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, FINANCIAL REGULATION FINANCIAL SERVICES COMMISSION, INSURANCE REGULATION ADMINISTRATION COMMISSION 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 Tuesday, October 17, 2006, commencing at approximately 9:09 a.m. Reported by: MARY ALLEN NEEL Registered Professional Reporter Registered Florida 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 * * * 3 I N D E X DIVISION OF BOND FINANCE (Presented by BEN WATKINS) ITEM ACTION PAGE 1 Approved 5 2 Approved 5 3 Approved 6 FINANCIAL SERVICES COMMISSION, FINANCIAL REGULATION (Presented by ANDREA MORELAND) ITEM ACTION PAGE 1 Approved 9 FINANCIAL SERVICES COMMISSION, INSURANCE REGULATION (Presented by KEVIN McCARTY) ITEM ACTION PAGE Update 10 ADMINISTRATION COMMISSION (Presented by TERESA TINKER) ITEM ACTION PAGE 1 Approved 19 2 Accepted 27 3 Approved 27 4 CONTINUED INDEX BOARD OF TRUSTEES, INTERNAL IMPROVEMENT TRUST FUND (Presented by COLLEEN CASTILLE) ITEM ACTION PAGE 1 Approved 28 2 Approved 32 3 Deferred 33 4 Approved 34 5 Approved 40 6 Approved 41 STATE BOARD OF ADMINISTRATION (Presented by COLEMAN STIPANOVICH) ITEM ACTION PAGE 1 Approved 43 2 Approved 43 3 Approved 43 CERTIFICATE OF REPORTER 45 5 1 P R O C E E D I N G S 2 (The agenda items commenced at 9:37 a.m.) 3 GOVERNOR BUSH: Ben, Division of Bond 4 Finance. How are you doing? 5 MR. WATKINS: Good, Governor. Thank you. 6 CFO GALLAGHER: Motion on the minutes. 7 ATTORNEY GENERAL CRIST: Second. 8 COMMISSIONER BRONSON: Second. 9 GOVERNOR BUSH: There's a motion and a 10 second. Without objection, Item 1 passes. 11 MR. WATKINS: Item Number 2 is a resolution 12 authorizing the competitive sale of up to $200 13 million in PECO bonds. 14 CFO GALLAGHER: Motion on 2. 15 COMMISSIONER BRONSON: Second. 16 GOVERNOR BUSH: There's a motion and a 17 second. Without objection, the item passes. 18 MR. WATKINS: And Item Number 3 are 19 resolutions authorizing the issuance and 20 competitive sale of up to $215 million of PECO 21 refunding bonds. 22 CFO GALLAGHER: Motion on 3. 23 ATTORNEY GENERAL CRIST: Second. 24 GOVERNOR BUSH: There's a motion and a 25 second. Without objection, the item passes. 6 1 Ben, would you like to give us a brief, 2 "brief" being the operative word, update on our 3 visit to New York with our friends that buy our 4 debt? 5 CFO GALLAGHER: And our AAA bond rating, you 6 need to mention that again, because they don't 7 seem to write it. 8 GOVERNOR BUSH: Oh, they're writing it all 9 the time now. 10 CFO GALLAGHER: Oh, they do? 11 GOVERNOR BUSH: Yes. We had a breakthrough 12 about a month ago, and there's just been a 13 veritable plethora of news on the subject. 14 CFO GALLAGHER: Every time they say the State 15 of Florida, they say it with a AAA bond rating? 16 GOVERNOR BUSH: I see it all the time. 17 MR. WATKINS: Governor, I've gotten -- 18 CFO GALLAGHER: It's getting blogged right 19 now. 20 MR. WATKINS: We had a meeting with major 21 institutional investors in New York last week and 22 have gotten very positive feedback from that 23 meeting. They very much appreciated the 24 opportunity to be able to interact with you and 25 hear about what's happening in the state, and 7 1 they've been very impressed with how the state has 2 been managed financially and the fiscal discipline 3 and the conservative financial management 4 practices demonstrated and hope that we continue 5 in that vein into the future. 6 GOVERNOR BUSH: A lot of questions about our 7 insurance issues, which are serious and we're 8 working on, but I thought it was a positive 9 meeting. 10 CFO GALLAGHER: Good answers. 11 MR. WATKINS: They appreciated it and were 12 very impressed, Governor. 13 GOVERNOR BUSH: Thank you, Ben. 14 MR. WATKINS: Thank you. 15 GOVERNOR BUSH: That was brief, and we 16 appreciate it. What's our bond rating again? 17 MR. WATKINS: Let me think about that. AAA. 18 ATTORNEY GENERAL CRIST: How many states have 19 that? 20 GOVERNOR BUSH: About 12? 21 MR. WATKINS: About nine. 22 GOVERNOR BUSH: Nine? 23 CFO GALLAGHER: And we're the only large 24 state -- 25 COMMISSIONER BRONSON: We're the only one 8 1 that has had major hurricanes that has it. 2 CFO GALLAGHER: Actually, no other large 3 state has it. Most of them are the small states. 4 GOVERNOR BUSH: Georgia. 5 CFO GALLAGHER: That's small. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9 1 GOVERNOR BUSH: Financial Services 2 Commission, Office of Financial Regulation. 3 MS. MORELAND: Good morning. 4 GOVERNOR BUSH: Good morning. 5 MS. MORELAND: I'm Andrea Moreland. I'm the 6 legislative director for the Office of Financial 7 Regulation. We are requesting approval to publish 8 a notice of proposed rulemaking for Rule 9 69T-1.001, which will establish the organizational 10 structure for the office. 11 CFO GALLAGHER: Motion on 1. 12 COMMISSIONER BRONSON: Second. 13 ATTORNEY GENERAL CRIST: Second. 14 GOVERNOR BUSH: There's a motion and a 15 second. Without objection, the item passes. 16 Thank you. 17 MS. MORELAND: Thank you. 18 19 20 21 22 23 24 25 10 1 GOVERNOR BUSH: Office of Insurance 2 Regulation. 3 MR. McCARTY: Good morning, Governor and 4 members of the Commission. I am pleased to 5 announce today for the fourth consecutive year 6 that workers' compensation rates are being reduced 7 in Florida. Shortly after I leave this podium, 8 I'll be signing an order reducing rates in Florida 9 by 15.7 percent, which will mean about a 10 $400 million additional savings this year for 11 Florida's employers. 12 As you know, Senate Bill 58, which passed in 13 2002, made very substantial changes to Florida's 14 workers' comp system. We at that particular time 15 had among the highest rates in the nation and 16 some of the lowest benefits. Since that time, we 17 have had four consecutive rate decreases in 18 Florida, which is a demonstration that the 19 legislation that was adopted in 2002 had its 20 intended impact. 21 The rate filing was filed August 29th. We 22 had a rate hearing on October 9th and will be 23 releasing the order today. 24 CFO GALLAGHER: Kevin, that basically is 25 almost a 50 percent savings over what it was four 11 1 years ago. 2 MR. McCARTY: 40.6 percent. 3 GOVERNOR BUSH: Forty? 4 MR. McCARTY: 40.6 percent, the cumulative 5 effect of the rate decreases from the legislative 6 change since 2002. 7 CFO GALLAGHER: Which is probably about a 8 billion and a half -- 9 MR. McCARTY: That's about right. 10 CFO GALLAGHER: That employers don't have to 11 pay into the work comp system. 12 MR. McCARTY: Yes. And one of the most 13 substantial reductions was in the roofer 14 classification, and we all know how important that 15 is in Florida today to have roofers that are 16 competitive in the marketplace. 17 CFO GALLAGHER: An interesting statistic is 18 that the rates have dropped by 40 percent and we 19 are collecting more premium now than we ever have 20 in gross amount of dollars. 21 MR. McCARTY: Well, part of the reform 22 package was to provide additional resources, fraud 23 resources, fraud prosecutions. The changes that 24 were made in the Division of Workers' Compensation 25 in terms of compliance with the law, I mean, it 12 1 was tough medicine at first, but it certainly had 2 its intended impact, which is to make sure that we 3 had a marketplace where everyone was on a level 4 playing field. A number of contractors who had to 5 competitively bid were bidding against people who 6 were not buying insurance. 7 The changes in the system affected three 8 areas in particular. The administration, which I 9 think provided greater administration, reduced 10 the number of permanent total disability in 11 Florida -- Florida was one of the highest in the 12 nation, with four times the national average for 13 permanent total -- but also made substantial 14 changes in reduction of the legal fees in the 15 system. So providing better benefits, or better 16 provision for administration to get the benefits 17 to the injured workers, but at the same time, 18 reducing the cost of litigation. So 19 collectively, it was has been a very effective 20 piece of legislation. 21 GOVERNOR BUSH: Good work, Kevin. Kudos to 22 the Legislature for passing the law. 23 MR. McCARTY: Kudos to the Legislature. 24 I would like to update you on Monroe County. 25 On motion of General Crist at our meeting on 13 1 September 19th, the Cabinet provisionally 2 approved the plan of operation of Citizens 3 subject to two specific provisions. One is the 4 limitation of the use of outside counsel to sue 5 the Office of Insurance Regulation in orders 6 relating to rates. As you know, since that time, 7 the office has settled with Citizens Insurance, 8 and Monroe County rates, I'm pleased to announce, 9 will be going down 35 percent compared to the 10 25.9 percent rate increase as had been 11 anticipated. 12 ATTORNEY GENERAL CRIST: Could you repeat 13 that, Kevin? 14 MR. McCARTY: Certainly. As you recall, 15 Heather Carruthers from Monroe County came here -- 16 ATTORNEY GENERAL CRIST: The rate part. 17 MR. McCARTY: The rate part, yes. The rates 18 are going down in Monroe County by 35 percent as 19 opposed to the 25.9 percent rate increase as 20 proposed by Citizens. So thank you on behalf on 21 the citizens of Monroe County. 22 GOVERNOR BUSH: The 25 percent decrease, is 23 that off of the 35 percent increase? In other 24 words, are you taking the base times 1.35 and then 25 reducing it by 25 percent? 14 1 MR. McCARTY: It's actually going to be a 21 2 percent rate reduction from the 2005 rate, which 3 really puts them at par with the highest level of 4 Dade County. 5 GOVERNOR BUSH: Yes, still -- 6 MR. McCARTY: I mean, they're still very high 7 rates. 8 In addition, at that meeting, upon motion of 9 General Crist, Citizens was directed to hold at 10 least three public hearings around the state to 11 capture consumer comments to comply with its 12 pro-consumer statutory mandates. In order to 13 improve the level of service of Citizens, 14 consistent with this Commission's order, the 15 Office is coordinating with Citizens in planning 16 these public hearings, the first of which we hope 17 to have at the end of this month, perhaps the 18 first week of November. We are planning for the 19 first hearing to be in Broward, and we hope to 20 have one in Pensacola and Sarasota. 21 And we will also be having a sinkhole 22 hearing in Pasco County on the rate reductions 23 for the sinkhole provision that Citizens has 24 filed which will limit their sinkhole coverage. 25 It would mean an up to 43 percent reduction in 15 1 Pasco County. So we hope to work with 2 legislative leaders in that area to maximize 3 consumer participation at all these hearings. 4 GOVERNOR BUSH: Thank you, Kevin. 5 MR. McCARTY: That concludes my report, 6 Governor. 7 GOVERNOR BUSH: Thank you very much. 8 CFO GALLAGHER: If I may use this time, 9 Governor, to give you an update on the My Safe 10 Florida Home mitigation program. 11 GOVERNOR BUSH: Yes, please. 12 CFO GALLAGHER: Since the launch of My Safe 13 Florida Home in August, we've received more than 14 186,000 phone calls and 58,000 completed 15 applications statewide for a free home inspection, 16 so it's a rather popular program. We were 17 supposed to do 50,000 homes, or as many as we 18 could in three years, and it looks like we're 19 going to do as many as we can and run of money in 20 one year. 21 We've made steady and successful progress. 22 We've completed or scheduled more than 5,300 23 inspections in Dade, Broward, and Lee County. 24 We've trained more than 450 inspectors to do home 25 inspections through a partnership that we have 16 1 with FLASH, the Federal Alliance for Safe Homes. 2 We've received more than 470 applications from 3 contractors interested in doing home 4 improvements, and we're now processing those 5 applications. We've partnered with 12 nonprofit 6 organizations in 10 counties to help up to 4,000 7 low-income homeowners make improvements. We have 8 seven local governments that have submitted 9 proposals to partner with us also on these home 10 mitigations. 11 So as a result of the progress we've made 12 and still anticipate making, we are confident 13 that our goal of 12,000 completed scheduled 14 inspections will be accomplished by the end of 15 hurricane season, November 30th. 16 We've also taken the opportunity to help 17 educate thousands of Floridians about the My Safe 18 Home program through the recent Fortified Florida 19 Fairs that we've held in Pensacola, Boca Raton, 20 and St. Petersburg. We've hosted these events, 21 Governor, in partnership with your office and the 22 Office of Insurance Regulation, and I'm proud to 23 say that overall, public attendance has been 24 outstanding. 25 GOVERNOR BUSH: It has been. 17 1 CFO GALLAGHER: So I want to give kudos to 2 the staff for doing a tremendous job in putting 3 these events together. And there's a real need to 4 continue the educational and outreach efforts. 5 Many homeowners when they're inspected learn 6 two things that are interesting. One is that in 7 some cases, they already qualify for discounts 8 and they don't know that. So that's number one. 9 In Dade and Broward County, homes that were built 10 under the new code qualify for discounts, and 11 many people don't know that, and they're not 12 getting those discounts. So that's one thing 13 they find out. The other is that if they spend 14 only a reasonable amount of money, they can get 15 additional discounts by fortifying their homes. 16 So we have a sheet that, if anybody is 17 interested, will give you day by day exactly how 18 many calls and exactly what we've done. We've 19 kept real good records of all of that. And we're 20 moving ahead on schedule, and I think it's going 21 to be something that the next administration may 22 want to work on continuing to fortify people's 23 homes, which is really the only thing we can do 24 in order to keep rates down. 25 GOVERNOR BUSH: The other thing that I think 18 1 will help as it relates to people having discounts 2 or credits that they don't know about is the new 3 rule that we passed -- I think it was last Cabinet 4 meeting -- where it's more transparent, in 5 English, and not hidden and uninsurance-like in 6 its approach, which I think will be very helpful. 7 You know, insurance is a foreign thing for 8 most consumers. They know they have to buy it to 9 get their loan, but the language of insurance is 10 not plain-spoken English. So I hope the rule 11 that we passed will help a lot, because it is 12 amazing how many people don't know that they can 13 get credits right now based on the structures of 14 their homes, or even if they don't qualify for 15 the mitigation program, they can do it on their 16 own and still save money over the long haul. 17 CFO GALLAGHER: Well, actually, everybody 18 qualifies for the matching money. That's 19 something the Legislature is going to have to look 20 at next year. But without matching -- 21 GOVERNOR BUSH: Here's the deal. The demand 22 will far exceed -- that's my point. 23 All right. Thank you, Treasurer. 24 25 19 1 GOVERNOR BUSH: Administration Commission. 2 T-Square. 3 CFO GALLAGHER: Motion on the minutes of 4 September 19th. 5 ATTORNEY GENERAL CRIST: Second. 6 GOVERNOR BUSH: There's a motion and a 7 second. Without objection, Item 1 passes. 8 MS. TINKER: Item 2 is consideration of an 9 interim report on the Division of Administrative 10 Hearings. Chief Judge Robert Cohen is here to 11 present the highlights of the report, and staff is 12 recommending acceptance of the report. 13 CFO GALLAGHER: The Chief Judge is here. 14 MR. COHEN: Thank you. Good morning. 15 GOVERNOR BUSH: Good morning. 16 MR. COHEN: This interim report was at the 17 request of the Administration Commission, Governor 18 and members of the Cabinet. And I guess I call it 19 an interim report because the Office of Judges of 20 Compensation Claims report is due December 1, and 21 DOAH's annual report is due February 1, so we're 22 in that in-between period. But with the fiscal 23 year having ended, we have a lot to report. 24 First of all, with the help of our new 25 Deputy Chief Judge of Compensation Claims Dave 20 1 Langham, we have already taken some dramatic 2 steps just in the past several months. We have 3 published our rules. The rulemaking has been 4 going on for about a year and a half. We 5 published the rules. They'll be in effect 6 November 1. 7 And having Commissioner McCarty just talking 8 about the reduction in workers' comp premiums in 9 the State of Florida, I believe that what we have 10 done at the OJCC, and really what our judges have 11 done in enforcing the laws with the amendments in 12 2002 and 2003 has also aided in bringing down 13 these rates. And that's because the judges, 14 unpopular for many -- there have been lots of 15 appeals filed in the First DCA. But the judges 16 have enforced lower attorney's fees. They have 17 enforced the statutory attorney's fees and not a 18 penny more. That has not been met with great 19 approval and great acceptance by all the legal 20 community, but we're here to enforce the law, and 21 that's the way it has gone. 22 CFO GALLAGHER: What fees are you talking 23 about? 24 MR. COHEN: Well, these are attorney's fees 25 that the attorneys receive for representing -- 21 1 they're medical-only claims, but -- 2 CFO GALLAGHER: And this is workers' comp? 3 MR. COHEN: Worker's comp, that's right, 4 claimants, fees to claimants' attorneys. 5 Office automation, we have continued to go 6 to the next phase of our electronic filing for 7 both the OJCC and the adjudication of disputes 8 program. With the OJCC, we've upgraded our 9 petition for benefits. And we learned at the 10 annual convention for workers' comp when we made 11 a presentation to all the paralegals and the 12 folks who are actually putting together these 13 petitions for claimants that most of them are 14 still scared to use electronic filing. 15 We are sending teams out on the road to 16 educate them, actually educate the people who 17 will be preparing the petitions. We've tried to 18 make it as simple as possible. It is simple, and 19 we've had some of our IT folks' kids try it out 20 to see if they could manipulate the fields and 21 manipulate the petitions, and they've been able 22 to do it. But there's still some folks out there 23 that need some help, and we're out there to help 24 train them. 25 On the adjudication of disputes program, our 22 1 general counsel agency page is just about ready 2 to be launched. We're going to have kind of a 3 kickoff and a luncheon inviting the general 4 counsels from the different agencies. But this 5 is what will allow all agencies to go to one 6 place, open up a page, see all the cases that 7 their agency has currently in the hopper, be able 8 to click on any of those cases, file pleadings, 9 whatever they need completed, really kind of a 10 one-stop shopping for the general counsels and 11 for anyone in the agencies, all our registered 12 attorneys, registered users. 13 We had some physical plant issues. We are 14 consolidating. In our Tallahassee office, we're 15 currently in two locations, close to each other. 16 But the district office for the workers' comp and 17 also our main office for the adjudication of 18 disputes, we're about to consolidate them into 19 one location. It will knock out about 2,500 20 square feet and save us a lot of money in rent, 21 and we'll really get, at least in one location, 22 one of our workers' comp offices under the same 23 roof as our adjudication of disputes for me to be 24 able and for us to be able to have a closer look, 25 take a closer look at what is happening day to 23 1 day without having to run down the street to see 2 what's happening and who's in the office and 3 who's not in the office. 4 Emergency management, we've implemented our 5 two plans this year, in addition to some other 6 plans, but really, our emergency management plan 7 and our continuity of operations plan. All of 8 our employees have emergency contact cards, 9 laminated cards they carry with them, and it has 10 numbers and contacts for each of them. Whenever 11 there is any type of emergency, they know whether 12 they -- when they should report to work, whether 13 to report to work. And we can check in with them 14 and they check in with us to make sure they're 15 safe and will be ready to return to work when 16 we're back in business if there's ever an event. 17 Performance measures and capabilities, this 18 year our adjudication of disputes program has had 19 an increase in the number of hearings and the 20 number of hours of hearing. We have met or come 21 close to meeting every performance standard. 22 Once again, in 2005, we still had a period where 23 the storms came through, and that resulted in 24 more continuances than usual and also resulted in 25 some scheduling issues, but we still got pretty 24 1 close in every category to our performance 2 standards. 3 In the OJCC, Judge Langham has taken great 4 strides to eliminate the backlog of cases. He 5 personally went down to Miami and handled cases 6 down there when his case load in Pensacola was 7 down. He went down to Miami. He actually took 8 on some cases that were older cases, tried them 9 himself, got the orders out in a week or two, and 10 got those off the docket. 11 I think what we're trying to do is really 12 cultivate a new culture in the OJCC, and that is, 13 if your office is down in caseload and another 14 office is up, you get in your car, and you drive 15 over there, and you take on some cases, and you 16 do your share to get those cases through the 17 system, not make people wait, and not you sit 18 around and wait until you have enough cases to 19 keep you busy all the time. 20 That's really -- we're focusing always on 21 education. We have our annual education 22 conference in Tallahassee the last couple of days 23 in November. We also have an educational 24 conference in the spring where we really work 25 with our people. And we have developed some 25 1 internal performance standards for our judges of 2 compensation claims who didn't have such 3 standards in the past to really let them know 4 what we expect of them. Their role is not as 5 clearly defined as that of the ALJs has been over 6 the years in terms of being at work, vacation 7 days, all those kind of things. And most of us 8 are used to coming to work every day and working 9 at our jobs. 10 GOVERNOR BUSH: They're acting like regular 11 judges? Is that what you're saying? 12 CFO GALLAGHER: So what you're telling me is 13 that now if I wanted to go sit in on a workers' 14 comp claim hearing -- which I tried to do, by the 15 way, and I went to Miami on a Monday around 11 16 o'clock in the morning -- there's a chance there's 17 actually a hearing going on? 18 MR. COHEN: I think -- well, I can't know 19 there's a chance of a hearing going on that Monday 20 morning, because judges have motion days, and they 21 have hearing days, and they have writing days, 22 but -- 23 CFO GALLAGHER: But, I mean, there might be 24 something going on? 25 MR. COHEN: -- the judges should be in the 26 1 office working. 2 CFO GALLAGHER: Well, in the past, I could 3 never find one. But you've changed that now? 4 MR. COHEN: Well, I invite you to visit 5 again, Mr. Treasurer. 6 CFO GALLAGHER: Okay. 7 GOVERNOR BUSH: He may take you up on it, 8 so -- 9 MR. COHEN: Please do. 10 GOVERNOR BUSH: -- be careful what you wish 11 for. 12 MR. COHEN: And really, I think one of the 13 things -- and Judge Langham has done this. He has 14 appeared in offices unannounced on a regular 15 basis, and that's always a good thing. I've done 16 it plenty of times, and when someone wasn't there, 17 I asked where they were, and there's usually a 18 reasonable explanation why someone wasn't there. 19 CFO GALLAGHER: They'll be on the cell phone 20 real quick with you, though, I promise you that. 21 MR. COHEN: Oh, they were there. 22 CFO GALLAGHER: No matter where they are. 23 MR. COHEN: You heard them screeching through 24 the parking garage. 25 CFO GALLAGHER: Motion to approve Item 2. 27 1 GOVERNOR BUSH: There's a motion. 2 COMMISSIONER BRONSON: Second. 3 GOVERNOR BUSH: And a second. Without 4 objection, the motion passes. Thank you very 5 much. 6 MR. COHEN: Thank you, Governor. It's been a 7 pleasure. 8 MS. TINKER: Item 3, recommend approval of 9 the final order granting the Public Service 10 Commission's petition for exceptions to the 11 Uniform Rules of Procedure. 12 CFO GALLAGHER: Motion on 3. 13 COMMISSIONER BRONSON: Second. 14 GOVERNOR BUSH: There's a motion and a 15 second. Without objection, the item passes. 16 MS. TINKER: Thank you, Governor. 17 GOVERNOR BUSH: Thank you. 18 19 20 21 22 23 24 25 28 1 GOVERNOR BUSH: Board of Trustees. 2 CFO GALLAGHER: Motion on the minutes from 3 August 1st and August 15th. 4 COMMISSIONER BRONSON: Second. 5 GOVERNOR BUSH: There's a motion on Item 1 6 and a second. Without objection, the item passes. 7 Secretary, good morning. 8 MS. CASTILLE: Good morning, Governor and 9 members of the Cabinet. I would like to take a 10 moment to make a very short presentation before 11 going on to the next agenda item. 12 GOVERNOR BUSH: That's right. How short? 13 MS. CASTILLE: Very short. I just wanted to 14 present to you our Florida Forever calendar this 15 year that we have completed, for each of you and 16 for the Cabinet aides. We've printed 5,000 of 17 them. They're available for the public, for 18 everyone who is here. And we have also set aside 19 several of them for each of the class members for 20 each of the students that you mentor. 21 CFO GALLAGHER: How did you find that -- 22 GOVERNOR BUSH: I see you found that first 23 year picture of me. 24 CFO GALLAGHER: Yes. How did you find that 25 picture? Out of the archives or something? 29 1 GOVERNOR BUSH: Exactly. 2 MS. CASTILLE: I'm sorry, sir? 3 GOVERNOR BUSH: You're very kind. 4 CFO GALLAGHER: That Governor picture there 5 looks like it came from the archives for the first 6 year. 7 MS. CASTILLE: I wish they had taken mine 8 from the archives. 9 GOVERNOR BUSH: That's nice. Where's the 10 first picture, the cover? 11 CFO GALLAGHER: The picture is gorgeous. 12 MS. CASTILLE: This first picture is the 13 lodge at Babcock Ranch. 14 GOVERNOR BUSH: Oh, the lodge. Spectacular. 15 CFO GALLAGHER: Man, I do need to go there. 16 MS. CASTILLE: And each of the pictures here 17 are parcels that have been purchased in the past 18 eight years. 19 GOVERNOR BUSH: Thank you. 20 MS. CASTILLE: And you'll notice one of our 21 cabins in here, one of our new, very nice cabins 22 that we have been building in the last five years, 23 in June, on the June parcel. 24 GOVERNOR BUSH: I see it. How are they 25 doing? Are they leasing out pretty good? 30 1 MS. CASTILLE: Oh, they stay -- I have 2 constant calls from people that ask me if I can 3 get them into the cabins at our state parks, which 4 I can't. 5 CFO GALLAGHER: Do what again? 6 MS. CASTILLE: We have a contract with 7 Reserve America, which is an 800 number for 8 leasing our properties, both campgrounds and 9 cabins. And our cabins pretty much stay full, 10 definitely on the weekends, but they are sometimes 11 available during the week. 12 CFO GALLAGHER: And you call the 800 number 13 to get a reservation? 14 MS. CASTILLE: Yes, sir. 15 CFO GALLAGHER: How much are -- 16 MS. CASTILLE: But I could probably help you 17 out. 18 CFO GALLAGHER: How much is it a -- I've got 19 about six weeks left. What do they charge? 20 MS. CASTILLE: Pardon me? 21 CFO GALLAGHER: What is the charge for the 22 use of the cabins? 23 MS. CASTILLE: I think they're different 24 prices. Around $100. 25 CFO GALLAGHER: For the whole cabin? 31 1 MS. CASTILLE: For the whole cabin. 2 Generally, the cabins are two-bedroom, one-bath 3 cabins. They have a bunk bed in one side, a 4 queen-size bed in the other, and generally two 5 couches, and the couches pull out to make beds as 6 well. And it's a full-size kitchen with 7 dishwashers generally. 8 GOVERNOR BUSH: 60-inch TV? 9 CFO GALLAGHER: Plasma? Sure. 10 MS. CASTILLE: No televisions. 11 CFO GALLAGHER: There's no televisions? 12 MS. CASTILLE: No televisions. We do not -- 13 CFO GALLAGHER: Just read books. 14 GOVERNOR BUSH: No televisions? 15 CFO GALLAGHER: Read books. 16 MS. CASTILLE: Read books. 17 GOVERNOR BUSH: Item 2. 18 MS. CASTILLE: Item 2. 19 CFO GALLAGHER: That was Item 2, Governor. I 20 move we accept it. 21 GOVERNOR BUSH: Item 3. 22 MS. CASTILLE: Item 2 is the annual land 23 management review team findings. This year, 31 24 reviews were conducted during the 2005-2006 fiscal 25 year involving more than 497,000 acres of managed 32 1 lands. This year, a special effort was taken to 2 encourage the participating agencies to vary their 3 representation, and we also invited some outside 4 entities to tag along on the reviews with us, 5 because I wanted to make sure that we were not 6 getting stale in our reviews. 7 This year, the overall team reviews found 8 that the managers are doing an excellent job with 9 the resources available. They did determine that 10 there were some issues that could be addressed. 11 And since all of the agencies are represented, we 12 took special care to make sure that we will go 13 and repair some of the areas that we were found 14 lacking in at the Department of Environmental 15 Protection state lands, state parks. 16 CFO GALLAGHER: Motion on 2. 17 ATTORNEY GENERAL CRIST: Second. 18 COMMISSIONER BRONSON: Second. 19 GOVERNOR BUSH: There's a motion and a 20 second. Without objection, the item passes. 21 Item 3. 22 MS. CASTILLE: Item 3 is deferred. 23 CFO GALLAGHER: Motion to defer Item 3 to 24 November 14th. 25 COMMISSIONER BRONSON: Second. 33 1 GOVERNOR BUSH: There's motion to defer and a 2 second. Without objection, the item will be 3 deferred till November 14th. 4 MS. CASTILLE: Item 4 is the Florida Keys 5 Ecosystem Florida Forever project. This is 6 consideration of four option agreements to acquire 7 27.14 acres within the Florida Keys Ecosystem 8 Florida Forever project from the Florida Keys 9 Aqueduct Authority, also from Frank Bervaldi, from 10 James D. and Jane P. Watermolen, and the Bonefish 11 Estate Trust. Total consideration for all of the 12 properties is $3,179,998.20. 13 ATTORNEY GENERAL CRIST: Motion on -- 14 GOVERNOR BUSH: Eva, what are you doing? 15 MS. ARMSTRONG: (Inaudible.) 16 GOVERNOR BUSH: You're looking at me not to 17 be -- you wanted me to be on my good behavior? 18 Sometimes I'm not on these land deals. I get -- 19 CFO GALLAGHER: Off the program? 20 GOVERNOR BUSH: Yes, I get off the program. 21 I had one question about this. This is 22 great. We're fulfilling our commitment to the 23 Keys. But just as a future reference for 24 purchasing of properties, I think we should 25 buy -- when we buy title, buy these properties, 34 1 we ought to buy the -- do our best to either buy 2 out the lease for advertising -- 3 CFO GALLAGHER: This is the one on that 4 that's coming. 5 GOVERNOR BUSH: Oh, okay. Never mind. 6 MS. CASTILLE: And we have a solution for 7 that. 8 GOVERNOR BUSH: Get ready for Item 6 then. 9 CFO GALLAGHER: Yep. I've already made a -- 10 GOVERNOR BUSH: Oh, you have the same 11 problem? 12 CFO GALLAGHER: Oh, yes. I have a solution 13 for it. 14 GOVERNOR BUSH: Never mind. 15 MS. CASTILLE: We have a solution on that 16 one. 17 CFO GALLAGHER: I move Item 4. 18 COMMISSIONER BRONSON: Second. 19 GOVERNOR BUSH: Is it Item 4? 20 CFO GALLAGHER: Yes, it is. 21 GOVERNOR BUSH: There's a motion and a 22 second. Without objection, erase all the stupid 23 things the Governor said. The item passes. 24 MS. CASTILLE: Item 5 is the Biomass Gas and 25 Electric plant approval for a 50-year term 35 1 sublease between Florida State University Board of 2 Trustees and Biomass Gas and Electric, LLC, for up 3 to 21.2 acres for construction and operation of an 4 alternative energy facility and for education and 5 research of alternative energy. 6 Additionally, we're asking for a 7 modification to the lease purpose contained in 8 the Board of Trustees lease number 2736 with 9 Florida State University to include the 10 construction and operation of an alternative 11 energy facility, a determination that the 12 proposed sublease is not contrary to the public 13 interest, a request to waive the competitive bid 14 requirements, as the proposed sublease is in the 15 public interest, and delegation of authority to 16 the Secretary of the Department of Environmental 17 Protection or designee to approve any 18 nonsubstantive changes to the proposed sublease. 19 GOVERNOR BUSH: You've got people lined up. 20 MS. CASTILLE: Yes, sir, we do. 21 GOVERNOR BUSH: They're teed up for 22 something. 23 CFO GALLAGHER: Is there anybody lined up 24 against it? 25 MS. CASTILLE: I believe all these are lined 36 1 up for it. 2 GOVERNOR BUSH: I'm pretty confident of that. 3 CFO GALLAGHER: I could tell by the ones 4 standing they're for it. 5 MS. CASTILLE: There may be one person who 6 may want to speak on a potential fuel, but I'm not 7 sure if they are here or not. They have not said 8 anything. 9 CFO GALLAGHER: I'll move Item 5. 10 ATTORNEY GENERAL CRIST: Second. 11 GOVERNOR BUSH: There's a motion and a 12 second. Any other discussion? Without objection, 13 the item passes. 14 MS. CASTILLE: Could I tell you that we've 15 got some support here, or does the support -- 16 GOVERNOR BUSH: You got your deal. 17 ATTORNEY GENERAL CRIST: You have support 18 here. 19 GOVERNOR BUSH: Go out and do good work. 20 Yes, Jim. We can change our mind, now. 21 CFO GALLAGHER: Do we need to reconsider 22 this? 23 MR. SMITH: I promise to be very brief, 24 Governor. Florida State made -- bought this land 25 in -- 37 1 GOVERNOR BUSH: Jim, you want to say who you 2 are for the reporters? 3 MR. SMITH: Jim Smith. I'm here representing 4 the -- as chair -- 5 CFO GALLAGHER: Jim, it's all approved. 6 Don't give us any reason to change our mind. 7 MR. SMITH: I understand. Just a very, very 8 small request. Florida State University bought 9 this property -- 10 GOVERNOR BUSH: You're here as the chair of 11 the Board of Trustees? 12 MR. SMITH: Yes, sir. 13 GOVERNOR BUSH: Okay. I just wanted to make 14 sure. 15 MR. SMITH: Okay. Thank you. Anyway, 16 Florida State bought this property in three 17 transactions between 1930 and 1948. In 1970, the 18 Legislature passed a law saying that the title to 19 all land would vest in the Trustees. 20 And I have a very minor request that 21 whatever the rent money might be from this 22 property, that it go to the FSU research center, 23 Center on Alternative Energy, rather than into 24 the State Treasury, because Florida State, you 25 know, bought the land. And it's not a typical 38 1 piece of state land laying around that all of a 2 sudden someone wants to use for a purpose. And I 3 think when a university can show that it made the 4 original purchase that any monetary benefits that 5 derive later on should go to the benefit of the 6 university. That's it. 7 CFO GALLAGHER: I don't have a problem with 8 that. 9 GOVERNOR BUSH: What's the lease? 10 MR. SMITH: Pardon me? 11 CFO GALLAGHER: Well, actually, it's a 12 percentage of -- 13 MR. SMITH: It's a percentage. I think it's 14 estimated to perhaps be 100,000 a year. 15 CFO GALLAGHER: Probably about 50,000 a year. 16 I don't personally have -- 17 GOVERNOR BUSH: Secretary? 18 MS. CASTILLE: It's a statutory requirement 19 that the lease fee goes into the Board of Trustees 20 Internal Improvement Trust Fund. 21 CFO GALLAGHER: Well, then we don't have a 22 whole lot of choice. 23 GOVERNOR BUSH: I'll tell you what. Why 24 don't we see if there's a way administratively to 25 -- I mean, we'll validate or verify the fact that 39 1 we can't -- if it's against the law to do it, we 2 can't do it. 3 MR. SMITH: Well, if you can't do it, you 4 can't do it. 5 GOVERNOR BUSH: But we'll see if we can. I 6 don't think anybody has a problem with it. 7 CFO GALLAGHER: Well, I have an idea, if I 8 may. 9 GOVERNOR BUSH: Uh-oh. 10 CFO GALLAGHER: If you would, Colleen, set up 11 a contract with FSU to manage that property while 12 it's under lease for the amount of the lease fees 13 so that we'll have the group that needs the money 14 to oversee the property. Add that to it, and that 15 way, we can -- 16 MS. CASTILLE: Can we look at that and see 17 how we can manage it statutorily and then get back 18 with you? 19 CFO GALLAGHER: Bring it back to us. 20 GOVERNOR BUSH: You could bring it back 21 November 14th. 22 MS. CASTILLE: Would you like to have a 23 negative response memo to go to you all that if 24 you're satisfied with what we get, then we can go 25 ahead and delegate that to me to include in the 40 1 contract, if we can work it out? 2 CFO GALLAGHER: If it's legal, sure. 3 MS. CASTILLE: If it's legal, yes. 4 CFO GALLAGHER: I'll move that. 5 MS. CASTILLE: And that way we can get the 6 contract done more quickly. 7 GOVERNOR BUSH: All right. 8 CFO GALLAGHER: Motion to do just that. 9 GOVERNOR BUSH: There's a motion and a 10 second. I think we've already done it. 11 CFO GALLAGHER: No, but she just -- she's 12 amending it. 13 GOVERNOR BUSH: Oh, you're amending it? 14 There's a motion and a second to authorize Colleen 15 to determine whether or not we can provide the 16 revenues that may come from this lease to FSU. 17 Without objection, the resolution passes. 18 MS. CASTILLE: Item 6. This is consideration 19 of a purchase agreement to acquire 24.35 surveyed 20 acres within the Florida Keys Ecosystem Florida 21 Forever project from Paul J. Mitchell and 22 authorization to add Parcels 9, 12459, and 9930 23 and 9931 to the purchase agreement when the title 24 issues are resolved prior to closing at no 25 additional consideration. Consideration is 41 1 $74 million, 74 -- I'm sorry, $7 million, 2 74 percent of approved value. 3 And Governor and members of the Cabinet, I 4 would like to make one change to the contract 5 which addresses the billboard issue that you 6 referred to earlier, Governor and Treasurer. 7 What we would like to do is amend the purchase 8 agreement to provide for the donation of the 9 three billboard sites following the termination 10 of the current leases on or before November 11, 11 2013, and amend the purchase agreement to provide 12 for the specific donation of Parcel 9 following 13 the resolution of title issues. 14 And then the following language should be 15 inserted immediately before the end of the item: 16 "If staff fails to complete any of the contract 17 amendments, this contract will be brought back to 18 the Board of Trustees for further consideration." 19 CFO GALLAGHER: I move Item 6 with the 20 amendment. 21 COMMISSIONER BRONSON: Second. 22 ATTORNEY GENERAL CRIST: Second. 23 GOVERNOR BUSH: There's a motion and a 24 second. As amended, without objection, the item 25 passes. 42 1 MS. CASTILLE: And that concludes our agenda. 2 GOVERNOR BUSH: Thank you. 3 MS. CASTILLE: Thank you. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 43 1 GOVERNOR BUSH: State Board of 2 Administration. 3 CFO GALLAGHER: Motion on the minutes of 4 October 3rd. 5 ATTORNEY GENERAL CRIST: Second. 6 GOVERNOR BUSH: There's a motion and a 7 second. Without objection, Item 1 passes. 8 MR. STIPANOVICH: Good morning, Governor and 9 members. Item 2 is a request for approval of 10 fiscal sufficiency of an amount not exceeding 11 215 million State of Florida, full faith and 12 credit, State Board of Education public education 13 capital outlay refunding bonds. 14 ATTORNEY GENERAL CRIST: Motion. 15 CFO GALLAGHER: Second. 16 GOVERNOR BUSH: There's a motion and a 17 second. Without objection, the item passes. 18 MR. STIPANOVICH: Item 3 is a request for 19 approval of fiscal sufficiency of an amount not 20 exceeding 200 million State of Florida -- 21 CFO GALLAGHER: Motion. 22 ATTORNEY GENERAL CRIST: Second. 23 GOVERNOR BUSH: There's a motion and a 24 second. Without objection, the item passes. 25 MR. STIPANOVICH: That completes the agenda, 44 1 Governor. Thank you. 2 GOVERNOR BUSH: Thank you. 3 MR. STIPANOVICH: Thank you, members. 4 (Proceedings concluded at 10:12 a.m.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 45 1 CERTIFICATE OF REPORTER 2 3 STATE OF FLORIDA: 4 COUNTY OF LEON: 5 I, MARY ALLEN NEEL, Registered Professional 6 Reporter, do hereby certify that the foregoing 7 proceedings were taken before me at the time and place 8 therein designated; that my shorthand notes were 9 thereafter translated under my supervision; and the 10 foregoing pages numbered 1 through 43 are a true and 11 correct record of the aforesaid proceedings. 12 I FURTHER CERTIFY that I am not a relative, 13 employee, attorney or counsel of any of the parties, 14 nor relative or employee of such attorney or counsel, 15 or financially interested in the foregoing action. 16 DATED THIS 28th day of October, 2006. 17 18 ____________________________ 19 MARY ALLEN NEEL, RPR, FPR 2894-A Remington Green Lane 20 Tallahassee, Florida 32308 (850) 878-2221 21 22 23 24 25