T H E C A B I N E T S T A T E O F F L O R I D A _____________________________________________________ Representing: FINANCIAL SERVICES COMMISSION, INSURANCE REGULATION 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 31, 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 FINANCIAL SERVICES COMMISSION, INSURANCE REGULATION (Presented by DAVID FOY and STEVE PARTON) ITEM PAGE UPDATE ON INSURANCE MATTERS 1 Citizens Property Insurance 4 2 Property & Casualty JUA 6 3 Capital Incentive Build-up Program 8 4 Home Structure Rating Program 13 5 Title Insurance Data Call 19 BOARD OF TRUSTEES, INTERNAL IMPROVEMENT TRUST FUND (Presented by COLLEEN CASTILLE) ITEM ACTION PAGE 1 Approved 23 2 Approved 24 3 Accepted 35 4 Withdrawn 35 STATE BOARD OF ADMINISTRATION (Presented by COLEMAN STIPANOVICH) ITEM ACTION PAGE 1 Approved 39 2 Approved 39 CERTIFICATE OF REPORTER 41 4 1 P R O C E E D I N G S 2 (The agenda items commenced at 9:12 a.m.) 3 GOVERNOR BUSH: Financial Services 4 Commission, Office of Insurance Regulation. 5 David, good morning. 6 MR. FOY: Good morning. Good morning, 7 Governor and members. Thank you. Commissioner 8 McCarty couldn't be here today, and I appreciate 9 the opportunity to come before you this morning. 10 Item Number 1 is an update on Citizens 11 Property Insurance Corporation. On September 12 19th, Citizens submitted a form filing to the 13 Office that will allow policyholders to opt out 14 of sinkhole coverage, while at the same time 15 providing coverage to policyholders in the event 16 of a total loss. These modifications are 17 expected to lower Citizens' homeowners rates by 18 as much as 43 percent in Pasco County and 28 19 percent in Hernando County, and those are the two 20 largest counties with sinkhole claims throughout 21 the state. The Office expects to receive the 22 Citizens sinkhole rate filing sometime this week. 23 And in addition, policyholders still do have the 24 option to purchase the coverage. 25 One other quick observation I wanted to 5 1 mention regarding sinkholes to you and the 2 consumers is that during the 2005 and 2006 3 legislative session, there were a number of laws 4 modified to help consumers related to sinkholes 5 by the leadership of Senator Fasano and 6 Representative Legg, and what they did is modify 7 the statute to ensure that the claims payout on 8 sinkholes is actually for and attributable to 9 sinkholes. 10 One of the things the Office was required to 11 look at was a presumed factor of savings from 12 those law modifications. The Office's report and 13 requirement of companies is to submit -- after 14 October 1, 2006, any rate filing must including a 15 14.4 percent reduction factor attributable to the 16 sinkhole portion of their premium, and we think 17 that's a very good savings for our consumers in 18 the state. 19 General Crist, at the September 19th 20 meeting, Citizens was directed to hold at least 21 three public meetings around the state to capture 22 consumer comments on how to comply with its 23 pro-consumer statutory mandate. Citizens is 24 required to recognize in their plan of operation 25 the obligations it has to its policyholders, who 6 1 are in desperate need of a higher level of 2 service from the State, and the Office is 3 coordinating with Citizens on these public 4 meetings. 5 I wanted to let you know that the first 6 meeting has been set in Monroe County on November 7 27th, and we plan to have three additional 8 hearings after that in the southwest Florida 9 area, hopefully in Sarasota, in the northwest 10 Florida area in the Pensacola area, and lastly, 11 in the southwest Florida area in the Broward 12 County area. 13 GOVERNOR BUSH: Are you finished? 14 MR. FOY: Item Number 2. 15 ATTORNEY GENERAL CRIST: We're listening. 16 We can do two things at once. 17 MR. FOY: Sure. Item Number 2, Governor and 18 members, is an update on the Property and 19 Casualty Joint Underwriting Association. I just 20 wanted to give you some new statistics. As of 21 October 27th, 108 policies have been issued in 22 the commercial JUA covering approximately 166 23 structures. 773,000 in premium has been 24 collected covering a total insured value of 43.9 25 million. 446 agents have been appointed. 7 1 And one thing I wanted to mention is that 2 about 66, 67 percent of the commercial property 3 is within two miles of the coast. I believe 44 4 or 45 percent is within one mile of the coast, 5 and another 20 percent added on top of that is 6 within two miles of the coast. So we see a lot 7 of the commercial problems we're having in our 8 marketplace is related to the proximity to the 9 water. 10 The leading counties by total insured value 11 in the Property and Casualty JUA is Brevard 12 County at 5.6 million, St. Johns at 4.4 million, 13 and Palm Beach County at 3.6 million. 14 GOVERNOR BUSH: Gulf Coast counties, I mean, 15 Pinellas, Hillsborough, Manatee? 16 MR. FOY: No, sir. They have lower value 17 amounts than those three counties. 18 CFO GALLAGHER: It only goes up to a million 19 dollars. 20 MR. FOY: That's correct. 21 CFO GALLAGHER: You're going to have a hard 22 time finding a million dollars coverage in some 23 of those areas. 24 MR. FOY: A million dollars for the 25 structure, not including land, and 750,000 is 8 1 available for contents in that program. 2 Item Number 3 is an update on the Capital 3 Incentive Build-up Program. 4 CFO GALLAGHER: David, before you go on -- 5 MR. FOY: Yes, sir. 6 CFO GALLAGHER: They got 1,600 applications 7 as of last -- probably maybe 1,700 by now, and 8 there's about 700 in the waiting period, and a 9 lot of them are getting pulled out by the private 10 market before it gets over there. 11 So there's a good thing here if people have 12 a market to go to other than what their agents 13 can find. And it sits in the MAP plan, and MAP 14 puts it on -- now they have it all on the 15 Internet, and any company that writes the 16 business gets to look at the risk, and they can 17 take it, and if they do, then it's not eligible 18 to go in there. So it's helping a lot of people 19 get private coverage. 20 MR. FOY: Absolutely. We're very pleased 21 with the program thus far, Governor. 22 GOVERNOR BUSH: No storms. 23 MR. FOY: We're keeping our fingers crossed. 24 Item Number 3 is an update on the Capital 25 Incentive Build-up Program. And Commissioner 9 1 McCarty and the State Board have testified 2 previously that the Capital Incentive Build-up 3 Program was created to increase the availability 4 of residential property insurance in the state 5 while mitigating premium increases for consumers. 6 As of October 30th, 11 companies have 7 applied for 244.7 million of the 250 million 8 appropriated by the Florida Legislature. So far 9 to date, the State Board of Administration has 10 interviewed eight of those 11 companies. Three 11 transactions have been completed thus far, 12 St. Johns, Southern Fidelity, United Property and 13 Casualty; one additional company has been 14 approved, and the transaction is being completed; 15 four applications are being processed and under 16 review; and three additional companies are 17 scheduled to interview with the State Board of 18 Administration within the coming weeks. This is 19 an excellent program, and we're very happy it has 20 done so well so quickly. 21 GOVERNOR BUSH: Any questions? 22 CFO GALLAGHER: Ten companies? 23 MR. FOY: Eleven companies have applied, and 24 eight companies have been interviewed by the 25 State Board, and there's approximately three that 10 1 -- I'm sorry, three companies that have an 2 interview with the State Board out of those 11. 3 CFO GALLAGHER: So we've got a good shot at 4 using the whole -- almost all of it? 5 MR. FOY: Right now, $244 million if all 11 6 applications were approved. 7 CFO GALLAGHER: Great. 8 GOVERNOR BUSH: And once fully allocated, 9 how much insurance will be written because of 10 this? 11 MR. FOY: It depends on the business plan of 12 the company. I don't have that information with 13 me. 14 GOVERNOR BUSH: But on average, it's like -- 15 CFO GALLAGHER: You can write 10 times -- 16 GOVERNOR BUSH: It would be 10 times 2 17 times -- 18 CFO GALLAGHER: Four times the cap in 19 premium, so if you take $250 million, it's a 20 billion dollars worth of coverage that that would 21 allow them to write. 22 GOVERNOR BUSH: Well, it's more than that, 23 isn't it, because the -- 24 CFO GALLAGHER: A billion dollars in 25 premium. 11 1 GOVERNOR BUSH: The 250 is matched by their 2 own -- 3 CFO GALLAGHER: Well, it's -- 4 GOVERNOR BUSH: Yes. 5 CFO GALLAGHER: This money, if you count 6 theirs, it's 2 billion. 7 GOVERNOR BUSH: Exactly. 8 CFO GALLAGHER: Minimum. 9 ATTORNEY GENERAL CRIST: That's a lot. 10 CFO GALLAGHER: As long as they can get 11 insurance. 12 GOVERNOR BUSH: Two billion in premium. 13 CFO GALLAGHER: In premium. That's a lot. 14 That covers a lot of property. 15 GOVERNOR BUSH: That theoretically otherwise 16 wouldn't be in the market. 17 MR. FOY: Yes, sir. 18 GOVERNOR BUSH: You need to speak English 19 sometimes when you guys advocate this so that 20 people know -- 21 CFO GALLAGHER: This is what we're talking 22 about, expanding the private market. 23 GOVERNOR BUSH: The whole point is the 24 additional capacity for consumers to get other 25 options. 12 1 MR. FOY: John and Jane Doe to be in a 2 private company instead of the Citizens Insurance 3 Corporation, yes, sir. It provides the 4 additional availability for those smaller 5 companies to write business that may not have the 6 aptitude to do it right now and to take on 7 additional consumers in the private market. 8 GOVERNOR BUSH: It's $2 billion of premium, 9 you know, which is -- if you did it on insured 10 value, it's some amount, you know, plus and 11 minus. That's a lot that otherwise wouldn't 12 exist. So next time you speak to a normal 13 person, if you could explain that to them, I 14 would be grateful. 15 MR. FOY: Yes, sir. 16 GOVERNOR BUSH: And if you're in front of 17 the press, I would suggest you do it too. 18 CFO GALLAGHER: I can put it in one other 19 perspective. 20 GOVERNOR BUSH: Not that not they're not 21 normal or anything, but normal people read their 22 papers. 23 CFO GALLAGHER: Citizens is about a third of 24 the market right now with 1,300,000 policies. 25 Citizens' premium, total premium is about 13 1 2.4 billion, just -- maybe it's a little higher 2 than that. So basically, we're expanding the 3 market by a third by putting that money in. 4 GOVERNOR BUSH: That's a good way of saying 5 it. 6 CFO GALLAGHER: And hopefully that will take 7 Citizens from being a third, you know, at least, 8 maybe even half, which will be great. 9 GOVERNOR BUSH: Okay. Any other questions 10 or comments? Thank you, David. Is this just an 11 update, or are we supposed to -- 12 MR. FOY: Yes, sir. I've got one more 13 update for you on something that I know you're 14 going to be interested in and I think Floridians 15 would love to hear about, and that's the home 16 structure rating system and the grading of homes. 17 We talked about this the other day with 18 Commissioner McCarty. 19 Well, Governor Bush, I just want to say as a 20 former employee of the Department of Education 21 and somebody that was very familiar with your 22 school grade plan and how well it worked to 23 change the behavior of not only schools, but of 24 individuals, and now as a person who is an 25 insurance regulator working to create a home 14 1 structure rating system -- 2 GOVERNOR BUSH: Thank you, Bill, for 3 bringing it up. 4 MR. FOY: We believe that proper information 5 to the homeowners to evaluate the ability of 6 their home to withstand the wind load from a 7 severe tropical storm or hurricane is past due in 8 the state. 9 This idea is not a new concept. It has been 10 around 15 years in Japan. When Japan had an 11 earthquake that devastated its cities with over 12 70,000 claims and $70 billion in damages in 13 yen -- I can't extrapolate what that is in 14 American currency. But basically, in the 15 aftermath, that insurance program in Japan 16 decided to provide some economic incentives to 17 individuals to encourage the building of 18 earthquake-resistant structures. So this is the 19 same idea today here in Florida. 20 You can ask your realtor or your builder how 21 well your hot water heater and how efficient it 22 is, but if you ask them, "What kind of wind load 23 is my garage door, my front door, or my windows 24 around my house, how well will they withstand 25 120-mile-per-hour winds," most of the time that 15 1 realtor and that builder doesn't have that answer 2 for the consumer. 3 So the Office has contracted with the 4 University of Florida to prepare an initial home 5 structure rating system. We've been holding 6 weekly conference calls with them and with an 7 advisory committee and are working with consumer 8 groups as well to get input on a transparent home 9 grading system to come up with ways that 10 individuals know how well their home is when they 11 purchase it, or if they want to mitigate their 12 home in conjunction with the Treasurer's home 13 mitigation program. 14 Our time line is to provide a report to the 15 Department of Financial Services in January of 16 this upcoming year, and the Department will take 17 the report that we provide, the home mitigation 18 program, and provide a report to the Legislature 19 in March 2007. 20 GOVERNOR BUSH: So you'll have it ready for 21 legislative action? 22 MR. FOY: Yes, sir. 23 GOVERNOR BUSH: The way I look at it -- I 24 don't know how you're going to grade them, but I 25 look at it like that (indicating), with risk 16 1 based on geography going up the scale, risk based 2 on structure going this way. So the lowest risk 3 would be, you know, a bunker in Jasper, and the 4 highest risk would be a mobile home in Miami 5 Beach or someplace that has a tendency of having 6 higher winds. And the per thousand insurance 7 would be related to the risk based on geography 8 and based on building structure. 9 So consumers then could upgrade their homes 10 before they sold it. The people that were buying 11 homes would know that they were going to have to 12 pay more because the structure wasn't stronger or 13 was located in a different place, and it would be 14 totally transparent. And just as schools have 15 shown improvement, our structures would show 16 improvement too, because people would be -- it 17 would be in their interest in order to maintain 18 their values to upgrade the strength of their 19 homes. 20 MR. FOY: Absolutely, Governor. 21 GOVERNOR BUSH: And why can't we do that 22 right now? And how are we -- 23 CFO GALLAGHER: It's the difference as far 24 as who's paying for it. 25 GOVERNOR BUSH: I know, but -- 17 1 CFO GALLAGHER: It's taking a long time. 2 GOVERNOR BUSH: It's taking a long time for 3 me. 4 CFO GALLAGHER: It's a little complicated. 5 MR. FOY: It's a complicated system. 6 However, we're working with the Treasurer -- 7 GOVERNOR BUSH: Are the Gators up to this? 8 Can they handle it? 9 CFO GALLAGHER: That's been a big problem. 10 MR. FOY: I was concerned when I worked on 11 that contract as a Seminole, but, yes, I think 12 the Gators can handle it. 13 GOVERNOR BUSH: Now, they've come to submit 14 their testimony with their work product or work 15 in progress to the Lieutenant Governor's 16 commission; right? 17 MR. FOY: Yes, sir. There's a model out 18 there that is done by a private company that is 19 being used as a baseline, but we want to make 20 sure that the private model works, because this 21 is for the public. This is for consumers, and 22 sometimes the private models, you can't always 23 delve into them to find out exactly how they're 24 doing the grading. So we're trying to combine 25 the best practices of that private model, but 18 1 from a public perspective, from a transparency 2 perspective, put a grade letter on it, A through 3 D, or 70 through 100, and come up with the best 4 possible system. 5 GOVERNOR BUSH: And you would have whatever 6 -- if it was a number or a grade, it would end up 7 becoming -- you would see it on for-sale signs, 8 and you would see it -- 9 CFO GALLAGHER: It would drive the insurance 10 prices. 11 MR. FOY: If had you a family with two young 12 children and you were moving into a new area and 13 you found out that the home was graded D, would 14 you purchase that home, or would you spend $5,000 15 more down the street on a home that's graded A 16 minus? 17 CFO GALLAGHER: And you'll know that your 18 insurance rate is going to be a sizable amount of 19 difference between the two. 20 GOVERNOR BUSH: Absolutely. This is 21 essential. Whatever else is done, this has got 22 to be done. 23 MR. FOY: We'll step up our efforts and move 24 quickly on that. 25 GOVERNOR BUSH: Get those Gators moving. 19 1 MR. FOY: Yes, sir. And lastly, if I may, 2 Governor, Steve Parton from our office, our 3 general counsel, would like to give you a brief 4 update on title, which has become a national 5 issue, consumer rates regarding title products. 6 GOVERNOR BUSH: Oh, yeah. Okay. 7 MR. PARTON: Good morning. I'll be very 8 brief. 9 Over the last 18 months to two years, there 10 have been a number of investigations by a number 11 of states, including Florida, into the business 12 practices of the title industry. The result of 13 those investigations have indicated that there 14 are a number of schemes that are out there that 15 have been utilized by the title industry to set 16 up either sham reinsurance agencies or sham title 17 agencies for the sole purpose of funneling 18 premium dollars to developers, realtors, or 19 mortgage bankers for the purposes of referring 20 business to the various title companies. 21 That fact alone was an indication to the 22 Office that perhaps the title rates in this state 23 are too rich. We've had a joint investigation 24 with DFS that has already resulted in a million 25 dollar fine for one insurer, the dismantling of 20 1 sham agencies by that insurer, as well as the 2 return of premium dollars to the affected 3 customers. 4 We then did a study of the title rates of 5 this state, and ultimately it was published 6 earlier this year, that indicated, in concert 7 with our own investigations of what is being done 8 with the premium dollars, that again the title 9 rates in the State of Florida are among the 10 highest in the nation and frankly suggest a need 11 to take a look at those particular rates. 12 We came to you in August of this year and 13 requested permission to publish a rule that will 14 require on a yearly basis the filing of data by 15 the various title agencies, as well as title 16 insurers, with the Office in a very detailed 17 manner so that we can see what in fact those 18 monies are being used for by these title 19 agencies. Hopefully, the final hearing will be 20 occurring this afternoon at the Department or at 21 the Office, and it will be back before you in 22 December asking for final approval of adoption of 23 that particular rule. 24 However, we are not waiting for that rule to 25 be finally adopted. We have issued a data call 21 1 statewide to all agencies and all insurers for 2 very detailed data so that we can take a look and 3 come back and look and see whether or not -- what 4 adjustments need to be done with regards to the 5 rates. 6 Our concerns are that if a title agency or a 7 title insurer has enough money to give away for 8 the purposes of referring business, which is 9 against the laws of the State of Florida in and 10 of itself, then in fact the rates in this state 11 may be too rich. So hopefully we'll be able to 12 provide some relief to the ultimate consumer. 13 Unfortunately, while these premiums are 14 being passed on to people that should not be 15 receiving it, the benefit of any reduction is not 16 being passed on to consumers. Competition is 17 occurring not at the consumer level, the ultimate 18 home buyer, but really between who can get the 19 most referrals from realtors and developers and 20 mortgage bankers, and those costs are being kept, 21 we believe, artificially high as a result of that 22 practice. 23 So hopefully we'll be able to get a handle 24 on that, and certainly with your help in allowing 25 us to go forward with a rule that's going to 22 1 require yearly reporting to the Office, we'll be 2 able to do that in a much more efficient manner 3 in the future. 4 GOVERNOR BUSH: Thank you for the update. 5 Any other -- any questions? 6 Thank you, sir. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 1 GOVERNOR BUSH: Board of Trustees. 2 ATTORNEY GENERAL CRIST: Motion on the 3 minutes. 4 GOVERNOR BUSH: There's a motion on the 5 minutes. 6 COMMISSIONER BRONSON: Second. 7 GOVERNOR BUSH: And a second. Without 8 objection, Item 1 passes. Item 2. 9 MS. CASTILLE: Item 2 -- 10 GOVERNOR BUSH: Good morning, Colleen. How 11 are you doing? 12 MS. CASTILLE: Good morning, Governor and 13 members of the Cabinet. I'm doing well, thank 14 you. 15 GOVERNOR BUSH: Good grammar. 16 MS. CASTILLE: Item 2 is the Blackwater 17 River State Forest additions and inholdings 18 acquisition. This is consideration of an option 19 agreement to acquire 77.6 acres within the 20 Division of Forestry's Blackwater River State 21 Forest additions from the Blackwater River 22 Foundation. The price is $360,000 for 77.6 23 acres, which is 76 percent of approved value. 24 CFO GALLAGHER: Motion on 2. 25 COMMISSIONER BRONSON: Second. 24 1 ATTORNEY GENERAL CRIST: Second. 2 GOVERNOR BUSH: There's a motion and a 3 second. Without objection, the item passes. 4 MS. CASTILLE: Item 3 is a sanctuary annual 5 status report from the Florida Keys National 6 Marine Sanctuary. 7 And before I ask Stephanie Bailenson, who is 8 our Director of Coastal and Aquatic Managed 9 Areas, to come up, I would like to introduce you 10 to Commander Dave Score, who is our new partner 11 with NOAA on managing the sanctuary. Commander 12 Score is taking Billy Causey's place, and Billy 13 has been promoted to Southeast Regional Director. 14 So we welcome Commander Score. 15 GOVERNOR BUSH: Good for Billy. 16 MS. CASTILLE: He is from -- 17 GOVERNOR BUSH: What did you get -- you must 18 have won the lottery, Commander. 19 COMMANDER SCORE: There's no replacing Billy 20 Causey, as you all know. I've worked with Billy 21 for the last five years and in the sanctuary 22 program for about 17 years. Billy is going to be 23 working more regionally through the Gulf states 24 and into the Caribbean, so it's not the last 25 you'll see of him. 25 1 GOVERNOR BUSH: Welcome. 2 COMMANDER SCORE: It's a pleasure to be 3 here. 4 GOVERNOR BUSH: Delighted to you have. 5 COMMANDER SCORE: Thank you. 6 MS. CASTILLE: And Commander Score is a 7 South Floridian who is back on his home 8 territory. 9 So if we would like, I would like Stephanie 10 to come on up and give the presentation. Thank 11 you. 12 MS. BAILENSON: Thank you. Good morning. 13 This is the ninth annual status report for the 14 Florida Keys National Marine Sanctuary. Under 15 the terms of the 1997 management agreement signed 16 by the Governor and Cabinet and the Department of 17 Commerce each year, we come up and tell you some 18 of the highlights of the past year. 19 A lot going on this past year. We continued 20 our long-term monitoring program, looking at the 21 coral reefs, the seagrass, and water quality 22 within the sanctuary. 23 Coral reef, we had started documenting a 24 decline in 1996, and it has been periods of 25 decline and stable situations, and this last 26 1 survey period showed a stable period. We will 2 continue to monitor the status of the coral reefs 3 so that we can adjust our management program 4 accordingly. 5 In 2005, we did see a rather high bleaching 6 event. Under the reef resilience partnership 7 between the State, NOAA, the Great Barrier Reef 8 Marine Park Authority, and the Nature 9 Conservancy, we were able to pull together some 10 rapid response monitoring protocols, and what we 11 saw was that the bleaching, while widespread, did 12 not have a very severe impact this last year. We 13 had a fairly good recovery rate, unlike some 14 areas in the Carribean. This is largely 15 attributed to Hurricane Katrina coming through 16 the Keys and stirring up that hot, stagnant 17 water. 18 The seagrass communities in the Keys remain 19 in fairly stable condition. We've been able to 20 expand our outreach efforts to the recreational 21 boating community to foster better boating 22 practices, and we're seeing an improvement there. 23 Water quality in the Keys has remained 24 fairly good sanctuary-wide. We continue to see 25 some elevated nutrient levels in the nearshore 27 1 area, and we will continue to coordinate with 2 local government on strategies to reduce some of 3 those land-based sources. 4 The Tortugas Ecological Reserve was 5 implemented in 2001, and the studies are showing 6 some encouraging signs that the reserve is 7 performing as we expected. In over 4,000 8 research dives conducted since 1999, we're 9 starting to see a greater abundance of grouper 10 and snapper, and we're also seeing some of the 11 larger fish coming back to the population. 12 As you know, 2005 was a very active 13 hurricane season, and we had four named storms 14 come through the Keys. We saw some widespread 15 coral impact and are still evaluating the 16 long-term impact of that. We saw a lot of rubble 17 moving through the area and some scouring or 18 sandblasting of the reef from all the sand that 19 was being moved about. 20 Anytime there are a lot of storms, you have 21 a heavy enforcement load, and the Florida Fish 22 and Wildlife Conservation Commission Sanctuary 23 Enforcement Team and the Monroe County officers 24 put in about twice as many hours last year as 25 they had in previous years, and we're all very 28 1 grateful for their efforts in that post-storm 2 pulsus. 3 One of the other impacts of storms are 4 derelict vessels. I have some updated 5 information for you from what's included in the 6 report following some intensive survey work for 7 both storm and nonstorm related derelict vessels. 8 About 500 vessels were up on the reefs. 375 have 9 been removed to date. 125 are still on the 10 reefs, and most are expected to be removed by the 11 end of November. 12 I'm very proud to report a significant 13 increase in volunteer activities down in the 14 Florida Keys National Marine Sanctuary. We had 15 an increase from about 4,800 hours in calendar 16 year 2004 to 8,198 hours in calendar year 2005. 17 These volunteers participate in our restoration 18 efforts, our monitoring efforts, and especially 19 in our outreach efforts. It demonstrates the 20 very strong commitment to the sanctuary of the 21 local community. 22 Our most exciting news of the year is the 23 opening of the Dr. Nancy Foster Complex. This is 24 a three-building facility at the Truman Annex in 25 Key West. Staff have moved into this office over 29 1 the summer. It has our office space, our 2 maintenance shop, and berthing of the sanctuary 3 vessels all in one location. And the crown jewel 4 of it is the EcoDiscovery Center, and this is a 5 state-of-the-art, high-tech visitor center that 6 had a soft opening the week before last. This 7 center is a partnership between the State, NOAA, 8 the National Park Service, and the U.S. Fish and 9 Wildlife Service. And we'll doing our official 10 grand opening January 13th, and we would like 11 nothing better than for you all to join us so 12 that we can show it off. 13 GOVERNOR BUSH: General. 14 ATTORNEY GENERAL CRIST: Thank you, 15 Governor. Stephanie, is it? 16 MS. BAILENSON: Yes. 17 ATTORNEY GENERAL CRIST: Thanks for the 18 report. I wanted to particularly direct, for 19 those in the audience who care, attention to the 20 study you did in the Tortugas about the fish. It 21 hits a soft spot in my heart because of net ban 22 that I like lot. You had how many -- what? 23 Forty-two experts to identify the fish in the 24 Tortugas area? 25 MS. BAILENSON: Right. It was a very large 30 1 team of scientists over intense, three-week 2 survey periods over several years. 3 ATTORNEY GENERAL CRIST: And over five times 4 more grouper were discovered? 5 MS. BAILENSON: Yes. 6 ATTORNEY GENERAL CRIST: And do you have any 7 attribution why? 8 MS. BAILENSON: We're still looking at that. 9 It's a little too early to show cause and effect. 10 We're showing some increases both within the 11 reserve, but we're also showing some increases 12 outside of the reserve, so it could be a good 13 environmental year. We're showing greater 14 increases within the reserve, however, which 15 indicates that restricting catch is making a 16 difference. 17 ATTORNEY GENERAL CRIST: There's a concern 18 too in other areas of our state about whether or 19 not grouper actually are being served in 20 restaurants when they're sold as such to 21 customers rather than it being something else. 22 So if the grouper population is coming back, 23 that's probably good news for not only the 24 grouper. 25 MS. BAILENSON: Absolutely. 31 1 ATTORNEY GENERAL CRIST: Thanks. 2 GOVERNOR BUSH: Now, the new arrangement 3 with the Feds, is it going to restrict more space 4 in the Tortugas area for fishing? 5 MS. BAILENSON: We will be bringing an item 6 to you on the National Park Service at the next 7 Cabinet meeting. 8 GOVERNOR BUSH: Right. You want to give us 9 a little prelude? 10 MS. BAILENSON: Sure. It includes a zoning 11 plan that includes a research natural area of 12 about 46 square miles that would be restricted to 13 recreational fishermen. 14 GOVERNOR BUSH: You're taking more property? 15 Is the agreement to take more property off the 16 fishing? 17 MS. BAILENSON: It does include some 18 restrictions on fishing, but it also remains 19 open, the areas that are most heavily fished. 20 GOVERNOR BUSH: Well, just be prepared two 21 weeks from now, just to have a -- 22 MS. BAILENSON: Absolutely. 23 ATTORNEY GENERAL CRIST: Be ready. 24 MS. BAILENSON: Absolutely. 25 GOVERNOR BUSH: -- conversation, since, you 32 1 know, it looked like it worked pretty good, what 2 we did. 3 CFO GALLAGHER: Because some of us like 4 fishing. 5 ATTORNEY GENERAL CRIST: Sounds like it, 6 yes. 7 GOVERNOR BUSH: It's prolific fishing. I 8 mean, it's -- 9 ATTORNEY GENERAL CRIST: We're not talking 10 about nets. We're talking about anglers. 11 GOVERNOR BUSH: All the critters follow the 12 Gulf stream through there. They spawn, and they 13 do all the fun things that life has to offer, and 14 then they come up here. 15 So the question is -- there needs to be a 16 proper balance between allowing people their 17 God-given right of recreation and making sure 18 that we don't overfish the population. And so I 19 want to hear some good, solid science on this, 20 because the natural tendency is to enclose -- you 21 know, to always be pushing the envelope out away 22 from recreational use. 23 CFO GALLAGHER: And one of the reasons that 24 this has been hanging around for a long time is 25 the fishing issue, because the Feds basically are 33 1 set on no fishing. 2 MS. BAILENSON: We've been working very 3 closely with the Federal Government to get to 4 that right balance that the Governor mentioned, 5 and we'll be presenting all the science to you. 6 GOVERNOR BUSH: Now, recognize, on November 7 14th, I'll be a lame grouper, but -- 8 CFO GALLAGHER: A dead grouper on the 2nd. 9 GOVERNOR BUSH: A dead grouper on the 2nd. 10 I'll be in the restaurant by then. 11 COMMISSIONER BRONSON: Governor, part of 12 that, as you remember, the last time we went 13 through this -- 14 GOVERNOR BUSH: I do remember it well. 15 COMMISSIONER BRONSON: -- was the catch and 16 release issue as compared to no fishing. And I 17 would lend my little bit of knowledge about the 18 aquatic side of this thing, but when you're 19 catching and releasing, especially where you 20 haven't caught a fish and fouled them to the 21 point that they're going to die, they're going to 22 reproduce right along with the rest of them. 23 I think there is a balance here, and I think 24 if you want support from the people who really 25 want those fishing resources to continue to grow, 34 1 then catch and release is the way to keep people 2 involved in this. If you say no fishing, then 3 you've just lost a whole group of people who are 4 interested in making sure that those fisheries 5 and spawning grounds stay active. And I think 6 sometimes we go overboard in our concept, and 7 then we lose people who are willing to support 8 the concept as long as it's a viable, working 9 situation. 10 You've already agreed that the population 11 levels, because of a number of reasons, are 12 getting better. And I think if you want the 13 fisherman from all over the nation, not just in 14 Florida or the Keys, who come down to recreate on 15 those waters to support and help fund through 16 private concerns and other things those spawning 17 areas, then I think they need to consider keeping 18 catch and release. 19 GOVERNOR BUSH: The reason I thought I could 20 get a -- prompt a discussion about this, I wanted 21 to give you a little prequel. 22 MS. BAILENSON: I appreciate that. 23 GOVERNOR BUSH: So that you all come 24 prepared to deal with -- that's probably the 25 biggest issue that we faced last time, so if 35 1 you're going to make a change, then it's going to 2 have to be defended with vigor. 3 ATTORNEY GENERAL CRIST: A lot of us like to 4 fish, and conservation is very important to us, I 5 think is the bottom line. 6 MS. BAILENSON: Absolutely, and we will have 7 the science for you. 8 ATTORNEY GENERAL CRIST: Yes, ma'am. 9 CFO GALLAGHER: I think it might be good to 10 get around to see at least the aides with the 11 final plan that you're planning on bringing early 12 enough so we can get it worked out if it needs it 13 more. 14 MS. BAILENSON: Yes. 15 GOVERNOR BUSH: Excellent. 16 CFO GALLAGHER: I move we accept Item 3. 17 ATTORNEY GENERAL CRIST: Second. 18 GOVERNOR BUSH: There's a motion and a 19 second. Without objection, the item is accepted. 20 And is there a motion to withdraw Item 4? 21 CFO GALLAGHER: Withdraw Item 4. 22 ATTORNEY GENERAL CRIST: Second. 23 GOVERNOR BUSH: There's a motion and a 24 second. Item 4 is withdrawn. 25 Thank you, Colleen. 36 1 MS. CASTILLE: That concludes our agenda. 2 Thank you. 3 GOVERNOR BUSH: Oh, Colleen, do you want to 4 -- I'm sorry. Before you leave, do you want to 5 mention anything about the Ocala property? 6 MS. CASTILLE: The Silver Springs Avatar 7 property? 8 GOVERNOR BUSH: Avatar, yes. 9 MS. CASTILLE: Yes, sir. We are going to be 10 bringing on the November 14th meeting an 11 acquisition item to you that is a joint 12 acquisition with the Nature Conservancy. It is 13 a -- 14 GOVERNOR BUSH: That's just so that we -- 15 MS. CASTILLE: A little over 4,400 acres. 16 GOVERNOR BUSH: Are they putting up the same 17 amount of money as we are? 18 MS. CASTILLE: No. They're buying it for us 19 so that we can pay in two installments. 20 GOVERNOR BUSH: Yes, we're paying for it. 21 MS. CASTILLE: Right. 22 CFO GALLAGHER: Same deal. We're buying it. 23 They're just making the deal. 24 GOVERNOR BUSH: Commission. 25 CFO GALLAGHER: The commission. 37 1 GOVERNOR BUSH: But it's -- you've been 2 working on this for a while, and it's a great 3 piece of property, and it protect the springs. 4 MS. CASTILLE: It is. Over a year and a 5 half, we've been getting quite a few e-mails and 6 visits from the community members, and you'll 7 have a very large group of people who will be 8 here to support it, including Representative 9 Dennis Baxley and -- 10 GOVERNOR BUSH: That's good. 11 MS. CASTILLE: -- Evelyn Lynn, Senator 12 Evelyn Lynn. 13 GOVERNOR BUSH: The interesting thing about 14 this property from my perspective is that this is 15 the first time to my knowledge -- and I'm sure 16 there's been other cases, but this is a first 17 time a large tract of land has seen a decline in 18 the property price. In our efforts to negotiate, 19 we were always trying to catch up with the 20 seller, and we never could quite catch up. And 21 now the seller is selling at a lower price, which 22 is an indicator, as I've tried to explain to the 23 really dedicated to the people at the Department, 24 that it doesn't always just go up. It goes down 25 sometimes too. Properties -- 38 1 CFO GALLAGHER: Us young people just haven't 2 seen that happen here in Florida. 3 GOVERNOR BUSH: You whipper-snappers 4 haven't. So, you know, just in terms of being 5 entrepreneurial in our efforts to get the maximum 6 amount of bang for what's a sizable amount of 7 money, but never enough, I think it's important 8 to be good purchasers. 9 MS. CASTILLE: Yes, sir, and we try to do 10 our best. 11 GOVERNOR BUSH: Okay. That's why I brought 12 it up. I just wanted to have one more little 13 pitch. 14 MS. CASTILLE: Thank you. 15 GOVERNOR BUSH: Since I'm a lame grouper. 16 ATTORNEY GENERAL CRIST: No, you're not. 17 18 19 20 21 22 23 24 25 39 1 GOVERNOR BUSH: State Board of 2 Administration. 3 CFO GALLAGHER: Motion on the minutes. 4 ATTORNEY GENERAL CRIST: Second. 5 GOVERNOR BUSH: There's a motion and a 6 second. Without objection, Item 1 passes. 7 Item 2. 8 MR. STIPANOVICH: Good morning, Governor and 9 members. 10 GOVERNOR BUSH: Good morning. 11 MR. STIPANOVICH: Item 2 is a request for 12 approval of fiscal determination by the State 13 Board of Administration of Florida to issue an 14 amount not exceeding $2,600,000 tax-exempt, 15 Florida Housing Finance Corporation multifamily 16 mortgage revenue bonds. 17 ATTORNEY GENERAL CRIST: Motion on 2. 18 CFO GALLAGHER: Second. 19 GOVERNOR BUSH: There's motion and a second. 20 Without objection, the item passes. 21 Yes, Coleman. You have something to add? 22 MR. STIPANOVICH: Well, the earlier 23 question, I believe I can answer that in terms of 24 the Incentive Capital Build-up Program for the 25 insurance companies. If the 250 million -- 244 40 1 has been asked for, so if the 250 million is 2 approved, with the matching 250, it would be a 3 total of 500 million of new capital, and then 4 with a two-to-one writing ratio, it would be a 5 billion dollars of new premiums. 6 CFO GALLAGHER: And the two-to-one is what 7 they -- in order to participate, they must do 8 two-to-one, but they may do four-to-one. So 9 that's -- 10 MR. STIPANOVICH: Right. So at a minimum, 11 it would be a billion dollars of new residential 12 coverage. 13 GOVERNOR BUSH: Is that it? Are we done? 14 CFO GALLAGHER: We're done. 15 GOVERNOR BUSH: Thank you, Coleman. 16 (Proceedings concluded at 9:45 a.m.) 17 18 19 20 21 22 23 24 25 41 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 40 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 16th day of November, 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