? I mean,
17 I think -- I could be wrong. But isn't the
18 same policy as pertains to pipelines pertains
19 to bridges?
20 SECRETARY HARRIS: But at least the
21 pipeline, we own the land for certain, there's
22 no question. And the bridges, there's some
23 question as to who owns that land due to
24 this -- this lawsuit.
25 My concern -- my real concern is on that
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1 pipeline issue.
2 TREASURER GALLAGHER: Let me ask a question
3 here.
4 If -- I don't know who I'm asking, one of
5 the Attorney General's folks here.
6 If you're contending that the land was
7 given away free, which can't happen, and that's
8 true, and we do this settlement agreement -- or
9 if it's not true, let's say, either way, and we
10 do the settlement agreement, aren't we either
11 giving it away a second time, or confirming a
12 give-away the first time?
13 I mean, we're still giving it away.
14 MS. REIMER: Yeah.
15 TREASURER GALLAGHER: If it wasn't given
16 away the first time.
17 MS. REIMER: Yes.
18 TREASURER GALLAGHER: If it was given away
19 the first time, then we're confirming that it's
20 okay to give it away.
21 MS. REIMER: Yes.
22 TREASURER GALLAGHER: I'm just checking.
23 GOVERNOR BUSH: My guess is that the --
24 TREASURER GALLAGHER: I'm just checking.
25 GOVERNOR BUSH: -- the other side has a
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1 different opinion about whether it's being
2 given away.
3 I mean, that's -- that's the -- again,
4 that's what's being either settled or
5 litigated, one of the two. That's what we're
6 here for. I'm assuming that they have a
7 different opinion about --
8 MS. REIMER: Obviously.
9 GOVERNOR BUSH: Okay. Good. So, I mean --
10 MS. REIMER: There wouldn't be a lawsuit.
11 GOVERNOR BUSH: That's why we have judges
12 and lawyers and Boards of Trustees.
13 SECRETARY HARRIS: Well, did the -- did the
14 judge confirm that -- I really just want to
15 understand what happened there in -- in his
16 ruling.
17 Because if there's a set price for a set
18 amount of uplands --
19 MS. REIMER: Twenty-five acres --
20 excuse me. It was $25 per acre that he paid --
21 SECRETARY HARRIS: For the uplands.
22 Then what exactly did the judge say
23 occurred on the balance of the 200 acres that
24 were sovereign submerged land?
25 MS. REIMER: His view was that under the
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1 statute that says under such prices and terms
2 as they see fit, that apparently the price
3 could be zero.
4 SECRETARY HARRIS: So the judge is
5 confirming that the price could be zero, and we
6 as -- we can give away land to a single owner.
7 MS. REIMER: Because the deed on its
8 face -- you don't have to look at anything
9 else. The deed on its face states that for
10 payment purposes, there was only the 365 acres
11 that were included.
12 SECRETARY HARRIS: Okay. So that we don't
13 disagree -- we don't have a disagreement in
14 terms of free -- free land. It's just
15 whether -- whether they really -- whether it's
16 owned or not.
17 MS. REIMER: I -- one more time.
18 SECRETARY HARRIS: Never mind.
19 MS. REIMER: No. No. I real-- I'd like --
20 SECRETARY HARRIS: It wasn't --
21 MS. REIMER: -- to be able to -- to answer
22 the question.
23 SECRETARY HARRIS: That -- that, indeed, we
24 would -- we all agree with the judge -- I mean,
25 we don't necessarily -- there are two sides to
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1 this issue.
2 But everyone agrees that there was a set
3 amount of uplands that was purchased, and there
4 was another part of sovereign submerged lands.
5 The agreement is whether or not it's owned.
6 But it's an agreement that it was zero.
7 MS. REIMER: Right. Exactly.
8 SECRETARY HARRIS: Okay.
9 MS. REIMER: The question is is under this
10 deed, how should you interpret this deed?
11 SECRETARY HARRIS: Okay.
12 MS. REIMER: So that's the question.
13 GOVERNOR BUSH: What --
14 MS. REIMER: Yes.
15 GOVERNOR BUSH: Unless there's more
16 questions, we probably ought to get to the
17 folks from Indian River that -- that want to
18 speak, and --
19 Well, if you can stick around, we're going
20 to have lots of --
21 MS. REIMER: I have just a few more --
22 GOVERNOR BUSH: Oh, you do.
23 MS. REIMER: -- just -- like, three more
24 things here that I'd just like to state because
25 it is the interface of the case with the
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1 settlement agreement that I -- I do think that
2 I'm peculiarly situated to be able to explain.
3 Lost Tree Village will need to win both of
4 these issues in the lawsuit in order to get the
5 benefits that they are going to receive under
6 this proposed settlement agreement.
7 Okay? They have to win both of them. If
8 they loose one, they're not going to get the
9 benefits that are being provided here.
10 Okay? That's number one.
11 Second, Lost Tree cannot win in this
12 lawsuit the deed and the pipeline. Those lands
13 are not at issue in this lawsuit. There is no
14 dispute --
15 GOVERNOR BUSH: Right.
16 MS. REIMER: -- that those lands included
17 in that deed are sovereignty submerged lands.
18 There is also -- as they've explained,
19 there -- there is a -- a lot of related
20 litigation going on.
21 There's a 72 million dollar taking case
22 that's been filed against the City of
23 Vero Beach by Lost Tree over their comp plan,
24 and there is all of the -- the comp plan
25 legislation -- you know, excuse me -- the
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1 comp plan litigation as well, which has been
2 going on for about ten years?
3 Lost Tree did challenge both of those
4 comp plans.
5 Okay.
6 GOVERNOR BUSH: Thank you very much.
7 MR. STRUHS: The way we're going to
8 organize this as a matter of protocol is to
9 invite the elected officials first; and then
10 the residents from that part of the state; and
11 then, finally, the environmental groups.
12 So I'm going to just -- if it's -- if
13 it's -- meets with your approval is read
14 through the names, and people can start teeing
15 up and -- and move with some dispatch.
16 GOVERNOR BUSH: And we're -- and we're
17 limiting --
18 MR. STRUHS: Well, if we keep it to
19 45 minutes, there are about 19 people on the
20 list, which means that they have slightly less
21 than two-and-a-half minutes a piece.
22 GOVERNOR BUSH: Can we do that?
23 You can't speak for more than 2 minutes
24 to -- you're the nineteenth person, and --
25 I mean -- seems like it's been said already,
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1 huh?
2 Let's try to be brief. I mean, it's --
3 succinct is fine. We'll -- we'll see what
4 happens when we go along. But please be
5 respectful of the fact that we've got more to
6 do after this, so --
7 MR. STRUHS: We've got Senator -- is
8 Senator Pruitt here? Did he arrive?
9 Senator Pruitt had -- had expressed
10 interest, as -- as had Representative Mayfield
11 and Representative Posey. But I think they're
12 in committee meetings.
13 So we've got Chairman Carolyn Ginn,
14 Vice-Chair Ruth Stanbridge, Commissioner
15 Kenneth Macht, Mayor Sandra Bowden, Vice-Mayor
16 Tom White, Councilman Art Neuberger, Councilman
17 John Capry, and Councilman Craig Fletcher.
18 If we could keep it cued up, we can be more
19 efficient.
20 GOVERNOR BUSH: Let's go.
21 Here we go.
22 Good afternoon.
23 MS. STANBRIDGE: Good afternoon, Governor,
24 and members of the Cabinet.
25 My name is Ruth Stanbridge. I'm the
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1 Vice-Chairman of the Board of County
2 Commissioners.
3 This district where this town and this City
4 is, is in my district. We had talked to your
5 Cabinet affairs person about the time limit.
6 We would like to have a slot of time.
7 Some of us have more to say than others, if
8 that is permissible --
9 GOVERNOR BUSH: So you're saying that
10 you're not going to let Charles Lee speak,
11 since he's an environmentalist at the end?
12 MS. STANBRIDGE: We will leave plenty of
13 room for -- for Charles.
14 GOVERNOR BUSH: That's fine. I mean, as
15 you all stay within 45 minutes, I'm more than
16 happy.
17 MS. STANBRIDGE: Okay.
18 GOVERNOR BUSH: I've just got a sneaking
19 suspicion --
20 MS. STANBRIDGE: We do appreciate --
21 GOVERNOR BUSH: -- some of the people in
22 the end may not -- may not make it.
23 So --
24 MS. STANBRIDGE: We do appreciate that.
25 We've come a -- a good many miles over a couple
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1 of days, and over a couple of weeks. And we do
2 want to give you our comments.
3 We have a lot of folks in the audience, and
4 you do not have to worry about all of them
5 speaking, because I think they have been
6 sending faxes and letters, et cetera, to let
7 you know how we feel.
8 As I said, the legislative delegation,
9 Lieutenant -- Senator Posey was here earlier,
10 Ken Pruitt is in education, and I think
11 Stan Mayfield is also in a new committee
12 assignment.
13 But they send their greetings.
14 We'll try to be very brief. And I'm not
15 sure if all of you know where Indian River
16 County is. We're a small rural county. We're
17 midway down the east coast of Florida, and we
18 border 22 miles of the 155 miles Indian River
19 Lagoon.
20 We're known for our citrus, our famous
21 Indian River citrus. And one of our most
22 important industries is tourism.
23 We're a very conservative county, we have a
24 strong economy. And the reason we have a
25 strong economy is we depend on our natural
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1 resources, and the values of those resources.
2 And we have for decades.
3 When we were here last week, Lost Tree
4 seemed to think that Indian River County
5 Commission had no business in this matter.
6 But I beg to differ then, and I strongly
7 disagree now. We, as local
8 county commissioners, are responsible for the
9 health, safety, and welfare of all our
10 citizens.
11 And we, as elected local officials, are
12 entrusted with protecting the economical
13 well-being and the resources within our county,
14 just as the Trustees are entrusted to protect
15 the sovereign lands and waters for all the
16 people of the State.
17 We do have a dog in this fight. I want to
18 let you know that we have been a very
19 responsible county since 1925 when we were
20 established, we initiated our first comp plan
21 in 1980. We have had over 20 years -- using
22 that comp plan to successfully balance the
23 growing population of our county.
24 Our LDRs are always in compliance with DCA.
25 We respect public property rights and private
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1 property rights in that our citizens in 1990
2 passed a referendum to acquire environmentally
3 sensitive lands from private owners.
4 We do not condemn land. We buy lands. Our
5 guidelines are simple. We are what we want
6 willing sellers and appraised prices.
7 We have a manatee protection and boating
8 safety plan. I think Governor Bush is aware of
9 this. We have -- it's one of only five in the
10 state, and the only one in the Lagoon.
11 We have both County and City utility
12 departments, and both of them have master plans
13 to put our people on sewer and water.
14 In 1998, Indian River County began planning
15 for a master stormwater plan. And it's a good
16 size, and that's the first volume.
17 We initiated that because we need to comply
18 with the Clean Water Act, and so does so many
19 other smaller counties and cities in the state.
20 And this was a challenge that I personally
21 accepted, and have spent the last two years
22 working on it.
23 I've been rather obnoxious about that. And
24 some of my fellow commissioners have dubbed me
25 as the stormwater queen.
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1 So I'll take that, because the degrading
2 and the decline of the Indian River Lagoon is
3 no joke. It's a very serious matter for us,
4 and for all of Florida.
5 So you can be -- imagine our dismay when we
6 learned just three weeks ago about this
7 settlement offer that was being proposed at the
8 State level that would undo so many of the
9 goals and objectives that already are being
10 achieved by our local governments.
11 This offer would even challenge rules of
12 the State, rules that we thought were in place
13 that could not be broken, a settlement that,
14 if accepted, would go beyond our lagoon, and
15 set a precedent throughout Florida.
16 The offer before you has no real benefits
17 for the public. And Commissioner Ginn will
18 address that in her remarks.
19 I want to address the fact of the golf
20 courses on -- on the outer islands.
21 Golf courses are one of the most nutrient
22 latent land uses that can occur in Florida.
23 Upland courses are bad enough, but those along
24 the river can cause major impacts.
25 In the last two years, we have marshalled
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1 local money, over a million dollars in our
2 general revenue, State funding and Federal
3 dollars to reduce the pollutants and loading
4 going into the lagoon.
5 Our counties to the north of us and south
6 of us are doing the same.
7 It's ironic that just this last fall, the
8 Department of Environmental Protection was
9 giving -- given the responsibility from the
10 Federal government on the Clean Water Act.
11 So while we are working feverishly on
12 master plans to reduce and eliminate nutrient
13 loading of the lagoon, and help -- and we are
14 helped by the same agency that today is
15 proposing to put golf courses, and even
16 possibly a sewer plant on outer islands in the
17 midst of this estuary that is a national
18 treasure, and an estuary of international
19 significance.
20 There is something very wrong here, and --
21 and something that we feel that you can do
22 something about. We applaud Governor Bush, and
23 I think back in October when you told some of
24 the counties that we needed -- they needed to
25 take responsibility for how they governed their
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1 properties, and how they rezones their lands.
2 That is -- and I can quote you verbatim.
3 And I'm sure --
4 GOVERNOR BUSH: I --
5 MS. STANBRIDGE: -- you remember it, that
6 this is something we totally agree with. We
7 think that we have done a very good job in our
8 rezoning.
9 And we would like to -- to leave you with
10 the thought that the Fourth District Court of
11 Appeal is ready for this case. It's a -- it
12 has a case number, a State brief has been
13 filed, the docket call may be as soon as March,
14 and six months or eight months, this could be
15 over. If Lost Tree wins in court, it can't be
16 any worse than this settlement offer.
17 Recently of -- a good American, a great
18 American said that we are a nation of laws, and
19 we must follow the rule of law.
20 We do not need to compromise our legal
21 system, the integrity of the Trustees, or the
22 trust of the people.
23 And more importantly, we do not need to
24 compromise Florida's natural resources.
25 Therefore, we -- and there's a lot of folks out
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1 here from Indian River County -- respectfully
2 petition that this settlement offer be
3 rejected, and that this land dispute -- and
4 that's all it is -- move forward through the
5 courts.
6 Thank you.
7 Have any questions?
8 GOVERNOR BUSH: Any questions?
9 Thank you, Vice Chairman.
10 Who was that great American that made that
11 quote, by the way?
12 MS. STANBRIDGE: He's now our
13 Vice President of the United States.
14 GOVERNOR BUSH: General Butterworth and I
15 were debating whether it was George W. or
16 Al Gore, I couldn't tell which.
17 SECRETARY HARRIS: I think we know who it
18 is.
19 TREASURER GALLAGHER: She didn't say, count
20 the votes, count the votes, count the votes.
21 GOVERNOR BUSH: Oh, come on.
22 Yes, ma'am.
23 MS. GINN: Good afternoon. Your -- your
24 eyes are beginning to glaze over. My speech is
25 going. But anyway, we're going to muddle
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1 through this.
2 My name is Caroline Ginn. I am the
3 Chairman of the County -- Indian River County
4 Commission.
5 It was I who --
6 GOVERNOR BUSH: Welcome.
7 MS. GINN: -- called the special called
8 meeting last Tuesday, because we just got wind
9 of a settlement agreement that none of us knew
10 anything about prior to that.
11 And we wanted to make sure that there was
12 some room for some public debate.
13 I had the -- one of the gals here give you
14 a -- a hand out. And I just want to review
15 some of the things on the map up here.
16 Oh, where is my dot?
17 Isn't that always the way?
18 I swear. I've had a dot -- there it is --
19 ATTORNEY GENERAL BUTTERWORTH: Madam Chair,
20 when did you first find out about this did you
21 say?
22 MS. GINN: I found out about this the
23 Thursday before the -- the Tuesday that we
24 called the special -- actually Commissioner
25 Ruth Stanbridge put it on as an emergency item
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1 on the 23rd of January.
2 We knew nothing about it. Information was
3 very sketchy --
4 ATTORNEY GENERAL BUTTERWORTH: Okay. I
5 just wanted to know when you -- when you knew
6 about it.
7 TREASURER GALLAGHER: That was before I
8 found out about it.
9 MS. GINN: Okay. All right.
10 TREASURER GALLAGHER: I found out about it
11 Tuesday last week.
12 MS. GINN: Anyway, by unanimous vote, our
13 commissioners determined that we could shuffle
14 our -- our meeting so that we could be here
15 with you today. And three of us are here with
16 you.
17 Let me tell you about the character of our
18 community, if I might. We are known as the
19 crown jewel of the Treasure Coast. There's a
20 reason for that.
21 We are -- we were a community that has been
22 willing to step up to the plate and tax
23 ourselves to preserve environmentally sensitive
24 lands with a 26 million dollars bond issue
25 voted and approved at referendum, one of the
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1 first counties in Florida to do so.
2 We have an approved Manatee Protection
3 Plan --
4 If I am repetitive, please forgive it. But
5 we have to operate in the sunshine, so we can't
6 compare a lot of things.
7 GOVERNOR BUSH: That's fine.
8 MS. GINN: Sorry about that.
9 We are one of only three counties on the
10 coast and the only county in the Indian River
11 Lagoon to have that Manatee Protection Plan.
12 We're a very small county, 545 square
13 miles, 110,000 people. That may change,
14 of course. It will change.
15 But we've readily accepted the
16 environmental protection demands of the State
17 and Federal government.
18 We have diverted our effluent from the
19 river to an award winning wetlands. I went and
20 took and -- and received the award for that.
21 We have -- our parks and our recreation
22 areas are the envy of other counties around
23 this state.
24 Indian River County is a leader in this
25 state in protecting and preserving the natural
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1 beauty of our community.
2 That said now, I want to get to the maps.
3 This is an aerial map taken in November of
4 the year 2000. It is one year old.
5 You -- what you have before you are -- is
6 a -- a copy of a navigational map that you can
7 pick up at the Vero Marine Center.
8 Bruce McIntyre is happy to give you a copy,
9 and he was happy to give me a copy.
10 Let me just, if I might -- you know
11 I think -- but I've heard some remarks here
12 that I'm not sure some of you have a complete
13 understanding here.
14 Do we have the red dot?
15 MEMBER OF THE AUDIENCE: The red dot is
16 defunct.
17 MS. GINN: All right. These are the inner
18 islands; you know this, this is --
19 Oh, look, there's the dot.
20 -- these are the outer islands.
21 This is the Gifford Cut. This, Lost Tree
22 does not lay claim to this.
23 This very definitely is the bottom lands
24 here, sovereign owned lands.
25 That is critical I think to this argument.
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1 Over here is Silver Shores Road. This is
2 where there will be a bridge built over to the
3 innermost island.
4 From this spot to here is 200 feet. It's
5 not a skip, hop, and jump. It's considerable
6 land. It does not show it on your map.
7 If you live up here -- and we'll get to
8 this later -- you have a difficult time getting
9 out to the intercoastal. But I'll review that
10 in just a minute.
11 The conveyance of sovereign submerged lands
12 requires a finding by the Board of Trustees
13 that it is -- is in the public interest to do
14 so.
15 At the Aides meeting last week, I asked if
16 there were a definition of public benefit, or
17 public interest anywhere in the statutes.
18 Of course, there was no answer.
19 Is it in the public interest to convey
20 submerged lands to a developer so that the
21 developer can deliver potable and non-potable
22 water to a private golf course?
23 A 3-foot by 450-foot conveyance of
24 sovereign owned land, undisputed sovereign
25 owned land in the middle of the Indian River
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1 Lagoon.
2 Why is this a provision in this settlement?
3 And how will the public's -- how will the
4 public's interest be served here?
5 Words have meanings. And under the
6 definition found in this agreement of
7 golf course purposes, we're not just talking
8 about a golf course out there. We are talking
9 about a private golf course, a clubhouse,
10 tennis courts, swimming pool, restrooms, and
11 maintenance facilities.
12 If you approve this settlement, Lost Tree
13 will have potable water and non-potable water
14 delivered across bottom lands, which you will
15 convey to them.
16 But what of the sewage? How will that be
17 handled? Again, I ask: How will the public's
18 interest be served?
19 Is it in the public's interest for
20 Lost Tree to run sewer lines to 49 homes in the
21 Silver Shores area? You know where that is.
22 I can assure you, these are not substandard
23 homes. They may or may not have problems with
24 their septic tanks.
25 Is there a public interest here, or is this
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1 interest to the 49 homeowners?
2 I can assure you, the City of Vero Beach,
3 and the residents who live there, can easily
4 afford to do this project.
5 Is there a problem? Is there leachate into
6 the river? Have any tests been done?
7 This is a provision that is included for
8 purposes that we all know.
9 McCuller's Point up here --
10 GOVERNOR BUSH: I don't see that light
11 working real well.
12 MS. GINN: I know.
13 You know what, shouldn't we have good
14 equipment in this day and age?
15 You know, shouldn't you have screens that
16 go up and down, and all the gizmos.
17 SECRETARY HARRIS: We will.
18 MS. GINN: We have -- we have better -- we
19 have better things in our county chambers than
20 you have here.
21 SECRETARY HARRIS: That's true.
22 MS. GINN: And I had to bring this easel on
23 Delta. They had -- they didn't know hardly
24 what to do with it. It was frightening.
25 TREASURER GALLAGHER: We do have easels.
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1 MS. GINN: I know. But I didn't see one
2 before, and I thought, I'm not going to hold
3 that up again.
4 So -- but anyway, this is McCuller's Point.
5 Up here --
6 COMMISSIONER CRIST: That works well --
7 MS. GINN: -- if you look closely you
8 can --
9 There it is.
10 -- you can see the diking -- well,
11 you know, we have -- we have a mosquito control
12 district. They're doing that RIMming, which is
13 a rotational impoundment management, R-I-M.
14 And they're doing that up and down the
15 Indian River Lagoon. We don't need Lost Tree
16 to do that for us.
17 The -- McCuller's Point is jurisdictional
18 wetlands. With mitigations credits that they
19 can use, they can be banked, used elsewhere.
20 And under this agreement, all mitigation
21 credits will go to Lost Tree. Although they
22 will convey the uplands to us in fee simple.
23 But anything else that has to be conveyed
24 to us is by quitclaim deed, because their
25 interest in fact may be zero.
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1 Is it in the public interest to damage or
2 destroy endangered Johnson's sea grass? We
3 only have a little of it left --
4 And my pointer's not working.
5 There is some there.
6 Is it in the public interest to trap --
7 now, this was testimony before the
8 County Commission -- to trap 25 boats in the
9 Pebble Bay area --
10 Now, this is where your little maps'll come
11 in handy.
12 -- from access to the intercoastal
13 waterway, because of the proposed bridge height
14 at the end of Silver Shores Road?
15 Now, stay with me.
16 Ross Perot said that. Do you remember when
17 he was on Larry King? I'll never forget it.
18 GOVERNOR BUSH: Yeah. What a great guy.
19 SECRETARY HARRIS: Stay with me.
20 GOVERNOR BUSH: First you take a shot at
21 the Cabinet room, and then you're talking about
22 Ross Perot. You're -- you may want to bring
23 the other speakers up real quick.
24 MS. GINN: The gentleman who spoke lives
25 there.
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1 In order to get out to the intercoastal,
2 they must come down here, and go this way, and
3 swing around --
4 TREASURER GALLAGHER: Straight out.
5 MS. GINN: -- and then come out to the
6 intercoastal, which is out here.
7 This is the northernmost of the inner
8 islands.
9 And I was out in a boat with the
10 Coast Guard, and we did measure the depth.
11 Now, they will say, well, from the transom it's
12 3.5 feet. That means it's probably 5 feet.
13 Whatever it is, there is a -- a small channel
14 here.
15 It's not marked. If you'll look on your
16 paper, it says 2, 2, 2 up here. That's
17 McCuller's Cove. It's very shallow. Very
18 shallow.
19 There's no agreement here to mark this.
20 There's no agreement to perhaps make it deeper.
21 So if the boats trapped up here can get out to
22 the intercoastal, this is going to be blocked
23 to them now with that 9-foot bridge.
24 Is it in the public interest to promote
25 more docks in the narrow Gifford Cut right
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1 here?
2 That's where you own the submerged lands,
3 under that body of water.
4 That is only one of two skiing --
5 water skiing areas in the Indian River Lagoon.
6 The other is up in the Jungle Trail Narrows,
7 and that's only available from November 1st to
8 April 30th -- or, no. It's not available --
9 GOVERNOR BUSH: Is the developer asking for
10 a lease on that -- on the Gifford Cut, other
11 than the -- the 3 feet --
12 MS. GINN: No. He's asking for --
13 SECRETARY HARRIS: Twenty-five feet.
14 MS. GINN: -- fee simple ownership of those
15 bottom lands so that he can put the potable
16 water pipes under there. He's asking you to
17 convey that land --
18 GOVERNOR BUSH: You talk about -- about
19 dock space. What about that?
20 MS. GINN: The -- the buffer zone, are
21 you --
22 GOVERNOR BUSH: You said that there were
23 going to be docks.
24 MS. GINN: Well, there'll be docks that --
25 GOVERNOR BUSH: Gifford Cut?
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1 MS. GINN: Yes. This is Gifford Cut, and
2 there will be docks here. And incidentally,
3 this, I believe, parcel is owned by the
4 Vanbush family. This -- I don't know -- this
5 is in limbo I guess.
6 But the docks'll be protruding out here.
7 Okay? I'm sorry. They're -- they're
8 telling me to hurry.
9 Is it in the public interest to rush to a
10 settlement when briefs have already been filed
11 by the State in a quiet title suit?
12 What public interest can be served? And
13 why did the public have such a difficult time
14 obtaining information on this settlement?
15 And why were we elected officials kept in
16 the dark until the 11th hour? Officials
17 charged with keeping the public trust. And
18 keeping the public trust is not only our
19 charge, it is your charge.
20 This is not a property rights dispute, it
21 is a legal dispute over the ownership of bottom
22 lands and a boundary dispute.
23 It really does matter today a great deal
24 what you do here, not only for Indian River
25 County, but for the City of Vero Beach, and for
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1 the City of Indian River Shores, and for all of
2 Florida.
3 How -- will we allow our irreplaceable
4 resources to go the way of so much of the rest
5 of Florida, overdeveloped, overpaved,
6 overpolluted?
7 I'm not going to tell you our home is -- is
8 home to many of the environmental groups.
9 There have been in the Legislature, and
10 elsewhere, a broad movement to turn over
11 sovereign lands to developers. Do you really
12 want to start down this path?
13 Only the consistency of our courts has
14 prevented this. This agreement is wrong for
15 Indian River County, it's wrong for the City of
16 Vero Beach, it's -- and -- and Indian River
17 Shores, and it's wrong for the State of
18 Florida.
19 Please do not bypass the judicial process.
20 Thank you.
21 GOVERNOR BUSH: Thank you very much.
22 Now, we -- I'm just guessing. I haven't
23 seen the time clock, but we're --
24 MR. TORNILLO: Twenty-three minutes left.
25 GOVERNOR BUSH: Twenty-three minutes left.
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1 So --
2 MR. MACHT: How many minutes left?
3 GOVERNOR BUSH: -- my worst fear was --
4 although --
5 MR. STRUHS: Twenty-- twenty-two minutes.
6 GOVERNOR BUSH: -- the speakers were great.
7 COMMISSIONER CRIST: Twenty-two.
8 MR. STRUHS: Twenty-two remaining.
9 GOVERNOR BUSH: Yeah.
10 TREASURER GALLAGHER: So two speakers used
11 up half the time.
12 GOVERNOR BUSH: Yeah. That's just as a
13 expected. So --
14 MR. MACHT: Yes. Thank you, Governor and
15 Cabinet.
16 My name's Commissioner Ken Macht, and I'm
17 also the Chairman of the Land Acquisition
18 Committee.
19 And I think to make things brief, you can
20 summarize the last two presentations as being
21 against the settlement.
22 GOVERNOR BUSH: Thank you.
23 TREASURER GALLAGHER: That was --
24 MR. MACHT: I'll get -- and another thing,
25 the first speaker mentioned the fact that we
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1 were heavy in citrus.
2 And I'd like to ask Mr. Milligan in the
3 future, when he compares apples to apples, he
4 shifts that to oranges to oranges. That
5 would -- that would make us much happier in
6 South County -- or south Florida.
7 GOVERNOR BUSH: Grapefruit maybe, huh?
8 MR. MACHT: I'm the Chairman of the
9 LAC Committee, Land Acquisition -- I know you
10 hate abbreviations, as I do.
11 And just to give you a -- a brief
12 background on how the committee was set up and
13 what our charges were, the -- we approached the
14 voters and -- in '91 asking them to approve a
15 26 million dollar land acquisition bond issue.
16 (Commissioner Rhodes exited the room.)
17 MR. MACHT: And to do -- excuse me -- to do
18 so, we promised them several things, that we
19 would only deal with -- excuse me -- willing --
20 holy smoke -- what kind of atmosphere do we
21 have here?
22 GOVERNOR BUSH: Need some water?
23 MR. MACHT: Yeah. Thank you.
24 -- that we'd only deal with willing sellers
25 at a reasonable price, determined by
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1 appraisals.
2 We would not exceed the appraisal price
3 by -- by more than 10 percent, and then only
4 with a super majority.
5 And we have kept to that tenet. And I'd
6 like to bring you to the point where we
7 contracted with the State with the Florida
8 communities trust for a -- a share.
9 And it was a 60/40 share. And part of the
10 deal was that FCT would negotiate with
11 Lost Tree Village.
12 And that turned out to be 5.7 million
13 dollars was the average of two appraisals, and
14 later confirmed by a review appraiser. That
15 was the figure that we were bound to use. The
16 contribution of the State would have been about
17 what, 2.4 million dollars.
18 That figure was offered, it was rejected --
19 GOVERNOR BUSH: When was that offered,
20 I'm sorry?
21 MR. MACHT: When was it offered?
22 I'm a little bit unclear, but I think
23 probably around '95.
24 GOVERNOR BUSH: Okay.
25 MR. MACHT: '95.
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1 And it progressed from there.
2 The -- the offer was rejected, and we were
3 encouraged to negate those appraisals, and
4 appraise it at a different level, which,
5 you know, we couldn't substantiate. We -- the
6 appraisers were from the State. It was your
7 appraisers.
8 Later by a -- a process we really don't
9 need to get into, a commissioner made a motion
10 to offer them a considerably higher sum,
11 namely --
12 (Commissioner Rhodes entered the room.)
13 MR. MACHT: -- 10.5 million dollars.
14 And -- and then negotiations began, we got
15 a counteroffer from Lost Tree Village for
16 eleven nine, with some provision for reducing
17 it if certain things happened.
18 In their counteroffer, they included the
19 right to name the islands after members of the
20 Ecklestone family.
21 They insisted on a reverter that should we
22 ever use any of the lands we purchased for
23 anything other than what we purchased them for,
24 it would revert to them.
25 And thirdly, and what the Commission felt
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1 was most onerous, was the provision that we
2 declared that a condemnation so that they could
3 obtain certain income tax advantages.
4 It was -- and it was on that basis that our
5 Commission voted not to accept their
6 counteroffer.
7 And from that point on, there has really
8 been no substantial exchange of -- of views on
9 the -- on the value of the property.
10 And so in order to get on with LAC
11 responsibilities, we withdrew the offer, we
12 withdrew our cooperation with the FCT, and we
13 restored the money to the FCT.
14 Let me add to it, let the judicial
15 processes prevail.
16 That's all we ask.
17 This is not an environmental issue, it's a
18 property dispute.
19 Thank you.
20 GOVERNOR BUSH: Thank you very much.
21 Good afternoon.
22 MS. LARKIN: Good afternoon, Governor, and
23 the Cabinet.
24 Thank you. I will be brief.
25 I wanted to address two things. I'm an
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1 attorney. My name is Lynne Larkin. And I work
2 in Vero Beach.
3 And I've practiced in front of Judge Kenney
4 for some time now, and, therefore, I do also
5 practice in front of the Fourth DCA.
6 And I just wanted to make a point because
7 you all had brought it up. Sometimes
8 Judge Kenney, when he is conflicted about an
9 issue, shall we say, will put these alternative
10 findings in place.
11 He stated after this, which is not in the
12 record, he knew someone was going to appeal.
13 And so, therefore, he really set the stage for
14 an appeal, and he also put things in his
15 findings which say that -- basically he
16 disagrees with this finding, so, therefore,
17 he's making this finding. It's very confusing.
18 But in short to say -- yes, indeed. And
19 that's again why I end up in the Fourth DCA
20 many times. I get these rulings, too. And it
21 is very difficult.
22 And as Ms. Reimer very clearly put, these
23 are signals to the Fourth DCA. He's really
24 turning it over to them, because this is an
25 issue of law, and he's not finding fact.
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1 If he were -- you know, not to be too
2 legal, he's not finding fact, he's just saying,
3 this issue of law is this way, it could be
4 issued this way, and therefore, you, the Fourth
5 DCA, you decide.
6 So don't take too much to heart about what
7 the lower court has found in this case.
8 I know it sounds very confusing. I see
9 your looks.
10 But it's been done -- it's unusual, it gets
11 done, but it doesn't mean that our -- our case
12 is so weak.
13 Ms. Reimer does have a very strong case,
14 and I think Mr. Butterworth is aware of that.
15 And I would hate to see it discarded just
16 because Judge Kenney wanted to send one of
17 these unusual rulings forward.
18 And --
19 SECRETARY HARRIS: Was -- was there -- was
20 there any comments about why he found in terms
21 of the -- the price, that it was zero? I mean,
22 was there any -- did he make any comments about
23 that? That's just kind of --
24 MS. LARKIN: I didn't find --
25 SECRETARY HARRIS: -- kind of a sticking
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1 point for me.
2 MS. LARKIN: Right. I didn't find it in
3 the -- in the -- the finding. He never really
4 actually addressed that.
5 And that is why -- he says on its face the
6 deed is good. There's no ambiguity. And yet
7 there is. And it's very clear on its face that
8 it is ambiguous. And it needs to be resolved,
9 and he did not resolve it.
10 SECRETARY HARRIS: Okay.
11 MS. LARKIN: And then -- so -- and he said
12 in his -- his intent -- or the intent of the
13 parties was clear, that they didn't want that
14 to happen.
15 Well, that's what he needs to do, he needs
16 to find that intent to resolve ambiguity.
17 So we feel very strongly that we have a
18 very good case. It's never a sure thing,
19 of course. But that is something that's very
20 important.
21 And so when that -- when that kind of
22 thing -- ruling happens, he's really just
23 sending it to the Fourth DCA to make the
24 finding for him.
25 I would -- I promised to be short, and I
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1 will be. So if there's any other questions,
2 I'd be glad to entertain them. Otherwise I
3 want to make sure people have time.
4 GOVERNOR BUSH: Thank you.
5 MS. LARKIN: Thank you.
6 MS. BOWDEN: Good afternoon, Governor Bush,
7 Cabinet, friends.
8 I'm Sandra Bowden, Mayor of Vero Beach,
9 Florida. I'm happy to be here in Bowden
10 country.
11 We're Indian River grapefruit Bowdens, and
12 I'm sure you are aware that it's the finest
13 grapefruit in the world.
14 GOVERNOR BUSH: It is.
15 MS. BOWDEN: I would like to take this
16 opportunity to introduce my City Council that I
17 have brought in total: Vice-Mayor, Tom White;
18 Mr. Art Neuberger; Mr. Craig Fletcher,
19 Mr. Jack Capra.
20 GOVERNOR BUSH: Welcome.
21 MS. BOWDEN: On behalf of the citizens of
22 Vero Beach, I urge you not to intervene with
23 the controversy surrounding the proposed
24 development of Lost Tree Island.
25 It must proceed as scheduled to the Fourth
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1 District of Court of Appeals.
2 This is the only way for a legal, fair, and
3 impartial decision. We are strongly and
4 actively opposed to a last minute, out-of-court
5 deal that would give submerged sovereign State
6 land to private developers.
7 Please do not be a party of such a request.
8 And that would have permanent and disastrous
9 consequences for an already extremely fragile
10 Indian River environment.
11 The health of nearby mangrove swamps,
12 sea grass beds, salt marshes, and dependent
13 marine life would be permanently impaired to
14 the point of extinction.
15 The Indian River Lagoon is a Florida
16 treasure, a unique and sensitive resource that
17 needs to be preserved and protected.
18 The future of the Indian River Lagoon will
19 be what we make it.
20 Please reject this irresponsible proposal
21 that would benefit only the developers, and not
22 the people.
23 Thank you.
24 GOVERNOR BUSH: Mayor, can I ask you a
25 question?
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1 No?
2 MS. BOWDEN: With all due respect,
3 Governor Bush, I am under, with the City of
4 Vero Beach, a 72 million dollar lawsuit from
5 Lost Tree Village.
6 GOVERNOR BUSH: Well, how do you know what
7 I'm going to ask you?
8 I might want to know how the Dodgers are
9 doing.
10 MS. BOWDEN: They're doing --
11 GOVERNOR BUSH: Let me --
12 MS. BOWDEN: -- wonderfully --
13 GOVERNOR BUSH: -- let me -- I tell you,
14 let me ask the question --
15 MS. BOWDEN: -- and I am --
16 GOVERNOR BUSH: -- and then if you feel
17 like it jeopardizes you --
18 MS. BOWDEN: Okay.
19 GOVERNOR BUSH: -- because --
20 MS. BOWDEN: No, I do not have my attorney
21 with me today.
22 GOVERNOR BUSH: Okay. How about -- did the
23 City Council vote in favor of the DCA proposed
24 agreement?
25 MS. BOWDEN: Not this City Council.
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1 GOVERNOR BUSH: A previous one?
2 MS. BOWDEN: I believe under duress, they
3 did.
4 GOVERNOR BUSH: Was -- what -- in what year
5 was that?
6 MS. BOWDEN: I don't have that number right
7 now.
8 GOVERNOR BUSH: So it's -- as it relates to
9 the proposed settlement, Cari, the current --
10 y'all have a settlement in front of -- a
11 pendi-- what is it called, pending or proposed,
12 or --
13 MS. ROTH: Yes, sir. We have a proposed
14 settlement.
15 GOVERNOR BUSH: Do you want to -- want to
16 just state for the record who you are?
17 MS. ROTH: Yes. Cari Roth,
18 General Counsel, Department of
19 Community Affairs.
20 Before I started at the Department, there
21 was a settlement that the City of Vero Beach,
22 and the Town of Indian River Shores had agreed
23 to that allowed for development on both the
24 inner and outer islands for a total of, I
25 believe 145 units.
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1 GOVERNOR BUSH: So this -- this current
2 settlement has not had any -- it sounds like
3 it --
4 MS. ROTH: We have not had any response
5 from the City or the Town on the current
6 settlement offer.
7 GOVERNOR BUSH: Okay.
8 Thank you.
9 MR. WHITE: Good afternoon, Governor and
10 Cabinet.
11 My name is Tom White, I'm Vice-Mayor of the
12 City of Vero Beach.
13 Just to bring you up on the previous
14 councils, we've had a couple votes under a
15 threat of a 72 million dollar lawsuit.
16 We did have -- we had a bridge ordinance in
17 place, and, of course, a density that was a
18 little bit high -- you know, lower than what
19 Lost Tree wanted.
20 We did vote on a 3 to 2 vote a couple years
21 ago to give up our bridge head ordinance under
22 a 72 million dollar lawsuit threat.
23 And, of course, the lawsuit was still in
24 place -- came on so we're still under it.
25 And also I was told that if one of us
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1 appeared in front of you today, the lawsuit
2 would continue. That's been -- kind of been
3 put in limbo, and it will come out before we
4 get back to Vero Beach.
5 I did not come here today though to speak
6 ill of Lost Tree developers, but to ask you to
7 take into consideration of consequences.
8 Vero Beach is a very unique city. This is
9 nestled at the bottom of the Treasure Coast,
10 and on top of where the tropics begin in our
11 great state.
12 We, the City, are strong advocates of low
13 density and building heights restrictions which
14 has made our city so desirable.
15 We also have the no bridge head ordinance.
16 Lost Tree is no stranger to our community.
17 Where they now want to develop will put a large
18 impact on our infrastructure, not to mention,
19 bridging between islands and to Silver Shores
20 Road.
21 Hundreds of truckloads of dirt a day to
22 bring these beautiful -- you know, these
23 beautiful islands above the sea level to meet
24 the building requirement.
25 There is already construction equipment on
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1 one of the outer islands. We are here today to
2 request that you should wait until an appellate
3 ruling is rendered from the Fourth District
4 Court of Appeals, which is in the process at
5 this time.
6 Our ultimate wish would be for
7 Governor Bush and this Board to vote against
8 the proposed settlement agreement presented by
9 Lost Tree Village Corporation.
10 We believe this development will degrade
11 the ecological balance in our Indian River
12 Lagoon, and we can see no positive reason for
13 this development to be allowed.
14 An I'm -- and we're here because of the
15 public outcry because of the negotiations of
16 the islands were -- did fall through, the
17 public outcry has been unbelievable in our
18 county and city. And that's why the whole
19 City Council is here, with the part --
20 you know, most of the County Commission is to
21 plead with you to please let it go through the
22 process. And I appreciate your time.
23 GOVERNOR BUSH: Thank you very much.
24 MR. NEUBERGER: I'm Art Neuberger --
25 (Commissioner Crist exited the room.)
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1 MR. NEUBERGER: -- also a City Councilman
2 from Vero Beach. And it's my pleasure to be
3 here.
4 I've been a resident of Vero Beach for
5 about 45 years. I first served on the
6 City Council back in the early '70s, and I
7 currently am on.
8 I was the Mayor in 1974, and I'm again the
9 Mayor -- or I was last year, the Mayor of 1999.
10 So I think I know what my people are thinking
11 about.
12 And it's true, we did vote in favor of
13 settlement because we're under this 72 million
14 dollar lawsuit. And I was one of the ones that
15 voted for it.
16 I have changed my mind since then because
17 I've heard from my constituents, and I know
18 what they feel.
19 And since many of them won't get up later
20 on, how about all the Vero Beach people
21 standing up? Show them -- show them you're
22 here.
23 Come on. We've got more than that.
24 There's a bunch of them there.
25 So all these people would like to speak.
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1 So I'm trying to speak for them to tell you
2 that we do not want this settlement to go
3 through, we would like to see the Court resolve
4 it.
5 Thank you very much.
6 GOVERNOR BUSH: Thank you.
7 MR. FLETCHER: I'll be shorter than he
8 was -- in length of time at any rate.
9 Craig Fletcher. I'm an eighth generation
10 Floridian.
11 I --
12 GOVERNOR BUSH: Eight generation?
13 MR. FLETCHER: My father was Mayor at
14 Vero Beach. I'm now City Councilman there.
15 And it is all about representing the
16 people. The people of Indian River County,
17 Vero Beach, do not want this to happen.
18 You've seen -- you've seen and heard a lot
19 of nice dances here, and a couple of pirouettes
20 that were kind of interesting.
21 But basically what we're here about is what
22 the public wants. And that is not to do this
23 thing. This belongs in the courts. We would
24 really like to see you keep it in the courts,
25 and let the courts run their -- run their
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1 course.
2 Thank you very much.
3 GOVERNOR BUSH: Thank you.
4 MR. CAPRA: Good afternoon, Governor,
5 Cabinet.
6 My name is John Capra. I'm a City
7 Councilman from Vero Beach.
8 I don't really have much to add to that. I
9 just got up to say -- tell my kids that I
10 talked to the Governor and Cabinet.
11 Thank you very much.
12 MS. HOLMES: My name is Pat Holmes. I'm
13 honored to have the opportunity to speak to you
14 today as a citizen who will be adversely
15 impacted by the settlement.
16 I have a home at 713 Shore Drive on the
17 Indian River Lagoon in Silver Shores, a
18 subdivision of Vero Beach, Florida.
19 While I recognize and respect Lost Tree's
20 right to develop their property, I am here
21 today to encourage you to reject this
22 settlement.
23 The settlement agreement states one of the
24 so-called benefits received by the State is
25 that Lost Tree would run sewage lines for
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1 49 residents in Silver Shores. I am one of the
2 49 residents.
3 (Governor Bush exited the room.)
4 MS. HOLMES: In my experience, the septic
5 systems in Silver Shores are well-maintained.
6 Saturday I walked the entire Silver Shores
7 neighborhood, and asked each neighbor if they
8 support the proposed settlement with Lost Tree
9 Corporation.
10 One, of more than 60 persons interviewed,
11 only one was in favor.
12 Therefore, I can honestly say that my
13 neighbors do not support the State settlement
14 with Lost Tree Corporation.
15 The consensus is that they want the
16 Trustees of the Internal Improvement Trust Fund
17 to reject the proposed settlement and allow the
18 judicial process to proceed.
19 Whether reading the State's initial brief,
20 I recognized that several --
21 (Commissioner Crist entered the room.)
22 MS. HOLMES: -- barrier island homes will
23 have title problems because of the overlapping
24 land claims by Lost Tree. All these homes will
25 have to have quiet title actions filed.
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1 I have been advised, this may constitute an
2 unlawful taking without constitutional due
3 process.
4 I purchased the property at 713 Shore Drive
5 in July of 2000, and I'm one of the houses
6 which Judge Kenney's decision now on appeal
7 before the Fourth DCA says was overlapped by
8 Lost Tree's 1998 survey produced for the
9 purpose for supporting their litigation.
10 When I bought my property in July, there
11 was a full title search --
12 (Governor Bush entered the room.)
13 MS. HOLMES: -- and survey done. I have a
14 title insurance policy in force. If there was
15 any valid -- validity at all to their claim
16 made in the Circuit Court, this title search
17 would have discovered it, and it didn't.
18 From my view, we will be no worse off with
19 an adverse court ruling than with this
20 settlement agreement.
21 Thank you.
22 (Comptroller Milligan exited the room.)
23 GOVERNOR BUSH: Thank you, ma'am.
24 MR. McCLURE: Governor Bush, members of the
25 Cabinet, my name is B.J. McClure.
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1 I appreciate the opportunity to address
2 this distinguished group this morning.
3 I'm a retired Florida trial lawyer,
4 long-time resident of Indian River County, and
5 a citizen very much concerned about the
6 negative impact of the proposed settlement on
7 the residents of Indian River County.
8 This morning, Secretary Struhs told you you
9 had two options. I disagree with him.
10 There's a third option. The third option
11 is to reject this settlement this morning, and
12 send the parties back to the negotiating table.
13 There's nothing prejudicial about your
14 decision here this morning. There's nothing
15 that prevents another settlement.
16 There is nothing, in my experience, that is
17 more conducive to settlement than to have a
18 court ruling, or a verdict imminent.
19 There are several reasons why I believe
20 this settlement should be rejected, but I will
21 shorten my talk just a little bit and tell you
22 that, first of all, I think that you have an
23 excellent chance on appeal.
24 (Comptroller Milligan entered the room.)
25 MR. McCLURE: The most basic -- the most
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1 fundamental issue in the trial court was to
2 determine the intent of the parties, as
3 expressed in the deed of 1950 and 1956 from the
4 Trustees to Mr. Tuerk.
5 One quotation from the trial judge during
6 his verbal rendition of his findings
7 exemplifies why I believe the Trustees will
8 prevail in the Fourth District Court of Appeal.
9 After ruling that Lost Tree had acquired
10 571 acres, instead of 365 that were paid for by
11 Tuerk, Judge Kenney stated, and I quote:
12 Quite frankly, I disagree with this result
13 because I don't believe that is really what the
14 parties intended, close quotes.
15 The evidence is clear that Mr. Tuerk
16 applied to purchase 365 acres, the Trustees
17 published notice of their intent to sell
18 365 acres, as mandated by statute.
19 The Trustees contracted with Mr. Tuerk for
20 the sale of 365 acres, and Tuerk ultimately
21 purchased 365 acres at $25 per acre.
22 For the final judgment to pass muster, one
23 must conclude the Trustees gratuitously
24 conveyed 206 acres without legal consideration
25 in 1950 in clear violation of Florida law.
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1 While the law at the time clearly gave the
2 Trustees authority to sell such lands, it just
3 as clearly did not convey authority to give
4 them away.
5 The proposed settlement is not a global
6 settlement. This agreement does not resolve
7 all pending cases, nor does it preclude future
8 litigation with other departments of State.
9 It does not extinguish all claims against
10 the State and its various agencies, the City of
11 Vero Beach, Town of Indian River Shores, and
12 the property owners like Ms. Holmes, who have
13 been impacted by this overlap.
14 It does not extinguish all claims arising
15 out of actions taken with respect to the
16 Lost Tree's properties. No settlement should
17 be contemplated, unless it is global and
18 extinguishes all claims.
19 Please do not buy another lawsuit.
20 Finally, this settlement would cloud the
21 title to several residential parcels on the
22 barrier island. You've heard this morning a
23 verbal representation that they would clear
24 those titles by a quitclaim deed.
25 Let me assure you that unless it is in
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1 writing, and -- and signed by the parties to be
2 charged, it has no validity. It is not part of
3 this settlement agreement, it is not in
4 writing, and it cannot be enforced.
5 Yes, sir.
6 TREASURER GALLAGHER: A question.
7 Somehow or another, I am under the
8 impression that there was testimony of a
9 previous member of the Board of Trustees that
10 testified that it was their intent to turn that
11 over.
12 Is that -- do you know anything about that?
13 MR. McCLURE: Intent to turn over --
14 TREASURER GALLAGHER: Was -- as a member of
15 the Board of Trustees at that time, that it was
16 his belief that it was the intent that all --
17 MR. McCLURE: I -- I cannot respond to
18 that, I have not read the entire trial
19 transcript. I only know that the judge's
20 ruling was that he did not believe it was the
21 intent to convey 571 acres, and -- and he also
22 indicated that it was not his understanding
23 that they intended to have the property overlap
24 the barrier island.
25 SECRETARY HARRIS: Well, why did he rule
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1 that way?
2 TREASURER GALLAGHER: I may be misinformed,
3 but I had heard that.
4 MR. McCLURE: In fact, he -- after the
5 judge ruled that this survey, which was created
6 solely for the purposes of litigation, he ruled
7 that it was the correctly operative survey,
8 even though it flies in the face of 70 years of
9 reliance on the 1930 survey, and almost as many
10 years of common law.
11 The Lost Tree survey shifts the boundary of
12 several parcels conveyed to them by substantial
13 distance overlapping the barrier island.
14 Even in regard to this survey, the judge
15 apparently disagreed with his own ruling when
16 he stated on the record, and I quote, it's
17 clear to me, clear and convincing, from 1930
18 what was going on here, and always clear in my
19 view from the totality of everything, that the
20 property that was being conveyed here was to be
21 unattached from the main barrier island,
22 close quotes.
23 It can't overlap and be unattached.
24 While local government has proven its
25 willingness to consider alternatives to
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1 litigation, they have little to lose by
2 permitting the judicial process to run its
3 course.
4 It was Lost Tree, not the State, that chose
5 the Court as its battleground. The future of
6 the Indian River Lagoon is all our
7 responsibility. If we're not part of the
8 solution, we're part of the problem.
9 At least in the Court of law, we have a
10 level playing field, a fighting chance. With
11 this settlement, we have none.
12 We accept the possibility of losing these
13 lands in court. We do not accept a giveaway.
14 There has been much ado about Lost Tree's
15 property rights. Acceptance of this
16 settlement, compromises, rather than protects,
17 the property rights of those who live along the
18 Indian River.
19 Please don't do it.
20 Thank you.
21 GOVERNOR BUSH: Thank you very much.
22 We've got about 8 minutes.
23 MR. NASON: Good afternoon, Governor,
24 members of the Cabinet.
25 I need a point of order. Governor, I
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1 brought petitions, and I would like them
2 entered into the record. Can I just --
3 GOVERNOR BUSH: Absolutely.
4 MR. NASON: Leave them here with you?
5 GOVERNOR BUSH: David'll take them.
6 Right behind you.
7 Secretary Struhs.
8 MR. STRUHS: Thank you.
9 MR. NASON: I just want to stay, we always
10 want to beware of the natives bearing gifts.
11 There's the only reason we are getting all
12 these concessions, and that means that
13 undoubtedly, the court case and the appeal is
14 not going correctly.
15 (Governor Bush exited the room.)
16 MR. NASON: You all are the Trustees of the
17 land, you are Trustees for us who are the
18 citizens of the state of Florida.
19 I think you should take and wait until the
20 full appellate procedures have been completed
21 before you act on this. It should be tabled,
22 or you can cancel it, it doesn't make any
23 difference.
24 The Indian River right now is a dying
25 lagoon. They are coming up, and they --
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1 they're going to put homes on that that are
2 going to be point sources of pollution.
3 Yes, they're going to have retainage ponds,
4 their 1 inch of water.
5 We get 3 to 4 inches in an hour in real
6 cloud burst in the Vero Beach. So it's going
7 to run off. We're at the middle of between two
8 inlets. There's not much flushing action.
9 Therefore, the contamination is going to stay
10 there.
11 Either we have -- you can either be the
12 savior or the executioner. We have about
13 800 islands that are so situated within the
14 lagoon.
15 If we give permission to build on these at
16 this -- at this stage, we -- we will render the
17 wrath of killing the lagoon as it is.
18 If you were to vote for it, the wake would
19 be all the trucks that Tom White, the
20 Councilman said, and that took something like
21 75,000 trucks of dirt to fill in Gem Island at
22 the end of John's Island.
23 It's so washboarded in --
24 (Governor Bush entered the room.)
25 MR. NASON: -- the A1A, it had to be
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1 repaved. We paid for that, folks.
2 So be a hero, be a savior, vote against it.
3 Thank you.
4 MR. TRIPSON: My name is Jens Tripson. I'm
5 from Indian River -- Indian River County. My
6 grandfather came to Indian River County in
7 1912. Currently I'm President of the
8 Pelican Island Audubon Society.
9 We brought a bus full of people up here,
10 and I would like to recognize some of the
11 organizations, and then I will defer any time I
12 might have left to Charles Lee.
13 GOVERNOR BUSH: Oh, my gosh.
14 TREASURER GALLAGHER: He's going to get
15 time?
16 MR. TRIPSON: Pelican Island Audubon
17 Society, Pelican Island Preservation Society,
18 Friends of the St. Sebastian River, the Indian
19 River County Taxpayers Association, the
20 Indian River County Civic Association, the
21 Democratic Executive Committee of Indian River
22 County, the Fish and Widelife Service Volunteer
23 Program, Town of Indian River Shores, the City
24 of Vero Beach, and the County of Indian River,
25 Florida, plus -- you know, we have a lot of
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1 people who are very concerned about this not
2 going to the appellate process.
3 Please let it go to the appellate process.
4 GOVERNOR BUSH: Appreciate you coming up.
5 MR. TRIPSON: Charles got any time I may
6 have had left.
7 MR. LEE: Governor, members of the Board of
8 Trustees, Charles Lee representing Audubon of
9 Florida.
10 I really want to turn you very quickly back
11 to those words that the young lady from
12 Indian River County read.
13 What the judge said when he had this case
14 in front of him in his chambers when he was
15 ruling, he said that being said, after he ruled
16 the way he did, I'm going to rule in the
17 alternative if I did consider the parole
18 evidence, because quite frankly, I disagree
19 with this resolve, because I don't believe that
20 it is really what the parties intended.
21 That's why the judge's ruling was exactly
22 the way it was, and I would submit to you that
23 is why the Fourth District Court of Appeal
24 ultimately had ought to rule on this issue.
25 Now, there's another matter that I'd like
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1 for you to take a look at.
2 I've passed up some pictures that we took
3 on the 28th of January around these islands.
4 The birds that you see are the shoreline
5 of -- of the inner island.
6 The picture of the pelican is the exact
7 location where the bridge would cross from --
8 from Silver Shores to the inner islands.
9 The third picture is a pelican roost, one
10 of about 20, that exists on the shoreline of
11 the inner islands. The fourth picture is an
12 osprey roost. There are osprey nests, osprey
13 roosts all over these islands.
14 Look -- anybody who says that because these
15 islands have exotic plants on them, they are
16 not valuable to the aquatic preserve, frankly,
17 does not know what they're talking about.
18 These are very rich islands, they have wildlife
19 all over them, they're heavily used by birds.
20 And it's very important that you recognize
21 that.
22 The final picture is a boat in one of the
23 finger canals that cannot possibly get under
24 the bridges that Lost Tree Village is proposing
25 to build.
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1 This set of pictures shows the location of
2 the Johnson sea grass endangered in the bay
3 between McCuller's Point and the northern edge
4 of the -- of the inner islands.
5 If the boats are diverted across that area
6 by these low bridges, that sea grass is a
7 goner.
8 Governor and members of the Cabinet, the
9 final technical thing I'll ask you to look at
10 is this document, which I'd like to be passed
11 to you.
12 Could -- could I get someone to take this
13 up?
14 What you're looking at is a piece of
15 Lost Tree Village's application to the
16 St. Johns River Water Management District.
17 The red line is the location of their 1998
18 survey, upon which they relied in front of
19 Judge Kenney.
20 If you look, you will see this red line
21 crosses on to 19 homes located on the
22 Orchid Aisle area. Now, those of you that are
23 lawyers, and those of you that have heard legal
24 testimony, I ask you to think about the
25 following matter with regard to Lost Tree's
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1 claim.
2 Do you see the house with an X on it right
3 here where it says, City of Vero Beach, where
4 the word City begins.
5 That house is the house that
6 Mrs. Pat Holmes, who spoke to you earlier,
7 owns.
8 She bought that in July of the year 2000.
9 There was a title search done on that
10 house. There was a title policy issued.
11 All of the matters that would have been in
12 front of Judge Kenney are matters that would
13 have been in front of those title researchers,
14 and the writer of that title policy.
15 Did they find valid the claim that
16 Lost Tree makes when they wrote that title
17 policy? I suggest to you that their title
18 research found no such claim.
19 And I would suggest to you that the dozens
20 of transactions that have taken place over the
21 years on the houses that have existed there for
22 30 or more years have had dozens of title
23 policies, and dozens of effort to research that
24 done over time.
25 None of them have ever found the claim that
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1 Lost Tree first started making -- think about
2 this -- first started making of ownership to
3 this land after it had lost -- after it had
4 lost its rule challenges. For the first time
5 it occurs to them, that they should start
6 claiming that they owned that land, rather than
7 the Trustees.
8 And I would suggest to you that that late
9 coming claim on their part is no more valid
10 than the title insurance companies and the
11 title researchers have found it to be valid
12 over the 30 or more years they've been writing
13 policies on all of these houses.
14 Governor and Cabinet, this is a big issue.
15 If you issue this settlement the way it is
16 requested, not only will you do damage to the
17 Indian River Aquatic Preserve, you will put at
18 risk 800 islands, unbridged around the State of
19 Florida that are similarly situated; that you
20 will set a precedent, the precedent springs,
21 among other things, from your proposed pipeline
22 between the inner islands and the other islands
23 across undisputed sovereign lands.
24 If you set that precedent, you will end up
25 with a situation where you put those islands at
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1 risk.
2 This map behind you --
3 GOVERNOR BUSH: Charles.
4 MR. LEE: -- those inner islands, what
5 you're -- what is proposed by this settlement
6 is the following conversion: Convert this to
7 this.
8 Governor, and members of the Board, that
9 has not happened in estuaries in Florida. That
10 has not happened in Florida's aquatic preserves
11 for the last 25 or 30 years.
12 Please follow the recommendations of the
13 local officials that have been in front of you.
14 We think those local officials are managing
15 their affairs pretty good.
16 Please vote no on this very bad settlement.
17 Thank you.
18 GOVERNOR BUSH: General.
19 ATTORNEY GENERAL BUTTERWORTH: I just have
20 one -- one very question -- one very short
21 question, Mr. Lee.
22 By the way you refer to this -- to this new
23 found survey that no one seemed to knew (sic)
24 existed, even when this -- when this lady
25 purchased a home a couple months ago, would you
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1 consider it to be something like a Perry Mason
2 type of ending?
3 MR. LEE: Well, I would consider it to be a
4 recent invention. And -- and I -- and I think
5 that the Fourth District Court of Appeal ought
6 to be able to sort out that recent invention,
7 and compare it with all the title history fact.
8 GOVERNOR BUSH: Thank you, Charles.
9 You took 5 minutes, instead of the proposed
10 2, of course, but --
11 ATTORNEY GENERAL BUTTERWORTH: We got --
12 GOVERNOR BUSH: -- we have five people --
13 MR. STRUHS: Yes. Governor, time has
14 officially expired, but we have one, two,
15 three, four, five individuals, three from
16 environmental groups, and two residents --
17 GOVERNOR BUSH: Sure. Come on. Let's --
18 MR. STRUHS: -- from Indian --
19 GOVERNOR BUSH: -- do it.
20 MR. STRUHS: -- River Shores.
21 GOVERNOR BUSH: But, please, it's almost
22 all been said, I'm sure.
23 MR. EGAN: My name is Jim Egan. I'm the
24 Executive Director of the Marine Resources
25 Council.
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1 I have some new information that I just
2 wanted to bring up. There was a scientific
3 study that was done on the evaluation of the
4 environmental impacts of spoil-out on
5 development on the Indian River Lagoon.
6 It's basically looked at as spoil-out
7 development that occurred in Brevard County.
8 This development was -- was monitored
9 before, during, and after the development, as
10 well as neighboring spoil islands that weren't
11 developed.
12 The results of the scientific study showed
13 that within just a -- a short time within a
14 year or two of the development, even though the
15 development was doing everything it could to
16 protect the mangrove fringe, did have
17 stormwater facilities to capture run-off, they
18 still saw a 37 percent loss of sea grasses at
19 the initial stage shortly after the
20 development.
21 And since that time, since that development
22 happened over a decade ago, since that time,
23 we've lost more than a third more.
24 So we have -- actually have less than
25 one third of the sea grasses that were once
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1 adjacent to the spoil island that was developed
2 the -- primarily due to effects of turbidity
3 and nutrients that were coming into the
4 systems.
5 Our best stormwater systems are not able to
6 capture 100 percent. And as result, the
7 sea grasses, which are very, very sensitive,
8 were still lost, even with the kind of
9 precautions that we're able to do.
10 GOVERNOR BUSH: Thank you, sir.
11 MR. WIELER: Governor Bush, ladies and
12 gentlemen, my name is Eric "Rip" Wieler, and I
13 am a resident of Indian River Shores, which has
14 not been heard from yet.
15 I am also a resident of John's Island. I
16 don't know why our Mayor isn't here today, or
17 any member of our town council.
18 So I felt that it was important that I as a
19 citizen come up and speak at least in my own
20 behalf.
21 Our Mayor one week ago at the special
22 called meeting of County Commission went on
23 public record as stating that no one in
24 Indian River Shores wants these islands
25 developed.
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1 I think that was a bit of a stretch. We
2 have heard already from some folks here that do
3 want those islands developed.
4 I do submit that a majority of the
5 taxpayers, and a large number of the people in
6 Johns Island who, by the way, represent almost
7 half of the voters of Indian River Shores are
8 opposed to the development of these islands,
9 and some other properties that Lost Tree and
10 some of their affiliated corporations are
11 planning to develop within Johns Island.
12 So speaking for those people, I just want
13 you to know that not everybody in Indian River
14 Shores and in Johns Island is for this
15 development.
16 I submit that a majority are not, and I
17 would ask you to consider that it is not in the
18 best public interest to develop these islands.
19 Thank you very much.
20 GOVERNOR BUSH: Thank you.
21 MS. TILNEY: I'm Barbara Tilney, a resident
22 of Indian River Shores.
23 GOVERNOR BUSH: Perfect.
24 MS. TILNEY: And -- and two -- the second
25 of three people from Indian River Shores who
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1 are here.
2 We want to make certain that you realize
3 that people in Indian River Shores are
4 concerned about this issue, even though we're
5 not officially represented by any of the
6 government people.
7 However, I want you also to know that in
8 six weeks, three of them will be replaced, and
9 there will be a new majority on the Council at
10 Indian River Shores.
11 GOVERNOR BUSH: Are you running?
12 MS. TILNEY: Yes.
13 GOVERNOR BUSH: Yeah, she is. There you
14 go.
15 MR. KARNAS: Good afternoon, Governor, and
16 members of the Cabinet.
17 I'm Jerry Karnas, Government Relations
18 Associate with Save the Manatee Club. I'm also
19 speaking on behalf of the Florida Wildlife
20 Federation today.
21 And I was going to waive my time to
22 Charles. But I was on the phone with my mother
23 last night for an hour trying to tell her how
24 to get on the Internet so she could listen to
25 this wonderful display of democracy.
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1 So I just wanted to at least get up -- get
2 up here and say, hi, Mom.
3 GOVERNOR BUSH: Let her hear you. Waive at
4 the camera up there.
5 MR. KARNAS: But the Save the Manatee Club
6 and the Federation strong -- feels very
7 strongly that the settlement agreement is not a
8 good deal for the State of Florida, and we
9 oppose it.
10 Thank you.
11 GOVERNOR BUSH: Thank you very much.
12 Well -- oh, one more.
13 MS. CAPLOWE: One more.
14 GOVERNOR BUSH: Fantastic.
15 MS. CAPLOWE: Clean up. Susie Caplowe,
16 Florida Chapter, Sierra Club; and the Florida
17 League of Conservation Voters.
18 And I'd like to refer to something that the
19 General Milligan uses. Does this pass the
20 7-Eleven test. And we believe that it does,
21 that the local governments, as you've heard
22 today, don't approve of the deal here before
23 you.
24 And we also believe that, if you were to
25 pass this today, that you would be going
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1 against your own rules regarding permissible
2 uses of submerged lands.
3 So we do hope that you vote this down
4 today.
5 Thank you.
6 GOVERNOR BUSH: Thank you very much.
7 Yes, ma'am.
8 MS. MACDONALD: Good afternoon.
9 Laurie Macdonald from Defenders of Wildlife,
10 and also representing my family that lives in
11 the Vero Beach area.
12 I would like to echo the words of the
13 orders who would seek to protect the area. In
14 particular, we work on national wildlife
15 refuges, Pelican Island is very close to there.
16 We worried about the -- the area, the effects
17 that this development would have on it.
18 I want to thank you for your support and
19 the protection.
20 Thank you.
21 GOVERNOR BUSH: Thank you very much.
22 Secretary Struhs.
23 MR. STRUHS: Yes, sir.
24 That -- that concludes the folks who want
25 to give you their opinion on the settlement
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1 agreement.
2 We're now going to go back to about --
3 somewhere between 5 and 10 minutes that was
4 remaining on the docket for Lost Tree Village.
5 And I believe Linda's going to organize
6 that for us.
7 MS. SHELLEY: Sure.
8 We're going to hear from Ernie Cox who will
9 give you the other side of the story on the
10 lawsuit just very briefly.
11 GOVERNOR BUSH: Okay.
12 MR. COX: Good afternoon, Governor.
13 Members of the Cabinet.
14 My name is Ernie Cox. And along with my
15 colleague, Bill Hyde, we're the lawyers that
16 tried the quiet title case this past summer.
17 It's -- it's interesting, as -- as a trial
18 lawyer to come before a body such as this and
19 participate in a process such as this one
20 because different than the way most other cases
21 work, the giving away of everything that you
22 won in the trial is a little bit different
23 circumstance.
24 In this case, we had a -- we had a five-day
25 trial. We had disagreements between the
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1 parties as to the facts, and as to the law to
2 be applied to those facts.
3 And Judge Kenney heard five days of
4 testimony. And he made evidentiary rulings,
5 and he ruled on each of the issues that were
6 properly before him.
7 At the conclusion of the five-day trial,
8 having heard both sides, he made his ruling, as
9 trial court judges are supposed to do under our
10 system.
11 And rather than rebutting the specific
12 points raised by Ms. Reimer in her comments, I
13 would simply point out a couple of things.
14 First as to the amount of land conveyed, there
15 was an issue, 571 versus 365.
16 And on that issue, Judge Kenney on both his
17 main ruling and his alternative ruling,
18 concluded that all of the lands had been
19 conveyed.
20 I heard some of them didn't pay for, didn't
21 contract for argument at trial. And that was
22 as to the intent of the parties.
23 I said, well, if that's a consideration
24 argument, a payment argument, that argument is
25 not before the Court. And was told, no, that's
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1 not before the Court, that's not the argument
2 that we're making.
3 Attorney General, and then Judge
4 Richard Irvin, did sign both of the deeds back
5 in 1950 and 1956.
6 And Judge Irvin, in his deposition in this
7 case, said, having read the documents, it was
8 the intent of the Trustees to convey all of the
9 land in his sworn testimony.
10 He did not recall specifically the details,
11 but said that's my reading of this, based upon
12 my experience when I was on the Trustees.
13 The second issue as to the location of the
14 property, it's a simple matter of surveying it,
15 according to surveying principles and where
16 does that land fall on the ground.
17 The issue was addressed about the overlap,
18 and we stated in court that we were not
19 claiming the backyards of those homes --
20 GOVERNOR BUSH: Can you -- can you answer
21 the question that -- or the theory or -- I'm
22 not sure what it was -- of Charles Lee's
23 assertion that there was a change -- that you
24 all had a different belief about the -- the
25 survey work --
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1 MR. COX: Yes, I can.
2 GOVERNOR BUSH: -- if you could explain
3 that.
4 MR. COX: Governor, very -- very briefly,
5 when the rule was enacted by the Trustees back
6 in the late 1980s, it was clear that we did not
7 own Gifford Cut. We don't own Gifford Cut
8 today. And so the rule affected the islands
9 owned by Lost Tree.
10 This property was not actually surveyed by
11 a surveyor until 1991. And in 1991, when the
12 property was actually surveyed, the location
13 was determined.
14 That did not go forward, because in 1992,
15 Lost Tree agreed, along with the local
16 governments, to place all of the litigation in
17 abeyance pending a purchase.
18 And so from 1991 and 1992 --
19 GOVERNOR BUSH: So there wasn't a change in
20 '98 that's been --
21 MR. COX: There was a change -- in 1991,
22 the property was first surveyed. And the
23 survey done in 1991 is remarkably similar to
24 the recent survey that was done by David Jones.
25 It was not presented in court, because
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1 there was no court proceeding, Governor --
2 GOVERNOR BUSH: So, therefore, title
3 insurance would not have had -- there was no
4 transfer of title or anything, so the people
5 that were doing the title work wouldn't have
6 seen this --
7 TREASURER GALLAGHER: The owner surveyed
8 his own property.
9 MR. COX: The owner surveyed his own
10 property. It was not made record until
11 admitted into the case.
12 One other thing, Governor, that I may point
13 out is that we have done the legal analysis of
14 it, and did -- and presented it to
15 Judge Kenney, that the title of the homes on
16 the main barrier island predated the conveyance
17 from the Trustees.
18 And so although the boundaries may overlap,
19 the ownership does not.
20 So we do not have a claim, have not made a
21 claim, do not seek to make a claim to title to
22 those backyards. And our case was only between
23 the claim of the Trustees and the ownership
24 deeds of Lost Tree.
25 TREASURER GALLAGHER: Question.
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1 GOVERNOR BUSH: Doesn't your claim also
2 have the -- do something about the bridge, the
3 ability to bridge over?
4 MR. COX: It does, Governor. The location
5 of the property would place the eastern
6 boundary of our lands on the main barrier
7 island.
8 And with Judge Kenney's ruling, there is no
9 need to cross sovereign submerged land to
10 bridge to or between the inner islands. That's
11 the ruling.
12 GOVERNOR BUSH: You want to keep that part,
13 but not all the parts of the backyards.
14 MR. COX: We have no desire for the
15 backyards, Governor.
16 The --
17 GOVERNOR BUSH: Tom.
18 TREASURER GALLAGHER: Just --
19 GOVERNOR BUSH: Treasurer --
20 TREASURER GALLAGHER: No. He can finish
21 up.
22 Go ahead.
23 MR. COX: A couple of other that -- that
24 came up in this, and it relates to the land use
25 case that is not before you.
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1 But in the late 1980s, the land use
2 designations on these properties, and the
3 restrictions would have allowed bridges and
4 upwards of 500 residential units.
5 There was an announced intention by the
6 local governments, one in particular, to
7 acquire the islands for public ownership. And
8 shortly after that announced intention, they
9 changed the zoning to one unit per 5 acres.
10 One jurisdiction passed a law that said you
11 cannot build a bridge to our road, and another
12 jurisdiction put in their Comprehensive Plan a
13 prohibition on building without a bridge.
14 So you have the City of Vero Beach saying,
15 you can't build a bridge, and you have the Town
16 of Indian River Shores saying, you can't build
17 anything in the town without a bridge.
18 Catch-22.
19 Under the currently existing regulations,
20 you can't build anything in the town, and you
21 can build 16 residential units without a bridge
22 in the City.
23 That's the genesis of the litigation. And
24 I've tried as best I could to try to resolve it
25 over the five years that I've been involved,
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1 through a sale of everything, sale of part of
2 it, settlement of part of it, 145 units and a
3 golf course, which was approved by the City and
4 the town, and now we're down to 64 units and a
5 golf course.
6 I guess I was a little surprised by the --
7 the reaction to that, because I looked at that
8 and said, this is less than anything that's
9 ever been there.
10 And -- and so, as we sit here today, your
11 decision is, do we settle litigation on terms
12 between two parties, the Trustees and the
13 Lost Tree; or do we let that go on?
14 Unfortunately all of these matters are
15 interrelated. I've heard today many comments,
16 they do not want them to be developed.
17 Well, I understand that, and those are the
18 comments that were heard in 1992. But the
19 efforts to purchase did not work.
20 And I would say that as a lawyer who
21 represents property owners, the government
22 can't say, we want to buy, change the land use
23 restrictions on the land to lower the price,
24 and then say we wouldn't sell at a fair price.
25 And so I -- I just don't know where we go
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1 from here, Governor, without -- without a
2 resolution.
3 GOVERNOR BUSH: Can I -- can I ask a
4 question, because to me, this -- this is really
5 the whole -- this is a little out of sequence,
6 frankly, from -- from my perspective.
7 The establishment of value is a critical
8 element of this. I mean, what I don't want to
9 have happen -- I really appreciate the -- the
10 County Commissioners coming and the -- the
11 City -- if -- if you all believe that it should
12 be bought, then there should be an
13 establishment of value, and you should buy it.
14 I'm not sure this would fit any of the land
15 programs of the State. It might. But I
16 don't -- it's not part of the CARL program,
17 it's not part of the main thrust of what we do.
18 I'd hate to have to get, you know, three or
19 four years from now, another Cabinet's here,
20 and we're -- we're bailing out somebody because
21 they couldn't come to -- to closure on this in
22 terms of establishing what the development
23 rights were and the valuations that come from
24 it.
25 Where are we on that? Where are we on that
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1 element of this?
2 This is -- this is part of -- I guess of
3 establishing that value in a sense. But -- but
4 where are we on the other side of this, with
5 the local communities and the -- and DCA?
6 MR. COX: Governor, here's -- here's where
7 I thought we were a few days ago, which I'm
8 hopeful hasn't changed.
9 We had had approvals by the two local
10 governments for a settlement that's allowed
11 145 units and a gold course a
12 year-and-a-half ago.
13 GOVERNOR BUSH: With bridges?
14 MR. COX: With bridges to the inner
15 islands, but not to the outer islands.
16 GOVERNOR BUSH: Okay.
17 MR. COX: That was approved by the local
18 governments. That was then rejected by the
19 Department of Community Affairs.
20 We then worked on a scenario where we would
21 develop the inner islands with 57 units, and we
22 would sell the outer islands to the County and
23 the Florida Communities Trust. And we tried to
24 do that.
25 Ultimately, the County decided they didn't
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1 want to do that, and those funds then lapsed.
2 So the purchase options are not available now.
3 During the last few months, I have been
4 working with counsel for the City and for the
5 Town on trying to figure out if there's a land
6 use settlement that would work.
7 And we worked from the original 145 units,
8 and just last Thursday, reached a point where
9 the Department of Community Affairs offered a
10 settlement for 64 units, which we have
11 accepted.
12 Governor, the reason it's sort of backwards
13 here is that two times there have been votes of
14 the local governments at public hearings with
15 many people where those elected officials have
16 taken a vote to settle litigation to send it up
17 to the State to then have it rejected.
18 And so the comments that I had been given
19 by the local government was, until we have
20 certainty from the State, we don't want to go
21 have another vote.
22 GOVERNOR BUSH: Well, it seems like we're
23 backwards though now, because now they're
24 opposed.
25 MR. COX: It's -- Governor, it's like
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1 when -- when I was a kid, I had that little
2 game, Monkeys and a Barrel, and you put them
3 in, and if you got a bunch of them in, one
4 would pop out.
5 Well, that -- that's what this case is.
6 We're -- we're constantly putting monkeys into
7 different barrels, and when we get them all
8 just about in, the last one in, the rest of
9 them come out.
10 ATTORNEY GENERAL BUTTERWORTH: A monkey
11 analogy might not be appropriate.
12 GOVERNOR BUSH: None of us thought he was
13 referring to us.
14 ATTORNEY GENERAL BUTTERWORTH: It was the
15 rest of them -- out there.
16 MS. SHELLEY: Governor, if I might, to put
17 the -- not the monkey in the barrel, but the --
18 to put it in context, there has been an
19 understanding on the part of Lost Tree as they
20 have heard the discussion from your staff, and
21 from you this morning, about the subaqueous
22 line.
23 And I want you to know that, on behalf of
24 Lost Tree, although that was a very valuable
25 benefit that we felt was in the agreement that
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1 Lost Tree would still be willing to go forward
2 with the agreement, without the subaqueous
3 line.
4 Similarly, Commissioner, you raised the
5 issue of not only putting in the sewer outline,
6 if you will, but the expense of connecting to
7 the house.
8 It wasn't that we weren't willing to do it,
9 nobody had said that we needed to do it. And
10 if that was part of what would make you more
11 comfortable with the agreement, then Lost Tree
12 would be able to do that.
13 I guess I need to, in fairness to
14 Lost Tree, I can't put too many monkeys in the
15 barrel, else the benefit of the bargain is no
16 longer balanced.
17 And we are trying to reach a balance with
18 you because you are the first ones that need to
19 agree to step out on -- on a settlement like
20 this, so that we can then try to resolve the
21 land use as well.
22 GOVERNOR BUSH: Without jeopardizing a
23 legal position of any kind, can you give me a
24 minute-long synopsis of the property value you
25 believe you have, right now, irrespective of
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1 where -- what's being discussed, and what's
2 being proposed, and what's pending, and what's
3 out there.
4 What are the -- what is the property
5 right -- what is the basis -- what is the value
6 of this property based on what exists today?
7 TREASURER GALLAGHER: Based on their
8 believing that they have title.
9 GOVERNOR BUSH: Well, they have title.
10 But beside that. I'm talking about what
11 they can develop on this property, not -- not
12 prospective development rights, but what --
13 what development rights exist today.
14 ATTORNEY GENERAL BUTTERWORTH: Without a
15 bridge.
16 MS. SHELLEY: Without a bridge, and with
17 they can't have any development unless you have
18 a bridge --
19 GOVERNOR BUSH: Well, I don't know if you
20 had rights before these decisions --
21 MS. SHELLEY: Oh, yes.
22 GOVERNOR BUSH: -- were made that could --
23 MS. SHELLEY: Oh, yes.
24 GOVERNOR BUSH: -- be -- put -- put the
25 local governments in a --
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1 MS. SHELLEY: Oh, there's no --
2 GOVERNOR BUSH: -- taking position. That's
3 my question.
4 MS. SHELLEY: Unfortunately, having been on
5 the receiving end of those arguments for many
6 years myself, there -- there is no doubt that
7 prior to those actions of local government,
8 there was a development potential for this
9 property, which has been reduced.
10 GOVERNOR BUSH: Potential or rights?
11 MS. SHELLEY: Rights. And --
12 ATTORNEY GENERAL BUTTERWORTH: So --
13 MS. SHELLEY: I will say that -- and I
14 don't think it -- it -- it helps for us to say
15 a big number and -- that -- you know, who --
16 GOVERNOR BUSH: Well, it is what it is.
17 I mean --
18 MS. SHELLEY: It is what it is.
19 GOVERNOR BUSH: -- it shouldn't be -- it's
20 not a speculative thing, is it?
21 I mean, I'm asking, not what the
22 perspective development rights are. I'm asking
23 what -- what the property was zoned for,
24 what --
25 MS. SHELLEY: Okay.
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1 MR. COX: I can answer that.
2 Governor, if you were to go back to the
3 1990 zoning and restrictions that were on the
4 property before the challenged land use
5 regulations, which have all been challenged,
6 that are in litigation that's been in one case
7 or another.
8 Based on those rights in today's market,
9 that value's in excess of 100 million dollars.
10 GOVERNOR BUSH: Put aside -- just tell me
11 what the development rights are.
12 We'll be --
13 MR. COX: Today or back then?
14 GOVERNOR BUSH: I mean, well, how many
15 units can be -- can be built --
16 MR. COX: Which year -- which year do I
17 use, Governor?
18 GOVERNOR BUSH: Well, what you had that --
19 TREASURER GALLAGHER: What -- what
20 question --
21 GOVERNOR BUSH: -- the question is: You
22 had something that has been taken away, or at
23 least is in litigation.
24 MR. COX: Prior -- prior -- if you went
25 back to 1990 before these were enacted, it was
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1 one unit per acre in the town, and it was up to
2 5 units per acre in the city.
3 And there were no restrictions on the
4 building of bridges. There were also no
5 restrictions on the development of the property
6 without the bridge.
7 So if you go back to that 1990 group,
8 that's what you had.
9 Now, if we take what we have today, as we
10 sit here today, we can develop that one unit
11 per 5 acres in the city, which means 18 5-acre
12 lots in the City of Vero Beach, with septic
13 tanks, accessed by boat on the city portion of
14 the islands. In the Town of Indian River
15 Shores, today we cannot build anything on the
16 150 acres that are in the town.
17 So as I see it, there is no value there
18 today. And, in fact, the appraisers that had
19 appraised it for the government said that it's
20 highest and best use, one of them said
21 conservation.
22 GOVERNOR BUSH: Thank you.
23 MS. SHELLEY: Okay.
24 I know it's difficult for you to give that
25 kind of feedback in -- in this forum. If we
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1 are not ready to make this decision today, and
2 we need to hear more about your concerns, then
3 we would suggest that that would be appropriate
4 to do.
5 TREASURER GALLAGHER: Well, I would -- I
6 would get us to somewhere here, because I --
7 I'm not ready to -- to make a decision to do
8 this. I don't know where anybody else is.
9 And I'd like to -- to make a motion -- I
10 will tell you that I know -- I want to
11 congratulate the City of Vero Beach, because
12 you guys found out about this before I did,
13 that it was coming.
14 I found out, you know, a little -- I guess,
15 early last week, and I, unfortunately, was out
16 of town most of the end of last week. So
17 really didn't get a chance to get into this
18 thing.
19 And as -- as we can tell by the questions
20 and the answers, it -- this is very
21 complicated. And I'm very uncomfortable making
22 a deal here with all the other issues so far up
23 in the air, at least till I can feel personally
24 that I have a handle on them.
25 So I'd make a motion that we not do this
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1 today, and -- and at least put it pending for
2 the next Cabinet meeting to allow at least me,
3 and any others that want to, get a handle on
4 what -- where we are and what we're doing,
5 and --
6 GOVERNOR BUSH: Do you have a comment on
7 that --
8 MS. SHELLEY: Mr. --
9 GOVERNOR BUSH: There's a motion.
10 But wait --
11 MS. SHELLEY: Most respectfully, if -- if
12 you would let us withdraw the item -- I mean, I
13 don't know whether we can, or whether DEP has
14 to ask you for permission, I hate to put you on
15 that automatic deferral, deferral, and I know
16 you're going to Tampa.
17 I know there's a lot of work to be done
18 with the local governments about some of their
19 concerns --
20 TREASURER GALLAGHER: Well, we -- we
21 could -- we can do a deferral, deferral, that's
22 not a problem.
23 MS. SHELLEY: It was -- it's your choice.
24 TREASURER GALLAGHER: I mean, that's what
25 I'm moving. But if -- I mean, if you want to
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1 withdraw it --
2 MS. SHELLEY: Okay.
3 TREASURER GALLAGHER: -- you're a party
4 here. It's up to you.
5 MS. SHELLEY: Okay. If we can ask for the
6 end of March then, would that be all right, the
7 second meeting in March? Would that be a time
8 certain then?
9 ATTORNEY GENERAL BUTTERWORTH: Governor, my
10 only comment would be, I agree with Ms. Shelley
11 on this, that the -- that local governments
12 must be contacted, and they're going to have to
13 have their input.
14 I'd rather not bind it to a certain
15 timetable. I mean, I think that this -- this
16 is going to take a little bit of time. And the
17 end of March, I personally don't see how you
18 can do it by then.
19 I don't see the -- I don't see how the
20 cities can do it.
21 GOVERNOR BUSH: Let me ask you something.
22 Is there some other -- there's another aspect
23 of this that's working its way towards us in
24 another form of -- that -- not the Cabinet,
25 whatever that thing's called, the --
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1 MS. SHELLEY: Administration Commission?
2 GOVERNOR BUSH: -- FLAWAC.
3 MS. SHELLEY: No, no. It's the
4 Administration Commission.
5 GOVERNOR BUSH: Is that going to be coming
6 relatively soon?
7 TREASURER GALLAGHER: We have a FLAWAC
8 issue on this, too?
9 MS. SHELLEY: No. We have an
10 Administration Commission because of the comp
11 plan noncompliance finding by the
12 hearing officer. But I don't know whether that
13 is coming, or is just out there.
14 And I think that we don't know.
15 GOVERNOR BUSH: Don't know yet.
16 MEMBER OF THE AUDIENCE: What is it?
17 GOVERNOR BUSH: What is it?
18 TREASURER GALLAGHER: Florida --
19 MS. SHELLEY: -- it's been out for a while.
20 TREASURER GALLAGHER: -- Florida Land and
21 Water Adjudicatory Commission.
22 And we sit as a judge, so we can't talk to
23 the parties on it. And it -- it's when,
24 in fact, there's a disagreement in regards to
25 land uses, and things like that.
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1 GOVERNOR BUSH: Which there's a potential
2 for, I assume.
3 TREASURER GALLAGHER: And so we're not
4 sitting as a judge on this, we're sitting as
5 the owners of the State land, or not owners of
6 the State land.
7 MS. SHELLEY: Or whatever.
8 TREASURER GALLAGHER: Depending on whether
9 we gave it away, or didn't give it away. But
10 that's a -- that's another issue on -- on uses.
11 This is on ownership.
12 MS. SHELLEY: So, with your permission, may
13 we withdraw?
14 Or may we have the item withdrawn -- or set
15 for a far enough time away that we have an
16 opportunity to work with the --
17 GOVERNOR BUSH: Well, I think you can keep
18 it open-ended.
19 ATTORNEY GENERAL BUTTERWORTH: I make a
20 substitute item -- a substitute motion, just
21 withdraw the item.
22 TREASURER GALLAGHER: Second.
23 ATTORNEY GENERAL BUTTERWORTH: Simple
24 solution, difficult problem.
25 GOVERNOR BUSH: That's a motion to
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1 withdraw, and a second.
2 Any other discussion?
3 SECRETARY HARRIS: I'd like to address
4 something with Secretary Struhs after we make
5 the decision.
6 I just want to --
7 COMMISSIONER CRIST: Well, before we make
8 the decision, I have a question.
9 I mean, this thing's been going on for over
10 a decade? I mean, don't we want a resolution
11 at some point in time?
12 I mean --
13 TREASURER GALLAGHER: Do you want to do it
14 now?
15 GOVERNOR BUSH: Well, here's --
16 COMMISSIONER CRIST: My -- my suggestion,
17 Commissioner, with all due respect, is -- is to
18 try to find out what we're talking about when
19 we withdraw it, if -- if we're going to come in
20 for a landing someday is --
21 GOVERNOR BUSH: Commissioner -- can I
22 ask -- can I ask Secretary Struhs a question
23 here? Just -- this --
24 MR. STRUHS: Yes.
25 GOVERNOR BUSH: -- this requires a -- a
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1 5 vote majority.
2 Can you explain that -- why? Just so
3 everybody knows.
4 MR. STRUHS: Yes.
5 And let me -- let me just as backup make
6 sure that Counselor Costigan is here.
7 Would you -- would you come up, Jon,
8 please?
9 It's our best legal advice that this
10 requires a vote of 5 members. And the
11 rationale for that is because it would --
12 because the current posture of the Board of
13 Trustees in the current litigation is that this
14 is State-owned land.
15 In order for this settlement to be
16 achieved, it would require conveying that land,
17 and any conveyance of land requires a vote of
18 5 --
19 GOVERNOR BUSH: Thank you.
20 MR. STRUHS: That's -- that's the legal
21 theory behind it.
22 But Mr. Costigan can give you --
23 GOVERNOR BUSH: No. I just -- I think
24 that's -- I just wanted to bring that out.
25 I'm -- I'm satisfied with that.
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1 SECRETARY HARRIS: I'll ask
2 Secretary Struhs now while it's open.
3 Are you finished?
4 Go ahead.
5 COMMISSIONER CRIST: Yeah.
6 So the effect of a withdrawal, I guess, is
7 my question. What does that do? I mean, does
8 it ever get back on the agenda, do they --
9 TREASURER GALLAGHER: Oh, yeah.
10 COMMISSIONER CRIST: -- have to put it back
11 on? How -- does anybody know the answer to
12 that question?
13 TREASURER GALLAGHER: They always come
14 back. They never go away.
15 COMMISSIONER CRIST: Voice of experience.
16 ATTORNEY GENERAL BUTTERWORTH: It's like
17 you, Tom.
18 TREASURER GALLAGHER: Just like me.
19 SECRETARY HARRIS: Just like Tom.
20 TREASURER GALLAGHER: They keep coming
21 back.
22 You never know what seat, but it'll be
23 back.
24 GOVERNOR BUSH: Right. It'll be back.
25 SECRETARY HARRIS: Like Tom.
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1 Secretary Struhs, just a couple of things.
2 I think it would be helpful, because so
3 many people came today on both sides, and if we
4 do this again, they have to come back.
5 But I think in the future, for example, on
6 Fisheating Creek, we knew for months and
7 months, this was going -- going on, and we had
8 the opportunity to work through some of these
9 issues.
10 I think that the -- for example, the -- the
11 subaqueous pipeline, that is clearly
12 prohibited, and I don't think our attorney
13 could say that.
14 But, you know, in the future, we would be
15 put in a position -- in a very difficult
16 position to do something like that, and that
17 was part of the settlement agreement.
18 So whenever we -- but when we do come back
19 on -- on the settlement, we're not opposed to
20 doing settlements. We -- we did a great
21 settlement, I think, with Fisheating Creek.
22 If we could really look at it. I mean, in
23 this diagram that you gave us, because the --
24 this corded -- this case is stayed, if you
25 will, it's not in the posit-- we don't know who
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1 owns which land. You know, so one isn't really
2 in one column or -- or another, per se.
3 But I just think all those issues need to
4 be looked across, because it didn't really seem
5 like there were many, quote, concessions for a
6 settlement.
7 But, in essence, regardless of who wins --
8 if we went back to the lawsuit, who wins, the
9 property will be developed.
10 And I think what -- what's important to
11 take away from all of this also is that, this
12 is really an extraordinary developer. They --
13 they do beautiful work. We're not concerned
14 about the ecological aspects in others.
15 What we are concerned about is that --
16 that, indeed, the settlement either is upheld
17 or not, but how we're going to deal with it.
18 I think the pipeline is absolutely crucial.
19 Excuse me.
20 And I think we have to -- to be very
21 sensitive about -- about that in -- in the
22 future. No doubt, there will be a tax base and
23 other issues.
24 But I think that -- what I was concerned
25 about in looking at the settlement was that I
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1 couldn't support the settlement today. And --
2 and -- based on the pipeline and some other
3 issues.
4 So I think we need to -- to continue to
5 work more closely on better communication in
6 the future so that it's not such a short
7 time frame so we can make a better decision
8 up-front.
9 MR. STRUHS: Yes. Madam Secretary, I quite
10 agree. And -- and as you know when we first
11 teed up this issue for you back when it was
12 still morning, we -- we -- we noted the fact
13 that the nature of settlement negotiations
14 oftentimes is that the information keeps
15 changing up until what seems to be the last
16 moment.
17 And we apologized for that. It -- it's
18 sort of the nature of the beast.
19 We -- we did our -- our level best once we
20 felt we knew what it might look like to -- to
21 make some calls and communicate that with the
22 local officials. I mean, clearly they would
23 have appreciated more time as well.
24 But we did the best we could with the
25 conditions under which we're operating. We'll
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1 strive, I -- I promise you, to -- to be as
2 communicative as possible as -- as we go
3 forward in --
4 SECRETARY HARRIS: You -- you always are.
5 I was just concerned about the short -- short
6 time frame --
7 MR. STRUHS: Sure.
8 SECRETARY HARRIS: -- that we had to
9 address it.
10 GOVERNOR BUSH: Any other comments?
11 There's a -- there's a motion and a second
12 to withdraw the -- there's a -- to withdraw the
13 motion -- move the item from the agenda.
14 All in favor, say aye.
15 THE CABINET: Aye.
16 GOVERNOR BUSH: All opposed?
17 Thank you all very much for coming.
18 We're not finished yet, but --
19 TREASURER GALLAGHER: Still have Education.
20 (The Board of Trustees of the Internal
21 Improvement Trust Fund Agenda was concluded.)
22 * * *
23
24
25
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1 GOVERNOR BUSH: State Board of Education.
2 COMMISSIONER CRIST: We have some
3 charter school issues, Governor.
4 GOVERNOR BUSH: I see that.
5 COMMISSIONER CRIST: Yes, sir.
6 Mr. Pierson's here.
7 MR. PIERSON: Good afternoon.
8 ATTORNEY GENERAL BUTTERWORTH: -- what are
9 our responsiblities?
10 MR. PIERSON: Good afternoon.
11 Our --
12 COMMISSIONER CRIST: -- our responsiblity
13 for charter schools.
14 TREASURER GALLAGHER: Tell us our
15 responsibilities, would you?
16 MR. PIERSON: Our agenda this afternoon
17 includes four charter school appeals, two of
18 which we ask to be deferred.
19 GOVERNOR BUSH: Thank you.
20 MR. PIERSON: The State Board of Education
21 considers appeals of denials of charter school
22 applications pursuant to 96-186, Laws of
23 Florida.
24 As prescribed by law, Florida school boards
25 are given authority to grant approval to
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1 applicants who wish to operate charter schools
2 within a district.
3 A further provision of the law allows an
4 applicant who has been denied a charter, the
5 right to appeal the School Board's decision to
6 the State Board of Education.
7 Based on the written record and oral
8 argument presented at this meeting, the
9 State Board must vote to recommend acceptance
10 or rejection of the appeal to the school board.
11 The vote requires a simple majority of the
12 members, and by law is not subject to the
13 provisions of the Administrative Procedures
14 Act.
15 The rule governing the appeal process was
16 unanimously adopted by the Cabinet sitting as
17 the State Board of Education on December 10th,
18 1996.
19 It very clearly states how this hearing
20 must proceed, and it specifies the following
21 limitations, which must be respected by the
22 applicant, the district school board, and their
23 representatives.
24 A Notice of Appeal must be based on errors
25 the applicant charges the School Board made in
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1 its decision to deny the charter.
2 The written arguments submitted by the
3 applicant to the State Board is limited to
4 discussion of those errors.
5 The record of this proceeding is limited to
6 the written arguments, the charter school
7 application itself, and transcripts of meetings
8 before the district school board.
9 At this hearing, representatives of each
10 party may give oral argument. Oral argument is
11 limited to a summary of the written arguments
12 previously submitted to the State Board.
13 We've requested each side to limit its
14 summary to 10 minutes --
15 GOVERNOR BUSH: Thank you.
16 MR. PIERSON: -- and the -- after the
17 summaries are presented, a vote will be taken,
18 and a written recommendation of the vote will
19 be returned to the district school board.
20 Item 1 is the Brevard Preparatory Academy
21 Junior/Senior High School --
22 GOVERNOR BUSH: Wayne, can we -- can I
23 pause this for a very brief second, to
24 recognize the Mighty Wilford Woodward (sic)
25 Academy from Orlando --
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1 TREASURER GALLAGHER: Yeah.
2 GOVERNOR BUSH: -- environmental class is
3 here.
4 We're grateful that you're here. Thank you
5 for being here.
6 Had I known you were -- I knew you were
7 here. But had I known that -- who you were, I
8 would have announced you in front of a larger
9 crowd. But you got the rest of the Cabinet
10 folks for the last item.
11 So we're delighted you're here.
12 Excuse me.
13 MR. PIERSON: Item 1 is Brevard Preparatory
14 Academy Junior/Senior High School Charter
15 School versus the School Board of
16 Brevard County.
17 Presenting for Brevard Preparatory Academy
18 Junior/Senior High Charter School is Ace Young.
19 MR. Ace Young: Good afternoon, Governor,
20 distinguished members of the Cabinet.
21 Since Governor Bush made reference to the
22 school there, I'd like to take this opportunity
23 also to introduce my family, who has made two
24 trips to Tallahassee with me: My wife, Julie;
25 my daughter, Tamara; and my son, Christopher.
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1 As you know, doing a charter school
2 proposal is a family effort. And, therefore,
3 that's why I felt it was important to bring
4 them, to show that I do have the support of my
5 family.
6 (Secretary Harris exited the room.)
7 MR. Ace Young: Brevard Preparatory Academy
8 is a charter school that was designed to allow
9 students to use the dual enrollment process
10 through the Brevard Community College at its
11 fullest extent.
12 Currently the students of Brevard Comm-- at
13 Brevard district high schools are not given
14 that opportunity to the fullest extent.
15 I would like to address the concerns based
16 upon good cause that was given for the denial.
17 Specifically, there is little evidence that a
18 proposal school would increase learning
19 opportunities for all. Brevard Preparatory
20 Academy has proposed smaller class size, which
21 will give more time for each teacher to spend
22 with each student increasing learning.
23 We plan to institute a college-like
24 schedule to allow the students to be able to
25 attend the campuses at Brevard Community
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1 College on a Monday-Wednesday-Friday basis, and
2 a Tuesday-Thursday basis.
3 Currently, if a child wants to take a
4 college class at Brevard Community College,
5 let's say a 9:00 o'clock class, they would have
6 to --
7 (Attorney General Butterworth exited the
8 room.)
9 MR. Ace Young: -- miss their 8:00 o'clock
10 class to get there, and their 10:00 o'clock
11 class to get back, because of the distance.
12 There is one school that is currently --
13 Cocoa High School that actually has adjacent
14 property that butts up to Brevard Community
15 College that, according to the Mark of
16 Excellence, which is a newspaper that the
17 County puts out, currently there's no programs
18 been offered in dual enrollment at
19 Cocoa High School.
20 Another area that we want to allow students
21 to have the opportunity to take advantage of is
22 transportation. Currently there is no
23 transportation offered from the high schools,
24 to the college, and back, to take these
25 classes.
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1 I think of it -- the young man who name
2 comes to me is Cole Darst. Cole is a 4.0
3 student, fully prepared to take college
4 classes. But because he comes from a single
5 parent home, there's only one car, and his
6 mother needs it to go to work with.
7 Cole could have certainly had at least one
8 to one-and-a-half years of his college and BCC
9 done, had he had an opportunity just to have
10 transportation back and forth.
11 That's why we feel this is a very important
12 part of our program.
13 We also are going to offer evening classes,
14 and Saturday classes to allow students to get
15 further ahead.
16 We think with those type of things, that
17 certainly would increase learning opportunities
18 for all students.
19 Use different and innovative learning
20 methods. We'll be allowing students who are
21 further advanced to take self-paced classes
22 through CD ROMs. We are going to institute
23 interdisciplinary and thematic models of
24 instruction, independent study for credit, and
25 real world problem solving methodologies.
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1 Basically we're going to tailor our
2 teaching styles to the needs of our students.
3 We think that will create and allow us to be
4 different and innovative in our learning
5 methods. And then establish a new form of
6 accountability.
7 In our proposal, we lined out that we will
8 be giving baseline assessments in the beginning
9 of the year, and also at the end of the year to
10 chart our progress.
11 We also said that we -- it is our goal that
12 our students will make one year of progress and
13 have one year's growth in one year of time.
14 GOVERNOR BUSH: All of them?
15 MR. Ace Young: That would be our goal.
16 GOVERNOR BUSH: What's your -- what's your
17 commitment?
18 MR. Ace Young: Our commitment would be to
19 meet or beat our district.
20 GOVERNOR BUSH: But do you have a contract
21 with the district?
22 MR. Ace Young: Not yet, sir.
23 TREASURER GALLAGHER: That's what they're
24 trying --
25 MR. Ace Young: That's what we're here for.
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1 GOVERNOR BUSH: You didn't have a proposed
2 contract where you said, 80 percent of our kids
3 will get a year's worth of --
4 MR. Ace Young: I believe our first year
5 growth -- currently I'm an administrator in a
6 charter school, and seeing the type of students
7 that have been coming into our charter schools,
8 most of the parents that are coming to charter
9 schools, are coming in because their students
10 are behind in the charter -- in the public
11 school. And they're coming in low.
12 We think that it would probably take us a
13 ye-- maybe a year or two to get our program put
14 fully together --
15 GOVERNOR BUSH: You -- you already have a
16 charter school operating?
17 MR. Ace Young: No, sir. I'm just an
18 administrator at one.
19 GOVERNOR BUSH: Another one.
20 MR. Ace Young: Yes, sir.
21 GOVERNOR BUSH: Oh, I'm sorry. Okay.
22 MR. Ace Young: Okay.
23 TREASURER GALLAGHER: Still getting over
24 the last one?
25 GOVERNOR BUSH: I'm still -- it's been a
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1 day.
2 My bad --
3 MR. ACE YOUNG: That's okay.
4 Now I'd like to address the list of
5 deficiencies that was brought up in the --
6 based upon good cause.
7 The first one was the target population.
8 Our target population is accelerated students,
9 or any student that has the desire to work
10 ahead.
11 My two children are home schooled. And the
12 reason they're home schooled is because they
13 both are accelerated. My daughter, who is in
14 the eighth grade, is doing ninth grade honors
15 classes.
16 My son, who is in the sixth grade, is doing
17 seventh grade honors classes. If they were in
18 the public school, in our area, that would not
19 be afforded to them.
20 We -- we took home school because there was
21 no charter school available to them at that
22 time.
23 It is the district's idea here that the
24 intent of the law is to provide options for low
25 achieving students.
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1 Well, the law says increased learning for
2 all students. If you can look at Exhibit C,
3 what the district put in, they have listed
4 eight schools that they currently have that are
5 charter schools. Of the eight, five of the
6 eight are either basic or gifted, not meeting
7 the lower end.
8 Draw your own conclusions from that.
9 That we're not innovative and -- and
10 different.
11 Well, I've already addressed that earlier.
12 Third is lack of experience of our Board
13 running a non-for-profit (sic) organization.
14 228.056 says that an application for a new
15 charter school may be made by an individual,
16 teachers, parents, a group of individuals.
17 We are a group of individuals that have
18 experiences in the legal, banking, performing
19 arts, and charter schools.
20 This Board -- the founding --
21 (Treasurer Gallagher exited the room.)
22 MR. Ace Young: -- board may or may not be
23 the governing board of our school. Once we're
24 approved, we hope to expand our board.
25 GOVERNOR BUSH: How many kids -- how many
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1 students do you want to have?
2 MR. Ace Young: A hundred to start with,
3 sir.
4 GOVERNOR BUSH: And what grades?
5 MR. Ace Young: Seventh and eighth.
6 GOVERNOR BUSH: And how much capital do you
7 have?
8 MR. Ace Young: The only capital we would
9 have to be starting with would be the start-up
10 grant of $70,000.
11 GOVERNOR BUSH: From the -- from the --
12 from the State?
13 MR. Ace Young: (Nodding head.)
14 GOVERNOR BUSH: Okay.
15 MR. Ace Young: I'll wind up by saying
16 this: A couple of the things that came to our
17 attention in the rebuttal from the School Board
18 that was major concerns for them was that as
19 a -- an advanced high school, that we had not
20 budgeted for a counselor.
21 And in seventh and eighth grade, there is a
22 need for a counselor, and we did say that we
23 would make a person, who we had started
24 part-time, take the counseling role on.
25 After doing a phone survey in -- of all the
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1 high schools in Brevard County, I found out
2 that the ratio of students to counselors in
3 Brevard County is 1 counselor to every
4 396 students. In their top tier schools that
5 are college prep, it's 1 to 410.
6 So I think that by year 3 in our proposal
7 when we're bringing on a -- a counselor
8 full-time, we'll certainly be able to provide a
9 better service to our students than the County
10 is currently.
11 Another area that they -- they were
12 concerned with is our facilities. When we
13 wrote this proposal back in August, we had just
14 a preliminary plan with an individual who did
15 submit a letter that said he was interested in
16 being involved in helping us build a facility.
17 At this point, we understand now that that
18 gentleman will not be able to present us that
19 building. So we have gone out and secured yet
20 another building in the same area with
21 approximately 20,000 square feet, a facility
22 that we would share with a church, and for less
23 than half the money that we had in our budget.
24 I'll stop there and say this: I would have
25 never appealed this school, except I was part
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1 of an organization that proposed four separate
2 charter schools last year, hoping to get at
3 least one of them approved.
4 We were denied on all four. Didn't find
5 out why we were denied specifically until
6 October of this year. Because that's when I
7 received my letter of denial.
8 At that School Board meeting last year, we
9 were told by the Superintendent that anyone who
10 wanted to reapply this year would have
11 technical assistance given to them by his
12 staff.
13 This year when I got to the point, I took
14 my proposal, presented it to the secretary
15 that -- the Director of Secondary Education, I
16 said, here, I need your help.
17 I also gave one to the Director of
18 Budgeting and the Director of Finance, asking
19 for their help, technical assistance.
20 This was three days before my proposal was
21 due.
22 (Attorney General Butterworth entered the
23 room.)
24 MR. Ace Young: I returned to their office,
25 made several phone calls asking for did they
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1 have any suggestions.
2 The Director of Secondary Education,
3 Ms. Ellis, gave me 5 minutes of her time when
4 she went and read and just underlined a few
5 items, and said, it looks like you've got
6 everything covered.
7 I never received any response back from the
8 Director of Budgeting or the Director of
9 Finance.
10 Now, this proposal went to them after
11 spending 3 hours with the charter school
12 liaison where she read over my proposals
13 line-by-line, and suggested several changes to
14 me.
15 My time is up?
16 Would you like me to stop?
17 GOVERNOR BUSH: You can -- if you could --
18 MR. Ace Young: Give me 30 seconds.
19 GOVERNOR BUSH: -- close and --
20 MR. Ace Young: Okay.
21 GOVERNOR BUSH: -- would be great.
22 MR. Ace Young: Okay.
23 I made the changes. Many of these changes
24 came back later as concerns from the District.
25 So had I not gone through all those steps,
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1 and had met all the criteria of the law, I
2 would not have appealed this. All I'm asking
3 you to do is give me a chance to go back to the
4 County, sit down with them, and work out any
5 differences, if they would be willing to do
6 that, and come to a contract.
7 That's all I'm asking for.
8 GOVERNOR BUSH: Thank you very much.
9 Any questions?
10 There may be some afterwards.
11 We'll hear the School District now.
12 MR. PIERSON: For Brevard County School
13 Board is Harold Bistline, attorney.
14 MR. BISTLINE: Governor Bush, members of
15 the Cabinet, thank you for the opportunity to
16 speak with you today.
17 I'll be brief.
18 I first want to introduce Bill Powell,
19 who's our senior school board member and former
20 chairman, is with me today.
21 And also with -- with Bill is Judy Preston,
22 who's the -- our budget director for our
23 district.
24 I want to first say that Brevard County has
25 eight charter schools in operation. And in the
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1 last cycle, which was in December, we approved
2 another one, so we have nine.
3 All of our charter schools are thriving.
4 They're doing very well. And if you compare
5 the number of charter schools in our district
6 with the -- with the number of students that we
7 have, I think you'll see that we have a -- a
8 very good number of charter schools, compared
9 to any other district in this -- in this state,
10 if you look at the biggest districts in the
11 county, as a matter of a percentage of student
12 population, we have a greater number of charter
13 schools than students in those schools than any
14 of those counties do.
15 And that's based on DOE statistics.
16 We also feel that we have a very good
17 charter school re-- application review process.
18 As we set forth in our brief, we have a
19 committee comprised -- comprised of 12 persons
20 of various disciplines in education, all
21 professionals, plus we have two charter school
22 operators that are on our committee as well.
23 That committee reviewed the three charter
24 school applications that we had in this cycle,
25 and unanimously recommended approval of one;
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1 and unanimously recommended the denial of two,
2 one of which is the Brevard Preparatory
3 Academy.
4 And on that committee, we have finance
5 people, we have ex-ed specialists, we have
6 school administrators, and high school
7 principals.
8 Now, the proposed Brevard Preparatory
9 Academy Charter School is a proposal to operate
10 a high school, which offers dual enrollment
11 and -- and accelerated in advanced curriculum.
12 I'd like you to know that all 12 of our
13 Brevard County high schools offer
14 dual enrollment and advanced studies. They're
15 all throughout the County. We have -- we do
16 that with the four separate campuses, Brevard
17 Community College. The students in our county
18 have an opportunity to do this, and that also
19 is a very thriving program.
20 Statistically, Brevard County has 47-- this
21 year, 4741 students in dual enrollment. That's
22 23 percent of our high school population. So
23 we do offer this program, and it is taken
24 advantage of.
25 Mr. Young also, I believe, stated that
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1 Cocoa High School doesn't have -- does not
2 offer dual enrollment. The statistics that I
3 have from our district show that 62 students at
4 Cocoa High School are enrolled in
5 dual enrollment this year.
6 So dual enrollment is offered to the
7 students in that area. We have four
8 high schools that are in the area that
9 Mr. Young proposes to locate his academy, and
10 all those high schools offer this -- offer
11 these programs.
12 I just want to briefly go through the main
13 reasons that the committee and the School Board
14 voted to deny this application.
15 The first is that the applicant and the
16 application shows: Has no experience in
17 secondary education.
18 I believe the School Board is of the
19 opinion that there should be somebody in the
20 organization that has experience in secondary
21 education, particularly if you're talking about
22 advanced studies and dual enrollment.
23 Neither the applicant nor the application
24 demonstrated a working knowledge of the
25 staffing or curriculum required of a top-rated
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1 secondary school, let alone -- let alone
2 accelerated program.
3 Third, the financial projections of the
4 budget proposals presented were unrealistic in
5 critical areas, ranging from salary and
6 benefits for the staff, to funding for ex-ed,
7 and the other services required by law to be
8 offered to eligible students in every charter
9 school.
10 Fourthly, the -- and finally, the
11 curriculum proposal for dual enrollment
12 accelerated case work -- course work offers
13 nothing that is not already being provided in
14 every high school in Brevard County. And I
15 went through those statistics to -- in an
16 effort to show you that we have a very good
17 program in that area, and that the students in
18 our county are taking advantage of them.
19 In summary, we believe that the
20 Brevard County School Board has a quality
21 process for reviewing charter school
22 applications. And I think that's borne out by
23 the fact that we have eight, and now nine,
24 charter schools. And the eight that are in
25 operation, are doing very, very well, and
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February 6, 2001
1 they're serving their students well.
2 We know that the Brevard County
3 School Board supports quality charter schools
4 that offer real educational choices for our
5 public school students.
6 And we ask that you support the -- the
7 decision of the local school board in this
8 case, and deny the appeal.
9 Thank you very much.
10 GOVERNOR BUSH: Thank you.
11 COMMISSIONER CRIST: So, what, do I need to
12 make a motion?
13 GOVERNOR BUSH: We can have discussion, or
14 you can make a motion.
15 COMMISSIONER CRIST: I would move that we
16 remand the application back to the
17 school district for approval, with a
18 recommendation that the School Board work with
19 the applicant to resolve their issues.
20 GOVERNOR BUSH: Is there a second?
21 COMMISSIONER RHODES: Second.
22 GOVERNOR BUSH: Any discussion?
23 It's a lively group here.
24 Let me ask you something.
25 I'll have a question.
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1 Maybe we can get our batteries charged up
2 again.
3 If it was to be remanded back, and -- you
4 all ultimately would have the -- the approval,
5 ultimate say --
6 (Treasurer Gallagher entered the room.)
7 GOVERNOR BUSH: -- in whether or not it met
8 your criteria that you've established that your
9 committee has, how long would that take, and
10 are we -- and -- and I -- this is a question
11 for the applicant as well -- does this put --
12 are we -- are we in a situation here where
13 we're going to have a timing issue for the
14 start of the school for September?
15 MR. BISTLINE: Well, Governor, I -- I think
16 we probably would. I -- the statute I believe
17 requires us to -- if you were to do that, to
18 hold a -- a meeting, and address that
19 recommendation within I think it's 30 days. I
20 have it here.
21 Is it 30 days?
22 Thirty days. And if the school board were
23 to agree with your recommendation, I do think
24 it would be hard to -- to do that for this
25 upcoming school year.
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1 GOVERNOR BUSH: Well -- so you would do it
2 in 30 days, and -- and would that put you in a
3 position where you'd have a hard time --
4 Why don't you come back to the --
5 MR. Ace Young: Our Board has continued to
6 work towards having our school ready to go in
7 August. So 30 days would not present us with a
8 problem.
9 GOVERNOR BUSH: Okay. Any other questions?
10 TREASURER GALLAGHER: Can they get -- and
11 you believe that you can get these items worked
12 out before the meeting in 30 days?
13 MR. Ace Young: It's always been my desire
14 to work with the County to work out any issues
15 that they have. If they would just be specific
16 and sit down and show me exactly what they want
17 done, I've always wanted to do that with them.
18 COMMISSIONER CRIST: And I think in
19 fairness to Commissioner Gallagher, some of
20 those items the School Board attorney
21 addressed, and he talked about a lack of
22 experience, a lack of working knowledge, and
23 items like that, that as this gentleman said,
24 are a little subjective. At least I felt they
25 were that way. That's why I recommended
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1 approval.
2 And it seems to me the man deserves a
3 chance to try.
4 TREASURER GALLAGHER: Well, one of the
5 things that you -- that -- that you would -- we
6 could suggest from here, and we haven't done it
7 before formally, but it might be worthwhile
8 having somebody from the Commissioner's office
9 pretty high up that you would send to get the
10 thing moving.
11 Because what'll happen otherwise is,
12 nothing'll happen till the school board meeting
13 happens, and then they'll all vote against it
14 because nothing happened.
15 And so somebody -- if -- if you've got a
16 catalyst in there from the Department,
17 something might have a chance of happening --
18 COMMISSIONER CRIST: Yeah.
19 TREASURER GALLAGHER: -- for whatever it's
20 worth.
21 GOVERNOR BUSH: Mr. Powell, do you want to
22 comment on that?
23 Would you like to comment on that, or are
24 you just standing up?
25 MR. POWELL: Well, I -- I'd like to make a
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1 statement, if I might.
2 GOVERNOR BUSH: Please. Sit down -- get --
3 get up to the podium.
4 MR. POWELL: My name is Bill Powell. I'm
5 on the Brevard County School Board. Previously
6 I was the Chairman for two years, and I've
7 discussed charter schools with you a couple of
8 times on the phone --
9 GOVERNOR BUSH: Yes, you have.
10 MR. POWELL: -- prior to your election.
11 And I want to -- I'd just like to say that,
12 the reason I stood up was the remark that was
13 made by Commissioner Charlie Crist.
14 Yes, they need opportunities, but people
15 don't need chances. As Brevard County School
16 Board, and as a life-long resident of -- of
17 Florida, and Miama (sic), not Miami -- of
18 Miama -- I don't take chances when I say yes or
19 no to charter schools. I don't take chances on
20 students.
21 Nor do I take a chance on anything that
22 deals with them.
23 Just in closing, I would say that we had a
24 school in its first year of operation, charter
25 school was $200,000 in the red. I wanted to
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1 close it down; the superintendent said, no.
2 We worked through financing, and we made
3 that charter school, through the efforts of our
4 staff, to succeed.
5 TREASURER GALLAGHER: That's what it takes.
6 MR. POWELL: It is succeeding today. But
7 we don't take chances with students.
8 Thank you.
9 TREASURER GALLAGHER: Well --
10 COMMISSIONER CRIST: I need to respond to
11 that, Governor.
12 You misinterpreted me, sir. My intent was
13 that the man deserved an opportunity, and not
14 to take chances on children. So I would just
15 advise you of that.
16 ATTORNEY GENERAL BUTTERWORTH: Governor --
17 GOVERNOR BUSH: General.
18 ATTORNEY GENERAL BUTTERWORTH: -- on this
19 one here, I mean, Brevard County has been very
20 exemplary in how they work with the -- with
21 their charter schools, as we just heard.
22 I -- I -- I would have to vote no on this.
23 I think they've made their decision. And if
24 the gentleman can make another application
25 before the Board, and go through the process
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1 again, that's what I would suggest here.
2 COMPTROLLER MILLIGAN: I would -- I'll just
3 comment.
4 I, you know, looked at this very carefully
5 in terms of the issues that were raised by the
6 School Board, and the -- and the responses
7 provided by Mr. Ace Young.
8 And -- and then listening to the
9 discussions here this morning, I -- I really
10 don't have that much confidence in the level of
11 issues that were raised, everything from
12 financial to -- to the skills of the -- of the
13 individuals that would be managing the school
14 or leading the school.
15 I -- I -- like the Attorney General, I -- I
16 just don't have much confidence, and I'll have
17 to vote no on -- on the issue.
18 GOVERNOR BUSH: Anybody else, any comments?
19 There's a motion to remand and a second --
20 remand back to the school district for further
21 deliberation I guess it would be -- not -- not
22 for approval.
23 You all ultimately have that power to do
24 that. I guess we're recommending approval, but
25 the school district has the -- the power to do
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1 that.
2 And there's been a second.
3 All in favor, say aye.
4 THE CABINET: Aye.
5 GOVERNOR BUSH: All opposed?
6 ATTORNEY GENERAL BUTTERWORTH: No.
7 COMPTROLLER MILLIGAN: No.
8 GOVERNOR BUSH: The ayes I believe --
9 four -- did I hear a --
10 COMMISSIONER RHODES: Yes, sir.
11 GOVERNOR BUSH: Four to two then, right?
12 TREASURER GALLAGHER: Four to two.
13 MR. BISTLINE: Thank you.
14 MR. PIERSON: Item 2 was deferred from the
15 February 6th, 2001, meeting at the request of
16 the applicant and the School Board. It's
17 Berkley Elementary School, which is a
18 conversion school, versus the School Board of
19 Polk County.
20 And representing Berkley is Randy Borland,
21 who's the principal.
22 MR. BORLAND: Good afternoon, Governor,
23 Cabinet.
24 I'm Randy Borland. I'm the principal of
25 Berkley Elementary School, a brand new school,
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1 elementary school, in Polk County.
2 We're working on becoming an AA school,
3 Governor Bush.
4 GOVERNOR BUSH: Been here all day, huh?
5 MR. BORLAND: Yeah.
6 Before I begin, and I'm just --
7 GOVERNOR BUSH: Get a bronze star.
8 MR. BORLAND: -- going to -- I'm just --
9 I'd like to recognize my teachers that drove
10 the 5-hour drive down here in support. They
11 couldn't wait for the decision till I got back
12 to Polk County, they had to come with us.
13 So --
14 COMMISSIONER CRIST: Can they stand?
15 MR. BORLAND: -- would the teachers stand,
16 please?
17 I'm just going to speak briefly, and then
18 I'm going to turn it over to our speaker, which
19 is our attorney, Rafael Echemendia.
20 Basically three reasons why I feel that the
21 Cabinet needs to support our appeal:
22 Number one is the academic piece.
23 We -- we offer an outstanding academic
24 piece that a public school cannot offer in
25 Polk County. In fact, even the District agrees
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1 with that.
2 The District -- I'll quote from one thing
3 that I had read, that it actually creates a
4 utopian learning environment for the students.
5 The second -- and I'll -- I'll expand on
6 that further.
7 We off-- we will offer free tutorial
8 service before and after school to any student
9 that's fallen below grade level in any subject.
10 TREASURER GALLAGHER: That's what they
11 ought to have in every school.
12 MR. BORLAND: The other part with our
13 students that are excelling, those students,
14 with our continuous progress model in our
15 charter, if they're reading at a seventh grade
16 level, then they're going to have a
17 seventh grade reading book.
18 And the same would go with mathematics to
19 take higher mathematic courses.
20 We want to meet the needs of all the
21 students, regardless of whether they fall
22 below, or they're excelling in their subject
23 areas. The other reason that I would like to
24 list is the -- is the support from the
25 community. Not just the legislative leaders in
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1 our community that you have letters on file,
2 but also the community itself.
3 When I started out to get the word out
4 about our conversion charter, and what it was
5 about, I made sure that we had many meetings
6 with parents and community members, so they
7 understood exactly what we were trying to do
8 for our students.
9 I also wanted to make sure that every
10 parent got a chance to fill that survey out, to
11 vote, and voice either yea or nay how they felt
12 about our conversion charter school.
13 And I'll say that we've opened up with
14 about 562 students. We had 552 parents respond
15 through those surveys. Five hundred and
16 thirty-two voted for our charter.
17 And I might also say, too, that the few
18 that voted against, later came back and said
19 they really didn't understand what they were
20 voting on. I don't think some of them attended
21 the meeting, or the word got out to them.
22 But I feel that we got the word out, and
23 they support us tremendously.
24 And the last reason I'd like to say is, I'd
25 like to have the opportunity, too, to be the
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1 third conversion charter school in Polk County.
2 You know, currently we only have two. We have
3 some others coming up. But I would like to
4 have that opportunity.
5 And I believe that the Governor and his
6 Cabinet support the conversion charter schools
7 and giving students the opportunity with the
8 autonomy that we would have to create a utopian
9 school.
10 GOVERNOR BUSH: I don't know about the
11 utopian part, but how about your teachers?
12 What -- what was their --
13 MR. BORLAND: A hundred percent of the
14 teachers voted for our charter conversion
15 school.
16 MS. HAMMAC: One hundred.
17 MEMBER OF THE AUDIENCE: One hundred.
18 COMMISSIONER CRIST: Really?
19 MS. HAMMAC: We are ready to go.
20 TREASURER GALLAGHER: I'm -- I'm going
21 to -- I'm going to sort of bring this thing to
22 a head real quick here. We've been here a long
23 time today.
24 I'm -- I'm pretty solid on -- on going for
25 y'all to have a charter school, K-6. And I
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1 know you probably had the opportunity to do
2 that. I think you better take that opportunity
3 to make it work, show what a great job a
4 conversion school will do, and move on, and --
5 and fill the void that's needed right now in
6 Polk County with a -- with the -- the
7 additional school sites -- chairs for kids
8 K-5 --
9 MR. BORLAND: Yes, sir.
10 TREASURER GALLAGHER: -- and -- and not try
11 to go into a place where they have an excess
12 right now.
13 And if -- if you guys can do that, I think
14 you're going to win, getting it down there, get
15 it started, show how it works, maybe encourage
16 some other schools to do the same thing.
17 MR. BORLAND: Thank you.
18 In fact, as far as compromising, I met with
19 my SAC committee -- in fact, that SAC committee
20 grew from a handful, and when they started
21 talking about the charter, they went to 132 on
22 that SAC committee.
23 They have --
24 TREASURER GALLAGHER: Gosh. That's a
25 school --
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1 MR. BORLAND: -- agreed that --
2 TREASURER GALLAGHER: -- board --
3 MR. BORLAND: -- if we have to compromise
4 for a K through 6, or even a K through 5, that
5 we want our charter, and we want it to work.
6 TREASURER GALLAGHER: Good.
7 MR. BORLAND: So we're willing to
8 compromise.
9 And if capacity is the issue, that I think
10 I read in one of the issues about shunting out
11 students to other schools that might be
12 overcrowded, we can raise our cap.
13 Right now we're only built for
14 600 students. And we're near that capacity
15 now. But if -- if there's a place to -- if the
16 School Board will help us find a place to -- a
17 classroom to put those students in, we have no
18 problem of raising our cap.
19 GOVERNOR BUSH: What percentage of the F--
20 of the FTE amount do you get?
21 MR. BORLAND: We -- currently?
22 I'm not sure. But --
23 GOVERNOR BUSH: You convert. I mean --
24 TREASURER GALLAGHER: They'll get more.
25 MR. BORLAND: Oh, if I convert, it would be
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1 95 percent of the FTE money, and 95 percent of
2 the categoricals.
3 TREASURER GALLAGHER: And they got
4 132 people sitting on that SAC committee, going
5 to figure out how to spend it. This should be
6 a good deal. I can't wait to see that.
7 GOVERNOR BUSH: Well, that's -- that might
8 explain why the school district might be a
9 little --
10 MR. BORLAND: Okay. Could I -- the
11 attorney talk just for a few minutes?
12 GOVERNOR BUSH: Is he representing you, or
13 the school dis--
14 MR. BORLAND: He -- he's representing us?
15 TREASURER GALLAGHER: Well, let me do
16 this --
17 GOVERNOR BUSH: Is there someone from
18 Polk County here?
19 TREASURER GALLAGHER: Let's -- let's hear
20 from Polk, and then you know what my motion's
21 going to be. You -- you guys have agreed.
22 Let's hear what the other guys are going to
23 say from Polk.
24 MR. BORLAND: Oh, sure.
25 GOVERNOR BUSH: Welcome.
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1 MR. BRIDGES: Thank you, Governor Bush --
2 GOVERNOR BUSH: Commissioner Gallagher --
3 MR. BRIDGES: -- members of --
4 GOVERNOR BUSH: -- almost negotiated a deal
5 right there in --
6 TREASURER GALLAGHER: I want to hear his --
7 GOVERNOR BUSH: -- without your --
8 TREASURER GALLAGHER: I want to hear your
9 side.
10 MR. BRIDGES: My name's Wes Bridges. And I
11 represent the -- the School Board of
12 Polk County.
13 And it was my impression that we were here
14 on the appeal for a K-8 application that the
15 School Board had denied.
16 And at the time of that -- of the meeting
17 where the School Board denied that, the -- the
18 School Board offered the opportunity, and
19 requested it, of the applicants to discuss
20 that -- that very thing.
21 I -- I probably ought to lead in by a
22 little -- by way of introduction. Polk County
23 has been very, very receptive to charter
24 applicants since the very beginning.
25 We've got seven of them up and running,
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1 doing well. We have the first -- we have one
2 conversion charter in -- in Polk County right
3 now. It is having great success --
4 GOVERNOR BUSH: One of two of the State?
5 MR. BRIDGES: We have one of two in the
6 state in Polk County, yes, sir. And they've
7 had very good success.
8 I also have with me a young lady by the
9 name of Carolyn Finch, who is our district-wide
10 director of Magnate Choice and Charter, and who
11 is very well-versed in all of the -- the
12 research behind this, and the statistics, and
13 the data, so that if there are particular
14 questions, I -- I have a corporate member with
15 me as well.
16 But right now we have seven. We just
17 approved seven more. Including four conversion
18 charters.
19 So right now, it looks like in the fall,
20 we're going to be -- we're going to be looking
21 at 14 conversion charters.
22 The reason I -- I mention that is that this
23 is the single application that was turned down.
24 And the appeal was brought, not on the basis of
25 the Board's reasons for turning it down, but
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1 basically a reiteration of the application
2 itself, indicating that this -- they have a
3 good educational program, and good community
4 support. And the School Board has never
5 disputed that.
6 The School Board set out in its reasons for
7 denial, a number of -- of items that were not
8 addressed in the appeal at all.
9 I also have -- have addr-- that -- that
10 denial, by the way, I believe is before you
11 as -- as document C to the appeal itself. I've
12 also addressed that in the -- in the response
13 that the District did for your benefit.
14 But in a -- in a nutshell, the
15 School Board's position is that Berkley was
16 created in a particular location in Polk County
17 to solve a problem. We had overcrowding in a
18 number of other schools. Berkley was designed
19 to alleviate that problem.
20 As a result of Berkley's construction, we
21 have been able to remove a number of portable
22 classrooms from other campuses. Those campuses
23 all still have portable classrooms, up to 11 of
24 them at -- at a small elementary school campus,
25 but we've been able to remove some -- we are
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1 working on removing more.
2 And the School Board's position on this is
3 that by creating a middle school component in
4 this campus that was built to be an elementary
5 school, aside from the curriculum difficulties
6 in putting middle school kids in an elementary
7 school facility, we have underutilized middle
8 schools in that area.
9 GOVERNOR BUSH: Would you agree to a
10 K through 6 school? Is that what you're
11 saying?
12 MR. BRIDGES: I -- no, sir. No, sir.
13 GOVERNOR BUSH: Oh.
14 MR. BRIDGES: I don't want -- I don't wish
15 to -- to give that -- that misconception.
16 GOVERNOR BUSH: We could -- right now --
17 MR. BRIDGES: In Polk County --
18 GOVERNOR BUSH: -- if you did.
19 MR. BRIDGES: -- our elementary school --
20 our -- our elementary schools are all
21 K through 5. We have middle schools --
22 TREASURER GALLAGHER: All right. Well,
23 let's do a K-5. Will you accept a K-5?
24 MR. BRIDGES: Sir, I don't -- I don't want
25 to -- to misrepresent the Board's position. We
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1 would have -- I would have to present it to --
2 GOVERNOR BUSH: Is there --
3 MR. BRIDGES: -- the School Board.
4 GOVERNOR BUSH: -- anything else, other
5 than the K through 8 idea, which I happen to
6 think -- I mean, it exists in --
7 MR. BRIDGES: Yeah.
8 GOVERNOR BUSH: -- it may exist in
9 Polk County. It's a -- in some places, it's a
10 very useful tool to keep kids from growing old
11 fast. I mean, it's a smart thing to do I think
12 in some cases. I'm not going to --
13 MR. BRIDGES: Yes, sir.
14 GOVERNOR BUSH: -- as it relates to the
15 real estate and all the -- you know, the
16 building, and all that, there may be some
17 legitimate reasons why you're concerned about
18 that.
19 But other than that, what -- what else is
20 there about this -- it can't be the parent
21 participation --
22 MR. BRIDGES: No, sir.
23 GOVERNOR BUSH: -- you've got the unanimous
24 support from teachers. I mean, that --
25 TREASURER GALLAGHER: It can't be --
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1 GOVERNOR BUSH: -- doesn't happen --
2 TREASURER GALLAGHER: -- management.
3 MR. BRIDGES: No. That has never been an
4 issue. The only remaining issue -- or the
5 primary remaining issue would be timeliness.
6 And --
7 GOVERNOR BUSH: What --
8 MR. BRIDGES: -- time. Yes, sir. Our
9 time line. Part of the --
10 Yes, sir.
11 TREASURER GALLAGHER: What can the
12 time line be? The teachers are there, the
13 principal's there, the building's there, the
14 students are there. All it takes is the
15 School Board to say, okay. Boom, done.
16 MR. BRIDGES: No, sir, I'm -- I'm not --
17 I'm not sure that that is the case.
18 I think I would need to present it to the
19 School Board. Part of the difficulty is that
20 we -- we're doing a big business in charters.
21 Right now, we're negotiating seven of them.
22 And we also had some other applicants
23 who -- who withdrew or -- or did not file their
24 application because of the -- of the time
25 lines.
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1 And one concern that we have is opening the
2 door to what essentially would be an
3 elimination of the structure that we've had for
4 bringing applications in, evaluating, and
5 presentation.
6 TREASURER GALLAGHER: But this school has
7 gone through that process. They chose to stay
8 in, not to withdraw, they went through that
9 process, they got denied, basically because
10 they wanted to extend the years they wanted.
11 And now they're -- if they're willing to go
12 back there, you're telling me that the
13 School Board on -- on their right to appeal
14 through a legislative process, the School Board
15 has the obligation to take this up again,
16 and --
17 MR. BRIDGES: Yes, sir.
18 TREASURER GALLAGHER: -- and I would like
19 to know what -- what reason for denial they
20 would have.
21 MR. BRIDGES: What -- I'm not -- what
22 I'm -- what I'm suggesting is I would -- I
23 would take it to the School Board, absolutely,
24 as the statute requires, but I believe that
25 there is more to it than a simple -- looking at
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1 it, saying nothing has changed, it -- it would
2 be a new application.
3 TREASURER GALLAGHER: No. No. That's not
4 what this law says. It's not a new
5 application. This is -- they appealed the old
6 application.
7 MR. BRIDGES: Yes, sir.
8 But the -- but what we're talking about now
9 is doing --
10 GOVERNOR BUSH: You can modify it.
11 MR. BRIDGES: Yes, sir. We're -- we're
12 changing it --
13 TREASURER GALLAGHER: We're modifying it.
14 MR. BRIDGES: -- chang-- we're changing
15 it --
16 TREASURER GALLAGHER: Modifying.
17 MR. BRIDGES: -- and -- and going -- going
18 back to that.
19 One -- one issue that I -- I keep going
20 back to is that the School Board lean-- reached
21 out, and tried to make that happen on our -- on
22 our regular --
23 TREASURER GALLAGHER: And it didn't work --
24 MR. BRIDGES: Yes, sir.
25 TREASURER GALLAGHER: -- and they took
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1 their shot, and they lost a shot; but guess
2 what, they have a legal other shot.
3 MR. BRIDGES: Yes, sir.
4 TREASURER GALLAGHER: They took that, they
5 came up here, we're recommending it go back,
6 they've agreed to do it, what the School Board
7 originally wanted to do, there's plenty of
8 time, why won't the School Board do it now?
9 MR. BRIDGES: I'm not -- I'm not suggesting
10 that they won't. I'm suggesting that I -- I
11 cannot represent to you --
12 GOVERNOR BUSH: Okay.
13 MR. BRIDGES: -- here today --
14 TREASURER GALLAGHER: Well --
15 GOVERNOR BUSH: That's fair.
16 TREASURER GALLAGHER: -- well -- I mean,
17 what --
18 MR. BRIDGES: Yes, sir.
19 TREASURER GALLAGHER: -- would you
20 recommend that they do it? That's the only --
21 that's the question. I mean, you've been here,
22 you see what we think about it --
23 MR. BRIDGES: Well, I think -- I think the
24 recommendation is -- is -- is from the Cabinet,
25 sir. And when the -- when the recommendation
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1 comes in, it will absolutely be presented to
2 the School Board for their action, yes, sir.
3 TREASURER GALLAGHER: Well, I'm --
4 GOVERNOR BUSH: Representative Dockery, do
5 you have any comments?
6 MS. DOCKERY: As -- as the representative
7 from that area --
8 GOVERNOR BUSH: You've got to come up here.
9 MS. DOCKERY: Thank you, Mr. Governor.
10 As a representative from that area, I am
11 fully supportive of the conversion to a charter
12 school, and I hope that you all will -- will
13 support that as well. It seems like that's the
14 sentiment, and I sure do appreciate it.
15 GOVERNOR BUSH: What's your position on
16 sovereign submerged lands?
17 MS. DOCKERY: Well -- thanks for that
18 softball of a question, but I'll defer that to
19 another time, sir.
20 TREASURER GALLAGHER: She's waiting till it
21 gets appealed.
22 COMMISSIONER CRIST: Withdrawn.
23 MR. BRIDGES: If I might --
24 GOVERNOR BUSH: Please.
25 MR. BRIDGES: -- one final.
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 369
February 6, 2001
1 This is the first time that the issue -- or
2 the possibility of a K-5 application has been
3 broached.
4 We have had the issue of K-6 raised before,
5 and I -- and the -- the School Board's position
6 on that would be that it's a sim-- similar
7 issues that would be K-8 that we would be
8 drawing students out of already underutilized
9 middle schools, and we would be pushing
10 elementary students out to already overutilized
11 elementary schools.
12 But this is the first time that we've heard
13 a -- an indication of a willingness to go K-5.
14 TREASURER GALLAGHER: I'd like to recommend
15 we remand it with a K-5.
16 ATTORNEY GENERAL BUTTERWORTH: Second.
17 COMMISSIONER CRIST: Comment, if --
18 GOVERNOR BUSH: Yes.
19 COMMISSIONER CRIST: -- this is that time.
20 We recommended K through 6. K through 5 is
21 fine, if that's acceptable to the parties.
22 It's a -- from my perspective, I'm only
23 speaking for my vote.
24 Actually, Governor, we thought K through 8
25 would be kind of neat, too, to tell you the
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 370
February 6, 2001
1 truth. But --
2 So don't give up. There's another day.
3 But I would --
4 TREASURER GALLAGHER: Well --
5 COMMISSIONER CRIST: -- with their
6 approval --
7 TREASURER GALLAGHER: -- get started.
8 COMMISSIONER CRIST: -- I'll -- I'll vote
9 for it.
10 GOVERNOR BUSH: So what are we -- what are
11 we proposing?
12 TREASURER GALLAGHER: Remanding it --
13 COMMISSIONER CRIST: A motion to --
14 TREASURER GALLAGHER: Remanding it to K-5.
15 GOVERNOR BUSH: K-5?
16 All right. I'd kind of like -- if
17 Polk County just --
18 There you are.
19 If -- if the School District wants to get
20 excited about this concept, it doesn't -- just
21 because we're making this suggestion, you all
22 can do K-8 if you like.
23 Any other --
24 MR. BRIDGES: Thank you very much.
25 TREASURER GALLAGHER: Listen, I'll be glad
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 371
February 6, 2001
1 to -- to -- to, just for the record, that --
2 that I would prefer K-8, and I think everybody
3 else here would, but --
4 GOVERNOR BUSH: Well, there you have it.
5 Well, why should we restrict it?
6 They'll -- they can restrict it if they like.
7 TREASURER GALLAGHER: Well --
8 GOVERNOR BUSH: That's -- that's the --
9 TREASURER GALLAGHER: -- here's the
10 problem.
11 GOVERNOR BUSH: -- beauty of this --
12 TREASURER GALLAGHER: They've already --
13 GOVERNOR BUSH: At the end, the
14 school districts have control over this.
15 We're --
16 TREASURER GALLAGHER: Right.
17 GOVERNOR BUSH: -- only trying to provide a
18 little protection --
19 TREASURER GALLAGHER: Well, I think
20 where -- I think where we are right now is I
21 think it's going to be very hard for them to
22 turn down K-8 if we send that back.
23 If we send back K-8, they're just going to
24 take -- they're going to -- they've already
25 been through that, and they're going to say no.
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 372
February 6, 2001
1 And so I want to get -- I want to get them
2 started, I want them to have the opportunity to
3 get started. And later on, they can do it.
4 GOVERNOR BUSH: If they could also just
5 say, we're only going to do K-5, and
6 everybody'd agree, too. But --
7 COMMISSIONER CRIST: They --
8 GOVERNOR BUSH: -- they have that
9 flexibility in this process, right?
10 TREASURER GALLAGHER: They can still -- the
11 School Board can still go up, if they want.
12 GOVERNOR BUSH: Okay. Good then. Okay.
13 Any other discussion?
14 COMMISSIONER CRIST: Do we vote?
15 GOVERNOR BUSH: We have to -- we're --
16 TREASURER GALLAGHER: Oh, yeah.
17 GOVERNOR BUSH: -- going to right now.
18 We have a motion and a second.
19 All in favor, say aye.
20 THE CABINET: Aye.
21 GOVERNOR BUSH: All opposed?
22 Thank you all very much.
23 TREASURER GALLAGHER: Yeah.
24 COMMISSIONER CRIST: Deferred --
25 MR. PIERSON: Still have two items.
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF EDUCATION 373
February 6, 2001
1 COMMISSIONER CRIST: -- do it officially.
2 MR. PIERSON: Just defer it.
3 TREASURER GALLAGHER: Move to defer 3 and
4 4.
5 COMMISSIONER CRIST: Second.
6 GOVERNOR BUSH: There's a motion to defer,
7 and a second on Items 3 and 4.
8 Without objection, it's approved.
9 Thank you all very much.
10 (The State Board of Education Agenda was
11 concluded.)
12 (The Cabinet meeting was concluded at
13 3:29 p.m.)
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ACCURATE STENOTYPE REPORTERS, INC.
374
February 6, 2001
1 CERTIFICATE OF REPORTER
2
3
4
5 STATE OF FLORIDA:
6 COUNTY OF LEON:
7 I, LAURIE L. GILBERT, do hereby certify that
8 the foregoing proceedings were taken before me at the
9 time and place therein designated; that my shorthand
10 notes were thereafter translated; and the foregoing
11 pages numbered 140 through 373 are a true and correct
12 record of the aforesaid proceedings.
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties,
15 nor relative or employee of such attorney or counsel,
16 or financially interested in the foregoing action.
17 DATED THIS 19TH day of FEBRUARY, 2001.
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23 LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
24 Tallahassee, Florida 32301
850/878-2221
25
ACCURATE STENOTYPE REPORTERS, INC.
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