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: DIVISION OF BOND FINANCE FINANCIAL SERVICES COMMISSION, OFFICE OF INSURANCE REGULATION DEPARTMENT OF REVENUE DEPARTMENT OF VETERANS' AFFAIRS ADMINISTRATION COMMISSION FLORIDA LAND AND WATER ADJUDICATORY COMMISSION DEPARTMENT OF ENVIRONMENTAL PROTECTION SITING BOARD BOARD OF TRUSTEES, INTERNAL IMPROVEMENT TRUST FUND STATE BOARD OF ADMINISTRATION 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 September 19, 2006, commencing at 9:10 a.m. Reported by: JO LANGSTON Registered Professional Reporter Notary Public ACCURATE STENOTYPE REPORTERS, INC. 2894 REMINGTON GREEN LANE TALLAHASSEE, FLORIDA 32308 (850) 878-2221 2 APPEARANCES: Representing the Florida Cabinet: JEB BUSH Governor CHARLES H. BRONSON Commissioner of Agriculture CHARLIE CRIST Attorney General TOM GALLAGHER Chief Financial Officer * * * ACCURATE STENOTYPE REPORTERS, INC. 3 1 I N D E X DIVISION OF BOND FINANCE 2 (Presented by BEN WATKINS) ITEM ACTION PAGE 3 1 Approved 5 2 Approved 5 4 3 Approved 6 4 Approved 6 5 5 Approved 6 6 FINANCIAL SERVICES COMMISSION, OFFICE OF INSURANCE REGULATION 7 (Presented by STEVE PARTON) ITEM ACTION PAGE 8 1 Approved 7 2 Approved 10 9 3 Approved 10 4 Approved 10 10 5 Approved 16 11 DEPARTMENT OF REVENUE (Presented by JIM ZINGALE) 12 ITEM ACTION PAGE 1 Approved 20 13 2 Approved 20 3 Approved 21 14 4 Approved 22 15 DEPARTMENT OF VETERANS' AFFAIRS (Presented by ROCKY McPHERSON) 16 ITEM ACTION PAGE 1 Approved 23 17 2 Approved 23 3 Discussion 23 18 ADMINISTRATION COMMISSION 19 (Presented by Teresa Tinker) ITEM ACTION PAGE 20 1 Approved 34 2 Approved 35 21 FLORIDA LAND AND WATER ADJUDICATORY COMMISSION 22 (Presented by Teresa Tinker) ITEM ACTION PAGE 23 1 Approved 36 2 Approved 36 24 3 Approved 37 4 Approved 37 25 ACCURATE STENOTYPE REPORTERS, INC. 4 1 CONTINUED INDEX 2 DEPARTMENT OF ENVIRONMENTAL PROTECTION SITING BOARD (Presented by COLLEEN CASTILLE) 3 ITEM ACTION PAGE 4 1 Approved 38 2 Approved 38 5 6 BOARD OF TRUSTEES, INTERNAL IMPROVEMENT TRUST FUND (Presented by COLLEEN CASTILLE) 7 ITEM ACTION PAGE 8 1 Approved 39 2 Approved 39 9 3 Deferred 57 4 Approved 61 10 5 Approved 64 11 STATE BOARD OF ADMINISTRATION 12 (Presented by COLEMAN STIPANOVICH) 13 ITEM ACTION PAGE 1 Approved 65 14 2 Approved 65 3 Approved 66 15 4 Approved 66 5 Approved 66 16 6 Approved 74 17 18 19 CERTIFICATE OF REPORTER 77 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. 5 1 P R O C E E D I N G S 2 (The agenda items commenced at 9:20 a.m.) 3 GOVERNOR BUSH: Now we'll go to our agenda. The 4 Division of Bond Finance. Ben, how are you doing? 5 MR. WATKINS: Very good, Governor. 6 CFO GALLAGHER: Motion on the minutes. 7 COMMISSIONER BRONSON: Second. 8 GOVERNOR BUSH: There's a motion and a second on 9 Item 1. Without objection, the item passes. 10 MR. WATKINS: Item Number 2 is a resolution which 11 does two things. One is authorize the issuance of up 12 to $1.44 billion in public education capital outlay 13 bonds, and secondly authorizes the competitive sale of 14 up to $400 million of that authorization. 15 CFO GALLAGHER: Motion on 2. 16 ATTORNEY GENERAL CRIST: Second. 17 GOVERNOR BUSH: There's a motion and a second. 18 Without objection, the item passes. 19 MR. WATKINS: Item Number 3 is the report of award 20 on the competitive sale of $27.6 million in student 21 housing bonds for a facility at Florida Atlantic 22 University. The bonds were awarded to the low bidder 23 at a true interest cost of approximately 4.62 percent. 24 CFO GALLAGHER: Motion on 3. 25 ATTORNEY GENERAL CRIST: Second. ACCURATE STENOTYPE REPORTERS, INC. 6 1 GOVERNOR BUSH: There's a motion and a second. 2 Without objection, the item passes. 3 MR. WATKINS: Item Number 4 is a report of award 4 on the competitive sale of $17 million in parking bonds 5 for a facility at the University of South Florida. The 6 bonds were awarded to the low bidder at a true interest 7 cost of approximately 4.38 percent. 8 CFO GALLAGHER: Motion on 4. 9 ATTORNEY GENERAL CRIST: Second. 10 GOVERNOR BUSH: There's a motion and a second. 11 Without objection, the item passes. 12 MR. WATKINS: And Item 5 is the report of award on 13 the competitive sale of $37.4 million of right-of-way 14 refunding bonds. The bonds were awarded to the low 15 bidder at a true interest cost of approximately 4.01 16 percent, generating gross debt service savings of 17 approximately 3.2 million or 2.4 million on a present 18 value basis. 19 CFO GALLAGHER: Motion on 5. 20 ATTORNEY GENERAL CRIST: Second. 21 GOVERNOR BUSH: There's a motion and a second. 22 Without objection, the item passes. 23 MR. WATKINS: Thank you, gentlemen. 24 GOVERNOR BUSH: Thank you, Ben. 25 ACCURATE STENOTYPE REPORTERS, INC. 7 1 GOVERNOR BUSH: Financial Services Commission, 2 Office of Insurance Regulation. 3 CFO GALLAGHER: Motion on the minutes. 4 ATTORNEY GENERAL CRIST: Second. 5 GOVERNOR BUSH: There's a motion and a second. 6 Without objection, the item passes. Item 2. 7 MR. PARTON: Item 2 is a motion for approval for 8 final adoption of the amendments to Rule 69O-149.005, 9 .006 and .007, reasonableness of benefits in 10 relationship to premiums, actuarial memorandum and 11 actuarial -- annual rate certification filing 12 procedures. 13 CFO GALLAGHER: Motion. 14 ATTORNEY GENERAL CRIST: Second. 15 GOVERNOR BUSH: There's a motion and a second. 16 Can you say what that is in English? 17 MR. PARTON: It does three things, Governor. 18 Sometimes companies issue various products that have 19 similar benefits. The rates, because they are similar 20 benefits, should be the same, but over time the rates 21 sometimes can get out of sync. 22 This requires them to annually or to come back and 23 make sure those rates are actually in sync. It also 24 clarifies that when you have an age-related product, 25 age-issued product -- that's a product where because of ACCURATE STENOTYPE REPORTERS, INC. 8 1 your age, it's rated or given a rate that is literally 2 higher in the beginning because over time you're going 3 to begin to use that product and the losses become 4 greater as the product ages and thus would be paying 5 less. Sometimes products are switched or other 6 products are provided. 7 And this rule would require that that built-in 8 buildup, the extra cost in the beginning of the policy 9 will be recognized in any new policy that would 10 otherwise be issued to the policyholder. 11 The third thing it does, there are certain 12 statutory requirements with regards to the loss ratios. 13 We had in a rule inartfully provided a sort of safe 14 harbor for limited books or new books of business to 15 come into compliance with that. We allowed a margin of 16 error. 17 And as a result of what I considered to be and we 18 considered to be poor drafting, that particular 19 provision was being abused. So we have clarified it to 20 prevent any future problems with the loss ratio 21 requirements that are required by the statute. 22 And, finally, we have amended the rule to clarify 23 what is needed for annual rate certifications as a 24 result of certain amendments to the long-term care 25 products that occurred this last year. ACCURATE STENOTYPE REPORTERS, INC. 9 1 CFO GALLAGHER: The goal of that is to see to it 2 that we don't get people buying long-term care products 3 at 50 years old and when they turn 65 and they need to 4 collect, all of a sudden they raise the premium on them 5 because they didn't collect enough in the first place. 6 They gave them a low rate to get started, which 7 everybody knew at the time or should have known it 8 wasn't going to be enough to pay the benefits. 9 MR. PARTON: That is correct. There is some very 10 good legislation that was passed last year regarding 11 long-term care. And this seeks to further implement 12 it. 13 By the way. I apologize. My name is Steve 14 Parton. I'm the general counsel for the office. 15 Commissioner McCarty had planned to be here this 16 morning, and I learned 15 minutes before the meeting 17 that he has been unavoidably detained, and so I will 18 muddle my way through this. And he asked me to 19 apologize to you for his not being here. 20 GOVERNOR BUSH: Is he coming afterwards, or are we 21 going to get to give him grief? 22 MR. PARTON: Well, I'm hoping so, but it's 23 unclear. 24 GOVERNOR BUSH: Well, you answered the question 25 very well. Any other discussion? There's a motion and ACCURATE STENOTYPE REPORTERS, INC. 10 1 a second. Without objection, the item passes. Onward. 2 MR. PARTON: Item 3 is the adoption of amendments 3 to Rule 69O-154.203 and .204. It's to bring the 4 morbidity tables into compliance with the NAIC's 5 requirements and to allow us to maintain our 6 accreditation. 7 CFO GALLAGHER: Motion on the minutes. 8 COMMISSIONER BRONSON: Second. 9 GOVERNOR BUSH: There's a motion and a second. 10 Without objection, the item passes. 11 MR. PARTON: Item 4 is the repeal of Rule 12 69O-141.021, procedures for implementing the moratorium 13 phaseout in Section 627.7013 Florida Statutes. That 14 statute has been repealed, thus the authority for this 15 rule no longer exists and we're repealing it or asking 16 that it be repealed. 17 CFO GALLAGHER: Motion. 18 COMMISSIONER BRONSON: Second. 19 GOVERNOR BUSH: There's a motion and a second. 20 Without objection, the item passes. Item 5. 21 MR. PARTON: Item 5, as you may recall in this 22 past legislative session, the Legislature changed the 23 requirement that the office approve the plan of 24 operations for Citizens and made it the responsibility 25 of the Financial Services Commission to approve that ACCURATE STENOTYPE REPORTERS, INC. 11 1 plan. 2 They were authorized, Citizens was authorized to 3 continue under a plan of operation approved by the 4 office until October 1. That deadline is quickly 5 approaching, and thus Citizens has submitted a plan of 6 operation with certain amendments to be approved by the 7 Financial Services Commission. 8 GOVERNOR BUSH: General? 9 ATTORNEY GENERAL CRIST: Thank you. I have a 10 suggestion. Governor, members of the Cabinet, 11 homeowners' property insurance in Florida is broken. 12 Nowhere is this more evident than with Citizens 13 Property Insurance. The Legislature took some steps to 14 ease the problem earlier this year. 15 And, Governor, the Property and Casualty Insurance 16 Reform Committee that you created will make an 17 important contribution to finding some workable 18 answers. Today we can take another important step by 19 disapproving the plan of operation submitted by 20 Citizens. 21 Prior to legislation enacted this year, Citizens 22 was able to get its plan of operations approved without 23 meaningful public input or scrutiny. Now the public 24 must be approved by us -- the plan must be approved by 25 us in a public meeting. ACCURATE STENOTYPE REPORTERS, INC. 12 1 Today is the first time we are being asked to 2 approve such a plan. Unfortunately, what Citizens has 3 submitted to us does nothing to correct the many 4 problems that have caused so much concern for the 5 consumers of our state. 6 Citizens provides an essential function to more 7 than 1.2 million Florideans who would not otherwise be 8 able to obtain property insurance for their homes. But 9 Florida law demands more than that from the insurer of 10 last resort. 11 Citizens must also provide what the law calls, 12 quote, efficiencies and economies, end quote, for its 13 policyholders, and it must serve and treat those 14 policyholders at, quote, the highest possible level. 15 Yet the plan of operation before us today fails to 16 recognize Citizens' obligations to the people it was 17 created to serve. 18 Nowhere in the plan is there a discussion of 19 Citizens' responsibility to the public. Nowhere in the 20 plan are policyholders even addressed, other than as 21 sources of assessments and premiums. This is totally 22 unacceptable. 23 Citizens misses the point that it was created to 24 help the people in desperate need, that the level of 25 service required by the Legislature is a minimum and ACCURATE STENOTYPE REPORTERS, INC. 13 1 not a limit. Policyholders have no choice but to 2 insure with Citizens. The fact that its plan 3 completely fails to mention anything suggesting it 4 understands the plight of these people is unacceptable. 5 Particularly outrageous is how Citizens uses 6 policyholder funds to work against the interest of 7 those very policyholders. Since May Citizens has filed 8 four petitions seeking to overturn the Office of 9 Insurance Regulation orders directing Citizens to 10 reduce or roll back its rates. 11 In each instance Citizens hired outside attorneys 12 to do its bidding. That means Citizens used 13 policyholder money to hire attorneys so they could sue 14 the government in order to force policyholders to pay 15 even more. 16 And since Citizens can impose assessments on all 17 insurance consumers and this year received a $715 18 million bailout from the taxpayers, that means the 19 taxpayers were paying to sue themselves so that some of 20 them could pay even more. And then they come here and 21 ask us to approve a plan that does nothing to help 22 policyholders or other consumers. 23 I don't see how any of us can conclude that this 24 is in anyone's interest other than the folks at 25 Citizens. Therefore, I'd like to propose an ACCURATE STENOTYPE REPORTERS, INC. 14 1 alternative plan, one that avoids any further harm 2 while giving time to find workable solutions. 3 Governor, I would propose that we disapprove 4 Citizens' plan of operation before us today. In order 5 to comply with statutory requirements that some plan be 6 in existence, I propose that the plan approved by the 7 Office of Insurance Regulation on June 13th, 2006, be 8 approved on a provisional basis subject to certain 9 modifications. 10 In addition, I propose that we order Citizens to 11 hold at least three public hearings around the state to 12 obtain public comment on how to comply with its 13 pro-consumer statutory mandates. I also propose that 14 Citizens be prohibited from hiring outside attorneys to 15 sue the Office of Insurance Regulation when the office 16 disapproves a Citizens request to raise rates, unless 17 both the Citizens board of directors and the Governor 18 and Cabinet approve the expenditure in full view of the 19 public. 20 Citizens seems to have forgotten that it was 21 created to serve the people during their time of great 22 need. It seems to have forgotten that the people of 23 Florida are the boss and that the corporation is there 24 to serve them, not the other way around. It's time we 25 remind Citizens of its statutory and moral duty to the ACCURATE STENOTYPE REPORTERS, INC. 15 1 people of Florida. 2 Governor, I would move the proposed substitute 3 order. 4 CFO GALLAGHER: Second. 5 GOVERNOR BUSH: There's a motion and a second. 6 CFO GALLAGHER: I've got one question. 7 GOVERNOR BUSH: Okay. Yes, Treasurer. 8 CFO GALLAGHER: The provision that we're -- that 9 you're recommending us to approve will change the 10 service process; is that right? 11 ATTORNEY GENERAL CRIST: That's right. 12 CFO GALLAGHER: It will change the amendments to 13 the plan that says they have to come here, right? In 14 other words, the one you're doing now says -- allows a 15 change in the plan. It says it comes here, and that's 16 the law. 17 ATTORNEY GENERAL CRIST: Yes, sir. 18 CFO GALLAGHER: And the third thing is that it 19 also eliminates the ability for them to spend money 20 challenging rates. That's changed also now? 21 ATTORNEY GENERAL CRIST: It must be approved, yes, 22 sir. And we modified the 1.2 million that was pointed 23 out. 24 GOVERNOR BUSH: Does anybody know what the OIR 25 plan that was approved, you said, in June, what's the ACCURATE STENOTYPE REPORTERS, INC. 16 1 difference? 2 MR. PARTON: Really it's, in essence, the same as 3 you have before you but without the amendments that you 4 are now proposing. 5 GOVERNOR BUSH: So basically we're taking the plan 6 that was submitted and -- 7 CFO GALLAGHER: Approving it plus -- 8 GOVERNOR BUSH: -- approving it, adding the two or 9 three additional things the General -- 10 ATTORNEY GENERAL CRIST: Yes, sir. 11 MR. PARTON: If I could ask, just to make sure I 12 understand. What we're actually doing is disapproving 13 what has been submitted by Citizens here today but 14 approving what had been previously approved by the 15 office, with the amendments that we have just 16 discussed. Am I correct? 17 CFO GALLAGHER: The amendments are a public 18 hearing and no expenditures for -- three public 19 hearings and no expenditures for rate challenges 20 without Cabinet and Governor approval. 21 ATTORNEY GENERAL CRIST: It's all in the 22 transcript if you have any further questions. 23 GOVERNOR BUSH: So there's a motion and a second. 24 Any other discussion? All in favor say aye. 25 (Ayes) ACCURATE STENOTYPE REPORTERS, INC. 17 1 GOVERNOR BUSH: Opposed? 2 (No response) 3 GOVERNOR BUSH: Thank you very much. 4 MR. PARTON: Is it the pleasure of the Commission 5 that that plan as it is amended, as it progresses, be 6 submitted through the Office of Insurance Regulation 7 for us to review before it's brought back before you in 8 January? 9 CFO GALLAGHER: I think so. That's the normal 10 process. 11 MR. PARTON: Well, again, the statute changed so 12 that you're approving it. We just want to make sure 13 you're comfortable with it coming through us before it 14 comes back to you. 15 GOVERNOR BUSH: You're the agency responsible for 16 presenting it to us so -- 17 CFO GALLAGHER: I think even if it didn't say in 18 the statute that you would approve it, I would think 19 that the Governor and Cabinet would want your review 20 before it was voted on here. 21 MR. PARTON: I would have thought so, too, but I 22 didn't want to be presumptuous. Would you care to hear 23 an update with regards to the JUA, the PCJUA that was 24 created by emergency rule? 25 CFO GALLAGHER: Yes. ACCURATE STENOTYPE REPORTERS, INC. 18 1 GOVERNOR BUSH: Yeah, sure. 2 MR. PARTON: The JUA board has been appointed by 3 the CFO and has held its organizational meeting, 4 several meetings. It has hired a servicing carrier 5 called ICAT and has approved a policy to be written 6 that insures a million dollars of contents and business 7 interruption. 8 That contract has been approved by the board and 9 will soon be available. There have been approximately 10 50 agents that have been appointed. These agents will 11 submit policy forms, application forms to the Florida 12 Market Assistance Plan, also known as FMAP. 13 FMAP will post the applications for commercial 14 coverage for authorized surplus lines carriers to 15 review. The purpose of that, of course, is to make 16 sure that there's no available coverage out there in 17 the voluntary market. That policy has to be shopped or 18 that application has to be shopped for at least ten 19 days. 20 As prescribed in the JUA plan of operation, 21 applicants must be turned down by at least three 22 authorized carriers and one surplus line carrier before 23 anyone would be eligible for that particular policy. 24 GOVERNOR BUSH: That will be easy. 25 MR. PARTON: I think you're correct. So that's ACCURATE STENOTYPE REPORTERS, INC. 19 1 essentially where we are today. 2 CFO GALLAGHER: Then there hasn't been enough time 3 for any policies to be issued. 4 MR. PARTON: That is my understanding. 5 CFO GALLAGHER: It's still in the 10-day period 6 from the time the contract was signed. 7 MR. PARTON: Correct. 8 GOVERNOR BUSH: As I recall in previous meetings, 9 I think we were talking about being operational on 10 October 1st. Is that -- 11 MR. PARTON: Yes, sir. And since that day there 12 have been a number of meetings on -- 13 GOVERNOR BUSH: Y'all have done a fantastic job. 14 CFO GALLAGHER: They would be operational before 15 that. They're just not going to have any policies 16 because they have to wait the ten days. Do you know 17 how many are in the process? 18 MR. PARTON: No, I do not. We don't have any 19 idea. I'm sorry. We can get you that information. 20 GOVERNOR BUSH: Appreciate the speed and intensity 21 of effort. 22 CFO GALLAGHER: And some great negotiations. 23 MR. PARTON: Thank you. 24 GOVERNOR BUSH: All right. Is that it? That's 25 it. ACCURATE STENOTYPE REPORTERS, INC. 20 1 GOVERNOR BUSH: Department of Revenue. 2 CFO GALLAGHER: Motion on the minutes. 3 ATTORNEY GENERAL CRIST: Second. 4 GOVERNOR BUSH: Dr. Z. There's a motion and a 5 second. Without objection, the item passes. Item 2. 6 DR. ZINGALE: We've got three rule changes today. 7 Item Number 2 deals with the criteria used by the 8 Department to report to credit reporting agencies a 9 child support payment due. Old criteria for the 10 delinquency was almost anything, a dollar and $500 11 minimum. The new criteria calls for five dollars and 12 two times the monthly payment. Request change in that 13 amendment, please. 14 GOVERNOR BUSH: Is there a motion? 15 ATTORNEY GENERAL CRIST: Motion. 16 GOVERNOR BUSH: A second? 17 CFO GALLAGHER: Second. 18 GOVERNOR BUSH: There's a motion and a second. 19 Without objection, the item passes. 20 DR. ZINGALE: The third item actually deals with 21 an effective rate decrease to the phosphate tax rate. 22 This decrease is the result of the way this tax rate is 23 established on a yearly basis. The original tax rate 24 was based on the phosphate tax index or price index. 25 The Fed subsequently caused that rate index to be not ACCURATE STENOTYPE REPORTERS, INC. 21 1 produced. 2 In the interim the Department, through rule, chose 3 an index that included a number of minerals, one of 4 which was potash, which has skyrocketed in the last 5 year, causing the index to grow from 1.67 to 1.82. 6 This clearly wasn't the intent of the Legislature. 7 So this rule went through and performed a 8 calculation to have that index be tracking the price of 9 phosphate rock. And the index will grow from 1.67 to 10 1.68 to provide an effective tax decrease. 11 COMMISSIONER BRONSON: Motion on Item 3. 12 CFO GALLAGHER: Second. 13 GOVERNOR BUSH: There's a motion and a second. 14 Without objection, the item passes. 15 DR. ZINGALE: The last, Item 4, is an amendment 16 that deals with the State's rewards program. Over the 17 last five years, the rewards program has brought in $23 18 million in tax and given out awards in the tune of 19 $450,000. 20 The old index was a ten, five, two and a half, one 21 point five, and a fairly complicated way of calculating 22 what the reward was. This amendment provides a fairly 23 straightforward ten percent, five percent, one percent, 24 and those amounts are determined by the significance 25 and value of the information provided by the citizen. ACCURATE STENOTYPE REPORTERS, INC. 22 1 Request Item 4 be approved. 2 COMMISSIONER BRONSON: Motion on Item 4. 3 ATTORNEY GENERAL CRIST: Second. 4 GOVERNOR BUSH: There's a motion and a second. 5 Without objection, the item passes. 6 DR. ZINGALE: Thank you very much. 7 GOVERNOR BUSH: Thank you, Jim. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. 23 1 GOVERNOR BUSH: Department of Veterans' Affairs. 2 MR. McPHERSON: Good morning, Governor. 3 CFO GALLAGHER: Motion. 4 GOVERNOR BUSH: Is there a second? 5 COMMISSIONER BRONSON: Second. 6 GOVERNOR BUSH: There's a motion and a second. 7 Without objection, Item 1 passes. Rocky. 8 MR. McPHERSON: Good morning, sir. Item 2 is our 9 quarterly minutes for the quarters past that are 10 recommended for acceptance. There are no known issues. 11 Recommend acceptance, sir. 12 ATTORNEY GENERAL CRIST: Motion on 2. 13 GOVERNOR BUSH: There's a motion. 14 CFO GALLAGHER: Second. 15 GOVERNOR BUSH: And a second. Without objection, 16 the item is accepted. 17 MR. McPHERSON: Sir, Item 3 is an information 18 briefing this morning on a program that the Department 19 has titled the Florida Seamless Transition Program. 20 This program was developed to achieve Governor Bush's 21 goals to enhance Florida's support to our severely 22 injured service members and families of the fallen. 23 The genesis of this program was that Governor Bush 24 traveled to Iraq and Afghanistan in April, and 25 following that, in a meeting with the Secretary of ACCURATE STENOTYPE REPORTERS, INC. 24 1 Defense, requested that additional data be provided to 2 state government concerning these severely wounded 3 troops who are returning from the War on Terror. 4 Dr. Chu, the undersecretary in Washington, 5 indicated that this issue would be worked out between 6 the DOD and VA. And in April the VA and the DOD began 7 to work on this proposal. 8 It wasn't moving quite fast enough, and in June 9 Governor Bush informed VA Secretary Nicholson of the 10 fact that he would like the VA to explore all 11 mechanisms for the VA to notify Florida and, by 12 inference, other states when the program is finished, 13 of inbound severely wounded veterans. And the 14 secretary of the VA accepted that proposal in July. 15 Next slide, please. Your Florida Veterans' 16 Department, representatives from the VA, up to and 17 including the level of the chief of staff of the VA, 18 and representatives from the Defense Department 19 convened in Washington in early July to work through 20 and develop a pilot concept and the procedures for 21 ensuring that we gain information on Florida's severely 22 injured veterans who are returning to the state. 23 To do that we are using VA social workers, federal 24 VA social workers who are currently assigned in nine VA 25 military hospitals across the nation. Those folks ACCURATE STENOTYPE REPORTERS, INC. 25 1 contact the veterans who have Florida as the state of 2 residence and, with their permission, provide contact 3 data to our department so that when they return to the 4 state, we are able to open and continue with them 5 discussions about the benefits that the State of 6 Florida offers in addition to the federal benefits that 7 are available both from pensions and health care from 8 the federal VA. 9 There were several issues to work through this 10 proposal, including a variety of concerns with privacy 11 data and health care protected information. And I 12 would note that this hit at exactly the same time the 13 VA was tightening every data security program they own 14 because of the loss of a computer. So asking them to 15 open the doors at the same time that they were dealing 16 with that massive problem with that loss of data on 17 almost every veteran in the nation was substantial. 18 GOVERNOR BUSH: The wounded soldier has to -- if 19 they don't want to have the information be given to the 20 State, we don't get it. 21 MR. McPHERSON: That's correct, sir. 22 GOVERNOR BUSH: So this is a voluntary program. 23 We're the only state that has it. And I think -- well, 24 go ahead. 25 MR. McPHERSON: Yes, sir. On the next slide, ACCURATE STENOTYPE REPORTERS, INC. 26 1 following developing the protocols and working through 2 the security issues of transferring the data, a pilot 3 program did commence on the 1st of September. 4 Once the contact data is received, the Department 5 will contact the family or the individual responsible 6 for that family, because in many cases some of these 7 veterans are unable to make some of the decisions 8 themselves, both by phone and introductory level. 9 And then based on the determination of the needs 10 of the individual, we will define the follow-up 11 intervals. And in some cases the benefits that the 12 State provides are also for children of families of the 13 fallen. So we need to be able to track these 14 individuals and their families for a lifetime so that 15 when that three-year-old now in 15 years from now 16 becomes eligible for his Florida college scholarship, 17 we know who they are and we can assist them in gaining 18 that benefit. 19 As the Governor mentioned, we are the first to 20 formalize this arrangement. It's a pilot program with 21 the VA for 90 days. And at the end of those 90 days, 22 assuming that we've worked out the issues concerning 23 privacy and health care data and in fact that this 24 proves a viable method of doing it, the VA does intend 25 to extend this to the other states and territories. ACCURATE STENOTYPE REPORTERS, INC. 27 1 Next slide, please. As a way to update for 2 current status, last week in Salt Lake City the state 3 directors of Veterans' Affairs met in a semiannual 4 meeting, and the deputy secretary of the VA briefed 5 this program to the other state directors. 6 I will tell you they are very enthusiastic for the 7 pilot program to succeed and for the same data to be 8 made available to them. And the VA's goal to do that 9 is the 1st of January, following completion of this 10 program. 11 Governor Bush has also agreed with Secretary 12 Nicholson to replicate -- advocate replication of this 13 with the National Governors' Association. Their next 14 meeting is in February. And we have developed a 15 database on all of these folks that are coming back. 16 The numbers to date, I think, are an interesting 17 update that I would like to provide. To date, since 18 the 1st of September, there are five veterans, four 19 from Walter Reed and one from the Eisenhower Medical 20 Center in Augusta, that are coming back to Florida. 21 There are two in the polytrauma center currently in 22 Tampa. Two of the 13 residents there are from Florida. 23 The other 11 are from other states. 24 And in addition we are tracking the entire 25 database of the 127 killed in action, Florida soldiers, ACCURATE STENOTYPE REPORTERS, INC. 28 1 soldiers, airmen or marines, and their families. And 2 the final element of this is the VA in Tampa is 3 tracking approximately 75 severely injured veterans who 4 have since 9/11 returned to the state of Florida. That 5 total number of cases in our database now is 209. And 6 we're working through that. 7 What we will do is continue the coordination and 8 cooperation and contact with these families and support 9 them in any manner and style that they need. We are 10 getting great coordination and cooperation both with 11 the Florida National Guard and the AWI because many of 12 these folks, once they finish rehabilitation, will be 13 seeking employment, and AWI has a tremendous program 14 and presence in these programs with the VA as well. 15 GOVERNOR BUSH: The genesis of this was when I 16 went to Iraq and Afghanistan and saw the incredible 17 emergency care systems that they have set up on the 18 front lines. And so what has happened now in this war 19 that is different than other wars past is that the care 20 is so sophisticated so quickly that the people are not 21 dying but they're severely wounded. 22 I mean, they literally can -- with these IEDs, 23 there's severe swelling of the head if there's contact 24 there. And they can on the battlefield, literally, cut 25 the skull to allow for the swelling to subside and get ACCURATE STENOTYPE REPORTERS, INC. 29 1 them within -- I was at Walter Reed and Bethesda 2 Hospital last week, I guess, or the week before, and I 3 was with a Florida marine that had been -- was shot 4 three days before, and he was already at Bethesda. 5 So the support that these guys are getting has 6 actually created the consequence of, I believe, over 7 the long haul more severely wounded veterans than we've 8 experienced in the past. 9 And so I asked Rocky to develop -- and, you know, 10 no offense to the Defense Department, but typically 11 they don't share information. So I asked the 12 secretary, give us a chance to share this information 13 so that we can have a case management process for every 14 wounded veteran that comes back and that we keep track 15 of them and that we take care of them, and it's not 16 just for the next month or two months, but it's for the 17 next years. 18 And we're working on trying to get the private 19 sector to be much more actively involved in this. I 20 know there are a lot of businesses that would eagerly 21 hire people that have served their country in this way 22 and that they can add value to the business. 23 So I'm really proud, Rocky, of the hard work to 24 break down the bureaucracy. And I'm pleased that both 25 the Defense Department and the Department of Veterans' ACCURATE STENOTYPE REPORTERS, INC. 30 1 Affairs up in Washington has responded to our efforts. 2 I think this is very excited. 3 MR. McPHERSON: Just for information, I was asked 4 yesterday to provide a briefing on this program to the 5 Joint Executive Committee, which is composed of senior 6 leadership in the Defense Department and the VA, on the 7 4th of October in Washington, to give them an update. 8 And then we fully anticipate complete success of this 9 and the VA extending it to other states in the new 10 year. 11 GOVERNOR BUSH: These young men are unbelievable, 12 quiet, unbelievable heroes. I met one guy who had his 13 arm shot off and part of his leg, and I can't remember 14 where he was from, but his family was there with him 15 and his wife. And the first thing he said was, you 16 know, "I'm so proud to be in service to my country." 17 And the second thing he said is, "I don't know if I'm 18 going to be able to go back." I mean, literally, 19 double amputee, but this attitude of service to country 20 was so powerful. 21 And he's going to need some extra help because his 22 life was probably saved given the -- and by the way, 23 done by reservists and guard, principally, rather than 24 people that are enlisted. 25 These are nurses and doctors that serve us in our ACCURATE STENOTYPE REPORTERS, INC. 31 1 emergency rooms across the country that come and save 2 people's lives in Iraq. It just is phenomenal. 3 MR. McPHERSON: Governor, I just want to thank you 4 for your personal leadership in this. This would not 5 have moved this fast if you had not stepped in, and we 6 appreciate that assistance, sir. 7 GOVERNOR BUSH: Treasurer. 8 CFO GALLAGHER: Rocky, we're seeing a problem with 9 guys coming back from Iraq and Afghanistan who find it 10 very hard, when they come out of the service, to get 11 hired. There seems to be a negativity with being in 12 the service. At one time it was a big plus. Now it 13 seems to be a negative. Have you seen that? And if 14 so, what should we be doing to help in that? 15 MR. McPHERSON: Sir, that trend has been noted 16 nationally. The unemployment rate, particularly for 17 the age group 18 to 24, has been higher than 18 anticipated. There have been major programs by the 19 Department of Labor to create initiatives to hire 20 younger veterans. 21 As a matter of fact, we had a program in Tampa 22 about two months ago in which we had over 50 industries 23 there and approximately 300 veterans at a job fair 24 sponsored by the New York Times. And that was 25 particularly successful. ACCURATE STENOTYPE REPORTERS, INC. 32 1 Those rates have -- the rates of unemployment that 2 exceed the national averages have come down in the last 3 three to four months. But there is a continued focus 4 and resources are needed in that particular arena to 5 find gainful employment for these veterans as they 6 return. 7 Some of them go back to college. Many of them 8 have family burdens that create some issues. But they 9 do need and deserve our support, and there are programs 10 in the federal government and we can work on that. AWI 11 is working on that in the state as well very, very 12 hard. 13 CFO GALLAGHER: We have a tremendous challenge in 14 hiring law enforcement. And there may be something 15 that someone may want to do for next session to give 16 these folks an advantage on the hiring. They've got 17 the military experience, they understand chain of 18 command, et cetera. Those that want to come in and get 19 in law enforcement down the road, maybe they should get 20 a little level up like we do for other vets hiring. 21 MR. McPHERSON: Yes, sir. 22 CFO GALLAGHER: Because they certainly have earned 23 it. And I really think it's a shame that these guys 24 come back, and they're at the bottom of the pile as far 25 as getting hired, when that just didn't exist in other ACCURATE STENOTYPE REPORTERS, INC. 33 1 wars, and I really hate to see that happen. 2 MR. McPHERSON: Sir, we'll continue those efforts 3 and take that suggestion. The Department of 4 Corrections is also looking to enhance their hiring 5 efforts in this same area. 6 GOVERNOR BUSH: It doesn't make much sense when we 7 have severe job shortages in a lot of areas that these 8 guys would be qualified to fill. 9 MR. McPHERSON: One of the factors in this is, of 10 course, the reported incidence of PTSD from this war 11 are approximately 30 percent. That figure is yet to be 12 verified, but it is a factor that employers look at. 13 And the solution to that, of course, is resources to 14 assist in the mental health issues that any of these 15 returning veterans might have. And that is being 16 worked on in both Defense and the VA. 17 CFO GALLAGHER: The federal Department of 18 Veterans' Affairs should be taking care of that. 19 MR. McPHERSON: Yes, sir, that's correct. 20 GOVERNOR BUSH: All right. Anything else? Thank 21 you, Rocky. 22 MR. McPHERSON: Thank you, sir. 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. 34 1 GOVERNOR BUSH: Administration Commission. Is 2 there a motion on 1? 3 ATTORNEY GENERAL CRIST: Motion. 4 COMMISSIONER BRONSON: Second. 5 GOVERNOR BUSH: And a second. Without objection, 6 the item passes. 7 MS. TINKER: Item 2, recommend approval of 8 amendments to Rule Chapter 60L-34.0071, relating to 9 administrative leave and special compensatory leave 10 credits during emergencies. 11 CFO GALLAGHER: Motion on 2. 12 ATTORNEY GENERAL CRIST: Second. 13 CFO GALLAGHER: Do you want to just quickly 14 explain what those changes are? 15 MS. TINKER: Yes, sir, I will. This basically 16 clarifies an existing rule that the Department of 17 Management Services has relating to who was actually 18 eligible during a declared emergency by executive order 19 for special compensatory leave. 20 Under this rule it would be any employees that are 21 at a bureau chief level or below, could claim comp time 22 essentially. 23 GOVERNOR BUSH: This is to bring clarification. 24 We didn't try to worry about what the rules were when 25 the storms hit. Now we've had time to figure out what ACCURATE STENOTYPE REPORTERS, INC. 35 1 the rules should be. And I think this is a thoroughly 2 vetted and pretty good way of doing it. 3 So there's a motion and a second. Any discussion? 4 Without objection, the item passes. That's it. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. 36 1 MS. TINKER: Florida Land and Water? 2 GOVERNOR BUSH: I can't hear you. 3 MS. TINKER: Florida Land and Water Adjudicatory 4 Commission? 5 GOVERNOR BUSH: Why don't you do that, too, 6 Teresa. 7 CFO GALLAGHER: Motion on the minutes. 8 COMMISSIONER BRONSON: Second. 9 MS. TINKER: Okay. I think I'll do that. 10 GOVERNOR BUSH: There's a motion and a second on 11 Item 1. Without objection it passes. 12 MS. TINKER: Item 2, recommend adoption of final 13 rule establishing the Sarasota National Community 14 Development District in Sarasota County. 15 CFO GALLAGHER: Motion on 2. 16 ATTORNEY GENERAL CRIST: Second. 17 GOVERNOR BUSH: There's a motion and a second. 18 Without objection, the item passes. 19 MS. TINKER: Item 3, recommend adoption of the 20 final rule amending the boundaries of the Capital 21 Region Community Development District in the city of 22 Tallahassee. 23 CFO GALLAGHER: Motion on 3. 24 ATTORNEY GENERAL CRIST: Second. 25 GOVERNOR BUSH: There's a motion and a second. ACCURATE STENOTYPE REPORTERS, INC. 37 1 Without objection, the item passes. 2 MS. TINKER: Thank you. 3 GOVERNOR BUSH: Thank you, Teresa. Do we have 4 a -- yeah. We have an Item 4. 5 MS. TINKER: Sorry. 6 CFO GALLAGHER: It's the same as 2; isn't it? 7 GOVERNOR BUSH: I don't know. Do you want to 8 approve it just in case? 9 CFO GALLAGHER: Motion on 4. 10 ATTORNEY GENERAL CRIST: Second. 11 MS. TINKER: I apologize. 12 GOVERNOR BUSH: There's a motion and a second. 13 Without objection, Item 4 passes as well, which is a 14 replication of Item 2 perhaps. 15 MS. TINKER: That's establishing the Rivers Edge 16 Community Development District in St. Johns County. 17 GOVERNOR BUSH: There's a motion and a second. 18 Without objection, the item passes. Delete all that 19 other stuff I said. 20 MS. TINKER: Thank you, Governor. 21 GOVERNOR BUSH: Thank you. 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. 38 1 GOVERNOR BUSH: Siting Board. 2 COMMISSIONER BRONSON: Motion on the minutes. 3 ATTORNEY GENERAL CRIST: Second. 4 GOVERNOR BUSH: There's a motion and a second. 5 Without objection, Item 1 passes. Item 2. 6 MS. CASTILLE: Item 2 is the Hillsborough County 7 Resource Recovery Facility. Governor, members of the 8 Cabinet, this is consideration to adopt a consolidated 9 final order for a site certification for expansion of 10 the Hillsborough County Resource Recovery Facility to 11 add a new 600-ton-per-day mass burn unit for a waste 12 energy plant. 13 CFO GALLAGHER: Motion on 2. 14 ATTORNEY GENERAL CRIST: Second. 15 GOVERNOR BUSH: There's a motion and a second. 16 Any discussion? Without objection, the item passes. 17 MS. CASTILLE: Thank you. 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. 39 1 GOVERNOR BUSH: Board of Trustees of the Internal 2 Improvement Trust Fund. Secretary Castille, how the 3 heck are you? 4 MS. CASTILLE: Very well, sir. Thank you. 5 CFO GALLAGHER: Motion on the minutes. 6 ATTORNEY GENERAL CRIST: Second. 7 GOVERNOR BUSH: There's a motion and a second for 8 Item 1. Without objection, the item passes. Item 2. 9 MS. CASTILLE: Item 2 is the City of Fernandina 10 Beach. This is consideration of an application for a 11 ten-year term sovereignty submerged lands lease 12 containing 947,491 square feet, or 21.75 acres, for a 13 managed municipal mooring field in the city of -- that 14 will soon be in the City of Fernandina Beach. 15 CFO GALLAGHER: Motion on 2. 16 GOVERNOR BUSH: There's a motion. Is there a 17 second? 18 COMMISSIONER BRONSON: Second. 19 GOVERNOR BUSH: Any discussion? Commissioner, do 20 you have a question? 21 COMMISSIONER BRONSON: No. I picked it up on the 22 second page. 23 GOVERNOR BUSH: Okay. No discussion? There's a 24 motion and a second. Without objection, the item 25 passes. Item 3. ACCURATE STENOTYPE REPORTERS, INC. 40 1 MS. CASTILLE: Item 3 is an acquisition for Joshua 2 Creek property in the Econ-St. Johns Ecosystem. 3 Governor, members of the Cabinet, we are recommending a 4 deferral, but there are a couple of people here who 5 have come to speak in favor of the project, Charles Lee 6 from the Florida Audubon Society and Kent Wimmer from 7 the -- actually, there are three people. Kent Wimmer 8 from the Florida Trails Association and Michelle 9 Mitchell from the U.S. Forest Service. 10 CFO GALLAGHER: I'll move to defer. 11 GOVERNOR BUSH: There's a motion to defer and a 12 second, Commissioner? 13 COMMISSIONER BRONSON: If this is to defer, I'll 14 second. 15 GOVERNOR BUSH: All right. Let's have some 16 discussion before we vote. 17 MS. CASTILLE: Shall I call up the -- 18 GOVERNOR BUSH: Absolutely. I have a few 19 questions, too, but maybe they will be resolved between 20 now and the time we get her back up again. 21 MS. CASTILLE: Mr. Lee. 22 GOVERNOR BUSH: Charles, how are you? It's been a 23 long time. 24 MR. LEE: Governor, it has been a long time. It's 25 good to see you all up there. ACCURATE STENOTYPE REPORTERS, INC. 41 1 GOVERNOR BUSH: Where have you been? 2 MR. LEE: Well, y'all have been doing such a good 3 job, I haven't needed to come up here. 4 CFO GALLAGHER: He tries not to come up as often 5 as possible. 6 GOVERNOR BUSH: Smart man. 7 MR. LEE: Governor and members of the Cabinet, 8 Charles Lee representing Audubon of Florida. We are 9 involved in an effort to Central Florida, which I would 10 describe as, we think, one of the most important things 11 that's happening with regard to our ecosystems. 12 You know -- I'm sure you know Jacob Stuart of the 13 Greater Orlando Chamber, the My Region effort that 14 relates to, under a contract with the Department of 15 Community Affairs, coming up with a vision plan for 16 Central Florida. 17 Part of that has been a decision that we have made 18 collectively as a community to look strategically at 19 the ecosystem resources of the Central Florida 20 community, the seven counties of Central Florida, to 21 identify those ecosystems which are both capable of 22 preservation and which are available for preservation 23 and make the logical strategic targets for major 24 preservation efforts. 25 The parcel that you have in front of you today, ACCURATE STENOTYPE REPORTERS, INC. 42 1 the Joshua Creek parcel, the 4,569 acres of the 2 Econ-St. Johns Ecosystem Forever Florida project, is a 3 very substantial piece of one of the ecosystems that 4 have been identified by the community as the seven 5 jewels of Central Florida. 6 This area of the Econlockhatchee and St. Johns is 7 coming under intense growth pressure. And what I would 8 urge you to consider is the future of this property in 9 light of what is happening in Central Florida. And 10 it's just one example that I will give you, Governor 11 and members, the trustees. 12 This parcel is immediately adjacent to the 13 corridor that has been designated by the Orlando/Orange 14 County Expressway Authority for the extension of the 15 408 Expressway where it currently terminates on Highway 16 50, all the way east to Interstate 95. The Expressway 17 Authority has three 20/20 corridors that will bisect 18 the Econlockhatchee and the St. Johns system. This 19 parcel -- 20 GOVERNOR BUSH: Charles, would that go on the 21 existing right-of-way of State Road 50? 22 MR. LEE: That's one possibility. But the 23 corridor that they are examining includes a fairly 24 extensive area on both the north and south edges of 25 Highway 50. It would bring potentially the expressway ACCURATE STENOTYPE REPORTERS, INC. 43 1 corridor within very -- in terms of looking at 2 development impacts on properties, if you consider what 3 the 417 did to the Oviedo area, the distances from the 4 expressway vis-a-vis 417 and Oviedo, as per this 5 property and the extension of the 408, would be very 6 comparable. The distances would not be different. 7 And if you look at the dramatically accelerated 8 development pressure that has taken place along that 9 route -- we know what is happening in this eastern area 10 of the county. The reality is that large tracts of 11 land such as this one are rapidly moving in the 12 direction of one of two ultimate fates. 13 They will either be protected through acquisitions 14 such as the one that you have in front of you today, or 15 they will become part of the development inventory. 16 GOVERNOR BUSH: Why? 17 MR. LEE: Why? 18 GOVERNOR BUSH: Why the second? The first one I 19 can see as an option, but why is it the God-given right 20 of developers to increase density on properties that 21 don't have it? Where is the law that says that you 22 have that right? 23 MR. LEE: Well, Governor, that's a question that 24 I've been asking for 35 years. 25 GOVERNOR BUSH: That's why I'm asking you. ACCURATE STENOTYPE REPORTERS, INC. 44 1 MR. LEE: And the experience that I have had for 2 35 years is, while I would not characterize it as a 3 necessarily God-given right, I would -- 4 GOVERNOR BUSH: Well, I mean, you said there's two 5 options and inevitability. I'm not sure how inevitable 6 it is that we have to assume that local governments are 7 going to allow something that right now has one unit 8 per five acres, that they have some right to turn that 9 into a development that may have ten units to one acre? 10 I just don't -- 11 MR. LEE: Governor, if it were to develop at one 12 unit per five acres, if that were the future of this 13 property -- and I can assure you that for that kind of 14 ranchette development in Central Florida, there is a 15 very strong market, people seeking those properties to 16 build their five-acre ranchettes. If that's all that 17 happens out there, from an ecological standpoint, this 18 property is gone. 19 It doesn't necessarily take a zoning or a plan 20 increase in order for development that is sprawling 21 across Central Florida to eat this property up. 22 GOVERNOR BUSH: That's fair. 23 MR. LEE: And, frankly, from our point of view, 24 with regard to what happens to the land, it's not 25 ecologically going to make any difference if they cut ACCURATE STENOTYPE REPORTERS, INC. 45 1 it up into five-acre tracts or if they put dense pods 2 of development there. Ecologically it's gone. 3 GOVERNOR BUSH: That's a fair counterpunch. Then 4 we get to valuation. 5 CFO GALLAGHER: Let me just ask a question here. 6 There's two areas of this. One is pretty much all 7 wetlands, and the other is pretty much developable, you 8 know, high and dry. 9 MR. LEE: I would not agree with that description. 10 I'm familiar with this tract. The eastern part of the 11 larger tract has substantial wetlands on it, and there 12 are substantial wetlands along the creek systems. But 13 this property, one of the things that makes this 14 property so ecologically desirable is it is a true 15 mosaic of uplands and wetlands. You have long leaf 16 pine. You have sandhill. You have virtually every 17 habitat type out there. 18 And if you think that wetlands are an impediment 19 to development and a complex wetland system on a 20 project is an impediment to development, I would just 21 ask you to look at the two DRIs within our East Central 22 Florida Regional Planning Council near Leesburg, one of 23 them called Renaissance Trails and the other one called 24 Secret Promise that are located in an area where you 25 have better than 50 percent of the land wetland, a ACCURATE STENOTYPE REPORTERS, INC. 46 1 large system of wet prairies, and they are engineering 2 and moving through the DRI process right today with a 3 project that will build on the high areas and allegedly 4 preserve the lower wetland areas. 5 And so the wetlands on this tract, to the extent 6 that they exist, are not in my view a significant 7 impediment to the kind of development that would 8 typically be proposed to take place in this area. This 9 is a very developable tract. 10 What the addition of the 616-acre parcel did that 11 would argue for the value that is in today's agenda 12 item is the fact that it created -- it created a hole 13 out of what were otherwise separate parts. 14 The separate parts, before the addition of the 15 616-acre parcel, did not have immediate road access. 16 This gives it road access to Fort Christmas Road. And 17 so you immediately have the potential for a development 18 entrance into this parcel from Fort Christmas Road, 19 which by the way will undoubtedly have interchange 20 access to the new expressway that is going to be built 21 some distance south of this area, in all likelihood. 22 And that is going to ignite the same kind of 23 development pressure that you see in the City of 24 Oviedo. And, yes, Governor, theoretically, local 25 governments would be able to control that through their ACCURATE STENOTYPE REPORTERS, INC. 47 1 planning and zoning. My 35-year experience is that in 2 the face of long-term, free market situations, with 3 people wanting to invest in land, wanting to build 4 developments, wanting to take care of the 3.4 million 5 additional citizens that are projected to come to 6 Central Florida between now and the year 2050 -- and, 7 by the way, that's the -- 8 GOVERNOR BUSH: Preach, Charles, preach. 9 MR. LEE: Governor, that's the midrange BEBR 10 projection. 11 GOVERNOR BUSH: I know. I know. 12 ATTORNEY GENERAL CRIST: By 20 what? 13 MR. LEE: 2050. 14 GOVERNOR BUSH: I got your point of -- 15 MR. LEE: This land is in the development pattern. 16 And this land, at one level or another, five acres, one 17 unit per five acres or denser is going to be developed 18 and in the near term. 19 GOVERNOR BUSH: I'm with you, baby. I'm with you. 20 But the point is the question of is it the proper role 21 of the State to pay more than what the market paid a 22 year ago. I mean, we're talking about a -- and let's 23 let the other people speak, and then I'm going to speak 24 to Colleen about this. 25 MR. LEE: You have an appraisal process. And you ACCURATE STENOTYPE REPORTERS, INC. 48 1 have two qualified appraisals that have considered 2 viable comparables, and they have also excluded 3 non-viable comparables. The statute and the rules that 4 govern this process are that the appraisal process is 5 what you have to look to. 6 And I do not -- I do not believe that the 7 appraisals associated with this land that under the 8 rules you should be looking at are different from the 9 real land value in this area. 10 I simply ask you this question. Anyone in this 11 room, tell me today where you can buy, whether it's 12 five acres, ten acres, 50 acres or 500 acres, tell me 13 where you can buy land in Orange County, Florida, for 14 less than $11,000 an acre. 15 That's what the purchase price on your agenda for 16 this property is. You are not going to -- in terms of 17 between now and a year from now or six months from now 18 or five years from now, the likelihood that you are 19 going to find a price for this property that is 20 significantly lower than $11,000 an acre in the Orange 21 County real estate market is simply not a viable 22 proposition. 23 Eleven thousand dollars an acre, as validated by 24 your two appraisals, indicate that this is the right 25 price. ACCURATE STENOTYPE REPORTERS, INC. 49 1 GOVERNOR BUSH: Okay, Charles. 2 MR. LEE: They discounted an appraisal, which was 3 the purchaser's appraisal for this property, for 4 reasons that are entirely consistent with your 5 appraisal rules. 6 CFO GALLAGHER: Well, why don't we assign our 7 contract over to you and you let Audubon buy it and 8 preserve it for everybody. 9 MR. LEE: Give me the money and we'll buy it. 10 Governor, it's a good deal, and we recommend it. It's 11 a crucial piece of the ecosystem in Central Florida. 12 And the likelihood, if this proposal gets away from 13 you, the likelihood, in terms of what's happening in 14 Central Florida, of you going back to it and getting it 15 again, let alone getting it at a better price, we think 16 is slim. 17 And we would recommend that you -- I understand a 18 deferral is in the offing. We urge you to work through 19 it. We think if you look carefully at the numbers and 20 get past the, frankly -- I'll be very frank -- get past 21 the emotional reaction created by a newspaper article 22 and look hard at the numbers and look hard at the real 23 estate market -- 24 GOVERNOR BUSH: Charles, I get emotional when a 25 guy a year ago bought something for 32 million and ACCURATE STENOTYPE REPORTERS, INC. 50 1 wants to sell it to us for 50. I get emotional. I 2 apologize. There's no -- I don't believe anybody here 3 would say that this property isn't a valuable property 4 to preserve. But we have a broader constituency as 5 well. And that's the taxpayers of the state. So 6 that's where I get passionate. I've passionate eight 7 years about it, ornery sometimes, kind of view it as my 8 role. 9 The worm has turned on real estate prices. Every 10 article in the paper, every paper is writing about it. 11 And I just do not believe that we should necessarily be 12 the purchaser that always shows up with the big number. 13 The scale should make it that we get discounts rather 14 than paying high prices. 15 And it has been a source of frustration from time 16 to time, and frankly this should be directed to Colleen 17 and her great team, not to you. So we'll move on to 18 the next speakers. 19 MR. LEE: Governor, if in fact that price that you 20 cited a year ago was considered by the appraisers to be 21 a viable comparable and a real arm's length 22 transaction, I would agree with you. The difficulty is 23 that the professionals who by law and by your rules are 24 supposed to look at the question of what is a viable 25 comparable, they have said that price a year ago was ACCURATE STENOTYPE REPORTERS, INC. 51 1 not a viable comparable. If it was, I would agree. 2 GOVERNOR BUSH: Well, we should all get that 3 nonviable comparable a year ago. That's my point. 4 Anyway, let's get the other speakers. 5 MR. LEE: Governor, we support it. We hope you'll 6 work through this. We hope you'll go forward. It's a 7 vital tract for Central Florida. Thank you. 8 GOVERNOR BUSH: Charles, it's great seeing you. 9 COMMISSIONER BRONSON: Governor, I do have a 10 question, based on what you were saying, and that is, 11 did we have a true -- were we in a position to really 12 pick that property up before it was acquired by private 13 interests? 14 And, of course, as I remember, we were looking at 15 a huge piece of property, Babcock, that was tying up 16 almost every transaction about that time and may have 17 thrown us out of the picture of picking up that 18 property until the Legislature and the Cabinet decided 19 on how Babcock was going to be purchased. 20 So once again -- and I'm like you. To pick up 21 something that's jumped in price as it has is tough to 22 look at. But what if it's worth 30, 40 percent more in 23 six more months than it is now? Now, land values are 24 beginning to shift a little bit and adjust. 25 But, you know, we can't buy everything at one ACCURATE STENOTYPE REPORTERS, INC. 52 1 time, and I think we may have been held up on this 2 piece. But I'd like to know from Colleen. Were we 3 looking at purchasing this prior to the current owner? 4 MS. CASTILLE: Yes, we were. In 1998 was the last 5 offer that was made to the previous owner. And at that 6 time the previous owner wanted $18 million, which was 7 twice as much as the appraisal showed in 1998. 8 There were also two other attempts by the owner to 9 have the federal government purchase the property. 10 Again, the appraisals came too low for that owner to 11 consider on the federal deal. And then also Orange 12 County was approached, but Orange County at that time 13 did not have an acquisition program that was that 14 large. 15 So there were different attempts on the part -- 16 were we there last year when, in accordance with the 17 appraisers, that this was a distressed sale? We were 18 not there last year. You're right. Last year we were 19 kind of holding back on most of the money for Babcock. 20 And we did have a lot of pressure from a lot of 21 different areas of the state who were a little 22 frustrated with us for that. But ultimately it worked 23 out. 24 COMMISSIONER BRONSON: So technically then there 25 were a number of circumstances involved in this. We ACCURATE STENOTYPE REPORTERS, INC. 53 1 just kind of got beat out by someone else who saw it as 2 a positive purchase for them, and they picked it up. 3 And we just didn't have a chance to bid on it at the 4 time. We were already obligated for a 74,000-acre 5 piece of property down the state. 6 MS. CASTILLE: Well, and the Water Management 7 District was obligated -- 8 GOVERNOR BUSH: It was a separate appropriation. 9 MS. CASTILLE: And the Water Management District 10 also has separate -- you know, their money from the 300 11 million is separate, and they were obligated as well. 12 GOVERNOR BUSH: And the County. I mean, the 13 County is now a partner in this, so it's more complex. 14 But, but the simple fact is that in one year's time, an 15 entity bought something for 32 and wants to sell it to 16 us for 50. And you can sugar-coat it, you can appraise 17 it, you can talk about it, you can do whatever you 18 want. But at the end of the day, that's a pretty good 19 entrepreneurial profit that we will have a discussion 20 about. 21 COMMISSIONER BRONSON: I can show you a lot of 22 other properties that are bought by private interests 23 and sold to private interests that probably have made 24 almost the same percentage of profit. So that's -- 25 GOVERNOR BUSH: It's not sustainable, ACCURATE STENOTYPE REPORTERS, INC. 54 1 Commissioner. And the net result of this is that 2 there's outrage amongst property owners right now for 3 the taxes that they're having to pay. It's just not 4 sustainable. We don't have the luxury of having 60 5 percent per year appreciation in the entire state. 6 It's just not going to continue. And, in fact, it's 7 stopped right now. It's already stopped. So who else 8 is going to speak? 9 MS. CASTILLE: Kent Wimmer from Florida Trails 10 Association and Michelle Mitchell from the U.S. Forest 11 Service. 12 GOVERNOR BUSH: Fantastic. Welcome. 13 MR. WIMMER: Good morning, Governor and Cabinet. 14 My name is Kent Wimmer. I'm with the Florida Trail 15 Association. We're one of the other partners on this 16 project. Our partnership represents the volunteers of 17 the Florida Trail Association who look forward to 18 building and maintaining the section of the Florida 19 National Scenic Trail through this parcel. 20 Currently the Florida National Scenic Trail 21 extends north of State Road 50, through the Seminole 22 Ranch Wildlife Management Area. This section, the 23 Joshua Creek acquisition, would allow us to connect the 24 trail from the Seminole Ranch Wildlife Management Area 25 up to the Seminole County Chuluota Wilderness Area. ACCURATE STENOTYPE REPORTERS, INC. 55 1 From there we only have a two-mile gap in the 2 trail to completing the trail all the way through 3 urbanized Seminole County all the way to the Wekiva 4 River. 5 GOVERNOR BUSH: And from there it goes -- doesn't 6 it keep going? 7 MR. WIMMER: And it keeps on going, all the way to 8 the Ocala National Forest, all the way up to the St. 9 Marks Refuge and all the way out to Fort Pickens. 10 GOVERNOR BUSH: Fantastic. 11 MR. WIMMER: So this is a very critical 12 acquisition. It would allow hikers to get off a 13 five-mile-long hike along Fort Christmas Road, so it 14 would greatly enhance the enjoyment and the safety of 15 hikers in the area. So Florida Trail Association very 16 strongly supports this, and we respectfully ask for 17 your consideration. Thank you. 18 GOVERNOR BUSH: Thank you very much. Thanks for 19 being here. 20 MS. MITCHELL: Hi. I'm Michelle Mitchell. I'm 21 with the U.S. Forest Service. We are the federal 22 administrator of the Florida National Scenic Trail, and 23 we really appreciate your time today and your 24 willingness to listen to our hope that you will 25 consider this project. ACCURATE STENOTYPE REPORTERS, INC. 56 1 It is a critical connection to the Florida 2 National Scenic Trail, which is not only a local 3 resource for families looking to recreate in this 4 rapidly urbanizing area but also a state resource and a 5 national resource. 6 Congress authorized the National Scenic Trail here 7 in Florida in 1983 under the same law that authorized 8 the Appalachian National Scenic Trail, which many of 9 you, I'm sure, are familiar with. 10 So with that in mind and building upon what my 11 colleague said, we hope you'll consider this project. 12 We strongly support it. 13 GOVERNOR BUSH: Thank you very much. 14 MS. MITCHELL: Thank you. 15 GOVERNOR BUSH: Thanks for being here. 16 MS. CASTILLE: And that concludes our speakers, 17 and I would like to request a deferral for two weeks on 18 this item. 19 CFO GALLAGHER: Motion to defer. 20 GOVERNOR BUSH: And what's the purpose of the 21 deferral, out of curiosity? 22 MS. CASTILLE: To discuss the value of the 23 property with the seller. 24 GOVERNOR BUSH: And I would add that if you could, 25 since we have partners, local partners in this, that ACCURATE STENOTYPE REPORTERS, INC. 57 1 they be fully included in that. 2 MS. CASTILLE: Okay. Will do. 3 GOVERNOR BUSH: So we're -- we sort it out 4 together. 5 COMMISSIONER BRONSON: Governor, may I ask also, 6 is there a way for the continuity of what the usage for 7 the acquisition would be used for, that part of that 8 portion could be privately kept by the owner and if 9 they -- if they're going to end up eventually 10 developing it, because of the price structures and so 11 forth, but still have a broad enough strip to make the 12 continuity of the rest of it, or does it need to be an 13 all/or proposition? 14 MS. CASTILLE: I think that's something we can 15 consider while we go back and look at the configuration 16 of the property and the value, because there is a 17 mitigation bank on the property as well. 18 GOVERNOR BUSH: And that's being purchased by St. 19 Johns? 20 MS. CASTILLE: St. Johns Water Management 21 District. 22 GOVERNOR BUSH: All right. Any other discussion? 23 There's a motion to defer and a second. Without 24 objection, the item will be deferred until the first 25 week of October or whenever the next meeting is. ACCURATE STENOTYPE REPORTERS, INC. 58 1 MS. CASTILLE: Yes. Thank you. 2 GOVERNOR BUSH: Okay. Thank you. Item 4. 3 MS. CASTILLE: Item 4 is the consideration of an 4 amendment to a lease with the Department of Management 5 Services. This is a consideration of a sublease or a 6 ground lease between DMS and a developer, which has not 7 been chosen yet. It's a leaseback agreement between a 8 developer and DMS. A determination that the lease 9 agreement to extend the term to 50 years with four 10 ten-year renewal options and the coterminous sublease 11 and leaseback agreement, a determination that the 12 leaseback agreement are in the public interest, a 13 determination that the proposed lease amendment, 14 sublease and leaseback agreement are not contrary to 15 the public interest, a delegation of authority to the 16 secretary of the Department of Environmental Protection 17 or my designee to approve a nonsubstantive 18 modifications to this lease, which is number 4489, the 19 sublease or the leaseback agreement following the Board 20 of Trustees' approval. 21 This is the SouthCom property, Governor, members 22 of the Cabinet. Additionally, there's been some 23 discussion with some local governments in the area, and 24 I recommend an addition, a change to this item that it 25 reflect that SouthCom will have the option to lease up ACCURATE STENOTYPE REPORTERS, INC. 59 1 to an additional 15 acres of the remaining 22.3 acres. 2 This option may not be exercised unless and until 3 SouthCom exhausts all reasonable ways to meet the 4 project build-out under its current 40-acre lease. And 5 I recommend that we defer any decision on the 6 disposition of the remaining 7.3 acres through the end 7 of this calendar year. 8 Also recommended is that the new cabinet beginning 9 in January grant Miami-Dade first right of refusal on 10 five acres and that the new cabinet provide the City of 11 Doral additional time to allow them to seek acquisition 12 of the remaining 2.3 acres as provided by law. 13 And, additionally, SouthCom has provided a letter 14 of support for the public use of the remainder of the 15 property for the City of Doral. 16 GOVERNOR BUSH: Secretary, are you coopting 17 Treasurer Gallagher's amendment to the -- 18 MS. CASTILLE: Yes, sir. 19 GOVERNOR BUSH: I just wanted to make sure. Give 20 the Treasurer credit where credit is due. 21 CFO GALLAGHER: Just want to add, give Doral 22 additional time to allow them to seek acquisition of 23 the remaining 2.3 acres as provided by law, or more if 24 Miami-Dade does not carry out its option. In other 25 words, if Miami-Dade doesn't do its -- take the option, ACCURATE STENOTYPE REPORTERS, INC. 60 1 then Doral gets more than 2.3. 2 MS. CASTILLE: Okay. We do have a representative 3 here from the City of Doral. We have DMS here, and 4 that's it, if anybody has any questions of those 5 members. 6 GOVERNOR BUSH: No. I think we apologize to the 7 City for not maintaining communication with them. The 8 intent was never to exclude Doral from the 9 conversations of this land use decision, which is an 10 important one for you all, and I appreciate the mayor's 11 expressing his concerns. 12 And I hope that yesterday's meeting was 13 satisfactory and that you understand that we want to be 14 partners in this. We want to keep SouthCom. In fact, 15 one of the problems that we have right now is 16 SouthCom's needs have grown, which is a good thing, not 17 a bad thing, because of its -- the economic viability 18 of SouthCom. And we want to create a degree of 19 permanency that will benefit your city, the county and 20 of course the state. 21 So hopefully we've satisfied the concerns with the 22 team that came down to visit yesterday. 23 MR. VILLELLA: Governor, if I may speak. 24 GOVERNOR BUSH: Yeah. 25 MR. VILLELLA: My name is Ron Villella, and I ACCURATE STENOTYPE REPORTERS, INC. 61 1 represent the City of Doral. I just wanted to thank 2 you all for your consideration. It's been great 3 working with the Department to try and come to this 4 agreement, and the amendment that Treasurer Gallagher 5 has made, especially with the additional if Miami-Dade 6 can't qualify for it. The City doesn't carry as big a 7 stick as Miami-Dade or the Governor and Cabinet, but 8 they want to be part of this and they appreciate y'all 9 making them part of it. Thank you. 10 GOVERNOR BUSH: Absolutely. All right. 11 CFO GALLAGHER: Motion. 12 GOVERNOR BUSH: There's a motion. And a second? 13 COMMISSIONER BRONSON: Second. 14 MS. CASTILLE: Motion as amended. 15 GOVERNOR BUSH: Motion as amended, of course. 16 CFO GALLAGHER: As amended. 17 GOVERNOR BUSH: It's your motion and your 18 amendment. 19 CFO GALLAGHER: Okay. 20 GOVERNOR BUSH: She stole it from you. 21 COMMISSIONER BRONSON: Second. 22 GOVERNOR BUSH: There's a motion as amended and a 23 second. Without objection, the item passes. And let's 24 make sure we check the minutes to make it really clear 25 what we just did at some point. ACCURATE STENOTYPE REPORTERS, INC. 62 1 MS. CASTILLE: Okay. 2 GOVERNOR BUSH: Item 5. 3 MS. CASTILLE: Item 5, Governor, members of the 4 Cabinet, this is an action with the Department of 5 Children and Families and Camillus House, Inc., which 6 is a homeless shelter in Miami-Dade County, and the 7 University of Miami. 8 This is a request for the consideration of an 9 exchange agreement with the Board of Trustees conveying 10 three parcels, approximately 7.87 acres of state-owned 11 non-conservation land in exchange for three parcels 12 containing approximately 268.09 acres owned by the 13 University of Miami. 14 Also it includes a determination that the 60-year 15 lease and a sublease term are in the public interest, a 16 60-year lease agreement on 3.41 acres to the Department 17 of Children and Families and a 60-year sublease 18 agreement on 3.41 acres to the Camillus House, Inc. 19 In 2003 the Department of Transportation donated 20 5.02 acres to the Board of Trustees for a lease to the 21 Department of Children and Families and sublease to 22 Charity Unlimited of Florida for a homeless shelter. 23 The Camillus House site is an area where 24 University of Miami has existing facilities and is 25 seeking to build a world class bioscience center that ACCURATE STENOTYPE REPORTERS, INC. 63 1 would help revitalize the area. The site is 2 particularly attractive because it is surrounded by 3 three additional DOT-owned parcels that are also 4 surplus to their needs. 5 All interested parties developed a plan with the 6 support of the City of Miami for the optimum use of the 7 public lands and the greatest benefit to the community 8 and to Florida citizens. This resulting exchange 9 agreement will allow for the construction of both the 10 Camillus House and the bioscience center. 11 The center is expected to create 5,000 new jobs, 12 bringing an estimated $263 million in salaries to the 13 community. This exchange will also acquire 66.88 acres 14 located within the Florida Keys Ecosystem Florida 15 Forever Project, which will become part of Crocodile 16 Lakes National Wildlife Refuge and will be managed by 17 the U.S. Fish and Wildlife Service. 18 And the exchange will also enhance South Florida's 19 water resource protection for the Everglades with the 20 acquisition of 200 acres located in South Florida Water 21 Management District, Water Conservation Area 3B. 22 UM will be required to pay a -- University of 23 Miami will be required to pay a 7 million -- 24 GOVERNOR BUSH: Colleen, you can just call it the 25 U. ACCURATE STENOTYPE REPORTERS, INC. 64 1 MS. CASTILLE: $7,844,360 to be deposited in the 2 Internal Improvement Trust Fund. We have speakers 3 available. Justin Sayfie is here representing the 4 University of Miami. I believe Bob de La Fuente from 5 Camillus House is here. 6 GOVERNOR BUSH: They're waiving their rights. 7 MS. CASTILLE: And they're waiving their rights to 8 speak. 9 GOVERNOR BUSH: Oh, to speak. 10 ATTORNEY GENERAL CRIST: Motion on 5. 11 COMMISSIONER BRONSON: Second. 12 GOVERNOR BUSH: There's a motion and a second. 13 Any other discussion? Kudos to the Department. Kudos 14 to everybody. Kudos to the beneficiaries of this for 15 their patience. This is, I think, a great transaction. 16 MS. CASTILLE: It is truly a great opportunity, 17 Governor. It is one of the most complex public-private 18 partnerships that we've worked on to the benefit of a 19 community who is seeking to diversify its economy and 20 to keep growing as a world class center. 21 GOVERNOR BUSH: There's a motion and a second. 22 Without objection, the item passes. Thank you very 23 much. Thank you all. 24 MS. CASTILLE: Thank you very much. And that 25 concludes our items. ACCURATE STENOTYPE REPORTERS, INC. 65 1 GOVERNOR BUSH: State Board of Administration. 2 CFO GALLAGHER: Motion. 3 ATTORNEY GENERAL CRIST: Second. 4 GOVERNOR BUSH: There's a motion and a second. 5 Without objection, the item passes. 6 What's your problem? The prospect of a life 7 science center at the University of Miami and serving 8 the homeless community in a way that allows the 9 community to continue to grow. And the State, of 10 course, benefits because we didn't give the land away, 11 and that money is reinvested back into conservation. 12 It's a great day for Florida. That could be the whole 13 article. You don't have to write anything else. Just 14 get your tape recorder out. 15 Item 2. 16 MR. STIPANOVICH: Thank you, Governor. Good 17 morning, members. Item 2, request approval for fiscal 18 sufficiency in an amount not exceeding 400 million 19 State of Florida State Board of Education Public 20 Education Capital Outlay Bonds. 21 CFO GALLAGHER: Motion. 22 ATTORNEY GENERAL CRIST: Second. 23 GOVERNOR BUSH: A motion and a second. Without 24 objection, the item passes. 25 MR. STIPANOVICH: The third item is request for ACCURATE STENOTYPE REPORTERS, INC. 66 1 approval of a fiscal determination to issue an amount 2 not exceeding 5,200,000 Tax Exempt Florida Housing 3 Finance Corporation Multifamily Mortgage Revenue Bonds. 4 ATTORNEY GENERAL CRIST: Motion. 5 CFO GALLAGHER: Second. 6 GOVERNOR BUSH: A motion and a second. Without 7 objection, the item passes. 8 MR. STIPANOVICH: Item 4 is request for approval 9 of a fiscal determination to issue an amount not 10 exceeding 4,750,000 Tax Exempt Florida Housing Finance 11 Corporation Multifamily Mortgage Revenue Bonds. 12 CFO GALLAGHER: Motion. 13 ATTORNEY GENERAL CRIST: Second. 14 GOVERNOR BUSH: There's a motion and a second. 15 Without objection, the item passes. 16 MR. STIPANOVICH: Item Number 5 is request for 17 approval of a fiscal determination to issue an amount 18 not exceeding 5,750,000 Tax Exempt Housing Finance 19 Corporation Multifamily Mortgage Revenue Bonds. 20 ATTORNEY GENERAL CRIST: Motion. 21 CFO GALLAGHER: Second. 22 GOVERNOR BUSH: Motion and a second. Without 23 objection, the item passes. 24 MR. STIPANOVICH: The last item, Item Number 6, is 25 request for approval to file a notice of change and ACCURATE STENOTYPE REPORTERS, INC. 67 1 adoption as amended for Rule 19-15.001, Insurance 2 Capital Build-Up Incentive Program. In this rule there 3 are basically four changes. 4 The first has to do with clarifying the definition 5 of new capital. The second one deals with a late fee 6 that would be charged for late payments. The third has 7 to do with a new provision that allows an insurer more 8 than 60 days to meet the two/one requirement with the 9 approval of the State Board of Administration, which 10 would be incorporated into the surplus note. And the 11 fourth deals with the minimum required surplus, which 12 slightly relaxes that requirement. 13 GOVERNOR BUSH: Treasurer? 14 CFO GALLAGHER: Sixty days to meet a two/one net 15 written premium to surplus ratio? 16 MR. STIPANOVICH: We're extending that. So they 17 would have more than 60 days to meet the two to one 18 ratio based on certain circumstances. It would be 19 incorporated into the surplus note, the contract, based 20 on the review of the loan request, reviewing the 21 business plan. 22 CFO GALLAGHER: How is somebody supposed to do 23 them in 60 days? Take them all to Citizens? 24 MR. STIPANOVICH: Well, that's why we're relaxing 25 it, Treasurer. It's not realistic. That was what was ACCURATE STENOTYPE REPORTERS, INC. 68 1 proposed in the emergency rule, and we're looking to 2 change that in terms of relaxing that. We can see 3 circumstances where it may take up to a year. 4 CFO GALLAGHER: Exactly. That's why I don't 5 understand, why are we -- why are we leaving 60 days in 6 here? 7 MR. STIPANOVICH: My understanding is that it's 8 something that came down from the Senate legislative 9 staff. It was a number that was proposed. We accepted 10 it. We wrote the rule. We used 60 days. We didn't 11 get it right, and we're asking to amend it. 12 CFO GALLAGHER: I got that part. But what I'm 13 asking is -- 14 GOVERNOR BUSH: Why keep the 60 in. 15 CFO GALLAGHER: What you've done is you've changed 16 the language. And what you're saying is, one, failure 17 to reach the minimum writing ratio within 60 days of an 18 insurer receiving the proceeds of the surplus note 19 distributed by the Board or failure to maintain the 20 minimum writing ratio once reached, unless a 21 supplemental agreement is provided for a surplus note 22 that allows the insurer more time to reach the minimum 23 writing ratio due to financial considerations. 24 Why don't we have an agreement on how long it's 25 going to take with each insurer based on whatever the ACCURATE STENOTYPE REPORTERS, INC. 69 1 criteria are, instead of even mentioning the 60 days? 2 MR. STIPANOVICH: Well, we do reach an agreement, 3 and it is part of the contract, so we do exactly that. 4 But still the 60 days is mentioned. But we come to an 5 agreement. What's binding is what we agree to that's 6 in the contract. So we really ignore the 60 days. 7 CFO GALLAGHER: I understand that. That's why I'm 8 asking why it says 60 days in it at all. 9 GOVERNOR BUSH: Because it might be to comply with 10 legislative intent. I'm speculating here. Mr. 11 Nicholson perhaps can clarify. 12 MR. NICHOLSON: When we first started doing the 13 rule, I mean, there was time pressure to get this thing 14 done by -- and we actually had it adopted by -- 15 CFO GALLAGHER: I got that. And you put 60 days 16 in there. Fine. Now we don't need it anymore. 17 MR. NICHOLSON: I'm saying that how we're handling 18 this is we're adding to that, unless a supplemental 19 agreement is provided for in the surplus note that 20 allows more time. We do that routinely in the surplus 21 notes. There are some companies that could meet the 22 within 60 days so -- 23 GOVERNOR BUSH: You think there are some companies 24 that could do it? 25 MR. NICHOLSON: Yes. Some companies say they're ACCURATE STENOTYPE REPORTERS, INC. 70 1 already at two to one. 2 CFO GALLAGHER: They're meeting 60 days. 3 MR. NICHOLSON: They're already at two to one 4 before they even sign the surplus note. We got one 5 yesterday at four to one. So there are situations -- 6 CFO GALLAGHER: That's the most they can go. 7 MR. NICHOLSON: So we don't really care, the 60 8 days -- we don't know what number to pick out of the 9 air and put in here. But that's the origin of it. 10 CFO GALLAGHER: I understand all that. My 11 question is, why wouldn't we say that an agreement is 12 to be provided for the surplus note that allows the 13 insurer the time necessary to reach the minimum writing 14 required ratio. 15 MR. NICHOLSON: I think that's what we do. We 16 don't say those words. 17 CFO GALLAGHER: You do it through a roundabout way 18 that leaves 60 days in there, which may or may not make 19 sense. 20 GOVERNOR BUSH: Just the failure to reach an 21 agreement within 60 days, and the agreement they're 22 looking at on a case-by-case basis, I assume. Is that 23 right? 24 MR. NICHOLSON: The provision that we worked out 25 with the two that we've done so far is we allowed them ACCURATE STENOTYPE REPORTERS, INC. 71 1 to identify the time it's going to take them to get to 2 a two to one. 3 CFO GALLAGHER: Right. So -- 4 MR. NICHOLSON: Let me explain further. 5 CFO GALLAGHER: Okay. 6 MR. NICHOLSON: Then what is required is that they 7 move in that direction for that time. If they don't 8 move in that direction, there are certain penalties 9 associated with that. So it is just a number of days. 10 We thought it was reasonable to begin with. We could 11 put any number in there that we want. I don't know 12 what the right number is. 13 CFO GALLAGHER: Well, that's where I'm coming 14 from. It shouldn't have a number. What it should say 15 is that an agreement is provided for in the surplus 16 note that allows the insurer the amount of time 17 necessary to meet the minimum writing ratio in 18 agreement with the State Board of Administration or the 19 Hurricane Cat Fund, whoever is doing the money. 20 In other words, you look at their financials. You 21 look at when they think they can do it, and that's what 22 the agreement will have in it, not all this other 23 stuff. 24 MR. STIPANOVICH: Treasurer, members, we'll do 25 what you all would like for us to do. That's exactly ACCURATE STENOTYPE REPORTERS, INC. 72 1 what we're doing, based on case by case. We're making 2 a determination. It's imbedded in the contract and 3 surplus note. 4 CFO GALLAGHER: Just say that that needs to be in 5 the contract. 6 MR. STIPANOVICH: But a 60-day period does at 7 least set a threshold. That's a target. So I think 8 that was the intent, was just to have a target time. 9 And then there can be all kind of exceptions to not 10 meeting a target. Otherwise you don't have an 11 expectation. And maybe a 60 days expectation is not 12 realistic. 13 GOVERNOR BUSH: Well, it apparently is for one of 14 the two. Is that right, Jack, one of the two companies 15 that you've reached an agreement with is okay with the 16 60 days? 17 MR. NICHOLSON: Both of them, we put it in the 18 supplemental agreement, which would be longer than 60 19 days, and we plan to do that for every single company. 20 CFO GALLAGHER: Right, because it's impossible for 21 someone to start a new company and have a two to one 22 writing ratio in 60 days. Some of them won't even have 23 their computer systems up and everything else in 60 24 days. 25 GOVERNOR BUSH: Unless they take out Citizens. ACCURATE STENOTYPE REPORTERS, INC. 73 1 CFO GALLAGHER: Well, even then they've got to 2 have the system to put them on. 3 MR. STIPANOVICH: So we will do whatever you would 4 like for us to do. 5 GOVERNOR BUSH: I'd like for you to comply with 6 the desires of the Treasurer. I'm not sure what they 7 are, but I'm with him. 8 CFO GALLAGHER: Just have a negotiated time. I 9 don't care what it is. It can be 60 days if they agree 10 to it, but have a negotiated time that you figure out. 11 But don't put 60 days in there when people can't do it. 12 The only person that could do a 60 days is if they 13 already had a company and they were already operating 14 and they had a four to one ratio already. This is your 15 notice anyway, right? 16 MR. STIPANOVICH: Well, it's notice and -- notice 17 and for adoption, and we have a pending -- 18 CFO GALLAGHER: So it was adopted on an emergency 19 basis? 20 MR. STIPANOVICH: Pardon? 21 GOVERNOR BUSH: You have a notice period, and then 22 would it have been adopted? 23 MR. STIPANOVICH: Well, that's what we're asking 24 for today, notice for change and for adoption as 25 amended. ACCURATE STENOTYPE REPORTERS, INC. 74 1 CFO GALLAGHER: I just think you ought to clean it 2 up. If you do or don't, it's not the end of the world. 3 MR. STIPANOVICH: What I'm not sure of, Governor 4 and members, is if we -- are we going to be required to 5 come back because what's being proposed here, unless 6 we -- 7 GOVERNOR BUSH: No. We're surrendering. So we're 8 going to approve, I think we're going to approve what 9 you're saying. But I think the Treasurer's point is 10 that in these negotiations which y'all have underway, 11 we want this to work, so don't impose a standard that 12 can't be achieved. Isn't that your -- 13 CFO GALLAGHER: That's it. Motion. 14 GOVERNOR BUSH: There's a motion. Is there a 15 second? 16 ATTORNEY GENERAL CRIST: Second. 17 GOVERNOR BUSH: Without objection, the item 18 passes. 19 CFO GALLAGHER: Sorry. 20 GOVERNOR BUSH: No. That's fine. It's important. 21 ATTORNEY GENERAL CRIST: Good to get it out. 22 GOVERNOR BUSH: As an aside, are we on track for 23 the people that have requested the 225 million? Do you 24 think all of them are going to be approved? 25 MR. STIPANOVICH: We are. We've got one ACCURATE STENOTYPE REPORTERS, INC. 75 1 company -- every company has a specific date that they 2 requested the loan approval. I think we have one 3 company that is behind in terms of when they would like 4 to have gotten it. We hope to resolve that this week. 5 GOVERNOR BUSH: Are we comfortable that every one 6 of these companies has the wherewithal, the capacity to 7 run an insurance company? 8 MR. STIPANOVICH: Yes, sir, or we wouldn't be 9 making these loans. There are no guarantees. We don't 10 have a crystal ball, but based on the standards that 11 we're applying and the process that we have in place 12 and what's in the law, we're conforming, and our 13 expectations are that these companies will thrive and 14 survive. But in this business there are no guarantees. 15 GOVERNOR BUSH: The Office of Insurance 16 Regulation, Coleman, is now reviewing all of these 17 business plans? 18 MR. STIPANOVICH: Side by side with us. 19 CFO GALLAGHER: They don't get a certificate of 20 authority until OIR goes through everything. And 21 there's no loan made until they have a certificate of 22 authority. 23 GOVERNOR BUSH: I was just asking about the 24 timing. It sounds like it's simultaneous. 25 MR. STIPANOVICH: We work very closely with OIR. ACCURATE STENOTYPE REPORTERS, INC. 76 1 GOVERNOR BUSH: Okay. Any other comments, 2 questions? Anybody want to write Gary's article for 3 him? 4 CFO GALLAGHER: I don't even want to read it. 5 GOVERNOR BUSH: Come on. It's the Herald. It's 6 the hometown paper. 7 MR. STIPANOVICH: Thank you, Governor, members. 8 (The proceeding was concluded at 10:40 a.m.) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ACCURATE STENOTYPE REPORTERS, INC. 77 1 2 CERTIFICATE OF REPORTER 3 4 STATE OF FLORIDA ) 5 COUNTY OF LEON ) 6 7 I, Jo Langston, Registered Professional Reporter, 8 do hereby certify that the foregoing pages 1 through 76, 9 both inclusive, comprise a true and correct transcript of 10 the proceeding; that said proceeding was taken by me 11 stenographically and transcribed by me as it now appears; 12 that I am not a relative or employee or attorney or counsel 13 of the parties, or a relative or employee of such attorney 14 or counsel, nor am I interested in this proceeding or its 15 outcome. 16 IN WITNESS WHEREOF, I have hereunto set my hand 17 this 30th day of September, 2006. 18 19 20 21 _______________________________ 22 JO LANGSTON 23 Registered Professional Reporter 24 25 ACCURATE STENOTYPE REPORTERS, INC.