1
2 T H E C A B I N E T
3 S T A T E O F F L O R I D A
_________________________________________________________
4 presenting:
5 STATE
BOARD OF EDUCATION
6 DIVISION OF BOND FINANCE
ADMINISTRATION COMMISSION
7 FLORIDA LAND AND WATER ADJUDICATORY
COMMISSION
BOARD OF TRUSTEES
8 STATE BOARD OF ADMINISTRATION
__________________________________________________________
9
10 The above agencies came to be
heard before
THE FLORIDA CABINET, Honorable Governor
Bush
11 presiding, in the Cabinet Meeting
Room, LL-03, The
Capitol, Tallahassee, Florida, on
Tuesday, April 10,
12 2001, commencing at approximately
9:20 a.m.
13
14
15 Reported by:
16 NANCY P. VETTERICK
Registered Professional Reporter
17 Certified Court Reporter
Notary Public in and for
18 the State of Florida at Large
19
20
21
22 ACCURATE STENOTYPE REPORTERS,
INC.
100 SALEM COURT
23 TALLAHASSEE, FLORIDA 32301
850.878.2221
24
25
2
1 APPEARANCES:
2 Representing the Florida Cabinet:
3 JEB BUSH
Governor
4
TERRY L. RHODES
5 Commissioner of Agriculture
6 BOB MILLIGAN
Comptroller
7
KATHERINE HARRIS
8 Secretary of State
9 TOM GALLAGHER
Treasurer
10
CHARLIE CRIST
11 Commissioner of Education
12 * * *
13
14
15
16
17
18
19
20
21
22
23
24
25
3
1 I N D E X
2 ITEM ACTION PAGE
3 VOTE
4 STATE BOARD OF EDUCATION:
(Presented by Wayne Pierson)
5
1 Approved 5
6 2 Approved 5
3 Remanded 13
7
DIVISION OF BOND FINANCE:
8 (Presented by J. Ben Watkins,
III,
Director)
9
1 Approved 14
10 2 Approved 14
3 Approved 15
11
ADMINISTRATION COMMISSION:
12
(Presented by Theresa Tinker)
13
1 Approved 17
14 2 Approved 20
15 FLORIDA LAND AND WATER AJUDICATORY
COMMISSION:
16 (Presented by Theresa Tinker)
17 1 Approved 21
2 Approved 21
18 3 Approved 22
19 BOARD OF TRUSTEES:
20 (Presented by David Struhs,
Deputy Secretary)
21
1 Approved 23
22 2 Approved 29
3 Approved 29
23 4 Approved 29
5 Deferred 30
24 Substitute 6 Approved 31
Substitute 7 Approved 42
25 Substitute 8 Discussion 42
4
1 I N D E X
2 ITEM ACTION PAGE
3 VOTE
4 STATE BOARD OF ADMINISTRATION:
(Presented by Tom Herndon,
5 Executive Director)
6 1 Approved 52
2 Approved 52
7 3 Approved 53
4 Approved 59
8 5.1.1 Approved 66
5.1.2 Deferred 69
9
10
11
12
13
14
15
16 CERTIFICATE OF REPORTER 70
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25
5
1 P R O C E E D I N G S
2 (The agenda items commenced at
10:10 a.m.)
3 GOVERNOR BUSH: State Board of
Education.
4 MR. PIERSON: Item 1 --
5 GOVERNOR BUSH: Go ahead.
6 MR. PIERSON: Item 1 is the minutes
of the
7 February 6th and February 27th,
2001 meetings.
8 GOVERNOR BUSH: Is there a motion?
9 TREASURER GALLAGHER: Second.
10 GOVERNOR BUSH: Is there a motion?
11 COMMISSIONER CRIST: Motion.
12 TREASURER GALLAGHER: Second.
13 GOVERNOR BUSH: Without objection,
it's
14 approved.
15 MR. PIERSON: Item 2 is the resolutions
16 authorizing $125 million State
of Florida, State
17 Board of Education Capital Outlay
Bonds.
18 TREASURER GALLAGHER: Motion.
19 COMMISSIONER CRIST: Second.
20 GOVERNOR BUSH: Moved and seconded.
Without
21 objection, it's approved.
22 MR. PIERSON: Item 3 is Amendment
to Rule
23 6A-1.0503, Definition of Qualified
Instructional
24 Personnel.
25 GOVERNOR BUSH: Motion?
6
1 MR. PIERSON: Maureen --
2 GOVERNOR BUSH: Sorry.
3 MR. PIERSON: Maureen Dinnen, President
of the
4 Florida Education Association
has requested to
5 speak.
6 GOVERNOR BUSH: Sure. Welcome.
7 MS. DINNEN: Good morning.
8 GOVERNOR BUSH: Good morning.
9 MS. DINNEN: Good morning and thank
you for
10 the opportunity today to speak
to you, and thank
11 you for the cooperative work
of all your staff and
12 listening to our concerns over
this proposed rule.
13 Now, we fully understand, as
everybody does,
14 the severe teacher shortage that
Florida faces in
15 the next 10 years if changes
are not made to
16 attract and, more importantly,
to retain teachers.
17 We know that today over 70 percent
of our
18 Florida teachers entering the
workforce will leave
19 the profession before retirement;
however, in
20 trying to solve the problem,
it is important that
21 we, who are responsible for the
public schools in
22 our state, don't put into place
a policy that might
23 supply more teachers at the cost
of reducing
24 quality.
25 Despite good intentions, in our
opinion, this
7
1 proposed rule would do just that.
What this change
2 permits and requires is that each
school district
3 set its own criteria for what
is a qualified
4 teacher.
5 We could have 67 different sets
of criteria to
6 determine who is qualified to
teach, different in
7 Miami-Dade than in Broward, different
still in
8 Hillsborough than in neighboring
Pinellas. How
9 then will parents and communities
know if teachers
10 are qualified or if districts
are simply watering
11 down standards to meet the teacher
shortage?
12 Please don't allow this to happen.
Do not
13 allow the serious reduction in
standards for the
14 teaching profession. Florida,
as a state, should
15 be reaching for the highest quality
standards, not
16 encouraging lower certification
criteria.
17 I understand you're in a difficult
position of
18 not having a lot of latitude
in developing this
19 rule given the requirements placed
by the
20 Legislature; however, you can
change that
21 situation.
22 I ask you today to withdraw this
proposed rule
23 so the language can be fixed.
There are vehicles
24 for this to be done. We really
need to guarantee
25 that every teacher in Florida
will be held to high
8
1 standards, and every parent in
Florida can depend
2 on quality teacher certificate
requirements for
3 those who teach our children.
4 Thank you.
5 GOVERNOR BUSH: Thank you.
6 TREASURER GALLAGHER: Governor,
I'd like to
7 say something. One of the things
that bothers me
8 about this rule -- actually, I
don't -- I
9 understand the law says, and I
don't have any
10 problem with the law, but one
of the things that I
11 think we should deal with, as
the State Board of
12 Education, is specify what "demonstrated
sufficient
13 subject area expertise" means.
14 Because right now, that's going
up to be
15 whatever a county wants it to
be; so if a counties'
16 school districts will be able
to make it look like
17 they have a lot more teachers
in-field than
18 out-of-field.
19 I think it's only fair that the
parents know,
20 which the law requires now us
to report whether the
21 teachers are in-field or out-of-field.
Now, this
22 does loosen up what in-field
means, and I
23 understand that.
24 I don't totally disagree with
allowing it to
25 be loosened somewhat, but there
truly is an opening
9
1 where we're not going to get any
longer good solid
2 information from school districts
as to how many
3 in-field and out-of-field teachers
they have when
4 they can, at their own volition,
make up what
5 demonstrated sufficient subject
area expertise
6 means.
7 So I really think that it is incumbent
upon
8 us, in our carrying out our role,
that we define
9 what demonstrated sufficient subject
area expertise
10 means, and that's what rules
are for, and that's
11 what we should do as the State
Board.
12 So I'd like to move, if I may,
that we send
13 this rule back to the Department
and ask them to
14 specify what demonstrated sufficient
subject area
15 expertise means so that we will
get consistent
16 information from the districts
as to who's in-field
17 and out-of-field.
18 Now, I know this relaxes it,
and that's fine,
19 but we should get the same information
from
20 everyone so that we can measure
it equal.
21 So I'd like to make that motion.
22 GOVERNOR BUSH: Is there a second
to the
23 motion?
24 COMPTROLLER MILLIGAN: I'd like
to hear the
25 Commissioner's comment.
10
1 COMMISSIONER CRIST: This one?
2 COMPTROLLER MILLIGAN: Yes.
3 COMMISSIONER CRIST: Okay.
4 COMPTROLLER MILLIGAN: Commissioner
of
5 Education.
6 COMMISSIONER CRIST: I thought
so. I respect
7 what Commissioner Gallagher, Treasurer
Gallagher
8 has stated and understand it.
I feel, though, that
9 what we're looking at here is
whether or not we're
10 going to have local control over
what each of these
11 districts feel is appropriate.
12 It seems to me that if you trust
the locally
13 elected school board members
and their ability to
14 determine what would be appropriate
in-field and
15 out-of-field and, according to
the language of the
16 law, demonstrates sufficient
subject area
17 expertise, I think we can trust
those local elected
18 officials, and I think we ought
to implement the
19 rule as we have presented it
today.
20 COMPTROLLER MILLIGAN: If you
were asked to
21 provide further definition, is
that feasible?
22 COMMISSIONER CRIST: Oh, certainly
it's
23 feasible. There's no question
about it. I mean,
24 if that's the Board's pleasure,
we certainly will
25 do that, obviously, but it seems
to me that, you
11
1 know, that can be done at the
local level.
2 I don't see why there's a problem
with the
3 people in Hillsborough making
that determination
4 about what they feel is appropriate
for their
5 teachers, or Pinellas, or Miami-Dade.
You know,
6 they're big boys and girls. We
can trust them.
7 TREASURER GALLAGHER: The reason
I'm doing
8 this is they're still going to
be doing that.
9 That's still their job, but they
need some
10 definition from us as to what
to consider to be
11 in-field and out-of-field.
12 If you give them no criteria
other than
13 demonstrate sufficient subject
area expertise,
14 different school districts are
going to pick
15 different levels, and one of
the things that we
16 need in order to manage attracting
the teachers in
17 the right professions, giving
scholarships to
18 teachers when they come into
the areas that we need
19 to give scholarships to, which
is, in most cases in
20 the past, it's been science.
21 It's been teachers for ESOL and
ESE, and all
22 of a sudden we're going to find
out that we don't
23 have a need there, when we truly
do, if we don't
24 specify what is considered in
and what is
25 considered out.
12
1 So I'm concerned that many of
the programs
2 that we manage here, as the Board,
are going to be
3 not -- we're not going to have
good evidence as to
4 what we should be using to set
where there's a real
5 shortage in the state.
6 We're going to get -- we're not
going to get
7 good numbers, and I think we really
should
8 establish what these words mean
so that we do get
9 good numbers and as to what the
law is and
10 giving -- and knowing where the
real shortages are.
11 COMPTROLLER MILLIGAN: I'll second
the
12 Treasurer's motion.
13 GOVERNOR BUSH: Commissioner?
14 COMMISSIONER CRIST: Well, I guess
--
15 GOVERNOR BUSH: Do you have any
discussion?
16 There's a motion to -- what is
the motion, to
17 withdraw?
18 TREASURER GALLAGHER: The motion
is to send
19 the rule back and spell out what
demonstrated
20 sufficient subject area expertise
means.
21 GOVERNOR BUSH: And a second.
Any other
22 discussion?
23 (No response.)
24 GOVERNOR BUSH: All in favor of
Commissioner
25 Gallagher's motion signify by
saying aye.
13
1 (Affirmative response.)
2 GOVERNOR BUSH: All opposed? No.
The ayes
3 have it. Thank you very much.
4 GOVERNOR BUSH: Is that the end
of the --
5 yeah.
6 (The State Board of Education
was concluded.)
7
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14
1 GOVERNOR BUSH: Division of Bond
Finance.
2 TREASURER GALLAGHER: Motion on
the minutes.
3 COMMISSIONER MILLIGAN: Second.
4 GOVERNOR BUSH: All right. Moved
and
5 seconded. Without objection, it's
approved.
6 Item 2.
7 MR. WATKINS: Item 2 is a resolution
8 authorizing the issuance and competitive
sale of up
9 to $125 million in Capital Outlay
Refunding Bonds
10 for education.
11 TREASURER GALLAGHER: Motion.
12 COMPTROLLER MILLIGAN: Second.
13 GOVERNOR BUSH: Moved and second.
Without
14 objection, it's approved.
15 MR. WATKINS: Item Number 3 is
a report of
16 award on the competitive sale
of $167,200,000 of
17 PECO bonds. The bonds were sold
at competitive
18 sale and awarded to the low bidder
at a true
19 interest cost rate of 4.92 percent.
20 TREASURER GALLAGHER: Motion.
21 COMMISSIONER CRIST: Second.
22 TREASURER GALLAGHER: And that's
like a new
23 low record.
24 MR. WATKINS: This is a 30-year
loan, and the
25 first time, certainly during
my tenure, that we've
15
1 broken the 5 percent mark on --
2 GOVERNOR BUSH: Congratulations.
I know you
3 worked hard to get there.
4 MR. WATKINS: Thanks, but it didn't
have
5 anything to do with me, but we
were ready to sell.
6 TREASURER GALLAGHER: We're taking
some good
7 looks at some refinances in this
time.
8 MR. WATKINS: Yes. As they become
9 economically feasible, we're on
top of keeping --
10 staying ahead of the game so
that the
11 authorizations are in place,
and we can move
12 quickly to take advantage of
market conditions as
13 those opportunities present themselves.
14 GOVERNOR BUSH: There's a motion
and a second.
15 Without objection, it's approved.
16 Ben, can you give us a time table?
I don't
17 know if you've spoken to General
Milligan about the
18 conversation we had last Cabinet
meeting, I
19 believe, about the P-2000 and
now Florida Forever
20 Bonds, looking at a better way
to issue the bonds
21 and coordinating that with a
better way to close
22 the land deals.
23 MR. WATKINS: Yes, sir, we have,
and I've
24 briefed your staff towards where
we are on that
25 project and have reached a consensus
on a better
16
1 way to go about implementing the
Florida Forever
2 Program.
3 We would normally be back this
time of the
4 year for authorization for the
entire $300 million.
5 There is a consensus that we ought
to look at what
6 the cash needs are for expenditure
of those
7 proceeds before we proceed with
implementing the
8 entire legislative authorization.
9 GOVERNOR BUSH: General?
10 COMPTROLLER MILLIGAN: As far
as I'm concerned
11 with that, we're going to march
on, right, Ben?
12 MR. WATKINS: Yes, sir.
13 GOVERNOR BUSH: Excellent. It's
amazing what
14 a little crisis does to get the
loan.
15 TREASURER GALLAGHER: This is
something that
16 has been recommended before and
just didn't come to
17 fruition. It's a good thing.
18 GOVERNOR BUSH: And a little reform
on
19 sequencing the closings, I think
we can have an
20 incredibly efficient management
of the money.
21 TREASURER GALLAGHER: It's amazing
what
22 happens when somebody comes around.
23 GOVERNOR BUSH: Thank you.
24 MR. WATKINS: Thank you, Governor.
25 (The Division of Bond Finance
was concluded.)
17
1 GOVERNOR BUSH: Administration
Commission.
2 TREASURER GALLAGHER: Motion on
the minutes.
3 COMMISSIONER CRIST: Seconded.
4 GOVERNOR BUSH: Moved and seconded.
Without
5 objection, it's approved.
6 Item 2?
7 MS. TINKER: Item 2, recommend
approval of the
8 draft final order denying an award
of attorneys'
9 fees and costs to the Broward
County School Board.
10 TREASURER GALLAGHER: Motion.
11 COMPTROLLER MILLIGAN: Second.
12 GOVERNOR BUSH: There's a motion
and a second.
13 Question? Yes.
14 COMMISSIONER CRIST: I'm sorry.
I don't know
15 your name.
16 MS. TINKER: Terry Tinker.
17 GOVERNOR BUSH: T square.
18 COMMISSIONER CRIST: All right.
I'm C.C. and
19 you're T.T. I was curious who
-- are these
20 government lawyers who we're
moving to deny their
21 case? Are they private?
22 MS. TINKER: They're private.
They're the
23 attorneys that represented the
Broward County
24 Economic Development Council,
the Building
25 Association of South Florida,
and the Florida Home
18
1 Builders Association.
2 What happened in this case is
several years
3 ago Broward County tried to adopt
a school element
4 of its comprehensive plan that
would have imposed
5 concurrently for schools.
6 GOVERNOR BUSH: Sounds familiar
kind of.
7 MS. TINKER: And that plan amendment
was found
8 not in compliance. It came to
the Administration
9 Commission after a hearing at
the Division of
10 Administrative Hearings, and
the Administration
11 Commission entered an order finding
it not in
12 compliance and setting out the
requirements that
13 Broward County would have to
meet in order to bring
14 it into compliance.
15 Broward County tried to do that.
They went
16 through a process of trying to
meet those
17 requirements. They submitted
the plan for the
18 second time to the Department
of -- or to the
19 Department of Community Affairs.
20 DCA determined that Broward County
had, in
21 fact, not met those requirements
and found it not
22 in compliance. The matter went
to the Division of
23 Administrative Hearings. These
entities that I
24 just named intervened in that
proceeding.
25 As a result of a lot of discussion,
Broward
19
1 County chose to withdraw their
attempt to impose
2 full concurrency. These entities
have now filed
3 for award of attorneys' fees.
They are claiming
4 that Broward County did not act
in good faith when
5 it went forward to do its amendments
to try to get
6 the plan in compliance.
7 Instead it just withdrew what
it had done,
8 said they never really even attempted
to, you know,
9 do it correctly; so we're suggesting,
based on,
10 again, the Administrative Hearing
Officer's
11 recommendation, that attorneys'
fees in this
12 proceeding are not appropriate.
13 TREASURER GALLAGHER: Well, and
also the
14 lawyers won. I mean, when Broward
pulled it out,
15 that's what --
16 MS. TINKER: That's right. That's
right.
17 TREASURER GALLAGHER: It's not,
you know, like
18 they fought to win. They won
sort of the easy way.
19 MS. TINKER: Yeah. Broward County
really is
20 the losing party in this matter.
Actually it's the
21 students of Broward County that
are the losing
22 parties in this matter.
23 GOVERNOR BUSH: Actually, it's
the Department
24 of Community Affairs maybe, but
that's my own
25 problem.
20
1 TREASURER GALLAGHER: That's your
department.
2 GOVERNOR BUSH: Exactly. Well,
is there a --
3 TREASURER GALLAGHER: I made a
motion.
4 GOVERNOR BUSH: Is there a second?
5 COMMISSIONER CRIST: Second.
6 GOVERNOR BUSH: Any other discussion?
7 (No response.)
8 GOVERNOR BUSH: Are there any objections?
9 (No response.)
10 GOVERNOR BUSH: No objections.
It passes.
11 (The Administration Commission
was concluded.)
12
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20
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25
21
1 GOVERNOR BUSH: Next? Is that it?
2 MS. TINKER: Land and Water. Do
you want to
3 do Land and Water?
4 GOVERNOR BUSH: Excuse me?
5 TREASURER GALLAGHER: She said
Land and Water.
6 GOVERNOR BUSH: Oh, yeah. Land
and Water.
7 TREASURER GALLAGHER: Motion on
the minutes.
8 GOVERNOR BUSH: Is there a second?
9 COMMISSIONER CRIST: Second.
10 GOVERNOR BUSH: Moved and seconded.
Without
11 objection, it's approved.
12 Item 2?
13 MS. TINKER: Item 2, recommended
approval of
14 the proposed final rule amending
the boundaries of
15 the Lakewood Ranch Community
Development District
16 2.
17 TREASURER GALLAGHER: Motion on
2.
18 COMMISSIONER RHODES: Second.
19 GOVERNOR BUSH: Any discussions?
20 (No response.)
21 GOVERNOR BUSH: There's a motion
and a second.
22 Without objection, it's approved.
23 MS. TINKER: Item 3, recommend
approval of the
24 proposed final rule establishing
the Lakewood Ranch
25 Community Development District
5.
22
1 TREASURER GALLAGHER: Motion.
2 GOVERNOR BUSH: Is there a second?
3 COMMISSIONER RHODES: Second.
4 GOVERNOR BUSH: Moved and seconded.
Without
5 objection, it's approved.
6 MS. TINKER: Thank you.
7 (The Land and Water Adjudicatory
Commission
8 was concluded.)
9
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1 GOVERNOR BUSH: Board of Trustees.
2 TREASURER GALLAGHER: Motion on
the minutes.
3 COMPTROLLER MILLIGAN: Second.
4 GOVERNOR BUSH: Moved and seconded.
Without
5 objection, it's approved.
6 Item 2?
7 MR. STRUHS: Item 2, we've got
two speakers,
8 Governor and Members of the Cabinet,
Bob Bendick
9 and Charles Lee, to speak to this
item. The
10 Department is recommending approval
of it. I
11 believe they will be brief.
12 MR. BENDICK: Good morning. I'm
Bob Bendick,
13 State Director for the Nature
Conservancy. We are
14 strongly --
15 GOVERNOR BUSH: What's your sticker
say? I
16 can't seem to read it.
17 MR. BENDICK: What? Oh, it says
save P-2000.
18 We support this item. It represents
an effort to
19 save one of the great estuaries
in America, the
20 Indian River Lagoon. It's just
the kind of project
21 that will not happen if $100
million is taken from
22 P-2000.
23 It is one of the listed items
of those
24 projects that will be lost if
that $100 million is
25 taken, that is the Indian River
Lagoon project. We
24
1 very much appreciate the Governor's
support of
2 keeping that money, but it should
be clear that the
3 environmental groups of Florida
and the people of
4 Florida are strongly opposed to
taking that $100
5 million.
6 It will be devastating to the
future of our
7 economy, our environment, and
our children. To
8 dramatize our opposition, we're
having a press
9 conference outside the Capitol
here, between the
10 Capitol and the Supreme Court
Building, at 11:30
11 today.
12 We'd love you-all to join us
at that press
13 conference to express our support
for the legacy of
14 P-2000 and our opposition to
taking money away at
15 the 11th hour. I have for you
Save P-2000 buttons,
16 and also a summary of those projects
that will be
17 lost if this $100 million is
withdrawn from the
18 program.
19 Thank you.
20 MR. LEE: Governor and Members
of the Board of
21 Trustees, Audubon, Florida. Governor,
as we have
22 moved around the legislative
session this year
23 talking about this issue, the
double-barreled
24 threat both to the acquisition
of properties on the
25 acquisition lists of the Water
Management District,
25
1 DEP, Department of Community Affairs
projects that
2 positively have the potential
to affect the quality
3 of life of the people in Florida
from Pensacola to
4 Key West.
5 As we've talked about this issue
in the
6 Legislature, we found out that
there is a
7 tremendous amount of misinformation
that's out
8 there, which I'm afraid may have
become the basis
9 for the position that the Senate
has taken in this
10 matter, which fortunately, the
House and obviously
11 your office have not taken.
12 The Senate seems to be under
the impression
13 that the P-2000 money is not
being spent, and in
14 fact, if you talk to people close
to the
15 President's Office in the Senate,
they actually
16 will tell you, even as late as
last week, that
17 they're under the belief that
if they don't make
18 the budget transfer that they
are talking about
19 making, that the State of Florida
will be in an
20 arbitrage penalty situation this
year.
21 We find that that is simply bad
information,
22 bad information that the President
of the Senate,
23 or at least his office, seems
to be operating
24 under. The project that's on
your agenda today, a
25 very vital Indian River project,
that really
26
1 summarizes the kind of cooperation
with the county
2 participating, the state participating,
a strong
3 consensus between landowners,
government, and
4 environmental groups like the
Nature Conservancy
5 and Audubon.
6 This is the kind of project that
if we simply
7 let the money be spent in the
remaining P-2000 last
8 bond series, we will be able to
do it all over
9 Florida, and if the information
that I have seen is
10 correct, not only in terms of
what is represented
11 by the staff of the Department
of Environmental
12 Protection, but just watching
what has happened
13 here at the last three Cabinet
meetings where
14 nearly in the course of these
three meetings nearly
15 $100 million in projects have
transacted in terms
16 of the expenditure of P-2000
dollars.
17 It's difficult to believe that
the Legislature
18 is operating under this misimpression;
so we're
19 hopeful today, in the west side
of the Capitol at
20 11:30, to bring some light to
share on what the
21 real facts are.
22 We're hopeful that the Legislature
this year
23 will do what you, Governor, and
your leadership
24 recommended last year and we
succeeded in doing,
25 which was fully funding both
the Preservation 2000
27
1 program and the restoration of
the Everglades.
2 We think that's what the people
of Florida
3 expect, and we hope we'll able
to do it this year.
4 With the cooperation of the House
and hopefully the
5 Senate coming along, we should
be able to do that.
6 GOVERNOR BUSH: Thank you, Charles.
7 MR. ABBERGER: Thank you, Governor
Bush,
8 Members of the Cabinet. I'm Will
Abberger with the
9 Trust for Public Land, and we,
too, are adamantly
10 opposed to the Senate transferring
money out of the
11 Preservation 2000 Trust Fund.
12 I just want to make two points
very briefly to
13 you. Number one, I think you-all
know this, the
14 people of Florida strongly support
the State's land
15 conservation program, both at
the state and the
16 local level.
17 Not only did they approve Amendment
5 to the
18 Constitution overwhelmingly in
'98, but just this
19 fall, in 2000, six measures were
on the ballot in
20 counties across the State of
Florida for tax
21 increases for land conservation
programs throughout
22 the state.
23 All of those measurements were
overwhelmingly
24 approved by the voters, based
on a commitment, in
25 part, that if they approved a
tax increase for a
28
1 local land conservation program,
state-matched
2 dollars would be there to match
those funds.
3 So the people strongly support
this, and the
4 second point is, we strongly disagree
with the
5 Senate's contention that lands
will not be lost if
6 they make this transfer. It's
not just wilderness
7 lands and protecting our ecosystem,
which is
8 critically important, but it's
also community parks
9 and open spaces in cities in Florida
where people
10 live.
11 Again, one of the measures that
was passed in
12 November was in Broward County,
a $400 million
13 bond. When the county initially
put together their
14 list of lands to be protected
in July of '97, over
15 one-third of those lands were
gone by the time the
16 voters approved the bond in November
of '98.
17 So with the pace of development
in this state,
18 as you all know, the growth,
the lands are under
19 threat. Taking any money out
of the program will
20 lose valuable resources not only
from an
21 environmental prospective, but
also from the local
22 parks and recreations perspective.
23 Thank you.
24 GOVERNOR BUSH: Thank you. Is
there any
25 discussion on Item 2?
29
1 (No response.)
2 GOVERNOR BUSH: There's a motion
and a second.
3 Without objection, it's approved.
4 MR. STRUHS: Item 3, we're recommending
5 approval of an option agreement
to acquire 20 acres
6 within the Rookery Bay CARL project.
7 COMPTROLLER MILLIGAN: Move Item
3.
8 COMMISSIONER RHODES: Second.
9 GOVERNOR BUSH: Moved and seconded.
Any
10 discussion?
11 (No response.)
12 GOVERNOR BUSH: Without objection,
it's
13 approved.
14 MR. STRUHS: Item 4 is the Zemel/Amoni
Option
15 Agreements/Charlotte Harbor Flatwoods
CARL project.
16 I'll point out that on this one,
we did quite well
17 with a trustee's purchase price
of 90 percent of
18 the appraised value.
19 TREASURER GALLAGHER: Motion.
20 COMMISSIONER CRIST: Second.
21 GOVERNOR BUSH: Moved and seconded.
Without
22 objection, it's approved.
23 MR. STRUHS: Item 5, we're requesting
a
24 deferral.
25 TREASURER GALLAGHER: Motion deferred
until
30
1 April 24th.
2 COMMISSIONER CRIST: How come?
3 GOVERNOR BUSH: I'm sorry?
4 COMMISSIONER CRIST: How come?
Why do you
5 want it deferred?
6 MR. STRUHS: Because that's what
staff asked
7 me to do.
8 TREASURER GALLAGHER: Now you know
how it
9 works, Charlie.
10 COMMISSIONER CRIST: Well, there
you go.
11 GOVERNOR BUSH: Is there someone
here that can
12 explain why it's being deferred?
13 (No response.)
14 COMMISSIONER CRIST: That's okay.
I can find
15 out later.
16 MR. STRUHS: I'm sorry, Commissioner.
I don't
17 know.
18 COMMISSIONER MILLIGAN: I think
there was some
19 concern about the price of it
being paid versus the
20 value of the --
21 GOVERNOR BUSH: Someone brought
that up to the
22 attention of the Department maybe?
23 COMPTROLLER MILLIGAN: Yes. So
it's being
24 deferred.
25 COMMISSIONER CRIST: Very good.
31
1 GOVERNOR BUSH: There's a motion
to defer and
2 a second. Without objection, it's
approved.
3 MR. STRUHS: I stay up late studying
these
4 things, but when I see deferral,
I skip over it and
5 go to the next one.
6 GOVERNOR BUSH: Well done.
7 MR. STRUHS: Next time I won't
do that,
8 Commissioner.
9 GOVERNOR BUSH: It's a learning
experience.
10 TREASURER GALLAGHER: Item 6?
11 MR. STRUHS: Item 6, this continues
a
12 previously approved Board of
Trustees plan, as it
13 relates to the ongoing efforts
to fulfill our
14 obligation to purchase what remains
of the Save Our
15 Everglades CARL project south
of I-75.
16 TREASURER GALLAGHER: Motion on
6.
17 COMPTROLLER MILLIGAN: Second.
18 GOVERNOR BUSH: Moved and seconded.
Without
19 objection, it's approved.
20 MR. STRUHS: Item number 7 is
a little out of
21 the ordinary, and I'd like to
take a moment just to
22 lay the groundwork if I could
please. In July of
23 1994, the Department of Corrections
purchased this
24 property in question for $3,750,000.
25 Today they seek to sell that
property, and, as
32
1 you know, Florida law requires
it to be sold for
2 not less than what the purchasing
agency actually
3 paid. Unfortunately, the most
recent appraisal of
4 this property, which was conducted
in January of
5 1999, appraised it at $3,275,000,
so clearly
6 there's an issue there.
7 As the Division of State Lands
proceeded to
8 market this property for the Department
of
9 Corrections, we were advised that
we would perhaps
10 do better by subdividing the
parcel into one parcel
11 that includes the 100-bed hospital
building that's
12 4.45 acres, and the other vacant
parcel at 1.87
13 acres.
14 In order to make sure that the
bids for both
15 of these parcels would meet or
exceed the statutory
16 requirement for the sale price,
we set minimum bids
17 at $2,850,000 for the parcel
with the building, and
18 $995,000 for the 1.87 acre vacant
parcel which
19 would have provided a total of
$3,845,000.
20 In fact, the high bids came in
substantially
21 less for both parcels. $1,000,050
for the parcel
22 with the building, and $1,301,002
for the 1.87 acre
23 vacant parcel for a total of
$2,301,052. It's a
24 long way around to get to the
point where it would
25 be illegal to actually accept
these bids because
33
1 it's required to be sold for not
less than
2 $3,750,000.
3 So, at this point, what we're
seeking is your
4 approval to reject the current
bids and to sell the
5 properties in accordance with
the provisions of
6 section 18-2.020, Florida Administrative
Code.
7 I'd be happy to answer any questions
you may
8 have.
9 TREASURER GALLAGHER: I'd like
to make a
10 comment here. I was here on that
issue. It was
11 taken out of order, and the Department
of
12 Corrections wanted the ability
to go bid on this
13 property.
14 The property was in bankruptcy,
and I think
15 what I certainly expected, and
I guess the rest of
16 the Cabinet members did, is that
they were going to
17 bid at bankruptcy and at most
pay the -- maybe --
18 the mortgagee is usually going
to bid their
19 mortgage, and we bid above the
mortgage, you know,
20 for $1 or something, and, you
know, walk with it.
21 Instead, it looks to me, like
-- and, of
22 course, nobody came back to us
to tell us what
23 actually happened, which is something
we ought to
24 start requiring if we allow this
again.
25 There was an appraisal in '94
for $3,732,000
34
1 by one appraiser, and $3,775,000
by the other --
2 now, think about this -- and we
send people down to
3 bid in a chapter 11 bankruptcy
and trustee at
4 $3,750,000.
5 That's what we did, and that's
what we voted
6 for. We just can't be allowing
somebody to go do
7 that in the future 'cause that's
just -- I think
8 what happened is they wanted this
building so bad,
9 they basically paid the value
on it, and now we're
10 stuck with it because the present
appraisal is
11 what, $3,200,000.
12 MR. STRUHS: Yes, sir.
13 TREASURER GALLAGHER: So, I guess,
maybe we
14 ought to look at leasing it to
Miami Dade Community
15 College or somebody else for
a while until the
16 value gets back to where it needs
to be because
17 this is -- I mean, to just give
it away would be a
18 bad -- back out the first bad
decision with the
19 second one.
20 If there's a public use that
could be made of
21 it, I'd rather keep it and let
it go to public use
22 for a period of time rather than
break the law and
23 sell it cheaper than we paid
for it.
24 GOVERNOR BUSH: Mr. Struhs, do
you have any
25 comments about that?
35
1 MR. STRUHS: Yes, sir, I do. Obviously,
we
2 all agree with what Mr. Gallagher
--
3 GOVERNOR BUSH: Some of us are
thankful we
4 weren't around in '90 to '94 years.
5 MR. STRUHS: Some of us are very
thankful
6 right now.
7 TREASURER GALLAGHER: Some of us
thought we
8 were leaving, and they're back.
9 MR. STRUHS: Well, what I would
point out that
10 I just --
11 TREASURER GALLAGHER: Can I just
have one
12 second? I've just got to straighten
out something.
13 We did once. We didn't bid. We
went and bought it
14 before the bid --
15 MR. STRUHS: That's correct.
16 TREASURER GALLAGHER: -- which
is -- I mean,
17 that wasn't even what we authorized.
I think we
18 authorized that we go bid for
it.
19 MR. STRUHS: This is where I need
to comment
20 just for the record. We had the
very same
21 question, and we drilled into
that to find out how
22 this ever happened. In 1994,
state agencies did
23 not have the authority to go
to an auction and bid
24 in a competitive environment
for a parcel of
25 property.
36
1 They only had the authority to
negotiate and
2 deal directly with the landowner;
so we essentially
3 did not have the capacity to be
nimble or be quick
4 and work in a quick response kind
of environment.
5 Indeed, I think the history shows
that it was
6 this particular instance which
led the Cabinet to
7 then change the rules and actually
delegate to
8 agencies the authority to engage
in a more
9 businesslike transaction in an
auction environment.
10 GOVERNOR BUSH: Commissioner Gallagher
made an
11 excellent -- several excellent
points for us, but
12 one that is worthy of consideration
is that when
13 the Department takes -- is attempting
to be
14 opportunistic or have the flexibility
to buy
15 properties like this, they ought
to come back and
16 report.
17 TREASURER GALLAGHER: They probably
would have
18 made a different decision if
they knew they had to
19 come back telling us they bought
it before it even
20 went to bid. Now, we also have
to look at the
21 Legislature's order to the Department
of
22 Corrections to sell this property
in 19 -- what --
23 98 or '99?
24 MR. STRUHS: Yes, sir.
25 TREASURER GALLAGHER: So, as the
trustees, I
37
1 guess we sort of really own it,
and it's in their
2 name. Is that how it sits right
now? Could you
3 sort of fill us in on that?
4 MR. STRUHS: I'm sorry, sir.
5 TREASURER GALLAGHER: The trustees
control
6 this property, but it's in the
Department of
7 Corrections' name. Is that how
it is?
8 MR. STRUHS: That's correct, sir.
9 TREASURER GALLAGHER: So we have
the ability
10 to pull it from them for a dollar
and put it in
11 state land and lease it to another
organization
12 that could use it. Is that available?
13 MR. STRUHS: I don't know. I think
we'd have
14 to get a lawyer to --
15 GOVERNOR BUSH: I think what happens
is if
16 they don't sell it by July 1st,
it goes into
17 general revenue and not into
the Department of
18 Corrections.
19 TREASURER GALLAGHER: Well, you
know what? I
20 hate to say it, but that's probably
the way -- of
21 course, this doesn't help you
much in your budget,
22 Governor, but that's probably
what the Department
23 of Corrections deserves after
doing this kind of --
24 GOVERNOR BUSH: That was the previous
25 administration, Commissioner.
38
1 TREASURER GALLAGHER: I understand.
I
2 understand.
3 MR. STRUHS: I would like to point
out --
4 GOVERNOR BUSH: Mr. Struhs, are
there any
5 buyers? I mean, we just talked
about something --
6 TREASURER GALLAGHER: Yeah. Well,
look at the
7 price.
8 GOVERNOR BUSH: Well, are there
any buyers at
9 a price higher than the --
10 MR. STRUHS: Actually, sir, there's
one here
11 today that would like to speak
to the Cabinet.
12 GOVERNOR BUSH: Oh.
13 MR. STRUHS: Mr. Earl Bradfield,
who works for
14 the Edison Charter Schools, is
here and would like
15 to speak to the subject.
16 GOVERNOR BUSH: Fantastic.
17 COMMISSIONER CRIST: Governor,
while he's
18 coming up, may I take a point
of personal
19 privilege?
20 GOVERNOR BUSH: Sure.
21 COMMISSIONER CRIST: Thank you.
I want to
22 welcome a friend that's here
today, Ken Marks and
23 his wife, Pam, and their children,
and, I believe,
24 his in-laws. I don't think they've
ever been to a
25 Cabinet meeting before, Governor,
but I just want
39
1 to welcome them from Clearwater,
and it's good to
2 have you with us.
3 Thank you very much.
4 GOVERNOR BUSH: Welcome. Yes, sir?
5 MR. BRADFIELD: Governor and Members
of the
6 Cabinet. Thank you for allowing
me to speak. My
7 name is Earl Bradfield. I'm with
C.B. Richard
8 Ellis. We represent one of the
interested parties,
9 Edison Schools.
10 We have the largest charter school
management
11 company in the United States.
They have a contract
12 with the United Teachers of Miami-Dade
to place
13 charter schools in Dade County.
We've been
14 interested in the property for
a couple of months.
15 We've had architects take a look
at the
16 property, and we're very much
interested in either
17 buying the property or leasing
this property.
18 GOVERNOR BUSH: What about the
price?
19 MR. BRADFIELD: The price? Actually,
the
20 price is not the issue. The price
has never been
21 the issue with us. The real issue
with us is the
22 timing of the sale.
23 We do have some problems with
zoning -- not
24 really problems, but there's
some issues with
25 zoning that we need to overcome,
and we may need 60
40
1 to 120 days to overcome those
issues. I went to
2 Hialeah Zoning Department last
week and was told
3 that the process takes four months
to go through.
4 So, you know, if we could buy
the property, or
5 if we could put in an offer for
the property and
6 have an opportunity to work through
the zoning
7 issues, the price is not an issue
because we've --
8 Edison Schools has developed charter
schools and
9 hospitals before, and they find
that a former
10 hospital is a good property to
renovate into a
11 charter school.
12 GOVERNOR BUSH: Any questions?
13 (No response.)
14 GOVERNOR BUSH: Thank you.
15 TREASURER GALLAGHER: Well, I
think what we
16 need to do to get this moving
along is to reject
17 the bids that we have and allow
the Department of
18 Community --
19 GOVERNOR BUSH: Corrections.
20 TREASURER GALLAGHER: No. I'm
sorry,
21 Environment Protection to come
back to us with
22 hopefully another buyer and let
other people out
23 there, including Edison and others
that are
24 interested, to come forth with
a price that's more
25 than $37,000 -- or $2,750,000
(sic), which is what
41
1 we paid for it in 1991.
2 MR. STRUHS: I will just add that
we were able
3 to pull up the historic records
here, and what
4 actually happened in July of 1994
was that the
5 Department of Corrections was
not authorized to go
6 to the auction and bid competitively,
but instead
7 was actually sent to get to the
seller prior to the
8 auction began to offer the full
purchase price.
9 GOVERNOR BUSH: Inflated price.
10 MR. STRUHS: So that's actually
what happened.
11 In retrospect, clearly a bad
business decision, but
12 that's indeed what the Cabinet
approved in July of
13 '94. I think we've all learned
a lesson, and
14 indeed, we do now, as agencies
working on your
15 behalf, have the ability to operate
in a more
16 businesslike way and do a quick
response kind of
17 auction purchase.
18 So hopefully, we'll never be
in this situation
19 again. I've also been advised
by the Department of
20 Corrections that they believe
and indeed already
21 have in writing bids that will
meet or exceed their
22 original purchase price.
23 TREASURER GALLAGHER: I move to
reject this
24 particular bid at the present
time.
25 GOVERNOR BUSH: Is there a second?
42
1 COMMISSIONER RHODES: Second.
2 GOVERNOR BUSH: There's a motion
to reject all
3 current bids and direct the staff
to sell the
4 property in accordance to the
provisions of section
5 18-2.020.
6 TREASURER GALLAGHER: Thank you
very much,
7 Governor. That's exactly what
the motion was.
8 GOVERNOR BUSH: And a second. Without
9 objection, it's approved.
10 MR. STRUHS: Our last item, Item
Number 8, is
11 a discussion item. There is currently
a local bill
12 in the Florida Legislature that's
being considered
13 as it relates to the Daytona
Beach pier, and as we,
14 your staff, learned of this,
we felt that it was
15 something we should bring to
your attention.
16 There are currently 21 coastal
piers in the
17 State of Florida today. Going
back to the early
18 1980s, it has been the policy
of the State, the
19 policy of the trustees, to utilize
these sovereign
20 submerged lands for water-dependent
uses only.
21 In the event that this bill were
to pass the
22 Legislature, this pier would
be redeveloped for
23 non-water dependent uses. One
of the ideas that we
24 wanted to bring to you for your
consideration is
25 perhaps, as the Board -- and
we would do this as
43
1 your staff -- begin the process
of rule-making that
2 would allow the trustees to perhaps
retain a bit
3 more control over these local
governments that are
4 seeking to redevelop these piers
with non-water
5 dependent uses on sovereign submerged
lands, rather
6 than seeing them dealt with on
a case-by-case
7 basis, by the Legislature, in
which case, the terms
8 and conditions would be unique
to every pier, and
9 we might not see a clear or a
rational policy in
10 terms of how we move forward
with these proposals.
11 GOVERNOR BUSH: Aren't there other
piers in
12 the state where there are non-water
related uses,
13 restaurants, for example? I've
eaten in one in
14 Jacksonville Beach, St. Petersberg,
Miami, so are
15 these grandfathered in? Is that
--
16 MR. STRUHS: Some of them are
grandfathered
17 in, yes, sir. Some of them are
not exclusively
18 non-water dependent. It's a mixed
use.
19 GOVERNOR BUSH: It's an interesting
policy
20 question. I mean, the redevelopment
of Daytona
21 Beach is pretty remarkable what's
happening. This
22 is an element of that that --
I saw one of the
23 plans was to put an amusement
park on it. That's
24 taking it to another level.
25 Ms. Rhodes is going to have to
regulate more
44
1 affairs over water. You're asking
for -- what are
2 you asking for?
3 MR. STRUHS: Well, we're asking
for your
4 counsel really. I mean, we can
do nothing, in
5 which case, we may, over the course
of time, see
6 the Legislature, as is their right,
pass local
7 bills related to specific piers
for specific
8 purposes.
9 To the extent we feel there should
be a
10 coherent policy that would apply
to all these kinds
11 of situations, it's an opportunity
for the Board to
12 consider rule-making where we
would lay out what
13 those rules should look like,
and we would
14 obviously take a first draft
and then bring it back
15 to your -- for your consideration.
16 TREASURER GALLAGHER: Well, I
-- I don't
17 really think we should set up
a rule. I think if
18 you do a rule, then what will
happen is -- I guess
19 an example would be what we did
with Duck Key. The
20 City would say, okay, we're going
to, you know, put
21 this structure there because
we want it, and
22 therefore, they'll be able to,
you know, do it
23 under this rule.
24 You know, the City would be that,
you know,
25 the applicants are therefore
-- the rule would say
45
1 that we give them that opportunity.
If we don't,
2 that's why we don't have a rule.
They still have
3 to come to us.
4 Number two, if we don't have a
rule, it would
5 require a local bill or a general
bill to pass. We
6 would set it up, which is the
situation we're here
7 in, and, number one, the Governor
would look at
8 that and see whether it made sense
from his side,
9 and it still has to come back
here.
10 If the Governor doesn't veto
it, it still
11 would come back here, and we
would get to look at
12 it as a policy decision. I think
each one of these
13 should be looked at both by the
Governor's
14 Office -- they do have a legislative
to vote it
15 in -- and we should vote on this
policy decision on
16 whether or not it makes sense
and it's not, you
17 know, some corporation trying
to use the local
18 government to set up some kind
of a business on the
19 property, so --
20 GOVERNOR BUSH: Commissioner,
how would it
21 work if the legislation was passed
and it was
22 open-ended saying the use --
this were any use, and
23 then it comes to us? We have
a policy that might
24 prohibit that, but the statute
is clear that
25 they're permitting a use that
we may not agree
46
1 with.
2 Do we have the power --
3 TREASURER GALLAGHER: Well, the
first person
4 that gets to disagree with that
would be you. If
5 you didn't agree, it would obviously
go into the
6 veto message.
7 GOVERNOR BUSH: I got that part,
but the next
8 part --
9 TREASURER GALLAGHER: Short of
that, I
10 guess we have to comply.
11 GOVERNOR BUSH: Exactly, so the
second step
12 that you brought up, if the law
is clear enough,
13 there's no way to -- I mean,
the policy versus
14 statute, the statute wins.
15 TREASURER GALLAGHER: Absolutely.
Just as if
16 we did a rule that people didn't
like, the statute
17 could be passed to change that
rule, so, you
18 know -- well, I mean, you still
have -- the
19 Legislature still has the final
say of the policy.
20 GOVERNOR BUSH: The first suggestion
may be to
21 seek input as to try to guide
the legislation that
22 you're -- that brought this to
the Cabinet in a way
23 that avoids the veto.
24 COMMISSIONER CRIST: I have a
question,
25 Governor.
47
1 GOVERNOR BUSH: Yes.
2 COMMISSIONER CRIST: Actually,
I guess two.
3 If you know, Mr. Secretary, whether
or not -- I'm
4 informed by my Department there's
no precedent in
5 this methodology. Is that correct?
This has never
6 happened in the history of the
State of Florida in
7 this fashion?
8 MR. STRUHS: I believe that's true,
yes.
9 COMMISSIONER CRIST: I believe
it is, too. I
10 mean, that's what we have found.
You're closer to
11 it than we are. Another concern
environmentally,
12 clearly is the sea turtle issue,
I think is
13 something that relates here.
14 Have you received any information
along those
15 lines?
16 MR. STRUHS: This area of Volusia
County is
17 actually a very productive sea
turtle nesting area
18 as I'm sure you know.
19 COMMISSIONER CRIST: Correct.
20 MR. STRUHS: Yes, sir.
21 TREASURER GALLAGHER: They've
got some strong
22 claws to dig through that. It's
like concrete.
23 COMMISSIONER CRIST: It's a big
deal.
24 GOVERNOR BUSH: So it must not
be the part of
25 the beach where the cars go by.
48
1 TREASURER GALLAGHER: I hope not,
but that's
2 cut like a concrete beach, and
I don't think they
3 would let --
4 GOVERNOR BUSH: Are you getting
any guidance
5 here, Secretary?
6 MR. STRUHS: Well, my guidance
would be for
7 the Department to take a first
stab at drafting
8 some proposed rules for your consideration
which
9 you can then either choose to
pursue or not.
10 I believe that if done well,
that all the
11 parties, the environmental community
as well as the
12 municipalities, that may want
to pursue these
13 projects in the future may be
better off, and see
14 if we have a clear pathway that
would be
15 predictable and up front rather
than, in every
16 instance, seeking a change to
law to create a new
17 set of standards or for performance.
18 COMMISSIONER CRIST: So that will
mean rules
19 in lieu of law?
20 MR. STRUHS: Clearly you could
pass -- you
21 could pass or adopt rules, and
even if you adopted
22 rules, the Legislature still
has the prerogative,
23 as you know, to come in and pass
a law that would
24 overrule them, but the thinking
is if there are
25 clear rules in place that are
fair and reasonable,
49
1 and all the parties could work
within those rules,
2 it would avoid the need for legislating
these on a
3 case-by-case basis in the future.
4 TREASURER GALLAGHER: But just
remember, when
5 you have a rule that's called
the authorization for
6 pier projects by governmental
entities, that's like
7 an invitation to start building
them.
8 SECRETARY HARRIS: Right.
9 MR. STRUHS: I agree with that,
and it's
10 something that you'll need to
take into
11 consideration and be very cautious
of.
12 GOVERNOR BUSH: Secretary Harris.
13 SECRETARY HARRIS: Thank you.
I think we're
14 still discussing that in terms
of a policy
15 position. We don't want to see
something, as
16 Commissioner Gallagher said,
that promulgates these
17 ideas for all the piers.
18 On the other hand, if we don't
have some type
19 of standards to, you know, just
to state up front,
20 it would be difficult, but even
so, Secretary
21 Struz, this would still be the
first step. This
22 rule pollination, and then it's
kind of an end run.
23 The Legislature comes in and
does a local
24 bill, I suppose, but then they
would still have to
25 go through all kinds of environmental
permitting
50
1 and things like that; is that
correct? There's
2 still -- even today, you still
have the authority
3 to look from a regulatory standpoint.
4 MR. STRUHS: Yes. Secretary, you're
correct.
5 It would still be the regulatory
oversight or the
6 permitting process, but would
negate the need to
7 come before the Cabinet for the
sovereign submerged
8 land lease or the lease conditions
that sometimes
9 you impose.
10 TREASURER GALLAGHER: I think
it's a very good
11 policy being discussed. There's
no doubt about
12 that. This issue brought up because
of Daytona
13 obviously affects Daytona because
they're taking
14 the statutory method, and I'm
sure they did it
15 because if they came to us asking
for a rule, it
16 would take a while to do the
rule.
17 I have a strong feeling that
those rules would
18 be challenged, which would take
another while, and
19 it would be a year or -- what
do you think? -- two
20 maybe --
21 MR. STRUHS: Yes, sir.
22 TREASURER GALLAGHER: -- maybe
longer for
23 anything to be done; so they're
taking, you know,
24 the route that makes sense to
them if they can get
25 the Legislature to approve it.
Maybe the others
51
1 will do the same. I don't know.
2 SECRETARY HARRIS: Commissioners
and
3 Secretary, the Governor would
have the authority to
4 veto the local bill if, indeed,
he felt that that
5 was inappropriate.
6 GOVERNOR BUSH: I hope I have the
authority.
7 MR. STRUHS: Yes, sir.
8 TREASURER GALLAGHER: You do.
9 GOVERNOR BUSH: Any other discussion?
10 (No response.)
11 GOVERNOR BUSH: Thank you, Secretary.
12 MR. STRUHS: Thank you very much.
13 (The Board of Trustees was concluded.)
14
15
16
17
18
19
20
21
22
23
24
25
52
1 GOVERNOR BUSH: State Board of
Administration.
2 MR. HERNDON: Good morning, Governor
and
3 Members.
4 GOVERNOR BUSH: Once again, I welcome
the
5 Cabinet to stay and listen to
the stimulating
6 discussion.
7 TREASURER GALLAGHER: Move.
8 GOVERNOR BUSH: Is there a second?
9 COMPTROLLER MILLIGAN: There is.
10 GOVERNOR BUSH: Moved and seconded.
Without
11 objection, it's approved.
12 Item 2?
13 MR. HERNDON: Item 2 is approval
of fiscal
14 sufficiency not exceeding $125
million, State of
15 Florida, Full Faith and Credit,
State Board of
16 Education Capital Outlay Bonds.
17 (Secretary Harris, Commissioner
Rhodes and
18 Commissioner Crist exit room.)
19 COMPTROLLER MILLIGAN: Motion.
20 TREASURER GALLAGHER: Second.
21 GOVERNOR BUSH: Moved and seconded.
Without
22 objection, it's approved.
23 MR. HERNDON: Item Number 3 is
an item that is
24 back before you this morning
on a deferral from
25 Comptroller Milligan's office
relating to the
53
1 Florida Focused Venture Capital
Fund.
2 COMPTROLLER MILLIGAN: And, Governor,
I'm
3 going to have to ask for a deferral
again to the
4 first meeting in May.
5 MR. HERNDON: The first meeting
in May?
6 COMPTROLLER MILLIGAN: Yes, sir.
7 MR. HERNDON: That would be the
May 15th
8 meeting. Governor and Members,
we're not under any
9 kind of time line or anything
like that, so it's
10 totally up to you.
11 TREASURER GALLAGHER: Second.
12 GOVERNOR BUSH: I'm going to Boston
tomorrow.
13 TREASURER GALLAGHER: Tell them
you've got to
14 work on the 15th of May.
15 GOVERNOR BUSH: There's a motion
to defer till
16 the May 15th meeting; is that
right?
17 COMPTROLLER MILLIGAN: Yes, sir.
18 TREASURER GALLAGHER: Second.
19 GOVERNOR BUSH: And a second.
Without
20 objection, it's approved.
21 MR. HERNDON: Item Number 4 is
a proposed
22 amendment to our current year
operating budget to
23 accommodate some anticipated
changes in the DC
24 program. You will recall, when
we presented this
25 budget to you several months
ago, it was with a
54
1 certain amount of speculation
on our part, given
2 the uncertainties with workload
and so forth.
3 We are now proposing a $2.3 million
increase
4 in our budget authority for the
balance of this
5 fiscal year. Recognize that it
will only take us
6 up to July 1st, but a substantial
portion of those
7 moneys of the $2.3 million are
for the education
8 program, for example, some start-up
costs and also
9 for the third-party administrator
start-up costs;
10 so those costs will have to be
incurred into the
11 program whether it occurs before
July 1st or after
12 July 1st.
13 Other aspects relate to workload
14 considerations on the part of
the consultants that
15 we have hired. We've also frankly
budgeted some
16 additional moneys for further
litigation expenses,
17 although frankly we're hopeful
that that won't be
18 necessary.
19 I'm not sure that it will be
at this point,
20 but we went ahead and budgeted
some moneys. Of
21 course, if those are not necessary,
they won't be
22 spent. They'll just simply roll
over and be
23 available for a re-expenditure
reauthorization next
24 year, next fiscal year.
25 We will bring back to you in
May our proposed
55
1 operating budget for the Board
for both the DB plan
2 and the DC plan starting July
1st, and that's going
3 to be quite a bit different than
this budget. This
4 budget is simply short-term, expedient,
quite
5 frankly.
6 GOVERNOR BUSH: Any discussion?
7 COMPTROLLER MILLIGAN: I certainly
am willing
8 to approve this at this stage,
but I am concerned
9 about the costs associated with
the defined
10 contribution and if we need to
take a good hard
11 look at what it is we're buying
into in terms of
12 costs.
13 I look at re-ocurring costs right
now say for
14 2003, I think it is. Some projected
it's up around
15 $20 million or about .15 percent
of the anticipated
16 assets that are going to be involved
in the defined
17 contribution. That seems to be
very high to me.
18 GOVERNOR BUSH: Those are recurring
numbers?
19 COMPTROLLER MILLIGAN: Yes.
20 TREASURER GALLAGHER: That's $2.7
million in
21 20304 for 405 is 23.6. Then it
goes up 506. It's
22 estimated to be at 26.4, .14
percent of the total
23 assets.
24 COMPTROLLER MILLIGAN: Compared
to the defined
25 benefits, where we are right
now, I think we're
56
1 more like -- what, Tom, .09 and
.08?
2 MR. HERNDON: We spent, in terms
of the fee
3 that we charge, 1.75 basis points
to all of our
4 clients, so less than .02 of a
percent is the fee
5 that is charged to our clients
for current service.
6 Now that doesn't take into consideration
the
7 fees that we paid outside managers.
In total, our
8 operating budget is about 16 basis
points, 1.6
9 percent roughly of the assets
of the fund. It's
10 difficult at this point to --
11 TREASURER GALLAGHER: But this
is on top of
12 that?
13 GOVERNOR BUSH: Well, I mean,
you could say
14 that the defined benefits cost
is on top of the
15 defined contribution costs.
16 COMPTROLLER MILLIGAN: I have
less problem
17 with that. That was the number
that it wasn't
18 quite what I thought it was.
I think it's
19 something we should be concerned
about and need to
20 look at.
21 GOVERNOR BUSH: I think we need
to have a
22 thorough review of the costs
to see where maybe
23 there's some best practices on
large plans like
24 this, and maybe we can look at.
I was always
25 thinking that there was some
front-end costs that
57
1 were pretty extraordinaire that
the recurring costs
2 would be, as we went through the
education
3 process --
4 MR. HERNDON: You will see that
pattern,
5 Governor. Clearly our forecast
for the first year
6 of transition is substantially
higher because you
7 have a dramatic education component
that costs the
8 State some.
9 GOVERNOR BUSH: Right. Now, when
you say, to
10 16 basis points, to me, 160 basis
points is --
11 MR. HERNDON: 1.6 percent, right.
12 GOVERNOR BUSH: -- 1.6. So are
you 16 basis
13 points or 160?
14 MR. HERNDON: Sixteen basis points.
15 TREASURER GALLAGHER: .14 percent.
16 MR. HERNDON: That's right.
17 COMPTROLLER MILLIGAN: So they're
about
18 comparable.
19 MR. HERNDON: Well, the difficult
part of this
20 equation is that what we are
able to forecast thus
21 far is the anticipated cost for
the elements that
22 we can price. We can price third-party
23 administrator. We can price the
education, and
24 we're beginning to get a handle
on pricing some of
25 the transition brokerage services
and so forth.
58
1 What we can't price is the fee
that will be
2 charged by the investment firms
to the members.
3 That's an element that we're going
to get a much
4 better handle on. I was going
to mention as an
5 aside that we got the response
to the bundled RFI
6 Friday evening.
7 We had 20 firms respond, 380 products
that
8 they're proposing, and one of
the tasks that we're
9 going to undertake is to try and
calculate for you
10 an average fee that those 380
firms would charge
11 the members.
12 That will give you -- will begin
to give you
13 some feel for what the investment
side of this
14 equation is going to cost. That's
where the big
15 dollars are. There's no question
that that's where
16 the significant price is.
17 We spent a little bit of time
with your staff
18 going through some of the budget
projections that
19 we're able to make, and I think
in the next couple
20 of weeks, we'll be in a position
to give you a much
21 better sense of that now that
we've got that
22 information available from Friday's
--
23 COMPTROLLER MILLIGAN: Again,
I'm not trying
24 to raise a red herring here.
I'm just saying
25 that's something that needs to
be looked at
59
1 closely, and I hope it's further
defined, Tom, and
2 that will --
3 MR. HERNDON: Yes, sir.
4 COMPTROLLER MILLIGAN: -- be part
of our
5 discussion.
6 MR. HERNDON: Absolutely.
7 TREASURER GALLAGHER: Well, we
recognize that
8 when you go to the defined contribution,
there's
9 additional cost because each individual
is making
10 choices, and it costs money to
make those choices;
11 so it's part of it.
12 GOVERNOR BUSH: Is there a motion?
13 COMPTROLLER MILLIGAN: Motion.
14 TREASURER GALLAGHER: I'll second
it.
15 COMPTROLLER MILLIGAN: I moved.
16 GOVERNOR BUSH: Moved and seconded.
Without
17 objection, it's approved.
18 Tom, can you give us a quick
briefing, just on
19 the legislation and the --
20 MR. HERNDON: Yes, sir. As you
will recall,
21 we have the proposed bill by
Representative Fasano
22 that amends the program. We have
been working with
23 Representative Fasano's office
for several weeks as
24 I know many of you have as well.
25 I'm pleased to say that I think
90 percent of
60
1 our problems with the legislation
have been
2 mitigated. Representative Fasano's
bill has passed
3 all of the relevant committees
in the House not
4 unsurprisingly, and we most certainly
expect it to
5 pass the full House anyday.
6 It has not had a hearing in the
Senate. No
7 bill has had a hearing in the
Senate although the
8 trust fund bill is up this afternoon
in the Senate
9 GOP committee, and we expect that
the Senate
10 counterpart to Representative
Fasano's bill may
11 also come up perhaps Thursday
of this week.
12 Our anticipation is that we will
see the same
13 amendment that was put on the
House bill by
14 Representative Fasano on the
Senate committee
15 proposal, and with any luck,
we'll be able to get a
16 couple of last little items squared
away and then
17 be comfortable representing to
you and the other
18 Members that the bill is in good
shape.
19 It's not quite there, but 90
percent of the
20 way there.
21 GOVERNOR BUSH: Thank you.
22 MR. HERNDON: It looks pretty
good. I might
23 just add, Governor, while we're
mentioning a little
24 bit of a status report, which
we'll will have for
25 you at the next Cabinet meeting,
but we've also
61
1 completed some selection work
on the transition
2 broker.
3 I'm very pleased with the bids
there. The
4 selection team met yesterday and
looked at the
5 media firm and picked a firm to
recommend. We've
6 also got recommendations on the
three of the first
7 unbundled providers.
8 All of that will go to our advisory
councils,
9 the two councils on the 18th of
this month, and
10 then come to you on the 24th
for your
11 consideration; so we're making
good progress in
12 that regard.
13 GOVERNOR BUSH: Very good.
14 MR. HERNDON: Item number 5 is
a set of three
15 items from the Florida Hurricane
Catastrophe Fund.
16 With your permission, what we'd
like to do is go
17 ahead and have Dr. Nicholson
walk you through these
18 items, but the end result is
going to be to ask for
19 a deferral.
20 We are discussing the whole question
of
21 mitigation and the insurance
premiums that result
22 from the mitigation dollars with
the Chairman of
23 the House Appropriations Committee.
24 Rather than adopt a premium formula
and so
25 forth today only to have it possibly
change in the
62
1 course of the next couple of weeks,
it seems
2 worthwhile to wait until the May
15th meeting and
3 bring this back, but with your
permission, we'll go
4 ahead and let Dr. Nicholson walk
you through the
5 item, what you have, and then
we may be in a
6 position to move forward.
7 GOVERNOR BUSH: Aren't we going
to have a
8 discussion about the appropriation?
9 MR. HERNDON: Well, we can. Basically,
what
10 the House Appropriations Committee
has done is
11 appropriated an additional $20
million on top of
12 the minimum $10 million that
is typically earmarked
13 out of the appropriation process
for mitigation for
14 a total of $30 million.
15 That does have an impact on the
premium that
16 would be charged under the statutory
obligation to
17 establish an actuarially approved
premium for home
18 owners out there, and so that's
the issue is that
19 additional $20 million is not
on the Senate side.
20 It is on the House side, and
Representative
21 Lacasa has written us a letter.
We have a response
22 going back to him today on the
very question of how
23 do you establish the premium
based on the amount
24 that's appropriated for mitigation?
25 How do you, in fact, reflect
the actuarial
63
1 soundness of the premium that
we're proposing to
2 charge, and Representative Lacasa
has asked a
3 question or several questions
relating to the
4 practice of the Board and the
CAT Fund has had for
5 several years in discounting the
premium for the
6 anticipated investment earnings.
7 That issue is really in many respects
central
8 to what Representative Lacasa
is concerned about,
9 is the fact that we have discounted
premiums for
10 anticipated investment earnings
has allowed us to
11 keep premiums at a lower level.
12 In fact, for the entire period
of time since
13 inception premiums are almost
a billion dollars
14 less than they would have been
had we had the
15 premium not discounted for future
investment
16 returns.
17 That's the issue, and around
our intention is
18 to simply lay that out for Representative
Lacasa.
19 Obviously the Legislature has
the authority to make
20 those decisions, if they choose,
subject to action
21 by yourself, Governor, as you
were talking about
22 with Secretary Struz, you always
have those
23 options.
24 But we're hoping that we can
persuade him. I
25 think the central point is that
the CAT Fund is
64
1 sitting here with almost $4 billion
in cash on hand
2 and a bonding capacity of $11
billion, and we've
3 achieved that using this discounted
process that's
4 allowed us to keep premiums $1
billion less than
5 they would have otherwise been.
6 Your responsibility is to weigh
the interests
7 of the premiums versus cash accumulation.
We think
8 you've done that well.
9 GOVERNOR BUSH: He's put the appropriation,
at
10 least -- I don't know where the
$10 million goes,
11 but the $20 million that I saw
is for a very worthy
12 objective. It's not a -- it may
be the wrong place
13 to get it from.
14 TREASURER GALLAGHER: I think
the issue is
15 if -- and I will tell you, I
was the guy that did
16 this bill to get it set, and
I'm concerned that the
17 industry has had from day one
-- and a concern I
18 have too is that because it's
such a large amount
19 of money sitting there, it's
very tempting to reach
20 in and grab.
21 GOVERNOR BUSH: Like P-2000.
22 TREASURER GALLAGHER: And part
of the --
23 exactly. And part of the issue
is that this is
24 premiums paid by policyholders,
that if you take it
25 out, it has to be made up in
order to be
65
1 actuarially sound with the obligations
that the CAT
2 Fund has made.
3 So the $10 million that is by
law and was set
4 up and helped to get the tax-free
status, that $10
5 million is there to be used for
mitigation
6 purposes. You know, if it should
have been 20 or
7 30 from the beginning, that would
have been fine,
8 but it would have been for mitigation
purposes, and
9 it would have had a higher --
we would have been
10 paying a higher rate, you know,
from the insurers.
11 The policy decision was made.
At the time, it
12 was 10. We're going to have some
people pretty
13 upset if we reach in and raise
it, and we can't set
14 the rate, which is what we're
here to do today,
15 until we know whether --
16 GOVERNOR BUSH: Life is full of
difficult
17 choices, isn't it?
18 TREASURER GALLAGHER: Exactly.
19 MR. HERNDON: Just as a point
of
20 clarification, too, Governor
and Members, what we'd
21 suggest is that we defer the
premium formula
22 element, but we would like your
permission to move
23 ahead with the contract, the
amendments to the
24 contract and so forth. Dr. Nicholson
can walk you
25 through that.
66
1 GOVERNOR BUSH: That's a lot of
paper, Doctor.
2 DR. NICHOLSON: It's just to strengthen
my
3 arms.
4 GOVERNOR BUSH: Oh, good. You're
not going to
5 go through all that, are you?
6 DR. NICHOLSON: No. We have two
agenda items,
7 and the first has to do with filing
a notice of
8 change in our reimbursement contract
forms and our
9 insurer reporting forms. Then,
also, to take up
10 the CAT forms and file those
for adoption, the
11 amended forms and then file those
for adoption.
12 We would like for you to approve
that. That
13 has been approved by our advisory
council subject
14 to hearings and so forth.
15 TREASURER GALLAGHER: I move Item
B. Both are
16 in Item B.
17 COMPTROLLER MILLIGAN: Well, I'm
looking at it
18 a little bit different. Okay.
The rule is the
19 filing of the notice of change.
20 DR. NICHOLSON: Yeah, 1.1 and
--
21 COMPTROLLER MILLIGAN: Yeah, 1.1.
22 TREASURER GALLAGHER: Okay.
23 GOVERNOR BUSH: Is there a second
then?
24 COMPTROLLER MILLIGAN: Then I
second 1.1.
25 GOVERNOR BUSH: Moved and seconded.
Without
67
1 objection, it's approved.
2 DR. NICHOLSON: Today I want to
talk about the
3 premium formula and answer your
questions on it and
4 so forth. The overall impact to
the CAT Fund with
5 this premium formula is a negative
.02 percent --
6 it's like one-fifth of 1 percent
reduction in
7 overall rates.
8 However, there has been some reallocations
9 within the CAT Fund rates based
on the type of
10 business, for example, residential,
mobile home,
11 commercial, residential. There's
been some changes
12 brought about through defining
new territories,
13 that the new territories were
brought about by
14 considering only excess losses
to the layer that we
15 actually covered in the CAT Fund,
and then
16 combining some model this time
that should create
17 greater stability over the long
run and actually
18 reflect the appropriate territorial
differences
19 versus the way we've been doing
it in the past.
20 Then the other change has to
do with the
21 allocation to the JUA and the
Wind pool. They
22 actually have more coverage in
the CAT Fund because
23 they're able to collect any excess
left over after
24 all other insurers collect their
share of the
25 capacity based on their premiums,
so that
68
1 reflection is in here.
2 About 4 percent greater losses
is what we
3 anticipate for the JUA and the
Wind was a result of
4 that. The only item that really
jumps out at you
5 is the commercial/residential,
and that rate change
6 tends to go up 12.82 percent,
but a little
7 explanation is in order there.
8 We have two ways of rating insurers.
We have
9 manual rating, and then we have
what's called
10 section 2, rating or individual
company rating,
11 that's done when we have companies
that write
12 excess or layered policies.
13 Since there's no way to calculate
all the
14 rates associated with that, we
run an individual
15 model for those companies and
calculate their
16 rates. Well, in the past year,
we had one company
17 change from that way of rating
to manual rating
18 which actually increased for
one category.
19 It was a superior noncombustible
category. It
20 increased the number of exposures
in that category
21 from 11 to 1245. The dollar amount
went from $11
22 million to $18.7 billion; so
that had a major
23 effect there that pushed up that
on category, but
24 excluding that one category,
all other commercial
25 rates would have gone up on the
average of 6
69
1 point -- excuse me, 4.65 percent.
2 It was a typo in our original
report, but that
3 would have been the overall impact
on the overall
4 commercial rates otherwise.
5 GOVERNOR BUSH: Any discussion?
6 TREASURER GALLAGHER: That's 1.2?
7 DR. NICHOLSON: That's deferred.
8 TREASURER GALLAGHER: That's right.
That's
9 part of the rates, right.
10 GOVERNOR BUSH: Is there a motion
to defer?
11 TREASURER GALLAGHER: Motion to
defer.
12 COMPTROLLER MILLIGAN: Seconded.
13 GOVERNOR BUSH: Moved and seconded.
Without
14 objection, the motion is deferred.
15 DR. NICHOLSON: That completes
the agenda.
16 GOVERNOR BUSH: Thank you.
17 DR. NICHOLSON: Thank you.
18 (Meeting concluded at 11:15 a.m.)
19
20
21
22
23
24
25
70
1 CERTIFICATE OF REPORTER
2
3 STATE OF FLORIDA:
4 COUNTY OF LEON:
5 I, NANCY P. VETTERICK, do hereby
certify that
6 the foregoing proceedings were
taken before me at the
7 time and place therein designated;
that my shorthand
8 notes were thereafter translated
under my supervision;
9 and the foregoing pages numbered
1 through 69 are a true
10 and correct record of the aforesaid
proceedings.
11 I FURTHER CERTIFY that I am not
a relative,
12 employee, attorney or counsel
of any of the parties, nor
13 relative or employee of such
attorney or counsel, or
14 financially interested in the
foregoing action.
15 DATED THIS 23RD DAY OF APRIL,
2001.
16
17
18
19 ___________________________
NANCY P. VETTERICK
20 100 SALEM COURT
TALLAHASSEE, FL 32301
21 (850) 878-2221
22
23
24
25
Cabinet
Affairs
