BOARD OF TRUSTEES

DEPARTMENT OF

AGRICULTURE & CONSUMER SERVICES

MARCH 29, 2001
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Item 1 Establishment of an Application Process/Selecting Qualified Applicants for Individual Lease Parcels/Alligator Harbor Aquaculture Use Area

DEFERRED FROM THE FEBRUARY 6, 2001 AGENDA

REQUEST: Consideration to establish an application process to select qualified applicants for individual lease parcels within the Alligator Harbor Aquaculture Use Area.

COUNTY: Franklin

APPLICANT: Franklin County Board of County Commissioners

LOCATION: Sections 27, 34 and 35, Township 6 South, Range 2 West, in Alligator Harbor, Alligator Harbor Aquatic Preserve, near the town of St. Teresa Beach.

CONSIDERATION: The lease fees for the proposed leases within the Alligator Harbor Aquaculture Use Area represent (1) a base annual rental fee set by the Trustees per acre or fraction thereof; and (2) an annual surcharge of $10.00, representing $10.00 per acre or fraction thereof, for deposit in the General Inspection Trust Fund pursuant to section 597.010, F.S. Commencing January 1, 2005, the lease fees shall be adjusted every five years, based upon the five-year average change in the Consumer Price Index.

STAFF REMARKS: On February 27, 2001 the Board of Trustees authorized the use of approximately 100 acres of sovereignty submerged lands for an aquaculture use area in Alligator Harbor, Franklin County. The aquaculture use area will be subdivided into individual 2-acre or 1.5-acre aquaculture lease parcels and leased to qualified lease applicants. The Department of Agriculture and Consumer Services (DACS) offers options listed below for the application process for consideration by the Board of Trustees.

Terms and Conditions of the Lease Agreement

The terms and conditions for aquaculture leases in the Alligator Harbor Aquaculture Use Area, regardless of option, will include:A ten-year lease term;Assessment of an annual fee and surcharge;No approved transfer or sale of the lease for three years; and Compliance with special lease conditions.

Applying for Individual Lease Parcels

Applicants, regardless of option, would fill out an application, as required in section 253.69, F.S., and section 18-21.008(3), F.A.C., and pay a $200 nonrefundable application fee. Once received, DACS would review the applications for completeness, evaluate business plans, and request a background check by the Florida Department of Law Enforcement and the Fish and Wildlife Conservation Commission to ensure that applicants have had no public health or marine resource violations or felonies. Once the background checks had been completed, applications meeting all requirements would be deemed complete.

In the past, aquaculture leases have been offered on a first-come, first-served basis, with

Item 1, cont.

preference having been given to applicants qualifying through training programs; and by competitive bidding. Staff is not aware of any offerings of aquaculture leases using a lottery system.

Options for Establishing an Application Process

Option 1 - First-come, First-served Basis. The individual lease parcels would be two acres each, and parcels would be awarded to qualified applicants on a first-come, first-served basis. Under this option, DACS would specify a time that it would begin to accept completed applications and application fees, publish a public notice, and contact all parties that were presently on the application list to notify potential applicants of the application deadline. After a specific date has been established, applications would be submitted to DACS, and date-stamped upon receipt to determine the order in which applications had been received. Applications would be received and evaluated after the established date. Leases would be issued to qualified applicants in the order that the applications had been received, pending approval by the Board of Trustees. When all available leases had been granted, the remaining qualified applicants would be placed on a waiting list for leases that may become available in the future. Annual lease fees would be $15.95 per acre or portion thereof. This annual lease fee would be consistent with lease fees for similar leases statewide.

The applicant endorses the first-come, first-served option (Option 1), because it is the applicant's opinion that this option represents the fairest way to accommodate local residents, and would offer the best opportunity to apply a preference for local applicants.

Option 2 - The Lottery System. DACS would establish a specific schedule for receiving applications, which would include a sixty-day timeframe in which completed applications and application fees must be received. DACS would publish a public notice and contact all parties that were presently on the application list to specify when, where and how potential applicants should complete the lease application process. Annual lease fees would be $15.95 per acre or portion thereof or established by the Board of Trustees prior to notice of the application process. Under this option, DACS would also anticipate conducting a public workshop to inform and assist potential applicants in completing applications.

At the end of the sixty-day application period, staff would review all applications for completeness, evaluate business plans, and conduct record checks to determine public health and marine resource violations, or felonies. Staff would then develop a list of qualified applicants. In the event that the number of qualified applicants did not exceed the number of available leases, leases will be awarded on a first-come, first-served basis.

If the number of qualified applicants exceeded the number of available leases, selecting applicants would be based on the number of qualified applicants and the number of lease parcels that were available. Staff would establish a specific process for selecting applicants in this case, which would involve (1) increasing the number of leases by reducing the size of individual lease parcels from 2.0 acres to 1.5 acres to accommodate applicants if the number of qualified applicants did not exceed the number of available 1.5-acre leases; or (2) selecting lessees by lottery from a pool of qualified applicants if the number of qualified applicants did, in fact, exceed the number of available leases.

In the event that applicants should be selected by lottery, DACS would notice and conduct a public workshop, at which the names of potential lessees would be drawn from the pool of

Item 1, cont.

qualified applicants. Potential lessees that were drawn would then select individual lease parcels in the order in which their names were drawn. DACS has not selected lessees using a lottery system in the past. It would also be problematic to apply local preferences using the lottery system. Two applicant pools would be necessary; one pool to accommodate Franklin and Wakulla County residents, and a second pool to accommodate applicants from outside of these counties. In the event that the lottery system is selected, DACS would establish specific procedures for a lottery.

Option 3 - Competitive Bidding Process. Applicants would be determined by competitive bidding. Section 18-21.011(4), F.A.C., provides that the dollar amount of fixed rate consideration for aquaculture leases can be determined by competitive bid when the Department designates the site for leases. DACS would determine the number of parcels to be offered for competitive bid before seeking competitive bids.

DACS would establish a specific schedule for receiving applications and competitive bids, which would include a thirty-day timeframe in which completed applications, application fees, and competitive bids must be received. DACS would file a public notice and contact all parties that were presently on the application list to specify when, where and how potential applicants should complete the lease application and competitive bid processes.

Bids for aquaculture leases would be required to be written offers, with a cash consideration based on a lease fee per acre per year. Bids would be held to a set minimum of $15.95, plus a $10 surcharge. Each competitive bid should include the bid per acre times the number of acres (two acres, more or less) in the lease area offered, and the application fee. The total cash consideration offered should accompany the written offer, and would be returned to unsuccessful bidders upon award of the leases; however, the application fee would be retained. The application fees should be submitted at the same time. All bids would be required to be submitted in a sealed envelope marked, "SEALED BID-STATE AQUACULTURE LEASE," showing the date and accompanied by two certified or cashier's checks made payable to the Department of Agriculture and Consumer Services for the full amount of the cash consideration offered as the bid and for the $200.00 application fee. Bids would be opened in accordance with DACS’s administrative processes for receiving bids. Staff would determine the highest bidders, review applications for completeness, evaluate business plans, and conduct record checks to determine public health and resource violations, or felonies for potential applicants. Staff would then develop a list of qualified applicants, based on the highest bids from complete applications and the number of available lease parcels. DACS would conduct a public workshop at which successful bidders would select individual lease parcels. The order of selection would be based on the highest bidder selecting first, followed by the other bidders selecting in order of their bid amounts, from highest to lowest.

There would be a disadvantage to the competitive bidding process, in that providing leases to the highest bidders may consequently deny availability to all sectors of the public. It would be likely that watermen and their families, who may be the biggest beneficiaries of the project, would not have the wherewithal to submit successful bids. It can be anticipated that the highest bids may come from existing seafood businesses that have interests in hard clams. If the success of applicants was to be decided by competitive bidding, then it becomes more critical to prohibit lease transfers during the initial three years of the lease terms. It is conceivable that other interests may also decide to bid so that they could, in turn, sell or sublease if the value of these leases increases. Furthermore, a single applicant may offer several successful bids; in this case, perhaps a limit could be imposed on the number of leases obtained by a single applicant.

Board of Trustees

Dept. of Agriculture & Consumer Services

Agenda - March 13, 2001

Page Four

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Item 1, cont.

Preferences for Applicants

In order to encourage economic development in the region, DACS would offer two additional options to assist first-time leaseholders in Franklin and Wakulla Counties in starting aquacultural businesses. These options would provide preferences for selecting qualified applicants:

a) Leases would be issued, as available, to qualified applicants who reside in Franklin County or Wakulla County. In the event that additional leases remained available after the applying residents of Franklin and Wakulla Counties had been accommodated, leases would then be issued to non-residents on a first-come, first-served basis.

b) Leases would be issued, as available, to qualified applicants who did not currently possess aquaculture leases issued under chapter 253, F.S. This option would, in effect, limit leases to individuals who were not already lessees, and limit applicants from obtaining more that one lease during each offering.

After the qualified applicants had been selected, DACS would bring the list of potential lessees to the Board of Trustees for approval of each individual lease parcel. Upon approval from the Board of Trustees, the potential lessees would then have their individual lease parcel surveyed, and the survey would be submitted for approval to the Department of Environmental Protection's (DEP) Bureau of Surveying and Mapping. After DACS received the approved survey and legal description of the lease parcel, the lease instrument would be executed. The lessees would then have their leases recorded with the county, and with DEP's Division of State Lands, and would mark their leases according to the lease agreements, and would finally begin production.

Section 253.68(2)(b), F.S., provides that "it shall be the policy of the state to foster aquaculture development when the aquaculture activity is consistent with state resource management goals, environmental protection, proprietary interests, and the state aquaculture plan." Additionally, section 253.68, F.S., provides that "the Board of Trustees may lease submerged lands to which it has title for the conduct of aquaculture activities and grant exclusive use of the bottom and the water column .... for either commercial or experimental purposes."

A consideration of the status of any local government comprehensive plans was not made for this item. DACS has determined that the proposed action is not subject to the local government planning process.

(See Attachment 1, Pages 1-6)

RECOMMEND APPROVAL OF THE ESTABLISHMENT OF AN APPLICATION PROCESS FOR THE SELECTION OF QUALIFIED APPLICANTS IN THE ALLIGATOR HARBOR AQUACULTURE USE AREA ON A FIRST-COME, FIRST-SERVED BASIS (OPTION 1), INCORPORATING THE USE OF ADDITIONAL PREFERENCES GIVEN TO RESIDENTS OF FRANKLIN AND WAKULLA COUNTIES AND TO FIRST-TIME LEASEHOLDERS TO PROMOTE LOCAL ECONOMIC DEVELOPMENT

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